Joshua David Mellberg LLC v. Will

96 F. Supp. 3d 953, 2015 U.S. Dist. LEXIS 40498, 2015 WL 1442920

• Court: District Court, D. Arizona
• Decided: March 30, 2015
• Docket: No. CV-14-02025-TUC-CKJ
• Status: Published

Opinion

ORDER

CINDY K. JORGENSON, District Judge.

Plaintiffs Joshua David Mellberg, LLC, dba J.D. Mellberg Financial, and Joshua David Mellberg filed a First Amended Complaint asserting 11 counts against various Defendants. (Doc. 9, FAC) Four motions are now pending before the Court: (1) Partial Motion to Dismiss filed by Defendants Jovan Will and Tree Fine (Doc. 22); (2) Motion to Dismiss filed by Defendant the Impact Partnership (Doe. 27); (3) Partial Motion to Dismiss filed by Defendants Fernando & Geovanna Godinez (Doc. 30); and (4) Motion to Dismiss filed by Defendant Carly Uretz (Doc. 34). Following oral argument on November 13, 2014, Magistrate Judge Charles R. Pyle issued a Report and Recommendation (R & R) on February 9, 2015, (1) denying in part and granting in part Defendant Will and Fine’s Partial Motion to Dismiss; (2) granting Defendant Impact Partnership’s Motion to Dismiss; (3) granting Defendant Godinez’ Partial Motion to Dismiss; and (4) granting Defendant Uretz’ Motion to Dismiss. (Doc. 45.) With the exception of certain claims in the Third Claim (Unfair Competition), the Magistrate Judge recommended that all dismissed claims be dismissed with leave to amend. (Id. at 33.)

Plaintiffs files objections to the R & R to the extent that it recommends that certain unfair competition claims be dismissed as based on theories too novel to be permitted to go forward. (Doc. 46.) Defendant Jovan Will objects to the R & R on the ground that the FAC contains no plain statement that Will misappropriated trade secrets. (Doc. 47.) Defendant Tree Fine objects to the R & R on the ground that the Confidentiality Agreement is facially unenforceable. (Doc. 48.)

The Court overrules the objections and adopts the R & R.

I. Background

Plaintiffs are Joshua David Mellberg, LLC, dba J.D. Mellberg Financial, and Joshua David Mellberg, an individual (collectively referred to as “JDM” or “Plaintiffs”). Joshua David Mellberg is the owner and President of JDM. (FAC ¶ 16.) He is a nationally known financial advisor based in Tucson, Arizona, and “is a pioneer and leader in marketing and selling annuities via the Internet.” (Id. ¶¶ 17, 18.) JDM Mellberg Financial is a nationwide retail and wholesale insurance agency specializing “in capturing internet based leads and supplying them to a network of agents across the country. JDM began developing internet based marketing and sales funnels in 2009.” (Id. ¶ 22; see also id. ¶ 23 (JDM has expended in excess of $30 million refining its sales funnels)) JDM advertises and promotes the services and products that it offers, including annuities. (Id. ¶¶21, 22.) A significant portion of JDM’s advertising and promotional activities in the field of annuities is conducted on the internet. (Id. ¶ 21).

The individual Defendants are former employees of JDM. Also named as a Defendant is The Impact Partnership, which is a business entity that some or all of the individual Defendants are alleged to have joined or otherwise furthered the interests thereof. (See e.g., id. ¶¶ 62, 75, 87-88, 118, 138.) As stated in the R & R, JDM’s theory of the case is that the individual Defendants “devised a scheme to steal JDM’s trade secrets and confidential information, attempted to destroy evidence of their theft, and are now using that stolen information in a competing venture.” (Doc. 45 at 6.)

JDM alleges the following claims for relief: (1) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (First Claim) against all Defendants; (2) violation of the Arizona Uniform Trade Secrets Act (“AUTSA”), A.R.S. § 44-401 et. seq., against all Defendants (Second Claim); (3) unfair competition against all Defendants (Third Claim); (4) breach of contract against Defendants Fine, Areeo and Godi-nez (Fourth Claim); (5) unjust enrichment against all Defendants (Fifth Claim); (6) breach of fiduciary duty/duty of loyalty against Defendants Fine and Will (Sixth Claim); (7) breach of duties regarding Alpha Academy Advisors, LLC, against Defendant Will (Seventh Claim); (8) trespass to chattel against Defendant Fine (Eighth Claim); (9) theft/conversion against Defendant Fine (Ninth Claim); (10) civil conspiracy against all Defendants (Tenth Claim); and (11) aiding and abetting against all Defendants (Eleventh Claim).

Pursuant to Fed.R.Civ.P. 12(b)(6), Defendants Will, Fine, Godinez, Uretz, and The Impact Partnership seek dismissal of JDM’s Second, Third, Fifth, Tenth, and Eleventh Claims for failure to state a claim. Additionally, Defendants Fine and Godinez seek dismissal of JDM’s Fourth Claim for relief for failure to state a claim, and Defendants Fine and Will seek dismissal of JDM’s Sixth Claim for relief for failure state a claim.

II. Standard of Review

The Court reviews de novo the objected-to portions of the Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). The Court reviews for clear error the unobjected-to portions of the Report and Recommendation. Johnson v. Zema Systems Corp., 170 F.3d 734, 739 (7th Cir.1999); see also, Conley v. Crabtree, 14 F.Supp.2d 1203, 1204 (D.Or.1998).

The standard for a motion to dismiss is correctly stated in the R & R and will not be repeated here. (Doc. 45 at 3-5.)

III. Findings and Conclusions of the Magistrate Judge and Parties’ Objections

A. Plaintiffs’ Objection

Plaintiffs’ Third Claim is for unfair competition against all Defendants. The FAC alleges as unfair competition that, inter alia, “Defendants have engaged in unlawful business acts or practices by committing acts including computer fraud, trespass, conversion, and other illegal acts as practices as alleged above, all in an effort to gain unfair competitive advantage over JDM.”¹ (FAC ¶ 147.) The R & R recognizes a cause of action in Arizona for unfair competition based on the misappropriation of confidential information that does not rise to the level of a trade secret under the Arizona Uniform Trade Secrets Act (AUTSA).² (Doc. 45 at 25.) ButMag-istrate Judge Pyle dismissed certain claims in the Third Claim; he recommended that the Court should be reluctant to allow Plaintiffs’ unfair competition claims based on specifically alleged unfair business practices — conversion, trespass, and computer fraud — that are novel to Arizona. (Doc. 45 at 25.) Plaintiffs object to the latter recommendation as reflective of an overly narrow view of unfair competition law that is inconsistent with Arizona authorities.

The Arizona Supreme Court has recently held that the AUTSA “creates an exclusive cause of action — and displaces conflicting causes of action — for claims based on the misappropriation of trade secrets.” Orca Commc’ns Unlimited, LLC v. Noder, 286 Ariz. 180, 337 P.3d 545, 546 (2014) (Orea II). The Court also held that assuming the viability of a common law claim for misappropriation of confidential information, AUTSA “does not displace common-law claims based on alleged misappropriation of confidential information that is not a trade secret.” Id. The Court, which was reviewing the lower courts’ decision on a motion to dismiss, declined to “decide today what aspects, if any, of the confidential information alleged in [the plaintiffs] unfair competition claim might fall within AUTSA’s broad definition of ‘trade secret’ and therefore be displaced.... That determination will not hinge on the claim’s label, but rather will depend on discovery and further litigation that has not yet occurred.” Id. at 549 (citations omitted). Magistrate Judge Pyle ruled that in light of Orea II, it cannot be said at this point in the litigation that JDM’s claim is preempted by AUTSA to the extent it may involve confidential information that does not constitute trade secrets. (Doc. 45 at 23.)

The Arizona Supreme Court also declined to decide whether Arizona recognizes a common-law claim for unfair competition as alleged in Orca’s complaint.

Nor do we decide whether Arizona recognizes a common-law claim for unfair competition as alleged in Orca’s complaint. Cf. Restatement (First) of Torts §§ 757, 759 (1939) (enumerating several theories of liability, including disclosure or use of another’s trade secret, and improper acquisition of information, whether or not it constitutes a trade secret, to advance a rival business interest). Compare Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, 124 ¶¶ 8-9, 970 P.2d 954, 956 (App.1998) (finding plaintiffs unfair-competition claim preempted by federal copyright law, and noting that such a claim is “based on principles of equity” and “encompasses several tort theories,” including “misappropriation”), with Restatement (Third) of Unfair Competition § 1 cmt. g (1995) (noting that the “specific forms of unfair competition [described therein] do not fully exhaust the scope of statutory or common law liability for unfair methods of competition”), and Restatement (Second) of Agency §§ 395, 396 (1958) (describing agent’s duty not to use or disclose confidential information acquired during the course of his agency in competition with principal).

Orca II, 337 P.3d at 549-550.

Plaintiffs argue that Arizona courts have stated that “[t]he common law doctrine of unfair competition is based on principles of equity,” Fairway Constructors, Inc., 970 P.2d at 956, and because of the doctrine’s equitable underpinning, the “tort of unfair competition is extremely flexible[.]” Golden Nugget, Inc. v. American Stock Exchange, Inc., 828 F.2d 586, 591 (9th Cir.1987). Plaintiffs contend that the only requirements in Arizona for the tort of unfair competition are that the plaintiff show either “that it was engaged in competitive business with [the defendant] or that [the defendant’s] actions were likely to produce public confusion[.]” Sutter Home Winery, Inc. v. Vintage Selections, Ltd., 971 F.2d 401, 407 (9th Cir.1992) (emphasis added). In declining to decide whether Arizona recognizes a common-law claim for unfair competition, the Court pointed to Restatement (Third) of Unfair Competition, which suggests that lower Arizona courts may follow the Restatement: Restatement (Third) of Unfair Competition § 1 cmt. g (1995) (noting that the “specific forms of unfair competition [described therein] do not fully exhaust the scope of statutory or common law liability for unfair methods of competition”). Orca II, 337 P.3d at 549. Plaintiffs argue that this is consistent with the rule in Arizona that in the absence of controlling Arizona authority, Arizona courts follow the Restatement of the Law. See Lerner v. DMB Realty, LLC, 234 Ariz. 397, 322 P.3d 909, 916 n. 7 (Ariz.App.2014). The Restatement Third of Unfair Competition acknowledges the flexible nature of the doctrine:

One who causes harm to the commercial relations of another by engaging in a business or trade is not subject to liability to the other for such harm unless: (a) the harm results from acts or practices of the actor actionable by the other under the rules, of this Restatement relating to: (1) deceptive marketing, as specified in Chapter Two; (2) infringement of trademarks and other indicia of identification, as specified in Chapter Three; (3) appropriation of intangible trade values including trade secrets and the right of publicity, as specified in Chapter Four; or from other acts or practices of the actor determined to be actionable as an unfair method of competition, taking into account the nature of the conduct and its likely effect on both the person seeking relief and the public.

§ 1 (emphasis added). Plaintiffs further contend that Comment (g) to this section of the Restatement further elucidates the broad and flexible application of the doctrine:

A primary purpose of the law of unfair competition is the identification and redress of business practices that hinder rather than promote the efficient operation of the market. Certain recurring patterns of objectionable practices form the basis of the traditional categories of liability specifically enumerated in Subsection (a)(l)-(3). However, these specific forms of unfair competition do not fully exhaust the scope of statutory or common law liability for unfair methods of competition, and Subsection (a) therefore includes a residual category encompassing other business practices determined to be unfair.

Restatement (Third) of Unfair Competition § 1 (1995) (emphasis added).

Defendant The Impact Partnership files a response, which is joined by Defendants Will, Fine, Godinez, and Uretz. (Docs. 49, 50.) They assert that Sutter Home, on which Plaintiffs rely, contains no analysis of the issue and cites a single Arizona Supreme Court opinion, from 1945. See Sutter Home, 971 F.2d at 407 (citing Lininger v. Desert Lodge, 63 Ariz. 239, 160 P.2d 761 (1945)). They contend that since Desert Lodge, the Arizona Supreme Court has twice held that “the universal test [for unfair competition] is whether the public is likely to be confused.” Boice v. Stevenson, 66 Ariz. 308, 187 P.2d 648, 653 (1947) (emphasis added); see also O’Hara v. Lance, 77 Ariz. 84, 267 P.2d 725, 728 (1954) (same). They also argue that Desert Lodge was a trade name dispute between the owners of “The Lodge on the Desert” and “Desert Lodge.” The court expressly limited its analysis to disputes over trade names. They point out that this court refused to recognize a claim for unfair competition in the absence of public confusion on two occasions. (Doc. 49 at 2-3, citing Doe v. Arizona Hospital & Healthcare Association, 2009 WL 1423378 at *12 (D.Ariz. Mar. 19, 2009) and ACT Group, Inc. v. Hamlin, 2012 WL 2976724, at *8 (D.Ariz. July 20, 2012).)

