ARRO-MARK CO. LLC v. WARREN

District Court, D. New Jersey·Decided September 5, 2024·No. 2:22-cv-06663·Unknown

Opinion

NOT FOR PUBLICATION UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY ARRO-MARK CO. LLC.,

Plaintiff, v. Case No.: 2:22-cv-6663-JKS-MAH CEDRIC WARREN (individually), OPINION MICHAEL MAMARY (individually), SKM INDUSTRIES, INC., SHANTA SYAL (individually), AND JOHN DOE September 5, 2024 1-10 AND ABC CORPORATIONS 1- 10 (being fictitious names of persons and entities who are not presently known to Plaintiff), Defendants. SEMPER, District Judge. This matter comes before the Court on Defendants SKM Industries, Inc. (“SKM”) and Shanta Syal’s (“Syal” and collectively with SKM, “SKM Defendants”) motion to dismiss Plaintiff Arro-Mark Co. LLC’s (“Plaintiff” or “Arro-Mark”) Second Amended Verified Complaint (ECF 123, “SAVC”) pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF 130-1, “Def. Br.”) Plaintiff filed a brief in opposition. (ECF 134, “Opp.”) SKM Defendants filed a reply. (ECF 134, “Reply.”) The Court reviewed the Plaintiff’s SAVC and the parties’ submissions and decided the motion without oral argument pursuant to Federal Rule of Civil Procedure 78 and Local Civil Rule 78.1. For the reasons set forth below, SKM Defendants’ motion to dismiss is GRANTED in part and DENIED in part. I. FACTUAL BACKGROUND1 This matter arises from a dispute between two businesses. Plaintiff Arro-Mark is a closely held, family-owned business that manufactures, produces, distributes, and sells industrial inks and paints for permanent and removable marking devices in interstate commerce. (SAVC ¶ 17.)

Defendant SKM manufactures, produces, and distributes industrial inks and paints for permanent and removable marking devices. (Id. ¶ 6.) Historically, Arro-Mark supplied SKM with inks, paints, nib applicators, and markers, which SKM resold to its customers in interstate commerce. (Id. ¶ 74.) Arro-Mark and SKM are competitors in the industrial inks, paints, and marking device market. (Id. ¶ 75.) For roughly sixty years, Arro-Mark has developed a loyal customer base. (Id. ¶ 18.) It has perfected and improved product formulas and manufacturing processes for producing inks and paints for permanent and removable marking pens and devices. (Id.) Arro-Mark alleges that its former employees, Defendants Warren and Mamary, together with SKM and Syal—SKM’s president and chief executive officer—misappropriated Arro-Mark’s proprietary business

information and trade secrets to give SKM Defendants an unfair commercial advantage in the industrial inks, paints, and marking pens and devices market. (Id. ¶¶ 7, 19.) A. Warren, Arro-Mark, and SKM Defendant Warren worked for Arro-Mark as a Laboratory Director and Chief Chemist from April 1, 2008 until November 15, 2022, when Arro-Mark terminated his employment. (Id. ¶ 20.) Warren’s responsibilities included, but were not limited to, processing chemical formulas utilized in the marking devices manufactured and sold by Arro-Mark, researching and developing existing

1 When considering a motion to dismiss under Rule 12(b)(6), the Court is obligated to accept as true allegations in the complaint and all reasonable inferences that can be drawn therefrom. See Rocks v. City of Phila., 868 F.2d 644, 645 (3d Cir. 1989). Accordingly, the facts are taken from Plaintiff’s Second Amended Verified Complaint. products, and devising new product ideas. (Id. ¶ 21.) Throughout his employment with Arro-Mark, Warren had access to and was in charge of securing and protecting Arro-Mark’s trade secrets for the formulation of inks and paints. (Id. ¶ 22.) He also had access to or was in charge of research and design for: inks and paints; applicator nibs for the application of Arro-Mark’s inks and paints;

