Bite Busters, LLC v. Burris, 2021 NCBC 19.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION MOORE COUNTY 20 CVS 899
BITE BUSTERS, LLC,
Plaintiff, ORDER AND OPINION ON v. DEFENDANT’S MOTION TO DISMISS CLIFFORD S. BURRIS,
Defendant.
1. THIS MATTER is before the Court on Defendant Clifford S. Burris’s
(“Burris” or “Defendant”) Motion to Dismiss (the “Motion”) pursuant to Rule 12(b)(6)
of the North Carolina Rules of Civil Procedure (“Rule(s)”) in the above-captioned case.
(ECF No. 13.)
2. Plaintiff Bite Busters, LLC (“Bite Busters” or the “Company”) alleges that
Burris violated an Employee Confidentiality, Non-Compete, and Invention
Assignment Agreement (the “Agreement”) that he signed as a condition of his
employment at Bite Busters and unfairly competed against the Company after
forming his own company. (Verified Compl., Mot. TRO & Preliminary Inj. ¶¶ 68–104
[hereinafter “Compl.”], ECF No. 3.)
3. Burris seeks to dismiss all of Bite Busters’s claims, contending that Bite
Busters has failed to state valid claims for breach of the non-competition and
employee non-solicitation provisions of the Agreement, tortious interference with
contract, and violation of both the North Carolina Trade Secrets Protection Act (“NCTSPA”) and the North Carolina Unfair and Deceptive Trade Practices Act
(“UDTPA”). (Br. Supp. Def.’s Mot. Dismiss 9–16, ECF No. 14.)
4. Having considered the Motion, the related briefing, and the arguments of
counsel at the hearing on the Motion, the Court hereby GRANTS in part and
DENIES in part the Motion.
Meynardie & Nanney, PLLC, by Joseph H. Nanney, for Plaintiff Bite Busters, LLC.
Vennum PLLC, by Liz Vennum, for Defendant Clifford S. Burris.
Bledsoe, Chief Judge.
I.
FACTUAL AND PROCEDURAL BACKGROUND
5. Under Rule 12(b)(6), “[t]he Court does not make findings of fact on motions
to dismiss[.]” Gallaher v. Ciszek, 2020 NCBC LEXIS 124, at *2 (N.C. Super. Ct. Oct.
16, 2020). Instead, the Court recites only those facts alleged in the Complaint
relevant to the Court’s determination of the Motion.
6. Bite Busters is a limited liability company formed and operating under the
laws of this State with its principal place of business in Moore County, North
Carolina.1 (Compl. ¶ 3.) The Company alleges that it provides outdoor pest control
services “mainly in Moore County, Stanly County, Richmond County, Montgomery
County, Anson County, and Scotland County, North Carolina[.]” (Compl. ¶¶ 5, 7.)
1 The Agreement describes the Company’s principal places of business as Aberdeen, North
Carolina and West Palm Beach, Florida. (Compl. Ex. A (preamble).) 7. Burris is a citizen and resident of Stanly County, North Carolina. (Compl.
¶ 8.) Bite Busters hired Burris in August 2019 as a technician to provide outdoor
pest control services. (See Compl. ¶¶ 5, 14–15, 18, 20.) In conjunction with his hiring,
Burris signed the Agreement on 23 August 2019, prior to beginning work for the
Company. (Compl. ¶ 24, Ex. A.)
8. The Agreement contains a set of non-competition provisions, which provide
as follows:
Non-Competition: Employee agrees not to, directly or indirectly, enter into, or in any manner take part in, [sic] similar business, profession, or other endeavor, which competes with the Company during the course of employment and for a period of 5 years thereafter, within the geographical limit of 200 miles of Company’s principal place of business specified above. i. Customers: Solicit the trade or patronage of any customers or prospective customers or suppliers of Company with respect to any technologies, services, products, trade secrets, or other matters in which Company is actively involved or becomes involved during the term of Employee’s employment with the Company; or ii. Competitors: Engage in any business or employment, or aid or endeavor to assist any third party, which is in competition with the products and/or services of Company.
(Compl. ¶ 26, Ex. A ¶ 3(a).)
9. The Agreement also contains a non-solicitation provision, which states:
Non-Solicitation: Employee agrees not to, directly or indirectly, during the course of employment or for a period of 5 years thereafter, solicit or aid third parties to solicit any employee or consultant of Company to leave their employment or engagement with Company in order to accept employment of any kind with any other person, including, but not limited to, any firm, company, partnership, or corporation.
(Compl. ¶ 30, Ex. A ¶ 3(b).) 10. Bite Busters alleges that at some point in early 2020 and without Bite
Busters’s knowledge, Burris began advising various Bite Busters customers that he
was starting a competing business. (Compl. ¶¶ 33–34.) Burris launched this
competing business in March or April 2020, (Compl. ¶ 35), and resigned from the
Company on 24 April 2020, (Compl. ¶ 37).
