1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Cadence Bank, No. CV-23-00124-TUC-SHR
10 Plaintiff, Order Re: Defendant’s Motion to Dismiss 11 v.
12 Heritage Family Offices L.L.P.,
13 Defendant. 14 15 16 Pending before the Court is a Motion to Dismiss filed by Defendant Heritage Family 17 Offices, L.L.P. (“Defendant”) pursuant to Federal Rules of Civil Procedure 12(b)(3) and 18 12(b)(6). (Doc. 10.) Defendant filed its Motion and Plaintiff Cadence Bank, f/k/a 19 BancorpSouth Bank, a Mississippi corporation (“Plaintiff”) filed a Response. (Doc. 14.) 20 For the reasons stated below, the Court grants in-part and denies in-part Defendant’s 21 Motion.1 22 I. FACTUAL AND PROCEDURAL BACKGROUND 23 The following facts are taken from the Complaint (Doc. 1) and construed in the light 24 most favorable to Plaintiff. 25 1Although Plaintiff requested oral argument (Doc. 14 at 1), the Court declines 26 because oral argument will not aid in resolution of the issues raised. See LRCiv 7.2(f) (“The Court may decide motions without oral argument.); Fed. R. Civ. P. 27 78; Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998) (“[A] district court can decide the issue without oral argument if the parties can submit their papers to the court.”); see 28 also Bach v. Teton Cty. Idaho, 207 F. App’x 766, 769 (9th Cir. 2006) (“Due process does not require the district court to hold oral argument before ruling on pending motions.”) 1 A. Parties 2 Plaintiff is a financial services company offering “wealth management and financial 3 advisory services to its customers.” (Doc. 1 ¶¶ 6, 11.) This includes investment and 4 financial advice to clients through its wealth management team. (Id. ¶ 11.) At the relevant 5 time, Infinex Investments, Inc. (“Infinex”) was the “broker-dealer with whom Plaintiff 6 participated as a subscriber under an Investment Services Agreement.” (Id.) “During the 7 period relevant to this action, Infinex acted as broker-dealer for Plaintiff’s registered 8 agents, supervising and sponsoring their advising services in accordance with the Financial 9 Industry Regulatory Authority and applicable law.” (Id.) “Under the Investment Services 10 Agreement, certain employees of Plaintiff enter into a Registered Representative 11 Agreement (‘Agreement’) with Infinex, in which Plaintiff (‘Subscriber’ in the Agreement) 12 is identified as a third-party beneficiary of the Agreement.” (Id. ¶ 12.) The Agreement 13 imposes various obligations on employees and requires them to follow the terms of 14 Plaintiff’s Code of Business Conduct and Ethics Policy. (Id. ¶¶ 13–15.) 15 Plaintiff alleges Defendant is an Arizona limited liability partnership who offers 16 “brokerage and investment services for [its] customers and perform[s] the same, or 17 substantially the same, functions” as Plaintiff “connected with the banking, financial 18 services, and investment industry.” (Doc. 1 ¶¶ 7, 19.) 19 B. Thomas’s Employment 20 On April 29, 2019, Plaintiff hired Zachary Thomas “to provide investment services 21 to its customers.”2 (Doc. 1 ¶¶ 3, 16.) On that date, Thomas entered into the Agreement 22 with Infinex. (Id. ¶¶ 16–17.) On or around June 24, 2022, Thomas resigned from his 23 position with Plaintiff. (Id. ¶ 19.) According to Plaintiff, “Thomas became an employee 24 of Defendant” sometime “before, upon, or shortly” after the resignation. (Id.) 25 Plaintiff alleges “Thomas contacted certain of Plaintiff’s employees to induce them 26 to leave their employment with Plaintiff, or to solicit them for employment with 27 Defendant.” (Doc. 1 ¶ 20.) Plaintiff also alleges Thomas “solicited Plaintiff’s customers 28 2At the time of the hire, Cadence Bank was known as BancorpSouth. (Doc.1 n.1.) 1 to move business from Plaintiff and to Thomas or Defendant.” (Id. ¶ 21.) According to 2 Plaintiff, its counsel sent Thomas a letter on June 27, 2022, informing Plaintiff he was 3 violating the Agreement and he needed to immediately “cease and desist his conduct.” (Id. 4 ¶ 24.) Thomas did not respond to the letter. (Id.) 5 C. Preliminary Injunction in Texas 6 On July 1, 2022, Plaintiff obtained a preliminary injunction (the “Injunction”) 7 against Thomas in a state court in Texas. (Doc. 1 ¶ 25.) The Injunction “prohibited Thomas 8 from contacting or soliciting Plaintiff’s customers.” (Id.) According to Plaintiff, the 9 Injunction “was extended several times, and a temporary restraining order (‘TRO’) against 10 Thomas and others acting in concert with Thomas, including Defendant, was issued on 11 August 29, 2022.” (Id.) 12 D. Current Lawsuit and Motion 13 On March 10, 2023, Plaintiff filed the current lawsuit. (Doc. 1.) Plaintiff brings 14 eight causes of action against Defendant: (1) violation of the Defend Trade Secrets Act, 18 15 U.S.C. § 1836; (2) violation of the Arizona Uniform Trade Secrets Act, A.R.S. § 44-401 et 16 seq.; (3) intentional inference with contractual relations and business expectancies; (4) 17 aiding and abetting breach of fiduciary duty; (5) aiding and abetting conversion; (6) unjust 18 enrichment; (7) unfair competition/misappropriation; and (8) civil conspiracy. (Id. ¶¶ 27– 19 78.) 20 Defendant now “moves for dismissal under Fed. R. Civ. P. 12(b)(3) and 12(b)(6) 21 because (1) the entire lawsuit is premised upon an agreement that was terminated by 22 Plaintiff and that termination rendered the operative provisions of the agreement null and 23 void; (2) if the agreement remains viable, venue is improper in this Court under the 24 applicable forum selection clause; (3) Plaintiff has failed to plead facts essential to its 25 claims under the Defen[d] . . . Trade Secrets Act (‘DTSA’) and the Arizona Uniform Trade 26 Secret[s] Act, (‘AUTSA’); and (4) Plaintiff’s common law tort claims are preempted by 27 the AUTSA and otherwise fail to state an actionable claim.” (Doc. 10 at 1.) 28 . . . . 1 II. LEGAL STANDARDS 2 A. 12(b)(3) Standard 3 Under Federal Rule of Civil Procedure 12(b)(3), a party may move for dismissal of 4 an action that has been brought in an improper venue. If venue is improper, the Court must 5 either dismiss the case or, “if it be in the interest of justice, transfer [the] case to any district 6 or division in which it could have been brought.” 28 U.S.C. § 1406(a). Once a defendant 7 challenges venue, the plaintiff bears the burden of establishing that venue is proper. 