UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
HIRECOUNSEL D.C., LLC,
Plaintiff, v. Civ. Action No. 20-3337 KILIAN CONNOLLY, (EGS) Defendant.
MEMORANDUM OPINION
Plaintiff HIRECounsel D.C., LLC (“HIRECounsel”) brings this
lawsuit against Defendant Kilian Connolly (“Mr. Connolly”)
alleging: (1) two counts of breach of contract; and (2)
violation of the District of Columbia Uniform Trade Secrets Act
(“DCUTSA”) arising out of his employment with his former
employer HIRECounsel. Compl., ECF No. 1-1 at 8-10. 1 HIRECounsel
filed its Complaint in the Superior Court of the District of
Columbia, and Mr. Connolly removed the action to this court,
alleging federal jurisdiction based on diversity of citizenship
and the amount in controversy. See Notice of Removal, ECF No. 1
at 2.
1 When citing electronic filings throughout this Opinion, the Court cites to the ECF page number, not the page number of the filed document.
1 Pending before the Court is Mr. Connolly’s Motion to
Dismiss. See Def.’s Mot. to Dismiss (“Mot. to Dismiss”), ECF No.
7. Upon careful consideration of the motion, opposition, reply,
the applicable law, and for the reasons explained below, Mr.
Connolly’s motion is DENIED.
I. Background
A. Factual
The Court assumes the following facts alleged in the
complaint to be true for the purposes of deciding this motion
and construes them in HIRECounsel’s favor. See Baird v. Gotbaum,
792 F.3d 166, 169 n.2 (D.C. Cir. 2015). HIRECounsel is a “legal
staffing and managed document review company” which “provides
law firms and corporate legal departments permanent and
temporary legal placements of attorneys and paralegals, as well
as supplies personnel, technology, and staff to support managed
document review for transactions and litigation matters.”
Compl., ECF No. 1-1 ¶ 4. On January 26, 2015, HIRECounsel hired
Mr. Connolly as a Managing Director of Client Relations and
entered into an Employment Agreement (the “Agreement”) with him
that included, among other things, certain post-employment
restrictive covenants. Id. ¶¶ 6, 10-11. While Mr. Connolly was
“based” in HIRECounsel’s Boston office, “on several occasions in
2019, he was also directly responsible for customer engagements
2 pertaining to managed document review projects in Washington, DC
for which he received compensation.” Id. ¶ 8.
HIRECounsel alleges that during Mr. Connolly’s employment,
he had “access to information that is confidential and
constitute trade secrets of [HIRECounsel]”. Id. ¶ 10. This
information included “detailed confidential information
regarding [HIRECounsel] legal placements and prospects as well
as the strengths and weaknesses of candidates for temporary and
permanent legal placements at customers . . . confidential
information concerning customers and [HIRECounsel’s]
relationship with them, pricing and other terms of contractual
agreements with these customers, and profitability concerning
services to its customers”. Id. ¶ 9.
HIRECounsel alleges that Section 4 of the Agreement
includes a non-disclosure covenant and defines “Confidential
Information”:
(b) During and after EMPLOYEE’S employment with the COMPANY, the EMPLOYEE agrees that EMPLOYEE will not use, disclose, copy or retain or remove from the COMPANY’S premises any confidential or proprietary information or trade secrets, including but not limited to, lists and information pertaining to clients and client contacts, job applicants, referrals, and employees, and any other ideas, methods, procedures, techniques, written material, and other know- how, developed or used in connection with the COMPANY’S or any of its Affiliates’ business belonging to the COMPANY or any of its Affiliates (collectively, “Confidential Information”),
3 other than for use in connection with authorized work performed for the COMPANY or such Affiliates. Confidential Information shall also include, but is not limited to, ... financial and other information of the COMPANY and its Affiliates, not generally available to others.
Id. at 4.