First, the Court is not persuaded that the Magistrate Judge’s ruling was based on the failure to allege public confusion. In addition, the unfair competition claims in Orea do not appear to involve public confusion. Nevertheless, the Court overrules Plaintiffs’ objection. The reference to the Restatements in Orea II was solely in the context of a theory of unfair competition based on misappropriation. The Arizona courts have previously stated that “the doctrine [of unfair competition] encompasses several tort theories, such as trademark infringement, false advertising, ‘palming off,’ and misappropriation.” Fairway Constructors, Inc., 970 P.2d at 956 (emphasis added). Pursuant to Orea 11, Plaintiffs will be permitted to amend the claim of unfair competition based on misappropriation of confidential information that is not a trade secret. But this Court does not read the language in Orea II as inviting additional expansion of the doctrine of unfair competition, and Plaintiffs cite no cases outside Arizona that recognize unfair competition as including theories of computer fraud, trespass, or conversion. Moreover, Plaintiffs have separately asserted claims for computer fraud, trespass, and conversion.

B. Defendant Will’s Objection

The R & R finds that Plaintiffs state a claim against Defendant Will for misappropriation of trade secrets. (Doc. 45 at 11-12.) Defendant Will objects, asserting that the FAC does not contain a plain statement of the claim that Will misappropriated trade secrets. (Doc. 47 at 1.)

According to Will, the R & R identifies six paragraphs that address the trade secrets claim against Will, two of which do not rise to the level of misappropriation— ¶¶ 38, 39 alleging access to client lists. (Doc. 47 at 2; ref. Doc. 45 at 11.) The R & R summarizes the remaining four paragraphs against Will as follows:

JDM alleges that he ... hosted an unauthorized webinar using JDM proprietary materials, (FAC, ¶¶47, 48), and postemployment with JDM, gained unauthorized access to “JDM web domains and, with that access secured, in November, 2013 ... illegally downloaded the content of those sites, including all of JDM’s training and educational videos! ]” (FAC ¶¶ 121-120).

(Doc. 45 at 11 (quoting FAC ¶¶ 47-48,120-121).)

Will argues that allegations that he “hosted an unauthorized webinar” (FAC ¶¶ 47, 48) cannot support a claim for misappropriation of trade secrets because on their face, the allegations relate to actions Will took “in July of 2013 ... through AAA” (FAC ¶ 47), which led to “an agreement to wind down AAA” (FAC ¶ 48.) The FAC alleges that AAA was at the time an LLC formed by Will and Plaintiff Josh Mellberg (FAC ¶ 40), “to provide sales and marketing training to agents outside of JDM” and “to market to and recruit agents to work with JDM.” (FAC ¶ 42.) Will contends that his actions cannot be misappropriation because he owned the entity with Plaintiff.

Will asserts that the allegation that he hosted a webinar “using JDM proprietary materials” is conclusory. A “plaintiff seeking relief for misappropriation of trade secrets must describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons ... skilled in the trade.” HTS, Inc. v. Boley, 954 F.Supp.2d 927, 944 (D.Ariz.2013) (quoting Imax Corp. v. Cinema Tech., Inc., 152 F.3d 1161, 1164-65 (9th Cir.1998)). The FAC does not distinguish the “proprietary materials” from general knowledge in the trade and fail to allege any facts whatsoever to identify what portion of the webinar constituted a trade secret.

Will also argues that Plaintiffs’ FAC allegations fail to plead sufficient facts to show that the information both

(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other 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.

Ariz.Rev.Stat. § 44-401(4). Both are essential elements for information to rise to the level of a trade secret.

Will further contends that the allegations of downloaded “web content” are insufficient because the allegations suggest that the “web content” is not secret; rather, it is readily available to all of Plaintiffs’ clients. The “hallmark of trade secrets is their secrecy.” Householder Grp., LLLP v. Van Mason, 2012 WL 4513635 (D.Ariz. Sept. 30, 2012). Plaintiffs admit that the “web content,” including the “training and educational videos,” were “available on a password-protected basis to agents that register for and pay for JDM’s services.” (FAC ¶ 119.) Will argues that information accessible to anyone who pays for access is not secret. In addition, Plaintiffs have alleged no facts to plausibly support “trade secret” status for the content they make available on the internet. Furthermore, the FAC does not allege that Will ever “used” the allegedly illegal downloads of JDM’s training videos. {See FAC ¶¶ 122-126, alleging that Will was told to stop using a client list, had launched websites, and was using JDM’s third-party compli-anee consultant — not that Will was using the training videos.)

Plaintiffs respond that they allege suf-fieient facts to state a claim and that Will’s objections are at odds with the applicable pleading standard. (Doc. 51 at 4.) The FAC’s detailed identification and description of Plaintiffs’ trade secrets satisfies the notice pleading standard because it plausibly appears that trade secrets are involved. Plaintiffs are not required to disclose the actual trade secrets in the Complaint. For example, in W.L. Gore & Assocs. v. GI Dynamics, Inc. (Gore I), No. CV-10-8088, 2010 WL 5184254, at *8 (D.Ariz. Dec. 15, 2010), the complaint alleged broad categories of confidential information including “market studies, financial information, manufacturing methods, and [counterclaimant’s] future plans.” Id. The court found that these categories were sufficient to state the existence of trade secrets in light of Iqbal. Id.

Here, Plaintiffs’ allegations, like the categories of information alleged in Gore I, include misappropriation of their training materials, confidential client and marketing lists, advertising data, call center metrics, proprietary sales processes, metrics, and scripts, sales and marketing programs, advertising copy still in development, and password protected . training and educational videos. (FAC ¶¶ 24, 27, 39, 48, 61, 85, 88, 96, 105, 115, 117, 119.)³ Plaintiffs assert that the FAC also describes in detail the types of information that are secret {id., ¶ 24(a)-(k)), the effort, cost, and time it took JDM to develop the trade secrets {id., ¶¶ 22-24), and the efforts JDM takes to maintain the secrecy of its trade secrets {id. ¶¶ 28-31).

Plaintiffs allege not only that Will misappropriated the ideas or secrets behind Plaintiffs’ trade secrets but also that he systematically and wrongfully misappropriated physical manifestations and embodiments of Plaintiffs’ trade secrets. (See e.g., id. ¶¶2427, 39, 48, 55-58, 61, 64, 69, 75, 85, 88, 96, 105, 114, 115, 117, 119, 121.)

Plaintiffs further argue that even if some aspects of the trade secrets are publically available, that would not warrant dismissal of the claim. As the Arizona Court of Appeals observed in the Enterprise Leasing v. Ehmke:

Although matters of general knowledge cannot be appropriated as secret, a trade secret may consist of a combination of elements even though each individual component may be a matter of common knowledge.

197 Ariz. 144, 3 P.3d 1064, 1069 (Ariz.App.1999). Trade secrets “may consist of a compilation of information that is continuously used or has the potential to be used in one’s business and that gives one an opportunity to obtain an advantage over competitors who do not know of or use it.” Id. at 1068 (citations omitted). Thus, training videos, business plans, customer information, and marketing techniques can be trade secrets.

As to efforts to maintain secrecy, Plaintiffs argue that the owner of the secret information need only show that it made reasonable efforts to maintain its secrecy to ensure that it would be difficult for others to discover it without using improper means. Id. at 1070. The FAC alleges significant, reasonable and sufficient measures to protect the secrecy of the materials and information in issue. (FAC ¶¶ 28-30.)

Finally, The FAC alleges misappropriation of more than general knowledge; Defendants are charged with misappropriating and using J.D. Mellberg Financial’s actual, physical proprietary information— the physical manifestations of Plaintiffs’ trade secrets.

The Court overrules Will’s objection. The R & R makes specific findings regarding trade secrets, economic advantage, and protection of trade secrets, including references to website materials. (Doc. 45 at 7-10.) As the Magistrate Judge noted, these issues are common to the motions filed by all Defendants. At this stage of the litigation, the Court need not decide whether the “web content” is, in fact, a trade secret. As the Magistrate Judge found, the allegations of trade secrets are plausible on their face. (Id. at 11.)

Moreover, in addition to the paragraphs cited by Will, the Magistrate Judge noted additional allegations in the FAC directed at Will. Specifically, the R & R states:

JDM also alleges that Defendant Will approached Defendant “Impact Partnership to launch a web-based lead program that mirrors the JDM program and that clients and agents of Advisors Excel have received marketing regarding the lead program. JDM’s internal advisors also received this marketing.” (FAC, ¶ 122). Further, “Defendant Will launched several websites very similar to JDM sites.... ” (FAC, ¶ 124) and one of his websites “is purchasing AdWords and keywords identical in name, pattern, and volume to the purchases conducted by Defendant Fine in his former role as Marketing Director at JDM.” (FAC, ¶ 126). The allegations plausibly suggest that Defendant ... Will ... not only had access to trade secret information, but that [he has] acquired that information and [is] using it as well.

In other words, although the FAC does not specifically assert that Will used the training and educational videos, it asserts that he illegally downloaded them, and in the next paragraph asserts that Advisors Excel notified Plaintiffs that Will had ap-' proached The Impact Partnership to launch a web-based lead program, that mirrors the JDM program and that clients and agents had received the marketing regarding the lead program. (FAC ¶¶ 121, 122.) The FAC also alleges that Will had launched websites very similar to JDM websites. (Id. ¶ 124.) This is sufficient factual content to allow the Court to draw the reasonable inference that Will may be liable for misappropriation. Viewed in its entirety, the Court finds the allegations in the FAC sufficient to state a claim against Will for misappropriation of trade secrets.⁴

C. Defendant Fine’s Objection

The R & R finds that Plaintiffs state a claim against Defendant Fine for misappropriation of the physical manifestations of JDM’s trade secrets. (Doc. 45 at 12-13.) Defendant Fine argues that even if, as Magistrate Judge Pyle found, Fine misappropriated the physical manifestation of trade secrets — i.e. specifically, spreadsheets compiling internet advertising data — the Confidentiality Agreement constitutes an unenforceable noncompetition agreement. (Doc. 48 at 1-2.)

In Arizona, an overly broad confidentiality agreement amounts to a non-competition agreement. See Orca Commc’ns Unlimited, LLC v. Noder, 233 Ariz. 411, 314 P.3d 89, 95 (Ariz.App.2013) (Orea I), depublished in part on other grounds, Orca II, 337 P.3d at 550 (depub-lishing ¶¶ 28-31). In turn, a noncompetition agreement must be limited in time and in geography or it is unenforceable. Orea I, 314 P.3d at 95.

In the FAC, Plaintiffs allege that Defendant Fine entered into a confidentiality agreement precluding him from:

disclosing] Confidential Information, directly or indirectly, under any circumstances, or by any means, to any third person without the express written consent of the Company ... [or] copying], transmit[ting], reproducing], summarizing], quoting], or making] any commercial or other use whatsoever of Confidential Information, except as may be necessary to perform [his] duties for the Company.

(Doc. 45 at 26 (quoting FAC ¶¶ 157, 158 & Ex. 1 §§ 5, 6).) According to Fine, the impermissibly broad definition of “Confidential Information” includes:

(a) proprietary information of the Company, (b) information marked or designated by the Company as confidential, (c) information, whether or not in written form and whether or not designated as confidential, that is known to me as being treated by the Company as confidential; and (d) information provided to the Company by third parties that the Company is obligated to keep confidential. Confidential Information includes, but is not limited to, client lists, financial information related to client accounts, discoveries, documentation, processes, know-how, marketing plans and other financial and technical information.

(Doc. 45 at 26 (quoting FAC Ex. 1 § 1) (emphasis added).)

In the Motion to Dismiss, the parties largely disputed the use of the term “know-how.” The Magistrate Judge adopted the Third Circuit’s definition of “know-how” that is sufficient to constitute a trade secret; it is not “ability” or “experience,” “but rather the compiled products of that ability and experience that had been recorded for repetitive use.” SI Handling Sys. Inc. v. Heisley, 753 F.2d 1244, 1262 (3d Cir.1985) (such compilations can be graphs, charts, drawings and other data). “The employee ability and experience that led to these developments, and presumably will lead to still further developments, does not belong to” the employer. Id. (“we do not think that, after employees leave, [the employer] can assert proprietary rights over their problem-solving ability or knowledge of mistakes to be avoided.”).