8 Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979). When 9 considering a motion to dismiss pursuant to Rule 12(b)(3), a court need not accept the 10 pleadings as true and may consider facts outside of the pleadings. See Murphy v. Schneider 11 Nat’l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004). The Court must draw all reasonable 12 inferences and resolve all factual conflicts in favor of the plaintiffs. See id. at 1138. 13 B. 12(b)(6) Standard 14 Dismissal of a complaint, or any claim within it, for failure to state a claim under 15 Federal Rule of Civil Procedure 12(b)(6) may be based on either a “‘lack of a cognizable 16 legal theory’ or ‘the absence of sufficient facts alleged under a cognizable legal theory.’” 17 Johnson v. Riverside Healthcare Sys., LP, 534 F.3d 1116, 1121–22 (9th Cir. 2008) (quoting 18 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990)). In determining 19 whether a complaint states a claim under this standard, the allegations in the complaint are 20 taken as true and the pleadings are construed in the light most favorable to the nonmovant. 21 Outdoor Media Grp., Inc. v. City of Beaumont, 506 F.3d 895, 900 (9th Cir. 2007). A 22 pleading must contain “a short and plain statement of the claim showing that the pleader is 23 entitled to relief.” Fed. R. Civ. P. 8(a)(2). However, “[s]pecific facts are not necessary; 24 the statement need only give the defendant fair notice of what . . . the claim is and the 25 grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (second 26 alteration in original) (internal quotation marks omitted). To survive a motion to dismiss, 27 a complaint must state a claim that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 28 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A 1 claim has facial plausibility when the plaintiff pleads factual content that allows the court 2 to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 3 Id. 4 III. DISCUSSION 5 A. Documents 6 As a threshold matter, the Court must first determine whether it can consider 7 Defendant’s proffered exhibits attached to its motion to dismiss. Defendant attached the 8 following four exhibits: (1) a full copy of the Agreement; (2) Plaintiff’s July 1, 2022 9 Original Petition and Application for Temporary Restraining Order, Temporary Injunction, 10 and Permanent Injunction, filed in the District Court of Williamson County, Texas, 26th 11 Judicial District Court; (3) the July 1, 2022 Order Granting Temporary Restraining Order, 12 and August 29, 2022 Order Granting Agreed Temporary Injunction; and (4) Plaintiff’s July 13 1, 2022 Complaint against Infinex, filed in the United States District Court for the Southern 14 District of Mississippi. (Doc. 10 at 2, Exhs. 1–4.) Defendant asks this Court to 15 “incorporate or otherwise take notice of [these] four extraneous documents.” (Id. at 2.) 16 Plaintiff argues the Court may only take judicial notice of the authenticity and existence of 17 Exhibit Four, not the veracity or validity of its contents. (Doc. 14 at 3.) Plaintiff does not 18 otherwise object to the consideration of the exhibits for purposes of this motion to dismiss. 19 (Id. at 3–4.) 20 Normally, if a district court considers evidence outside the pleadings when ruling 21 on a Rule 12(b)(6) motion, it must convert that motion into a Rule 56 motion for summary 22 judgment. United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). However, the court 23 can “consider certain materials—documents attached to the complaint, documents 24 incorporated by reference in the complaint, or matters of judicial notice—without 25 converting the motion to dismiss into a motion for summary judgment.” Id. at 908. 26 Incorporation by reference allows courts to consider “documents whose contents are 27 alleged in a complaint and whose authenticity no party questions, but which are not 28 attached to the [plaintiff’s] pleading.” Davis v. HSBC Bank Nevada, N.A., 691 F.3d 1152, 1 1160 (9th Cir. 2012) (quoting Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)). A 2 court can take judicial notice of adjudicative facts that are “not subject to reasonable dispute 3 because” they “can be accurately and readily determined from sources whose accuracy 4 cannot reasonably be questioned.” Fed. R. Evid. 201(b)(2). 5 Here, the Court will consider Defendant’s exhibits 1-3 for purposes of this Motion 6 because they are referenced in the Complaint. However, it will only take judicial notice of 7 the existence of Exhibit Four, not the veracity or validity of its contents. See Lee v. City of 8 Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001). 9 B. Forum Selection Clause 10 Defendant argues the Court should dismiss the Complaint for improper venue under 11 Federal Rule of Civil Procedure 12(b)(3) because there is a forum selection clause in § 14 12 of the Agreement that “must be enforced” and this clause grants “exclusive jurisdiction to 13 Williamson County, Texas.” (Doc. 10 at 11; Doc. 17 at 1.) 14 In its response, Plaintiff argues Defendant cannot enforce the forum selection clause 15 of the Agreement because Defendant is not a party or closely related to the Agreement. 16 (Doc. 14 at 5–6.) Specifically, Plaintiff argues “[b]efore that agreement, and for most of 17 its existence, Defendant had no business relationship with either party. Nor was Defendant 18 involved—extensively or otherwise—in the formation, execution and/or subject matter of 19 the [] Agreement.” (Id. at 6.) Plaintiff also argues the contract between Thomas and 20 Defendant is “entirely separate” from the Agreement. (Id. at 6.) 21 In its reply, Defendant argues the forum selection clause applies because “the claims 22 cannot be adjudicated without analyzing whether Thomas breached the Agreement” and 23 “the claims necessarily arise out of the Agreement.” (Doc. 17 at 1–2.) In other words, 24 Defendant is arguing this situation is enough to meet the “closely related to the Agreement” 25 standard. (Id. at 2.) 