Section 5 of the Agreement imposed non-competition
restrictions, providing in relevant part that:
(a) EMPLOYEE agrees that during the term of this Agreement and for a period of twelve (12) months following EMPLOYEE ceasing to be an employee of the COMPANY, EMPLOYEE will not, without the prior written consent of the COMPANY, either directly or indirectly, on EMPLOYEE'S own behalf or in the service or on behalf of others: ... (vii) directly or indirectly ... be employed by ... any Competing Business within seventy- five (75) miles of any office of the COMPANY or any of the COMPANY'S Affiliates, at which the EMPLOYEE is or was employed, performed services or engaged or assisted in the business or operations of the COMPNY or any of its Affiliates. ...
Id. Section 5(a)(i) defines “Competing Business” as a “business
which is either engaged in permanent or temporary placement or
the same or substantially the same business of HIRECounsel or
its Affiliates.” Id.
On August 7, 2020, Mr. Connolly resigned from his position
with HIRECounsel, effective that day. Id. ¶ 13. Several weeks
after his resignation, HIRECounsel alleges that it learned that
4 Mr. Connolly had joined Beacon Hill Staffing, LLC (“Beacon
Hill”) in its Boston office in its legal staffing specialty
division as a Senior Account Executive. Id. ¶ 14. HIRECounsel
alleges that Beacon Hill’s legal specialty division provides
legal placement and managed document review services similar to
HIRECounsel and is a competitor of HIRECounsel. Id.
After Mr. Connolly’s departure, HIRECounsel learned that he
had, on July 28, 2020, “wrongfully forwarded from his work e-
mail address to his personal e-mail a confidential internal
report prepared by the Company’s Vice-President of Sales
regarding on- going placements, price mark-ups, and revenue
projections by sales person.” Id. ¶ 15. HIRECounsel alleges that
this information was not available to the public and was only
drawn from data in a password protected confidential database,
and that Mr. Connolly was only given access by his direct
superior during a virtual meeting when she shared her computer
screen with the attendees of the virtual meeting. Id.
HIRECounsel alleges that Mr. Connolly took “a screen shot with a
snipping tool and then forward[ed] that image to his personal e-
mail account.” Id.
On September 23, 2020, HIRECounsel’s counsel sent Mr.
Connolly a cease and desist letter, alleging, in essence, that
Mr. Connolly was in violation of the non-compete provision of
the Agreement, and claiming that Mr. Connolly had sent
5 confidential information belonging to HIRECounsel to his
personal e-mail address, in violation of Section 4(b) of the
Agreement. Id. ¶ 16. Counsel to HIRECounsel also wrote to Beacon
Hill, on or about September 29, 2020, claiming that Mr.
Connolly’s employment with Beacon Hill–and the alleged
misappropriation of HIRECounsel’s confidential information–
violated the Agreement. Id. ¶ 17.
B. Procedural
On November 24, 2020, Mr. Connolly filed his Motion to
Dismiss. See Mot. to Dismiss, ECF No. 7. HIRECounsel filed its
Opposition brief on December 8, 2020, see Opp’n, No. 8; and Mr.
Connolly filed his Reply brief on December 15, 2020, see Reply,
ECF No. 10. The Motion is ripe and ready for the Court’s
adjudication.
II. Standard of Review
A motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6) tests the legal sufficiency of a complaint.
Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A
complaint must contain "a short and plain statement of the claim
showing that the pleader is entitled to relief, in order to give
the defendant fair notice of what the . . . claim is and the
grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555, (2007) (internal quotation marks omitted).
6 Despite this liberal pleading standard, to survive a motion
to dismiss, a complaint "must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible
on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009)
(internal quotation marks omitted). A claim is facially
plausible when the facts pled in the complaint allow the court
to "draw the reasonable inference that the defendant is liable
for the misconduct alleged." Id. The standard does not amount to
a "probability requirement," but it does require more than a
"sheer possibility that a defendant has acted unlawfully." Id.
"[W]hen ruling on a defendant's motion to dismiss [pursuant
to Rule 12(b)(6)], a judge must accept as true all of the
factual allegations contained in the complaint." Atherton v.