Thus, the Magistrate Judge reasoned that “know-how” as used in the Agreement here means the compilation, ie., physical manifestation of data or information, such as spread sheets, not mere knowledge. Furthermore, such a meaning is consistent with the allegations of trade secret violations that JDM has advanced. The Magistrate Judge also noted there no suggestion that the “discoveries, documentation, processes [and] know-how” as used in the Agreement are matters of public knowledge. If they were, then they would not fall within the scope of the Agreement because it specifically excludes “information that the Company now or hereafter voluntarily disseminates to the public or that otherwise becomes part of the public domain through lawful means.” (Doc. 45 at 27-28; FAC, Ex. 1, Sec. 8.)

In his objection, Fine reasserts that the Agreement is overly broad, and he cites to Orea I.

In Orea I, the employee Noder signed a confidentiality covenant that

prohibited Noder from ‘directly or indirectly circumventing] or competing] with The Company with regard to any Confidential Information.’ The Agreement defined confidential information in section 2.2 as ‘knowledge or information not generally known to the public or in the public relations industry’ that Noder learned from her employment with Orea that related to Orea, its business partners, or the business of its customers or potential customers. This included ‘any information [Noder] learn[ed] of, possessed] as a result of, or access[ed] through’ Noder’s employment. The definition excluded ‘publicly known’ information, information ‘readily accessible to the public in a written publication,’ but included information that was only available through ‘substantial searching of published literature’ or that had to be ‘pieced together’ from a number of publications or sources. In the event of a dispute, the covenant placed on Noder the burden of proving that information was not confidential.

Orca I, 314 P.3d at 92. The Court of Appeals reasoned that the

the Agreement’s definition of ‘confidential information’ extends far beyond the ‘truly confidential.’ The definition properly excludes ‘publicly known’ information, and further defines ‘publicly known’ as ‘readily accessible to the public in a written publication,’ but then includes within its ambit information that is available through ‘substantial searching of published literature’ or that has to be ‘pieced together’ from a number of publications or sources. The definition also includes as confidential, ‘any information’ Noder ‘learn[ed] of, possess [ed] as a result of, or access[ed] through employment’ with Orea.

Id. at 94-95.

Thus the court held that the definition of confidential information was overbroad because (1) it deemed public information confidential if the public had to do substantial searching or to combine information, and (2) it deemed confidential any information that the employee might have come across during her employment with Orea, regardless of whether the information was truly confidential. As to the first ground, the court stated that information available to the public remains public knowledge even if a member of the public has to expend substantial time to gather or comprehend it. As to the second ground, the court said that Orea cannot by fiat deem confidential all information Noder obtained through her employment with Orea. Id. at 95.

As noted, according to the Agreement here, “Confidential information” encompasses “discoveries, documentation, processes, [and] know-how, marketing plans, and other financial and technical information.” (Id.) In his objections, Fine argues that as the Confidentiality Agreement extends beyond the “truly confidential,” and includes all information “designated” or “treated” by the company as confidential. (Doc. 48 at 3.) He contends that it is overbroad because it purports to prevent him from using most, if not all, of the information he learned from his employment, including any information the company unilaterally designates as confidential and any information related to his or the company’s “documentation, processes, [or] knowhow” (among other things). This imposes an unlimited restriction against competing with JDM. (Doc. 48 at 3-4.) Even assuming the spreadsheets are confidential, the Confidentiality Agreement is, nevertheless, overly broad because, on its face, it includes much more than spreadsheets.

Plaintiffs respond that this Agreement is not like the one in Orea. This Agreement nowhere expressly defines as “Confidential” information that is available to the public; in fact, it expressly excludes such information. And the Agreement at issue here does not define as confidential “any information” acquired by Defendant Fine during his employment with JDM. As the Magistrate Judge held, “know-how” is a term of art typically used in confidentiality provisions to designate a subset of trade secrets or confidential information that is quite distinct from the general knowledge an employee may acquire during employment. See e.g., SI Handling Sys., Inc., 753 F.2d at 1262 (noting that while an employee’s “know-how” with regard to specific methods and techniques may be protected under trade secret law, an employee may still be entitled to use his “experience, knowledge, memory, and skill, which he gained” from his previous employment) (quotations omitted).

The Court finds that the Confidentiality Agreement here is not like the Agreement in Orea I. The Agreement in Orea I was overly broad on its face largely because although it purported to exclude publically known information from what was deemed confidential, it also, in fact, included information available to the public. The Agreement here may include items or information that are not truly confidential but does not do so necessarily. As the Magistrate Judge noted, the Agreement specifically excludes “information that the Company now or hereafter voluntarily disseminates to the public or that otherwise becomes part of the public domain through lawful means.” (FAC, Ex. 1, Sec. 8.) In other words, it does not contain an impermissible limitation on what constitutes public information. And, unlike Orca I, it does not define as confidential “any information” acquired by an employee while working for Plaintiffs.

IV. Conclusion

The Court will overrule the objections to the R & R. In addition, the Court has reviewed and considered the Motions to Dismiss, the responses, the. replies, the exhibits, and the R & R and, after an independent review, of the unobjected to portions of the R & R finds no clear error.

Accordingly,

IT IS ORDERED:

(1) The Report and Recommendation (Doc. 45) is ADOPTED;

(2) The pending motions (Docs. 22, 27, 30, and 34) are granted and denied as follows:

(a) Defendants Will and Fine’s Partial Motion to Dismiss (Doc. 22) is granted to the extent that Plaintiffs’ claims of unfair competition (Third Claim) and unjust enrichment (Fifth Claim) are dismissed. The motion is denied to the extent that they seek dismissal of claims under AUT-SA (Second Claim); claims for breach of contract (Fourth Claim); claims for breach of fiduciary duty/duty of loyalty (Sixth Claim); claims for civil conspiracy (Tenth Claim); and claims for aiding and abetting (Eleventh Claim);

(b) Defendant Impact Partnership’s Motion to Dismiss (Doc. 27) is granted;

(c) Defendant Godinez’ Partial Motion to Dismiss (Doc. 30) is granted; and

(d) Defendant Carly Uretz’ Motion to Dismiss (Doc. 34) is granted.

(3) Dismissed claims are dismissed with leave to amend, with the exception of certain claims for unfair competition (Third Claim). Claims for unfair competition regarding misappropriation of confidential information that do not rise to the level of a trade secret are dismissed with leave to amend; other claims for unfair competition are dismissed with prejudice.

(4) Plaintiffs may file a second amended complaint within 30 days of the date of this Order as set forth herein and in the Report and Recommendation.

REPORT & RECOMMENDATION

CHARLES R. PYLE, United States Magistrate Judge.

The following motions are pending before the Court: (1) Partial Motion to Dismiss filed by Defendants Jovan Will and Tree Fine (Doc. 22); (2) Motion to Dismiss filed by Defendant the Impact Partnership (Doc. 27); (3) Partial Motion to Dismiss filed by Defendants Fernando & Geovanna Godinez (Doc. 30); and (4) Motion to Dismiss filed by Defendant Carly Uretz (Doc. 34). The Motions came on for oral argument on November 13, 2014. For the following reasons, the Magistrate Judge recommends that the District Court, after its independent review: (1) deny in part and grant in party Defendant Will and Fine’s Partial Motion to Dismiss; (2) grant Defendant Impact Partnership’s Motion to Dismiss; (3) grant Defendant Godinez’ Partial Motion to Dismiss; and (4) grant Defendant Uretz’ Motion to Dismiss. Background

This case was removed from State Court and a First Amended Complaint (“FAC”) was subsequently filed as a matter of right pursuant to Fed.R.Civ.P. 15(a)(1). Plaintiffs are Joshua David Mell-berg, LLC, dba J.D. Mellberg Financial, and Joshua David Mellberg, an individual (collectively referred to . as “JDM” or “Plaintiffs”). Joshua David Mellberg is the owner and President of JDM. (FAC, ¶ 16). He is a nationally known financial advisor based in Tucson, Arizona, and “is a pioneer and leader in marketing and selling annuities via the Internet”. (Id. at ¶¶ 17, 18). JDM Mellberg Financial is a nationwide retail and wholesale insurance agency specializing “in capturing internet based leads and supplying them to a network of agents across the country. JDM began developing internet based marketing and sales funnels in 2009.” (FAC, ¶ 22; see also id. at ¶ 24 (JDM has expended in excess of $30 million refining its sales funnels)). JDM advertises and promotes the services and products that it offers, including annuities. (FAC, ¶¶ 20, 22). A significant portion of JDM’s advertising and promotional activities in the field of annuities is conducted on the internet. (Id. at ¶ 21).

The individual defendants are former employees of JDM.¹ Also named as a Defendant is The Impact Partnership, which is a business entity that some or all of the individual defendants are alleged to have joined or otherwise furthered the interests thereof. {See e.g., FAC, ¶¶ 62, 75, 87-88, 118,138).

JDM alleges the following claims for relief: (1) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (First Claim) against all Defendants; (2) violation of the Arizona Uniform Trade Secrets Act (“AUTSA”), A.R.S. § 44-401, et. seq., against alj Defendants (Second Claim); (3) unfair competition against all Defendants (Third Claim); (4) breach of contract against Defendants Fine, Arceo and Godi-nez (Fourth Claim); (5) unjust enrichment against all Defendants (Fifth Claim); (6) breach of fiduciary duty/duty of loyalty against Defendants Fine and Will (Sixth Claim); (7) breach of duties regarding Alpha Academy Advisors, LLC, against Defendant Will (Seventh Claim); (8) trespass to chattel against Defendant Fine (Eighth Claim); (9) theft/conversion against Defendant Fine (Ninth Claim); (10) civil conspiracy against all Defendants (Tenth Claim); and (11) aiding and abetting against all Defendants (Eleventh Claim).

Pursuant to Fed.R.Civ.P. 12(b)(6), Defendants Will², Fine³, Godinez⁴, Uretz⁵, and The Impact Partnership (referred to collectively as “all moving Defendants”) seek dismissal of JDM’s Second, Third, Fifth, Tenth, and Eleventh Claims for failure to state a claim. Additionally, Defendants Fine and Godinez seek dismissal of JDM’s Fourth Claim for relief for failure to state a claim, and Defendants Fine and Will seek dismissal of JDM’s Sixth Claim for relief for failure state a claim.

Standard

“Federal pleading rules call for ‘a short and plain statement of the claim showing that the pleader is entitled to relieff.]’ ” Johnson v. City of Shelby, Mississippi — U.S. -, 135 S.Ct. 346, 190 L.Ed.2d 309 (2014) (quoting Fed.R.Civ.P. 8(a)(2)). The complaint must contain a set of facts that serves to place the defendants on notice as to the nature and basis of the claims. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

“ ‘To survive a motion to dismiss [under Fed.R.Civ.P. 12(b)(6) ], a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face;’ that is, plaintiff must ‘plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir.2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)); see also Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th Cir.2009) (to defeat a motion to dismiss, the “non-conclusory ‘factual content,’ and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.”). Dismissal under Rule 12(b)(6) “can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.1990), abrogated on other grounds by Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

“[T]he tenet that a court must accept as true all of the allegations contained in a complaint ...” does not apply to legal conclusions. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937; see also Telesaurus, 623 F.3d. at 1003 (pleadings that are no more than legal conclusions “ ‘are not entitled to the assumption of truth.’ ” (quoting Iqbal, 556 U.S. at 679, 129 S.Ct. 1937).) Thus, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conelu-sory statements, do not suffice.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Moreover, the court “cannot assume any facts necessary to [the plaintiffs’] ... claim that they have not alleged.” Jack Russell Terrier Network of Northern Calif. v. American Kennel Club, Inc., 407 F.3d 1027, 1035 (9th Cir.2005).

However, the court will assume “ ‘well-pleaded factual allegations,’... to be true, ‘and then determine whether they plausibly give rise to an entitlement to relief.’ ” Telesaurus, 623 F.3d. at 1003 (quoting Iqbal, 556 U.S. at 679, 129 S.Ct. 1937); see also Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”). “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.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Determining plausibility is a “context-specific task ...” that requires the court to “draw on its judicial experience and common sense.” Id. at 679, 129 S.Ct. 1937. A complaint cannot survive dismissal where the court can only infer that a claim is merely possible rather than plausible. Id. Trade Secrets Claim against all Moving Defendants (Second Claim for Relief)

All moving Defendants contend that JDM’s AUTSA claim fails to satisfy the notice pleading requirement of Rule 8 of the Federal Rules of Civil Procedure. All moving Defendants also argue that JDM fails to state a claim under the AUTSA for the following reasons: (1) JDM has failed to allege facts showing their alleged trade secrets are actually trade secrets; (2) JDM merely alleges that the individual Defendants gained “general knowledge and skills” while working at JDM and are using those skills to compete; (3) JDM fails to allege facts showing that it made reasonable efforts to maintain the secrecy of the information to which the individual Defendants had access; and (4) JDM fails to allege facts showing Defendants misappropriated the trade secrets.