11. Bite Busters first learned of Burris’s competing business when some of Bite
Busters’s customers informed the Company that Burris had solicited them to do
business with his new company. (Compl. ¶¶ 38, 45.) A few of the solicited customers
switched their business from Bite Busters to Burris’s company. (Compl. ¶¶ 38, 45;
see also Aff. Larry Watkins2 ¶ 6, ECF No. 5.) Bite Busters later discovered that
Burris set up a Facebook page called “Mosquito Man,” where he advertised his new
firm’s competing services. (Compl. ¶ 59, Ex. C.)
12. One Bite Busters customer, Larry Watkins, reported to the Company that
Burris falsely told him that “Bite Busters was doing improper applications that were
dangerous to people and pets” and that “the chemicals that Bite Busters uses are
harmful to animals and plants.” (Compl. ¶¶ 46–49; see also Aff. Larry Watkins ¶ 9.)
13. One of the Company’s employees, Amedeo L. Camarco (“Camarco”), also
reported to the Company that Burris told him that Burris was starting a competing
2 Plaintiff’s Complaint references and relies upon the affidavit of Larry Watkins, (see Compl.
¶¶ 43, 45), thus the Court may consider the affidavit on this Motion, see, e.g., Schlieper v. Johnson, 195 N.C. App. 257, 261 (“When documents are attached to and incorporated into a complaint, they become part of the complaint and may be considered in connection with a Rule 12(b)(6) motion without converting it into a motion for summary judgment.”). business and that Burris had asked Camarco to terminate his employment with the
Company and come to work for Burris’s competing business. (Compl. ¶¶ 62–63.)
14. Bite Busters initiated this action on 25 August 2020. (See Compl.) Burris
filed the current Motion seeking dismissal of Bite Busters’s claims on 26 October
2020. (Def’s Mot. Dismiss. 1) After full briefing, the Court held a hearing on the
Motion on 17 December 2020 (the “Hearing”) via WebEx videoconference, at which
all parties were represented by counsel. The following day, the Court, with the
parties’ consent, entered an order permitting limited discovery and deferring its
ruling on the Motion through 28 February 2021 to assist the parties’ efforts in
pursuing early mediation and potential settlement of this action. (Interim Case
Management Order, ECF No. 27.) Those efforts have resulted in an impasse,
however, and the Motion is now ripe for resolution.
II.
LEGAL STANDARD
15. “A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the
complaint by presenting ‘the question whether, as a matter of law, the allegations of
the complaint, treated as true, are sufficient to state a claim upon which relief can be
granted under some [recognized] legal theory.’ ” Forsyth Mem’l Hosp., Inc. v.
Armstrong World Indus., Inc., 336 N.C. 438, 442 (1994) (quoting Lynn v. Overlook
Dev., 328 N.C. 689, 692 (1991)). Accordingly, the Court must view the allegations in
the complaint “in the light most favorable to the non-moving party.” Christenbury Eye Ctr., P.A. v. Medflow, Inc., 370 N.C. 1, 5 (2017) (quoting Kirby v. N.C. Dep’t of
Transp., 368 N.C. 847, 852 (2016)).
16. “When considering a [Rule] 12(b)(6) motion to dismiss, the trial court need
only look to the face of the complaint to determine whether it reveals an
insurmountable bar to plaintiff’s recovery.” Kemp v. Spivey, 166 N.C. App. 456, 461
(2004) (quoting Locus v. Fayetteville State Univ., 102 N.C. App. 522, 527 (1991)).
Further, “the complaint is to be liberally construed, and the trial court should not
dismiss the complaint unless it appears beyond doubt that [the] plaintiff could prove
no set of facts in support of his claim which would entitle him to relief.” State ex rel.
Cooper v. Ridgeway Brands Mfg., LLC, 362 N.C. 431, 444 (2008) (quoting Meyer v.
Walls, 347 N.C. 97, 111–12 (1997)); see also Strickland v. Hedrick, 194 N.C. App. 1,
20 (2008) (“[T]o prevent a Rule 12(b)(6) dismissal, a party must . . . state enough to
satisfy the substantive elements of at least some legally recognized claim.” (citation
and internal quotation marks omitted)).
17. Therefore, dismissal of a complaint under Rule 12(b)(6) is proper only when:
“(1) the complaint on its face reveals that no law supports the plaintiff’s claim; (2) the
complaint on its face reveals the absence of facts sufficient to make a good claim; or
(3) the complaint discloses some fact that necessarily defeats the plaintiff’s claim.”
Krawiec v. Manly, 370 N.C. 602, 606 (2018) (quoting Wood v. Guilford Cty., 355 N.C.
161, 166 (2002)). III.
ANALYSIS
A. Breach of Contract (Non-Compete)
18. Burris contends that Bite Busters’s claim for breach of the non-competition
provisions in paragraph 3(a) of the Agreement should be dismissed because the
provisions Bite Busters seeks to enforce are invalid as a matter of North Carolina
law. The Court agrees.
19. As an initial matter, “[i]t is well established that ‘[a] covenant in an
employment agreement providing that an employee will not compete with his former
employer is not viewed favorably in modern law.’ ” Sterling Title Co. v. Martin, 266
N.C. App. 593, 597 (2019) (quoting Hartman v. W.H. Odell & Assocs., Inc., 117 N.C.