D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009)
(internal quotation marks omitted). “In determining whether a
complaint fails to state a claim, [the Court] may consider only
the facts alleged in the complaint, any documents either
attached to or incorporated in the complaint and matters of
which [the Court] may take judicial notice.” EEOC v. St. Francis
Xavier Parochial Schl., 117 F.3d 621, 624 (D.C. Cir. 1997). In
addition, the court must give the plaintiff the "benefit of all
inferences that can be derived from the facts alleged." Kowal v.
MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).
7 III. Analysis
A. Counts I and II State a Claim for Breach of Contract with Regard to Certain Provisions of the Agreement
In Count I, HIRECounsel alleges that Mr. Connolly violated
the non-Competition provision in Section 5 of the Agreement as a
result of his employment with Beacon Hill’s legal staffing
specialty division. Compl., ECF No. 1-1 at 8. In Count II,
HIRECounsel alleges that Mr. Connolly violated Section 4(b) of
the Agreement by taking a screen shot with a snipping tool of a
confidential internal report and then forwarding that image to
his personal e-mail account. Id. at 9.
Under District of Columbia law, to state a claim for breach
of contract, HIRECounsel must allege: (1) a valid contract
between the parties; (2) an obligation or duty arising out of
the contract; (3) a breach of that duty; and (4) damages caused
by the breach. Tsintolas Realty Co., v. Mendez, 984 A.2d 181,
187 (D.C. 2009).
1. Count I States a Claim for Breach of Contract With Regard to the Non-Compete Provisions in Section 5 of the Employment Agreement
Mr. Connolly argues that HIRECounsel fails to state a claim
for breach of contract on the ground that the non-compete
provision in the Agreement is unenforceable because: (1) it is
not reasonable; and (2) “it is far broader than necessary for
the protection of any possible business interest at stake for
8 HIRECounsel.” Mot. to Dismiss, ECF No. 7 at 8. “Under District
of Columbia law, a non-compete agreement’s terms are enforceable
if the restrictions further a legitimate business interest and
are reasonable in duration and geographic scope.” Robert Half
Int’l v. Billingham, 315 F. Supp. 3d 419, 430 (D.D.C. 2018)
(citations omitted). Here, HIRECounsel has alleged that Section
5(a)(vii) of the Agreement obligates Mr. Connolly to not be
employed by a competing business within 75 miles of the
HIRECounsel Boston office for one year. 2 Compl., ECF No. 1-1 ¶
11. The Agreement defines a “competing business” as a “business
which is either engaged permanent or temporary placement or the
same or substantially business.” Id. Mr. Connolly argues that
the provision is overbroad because it would prohibit him “from
being employed in any business engaged in staffing, without
limitation to industry, and even in a role unrelated to the kind
of work [he] performed for HIRECounsel.” Mot. to Dismiss, ECF
No. 7 at 18. HIRECounsel responds—and the Court agrees—that a
“competing business” is a “competing legal staffing business.”
Opp’n, ECF No. 8 at 13. And to the extent Mr. Connolly argues
that the provision would prevent him from doing any kind of work
for a competing legal staffing business, that is not the case
before the Court. Here, HIRECounsel has alleged that it hired
2 Mr. Connolly does not contest the one-year time restriction. See generally Mot. to Dismiss, ECF No. 7.
9 Mr. Connolly as a Managing Director of Client Relations and that
after resigning from his position with HIRECounsel, he joined a
competitor of HIRECounsel as a Senior Account Executive in its
legal staffing specialty division. Compl., ECF No. 1-1 ¶¶ 6, 13,
14. Accordingly, “[t]he [C]ourt need not indulge in this thought
experiment.” Robert Half, 315 F. Supp. 3d at 431.
Mr. Connolly also argues that because staffing businesses
do not rely on customer goodwill and confidential information,
HIRECounsel has no legitimate business interest in the
restrictive covenant. Mot. to Dismiss, ECF No. 7 at 17.