“To establish a claim for misappropriation of a trade secret, the [plaintiff] must first prove a legally protectable trade secret exists. Arizona has adopted the Uniform Trade Secrets Act ..., which codifies the basic principles of common law trade secret protection.” Calisi v. Unified Financial Servs., LLC., 232 Ariz. 103, 106, 302 P.3d 628, 631 (App.2013). Further, the plaintiff must allege that the defendant misappropriated the trade secret through improper means. HTS, Inc. v. Boley, 954 F.Supp.2d 927, 943 (D.Ariz.2013).

Under AUTSA a “trade secret” is: information, including a formula, pattern, compilation, program, device, method, technique or process, that both: (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.

(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

A.R.S. § 44-401(4). “Whether a trade secret exists is a mixed question of law and fact.” Calisi, 232 Ariz. at 106, 302 P.3d at 631.

AUTSA defines “misappropriation” as either:

(a) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means.

(b) Disclosure or use of a trade secret of another without express or implied consent by a person who either:

(i) Used improper means to acquire knowledge of the trade secret.

(ii) At the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was derived from or through a person who had utilized improper means to acquire it, was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use or was derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use.

(iii) Before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

A.R.S. § 44-401(2). Finally, AUTSA defines “improper means” as including:

theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy or espionage through electronic or other means.

A.R.S. § 44-401(1).

It is well-settled that “the policy supporting trade-secret law is to balance this public interest in competition in the workplace with the need for commercial ethics.” Enterprise Leasing Co. of Phoenix v. Ehmke, 197 Ariz. 144, 151, 3 P.3d 1064, 1070 (App.2000) (citing Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 481-82, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974) (other citations omitted)).

JDM’s theory of the case is that the individual Defendants, who are JDM’s former employees, “devised a scheme to steal JDM’s trade secrets and confidential information, attempted to destroy evidence of their theft, and are now using that stolen information in a competing venture.” (See e.g. JDM’s Opposition to Defendant Godi-nez’ Partial Motion to Dismiss (Doc. 38, p. 2)⁶; (see e.g., FAC, ¶¶ 11, 61, 75, 87, 88, 122)). JDM contends that the FAC alleges specific and individualized facts to place all moving Defendants on notice of the claims against them.

At the outset, the Magistrate Judge addresses the issue of protection of trade secrets and economic advantage which is common to the motions filed by Defendants Will, Fine, Godinez, and Uretz.

Protection of Trade Secrets. Defendants Will, Fine, Godinez, and Uretz argue that JDM fails to plead sufficient facts to establish that JDM took reasonable efforts to maintain the secrecy of the alleged trade secrets. “Just as the trade secret’s owner is obliged to establish that the matter is secret, it must also show that it exercised reasonable care to safeguard the secret.” Ehmke, 197 Ariz. at 150, 3 P.3d at 1070 (citing A.R.S. § 44-401(4)(b)). Thus, “the most important factor in gaining trade-secret protection is demonstrating that the owner has taken such precautions as are reasonable under the circumstances to preserve the secrecy of the information.” Id. (citation omitted). To satisfy this requirement, the plaintiff need only “show that it made reasonable efforts to maintain the secrecy of the information such as to ensure that it would be difficult for others to discover the information without using improper means.” Id.; see also id., 197 Ariz. at 151, 3 P.3d at 1071; Sunshine Media Group, Inc. v. Goldberg, 2010 WL 2899081, *5 (D.Ariz. July 22, 2010) (complaint survived motion to dismiss where plaintiffs alleged that manual containing trade secretes was stamped “confidential” on each page in bold and employees were required to sign a confidentiality agreement). Further, “the owner of a trade secret does not relinquish its secret by disclosure to employees on a necessary basis or by limited publication for a restricted purpose.” Ehmke, 197 Ariz. at 150, 3 P.3d at 1070 (citation omitted).

In the FAC, JDM sets out “some of the security measures invoked ... to protect its confidential information and trade secrets .... ” (FAC, ¶ 30; see also ¶ 31). Contrary to Defendants’ protestations, the measures are not mere formulaic recitations but are specific to JDM. Given that JDM has listed several measures to ensure .secrecy, Defendants’ arguments that not all employees were required to sign confidentiality agreements is an argument for summary judgment, not a motion to dismiss. JDM has sufficiently alleged that reasonable efforts have been made to keep the information secret.

Economic Advantage. Defendants argue that the FAC fails to set out facts plausibly suggesting JDM derived economic value from the alleged trade secrets not being generally known to others.

Independent economic value can be shown by “circumstantial evidence of the resources invested in producing the information, the precautions taken to protect its secrecy, and the willingness of others to pay for its access.” Religious Tech. Ctr. v. Netcom On-Line Commc’n Servs., Inc., 923 F.Supp. 1231, 1253 (N.D.Cal.1995) (citations omitted). “[IJnformation can have independent economic value even if there is no actual product on the market utilizing the information.” Leatt Corp. v. Innovative Safety Tech., LLC, No. 09-1301, 2010 U.S. Dist. LEXIS 37382, at *18, 2010 WL 1526382 [*6], (S.D.Cal. Apr. 15, 2010). Indeed, information can have independent economic value even if its value comes from a “negative” standpoint, such as “the results of lengthy and expensive research which proves that a certain process will not work....” Courtesy Temp. Serv. v. Camacho, 222 Cal.App.3d 1278, 1287, 272 Cal.Rptr. 352 (Cal.Ct.App.1990) (citation and quotations omitted).

Spring Design, Inc. v. Barnesandnoble.com, LLC, 2010 WL 5422556, *5 (N.D.Cal. Dec. 27, 2010).

JDM alleges that it began developing internet based marketing and sales funnels in 2009, has expended over $30 million refining its sales funnels, and its “business advantage is derived in part from confidential and proprietary information and practice, and from trade secrets that it has developed in its long history of business[ ]”. (FAC, ¶¶ 22-24, 24(a)-24(k)). JDM also alleges that it derives significant economic value from the fact that its confidential information and trade secrets are not known to its competitors and cannot be readily ascertained from public sources. (FAC, 1Í26). According, to JDM its business advantage is derived, in part, from its relationships with customers and potential customers, for its agent training materials, agent support and marketing services, and its reputation with those customers and potential customers. (FAC, ¶27). JDM persuasively points out that the allegations in the FAC, “combined with the ... fact that the Plaintiffs are businesses ..., plausibly suggest that the trade secrets [at issue] have economic value.” (Doc. 38, p. 14). JDM’s allegations satisfy sufficiently allege economic advantage in support of its misappropriation claim.

Alleged trade secrets. “A plaintiff seeking relief for misappropriation of trade secrets must describe the ‘subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons ... skilled in the trade.’ ” HTS Inc., 954 F.Supp.2d at 944 (quoting Imax Corp. v. Cinema Tech. Inc., 152 F.3d 1161, 1164-65 (9th Cir.1998) (internal citations omitted)). In the FAC, JDM specifically identifies “[t]he confidential information and trade secrets regarding JDM’s sales and marketing funnels .... ” (See FAC, ¶ 24(a)-(k)). The allegations include:

Pay per click advertising designed to convert views to website visits that has been put through a rigorous compliance process developed specifically for JDM for this type of product and industry. Pay per click advertising must create a response based upon just a few key words or phrases.

(FAC, ¶ 24(a));

Knowing when and where to use pay per click advertising to increase consumer response and decrease advertising costs. Incredible amounts of money can be wasted by advertising at the wrong place or time. Knowing what words, word combinations, phrases, titles, topics on what websites or combination of websites at different times of the day, week, or month is critical. This has taken JDM years to develop at tremendous expense — JDM has spent over $30 million on such advertising.

(FAC, ¶ 24(b));

E-mails designed to convert to website visits that have been put through a rigorous compliance process developed specifically for this type of product and industry. Development includes knowing what copy to use in the subject line, what headlines to use, what copy to use for the body of the e-mail, and what calls to action to sue [sic]. If any one of these factors is missing or “off’, then the entire e-mail may be ineffective. Development also includes knowing what topics to use relative to current events and how to blend different topics for best response.

(FAC, ¶ 24(c));

Knowing when and where to use e-mail advertising to increase consumer response and decrease advertising- costs. E-mails must be sent to the right demographics, at the right time (relative to time of day, current events, and days of the week also taking into account holidays). This has also taken years to develop at great expense.

(FAC, ¶ 24(d));

Website landing pages [of which] ... [c]ritieal components include specific words, phrases, titles, topics, and videos as well as almost innumerable combinations of them. Each component has been tested and tracked to determine what gets the best response from consumers taking into account variables such at [sic] what e-mails and pay per click ads they are used in conjunction with.

(FAC, 24(e));

... Call center staffing and activity [which] must be closely coordinated to current advertising volume and message. All aspects of call center performance have been tracked and measured to improve performance including call response times, time of day, clients called, number of clients called, number of times clients called, frequency of client calls, coordinating client calls with emails and timing of appointments set.

(FAC, ¶ 24(f));

Training for financial advisors that teaches them JDM’s sales process, including specific messaging for each appointment with the client. Critical aspects include what to say to clients under different circumstances, at what stage in the sale process to introduce different concepts, income planning to maximize value to the client, and the psychology of annuity buyers.

(FAC, ¶ 24(j); see also FAC, 1Hi24(g)-(h) and (k) (regarding sales processes and training techniques)).

Defendants Will, Fine, Godinez, and Ur-etz take issue with the fact that JDM combines reference to “confidential information and trade secrets” in the same allegation, asserting that that the FAC fails to put them on notice as to what the actual trade secrets are that they are alleged to have misappropriated. However, as discussed below, JDM does not rely on paragraph 24 and its sub-parts, alone, to identify the trade secrets that Defendants Will, Fine, Godinez and Uretz are alleged to have misappropriated. Instead, JDM asserts that Defendants Will, Fine, Godi-nez, and Uretz misappropriated the physical manifestations of trade secrets. Because the information that each of the individual moving defendants is alleged to have misappropriated is, for the most part, unique to the individual, the Magistrate Judge discusses each motion to dismiss the AUTSA claim separately with regard to the each of the moving Defendants.

Defendants Will and Fine’s Motion to Dismiss AUTSA Claim. At the outset, Defendants Will and Fine contend that “[a]s a matter of law” websites, website design, internet advertising, and keywords cannot be considered trade secrets. (Doc. 36, p. 3 (citing Wyatt Technology Corp. v. Malvern Instruments, Inc., 2009 WL 2365647, *21 (C.D.Cal. July 29, 2009), aff'd 526 Fed.Appx. 761 (9th Cir.2013))). However, Wyatt was decided on summary judgment and the court relied on affidavits to conclude that “relevant search terms of the ... industry and other keywords are publicly disclosed and publicly accessible.” Wyatt Technology Corp., 2009 WL 2365647 at *21 (citing affidavits for conclusion that website is public, keywords are publicly accessible, and other competitors use the same phrasing on their websites). Defendants Will and Fine assert that “[t]he Court may take judicial notice ... that the so-called ‘secrets’ to successful pay per click and e-mail advertising and website landing pages, are readily available to anyone who enters those very terms in a ‘Google’ search.” (Doc. 29, p. 3 n. 2) At best, Defendants’ arguments on this issue are premature at this stage in the litigation.