26 Forum selection clauses may be enforced against nonparties “where the alleged 27 conduct of the nonparties is closely related to the contractual relationship.” See Holland 28 Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 456 (9th Cir. 2007); see also Manetti– 1 Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 514 n.5 (9th Cir.1988). In these situations, 2 “nonparties can be considered ‘transaction participants’ intended to ‘benefit from and be 3 subject to’ the forum selection clause.” Mitsui Sumitomo Ins. USA, Inc. v. Tokio Marine 4 & Nichido Fire Ins. Co., Ltd., No. LACV1209953JAKJCGX, 2013 WL 12136602, at *4 5 (C.D. Cal. Aug. 8, 2013), aff’d, 659 F. App’x 918 (9th Cir. 2016) (quoting Holland Am. 6 Line, 485 F.3d at 456). “The conduct of the parties is ‘closely related’ when the nonparty 7 is ‘part of the larger contractual relationship’ between the parties” which “occurs where the 8 nonparties to the contract are related entities.” Id. (quoting Holland Am. Line, 485 F.3d at 9 456). 10 Here, the parties do not dispute § 14 of the Agreement contains a forum selection 11 clause.3 They only dispute whether the forum section clause applies. Defendant does not 12 claim it had any business relationship with either party to the Agreement prior to the 13 Agreement’s creation or that it was involved in any way in the process of creating or 14 negotiating the Agreement. Therefore, the Court concludes the alleged conduct of 15 Defendant is not closely related to the Agreement such that it can enforce the forum 16 selection clause.4 17 C. Agreement Provisions 18 Defendant argues the entire lawsuit should be dismissed because all claims are 19 based on inapplicable provisions of the Agreement. (Doc. 10 at 1, 10–11.) Specifically, 20 Defendant makes two arguments. First, Defendant argues § 7 is inapplicable because this 21 section stopped applying after Thomas resigned his employment. (Id. at 10.) Second, 22 Defendant argues § 8(c) is inapplicable because this section stopped applying after Plaintiff 23 gave written notice of its termination of its relationship with Infinex. (Id.) 24 3“This Agreement shall be governed in all respects by the laws of the State of 25 Connecticut, exclusive of principles of conflict of laws, and with the exception of matters falling within the purview of paragraph 8, hereof, any dispute hereunder shall be submitted 26 to arbitration in accordance with the rules then in effect of FINRA. With respect to matters falling within the purview of paragraph 8, you and Infinex hereby consent to the exclusive 27 jurisdiction of the United States District Court or State Court that has original jurisdiction for the judicial district or county in which you last provided services for Infinex.” 28 4Defendant is not attempting to enforce the clause as a party to the contract. (Doc. 17 at 1–2.) 1 1. Section 7 2 Section 7 of the Agreement states You agree that you will devote all the time, attention, 3 knowledge and skills to the business of Infinex that are 4 necessary to render your duties hereunder in a manner consistent with your performance of services as an employee 5 of [Plaintiff]. Infinex will be entitled to all of the benefits, 6 profits or other issues arsing from, or incident to, all of the work and services you provide hereunder and you will not, 7 during the term of this Agreement, be interested, directly or 8 indirectly, in any manner, as a partner, officer, director, stockholder, adviser, employee, or in any other capacity, in any 9 other business similar to Infinex’s business or any allied trade, 10 and you will not, during the term of this Agreement . . . . 11 (Doc. 10-1 ¶ 7) (emphases added). 12 Defendant argues the portions of Section 7 of the agreement limiting Thomas’s 13 ability to work “became null and void the moment Thomas resigned his employment.” 14 (Doc. 10 at 10.) Plaintiff does not respond to this argument. (See Doc. 14 generally.) 15 To the extent Plaintiff intends to rely on provisions of § 7 for any of its claims, those 16 claims are waived. See, e.g., Doe v. Dickenson, No. CV-07-1998-PHX-GMS, 2008 WL 17 4933964, at *5 (D. Ariz. 2008) (“[T]he Court is entitled to treat Plaintiffs’ failure to respond 18 as waiver of the issue and consent to Defendants’ argument.”); Currie v. Maricopa Cnty. 19 Cmty. Coll. Dist., No. CV-07-2093-PHX-FJM, 2008 WL 2512841, at *2 n.1 (D. Ariz. 20 2008) (“Plaintiff does not respond to this argument, and her failure to do so serves as an 21 independent basis upon which to grant [the] motion.”). Even if this issue was not waived, 22 the Court concludes the language of Section 7 appears to only apply during the term of the 23 Agreement. Therefore, the Court will dismiss any claims related to Section 7 of the 24 Agreement. 25 2. Section 8(c) 26 Section 8 of the agreement states (a) You agree that, except at the direction of Infinex, you will not, 27 at any time, during or after the terms of this Agreement, either 28 directly or indirectly, divulge, disclose or communicate any trade secrets learned by you in connection with your 1 engagement as an Infinex representative. Trade secrets shall mean . . . . This paragraph shall not apply if [Plaintiff] 2 continues to offer investment products through its own broker- 3 deal, investment adviser or insurance agency, or another third- party marketing firm, and you continue to be employed or 4 otherwise associated with [Plaintiff]. 5 . . . (c) Except as required in connection with the performance of your 6 duties as an Infinex Representative as contemplated hereunder, 7 you agree that, during your engagement under this Agreement and for a period of one (1) year thereafter, you will not, either 8 directly or indirectly, for your own account or as an agent, 9 servant, employee, officer, director, shareholder, partner, member or manager of any entity, or member of any member, 10 or participant in any venture: 11 . . . . In the event that [Plaintiff] terminates its subscriber agreement 12 with Infinex, this paragraph 8(c) shall not apply if [Plaintiff] 13 continues to offer investment products through its own broker- dealer, investment adviser or insurance agency or another third 14 party marketer, and you continue to be employed or otherwise associated with [Plaintiff]. 15 (Doc. 10-1 ¶ 8) (emphases added). 16 Defendant argues Plaintiff’s Complaint relies upon the “one-year non-solicitation” 17 clause in § 8(c) of the Agreement as the basis for every claim in the Complaint. (Doc. 10 18 at 6.) Defendant contends this case should be dismissed because § 8(c) of the Agreement 19 ceased to apply after Plaintiff gave written notice of termination of its relationship with 20 Infinex.5 (Id. at 10–11.) Defendant reasons “[b]ecause the Agreement was no longer in 21 effect, there was no possible breach of the Agreement by Thomas, and thus, no possible 22 wrongdoing by” Defendant. (Doc. 17 at 3.) 23 Defendant’s argument is unavailing because it ignores the latter part of the language 24 in § 8(c). Even if Plaintiff terminated its subscriber agreement with Infinex on June 24, 25 2022, as Defendant contends, and Plaintiff continued to offer investment products after the 26 termination (Doc. 1 ¶ 19), Defendant has not argued or shown Thomas continued to be 27