HIRECounsel has alleged that it provided Mr. Connolly with
access to its confidential and trade secret information
including “detailed confidential information regarding [its]
legal placements and prospects as well as the strengths and
weaknesses of candidates for temporary and permanent legal
placements at customers.” Compl., ECF No 1-1 ¶ 9. HIRECounsel
has further alleged that the information “also included
confidential information concerning customers and [its]
relationships with them, pricing and other terms of contractual
agreements with these customers; and profitability concerning
services to its customers.” Id. With these allegations,
HIRECounsel has sufficiently alleged its legitimate business
interest in maintaining customer goodwill and protecting
confidential information. Cf. Mercer Mgmt. Consulting v. Wlide,
10 920 F. Supp. 219, 237 (D.D.C. 1996) (finding a non-compete
agreement to be reasonable and enforceable in view of the
substantial investment Mercer made in its employees, the vital
importance of its client base to its business, and the close
contacts established between its consultants and its client
base).
Mr. Connolly also argues that the 75-mile restriction is
geographically overbroad and unreasonable. 3 Mot. to Dismiss, ECF
No. 7 at 20. The Court disagrees. Courts applying District of
Columbia law have repeatedly upheld the enforceability of
similar geographic scope restrictions. E.g., Robert Half, 315 F.
Supp. 3d at 430 (50-mile restriction); Morgan Stanley DW Inc.,
150 F. Supp. 2d 67, 74 (D.D.C. 2001) (100-mile restriction).
Finally, Mr. Connolly argues that even if the provision is
enforceable, HIRECounsel has “fail[ed] to allege the essential
element of damages” because it “does not allege that it has lost
any customer, job placement, or any other business . . . .” Mot.
to Dismiss, ECF No. 7 at 21. Under District of Columbia law,
however, a plaintiff is not required to allege the damages
caused by a breach of contract to survive a Rule 12(b)(6) motion
3 To the extent Mr. Connolly argues that the provision could also restrict his employment within a 75-mile radius of Washington, D.C., again, that is not the case before the Court. Here, the complaint alleges that Mr. Connolly went to work for its competitor Beacon Hill in its Boston Office. Compl., ECF No. 1-1 ¶ 14.
11 to dismiss. At this stage, “‘it is enough for the plaintiff to
describe the terms of the alleged contract and the nature of the
defendant’s breach.’” Jacobson v. Hofgard, 168 F. Supp. 3d 187,
207 (D.D.C. 2016) (quoting Francis v. Rehman, 110 A.3d 615, 620
(D.C. 2015).
For these reasons, HIRECounsel has sufficiently stated a
claim for breach of contract and Mr. Connolly’s Motion to
Dismiss is DENIED as to Count I of the Complaint.
2. Count II States a Claim for Breach of Contract With Regard to Section 4(b) of the Employment Agreement
Mr. Connolly contends that HIRECounsel has failed to
plausibly allege a violation of Section 4(b) of the Agreement
because HIRECounsel failed to allege that: (1) he removed the
screen shot for any unauthorized reason; (2) he disclosed the
information to anyone outside of HIRECounsel; (3) he has used it
since leaving HIRECounsel; (4) the information would be valuable
to HIRECounsel’s competitors; (5) facts describing what the
image contained; and (6) why the information was subject to the
Agreement’s definition of Confidential Information. Mot. to
Dismiss, ECF No. 7 at 22.
Mr. Connolly’s arguments are unpersuasive. First,
HIRECounsel has adequately described what the image contained
and has adequately alleged that the information in the screen
shot falls within Section 4(b) of the Agreement. Section 4(b) of
12 the Agreement defines “Confidential Information” as “including
but not limited to, lists and information pertaining to clients
and client contacts, job applicants, referrals, and employees,
and any other ideas, methods, procedures, techniques, written
material, and other know-how, developed or used in connection
with the COMPANY'S or any of its Affiliates' business belonging
to the COMPANY or any of its Affiliates,” Compl., ECF No. 1-1 ¶
10; and as “include[ing], but not [] limited to, ... financial
and other information of the COMPANY and its Affiliates, not
generally available to others,” id. HIRECounsel alleges that the
screen shot contained “a confidential internal report . ..
regarding on-going placements, price mark-ups, and revenue
projections.” Id. ¶ 15. HIRECounsel further alleges that “[t]his
information was not available to the public,” was “drawn from
data in a password protected confidential database,” and was
“marked ‘confidential and proprietary.’” Id.
