SkyX Group Inc v. Foundation for a Smoke Free World

2024 NY Slip Op 34550(U)
New York Supreme Court, New York County·Decided December 20, 2024·No. Index No. 656417/2023·Unpublished

Opinion

SkyX Group Inc v Foundation for a Smoke Free World 2024 NY Slip Op 34550(U)

December 20, 2024

Supreme Court, New York County Docket Number: Index No. 656417/2023 Judge: Joel M. Cohen

Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.

NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 12/20/2024

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 03M -----------------------------------------------------------------------------------X SKYX GROUP INC, LOFT LABS, LLC, MARTIN INDEX NO. 656417/2023 STEINBAUER

Plaintiffs, MOTION DATE 03/26/2024

-v- MOTION SEQ. NO. 002 FOUNDATION FOR A SMOKE FREE WORLD, PAMELA J PARIZEK, HEIDI GOLDSTEIN, DECISION + ORDER ON MOTION

Defendants.

-----------------------------------------------------------------------------------X HON. JOEL M. COHEN:

The following e-filed documents, listed by NYSCEF document number (Motion 002) 21, 22, 23, 24, 25, 26, 27, 28, 29, 33, 36, 37, 38, 39, 40, 41, 42 were read on this motion to DISMISS .

Plaintiffs, SkyX Group (hereafter “SkyX”), Loft Labs LLC, and Martin Steinbauer (collectively, “Plaintiffs”), allege that Defendants, Foundation for a Smoke-Free World (hereafter “FSFW”) and two members of FSFW leadership, Pamela J. Parizek and Heidi Goldstein (together “Foundation Individuals”) (collectively, “Defendants”), (1) misappropriated and misused SkyX’s confidential and proprietary information and trade secrets, (2) were unjustly enriched with the trade secrets, (3) committed fraud, (4) breached a fiduciary duty, and (5) that the Plaintiffs are entitled to preliminary injunctive relief. Defendants move pursuant to CPLR 3211(a)(1) and (7) to dismiss the Amended Complaint. Plaintiffs cross-move for leave to file a proposed Second Amended Complaint.

For the reasons set forth below, Defendants’ motion is granted, and Plaintiff’s motion is denied.

656417/2023 SKYX GROUP INC ET AL vs. FOUNDATION FOR A SMOKE FREE WORLD, ET AL Page 1 of 15 Motion No. 002

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NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 12/20/2024

BACKGROUND

SkyX, a Delaware corporation, is a biotechnology and medical device company that is the sole owner of Loft Labs LLC and does business in New York (NYSCEF 6 [“FAC”] at ¶ 2). According to the Amended Complaint, SkyX is a leader in the research and development of environmental and sustainability solutions, resulting in the commercialization of a host of inventions relating to Electronic Nicotine Delivery System (“ENDS”) products, wholly independent of the tobacco sector (id.). SkyX and its principal, Martin Steinbauer (hereafter “Steinbauer”), are alleged to be widely regarded as experts in the field of sustainability and have been invited to present topics at different institutes and forums, including at the Food Drug and Law Institute (“FDLI”), the Global Forum on Nicotine (“GFN”), Smither’s ENDS US, and the Next Generation Nicotine Conference (id. at ¶6; NYSCEF 37 [“Steinbauer Aff”] at ¶¶ 3-4).

FSFW is a Delaware not-for-profit corporation with the stated purpose of “improving global health by ending smoking in this generation” (FAC at ¶ 3). FSFW funds the Tobacco Transformation Index (“TTI”), which monitors the activities of tobacco companies (id.).

Plaintiffs allege that on October 20, 2022, after Steinbauer gave a presentation at the annual FDLI conference, certain FSFW’s representatives—then Co-President Heidi Goldstein (“Goldstein”) and Chair of the Board of Directors Pamela Parizek (“Parizek”)—approached Steinbauer and another SkyX principal, Robert Murtfeld (“Murtfeld”), to discuss the diversification of FSFW funding and to solicit a research proposal on the topic of sustainability and waste management of Reduced-Risk Products (“RRPs”) (FAC at ¶ 8). Plaintiffs allege that FSFW solicited SkyX for this proposal as they were interested in the Plaintiffs’ expertise and were looking to expand into the area (id.).

656417/2023 SKYX GROUP INC ET AL vs. FOUNDATION FOR A SMOKE FREE WORLD, ET AL Page 2 of 15 Motion No. 002

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NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 12/20/2024

According to the Amended Complaint, after the initial solicitation in October 2022, Parizek invited Plaintiffs to a Christmas party in New York City and a subsequent dinner to further encourage and build the relationship between the two parties. Parizek emphasized the expectation to receive a submission (id. at ¶ 9). On December 20, 2022, Plaintiffs submitted their proposal (hereafter “the December Proposal”) via email to Co-Presidents Goldstein and David Janazzo (id. at ¶¶ 9-10; NYSCEF 14). Notably, the December Proposal is not marked “confidential” (NYSCEF 14). Goldstein acknowledged receipt of the December Proposal via email outlining the acceptance of the proposal as solicited or as responsive to a Request for Proposals (RFP) that FSFW planned to issue on the topic of electronic waste in early 2023 (FAC at ¶¶ 9-10).

On February 6, 2023, FSFW issued an RFP (the “February RFP”) which incorporated language from the December Proposal without any prior agreement from the Plaintiffs to do so (id. at ¶¶ 11, 17-30). In this February RFP, Defendants stated that the Foundation will work to ensure that “any materials made public will not disclose protected information” (Steinbauer Aff. at ¶ 16; NYSCEF 15 at 6). Following this RFP, Defendants assured other organizations that all proposals would be treated as confidential and would not be shared (Steinbauer Aff. at ¶17). Plaintiffs allege that while they noticed the inclusion of language from their December Proposal, they did not complain because they took it as a good sign that the RFP was “tailor made for SkyX” (id. at ¶ 7).

Plaintiffs again submitted materials on March 10, 2023, as a response to the February RFP (the “March Proposal”) which fine-tuned the December Proposal and requested $2,826,311.00 in grant funding (FAC at ¶12). On March 14, 2023, Goldstein responded to the Plaintiffs’ submission acknowledging receipt (id.).

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NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 12/20/2024

Plaintiffs allege that their December and March Proposals contained approaches and methods that are proprietary to SkyX which have been internally developed over the years using prior experiences (id. at ¶13). These approaches were not previously publicly available and were only ever circulated in full to a limited number of SkyX team members (Steinbauer Aff. at ¶¶ 9, 13).

On May 8, 2023, Plaintiffs were informed by Goldstein that they would not be moving forward with their proposal “in part based on the recommendation of [FSFW’s] independent peer review panel” (FAC at ¶14-15). The February RFP concluded with the awarding of a grant to Idwala Research. Plaintiffs allege that Idwala Research is a company that has a close relationship with TTI (which is funded by the Foundation) and whose principal was an active participant in the TTI and Foundation matters during the time in which the proposal was initially solicited from SkyX (id. at ¶¶ 37-38).

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