28 5According to Defendant, Plaintiff “provided to Infinex written notice of its termination of the Agreement” on June 24, 2022. (Doc. 10 at 7.) 1 employed or associated with Plaintiff at any relevant time, as required by the Agreement, 2 to make § 8(c) inapplicable. Therefore, Defendant’s argument on this matter fails. 3 D. Preemption 4 Defendant argues Counts III-VIII should be dismissed because they are preempted 5 by the AUTSA claim. (Doc. 10 at 13.) Specifically, Defendant argues Counts III-VIII are 6 preempted by AUTSA because they are all common law tort claims “based on, rooted in, 7 or inescapably [dependent] on misappropriation of trade secrets.” (Id.; Doc. 17 at 11.) 8 Plaintiff argues “Defendant’s preemption argument is not a proper basis to dismiss 9 any of Plaintiff’s common law causes of action at this stage in the litigation” because 10 “whether confidential information Defendant is alleged to have taken falls within 11 AUTSA’s definition of ‘trade secret’ does not hinge on a ‘claim’s label,’ but rather ‘on 12 discovery and further litigation that has not yet occurred.’” (Doc. 14 at 13.) Plaintiff argues 13 at this stage it is enough to allege there was other confidential and proprietary (non-trade- 14 secret) information at issue. (Id.) 15 AUTSA creates an exclusive cause of action—and displaces conflicting causes of 16 action—for claims based on the misappropriation of trade secrets. Orca Commc’ns 17 Unlimited, LLC v. Noder, 337 P.3d 545, 546 (Ariz. 2014); A.R.S. § 44-407. The Arizona 18 Supreme Court has explained A.R.S. § 44-407 “displaces only conflicting tort claims for 19 ‘misappropriation’ of a ‘trade secret,’ terms AUTSA specifically defines, and leaves 20 undisturbed claims ‘that are not based on misappropriation of a trade secret.’” Orca, 337 21 P.3d at 547. In Orca, the Arizona Supreme Court held § 44-407 does not broadly displace 22 all common-law claims for misuse of confidential information that does not fall within 23 AUTSA’s definition of a trade secret. Id. 24 Because the AUTSA does not preempt claims that may be outside the scope of 25 AUTSA’s definitions of “misappropriation” and “trade secret,” the question is whether any 26 of the claims Defendant seeks to dismiss as preempted may encompass conduct or 27 information beyond “misappropriation of trade secrets.” 28 Based on the allegations in the Complaint, it appears these counts could implicate 1 other confidential and proprietary information in addition to trade secrets. (Doc. 1 ¶¶ 50, 2 53–55, 58–60, 64, 69, 75). To the extent these claims are based on misappropriation of 3 trade secrets, they are preempted. However, whether information constitutes a trade secret 4 is a question of fact. Gordon Grado M.D., Inc. v. Phoenix Cancer & Blood Disorder 5 Treatment Inst. PLLC, 603 F. Supp. 3d 799, 809 n.4 (D. Ariz. 2022). Because these claims 6 could plausibly encompass non-trade-secret information, the claims cannot be preempted 7 at this stage in the litigation. See e.g., Modulus Glob. Inc. v. Quintzy FZE LLC, No. CV- 8 22-01457-PHX-GMS, 2023 WL 6147567, at *2 (D. Ariz. Sept. 20, 2023) (finding claims 9 cannot be preempted at motion to dismiss stage); TLX Inc. v. JetBlue Airways Corp., No. 10 CV-19-04734-PHX-SMB, 2020 WL 364198, at *3 (D. Ariz. Jan. 22, 2020) (same). 11 E. Failure to State a Claim 12 Defendant argues Plaintiff failed to state a claim for all eight counts. 13 1. Counts I and II–Misappropriation of Trade Secrets 14 Count I alleges Defendant violated the DTSA. (Doc. 1 ¶¶ 27–33.) DTSA defines a 15 “trade secret” as “all forms and types of financial, business, scientific, technical, economic, 16 or engineering information” that “(A) the owner thereof has taken reasonable measures to 17 keep . . . secret”; and (B) “derives independent economic value, actual or potential, from 18 not being generally known to, and not being readily ascertainable through proper means 19 by, another person who can obtain economic value from the disclosure or use of the 20 information.” 18 U.S.C. § 1839(3). “To succeed on a claim for misappropriation 21 of trade secrets under the DTSA, a plaintiff must prove: (1) that the plaintiff possessed a 22 trade secret, (2) that the defendant misappropriated the trade secret; and (3) that the 23 misappropriation caused or threatened damage to the plaintiff.” InteliClear, LLC v. ETC 24 Glob. Holdings, Inc., 978 F.3d 653, 657–58 (9th Cir. 2020). 25 Count II alleges Defendant violated the AUTSA. (Doc. 1 ¶¶ 34–41.) AUTSA 26 defines a “trade secret” as “information, including a formula, pattern, compilation, 27 program, device, method, technique or process, that both: (a) Derives independent 28 economic value, actual or potential, from not being generally known to, and not being 1 readily ascertainable by proper means by, other persons who can obtain economic value 2 from its disclosure or use”; and “(b) Is the subject of efforts that are reasonable under the 3 circumstances to maintain its secrecy.” A.R.S. § 44-401(4). “Under Arizona law, 4 misappropriation of a trade secret includes the ‘[d]isclosure or use of a trade secret of 5 another without express or implied consent by a person’ who ‘[a]t the time of the disclosure 6 or use,’ ‘knew or had reason to know that his knowledge of the trade secret 7 was . . . acquired under circumstances giving rise to a duty to maintain its secrecy or limit 8 its use . . . .’” HTS, Inc. v. Boley, 954 F. Supp. 2d 927, 945 (D. Ariz. 2013) (alterations in 9 original) (quoting A.R.S. § 44-401). 10 Because the claims are noticeably similar, the Court will analyze them together. 11 InteliClear, 978 F.3d at 657. 