JDM asserts in its Opposition to Defendant Will and Fine’s Motion that the allegations are “not that Defendants have simply misappropriated the ideas or secrets behind Plaintiffs’ various trade secrets, but that Defendants have systematically and wrongfully misappropriated the physical manifestations of Plaintiffs’ trade secrets.” (JDM’s Opposition to Defendant Will and Fine’s Motion (Doc. 29, p. 4) (citing FAC, ¶¶ 24-27, 39, 55-58, 61, 64, 69, 75, 96, 114, 115,117,119,121)).⁷

As to Defendant Will, JDM alleges that he “had access to” confidential client and marketing lists and access to the confidential client/agent list of Advisor Excel, which is a product partner/vender to JDM (FAC, ¶ 39; see also FAC, ¶ 38), hosted an unauthorized webinar using JDM proprietary materials, (FAC, ¶¶ 47, 48), and post-employment with JDM, gained unauthorized access to “JDM web domáins and, with that access secured, in November, 2013 ... illegally downloaded the content of those sites, including all of JDM’s training and educational videos[ ]” (FAC, ¶¶ 121-120). JDM stresses, “at the pleading stage, what matters is that it is ‘plausible on its face’ that these items constitute protectable trade secrets.” (Doc. 29, p. 4). This Court agrees. “[A] trade secret may consist of a compilation of information that is continuously used or has the potential to be used in one’s business and that gives one an opportunity to obtain an advantage over competitors who do not know of or use it.” Ehmke, 197 Ariz. at 148, 151, 3 P.3d at 1068 (holding car rental company’s worksheet, reflecting substantial market-research investment by plaintiff delineating factors helpful to managing a successful branch office, “as a whole is an original product containing an arrangement of factors that provides [plaintiff] a competitive advantage” unique to the plaintiff); see also Prudential Ins. Co. v. Pochiro, 153 Ariz. 368, 371, 736 P.2d 1180, 1183 (App.1987) (“ ‘A list of customers, if their trade and patronage have been secured by years of business effort and advertising and the expenditure of time and money, constitutes an important part of a business and is in the nature of a trade secret.’ ”) (quoting Town & Country House & Homes Service, Inc. v. Evans, 150 Conn. 314, 319, 189 A.2d 390, 393-394 (1963)); Amex Distributing Co., Inc. v. Mascari, 150 Ariz. 510, 516, 724 P.2d 596, 602 (1986) (“[i]f customer information is truly confidential, and to a substantial degree inaccessible, it may be given a measure of the protection accorded true trade secrets .... ”). The allegations set out in the FAC place Defendant Will on notice of the claim asserted against him and sets forth sufficient facts to support JDM’s claim that trade secrets are at issue.

JDM also alleges that Defendant Fine misappropriated physical manifestations of JDM’s trade secrets. (Doc. 29, pp. 4,11-12). JDM alleges that before leaving JDM’s employ, Defendant Fine “caused a forensic wipe of the hard drive on his JDM-assigned desktop computer to occur.” (FAC, ¶ 55). As a result of the thoroughness of the hard wipe, no data can be recovered from the computer and “the body of work Defendant Fine had performed for JDM over the last three (3) plus-years was largely destroyed, including spreadsheets that documented the relative cost-effectiveness and profitability of all of JDM’s historical ADWords marketing, including information such as cost per click, cost per lead conversion, cost per appointment, average size of policy generated, revenue per key word per marketing channel, and profit per key work [sic] per marketing channel.” (Id.; see also FAC, ¶¶ 56-58 (Defendant Fine also caused a wipe of a secondary hard drive on his JDM desktop computer and his JDM assigned notebook computer)). JDM alleges that “prior to wiping the data, Fine misappropriated [JDM’s] ... trade secrets, including but not limited to its Internet advertising data, so that he could use these trade secrets in conjunction with his planned new competing business venture [sic] Defendants Will and Impact.” (FAC, ¶ 61 see also FAC, ¶¶ 64-65). JDM also alleges that Defendant Fine “caused some or the entire work product that he had performed for JDM to be transferred to Defendants Impact and Will and is using such proprietary work product and trade secret information in his current work with Defendant Impact.” (FAC, ¶ 75).

At oral argument, counsel for JDM explained that the information destroyed by Defendant Fine’s wipe of JDM’s hard drives, and the information that JDM alleges Defendant Fine is using in his new venture is based on data collected over the years by JDM and that such data show which leads actually work and how they work and what has been most effective most of the time, and that this information constitute trade secrets. The FAC supports this assertion. See FAC, ¶¶ 22-23 (JDM began developing internet based marketing and sales funnels in 2009 and, to date, has expended in excess of $30 million refining its sales funnels); FAC, ¶ 24 (describing knowledge JDM has “developed in its long history of business.”); FAC, ¶ 1 (JDM has operated since 2004 in its current area). JDM has sufficiently alleged facts that support a claim that the information Defendant Fine allegedly misappropriated constitutes trade secrets. See e.g. W.L. Gore & Assocs., Inc. v. GI Dynamics, Inc., 2010 WL 5184254, *8 (D.Ariz.2010) (declining to dismiss allegation that information plaintiff “disclosed about ... [ Approaches that were successful and approaches that were not successful ... [ ]” in product development constituted trade secrets); Ehmke, 197 Ariz. at 150, 3 P.3d at 1070 (trade secret protection can extend to “market research”). The allegations set out in the FAC place Defendant Fine on notice of the claim asserted against him and sets forth sufficient facts to support JDM’s claim that trade secrets are at issue.

General Knowledge. Defendants Will and Fine argue that even if JDM’s AUTSA claim satisfies Rule 8 pleading requirements, “that count must still be dismissed because the facts alleged show nothing more than that Moving Defendants gained skills and general knowledge from Plaintiffs concerning internet-based marketing and used that knowledge to subsequently compete with Plaintiffs.” (Doc. 23, p. 5 (citing HTS Inc., 954 F.Supp.2d at 944) (the claim must describe the “subject matter of the trade secret with specific particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons ... skilled in the trade.”)).

“Under Arizona law, ‘matters of general knowledge cannot be appropriated as secret, [however,] a trade secret may consist of a combination of elements even though each individual component may be a matter of common knowledge.’ ” HTS, Inc., 954 F.Supp.2d at 944 (quoting Imax Corp., 152 F.3d at 1164-65). Further, “ ‘[a] former agent may use skills and more general knowledge, although learned in the course of work done for the former principal,’ in the course of competition.” Taser Int’l, Inc. v. Ward, 224 Ariz. 389, 397, 231 P.3d 921, 929 (App.2010) (quoting Restatement 3d Agency § 804 cmt. c (2006)) (denying summary judgment because dispute of fact existed as to whether defendant used trade secret information); see also Mascari, 150 Ariz. at 516, 724 P.2d at 602 (“One who has worked in a particular field cannot be compelled to erase from his mind all of the general skills, knowledge and expertise acquired through his experience. These skills are valuable to such employee in the market place for his services.”).

JDM asserts that the individual Defendants misappropriated “the physical manifestations of Plaintiffs’ trade secrets[]”. (Doc. 29, p. 11). JDM points to its allegations identifying specific information misappropriated by Defendants’ Will and Fine which is discussed in detail above.

There is no question that information that “encompasses basic general principles for the aggressive pursuit of success in a highly competitive field of business .... The essentials of these (know the customer, be constantly aware of his concerns, keep in regular frequent contact, limit conversations to relevant business, etc.), are clearly in the public domain[]” and do not qualify as trade secrets. Mascari, 150 Ariz. at 516, 724 P.2d at 602. There is simply no basis to believe that the information that Defendants Will and Fine are alleged to have misappropriated, which includes client lists, training information, or data reflecting effectiveness of methods and strategies for internet advertising or calls, or other marketing all unique to JDM are general knowledge. To the contrary, JDM alleges that the information that Defendants Will and Fine misappropriated was arrived at after JDM’s years of development of data related to sales and marketing funnels. The allegations in the FAC plausibly suggest that the information at issue is not mere general knowledge but was derived after analysis and compilation of data by JDM. See e.g. Ehmke, 197 Ariz. at 150, 3 P.3d at 1070 (trade secret protection can extend to “market research”); Prudential Ins. Co., 153 Ariz. at 371, 736 P.2d at 1183 (trade secret protection can extend to client lists) Mascari, 150 Ariz. at 516, 724 P.2d at 602 (same). Indeed, as JDM persuasively point out, “if Defendants [Will and Fine] were merely misappropriating general skills and knowledge then they presumably would not have needed to go to the lengths they did to steal the physical embodiments of Plaintiffs’ trade secrets.” (Doc. 29, p. 12). Dismissal on the issue of whether the information is mere general knowledge is not appropriate at this stage in the proceeding.

Misappropriation. Defendants Will and Fine argue for the first time in their Reply that JDM’s allegations fail to meet, the statutory definition of misappropriation. (Defendant Will and Fine’s Reply (Doc. 36, p. 4)). Defendants assert, and the Magistrate Judge agrees, that Defendant Will having “access” to client lists, or Defendant Fine taking internet advertising data so “he could use it” in a planned new competing venture, and even Defendant Fine’s forensic wipe of JDM hard drives, may not necessarily constitute misappropriation. Id. at pp. 4-5 (citing Pellerin v. Honeywell Int’l Inc., 877 F.Supp.2d 983, 989 (S.D.Cal.2012) (allegation that defendant had access to and acquired plaintiffs trade secret information is insufficient to establish misappropriation); Eletronic Planroom, Inc. v. The McGraw-Hill Companies, Inc., 135 F.Supp.2d 805 (E.D.Mich.2001) (on summary judgment, defendant’s deletion and copying of trade secret information, alone, is not enough; defendant must have actually used this information)). In Pellerin, the court dismissed a counterclaim of misappropriation of trade secrets where the counterclaimant failed to allege any facts in support of a legal conclusion that plaintiffs “ ‘used and/or disclosed’ and ‘acquired and/or used’ [counterclaimant’s] trade secrets or confidential information.” Pellerin, 877 F.Supp.2d at 990.

Here, the FAC alleges that Defendant Fine, prior to deleting the information, misappropriated JDM’s trade secrets, including but not limited to marketing data, so that he could use these trade secrets in conjunction with a competing business venture with Defendants Will and Impact Partnerhsip. (FAC, ¶ 61). Further, JDM learned in February 2014 “that Defendants Will and Fine had associated themselves with Defendant Impact and that Defendant Impact was in the process of launching an Internet marketing portal for insurance and annuity agents that would compete directly with JDM’s Internet marketing portal.” (FAC, ¶ 62). JDM also alleges that Defendant Will approached Defendant “Impact Partnership to launch a web-based lead program that mirrors the JDM program and that clients and agents of Advisors Excel have received marketing regarding the lead program. JDM’s internal advisors also received this marketing.” (FAC, ¶ 122). Further, “Defendant Will launched several websites very similar to JDM sites.... ” (FAC, ¶ 124) and one of his websites “is purchasing AdWords and keywords identical in name, pattern, and volume to the purchases conducted by Defendant Fine in his former role as Marketing Director at JDM.” (FAC, ¶ 126). The allegations plausibly suggest that Defendants Will and Fine not only had access to trade secret information, but that they have acquired that information and are using it as well. Consequently, JDM has sufficiently alleged misappropriation by Defendants Will and Fine.

Conclusion. Defendant Will and Fine’s motion to dismiss the AUTSA claim should be denied.

Dependant Godinez’ Motion to Dismiss AUTSA Claim. JDM alleges that during Defendant Godinez’ tenure as Creative Programming Specialist and later, during his 2-day stint as Marketing Manager, he “had access' to confidential and proprietary information” and “was responsible for overseeing the design and implementation of advertising campaigns and media buys. He was responsible for measuring the effectiveness of money spent on advertising per campaign and tracked all consumer response and lead flow. Defendant Godinez’ responsibilities were such that he had oversight of some of the most critical and proprietary information relative to JDM’s marketing and sales funnels.” (FAC, ¶ 93). JDM links Defendant Godinez to Defendant Will by alleging that while both were at JDM, they “worked together using JDM resources during work hours on websites similar to those of JDM to attract other insurance clients” and Defendant Godinez contacted JDM’s advertising vendors to assist in this effort, which resulted in Defendants Will and Go-dinez “launching competing websites and competing advertising.” (FAC, ¶ 98 (identifying competing websites allegedly developed by Defendants Godinez and Will)). JDM alleges that while still employed at JDM, Defendant Godinez made proactive efforts to conceal and destroy evidence of wrongdoing on behalf of Defendant Will and also deleted numerous files from his own computer to hide his misconduct. (FAC, ¶¶ 99-100). JDM further alleges that after leaving JDM’s employment, Defendant Godinez “has collaborated with Defendants Will, Fine, Arceo and Uretz to copy JDM’s sales and marketing programs.” (FAC, ¶ 96).

To state a claim for misappropriation of trade secrets, courts have found sufficient allegations that a defendant misappropriated strategies and plans for advertising and marketing. See e.g. Lepton Labs, LLC v. Walker, 55 F.Supp.3d 1230, 1237-38 (C.D.Cal.2014); Fire ’Em Up, Inc. v. Technocarb Equip. (2001) Ltd., 799 F.Supp.2d 846, 850 (N.D.Ill.2011) (citations omitted) (holding same but ultimately dismissing claim because, on the facts of that case, plaintiff failed to sufficiently allege that the secrecy of the information was adequately maintained). Such a conclusion is consistent with the Ehmke court’s holding that trade secret protection extends to sensitive internal economic records. See Ehmke, 197 Ariz. at 149-150, 3 P.3d at 1070. Thus, the allegations set out in the FAC place Defendant Godinez on notice of the claim asserted against him and sets forth sufficient facts to support JDM’s claim that trade secrets are at issue.