App. 307, 311 (1994)). Nevertheless, a covenant not to compete will be enforced if it
is “(1) in writing; (2) reasonable as to time and territory; (3) made a part of the
employment contract; (4) based on valuable consideration; and (5) designed to protect
a legitimate business interest of the employer.” Young v. Mastrom, Inc., 99 N.C. App.
120, 122–23, disc. review denied, 327 N.C. 488 (1990). “The reasonableness of a non-
competition covenant is a matter of law for the court to decide.” Med. Staffing
Network, Inc. v. Ridgway, 194 N.C. App. 649, 655 (2009).
20. Paragraph 3(a) provides that Burris may not, either “directly or indirectly,
enter into, or in any manner take part in, [sic] similar business, profession, or other
endeavor, which competes with the Company during the course of employment and
for a period of 5 years thereafter, within the geographical limit of 200 miles of Company’s principal place of business.” (Compl. Ex. A ¶ 3(a).) That sentence is then
followed by two incomplete sentences that appear as numbered subparagraphs with
apparent (but not express) limitations, one as to “Customers” (“Solicit the trade or
patronage of any customers . . . of Company[,]” (Compl. Ex. A, at ¶ 3(a)(i))), and the
other as to “Competitors” (“Engage in any business or employment . . . which is in
competition with . . . Company[,] (Compl. Ex. A 3(a)(ii))).3 These provisions are
unenforceable as a matter of North Carolina law for several reasons.
21. First, paragraph 3(a) unreasonably restricts Burris’s business activities
because it prohibits him from “directly or indirectly” taking part “in any manner” in
a similar business, without regard to whether Burris is employed in a similar position
at that business or the services he provides at that business are the same as those he
provided at Bite Busters. See, e.g., VisionAIR, Inc. v. James, 167 N.C. App. 504, 509
(2004) (holding unenforceable a restriction that prevented the employee “from doing
even wholly unrelated work at any firm similar to [the employer]”); Hartman, 117
N.C. App. at 317 (holding unenforceable a restriction “that, rather than attempting
to prevent [the former employee] from competing for . . . business, it require[d] [the
former employee] to have no association whatsoever with any business that provides
[similar] services.”); Ridgway, 194 N.C. App. at 656 (holding unenforceable
restrictions that “prohibit the employee from engaging in future work that is distinct
from the duties actually performed by the employee”); Window Gang Ventures, Corp.
3 Although it is debatable whether subparagraphs 3(a)(i) and 3(a)(ii) restrict Burris’s activities due to their lack of express prohibitory language, even if they can be read to do so, each, as explained below, is unenforceable under North Carolina law. v. Salinas, 2019 NCBC LEXIS 24, at *20 (N.C. Super. Ct. Apr. 2, 2019) (holding
unenforceable a provision restricting employees from working for competitors “in any
capacity whatsoever—not simply in roles which would cause competitive harm to [the
employer] or only in divisions of those businesses which compete with [the
employer]”).
22. Next, paragraph 3(a)’s geographic restriction is also unreasonable as a
matter of law. “A restriction as to territory is reasonable only to the extent it protects
the legitimate interests of the employer in maintaining [its] customers.” Hejl v. Hood,
Hargett & Assocs., Inc., 196 N.C. App. 299, 306 (2009) (quoting Manpower, Inc. v.
Hedgecock, 42 N.C. App. 515, 523 (1979)). “Ordinarily, a covenant’s geographic scope
will be found reasonable if it encompasses the area served by the business that the
covenant protects[.]” Beverage Sys. of the Carolinas, LLC v. Associated Beverage
Repair, LLC, 368 N.C. 693, 698 (2016) (citing Thompson v. Turner, 245 N.C. 478,
481–82 (1957)).
23. Bite Busters has alleged that its customers are located in “Moore County,
Stanly County, Richmond County, Montgomery County, Anson County, and Scotland
County, North Carolina[.]” (Compl. ¶ 7.) Yet the territory prohibited to Burris under
the Agreement extends 200 miles from the Company’s principal place of business,
which is alleged in the Complaint as Moore County, North Carolina but defined in
the Agreement as both Aberdeen, North Carolina (which is in Moore County) and
West Palm Beach, Florida. (Compl. ¶ 3, Ex. A (preamble).) The Court takes judicial
notice that the geographic territory extending 200 miles from Moore County, North Carolina includes all but the westernmost counties of North Carolina, nearly all of
South Carolina, and a large portion of Virginia, including the cities of Roanoke,
Richmond, and Norfolk. For good measure, the territory extending 200 miles from
West Palm Beach, Florida includes the southern half of Florida as well as a large
portion of the Bahamas.