12 Defendant seeks dismissal of the misappropriation claims on three grounds. First, 13 Defendant argues Plaintiff has not plead with the required particularity how it took 14 reasonable measures to keep any information secret. (Doc. 10 at 11.) Second, Defendant 15 argues Plaintiff has not plead with the required particularity how the information derives 16 independent economic value. (Id.) Third, Defendant argues Plaintiff has not alleged how 17 Defendant “itself, as opposed to Thomas” misappropriated trade secrets. (Id.) 18 a. Trade Secret–Reasonable Measures 19 First, Defendant argues Plaintiff merely recites the elements to prove reasonable 20 measures were taken. (Doc. 10 at 11.) Defendant’s first argument is unavailing. 21 Here, the Complaint alleges Thomas was required to keep trade secrets confidential 22 pursuant to the Agreement he signed and the Code of Conduct he agreed to follow. (Doc. 23 1 ¶¶ 14–18.) The Agreement and the Code of Conduct contain confidentiality provisions 24 related to trade secrets (Id. ¶¶ 14–15) and the Complaint also alleges Thomas received 25 multiple trainings on the Code of Conduct (Id. ¶¶ 17–18). This includes language requiring 26 employees to “protect and maintain the consideration or proprietary character” of Trade 27 Secrets and to return trade secret information upon termination of employment. (Id. ¶¶ 14– 28 15.) The Court finds this sufficient. See MAI Sys. Corp. v. Peak Comput., Inc., 991 F.2d 1 511, 521 (9th Cir. 1993) (upholding confidentiality agreements as reasonable measures to 2 insure secrecy). 3 b. Trade Secret–Independent Economic Value 4 Second, Defendant argues Plaintiff merely recites the elements to prove there is 5 independent economic value. (Doc. 10 at 11.) Defendant’s second argument is unavailing. 6 Courts have identified various factors helpful in determining whether a customer 7 list qualifies as a trade secret. Calisi v. Unified Fin. Servs., 302 P.3d 628, 631 (Ariz. Ct. 8 App. 2013). This includes whether the list (1) “represents a selective accumulation of 9 detailed, valuable information about customers—such as their particular needs, 10 preferences, or characteristics—that naturally would not occur to persons in the trade or 11 business”; (2) was “compiled . . . by expending substantial efforts to identify and cultivate 12 [a] customer base such that it would be difficult for a competitor to acquire or duplicate the 13 same information”; (3) “derives independent economic value from its secrecy, and gives 14 the holder of the list a demonstrable competitive advantage over others in the industry”; 15 and (4) was “divulged . . . externally and internally, i.e., to people outside of [the holder’s] 16 business as well as to its own employees.” Id. at 631–32 (citation and internal quotation 17 marks omitted). 18 Here, the Complaint alleges Defendant misappropriated “customer lists (with 19 detailed, non-public customer information Plaintiff expended substantial effort to develop 20 that gives Plaintiff a competitive advantage over Defendant and other industry 21 competitors), amounts Plaintiff charges its customers and earns on the book of business 22 Defendant and Thomas misappropriated, and certain internal policies and private business 23 information that gives Plaintiff an advantage over competitors.” (Doc. 1 ¶ 30.) The Court 24 finds this sufficient at this stage. See Calisi, 302 P.3d at 632 (citing case recognizing 25 pricing information has independent economic value); MAI Sys. Corp., 991 F.2d at 521 26 (finding independent economic value in customer database because it could help 27 competitor’s direction of sales efforts). 28 . . . . 1 c. Misappropriation 2 Third, Defendant argues the Complaint fails to allege Defendant “itself, as opposed 3 to Thomas, acquired any trade secrets” because the Complaint simply alleges Defendant 4 hired Thomas. (Doc. 10 at 11.) Defendant also argues Plaintiff fails to allege “facts to 5 support the conclusion [Defendant] knew or had reason to know that Thomas used 6 improper means” to obtain trade secrets. (Id. at 12.) 7 Plaintiff argues the Complaint plausibly alleges Defendant acquired and used its 8 trade secrets because the Complaint alleges “Thomas acted with Defendant’s knowledge” 9 and “Defendant acquired Plaintiff’s trade secret information by hiring Thomas.” (Doc. 14 10 at 10–11.) Plaintiff also contends the Complaint alleges based “on information and belief 11 that Defendant knew Plaintiff’s trade secrets were acquired and would be used for improper 12 means but still ‘encouraged and supported the misappropriation’ and ‘knew, had reason to 13 know, or expressly intended’ that the trade secrets were ‘inappropriately derived’ and 14 ‘misappropriated and used’ those trade secrets in the operation of its business.” (Id. at 11 15 (quoting Doc. 1 ¶¶ 31, 38).) Plaintiff argues Defendant “undeniably knew” Thomas 16 violated the Agreement because “Plaintiff sent Defendant a ‘letter advising of Thomas’ 17 obligations and his violations’” on or about June 30, 2022. (Id. at 11–12.) According to 18 Plaintiff, the rest of the allegations of Defendant’s involvement based “on information and 19 belief” are appropriate “because the details are unavailable to Plaintiff without the benefit 20 of discovery.” (Id. at 11.) 21 In the Reply, Defendant argues Plaintiff cannot rely on “information and belief” 22 pleadings here because the facts are not peculiarly within Defendant’s control or possession 23 and Plaintiff has not alleged facts to make the Defendant’s culpability plausible. (Doc. 17 24 at 5–6.) Specifically, Defendant argues the facts have been available to Plaintiff for nearly 25 a year because Plaintiff filed a nearly identical action on July 1, 2022, in Texas State court 26 against Thomas as the sole defendant—252 days before this Complaint was filed. (Id. at 27 5.) Defendant reasons Plaintiff “had sufficient opportunity to conduct discovery [in the 28 Texas state court case] as to Thomas’s alleged wrongdoings . . . including subpoenaing 1 documents or testimony from [Defendant].” (Id.) Defendant also argues Plaintiff fails to 2 provide any factual allegations as to how Defendant used or acquired any misappropriated 3 trade secrets and how Defendant “encouraged and supported” Thomas in misappropriating 4 trade secrets. (Id. at 6–7.) 5 At the motion to dismiss stage, a plaintiff can plead “facts alleged upon information 6 and belief where the facts are peculiarly within the possession and control of the defendant 7 or where the belief is based on factual information that makes the inference of culpability 8 plausible.” Soo Park v. Thompson, 851 F.3d 910, 928 (9th Cir. 2017) (quoting Arista 9 Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010)). 