Local Access, LLC v. Kelley Drye & Warren LLP

CourtDistrict Court, M.D. Florida
DecidedSeptember 8, 2023
Docket6:20-cv-02315
StatusUnknown

This text of Local Access, LLC v. Kelley Drye & Warren LLP (Local Access, LLC v. Kelley Drye & Warren LLP) is published on Counsel Stack Legal Research, covering District Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Local Access, LLC v. Kelley Drye & Warren LLP, (M.D. Fla. 2023).

Opinion

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION

LOCAL ACCESS, LLC and BLITZ TELECOM CONSULTING, LLC,

Plaintiffs,

v. Case No.: 6:20-cv-2315-WWB-EJK

KELLEY DRYE & WARREN LLP, HENRY KELLY, CATHERINE JAMES, PEERLESS NETWORK, INC. and RICHARD KNIGHT,

Defendants. / ORDER THIS CAUSE is before the Court on Defendants Kelley Drye & Warren LLP, Henry Kelly, and Catherine James’s (collectively, “KDW Defendants”) Amended Motion to Dismiss Second Amended Complaint (Doc. 91), Defendants Peerless Network, Inc. and Richard Knight’s (collectively, “Peerless Defendants”) Amended Motion to Dismiss Plaintiffs’ Second Amended Complaint (Doc. 92), and Plaintiffs’ Responses (Doc. Nos. 93, 94). For the reasons set forth herein, Defendants’ Motions will be denied. I. BACKGROUND Plaintiff Local Access, LLC (“Local Access”) and Defendant Peerless Network, Inc. (“Peerless”) are licensed and regulated as Competitive Local Exchange Carriers authorized to provide telecommunication services throughout the State of Florida. (Doc. 77, ¶¶ 1, 12). Plaintiff Blitz Telecom Consulting, LLC (“Blitz”), a communications services aggregator, is a customer of Local Access. (Id. ¶ 8). Defendant Richard Knight is a founder, shareholder, and executive vice president of sales and marketing of Peerless. (Id. ¶ 13). In 2012, Local Access and Peerless entered into a contract for Peerless to provide “Homing Tandem Service” for Local Access and its customers. (Id. ¶ 28). In 2017, Local Access filed suit against Peerless for breaches of that agreement (“Case III”).1 (Id. ¶ 31). Defendant Kelley Drye & Warren, LLP (“KDW”), a New York-based law

firm, and two of its attorneys, Defendants Henry Kelly and Catherine James, represented Peerless in Case III. (Id. ¶¶ 9–11, 32). In the discovery phase of Case III, the Court entered a Protective Order Governing the Production of Discovery Material (“Protective Order”) to protect certain information from disclosure and misuse. (Id. ¶¶ 35–36; Doc. 77-1). The KDW Defendants and Peerless violated the Court’s Protective Order, and sanctions were issued. (Doc. 77, ¶¶ 124–26, 155–56, 161–62). However, during the sanctions proceedings, Local Access did not seek compensatory damages. (Id. ¶ 141; see also Doc. 77-2). Now, as a result of the discovery violations, Plaintiffs allege claims against Defendants for violations of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836 et seq., the Florida Uniform Trade

Secrets Act (“FUTSA”), Fla. Stat. § 688.001 et seq., the Illinois Trade Secrets Act (“ITSA”), 765 Ill. Comp. Stat. 1065/1 et seq., and the Telecommunications Act (“TCA”), 47 U.S.C. § 201, et seq. (Doc. 77, ¶¶ 186–552). II. LEGAL STANDARD “A pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.

1 The parties have been involved in several disputes in the United States District Court for the Middle District of Florida, including Blitz Telecom Consulting, LLC v. Peerless Network, Inc., Case No. 6:14-cv-307-PGB-GJK (“Case I”); Local Access, LLC v. Peerless Network, Inc., Case No. 6:14-cv-399-PGB-TBS (“Case II”); and Local Access, LLC v. Peerless Network, Inc., Case No. 6:17-cv-236-WWB-EJK (“Case III”). 8(a)(2). Pursuant to Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a complaint for “failure to state a claim upon which relief can be granted.” In determining whether to dismiss under Rule 12(b)(6), a court accepts the factual allegations in the complaint as true and construes them in a light most favorable to the

non-moving party. See United Techs. Corp. v. Mazer, 556 F.3d 1260, 1269 (11th Cir. 2009). Nonetheless, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions,” and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Furthermore, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” Id.

III. DISCUSSION Defendants argue that the Second Amended Complaint (Doc. 77) should be dismissed pursuant to the rule against claim splitting and res judicata, the litigation privilege bars Plaintiffs’ state law claims, and Plaintiffs fail to sufficiently allege trade secret misappropriation. The Peerless Defendants further argue that Plaintiffs fail to state claims under the TCA. Plaintiffs disagree. A. Claim Splitting and Res Judicata Defendants argue that the Second Amended Complaint should be dismissed in its entirety because this action constitutes impermissible claim splitting with the sanctions proceedings in Case III and is otherwise barred by res judicata. “[T]he claim-splitting doctrine derives from the doctrine of res judicata.” Shannon v. Nat’l R.R. Passenger Corp., 780 F. App’x 777, 779 (11th Cir. 2019). “[A] district court may resolve the issue of res judicata [including claim-splitting] at the pleading stage where the defense appears

on the face of the plaintiff’s complaint and the court is in possession of any judicially noticeable facts it needs to reach a decision.” Vanover v. NCO Fin. Servs., Inc., 857 F.3d 833, 836 n.1 (11th Cir. 2017) (citing Concordia v. Bendekovic, 693 F.2d 1073, 1075–76 (11th Cir. 1982)). “At all times the burden is on the party asserting res judicata . . . to show that the later-filed suit is barred.” Kaiser Aerospace & Elecs. Corp. v. Teledyne Indus., Inc. (In re Piper Aircraft Corp.), 244 F.3d 1289, 1296 (11th Cir. 2001). “The claim-splitting doctrine: (1) ‘requires a plaintiff to assert all of its causes of action arising from a common set of facts in one lawsuit,’ and (2) applies where a second suit has been filed before the first suit has reached a final judgment.” Kennedy v. Floridian Hotel, Inc., 998 F.3d 1221, 1236 (11th Cir. 2021) (quoting Vanover, 857 F.3d at 840 n.3,

841). To determine whether improper claim splitting has occurred, courts consider: “(1) whether the case involves the same parties and their privies, and (2) whether separate cases arise from the same transaction or series of transactions.” Id. (quotation omitted). “Successive causes of action arise from the same transaction or series of transactions when the two actions are based on the same nucleus of operative facts.” Id. (quotation omitted).

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Local Access, LLC v. Kelley Drye & Warren LLP, Counsel Stack Legal Research, https://law.counselstack.com/opinion/local-access-llc-v-kelley-drye-warren-llp-flmd-2023.