Defendant Godinez challenges the plausibility of the allegations against him by taking issue with JDM’s assertions that he concealed and destroyed evidence of Defendant Will’s wrongdoing and notified Defendant Will of JDM’s investigation of Defendant Will’s actions. Defendant Godinez points out that he resigned from JDM in July 2013 (FAC, ¶¶ 49-50) and Defendant Will’s wrongdoing occurred after July 19, 2013 and, in some instances, was not discovered until January and February 2014. (Defendant Godinez’ Reply (Doc. 40, p. 3)). The precise date in July 2013 Defendant Godinez resigned is not alleged in the FAC. Further, the date in July 2013 that Defendant Will hosted an unauthorized webinar is not alleged. Nonetheless, most germane to JDM’s claim linking Defendants Godinez’ and Will’s post-JDM employment efforts together is, that while at JDM they worked together using JDM resources to create ventures that competed against JDM. {See FAC, ¶ 97). At bottom, the allegations at paragraph 97 nudge “across the line from conceivable to plausible”, Iqbal, 556 U.S. at 680, 129 S.Ct. 1937, the allegation that the two continued to collaborate in competing with JDM after leaving JDM’s employment.

Misappropriation. JDM’s claim is lacking, however, in establishing misappropriation by Defendant Godinez. Although JDM alleges that Defendant Will “had approached The Impact Partnership to launch a web-based lead program that mirrors the JDM program ... ”, marketed same to clients and agents of Advisors Excel, launched his own websites similar to JDM, and purchased AdWords and keywords identical in name, pattern, and volume to the purchases made by Defendant Fine while at JDM (FAC, ¶¶ 122,124,126), JDM’s allegations make no suggestion that any trade secret information obtained from Defendant Godinez after he left JDM’s employment played a role in any of this. Instead, the allegations plausibly suggest that in his actions alleged at paragraphs 122, 124 and 126, Defendant Will relied on such information as client lists, to which JDM alleges he had access, and to information obtained from Defendant Fine. Because JDM fails to allege facts supporting the allegation in paragraph 96 that Defendant Godinez actually misappropriated any trade secrets, including sales and marketing programs, in collaboration with the individual Defendants, JDM’s AUTSA claim against Defendant Godinez should be dismissed for failure to state a claim. Conclusion. Defendant Godinez’ motion to dismiss the AUTSA claim for failure to state a claim should be granted.

DEFENDANT ÜRETZ’ MOTION TO DISMISS AUTSA Claim. JDM alleges that Defendant Uretz, as a Copywriter, was responsible for developing content for all advertising and that during her tenure at JDM, she “had exposure and access to ... some of the most critical and proprietary information relative to JDM’s marketing and sales funnels.” (FAC, ¶¶ 107, 111; see also FAC, ¶ 107 (“While the copy that Defendant Uretz developed appeared in the public domain, the measured effectiveness of the copy is confidential and proprietary information.”)). After Defendant Uretz’ termination, for refusal to sign a non-compete agreement, JDM alleges that it discovered that Defendant Uretz “had sent confidential and proprietary materials from her JDM email to her personal email account prior to her termination.” (FAC, ¶ 115). The information Defendant Uretz emailed to her personal account “included ongoing work projects, documentation of the JDM advisor recruiting process and initial contact letter, contact information and pricing for third party vendors, nonpublic advertising copy still in development, and advertising copy associated with third party vendors[]” and there was no business justification for sending herself this information. (FAC, ¶ 115; see also FAC, ¶ 116 (valuing such information in excess of $1 million)). JDM alleges that Defendant Uretz has collaborated with the other individual Defendants “to copy JDM’s sales and marketing programs.” (FAC, ¶ 117). JDM also alleges that it has “learned from its current clients that Defendant Uretz, in conjunction with Defendant Fine, has been contacting JDM clients in an effort to recruit them to Impact Partnership.” (FAC, ¶ 118).

The allegations at paragraph 115 sufficiently place Defendant Uretz on notice as to what information she is alleged to have misappropriated. However, even assuming that all or some of the information Defendant Uretz emailed herself constitute trade secrets, there are no allegations to support the conclusion that Defendant Ur-etz has used or disclosed that information. The allegations that at some point during her two-year tenure at JDM that she emailed information to her personal account, and post-JDM employment, she has associated herself with Defendant Impact Partnership do not plausibly support the conclusion that she collaborated with others to copy JDM’s sales and marketing programs. Furthermore, although JDM alleges that Defendant Uretz, in her association with Defendant Impact Partnership, has contacted JDM clients, there is no allegation that she misappropriated JDM’s client lists. JDM’s allegations that Defendant Uretz misappropriated trade secrets are insufficient to raise JDM’s right to relief under AUTSA above the speculative level. Consequently, JDM’s AUTSA claim against Defendant Uretz should be dismissed for failure to state a claim.

Conclusion. Defendant Uretz’ motion to dismiss the AUTSA claim for failure to state a claim should be granted.

Defendant Impact Partnership’s Motion to Dismiss AUTSA Claim. The parties agree that JDM must allege facts supporting the conclusion that Defendant Impact Partnership knew or had reason to know that it was using trade secrets acquired by improper means. (See Defendant Impact Partnership’s Motion to Dismiss (Doc. 27, p. 4) (citing A.R.S. § 44-401(2)(b)(ii)); JDM’s Opposition to Defendant Impact Partnership’s Motion to Dismiss (Doc. 33, p. 8)).

Many of the allegations involving Defendant Impact Partnership appear in the portion of the FAC captioned “Defendant Fine’s Misconduct”. JDM alleges that Defendants Fine and Will “associated themselves with Defendant Impact Partnership and that Defendant Impact was in the process of launching an Internet marketing portal for insurance and annuity agents that would compete directly with JDM’s Internet marketing portal.” (FAC, ¶ 62). In the next paragraph, JDM refers to “Defendants’ competing www. annuityangel.com website” which purchased AdWords and keywords identical in nature, pattern, and volume to the purchases conducted by Defendant Fine in his former role as Marketing Director at JDM (FAC, ¶ 63) (emphasis added); however elsewhere in the FAC, JDM alleges that it was Defendant Will who launched that particular website and makes no reference to Defendant Impact Partnership. (See FAC, ¶ 124). In outlining Defendant Fine’s misconduct, JDM next alleges that “Defendants had formed a new Georgia limited liability company, JFI, LLC (“JFI”), that was upon information and belief, created to market and promote their Internet marketing portal for insurance and annuity agents to be based on JDM’s stolen trade secrets, including data removed from the JDM computer hard drive that Defendant Fine subsequently caused to be destroyed.” (FAC, ¶ 64). It is not clear which Defendants, other than perhaps Defendant Fine since the allegation is in a section detailing his alleged misconduct, created JFI. As Defendant Impact Partnership points out, there is no allegation that The Impact Partnership is a member of JFI, LLC, or has any role whatsoever in managing it. (Defendant Impact Partnership’s Reply, (Doc. 37, p. 5)). In deciding a motion to dismiss, the court is not permitted to assume any facts necessary to the plaintiffs claim that the plaintiff has not alleged. American Kennel Club, Inc., 407 F.3d at 1035.

Defendant Impact Partnership persuasively points out that while, at best, JDM’s allegations are that the individual defendants in the course of their work with Defendant Impact Partnership used trade secret information, there are no facts showing that Defendant Impact Partnership had any knowledge whatsoever regarding the information purportedly used. (See Doc. 37, p. 5 n. 5; see also id. at p. 5 (“Plaintiffs rely, on their allegations that other defendants misappropriated trade secrets and are now working with The Impact Partnership.... ”)) (emphasis in original). JDM cites Morlife, Inc. v. Perry, 56 Cal.App.4th 1514, 66 Cal.Rptr.2d 731 (1997) for the premise that former employees and “corporate entity they joined to compete with former employer ... ‘jointly misappropriated’ [the plaintiffs] customer list by using their knowledge about [the plaintiffs] customers to actively ‘solicit’ customers for [the corporate entity.]’ ” (Doc. 33, p. 10 (quoting Morlife, 56 Cal.App.4th at 1523-24, 66 Cal.Rptr.2d 731)). In Morlife, the defendant employees formed the competing business with another person and then used the former employer’s customer list to solicit customers. Here, there are no similar allegations with regard to the individual Defendants and Defendant Impact Partnership.

While it is conceivable that Defendant Impact Partnership may know or have reason to know that the information that Defendants Arceo, Will and Fine allegedly have used to the benefit of Defendant Impact Partnership constitutes JDM trade secrets, the allegations of the FAC, without more, fail to nudge JDM’s claim of AUTSA violation “ ‘across the line from conceivable to plausible.’ ” Somers v. Apple, 729 F.3d 953, 966 (9th Cir.2013) (quoting Iqbal, 556 U.S. at 680, 129 S.Ct. 1937); see e.g. Forest Labs., Inc. v. Pillsbury Co., 452 F.2d 621, 626 (7th Cir.1971) (the knowledge of trade secrets of former employees “cannot properly be imputed to [corporation that purchased employees’ former corporation] just because they went to work for ... ” the purchasing corporation). JDM fails to state an AUTSA claim against Defendant Impact Partnership.

Conclusion. Defendant Impact Partnership’s motion to dismiss the AUTSA claim for failure to state a claim should be granted.

unfair Competition alleged against all Moving Defendants (Third Claim for Relief)

JDM alleges, inter alia, that all Defendants “have engaged in unlawful business acts or practices by committing acts including computer fraud, trespass, conversion, and other illegal acts and practices as alleged above [i.e. AUTSA claim] ... ”, in effort to gain unfair competitive advantage over JDM. (FAC, ¶ 147). Defendants primarily raise two challenges to JDM’s claim: first that the claim is pre-empted by AUTSA; and second, that JDM fails to allege public confusion.

As to pre-emption, AUTSA “creates an exclusive cause of action — and displaces conflicting causes of action — for claims based on the misappropriation of trade secrets.” Orca Commc’ns Unlimited, LLC v. Noder, 236 Ariz. 180, 181, 337 P.3d 545, 546 (2014) (Orea II). After briefing and oral argument occurred on the pending motions, the Arizona Supreme Court held that AUTSA “does not displace common-law claims based on alleged misappropriation of confidential information that is not a trade secret.” Id. The court, which was reviewing the lower courts’ decision on a motion to dismiss, declined to “decide today what aspects, if any, of the confidential information alleged in [the plaintiffs] unfair-competition claim might fall within AUTSA’s broad definition of ‘trade secret’ and therefore be displaced .... That determination will not hinge on the claim’s label, but rather will depend on discovery and further litigation that has not yet occurred.” Id. at 184, 337 P.3d at 549 (citations omitted). The court also declined to decide whether Arizona recognizes a common-law claim for unfair competition as alleged in the complaint. Id. In light of Orea II, it cannot be said at this point in the litigation that JDM’s claim is preempted by AUTSA to the extent it may involve confidential information that are not trade secrets.

The next question is whether JDM must allege public confusion to state an unfair competition claim. “In order to maintain an action for unfair competition under Arizona law, [the plaintiff] must either show that it was engaged in competitive business with [the defendant] Lininger v. Desert Lodge, 63 Ariz. 239, 160 P.2d 761, 764 (1945), or that [the defendant’s] actions were likely to produce public confusion, Taylor v. Quebedeaux, 126 Ariz. 515, 617 P.2d 23, 24 (1980).” Sutter Home Winery, Inc. v. Vintage Selections, Ltd., 971 F.2d 401, 407 (9th Cir.1992). The District Court for the District of Arizona has observed that:

The Arizona Court of Appeals has held that the common law doctrine of unfair competition “encompasses several tort theories, such as trademark infringement, false advertising, ‘palming off,’ and misappropriation.” Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, 970 P.2d 954, 956 (Ariz.Ct.App.1998) (citing W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 130 (5th ed.1984)). “[T]he central tort in unfair competition at common law is known as ‘palming off,’ or ‘passing off [sic] It consists in a false representation tending to induce buyers to believe that the defendant’s product is that of the plaintiff ...” Id. Moreover, while collecting opinions and noting that “no inflexible rule can be stated as to what conduct will constitute unfair competition,” the Arizona Supreme Court held, “The universal test is whether the public is likely to be confused.” Boice v. Stevenson, 66 Ariz. 308, 187 P.2d 648, 653 (Ariz.1947)[⁸ ]; see also Sutter Home Winery, Inc. v. Vintage Selections, Ltd., 971 F.2d 401, 407 (9th Cir.1992) (explaining that, under Arizona law, an action for unfair competition requires the plaintiff to show either “that it was engaged in competitive business” with the defendant or that the defendant’s actions “were likely to produce public confusion” (citations omitted)).