10 Here, contrary to Defendant’s suggestion, the Complaint clearly alleges Defendant 11 acquired and used trade secrets. The Complaint alleges “[o]n information and belief, 12 Defendant knew such information was acquired and intended to be used for improper 13 means and encouraged and supported the misappropriation.” (Doc. 1 ¶¶ 31, 34.) It also 14 alleges “Defendant and Thomas are now using Plaintiff’s confidential, proprietary, and 15 trade secret information to target Plaintiff’s banking, financial services, and investment 16 industry clients and convince the clients to end their relationships with Plaintiff and 17 transition to Defendant.” (Id.) Plaintiff includes examples of Thomas contacting 18 Plaintiff’s employees and customers days after resigning from Plaintiff and encouraging 19 them to transition or move their business to Defendant. (Id. ¶¶ 20–21.) The Court finds 20 this sufficient to state a claim under Counts I and II at this stage in the litigation. The Court 21 is not persuaded by Defendant’s arguments related to the Texas State Court case because 22 they are speculative, and the Court is not aware of the status of that case and what discovery 23 has been conducted. 24 2. Count III, IV, V 25 Defendant argues Counts III, IV, and V should be dismissed because Plaintiff 26 insufficiently pleads the knowledge component of these counts. (Doc. 10 at 14.) 27 Defendant also argues Plaintiff improperly references unspecified agreements, unspecified 28 business expectancies, and insufficient allegations to support Defendant acted intentionally 1 or improperly. (Id.) 2 Plaintiff argues dismissal is unwarranted because “the Complaint plausibly pleads 3 Defendant’s knowledge” at this stage in the dispute. (Doc. 14 at 13–14.) According to 4 Plaintiff, it was proper to make allegations on information and belief because the facts are 5 possessed and controlled by Defendant. (Id. at 14.) 6 a. Count III–Intentional Interference with Contractual Relations and 7 Business Expectancies 8 Count III alleges “[o]n information and belief, Defendant had knowledge of the 9 Agreement (and of Thomas’ other agreements with Plaintiff such as Thomas’ post-tuition 10 payment employment agreement) and Thomas[’] obligations thereunder.” (Doc. 1 ¶ 50.) 11 It also alleges Defendant “had knowledge of business expectancies Plaintiff had with 12 current and prospective customers, the revenue generated by those customers, and the time, 13 money, and resources Plaintiff invested in those customers.” (Id.) Last, it alleges 14 Defendant “intentionally interfered with, induced, and/or caused Thomas to breach the 15 Agreement and other agreements Thomas and Plaintiff entered, and interfered with 16 business expectancies Plaintiff had with its current and prospective customers.” (Id. ¶ 51.) 17 Defendant argues Count III should be dismissed because “Plaintiff makes only 18 conclusory and speculative allegations related to [Defendant’s] ‘knowledge’ of the 19 Agreement, ‘other’ unspecified agreements into which Thomas and Plaintiff entered, and 20 of Plaintiff’s unspecified business expectancies.” (Doc. 10 at 14.) Defendant also argues 21 Plaintiff “makes only conclusory and speculative allegations that ‘through the actions 22 described above’ (of which there are no actions described, apart from [Defendant] simply 23 hiring Thomas) . . . [Defendant] acted intentionally or improperly.” (Id.) 24 Under Arizona law, “a plaintiff must show ‘the existence of a valid contractual 25 relationship or business expectancy; the interferer’s knowledge of the relationship or 26 expectancy; intentional interference inducing or causing a breach or termination of the 27 relationship or expectancy; and resultant damage to the party whose relationship or 28 expectancy has been disrupted.’” Miller v. Hehlen, 104 P.3d 193, 202 (Ariz. Ct. App. 1 2005) (quoting Wallace v. Casa Grande Union High Sch. Dist. No. 82 Bd. of Governors, 2 909 P.2d 486, 494 (Ariz. Ct. App. 1995)). Furthermore, “the interference must be 3 ‘improper as to motive or means’ before liability will attach.” Wallace, 909 P.2d at 494 4 (quoting Wagenseller v. Scottsdale Mem’l Hosp., 710 P.2d 1025, 1043 (1985)). Here, 5 Plaintiff has sufficiently alleged Defendant knew of the contractual relationship between 6 Thomas and Plaintiff regarding the Agreement and the tuition agreement.6 For the reasons 7 mentioned in Section III(E)(1)(c), the Court finds the information and belief pleadings 8 proper at this stage. The Court also finds the hiring of Thomas sufficient to support a claim 9 for intentional and improper action based on the context of the hiring (i.e. Defendant hired 10 and allowed Thomas to solicit Plaintiff’s customers and employees shortly after he left 11 Plaintiff’s employment). Cf. SinglePoint Direct Solar LLC v. Curiel, No. CV-21-0989- 12 PHX-JAT, 2022 WL 331157, at *14 (D. Ariz. Feb. 3, 2022) (finding complaint insufficient 13 to state a claim because it did not allege defendants had solicited plaintiff’s client or 14 prospective client.) 15 Thus, the Court finds Plaintiff has sufficiently stated a claim for relief under Count 16 III to survive Defendant’s Motion to Dismiss. 17 b. Count IV and V–Aiding and Abetting (Fiduciary Duty & 18 Conversion) 19 Count IV alleges “Thomas breached fiduciary duties he owed to Plaintiff, and on 20 information and belief, Defendant knew or reasonably should have known Thomas was 21 breaching those fiduciary duties to Plaintiff at the time of Thomas’ breaches.” (Doc. 1 22 ¶ 54.) It also alleges “on or about June 30, 2022, Plaintiff served Defendant a letter 23 advising of Thomas’ obligations and his violations of the Agreement.” (Id.) 24 Count V alleges “Thomas wrongfully exercised dominion and control over 25 Plaintiff’s property—including the Trade Secrets. Defendant knew, or reasonably should