24. It merely states the obvious to note that the six-county area in central North
Carolina in which Bite Busters alleges it has customers is far smaller than the vastly
more expansive territory it seeks to protect from Burris’s competitive activities in the
Agreement. Even if Burris serviced customers in the Company’s entire six-county
operating area, Bite Busters’s prohibited territory under the Agreement far exceeds
any reasonable geographic limitation on Burris’s competitive activities that is
necessary to protect the Company’s legitimate business interests. See, e.g., Farr
Assocs., Inc. v. Baskin, 138 N.C. App. 276, 281 (2000) (“The employer must show that
the territory embraced by the covenant is no more than necessary to secure the
protection of its business[.]”). As such, the Court concludes that on the facts as
pleaded, the territory in the Agreement is unreasonable as a matter of law. Where,
as here, “the scope of the client-based territorial restriction . . . is unreasonable,” it
“thereby render[s] the non-compete agreement unenforceable.” Farr Assocs., Inc., 138
N.C. App. at 283.
25. The Court also concludes that the Agreement’s five-year restrictive period
is unenforceable as a matter of law on the pleaded facts. North Carolina courts only
enforce five-year employment covenants “under extreme conditions,” Hartman, 117 N.C. App. at 315 (quoting Eng’g Assocs., Inc. v. Pankow, 268 N.C. 137, 139 (1966)),
and no “extreme conditions” have been pleaded to support the five-year term here,
see, e.g., Akzo Nobel Coatings, Inc. v. Rogers, 2011 NCBC LEXIS 42, at *46–47 (N.C.
Super. Ct. Nov. 3, 2011) (holding a non-compete clause unenforceable where “[t]here
[we]re no special circumstances pled that would allow the Court to determine that a
five-year restriction is reasonable”).
26. The unreasonableness of paragraph 3(a)’s time restriction is all the more
apparent when the Court considers that the paragraph purports to restrict Burris
from soliciting “any customers . . . with respect to . . . matters in which Company is
actively involved or becomes involved during the term of Employee’s employment with
the Company[.]” (Compl. Ex. A ¶ 3(a)(i) (emphasis added).) Because the provision
looks back to the beginning of Burris’s employment in August 2019, North Carolina
courts deem the restriction as actually extending for five years and eight months.
See, e.g., Farr Assocs., Inc., 138 N.C. App. at 280 (“[W]hen a non-compete agreement
reaches back to include clients of the employer during some period in the past, that
look-back period must be added to the restrictive period to determine the real scope
of the time limitation.”). Thus, the actual time period of the Company’s restriction is
beyond the five-year period our courts have enforced only “under extreme conditions.”
See, e.g., Sterling Title Co., 266 N.C. App. at 599 (holding restriction unenforceable
because it restricted defendant “from soliciting or providing competitive services to
any of [p]laintiff’s customers with whom she had contact during her employment, a
period of roughly ten years.”). 27. Subparagraphs 3(a)(i) and 3(a)(ii) contain non-solicitation provisions that
are unenforceable for similar reasons. Non-solicitation provisions “ ‘must meet the
same requirements as are applied to . . . covenant[s] not to compete[,]’ including that
they be ‘reasonable as to time and territory.’ ” Window Gang Ventures, Corp., 2018
NCBC LEXIS 18, at *28 (quoting Aeroflow Inc. v. Arias, 2011 NCBC LEXIS 21, at
*24 (N.C. Super. Ct. July 5, 2011)).
28. Paragraph 3(a)(i) purports to restrict Burris from “[s]olicit[ing] the trade or
patronage of any customers or prospective customers and suppliers of the Company
with respect to any technologies, services, products, trade secrets, or other matters in
which Company is actively involved or becomes involved during the term of
Employee’s employment with the Company[.]” (Compl. Ex. A ¶ 3(a)(i).) This Court
has recognized that “North Carolina[ ] courts will enforce a covenant prohibiting a
former employee from soliciting his former employer’s customers even when not tied
to a specific geographic region where ‘the terms and conditions of this contract clause
were reasonably necessary to protect the employer’s legitimate business interests.’ ”
Sandhills Home Care, L.L.C. v. Companion Home Care - Unimed, Inc., 2016 NCBC
LEXIS 61, at *25–26 (N.C. Super. Ct. Aug. 1, 2016) (quoting Triangle Leasing Co. v.
McMahon, 327 N.C. 224, 229 (1990)). But where, as here, a non-solicitation clause
“reaches not only clients, but potential clients, and extends to areas where [p]laintiff
had no connections or personal knowledge of customers, the [provision] is unreasonable.” Aesthetic Facial & Ocular Plastic Surgery Ctr., P.A. v. Zaldivar, 264
N.C. App. 260, 272–73 (2019) (quoting Hejl, 196 N.C. App. at 307).4
29. Paragraph 3(a)(ii) appears to restrict Burris from “[e]ngag[ing] in any
business or employment, or aid[ing] or endeavor[ing] to assist any third party, which
is in competition with the products and/or services of Company.” (Compl. Ex. A
¶ 3(a)(ii).) As explained in connection with paragraph 3(a) above, however, such a
provision—which restricts Burris from working for a competitor in a position
different from the position he held at the Company and from providing services unlike
those he performed at the Company—is unreasonable as a matter of law and shall
not be enforced. See, e.g., VisionAIR, Inc., 167 N.C. App. at 509; Hartman, 117 N.C.