Doe v. Arizona Hosp. and Healthcare Assoc., 2009 WL 1423378, *11 (D.Ariz. Mar. 19, 2009). • The Doe court dismissed a claim of unfair competition where the plaintiff failed to allege that the defendant’s actions were likely to cause public confusion because no Arizona case has ever held that the tort of unfair competition can exist in the absence of an allegation of public confusion. Id. The court went on to state that plaintiffs, whose main theory of unfair competition was based on alleged antitrust activity, did not “allege trademark infringement, false advertising, palming off, misappropriation, or any other actions that have been found to constitute unfair competition[ ]” in Arizona. Id. The court was “unwilling to find that Plaintiffs may maintain a theory of unfair competition that is entirely novel in Arizona.” Id.; See also ACT Group, Inc. v. Hamlin, 2012 WL 2976724, *8 (D.Ariz. July 20, 2012) (declining to entertain a theory of unfair competition that is novel to Arizona) (citing Doe, 2009 WL 1423378).

At oral argument, JDM conceded that the fundamental nature of its unfair competition does not rest upon a theory of public confusion. Instead, JDM argues that the allegation that JDM is engaged in competitive business with the Defendants is enough to state a claim. (See Doc. 29, p. 14).

ACT Group, is particularly instructive. In that case, the court held that the plaintiff failed to establish unfair competition based on a theory of palming off because the plaintiff failed to allege public confusion. 2012 WL 2976724 at *7. However, despite the lacking allegations of public confusion, the court went on to hold that the plaintiff would have stated a claim of unfair competition based upon misappropriation but that the claim was pre-empted by federal copyright law. Id. at *7-*8. The ACT Group court’s analysis is consistent with the conclusion that an unfair competition claim must either show that the plaintiff was engaged in competitive business with the defendant or that the defendant’s actions were likely to produce public confusion. See Sutter Home Winery, Inc. 971 F.2d at 407.

Moreover, the Arizona Supreme Court recently declined to dismiss a claim of unfair competition based on AUTSA preemption where the plaintiff alleged that

[the defendant employee] had/learned confidential and trade secret information about [the plaintiff]’, including ‘information about [plaintiffs] business model, operating procedures, techniques, and strengths and weaknesses.’ [Plaintiff] further alleged that [defendant] intended to ‘steal[ ]’ and ‘exploit’ that information and [plaintiffs] customers to gain a competitive advantage for her company.

Orca II, 236 Ariz. at 181, 337 P.3d at 546. However, the court emphasized that its decision was confined to the pre-emption issue and it declined to “decide whether Arizona recognizes a common-law claim for unfair competition as alleged in [the plain-Orca II, 236 Ariz. at 181, 337 P.3d at 546. However, the court emphasized that its decision was confined to the pre-emption issue and it declined to “decide whether Arizona recognizes a common-law claim for unfair competition as alleged in [the plain-

“The common law doctrine of ‘misappropriation’ originated in International News Service v. Associated Press, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211 (1918). Balboa [Ins. Co. v. Trans Global Equities, 218 Cal.App.3d 1327, 267 Cal.Rptr. 787, 795 (1990) ]. ‘It is normally invoked in an effort to protect something of value that is not covered either by patent or copyright law....’ Id. (citations omitted). Misappropriation involves the unfair taking for profit, at little or no cost, of property acquired by another through investment of substantial time and money. Id.” Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, 124, 970 P.2d 954, 956 (App.1998) (holding that unfair competition claim based on misappropriation was preempted by federal copyright law).

The doctrine of “unfair competition is based on principles of equity.... The general purpose of the doctrine is to prevent business conduct that is contrary to honest practice in industrial or commercial matters.” Id. (internal quotation marks and citations omitted). In the instant case, any claim of misappropriation of trade secrets is clearly pre-empted by AUTSA. See Orca II, 236 Ariz. at 180, 337 P.3d at 545. Otherwise, JDM’s allegations in general are strikingly similar in concept to those alleged by the plaintiff in Orea II. However, JDM has not specifically alleged in stating its unfair competition claim that Defendants misappropriated information that falls outside AUTSA’s coverage. As to JDM’s claims of unfair competition based on conversion and trespass by Defendant Fine (see Eighth and Ninth Claims), and computer fraud by Defendants Will and Fine (see First Claim), this Court, like the courts in Doe and ACT Group, should be reluctant to allow theories of unfair competition that are novel to Arizona. Consequently, JDM’s claim for unfair competition should be dismissed for failure to state a claim.

BREACH of Contract Claim alleged against Moving Defendants Fine and Godinez (Fourth Claim for Relief)

JDM alleges that Defendants Fine and Godinez, in exchange for adequate consideration, entered into respective Confidentiality Agreements (“Agreement”) wherein they agreed not to:

□disclose Confidential Information, directly or indirectly, under any circumstances, or by any means, to any third person without the express written consent of the Company[ ]

or

copy, transmit, reproduce, summarize, quote, or make any commercial or other use whatsoever of Confidential Information, except as may be necessary to perform [their] duties for the Company.

(FAC, ¶¶ 157, 158; see also FAC, Exh. 1, §§ 5, 6 (Defendant Fine’s Agreement) & Exh. 6, §§ 5, 6 (Defendant Godinez’ agreement)). Under the Agreement, “Confidential Information” is defined to include:

(a) proprietary information of the Company, (b) information marked or designated by the Company as confidential, (c) information, whether or not in written form and whether or not designated as confidential, that is known to me as being treated by the Company as confidential; and (d) information provided to the Company by third parties that the Company is obligated to keep confidential. Confidential Information includes, but is not limited to, client lists, financial information related to client accounts, discoveries, documentation, processes, know-how, marketing plans, and other financial and technical information.

(FAC, Exh. 1, § 1 & Exh. 6, § 1). Further, the Agreement specifically states that it shall not apply to any information that JDM voluntarily makes public or that otherwise becomes part of the public domain through lawful means. (FAC, Exh. 1, § 8; FAC, Exh. 6, § 8). Defendants’ obligations under the Agreement “will continue beyond the termination of [their] business relationship with [JDM] and for as long as [they] possess Confidential Information.” (FAC, Exh. 1, § 11; FAC, Exh. 6, § 11).

Defendants Fine and Godinez argue that the Agreement is unenforceable. (Doc. 23, pp. 9-10; Doc. 36, pp. 9-10; Doc. 32, pp. 11-13; Doc. 40, pp. 7-11). They also argue that JDM fails to allege facts to state a claim for breach of contract.

Enforceability. In Arizona, an overly broad confidentiality agreement amounts to a noncompetition agreement. See Orea Commc’ns Unlimited, LLC v. Noder, 233 Ariz. 411, 417, 314 P.3d 89, 95 (App.2013), depublished in part on other grounds, Orea II, 236 Ariz. at 185, 337 P.3d at 550 (deppblishing ¶¶ 28-31). In turn, a non-competition agreement must be limited in time and in geography. Id. Thus, Defendants’ argument is that because the definition of Confidential Information in the Agreement is overly broad, it must be treated as a noncompetition agreement, which in this case would be unenforceable because it is not restricted in time or geography. {See FAC, Exh. 1 § 11; FAC, Exh. 6, § 11 (duration clause)).

Defendants argue that the Agreement is over broad because it includes information that is not truly confidential such as “discoveries, documentation, processes and know-how.” {See Doc. 36, pp. 9-10; see also Doc. 40, pp. 7-9). According to Defendants, the Agreement prevents them from using public information and information they learned from employment, thus the Agreement does not operate as a confidentiality agreement but as an unlimited restriction on competition.

The confidentiality agreement held unenforceable in Orea defined confidential information to include any information the employee learned of, possessed as a result of, or accessed through employment. Orca, 233 Ariz. at 417, 314 P.3d at 95. Although the definition “properly exclude^] ‘publicly known’ information ... ”, it included “within its ambit information that is available through ‘substantial searching of published literature’ or that has to be ‘pieced together’ from a number of publications or sources.” Id. The court found both restrictions untenable. As to first, the court stated that the employer “cannot deem by fiat all information [the employee] acquired through her employment ‘confidential.’ [The employer] has no protectable interest in public information.” Id. As to the latter restriction, the court stated that “[i]nformation easily or readily available to the public remains public knowledge and not protectable as confidential information even if a member of the public may have to expend substantial time to gather it and comprehend its significance.” Id. At bottom, in assessing the scope of a confidentiality agreement, the question is “whether the information [sought to be restricted] is truly confidential — not known to the public and ‘substantially inaccessible.’ ” Id.

The parties argue in detail about the use of the term “know-how” in the Agreement. JDM argues that “ ‘know-how’ is a term of art typically used in confidentiality provisions to designate a subset of trade secrets or confidential information that is quite distinct from the general knowledge an employee may acquire during employment.” (Doc. 38, p. 8 (citing SI Handling Sys. Inc. v. Heisley, 753 F.2d 1244, 1262 (3d Cir.1985))). Although Heisley, a trade secrets case, did not involve a confidentiality agreement, it is nonetheless instructive. The Heisley court recognized that “ ‘[t]he concept of [ ]know-how ... is ... a very fuzzily defined area....’” Heisley, 753 F.2d at 1261 (quoting Van Products Co. v. General Welding and Fabricating Co., 419 Pa. 248, 263-64, 213 A.2d 769, 777 (1965)). The court went on to identify “know-how” sufficient to constitute a trade secret as not being “ability” or “experience”, “but rather the compiled products of that ability and experience that had been recorded for repetitive use.” Id. (such compilations can be graphs, charts, drawings and other data). Whereas, “the employee ability and experience that led to these developments, and presumably will lead to still further developments, does not belong to ...” the employer. Id. (“we do not think that, after employees leave, [the employer] can assert proprietary rights over their problem-solving ability or knowledge of mistakes to be avoided.”).

That “know-how” as used in the Agreement means the compilation, ie., physical manifestation of data or information, such as spread sheets, rather than mere knowledge, is consistent with the allegations of trade secret violations that JDM has advanced thus far. Nor is there any suggestion that the “discoveries, documentation, processes [and] know-how” as used in the Agreement are matters of public knowledge. If they were, then they would not fall within the scope of the Agreement. At this point in the proceeding, the breach of contract claim should not be dismissed as unenforceable.

Breach. Defendant Fine argues that JDM cannot state a claim for breach of contract because the information “does not contain anything that is secret.” (Doc. 23, p. 10). As discussed above, the allegations in the FAC plausibly support the conclusion that is not the case. Defendant Fine’s motion to dismiss the breach of contract claim should be denied.

Defendant Godinez argues that JDM fails to sufficiently allege a breach of contract claim because JDM has failed to identify “confidential information” that he allegedly used. (Doc. 32, p. 13). JDM argues that to show breach, the FAC alleges that Defendant Godinez collaborated with Defendants Will, Fine, Arceo, and Uretz to copy JDM’s sales and marketing programs, and is now using JDM’s confidential information in collaboration with Defendants Will and Fine. (Doc. 38, p. 8 (citing FAC, ¶¶ 96, 161)). Further Defendant Godinez deleted files to hide his misconduct and destroy evidence of Defendant Will’s wrongdoing (Id. at pp. 9-10 (citing FAC ¶¶ 98, 100)). However, as discussed above in relation to the AUTSA claim, the allegations do not sufficiently state facts to support the conclusion that Defendant Go-dinez collaborated with the other individual Defendants to copy JDM’s confidential information. Moreover, the allegation that Defendant Godinez deleted unspecified files from his JDM computer to hide his misconduct nowhere suggests that the deleted information fell within the definition of Confidential Information under the Agreement. Because JDM fails to allege facts to support a claim that Defendant Godinez breached the Agreement, Defendant Godinez’ Motion to Dismiss should be granted as to the breach of contract claim.

Unjust Enrichment against all moving Defendants (Fifth Claim)

Defendants argue that the unjust enrichment claim should be dismissed because JDM fails to identify a single allegation that JDM “conferred” a benefit on all moving Defendants. Defendants Will and Fine further point out that their alleged unauthorized destruction and theft of company property, which may support other claims, does not support a theory of unjust enrichment which requires that the plaintiff confer a benefit upon the defendant. Defendants also argue that, although plaintiffs are permitted to plead facts in the alternative, on a motion to dismiss, they must allege facts that plausibly suggest an entitlement to relief, which Defendants contend is not the case here. See Isofoton, S.A. v. Giremberk, 2006 WL 1516026, *3 (D.Ariz. May 30, 2006) (“An unjust enrichment count should not be dismissed unless it was insufficient apart from its inconsistency with other counts”).