Second, HIRECounsel has adequately alleged that Mr.
Connolly violated Section 4(b) of the Agreement when he emailed
a screen shot of the report to his personal email address.
Section 4(b) of the Agreement provides that, among other things,
Mr. Connolly was prohibited, during his employment with
HIRECounsel from copying, retaining, or removing from
HIRECounsel’s premises any confidential information. Compl., ECF
No. 1-1 ¶ 10. HIRECounsel alleges that Mr. Connolly took “a
13 screen shot [of the report] with a snipping tool and then
forward[ed] that image to his personal email account.” Id. ¶ 15.
Based on the relevant provision in the Agreement, Mr. Connolly’s
contentions that HIRECounsel needs to allege that: (1) he
removed the screen shot for any unauthorized reason; (2) he
disclosed the information to anyone outside of HIRECounsel; (3)
he has used it since leaving HIRECounsel; and (4) the
information would be valuable to HIRECounsel’s competitors are
entirely without merit.
Finally, Mr. Connolly again argues that HIRECounsel has
failed to allege facts demonstrating that it suffered any
damages as a result of the alleged breach. Mot. to Dismiss, ECF
No. 7 at 23-24. However, and an explained supra, under District
of Columbia law, a plaintiff is not required to allege the
damages caused by a breach of contract to survive a Rule
12(b)(6) motion to dismiss. At this stage, “‘it is enough for
the plaintiff to describe the terms of the alleged contract and
the nature of the defendant’s breach.’” Jacobson, 168 F. Supp.
3d at 207 (quoting Francis, 110 A.3d at 620).
claim for breach of contract as to Section 4(b) of the Agreement
and Mr. Connolly’s Motion to Dismiss is DENIED as to Count II of
the Complaint.
14 B. Count III States a Claim for Violation of the DCUTSA
In Count III, HIRECounsel alleges that Mr. Connolly
violated the DCUTSA when he allegedly sent to his personal e-
mail of a “screen shot” “image” from the July 2020 virtual
meeting. Compl., ECF No. 1-1 at 9.
To establish a trade secret misappropriation claim under
the DCUTSA, HIRECounsel must allege: (1) the existence of a
trade secret; and (2) acquisition of the trade secret by
improper means, or improper use or disclosure by one under a
duty not to disclose. DSMC, Inc. v. Convera Corp., 479 F. Supp.
2d 68, 77 (D.D.C. 2007) (citing D.C. Code § 36–401). The
“threshold inquiry” in every trade secret case is “whether or
not there [is] a trade secret to be misappropriated.” Catalyst &
Chemical & Chemistry Services, Inc. v. Global Ground Support,
350 F. Supp. 2d 1, 8 (D.D.C. 2004). “For information to
constitute a trade secret under the DCUTSA, (1) the information
must be secret; (2) its value must derive from its secrecy; and
(3) its owner must use reasonable efforts to safeguard its
secrecy.” DSMC, Inc., 479 F. Supp. 2d at 77-78 (internal
quotation marks and citation omitted). “Whether a particular
piece of information is a trade secret is generally a question
of fact.” Id.
The DCUTSA defines a “trade secret” as “information,
including a formula, pattern, compilation, program, device,
15 method, technique, or process, that: (A) [d]erives actual or
potential independent economic value, from not being generally
known to, and not being readily ascertainable by, proper means
by another who can obtain economic value from its disclosure or
use; and (B) [i]s the subject of reasonable efforts to maintain
its secrecy.” D.C. Code § 36-401(4). Information, which is
generally known within industry, even if it is not generally
known to public, cannot constitute “trade secret” under District
of Columbia law. Catalyst & Chemical Services, Inc., 350 F.