App. at 317.
30. For each of these reasons, therefore, the Court concludes that the Company’s
claim for breach of contract based on the non-competition and customer non-
solicitation provisions of paragraph 3(a) of the Agreement and its subparagraphs
should be dismissed under Rule 12(b)(6).5
4 Paragraph 3(a)(i)’s restriction on solicitation of suppliers is unreasonable as a matter of law
for the same reason. 5 Although not requested by Bite Busters, the Court notes that it is precluded from blue
penciling paragraph 3(a) and its subparagraphs because they do not contain distinctly separable parts. See Hartman, 117 N.C. App. at 317 (“A court at most may choose not to enforce a distinctly separable part of a covenant in order to render the provision reasonable. It may not otherwise revise or rewrite the covenant.”). B. Breach of Contract (Non-Solicitation of Employees)
31. Burris next contends that the same deficiencies that doomed Bite Busters’s
claim for breach of paragraph 3(a) compel the dismissal of its claim for breach of the
non-solicitation of employees provision in paragraph 3(b) of the Agreement.
32. “Courts in North Carolina have recognized that reasonable restrictions on a
former employee’s right to solicit an employer’s current employees are enforceable[,]”
as such provisions are simply “another means of protecting the former employer’s
interest in the good-will it has with its customers.” Wells Fargo Ins. Servs. USA, Inc.
v. Link, 2018 NCBC LEXIS 42, at *26–28 (N.C. Super. Ct. May 8, 2018), aff’d, 372
N.C. 260 (2019); see also, e.g., Kennedy v. Kennedy, 160 N.C. App. 1, 11 (2003) (“[T]he
covenant prohibiting [defendant] from soliciting and hiring plaintiff’s former
employees for the three-year period does not violate public policy.”) Nevertheless,
“[a] restriction on solicitation of employees generally is subject to the same
requirements as other restrictive covenants.” Wells Fargo Ins. Servs. USA, Inc., 2018
NCBC LEXIS 42, at *27. Thus, “[t]o establish that a non-solicitation of employees
covenant is reasonable, an employer must establish that it has a protectable business
interest in prohibiting solicitation of former employees, and such prohibition must be
no broader than necessary to protect that interest.” Id. at *28; see, e.g., Ridgway, 194
N.C. App. at 657 (holding unenforceable a prohibition on defendant’s solicitation of
employees of plaintiff’s affiliate for which defendant did not work).
33. Paragraph 3(b) of the Agreement provides that Burris may not “directly or
indirectly, during the course of employment or for a period of 5 years thereafter, solicit or aid third parties to solicit any employee or consultant of Company to leave their
employment or engagement with Company in order to accept employment of any kind
with any other person[.]” (Compl. Ex. A ¶ 3(b).) This language is substantially
similar to the language of paragraph 3(a) and its subparagraphs, and the Company’s
counsel asserted at the Hearing that its claim for breach of paragraph 3(b) should
rise and fall with its claim for breach of paragraphs 3(a), 3(a)(i), and 3(a)(ii). The
Court agrees.
34. In particular, the Court concludes that paragraph 3(b)’s prohibition of
Burris’s “direct[ ] or indirect[ ]” solicitation of the Company’s employees for a period
of five years after the termination of his employment—regardless of whether the
employees were current Company employees, whether the employees worked in the
same territories in which Burris worked, whether Burris ever worked with the
employees, or whether the employees provided services or developed relationships for
Bite Busters that would be of value to a competitive business—is unreasonable as a
matter of law on the pleaded facts. Nothing on the face of the Complaint nor in the
Agreement suggests that such a restriction is necessary to protect the Company’s
legitimate business interests, and the Company has not contended that a legitimate
business interest supports the restriction in its briefing or oral argument. For each
of these reasons, therefore, the Court concludes that Bite Busters’s claim for breach
of contract based on paragraph 3(b) of the Agreement must be dismissed. C. Violation of the NCTSPA
35. Burris next seeks the dismissal of Bite Busters’s claim for misappropriation
of trade secrets under the NCTSPA. (Compl. ¶¶ 84–96.) “To plead misappropriation
of trade secrets, a plaintiff must identify a trade secret with sufficient particularity
so as to enable a defendant to delineate that which he is accused of misappropriating
and a court to determine whether misappropriation has or is threatened to occur.”
Krawiec, 370 N.C. at 609 (quoting Washburn v. Yadkin Valley Bank & Tr. Co., 190
N.C. App. 315, 326 (2008)). Therefore, “a complaint that makes general allegations
in sweeping and conclusory statements, without specifically identifying the trade
secrets allegedly misappropriated, is ‘insufficient to state a claim for
misappropriation of trade secrets.’ ” Id. at 610 (quoting Washburn, 190 N.C. App. at
327).
36. The NCTSPA defines a “[t]rade secret” as:
business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that: a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
N.C.G.S. § 66-152(3).