marker barrels; containers; bottles for the storage and use of inks and paints; marketing strategies; new product ideas; customers; and ink and paint manufacturing processes. (Id.) Arro-Mark alleges Warren secretly and simultaneously worked for SKM Defendants and provided them with Arro- Mark’s proprietary information, including formulas, nib guides, and photographs and videos of Arro-Mark’s products and systems. (Id. ¶ 26.) Arro-Mark alleges Warren failed to abide by various company policies and procedures. (Id. ¶ 27.) For example, Warren used his personal email address, his personal cell phone, and his personal laptop for business purposes (id. ¶ 28) and took photos and videos of Arro-Mark’s specialized process for filling ink/paint bottles and Arro-Mark’s “nib board,” which Arro-Mark alleges was a trade secret. (Id. ¶ 31.) Warren was terminated by Arro-Mark for, among other

reasons, taking prohibited photos and videos, misappropriating Arro-Mark’s trade secrets, and conspiring with SKM Defendants to misappropriate Arro-Mark’s trade secrets, intellectual property, and proprietary information. (Id. ¶ 44.) After Warren’s termination, Arro-Mark reviewed his office and work computer and found he was pricing out product parts, which was not part of his job responsibilities. (Id. ¶ 45.) On Warren’s desk, Arro-Mark found formulas for at least thirty different products, including Mighty Marker Degrease “DG,” Cow-Tag Marker, Bleed Thru Marker, Alcohol Bottle Marker Formulas for all colors, Xylene-based formulas for all colors, an old formula book from approximately 30 years ago, a chemical brochure, and a catalogue for a supplier. (Id. ¶ 46.) Arro-Mark asserts Warren took these items without authorization and shared it with SKM Defendants. (Id. ¶¶ 47-50.) Arro- Mark also found SKM products and samples in Warren’s desk. B. Mamary, Arro-Mark, and SKM Mamary worked at Arro-Mark as an Information Technology Specialist, Web Designer,

and Graphic Artist from May 17, 2017 until December 30, 2020. (Id. ¶ 54.) Mamary’s duties included creating and maintaining Arro-Mark’s website and e-commerce store, providing in-house technical support, and creating sale sheets and marketing materials while securing the electronic integrity thereof. (Id. ¶ 55.) Mamary created labels for Arro-Mark’s products and for its private label customers. (Id. ¶ 56.) During the COVID-19 Pandemic, Arro-Mark’s purchasing agent fell ill, and Mamary covered the purchasing agent position for several months. (Id. ¶ 57.) As temporary purchasing agent, Mamary had access to all of Arro-Mark’s suppliers’ information, including but not limited to the suppliers’ names, prices, and quality control information. (Id. ¶ 57.) As Arro-Mark’s on-site technology service provider, Mamary helped Arro-Mark secure its documents by creating a password sheet. (Id. ¶ 58.) To do so, Mamary was entrusted with all of

Arro-Mark’s passwords, which gave Mamary access to all of Arro-Mark’s proprietary information, including proprietary formulas. (Id.) Further, as needed, Mamary assisted Arro-Mark with purchasing, creating “nib boards,” and creating nib guides with Arro-Mark’s proprietary information. (Id. ¶ 59.) Through his positions as Information Technology Specialist and Graphic Design Artist, Mamary had access to: Arro-Mark’s trade secrets for the formulation of inks and paints; research and design of nibs for the application of Arro-Mark’s inks and paints; research and design for marker bodies and bottles for the storage and application of inks and paints; paint manufacturing processes; product pricing information; and information concerning suppliers of raw materials, parts, and nibs. (Id. ¶ 60.) Mamary was also in charge of keeping this information secure. (Id.) Along with the other duties listed above, Mamary was assigned to develop and publish Arro-Mark’s website, which took him approximately 18 to 24 months to complete. (Id. ¶ 61.)

Mamary utilized Arro-Mark’s artwork, labels, SDS sheets, nib guides, pricing, and other proprietary information to create the website.

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