Supp. 2d at 8.
Mr. Connolly first argues that the Complaint fails to
allege facts which describe the actual information in the screen
shot. Mot. to Dismiss, ECF No. 7 at 25. However, and as
discussed supra, HIRECounsel has sufficiently described the
information Mr. Connolly allegedly retained in the form of a
screen shot of the report.
Second, Mr. Connolly argues that HIRECounsel has failed to
explain “how it derives economic value from the secrecy of such
information, or how such information is not readily
ascertainable ‘by another who can obtain economic value from its
disclosure or use.’” Id. (quoting D.C. Code § 36-401(4)).
However, “[w]hether a particular piece of information is a trade
secret is generally a question of fact . . . after full
presentation of the evidence from each side.” Id. DSMC, Inc.,
16 479 F. Supp. 2d at 77-79 (internal quotation marks and citation
omitted). As this juncture, HIRECounsel has sufficiently alleged
that the confidential information is a trade secret by alleging
that: (1) the report contained information regarding “on-going
placements, price mark-ups, and revenue projections by sales
persons”; (2) it was not publicly available; (3) was “drawn from
data in a password protected confidential database; and (4) was
marked “confidential and proprietary.” Compl., ECF No. 1-1 ¶ 15.
Third, Mr. Connolly argues that HIRECounsel fails to allege
that he misappropriated the alleged trade secret because: (1) he
did not access the information without permission; and (2)
HIRECounsel does not allege that he has disclosed the
information to anyone outside of HIRECounsel nor used it for any
purpose other than for his work at HIRECounsel. Mot. to Dismiss,
ECF No. 7 at 26. Relevant to the allegations here, DCUTSA
defines “misappropriation” as “disclosure or use of a trade
secret without express or implied consent by a person who: (i)
used improper means to acquire knowledge of the trade secret.”
DC Code 36-401(2)(A). “‘Improper means’ means theft, bribery,
misrepresentation, breach or inducement of a breach of a duty to
maintain secrecy or espionage through electronic or other
means.” DC Code 36-401(1). HIRECounsel argues that the “improper
means” was “taking a screen shot of the confidential report with
a snipping tool and then forwarding that image to his personal
17 email account for his use unrelated to his employment with
[HIRECounsel].” Opp’n, ECF No. 8 at 22 (citing Compl., ECF No.
1-1 ¶ 34. HIRECounsel further argues that Mr. Connolly
misappropriated the information because his action amounted to
theft and was in violation of his Employment Agreement. Id. The
Court is persuaded that, at this juncture, HIRECounsel has
sufficiently alleged that Mr. Connolly misappropriated the
alleged trade secret. He acquired it for use unrelated to his
employment with HIRECounsel and by improper means when he
emailed the information to his personal email address 10 days
before he resigned from his position with HIRECounsel and soon
thereafter began working with one of HIRECounse’s direct
competitors. See E.I. DuPont deNemours & Co. v. Christopher, 431
F.2d 1012, 1016 (5th Cir. 1970) ("improper means" has been
defined as those means that "fall below the generally accepted
standards of commercial morality and reasonable conduct"). Mr.
Connolly’s argument that HIRECounsel’s claim fails because it
does not allege that he used the trade secret is without merit
based on the pain language of the statute. D.C. Code § 46-401
(“acquisition of the trade secret by improper means, or improper
use or disclosure by one under a duty not to disclose”)
(emphasis added).
Finally, Mr. Connolly argues that HIRECounsel’s demand for
exemplary damages are baseless. Mot. to Dismiss, ECF No. 7 at
18 27. However, none of the persuasive authority cited by Mr.
Connolly supports dismissal of such a demand at this juncture in
the proceedings.
claim for a violation of the DCUTSA and Mr. Connolly’s Motion to
Dismiss is DENIED as to Count III of the Complaint.
IV. Conclusion
For the reasons explained above, Mr. Connolly’s Motion to
Dismiss is DENIED. An appropriate Order accompanies this
Memorandum Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan United States District Judge December 20, 2021