37. Our courts consider the following factors in determining whether a plaintiff
has successfully pleaded a cognizable trade secret:
(1) [t]he extent to which information is known outside the business; (2) the extent to which it is known to employees and others involved in the business; (3) the extent of measures taken to guard secrecy of the information; [(4)] the value of information to business and its competitors; [(5)] the amount of effort or money expended in developing the information; and [(6)] the ease or difficulty with which the information could properly be acquired or duplicated by others.
Wilmington Star-News, Inc. v. New Hanover Reg’l Med. Ctr., Inc., 125 N.C. App. 174,
180-81 (1997) (citations omitted). “These factors overlap, and courts do not always
examine them separately and individually.” Vitaform, Inc. v. Aeroflow, Inc., 2020
NCBC LEXIS 132, at *19 (N.C. Super. Ct. Nov. 4, 2020) (citation omitted).
“Information will not merit trade secret protection where the information is ‘either
generally known in the industry . . . or [is] readily ascertainable by reverse
engineering.’ ” Sterling Title Co., 266 N.C. App. at 601 (quoting Analog Devices, Inc.
v. Michalski, 157 N.C. App. 462, 470 (2003)).
38. The NCTSPA defines “misappropriation” as the “acquisition, disclosure, or
use of a trade secret of another without express or implied authority or consent,
unless such trade secret was arrived at by independent development, reverse
engineering, or was obtained from another person with a right to disclose the trade
secret.” N.C.G.S. § 66-152(1). Further, “[a] complaint must contain allegations,
identifying with specificity, ‘the acts by which the alleged misappropriations were
accomplished.’ ” Strata Solar, LLC v. Naftel, 2020 NCBC LEXIS 129, at *9 (N.C.
Super. Ct. Oct. 29, 2020) (quoting Washburn, 190 N.C. App. at 327).
39. Bite Busters alleges that its trade secrets “includ[e] but [are] not limited to
its processes, procedures, customer lists and other trade secrets,” (Compl. ¶ 85), and
that “Defendant, while an employee of Bite Busters, misappropriated those trade secrets,” (Compl. ¶ 88). These allegations are insufficient to survive Rule 12(b)(6)
scrutiny. See Krawiec, 370 N.C. at 609 (requiring trade secret identification with
“sufficient particularity”).
40. First, the courts of this State routinely dismiss NCTSPA claims broadly
asserting that a plaintiff’s processes and procedures constitute its trade secrets
because, without more, such allegations do not identify with sufficient particularity
the trade secrets the defendant allegedly misappropriated. See, e.g., Washburn, 190
N.C. App. at 327 (concluding that trade secrets comprised of “business methods;
clients, their specific requirements and needs; and other confidential information”
failed to identify alleged trade secrets with sufficient specificity); Analog Devices, Inc.,
157 N.C. App. at 468–69 (concluding that “general claims concerning areas of
[plaintiff’s] production and design” failed to identify alleged trade secrets with
reasonable particularity); Window Gang Ventures, Corp., 2019 NCBC LEXIS 24 at
*43 (concluding that trade secrets comprised of “[i]nformation regarding [plaintiff’s]
proprietary equipment and chemical cleaning solutions” failed to identify alleged
trade secrets with sufficient particularity); Edgewater Servs., Inc. v. Epic Logistics,
Inc., 2009 NCBC LEXIS 21, at *9, *11 (2009) (concluding that “formulae, patterns,
programs, devices, compilations of information, methods, techniques and
processes,” failed to identify alleged trade secrets with sufficient particularity
(citation and internal quotation marks omitted)).
41. Bite Busters’s identification of its “customer lists” trade secret, however,
fares better. Our Supreme Court has held that customer lists may, in certain circumstances, constitute a trade secret, see Krawiec, 370 N.C. at 610, provided that
the plaintiff “allege[s] that the lists contained . . . information that would not be
readily accessible to defendant[ ,]” id. at 611. Here, Bite Busters specifically alleges
that “[Burris] would not have had access to customer contact information, including
addresses, telephone numbers, and e-mail addresses, had he not been employed by
Bite Busters[,]” (Compl. ¶ 22), and supports this assertion with additional factual
allegations identifying various measures the Company took to protect this
information from anyone other than an employee with a need to know, including by
locking doors, limiting access to computers, and requiring employees to execute
nondisclosure agreements, (Compl. ¶¶ 23, 28). The Court finds these allegations
sufficient to satisfy the identification requirement set forth in Krawiec.
