Brainware, Inc. v. Mahan

808 F. Supp. 2d 820, 2011 U.S. Dist. LEXIS 95825, 2011 WL 3734456
District Court, E.D. Virginia·Decided August 24, 2011·No. No. 1:11cv470 (LMB/TCB)·Published·Cited by 9 cases

Opinion

MEMORANDUM OPINION

LEONIE M. BRINKEMA, District Judge.

Before the Court is defendant’s Motion to Dismiss [Dkt. No 11]. For the reasons stated below, defendant’s motion will be granted in part and denied in part.

I. BACKGROUND

Plaintiff Brainware, Inc. (“Brainware”) is a Virginia corporation that markets and sells “proprietary, enterprise software applications in a market known as Intelligent Data Capture or Intelligent Data Recognition.” Pl.’s First Am. Compl. [“Am. Compl.”] ¶¶ 7, 12. Defendant Michael Mahan (“Mahan”), who is a citizen of Texas, was employed by Brainware as a senior account executive in its sales department from January 2009 until he voluntarily resigned in November 2010. Id. ¶¶ 1, 7, 25.

Mahan’s Employment Agreement (“Agreement”) with plaintiff contained three separate provisions, each of which is at issue in this litigation: a non-compete clause, a non-solicitation clause, and a nondisclosure clause. Id. ¶¶ 2-3, 19-21. Paragraph 4 of the Agreement contains the non-compete and nonsolicitation provisions, which provides, in pertinent part that

While the Employee is employed by the Company and for a period of one year after the termination or cessation of such employment for any reason, the Employee will not directly or indirectly:
(i) As an.. employee ... or in any other capacity whatsoever ... develop, design, produce, market, sell or render (or assist any other person in developing, designing, producing, marketing, selling or rendering) products or services competitive with those developed, designed, produced, marketed, sold or rendered by the Company while the Employee was employed by the Company; or
(ii) Solicit, divert or take away or attempt to divert or to take away, the business or patronage of any of the clients, customers or accounts, or prospective clients, customers or accounts, of the Company which were contacted, solicited or served by the Employee while employed by the Company.

Def.’s Mem. in Supp. of Mot. to Dismiss [“Def.’s Mem.”] at 3.1 The non-disclosure provision in Paragraph 1 of the Agreement states:

Recognition of Company’s Rights; Nondisclosure. At all times during my employment and thereafter, I will hold in strictest confidence and will not disclose, [824] use, lecture upon or publish any of the Company’s Proprietary Information (defined below), except as such disclosure, use or publication may be required in connection with my work for the Company, or unless an officer of the Company expressly authorizes such in writing. I will obtain Company’s written approval before publishing or submitting for publication any material (written, verbal, or otherwise) that relates to my work at Company and/or incorporates any Proprietary Information. I hereby assign to the Company any rights I may have or acquire in such Proprietary Information and recognize that all Proprietary Information shall be the sole property of the Company and its assigns.

Am. Compl. ¶ 21.

Brainware alleges that during Mahan’s tenure with the company, he was “involved in numerous activities that provided him with direct access to highly proprietary, non-public and confidential company information,” including account evaluations, pricing information, and functional design documentation, some of which was obtained during frequent meetings with Brainware’s CEO and other senior management. Id. ¶ 24.

After leaving Brainware’s employ, Mahan began working in sales for Kofax, Inc. (“Kofax”), a Brainware competitor. Id. ¶26. Brainware alleges that on behalf of Kofax, and in violation of his Agreement with Brainware, Mahan is now marketing and selling, or assisting others in marketing or selling, products that are directly competitive with those marketed and sold by Brainware while he was employed by Brainware; and further, that Mahan is soliciting the business of prospective Brainware customers, including Allstate, that were contacted, solicited, or served by him during his tenure with Brainware. Id. ¶ 27-28; Def.’s Mem. at 3-4.

Additionally, Brainware alleges that during Mahan’s employment at Brainware, he “forwarded Brainware Confidential Information from his corporate Brainware email account to his personal email account” and that in May 2011, Kofax held a webinar touting its superiority over Brainware during which a Kofax representative “made statements related to Brainware Confidential Information, including, but not limited to, pricing information; and strategic and tactical sales information.” Am. Compl. ¶¶ 28-29. Brainware alleges that “Mr. Mahan disclosed said information to Kofax in violation of his Agreement, his fiduciary duties and in violation of the Virginia Uniform Trade Secrets Act.” Id. ¶ 30.

On May 2, 2011, Brainware initiated this civil action, alleging breach of contract. On June 20, 2011, Brainware filed an amended complaint to add Counts II through VI, which respectively allege breach of fiduciary duty, conversion, violation of the Virginia Uniform Trade Secrets Act, unjust enrichment, and intentional interference with business expectancies. Id. ¶¶ 40-66. Defendant has moved to dismiss all six counts under Fed.R.Civ.P. 12(b)(6) on two main grounds: that the non-compete, non-solicitation, and non-disclosure provisions are overbroad and thus unenforceable as a matter of Virginia law, and that the claims alleged in Counts II through VI do not comply with the federal pleading standard under Twombly and Iqbal and do not put defendant on fair notice of the nature of plaintiffs claims. Def.’s Mem. at 1-3.

For the reasons set forth below, defendant’s Motion to Dismiss will be denied as to Counts I through V and granted as to Count VI.

II. DISCUSSION

A. Standard of Review

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Brainware, Inc. v. Mahan, 808 F. Supp. 2d 820, 2011 U.S. Dist. LEXIS 95825, 2011 WL 3734456 (E.D. Va. 2011).

808 F. Supp. 2d 820 (Brainware, Inc. v. Mahan) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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