26 6As Defendant points out, it is unclear exactly what “other agreements” or “business expectancies” Plaintiff is referencing. Nonetheless, the Complaint clearly references the 27 Agreement and alleges Plaintiff “supported and paid Thomas’ tuition at Texas A&M Financial Planning School. Thomas signed an agreement to remain in Plaintiff’s employ 28 for two years after the tuition payments, which he breached by resigning to join Defendant.” (Doc. 1 ¶ 44.) 1 have known, Thomas wrongfully converted Plaintiff’s property at the time Thomas 2 converted the same.” (Doc. 1 ¶ 59.) The Complaint also alleges “Defendant and its 3 employee Thomas sought to steal and profit from Plaintiff’s confidential, proprietary, and 4 trade secret information.” (Id. ¶¶ 32, 53, 58.) 5 Defendant argues Plaintiff fails to allege facts demonstrating a plausible cause of 6 action for both aiding and abetting counts (i.e. Counts IV and V) because Plaintiff’s 7 allegations of knowledge are wholly conclusory and speculative. (Doc. 10 at 15.) 8 Specifically, Defendant argues Plaintiff must plead facts showing it had actual knowledge 9 the conduct it was aiding was a tort because mere knowledge of suspicious activity is 10 insufficient. (Id.) 11 Under Arizona law, there are three elements in an aiding and abetting tort claim: 12 “(1) the primary tortfeasor must commit a tort that causes injury to the plaintiff; (2) the 13 defendant must know that the primary tortfeasor’s conduct constitutes a breach of duty; 14 and (3) the defendant must substantially assist or encourage the primary tortfeasor in the 15 achievement of the breach.” Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement 16 Masons Loc. No. 395 Pension Tr. Fund, 38 P.3d 12, 23 (Ariz. 2002). “Because aiding and 17 abetting is a theory of secondary liability, the party charged with the tort must have 18 knowledge of the primary violation, and such knowledge may be inferred from the 19 circumstances.” Id. 20 The elements of a claim for breach of fiduciary duty are “the existence of a duty 21 owed, a breach of that duty, and damages causally related to such breach.” Surowiec v. 22 Cap. Title Agency, Inc., 790 F. Supp. 2d 997, 1004 (D. Ariz. 2011) (citing Smethers v. 23 Campion, 108 P.3d 946, 949 (Ariz. Ct. App. 2005)). Moreover, conversion is established 24 by showing the “act of wrongful dominion or control over personal property in denial of 25 or inconsistent with the rights of another.” Case Corp. v. Gehrke, 91 P.3d 362, 365 (Ariz. 26 Ct. App. 2004) (citation omitted). 27 Here, Plaintiff has sufficiently alleged Defendant knew Thomas was breaching a 28 fiduciary duty and converting confidential information for financial gain. See JTH Tax 1 LLC v. Anderson, No. CV-23-00209-PHX-DJH, 2023 WL 3499645, at *5 (D. Ariz. Apr. 2 18, 2023) (denying motion to dismiss for failure to state conversion claim because 3 confidential information shared and converted for financial gain). For the reasons 4 mentioned in Section III(E)(1)(c), the Court finds the information and belief pleadings 5 proper at this stage. Thus, the Court finds Plaintiff has sufficiently stated a claim for relief 6 under Count IV and V to survive Defendant’s Motion to Dismiss. 7 3. Count VI–Unjust Enrichment 8 Count VI alleges “Defendant has improperly and without justification retained 9 various assets that rightfully belong to Plaintiff, including proprietary and confidential 10 business information, the Trade Secrets, and profits from client accounts transitioned from 11 Plaintiff to Defendant.” (Doc. 1 ¶ 64.) 12 Defendant argues the Complaint lacks factual allegations showing “Plaintiff 13 conferred a benefit on” Defendant. (Doc. 10 at 15.) Defendant contends, “[a]t best, 14 Plaintiff has alleged [Defendant] hired Thomas who allegedly misappropriate[d] trade 15 secrets or other confidential information.” (Id.) According to Defendant, Plaintiff does 16 not provide any factual allegations as to how it has been injured and how Defendant has 17 been enriched. (Doc. 17 at 9.) 18 Plaintiff argues “[a]llegations of access to misappropriated trade secrets and 19 confidential information can be a benefit conferred that supports a plausible claim for 20 unjust enrichment.” (Doc. 14 at 16 (citing CPA Lead, LLC v. Adeptive Ads LLC, No. 2:14- 21 CV-1449 JCM CWH, 2014 WL 7072316, at *5 (D. Nev. Dec. 15, 2014).) 22 “[I]n order to prevail upon a theory of unjust enrichment, a plaintiff must establish 23 that . . . plaintiff conferred a benefit upon the defendant.” USLife Title Co. v. Gutkin, 152 24 Ariz. 349, 354 (App. 1986). 25 Here, the Complaint alleges Defendant unlawfully retained Plaintiff’s confidential 26 business information by hiring Thomas and allowing him to use that information to target 27 Plaintiff’s customers and employees despite the Agreement’s limitation on Plaintiff’s use 28 of that information. (See Doc. 1 ¶¶ 31, 63.) The Complaint also alleges Plaintiff was 1 damaged because it lost business when customers transitioned to Defendant. (Id. ¶ 51, 63.) 2 The Court finds that Plaintiff has sufficiently stated a claim for relief under unjust 3 enrichment to survive Defendant’s Motion to Dismiss 4 4. Count VII–Unfair Competition Based on Misappropriation 5 Count VII alleges “Defendant’s actions described in this Complaint, including, 6 without limitation, improperly procuring, possessing, and using Plaintiff’s property and 7 confidential business information without authorization was for the purpose of advancing 8 and providing an unfair competitive advantage to Defendant’s rival business interest.” 9 (Doc. 1 ¶ 70.) 10 Defendant argues this count should be dismissed because Plaintiff fails to “allege 11 any facts that the public could be or has been misled by any conduct undertaken by 12 [Defendant].” (Doc. 10 at 16.) Defendant cites to two district court cases for the 13 proposition that “the universal test for unfair competition is whether the public is likely to 14 be confused.” (Doc. 10 at 15–16 (cleaned up).) See Doe v. Ariz. Hosp. & Healthcare 15 Ass’n, 2009 WL 1423378, *11 (D. Ariz. Mar. 19, 2009); HTS, Inc. v. Boley, 954 F.Supp.2d 16 927, 946 (D. Ariz. 2013). Plaintiff argues public confusion does not have to be proven in 17 an unfair competition claim based on misappropriation; it only needs to show it was 18 engaged in competitive business with Defendant. (Doc. 14 at 16–17.) Defendant does not 19 address Plaintiff’s argument in its Reply.7 20 “The common law doctrine of unfair competition is based on the principles of 21 equity.” Fairway Constructors, Inc. v. Ahern, 970 P.2d 954, 956 (Ariz. Ct. App. 1998). 22 “The general purpose of the doctrine is to prevent business conduct that is ‘contrary to 23 honest practice in industrial or commercial matters.’” Id. (quoting Am. Heritage Life Ins. 24 Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir. 1974)). “The Arizona Court of 25 Appeals has held that the common law doctrine of unfair competition encompasses several
