Intrepid Financial Partners, LLC v. Fernandez

District Court, S.D. New York·Decided December 30, 2020·No. 1:20-cv-09779·Unknown

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------x

INTREPID FINANCIAL PARTNERS, LLC,

Plaintiff,

-v- No. 20 CV 9779-LTS

ANTONIO C. FERNANDEZ,

Defendant.

-------------------------------------------------------x

MEMORANDUM OPINION AND ORDER

Plaintiff Intrepid Financial Partners, LLC (“Intrepid” or the “Plaintiff”) commenced this action on November 20, 2020, against its then-employee Defendant Antonio Fernandez (“Mr. Fernandez” or the “Defendant”), seeking a temporary restraining order (“TRO”) and preliminary injunctive relief in aid of adjudication by a Financial Industry Regulatory Authority (“FINRA”) arbitration panel of Intrepid’s contract claims resulting from Mr. Fernandez’s imminent departure from Intrepid to work with another company. In the arbitration proceeding, and in this Court pending completion of the arbitration proceedings, Plaintiff seeks to enforce the post-employment non-competition, non-solicitation and confidentiality provisions of Mr. Fernandez’s employment agreement with Intrepid (the “Agreement”) and prevent him from engaging in what Plaintiff contends is competitive employment at Citigroup, Inc. (“Citi”) following his departure from Intrepid. (See docket entry no. 1.) Plaintiff’s original complaint alleged that the Court had diversity jurisdiction of the action pursuant to 28 U.S.C. section 1332. At the first hearing on Plaintiff’s TRO application, Plaintiff conceded that there was no diversity but represented that it would promptly amend its complaint as of right to assert a federal claim under the Defend Trade Secrets Act, such that the Court could exercise supplemental jurisdiction of Plaintiff’s contract-based claims. The Court directed the parties to meet and confer on, inter alia, a proposed schedule for expedited discovery and preliminary injunction motion practice, and set November 30, 2020, as the date for a hearing

on Plaintiff’s TRO application. On the morning of November 30, 2020, immediately before the commencement of the second hearing, Plaintiff filed an amended complaint against Mr. Fernandez, asserting federal subject matter jurisdiction of a new claim under the Defend Trade Secrets Act, 18 U.S.C. section 1836 (the “DTSA”), and supplemental jurisdiction of its common law claims under 28 U.S.C. section 1367(a). (See docket entry no. 31, the “AC”.) The Court proceeded to hear oral argument on the Plaintiff’s application for a TRO, during which the Defendant contested the Court’s authority to rule on Plaintiff’s application due to a lack of both personal jurisdiction over Mr. Fernandez and subject matter jurisdiction of the case under the DTSA. (See docket entry no. 35.) After hearing brief oral argument on the jurisdictional disputes, the Court held that Fernandez had failed to demonstrate

that the contractual forum selection clause should not be enforced and, as to subject matter jurisdiction, found that, “on its face the [newly filed amended] complaint appears to assert a claim under the Defend Trade Secrets Act sufficient to establish at [the TRO] stage the existence of federal subject matter jurisdiction.” (See docket entry no. 35.) The Court then heard oral argument on the merits of Plaintiff’s TRO application, and granted Plaintiff’s application for a temporary restraining order against Mr. Fernandez, which expires on December 30, 2020, at the latest and Plaintiff’s request for expedited discovery, and set a briefing and hearing schedule for Plaintiff’s preliminary injunction motion. (See docket entry nos. 32 and 35.) On December 12, 2020, the Plaintiff filed a motion for preliminary injunction in aid of arbitration. (See docket entry no. 43.) On December 14, 2020, Defendant filed its opposition to the motion for a preliminary injunction, as well as a motion pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6) to dismiss the AC. (See docket entry nos. 67 and 62,

respectively.) On December 16, 2020, the Plaintiff filed its reply in further support of its motion for a preliminary injunction. (See docket entry no. 80.) On December 18, 2020, the Court heard oral argument on Plaintiff’s motion for a preliminary injunction and set an expedited briefing schedule on Defendant’s motion to dismiss the AC. (See docket entry no. 101.) On December 21, 2020, the Plaintiff filed its opposition to the Defendant’s motion to dismiss. (See docket entry no. 91, the “MTD Opp.”) Defendant filed reply papers in further support of its motion to dismiss on December 23, 2020. (See docket entry no. 97.) The Court has considered all of the parties’ submissions in connection with their respective motions. For the following reasons, the Defendant’s motion to dismiss the AC is granted insofar as the Court finds that Plaintiff has failed to state a claim for relief under the DTSA and the Court declines to exercise supplemental

jurisdiction of Plaintiff’s state law claims, and the Plaintiff’s motion for a preliminary injunction is, consequently, denied for lack of jurisdiction. DISCUSSION

The Defendant seeks an order dismissing the AC pursuant to Rule 12(b)(1), arguing that Plaintiff’s failure to proffer facts establishing the elements of its DTSA claim deprives the Court of jurisdiction to entertain that claim such that there is no basis for the exercise of jurisdiction of any of Plaintiff’s state law contract claims, and under Rule 12(b)(6) for failure to state a DTSA claim upon which relief can be granted. Because failure to state a viable federal claim would also point to dismissal of the state law contract claims pursuant to 28 U.S.C. section 1367(c) and it is at best questionable that the statutory elements of a DTSA claim are jurisdictional,1 the Court will address the motion as one under Rule 12(b)(6) to the extent it is directed to the DTSA claim. To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead “enough facts to state a claim to relief that is plausible on its face” and sufficient 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, 570 (2007). A proper complaint cannot simply proffer legal conclusions or threadbare recitals of the elements of a cause of action; the plaintiff must plead specific facts that “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. To sustain a claim under the DTSA, which creates a federal cause of action for the misappropriation of trade secrets used in interstate commerce, a plaintiff must establish “an unconsented disclosure or use of a trade secret by one who (i) used improper means to acquire

the secret, or (ii) at the time of disclosure, knew or had reason to know that the trade secret was acquired through improper means, under circumstances giving rise to a duty to maintain the secrecy of the trade secret, or derived from or through a person who owed such a duty.” Broker Genius, Inc. v.

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