Physics, Materials, and Applied Mathematics Research LLC v. Yeak

District Court, D. Arizona·Decided August 11, 2022·No. 4:20-cv-00379·Unknown

Opinion

WO

Physics, Materials, and Applied Mathematics No. CV-20-00379-TUC-JCH Research LLC, Plaintiff, v. Jeremy Yeak, et al., Defendants. Plaintiff Physics, Materials, and Applied Mathematics Research, L.L.C. (“PM&AM”), brought this action alleging inter alia misappropriation of trade secrets under federal and state statutes and related claims. (Doc. 1.) Defendants Jeremy Yeak (“Yeak”) and Opticslah, L.L.C. (“Opticslah”) (collectively “Defendants”) move to dismiss pursuant to Fed. R. Civ. P. 12(b)(7) (“Motion”), arguing that Plaintiff failed to join the United States, an indispensable party to this suit.1 (Doc. 72.) PM&AM opposes the Motion. (Doc. 75.) The Court held oral argument on August 4, 2022. (See Physics, Materials, and Applied Mathematics Research LLC v. Yeak et al., 4:20-CV-00379-TUC-JCH (D. Ariz. August 4, 2022), Hr'g Tr. at 2:4 (hereinafter "Hr'g Tr.").) The Court denies the Motion. PM&AM is a limited liability company, principally located in Tucson, Arizona, specializing in applied research involving high intensity laser systems, ultrashort pulse lasers, laser-guided electric discharge, standoff material detection including laser induced breakdown spectroscopy and laser absorption spectroscopy, laser marking, and material processing. (Doc. 1 at ¶¶ 6, 13.) Through conducting business and extensive research and

1 Previously, Defendants filed a Motion to Dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. (Doc. 8.) On May 3, 2021, the Court dismissed the unjust enrichment claim (Count XII) as to Defendant Yeak but denied the motion as to all other claims. (Doc. 16.) development activities, PM&AM has developed proprietary and confidential information with respect to these technologies. (Id. at ¶ 14.) PM&AM has taken measures and adopted practices to protect such confidential information. (Id. at ¶ 15.) In 2009, PM&AM hired Yeak. (Id. at ¶ 16.) The parties entered into an Employment Agreement (the “Employment Agreement”), dated December 30, 2013, which sets forth covenants restricting confidential information disclosure, prohibiting outside employment or business activities, and securing rights, titles, and interests in developments related to PM&AM's actual or expected business or activities. (Doc. 1 at ¶ 17; See Doc. 1-2.) Yeak indicated that he had no unpatented inventions made or conceived prior to his employment at PM&AM. (Doc. 1 at ¶ 21.) During his employment with PM&AM, Yeak accessed PM&AM’s confidential information and trade secrets and helped advance PM&AM’s remote-sensing laser systems. (Id. at ¶¶ 25–30.) Without PM&AM’s knowledge, Yeak incorporated Opticslah with the New Mexico Secretary of State in June 2015. (Id. at ¶ 31.) Yeak is Opticslah’s statutory agent and sole member. (Id. at ¶¶ 8, 31.) Opticslah claims expertise in solid-state laser development, optical emission, and absorption spectroscopy techniques. (Id. at ¶ 32.) In September 2019, PM&AM discovered Opticslah’s existence, and in December 2019, PM&AM terminated Yeak citing breach of his Employment Agreement. (Id. at ¶¶ 51–52.) In 2014, while Yeak was still employed by PM&AM, the U.S. Department of Energy (“DOE”) awarded PM&AM a Small Business Innovation Research (“SBIR”) grant2 for “Filament-Based Laser-Induced Breakdown Spectroscopy for the Standoff Detection of Radiological Materials.” (Id. at ¶ 28.) Yeak was the principal investigator on the grant and the primary liaison between PM&AM and DOE. (Id. at ¶¶ 28–29.) As the remote-sensing grant was nearing its end, Yeak allegedly told PM&AM that the DOE was

2 Agencies participating in the SBIR program award funding to small business applicants to perform research and development and to stimulate technological innovation. https://www.sbir.gov/sites/default/files/SBA_SBIR_Overview_March2020.pdf. Certain agencies, like the Department of Defense (“DOD”), enter into binding contracts with the recipients and set out plans, protocols and requirements. Id. Other agencies, like the DOE, are granting agencies, which award grants with greater flexibility that are led by the recipient. Id. Therefore, in this Order the terms “contract” and “grant” are used interchangeably. no longer interested in funding additional remote-sensing research. (Id. at ¶¶ 44, 47.) But in February 2017, Yeak, on behalf of Opticslah, submitted a SBIR grant proposal to DOE, to perform similar research as that in PM&AM’s remote-sensing grant; the grant was procured in June 2017. (Id. at ¶¶ 37–39.) Opticslah applied for additional government contracts on the following dates: May 1, 2018; June 20, 2018; and February 25, 2019. (Id. at ¶ 41.) Throughout this time, Yeak continued to work for and access PM&AM’s secure laboratory facility in Tucson, Arizona, and, according to PM&AM, continued to misrepresent facts about his employment to government agencies. (Id. at ¶¶ 40, 47–48.) In total, Opticslah has obtained twelve SBIR grants or contracts with federal agencies and three are currently active.3 (Doc. 77-1 at 7, 30.) On September 3, 2020, PM&AM sued Defendants and raised twelve claims including: (I) trade secret misappropriation pursuant to the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836 et seq.; (II) trade secret misappropriation pursuant to the Arizona Uniform Trade Secrets Act (“AUTSA”), A.R.S. § 44-401 et seq.; (III) contract breach: confidential information disclosure; (IV) contract breach: failure to disclose developments; (V) contract breach: non-compete; (VI) breach of duty of loyalty; (VII) fraud; (VIII) conversion; (IX) tortious interference with contract; (X) tortious

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