42. Despite satisfying its burden to sufficiently plead its customer list trade
secret, however, Bite Busters’s trade secret claim nonetheless fails because the
Company has failed to allege “the acts by which the alleged misappropriations were
accomplished.’’ Strata Solar, LLC, 2020 NCBS LEXIS 129, at *9 (quoting Washburn,
190 N.C. App. at 327). Indeed, Bite Busters has not pleaded how Burris accessed or
acquired the Company’s trade secrets when he was not authorized to do so or how he
used Bite Busters’s trade secrets without authorization. To the contrary, the
Company’s only allegation concerning misappropriation is general and conclusory:
“Defendant, while an employee of Bite Busters, misappropriated those trade secrets,
acquiring them to use in his competing business to unfairly compete with Bite
Busters.” (Compl. ¶ 88.) Our courts have made clear that such allegations are insufficient to survive Rule 12(b)(6) scrutiny. See, e.g., Washburn, 190 N.C. App. at
327 (holding that “general and conclusory” allegations of misappropriation are
insufficient to survive a motion under Rule 12(b)(6)); see also Strata Solar, LLC, 2020
NCBC LEXIS 129, at *11–12 (holding that when a “[p]laintiff does not allege any
specific acts by [defendants] to show that they accessed, disclosed, or used [p]laintiff’s
trade secrets without [p]laintiff’s authorization[,]” a trade secret misappropriation
claim necessarily fails).
43. Accordingly, for the reasons discussed above, Bite Busters’s NCTSPA claim
must be dismissed. Nevertheless, given that Bite Busters has not yet amended its
Complaint and based on counsel’s representations at the Hearing that the failures of
pleading identified above may be cured through repleading, the Court will dismiss
the Company’s trade secret claim without prejudice6.
D. Tortious Interference with Business and Contractual Relationships
44. Burris next seeks to dismiss Bite Busters’s claim for tortious interference
with the Company’s business and contractual relationships. The Company bases its
claim on Burris’s alleged conduct in soliciting the business of Bite Busters’s customers
in violation of his contractual obligations to the Company, including by “defaming
Bite Busters[.]” (Compl. ¶¶ 76–83.)
6 Notwithstanding the Court’s conclusion that this claim should be dismissed, “[t]he decision to dismiss an action with or without prejudice is in the discretion of the trial court[.]” First Fed. Bank v. Aldridge, 230 N.C. App. 187, 191 (2013). The Court concludes, in the exercise of its discretion, that dismissal of Bite Busters’s NCTSPA claim should be without prejudice to its right to attempt to reassert that claim through proper factual allegations consistent with Rule 12. 45. Under North Carolina law, a plaintiff bringing a tortious interference with
contract claim must allege more than “an expectation of a continuing business
relationship” with a third party to survive dismissal under Rule 12(b)(6). Dalton v.
Camp, 353 N.C. 647, 655 (2001). Rather, a plaintiff must plead:
(1) a valid contract between the plaintiff and a third person which confers upon the plaintiff a contractual right against a third person; (2) the defendant knows of the contract; (3) the defendant intentionally induces the third person not to perform the contract; (4) and in doing so acts without justification; (5) resulting in actual damage to plaintiff.
Krawiec, 370 N.C. at 606–07 (quoting United Labs. v. Kuykendall, 322 N.C. 643, 661
(1988)).
46. Although Bite Busters has alleged that it has “developed . . . contractual
relationships with its customers[,]” (Compl. ¶ 77), and that Burris approached
customers of Bite Busters and advised them that he would begin a competing
business, (Compl. ¶ 33), the Company nowhere pleads specific facts showing that
Burris knew of the particular contractual relationships with customers on which Bite
Busters’s claim is based. Such a failure of pleading requires that the claim be
dismissed. See, e.g., Salon Blu, Inc. v. Salon Lofts Grp., LLC, 2018 NCBC LEXIS 72,
at *12 (N.C. Super. Ct. July 16, 2018) (“[W]hen alleging a claim for tortious
interference with contract, it is not enough to broadly allege that the defendant[ ] had
‘knowledge of the contract[ ]’; rather, a complaint must contain ‘facts sufficient to
make a good claim’ that the defendant[ ] knew of the contract[ ] at issue.” (quoting
Krawiec, 370 N.C. at 606–07)). As both parties admitted at the Hearing, however, it appears that these pleading deficiencies can be cured. The Court will therefore
dismiss this claim without prejudice.
E. Violation of the UDTPA (Section 75-1.1)
47. Bite Busters’s final claim is for violation of the UDTPA, N.C.G.S. § 75-1.1,
(Compl. ¶¶ 97–104), and is based on a variety of alleged misconduct, including that
Burris (i) “misrepresented to customers that he had the right to start a competing
business,” (Compl. ¶ 100), (ii) “us[ed] the confidential trade secret information that
belongs to Bite Busters,” (Compl. ¶ 100), and (iii) falsely represented to a Bite Busters
customer that Bite Busters used “improper applications that were dangerous to
people and to pets[,]” (Compl. ¶¶ 46-47), and chemicals that were “harmful to animals
and to plants[,]” (Compl. ¶¶ 48-49).
48. To “establish a prima facie claim for unfair trade practices, a plaintiff must
show: (1) [the] defendant committed an unfair or deceptive act or practice, (2) the
action in question was in or affecting commerce, and (3) the act proximately caused
injury to the plaintiff.” Bumpers v. Cmty. Bank of N. Va., 367 N.C. 81, 88 (2013)
(quoting Dalton, 353 N.C. at 656).