Unjust enrichment provides a flexible “remedy when a party has received a benefit at another’s expense and, in good conscience, the benefitted party should compensate the other.” Wang Elec., Inc. v. Smoke Tree Resort, LLC, 230 Ariz. 314, 318, 283 P.3d 45, 49 (App.2012). “ ‘Unjust enrichment occurs whenever a person has and retains money or benefits that in justice and equity belong to another.’” Doe, 2009 WL 1423378, at *12. (quoting City of Sierra Vista v. Cochise Enter., Inc., 144 Ariz. 375, 381, 697 P.2d 1125, 1131 (App.1984)). Defendants argue that the FAC contains no facts that could establish such a claim.

JDM argues that the FAC alleges that Defendants unjustly received benefits at JDM’s expense through their wrongful conduct, including trespass, computer fraud, and conversion. (Doc. 29, p. 14). Recovery for unjust enrichment is available “when equity demands compensation for benefits received, ‘even though [the defendant] has committed no tort and is not. contractually obligated to the [other]. ’ ” Wang, 230 Ariz. at 318, 283 P.3d at 50 (emphasis added). Here, JDM alleges that Defendants obtained “benefit” at JDM’s expense by committing wrongful conduct including computer fraud, trespass, and conversion, which are alleged as independent claims elsewhere in the FAC against Defendants Will and/or Fine. While a plaintiff may plead alternative claims, see Isofoton, 2006 WL 1516026, *3 (plaintiff may make alternative claim of unjust enrichment), the allegations in the FAC do not support the theory that JDM conferred a single benefit on Defendants. Thus, JDM fails to state a claim for unjust enrichment.

Breach of Fiduciary Duty/Duty of Loyalty against Defendants Will and Fine (Sixth Claim for Relief)

In the introduction to their Partial Motion to Dismiss, Defendants Will and Fine state they seek dismissal of this claim. (Doc. 23, p. 2). Defendants do not specifically address this claim within their Motion or Reply. Because Defendants Will and Fine have provided no basis as to why this claim should be dismissed, their motion to dismiss JDM’s Sixth Claim for relief should be denied.

Civil Conspiracy Claim against all moving Defendants (Tenth Claim for Relief)

“[Liability for civil conspiracy requires that two or more individuals agree and thereupon accomplish ‘an underlying tort which the alleged conspirators agreed to commit.’ ” Wells Fargo Bank v. Arizona Laborers, Teamsters and Cement Masons, 201 Ariz. 474, 499, 38 P.3d 12, 37 (2002) (quoting Baker v. Stewart Title & Trust of Phoenix, 197 Ariz. 535, 542, 5 P.3d 249, 259 (App.2000)). JDM alleges that Defendants “conspired with each other to engage in the alleged wrongful conduct, including Defendants’ misappropriation of trade secrets and other unfair business practices.” (FAC, ¶ 89). Defendants argue that the FAC identifies only the torts of misappropriation and unfair competition in connection with civil conspiracy and JDM has failed to state a claim on those grounds. (Doc. 36, p. 10). Defendants also contend that because the majority of the allegations in support of JDM’s civil conspiracy claim are based-only on information and belief, they fail to state a claim because they are conclusory. (Id. (citing FAC, ¶¶189, 190, 194 195)).

“[Although allegations ‘upon information and belief may state a claim after Iqbal and Twombly, a claim must still be based on factual content that makes liability plausible, and not be ‘formulaic recitations of the elements of a cause of action.’ ” Klohs v. Wells Fargo Bank, N.A., 901 F.Supp.2d 1253, 1260 n. 2 (D.Haw.2012) (quoting Long v. Yomes, 2011 WL 4412847, at *4 (D.Haw. Sept. 20, 2011) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955)); see also Solis v. City of Fresno, 2012 WL 868681, at *8 (E.D.Cal. Mar. 13, 2012) (“In the post-Twombly and Iqbal era, pleading on information and belief, without more, is insufficient to survive a motion to dismiss for failure to state a claim.”). “The facts alleged must be sufficient to nudge the claims ‘across the line from conceivable to plausible.’ ” Solis, 2012 WL 868681, at *8 (quoting Twombly, 550 U.S. at 547, 127 S.Ct. 1955); see also Tesi v. ReconTrust NA, 2013 WL 2635613, *4 (D.Ariz. June 12, 2013).

Defendants are correct that because JDM has failed to state a claim for unfair competition, that claim cannot form the basis for a civil conspiracy claim. However, as discussed earlier, JDM has stated a claim against Defendants Will and Fine for misappropriation of trade secrets. Moreover, although based on information and belief, the allegations in the FAC, plausibly support the conclusion that the two conspired with each other to engage in such conduct in light of the fact that Defendant Will purchased AdWords “identical in name, pattern, and volume to the purchases conducted by Defendant Fine in his former role as Marketing Director at JDM.” (FAC, ¶ 126).

Defendant Will and Fine’s motion to dismiss the civil conspiracy claim should be denied. Because JDM has not sufficiently alleged facts of wrongdoing on behalf of the other moving Defendants that would link them to a conspiracy, the civil conspiracy claim should be dismissed as to Defendants Godinez, Uretz, and Impact Partnership.

Aiding & Abetting against all Moving Defendants (Eleventh Claim for Relief)

“Claims of aiding and abetting tortious conduct require proof of three elements: (1) the primary tortfeasor must commit a tort that causes injury to the plaintiff; (2) the defendant must know that the primary tortfeasor’s conduct constitutes a breach of duty; and (3) the defendant must substantially assist or encourage the primary tortfeasor in the achievement of the breach.” Wells Fargo, 201 Ariz. at 485, 38 P.3d at 23. Defendants contend this claim, like the civil conspiracy claim, fails to sufficiently allege an underlying tort. JDM makes the same argument it made with regard to the civil conspiracy claim (Doc. 29, pp. 14-15).

For the same reasons supporting the recommendation on the civil conspiracy claim, the District Court should: (1) deny Defendant Will and Fine’s motion to dismiss this claim; and (2) dismiss this claim as to Defendants Godinez, Uretz, and Impact Partnership.

Conclusion

For the reasons stated above, JDM has sufficiently alleged a claim under AUTSA and claims for civil conspiracy and aiding and abetting against Defendants Will and Fine. Additionally, JDM has sufficiently alleged that Defendant Fine breached the Confidentiality Agreement. Further, Defendants Will and Fine have failed to offer any reason why JDM’s claim for breach of fiduciary duty/duty of loyalty should be dismissed. However, JDM has failed to state a claim against Defendants Will, Fine, Godinez, Uretz and Impact Partnership for unfair competition and unjust enrichment. Further, JDM’s AUTSA claim and claims of civil conspiracy and aiding and abetting against Defendants Godinez, Uretz and Impact Partnership should be dismissed for failure to state a claim. Moreover, JDM’s claim of breach of contract against Defendant Godinez should also be dismissed for failure to state a claim. Because leave to amend should be given freely and because there has been no showing that JDM’s claims subject to dismissal “could not possibly be cured by the allegation of other facts,” Cook, Perkiss and Liehe, Inc. v. Northern California Collection Serv., Inc., 911 F.2d 242, 247 (9th Cir.1990), the FAC should be dismissed with leave to amend.

Recommendation

For the foregoing reasons, the Magistrate Judge recommends that the District Court, after its independent review:

(1) grant in part and deny in part Defendant Will and Fine’s Partial Motion to Dismiss (Doc. 22). Defendants’ Motion should be granted to the extent that Plaintiffs’ claims of unfair competition (Third Claim) and unjust enrichment (Fifth Claim) should be dismissed with leave to amend. Defendants’ Motion should be denied to the extent Defendants seek dismissal of Plaintiffs’ claims: under AUTSA (Second Claim); for breach of contract against Defendant Fine (Fourth Claim); for breach of fiduciary duty/duty of loyalty (Sixth Claim); civil conspiracy (Tenth Claim); and aiding and abetting (Eleventh Claim);

(2) grant Defendant Impact Partnership’s Motion to Dismiss (Doc. 27) with leave to amend;

(3) grant Defendant Godinez’ Partial Motion to Dismiss (Doc. 30) with leave to amend;

(4) grant Defendant Carly Uretz’ Motion to Dismiss (Doc. 34) with leave to amend.

Pursuant to 28 U.S.C. § 636(b) and Rule 72(b)(2) of the Federal Rules of Civil Procedure and LRCiv 7.2(e), Rules of Practice of the U.S. District Court for the District of Arizona, any party may serve and file written objections within fourteen (14) days after being served with a copy of this Report and Recommendation. A party may respond to another party’s objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P. 72(b)(2). No replies to objections shall be filed unless leave is granted from the District Court to do so. If objections are filed, the parties should use the following case number: CV 14-2025-TUC-CKJ.

Failure to file timely objections to any factual or legal determination of the Magistrate Judge may be deemed a waiver of the party’s right to de novo review of the issues. See United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir.2003) (en banc).

Dated this 9th day of February, 2015.

1 . Computer fraud is also separately asserted in the First Claim, Trespass is separately alleged in the Eighth Claim, and Theft/Conversion is separately alleged in the Ninth Claim.

2 . The claim was dismissed with leave to amend, and Plaintiffs’ objection is not directed at that portion of the R & R. (Doc. 46 at 4, n. 1.)

3 . The Court notes that several of these paragraphs do not allege categories of materials related to conduct by Will.

4 . Will is also a Defendant in the First Claim, Computer Fraud and Abuse; the Fifth Claim, Unjust Enrichment; the Sixth Claim, Breach of Fiduciary Duty; the Seventh Claim, Breach of Duties Re: Alpha Academy Advisors; the Tenth Claim, Civil Conspiracy; and Eleventh Claim, Aiding and Abetting.

1 . The record reflects that the following Defendants have not been served with the April 25, 2014 FAC: John Arceo and Jane Doe Arceo, and Patricia Latham and John Doe Latham. At the hearing, counsel for Plaintiffs stated that a process server had not been successful in attempts to serve John Arceo. Counsel did not address the issue of service on the La-thams.

2 . JDM alleges Defendant Will worked with JDM from early 2009 through August 2013. (FAC, ¶ 32; see also FAC ¶ 33 (Defendant Will requested to be compensated on a 1099 basis rather than as a salaried W-2 employee)). Defendant Will’s assignment was to help with general sales and marketing programs of JDM as well as the development of Alpha Advisor Academy, LLC (“AAA”), a sub-LLC of JDM that was formed with Defendant Will. (FAC, ¶ 34). JDM paid for the expenses of AAA, and AAA used the shared resources of JDM. (Id.). In his role with JDM, Defendant Will had a great deal of interaction with third-party vendors often obtaining agreements to protect JDM trade secrets. (FAC, ¶ 38).

3 . JDM alleges that Defendant Fine was hired by JDM in July 2010 as its Online Marketing Manager, and continued in that position until July 2013 when he was promoted to Marketing Director, responsible for JDM's entire marketing department. (FAC, ¶ 51). Defendant Fine executed a 2010 Confidentiality Agreement and a March 2012 Work for Hire Agreement. (FAC ¶ 58 & Exhs. 1, 2). In September 2013 Defendant Fine refused to sign an updated Confidentiality and Non-Compete Agreement. (FAC, ¶ 53). On November 15, 2013, Defendant Fine submitted his resignation, and that date served as his final day of employment at JDM. {Id., at ¶ 54).

4 . JDM alleges that Defendant Godinez was hired by JDM in October 2011 as a Creative Programming Specialist and, in 2013, was promoted to Marketing Manager, responsible for supervising all employees and operations in the marketing department. (FAC, ¶¶ 89-90; see also FAC, ¶ 95 (Defendant Godinez held the Marketing Manager position for two days)). Defendants Fine and Uretz were among the eight or so employees who reported to Defendant Godinez during the time he served as Marketing Manager. {Id. at ¶ 90 Defendant Godinez executed both a 2011 Confidentiality Agreement and a 2012 Work r Hire Agreement. (FAC, ¶ 94 & Exhs. 6, 7)). In July 2013, two days after being promoted to Marketing Manager, Defendant Godinez resigned. (FAC, ¶¶ 92, 95).

5 . JDM alleges that Defendant Uretz was hired in September 2011 as a Content Specialist and was later promoted to Copywriter. (FAC, ¶ 106). In 2012, Uretz signed a Work for Hire Agreement. (FAC, ¶ 112 & Exh. 8). In March 2013, Uretz tendered her resignation, but in June 2013, Godinez convinced her to return to JDM as a Copywriter. (FAC, ¶¶ 108-109). In July 2013 when JDM presented a new Non-Competition Agreement to all its employees, Defendant Uretz refused to sign the agreement which led to her termination. (FAC, ¶ 110).

6 . Unless otherwise indicated, cited page numbers of the parties’ filings refer to the CMECF pagination at the top of the page of each document cited.

7 . The Court omits citation to allegations concerning defendants who have not been served.

8 . Boice involved a claim of unfair competition between similarly named businesses.