26 7In its Reply, Defendant argues for the first time, that Plaintiff only pleads legal conclusions and provides no factual support for this claim. The Court will not address this 27 argument. See Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007) (“The district court need not consider arguments raised for the first time in a reply brief.”) 28 1 tort theories, such as trademark infringement, false advertising, palming off, and 2 misappropriation.” Joshua David Mellberg LLC v. Will, 96 F. Supp. 3d 953, 983 (D. Ariz. 3 2015) (internal quotation marks omitted) (quoting Doe, 2009 WL 1423378, at *11). 4 Palming off consists of “a false representation tending to induce buyers to believe that 5 defendant’s product is that of the plaintiff.” Id. (quoting Doe, 2009 WL 1423378, at *11). 6 “Misappropriation involves the unfair taking for profit, at little or no cost, of property 7 acquired by another through investment of substantial time and money.” Fairway 8 Constructors, 970 P.2d at 957. 9 “In order to maintain an action for unfair competition under Arizona law, [the 10 plaintiff] must either show that it was engaged in competitive business with [the defendant] 11 or that [the defendant’s] actions were likely to produce public confusion.” Sutter Home 12 Winery, Inc. v. Vintage Selections, Ltd., 971 F.2d 401, 407 (9th Cir. 1992) (internal citation 13 omitted). To be in competition with each other, parties must solicit the same trade or solicit 14 the same customers. Id. at 408. 15 Here, Plaintiff alleges “Defendant directly competes with Plaintiff as both 16 Defendant and Plaintiff offer brokerage and investment services for their customers and 17 perform the same, or substantially the same, functions connected with the banking, 18 financial services, and investment industry.” (Doc. 1 ¶ 19.) Plaintiff also alleges “Thomas 19 also solicited Plaintiff’s customers to move business from Plaintiff and to Thomas or 20 Defendant.” (Id. ¶ 21.) At this stage in the litigation the Court will allow the unfair 21 competition claim to proceed because Plaintiff has alleged it is in competitive business 22 with Defendant. See Sutter Home Winery, 971 F.2d at 407–08; but see Lerner & Rowe 23 PC v. Brown Engstrand & Shelly LLC, No. CV-21-01540-PHX-DGC, 2023 WL 4847600, 24 at *2–3 (D. Ariz. July 28, 2023) (finding “it makes no sense to suggest that the tort of unfair 25 competition can be established simply by proving the parties compete”).8
26 8Although the Court is skeptical of whether the Ninth Circuit’s seemingly disjunctive test for unfair competition applies in this case, the Court does not find the 27 authority cited by Defendant persuasive enough to dismiss this Count on this basis. See Doe, 2009 WL 1423378 at *11–12 (dismissing unfair competition claim for failing to 28 allege, among other things, a theory of misappropriation); Boley, 954 F.Supp.2d at 946 (dismissing unfair competition claim based on preemption); see also Boice v. Stevenson, 1 5. Count VIII–Civil Conspiracy 2 Count VIII alleges “Defendant and Thomas have agreed to and engaged in a 3 conspiracy among themselves with the unlawful purpose of misappropriating and 4 converting Plaintiff’s Trade Secrets and other confidential and proprietary business 5 information and property.” (Doc. 1 ¶ 75.) It also alleges Defendant committed the 6 following actions in furtherance of the conspiracy: 7 A. Knowing Thomas was subject to non-solicitation and other requirements under the Agreement, allowed Thomas to access 8 its systems to establish client profiles; 9 B. Facilitated Thomas’ communications with Plaintiff’s customers to seek authorizations to transfer their accounts to 10 Defendant; 11 C. Knowing of the Agreement’s requirements and Plaintiff’s efforts to enforce them, accepted transfer of client assets; and 12 D. On information and belief, agreed to accept the client 13 transfers on terms and conditions mirroring, either in full or in relevant part, the terms and conditions the client received with 14 Plaintiff and under the Agreement. 15 (Id. ¶ 76.) 16 Defendant argues Plaintiff fails to state a claim of civil conspiracy because it “pleads 17 only the conclusion of the existence of an agreement between Thomas and [Defendant], 18 not any facts supporting that conclusion.” (Doc. 10 at 16.) Plaintiff argues it does not need 19 to prove facts with evidence at the motion to dismiss stage and information and belief 20 allegations are proper because certain parts of the conspiracy are within Defendant’s 21 knowledge and control. (Doc. 14 at 17.) According to Plaintiff, it has sufficiently alleged 22 Defendant and Thomas conspired to take confidential and proprietary business information 23 and use it to get Plaintiff’s customers to Defendant. (Id.) Defendant does not address 24 Plaintiff’s argument in its Reply.9 25 187 P.2d 648 (1947) (“The question in every [unfair competition by misuse of a tradename] 26 case is whether . . . the name adopted by defendant has previously come to indicate plaintiff’s business, and whether the public is likely to be deceived.” (emphasis added)). 27 Defendant may re-raise this argument with more support at summary judgment. 9Instead, Defendant argues for the first time in its Reply that Plaintiff’s civil 28 conspiracy claim fails because Plaintiff fails to sufficiently plead an underlying tort claim. The Court will not address this argument. See Zamani, 491 F.3d at 997. 1 “For a civil conspiracy to occur[,] two or more people must agree to accomplish an 2|| unlawful purpose or to accomplish a lawful object by unlawful means, causing damages.” 3|| Wells Fargo, 38 P.3d at 36 (citation omitted). 4 Here, Plaintiff alleges Defendant and Thomas conspired to misappropriate || Plaintiff's information and property to capture market share. These allegations are || sufficient to state a claim for relief. 7 IV. CONCLUSION 8 For the reasons stated above, the Court grants the Motion to Dismiss (Doc. 10) to 9|| the extent it asks the Court to find Section 7 of the Agreement cannot support any of || Plaintiff's Counts. The Court denies the Motion to Dismiss in all other respects. Defendant 11 || must file an answer on or before Tuesday, March 19, 2024. 12 Dated this 5th day of March, 2024. 13 14 /] Aut: fol 16 Honorable Scott H, Rash □□□ United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28
-23-