49. As an initial matter, to the extent the Company’s UDTPA claim is premised
on the success of its claims for tortious interference and misappropriation of trade
secrets, the failure of those claims, as discussed above, is fatal to the Company’s claim
under Chapter 75. See, e.g., Krawiec, 370 N.C. at 613 (“Because we determined that
plaintiffs failed to state a valid claim for tortious interference with contract or
misappropriation of trade secrets, we necessarily must conclude that plaintiffs also failed to adequately allege that [defendants] committed an unfair or deceptive act or
practice [based on those claims].” (citation and internal quotation marks omitted)).
Similarly, because the Court has dismissed the Company’s breach of contract claims,
the Company’s UDTPA claim shall also be dismissed to the extent it is based on
Burris’s alleged breach of contract.
50. In addition, to the extent Bite Busters bases its UDTPA claim on its
allegations that Burris misrepresented to customers his right to start a competing
business and thereby induced those customers to take actions that harmed the
Company, that claim, too, must fail. Our appellate courts have made clear that
where, as here, a plaintiff asserts a misrepresentation-based UDTPA claim, the
plaintiff must plead “reliance on the misrepresentation in order to show the necessary
proximate cause[,]” Bumpers, 367 N.C. at 88, and, in particular, that “the plaintiff
[has] affirmatively incorporated the alleged misrepresentation into his or her
decision-making process[,]” id. at 90.
51. Because Bite Busters has failed to allege that the Company relied on
Burris’s alleged misrepresentation, the Company’s UDTPA claim must be dismissed
to this extent. See, e.g., D C Custom Freight, LLC v. Tammy A. Ross & Assocs., Inc.,
848 S.E.2d 552, 562 (N.C. Ct. App. 2020) (“It is clear from [Bumpers] that only the
direct reliance of the plaintiff is sufficient to support a UDTP[A] claim based on
misrepresentation. The holding in Bumpers precludes a UDTP[A] claim . . . in which
a third party’s reliance caused damage to the plaintiff.”). 52. The Court reaches a different conclusion, however, concerning Bite
Busters’s allegation that Burris falsely stated to a customer that the Company’s
chemicals and applications caused harm to plants, animals, and humans. (Compl.
¶¶ 46–49.) Such alleged statements, if false, impeach the Company in its trade or
business and can support a claim for slander per se. See, e.g., Taube v. Hooper, 840
S.E.2d 313, 317 (N.C. Ct. App. 2020) (“Slander per se is an oral communication to a
third person which amounts to . . . an allegation that impeaches the plaintiff in his
trade, business, or profession[.]” (citation omitted)). Our courts have recognized that
slander per se may constitute an unfair trade practice under section 75-1.1. See
Ausley v. Bishop, 133 N.C. App. 210, 216 (1999) (holding that “slander per se may
constitute a violation of section 75-1.1”); see also, e.g., Ellis v. N. Star Co., 326 N.C.
219, 226 (1990) (holding that “a libel per se of a type impeaching a party in its business
activities is an unfair or deceptive act in or affecting commerce in violation of N.C.G.S.
§ 75-1.1”); Nguyen v. Taylor, 219 N.C. App. 1, 9 (2012) (holding that “defam[ing]
[plaintiffs] while profiting at their expense” may constitute an unfair trade practice
under section 75-1.1).
53. Accordingly, because the Court concludes that the Company has pleaded
sufficient facts which, if proven, would support a finding that Burris engaged in an
unfair or deceptive act or practice “in or affecting commerce” that proximately caused
injury to the Company by defaming the Company in its trade or business, Burris’s
motion to dismiss Bite Busters’s UDTPA claim based on these allegations should be
denied. IV.
CONCLUSION
54. WHEREFORE, for the reasons set forth above, the Court hereby ORDERS
a. Defendant’s Motion is GRANTED as to Bite Busters’s claims for
breach of contract (non-compete) and breach of contract (non-
solicitation), and those claims are hereby DISMISSED with
prejudice.
b. Defendant’s Motion is GRANTED as to Bite Busters’s claims for
tortious interference with business and contractual relationships and
violation of the North Carolina Trade Secrets Protection Act, and
those claims are hereby DISMISSED without prejudice.
c. Defendant’s Motion is GRANTED as to Bite Busters’s claim for
violation of section 75-1.1 (except to the extent that claim is based on
the Company’s allegations that Burris made false statements that
defamed the Company in its trade or business), and that claim is
hereby DISMISSED without prejudice to the extent that claim is
based on Bite Busters’s claims for tortious interference with business
and contractual relationships and for violation of the North Carolina
Trade Secrets Protection Act and DISMISSED with prejudice to
the extent that claim is based on Bite Busters’s claims for breach of
contract (non-compete) and breach of contract (non-solicitation). d. Defendant’s Motion is DENIED as to Bite Busters’s claim for
violation of section 75-1.1 to the extent that claim is based on the
Company’s allegations that Burris made false statements that
defamed the Company in its trade or business, and that claim shall
proceed to discovery.
SO ORDERED, this the 25th day of March, 2021.
/s/ Louis A. Bledsoe, III Louis A. Bledsoe, III Chief Business Court Judge