1 2 3 4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 TORI BELLE COSMETICS LLC, 8 NO. C21-0066RSL Plaintiff, 9 v. ORDER GRANTING IN PART 10 DEFENDANTS’ MOTION TO NATALIE MEEK, et al., DISMISS 11 Defendants. 12 13 This matter comes before the Court on “Defendants’ Motion to Dismiss First Amended 14 Complaint for Failure to State a Claim.” Dkt. # 29. Plaintiff sells cosmetics and false eyelashes 15 through a network of salespeople it calls “Affiliates.” The Affiliates recruit additional Affiliates, 16 17 earning a portion of the proceeds from a recruit’s sales and forming a branching sales team. 18 Plaintiff alleges that five of its former Affiliates are using or have used the social media and 19 communication channels they had developed while they were Tori Belle Affiliates for the benefit 20 of a competing venture, defendants Juvenae LLC and Juvenae Holdings LLC. Plaintiff asserts 21 claims of breach of contract (Counts I and II), tortious interference with contract and prospective 22 23 business expectancy (Counts III, IV, and V), violation of the Defend Trade Secrets Act (Count 24 VI), civil conspiracy (Count VII), and conversion (Count VIII). Defendants seek dismissal of all 25 of plaintiff’s claims with prejudice. 26 27 ORDER GRANTING IN PART 1 The question for the Court on a motion to dismiss is whether the facts alleged in the 2 complaint sufficiently state a “plausible” ground for relief. Bell Atl. Corp. v. Twombly, 550 U.S. 3 544, 570 (2007). In the context of a motion under Rule 12(b)(6) of the Federal Rules of Civil 4 Procedure, the Court must “accept factual allegations in the complaint as true and construe the 5 pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & 6 7 Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008) (citation omitted). The Court’s review is 8 generally limited to the contents of the complaint. Campanelli v. Bockrath, 100 F.3d 1476, 1479 9 (9th Cir. 1996). 10 To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege 11 “enough facts to state a claim to relief that is plausible on its face.” []Twombly, 12 550 U.S. [at 570]. A plausible claim includes “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct 13 alleged.” U.S. v. Corinthian Colls., 655 F.3d 984, 991 (9th Cir. 2011) (quoting 14 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Under the pleading standards of Rule 15 8(a)(2), a party must make a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). . . . A complaint “that 16 offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause 17 of action will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). 18 Thus, “conclusory allegations of law and unwarranted inferences are insufficient to 19 defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004). 20 Benavidez v. Cty. of San Diego, 993 F.3d 1134, 1144-45 (9th Cir. 2021). If the complaint fails to 21 22 state a cognizable legal theory or fails to provide sufficient facts to support a claim, dismissal is 23 appropriate. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). 24 25 26 27 ORDER GRANTING IN PART 1 A. Breach of Contract Claims (Counts I and II) 2 Plaintiff alleges that individuals interested in becoming a Tori Belle Affiliate must 3 complete an online process, during which the individual is required to check a box indicating 4 that they have had the opportunity to read the contracts that govern the relationship between Tori 5 Belle and its Affiliates and that they agree to its terms. Dkt. # 24 at ¶ 53. The five former 6 7 Affiliates named as defendants in this matter all completed the on-line process on June 11, 2019, 8 when plaintiff’s business launched. Dkt. # 24 at ¶ 56. They then received an email confirming 9 their new status as Affiliates and disclosing the terms of the contracts to which they had 10 previously agreed. Dkt. # 24 at ¶ 57. 11 The governing contracts contain a number of promises and provisions. Plaintiff alleges 12 material breaches of Sections 2.11, 2.13, 5.4, and 11 of the “Policies and Procedures of the Tori 13 14 Belle Independent Affiliate Agreement” without specifically identifying which covenants are at 15 issue. Dkt. # 24 at ¶¶ 164, 166, 170, and 172. Defendants challenge the viability of plaintiff’s 16 breach of contract claims, arguing that the noncompete and nonsolicitation provisions are not 17 enforceable under Washington law, that plaintiff failed to adequately allege the disclosure of any 18 confidential information, and that the nondisparagement provision does not apply post- 19 20 termination and/or has not been breached. 21 1. Noncompete/Anti-Moonlighting 22 Plaintiff asserts that defendants’ characterization of Count I of the First Amended 23 Complaint is misleading in that plaintiff has alleged a breach of an anti-moonlighting clause, not 24 a noncompete provision. Section 2.11 of the “Policies and Procedures of the Tori Belle 25 Independent Affiliate Agreement” (hereinafter, the “Affiliate Agreement”) is entitled 26 27 ORDER GRANTING IN PART 1 “Participation in Other Business or Network Marketing Programs” and states, “Affiliate may 2 NOT sell products for other companies that sell false eyelash products. . . . Affiliates found to be 3 selling for other companies that sell these competitive items will be suspended and/or 4 terminated.” Dkt. # 24-1 at 41 (emphasis in original). Plaintiff does not, however, allege that any 5 of the former Affiliates sold Juvenae products while they were engaged as independent 6 7 contractors for Tori Belle. Rather, plaintiff argues that the former Affiliates were in 8 communication with and began promoting the interests of its competitor before they resigned 9 from (or were fired by) Tori Belle. The anti-moonlighting provision is very specific, however, 10 and bars the sale of competing false eyelash products, not general disloyalty. 11 To the extent plaintiff now hopes to use Section 2.11 to prevent its former Affiliates from 12 ever selling false eyelashes for another company, both the language of the agreement and the 13 14 allegations of the First Amended Complaint make clear that the “anti-moonlighting duties apply 15 only during one’s tenure as an Affiliate.” Dkt. # 24 at ¶ 68.b. Any attempt to limit, restrain, or 16 prohibit its former Affiliates’ ability to engage in direct sales of false eyelash products after 17 leaving Tori Belle would be properly characterized as a noncompetition provision. RCW 18 49.62.010(4). “A noncompetition covenant is void and unenforceable against an independent 19 20 contractor unless the independent contractor’s earnings from the party seeking enforcement 21 exceed two hundred fifty thousand dollars per year.” RCW 49.62.030(1). Plaintiff alleges that its 22 former Affiliates were independent contractors and that they earned less than $250,000 per year. 23 Dkt. # 24 at ¶¶ 65 and 81; Dkt. # 24-1 at 2. Thus, even if the anti-moonlighting clause could 24 reasonably be read to prevent competition after an Affiliate has left Tori Belle, it would be void 25 and unenforceable under Washington law. 26 27 ORDER GRANTING IN PART 1 2. Nonsolicitation 2 Section 5.4 of the Affiliate agreement precludes an Affiliate from recruiting any Tori 3 Belle Affiliate or customer to participate in another direct sales or network marketing 4 opportunity. Dkt. # 24-1 at 64. The prohibition applies during the term of the agreement and for 5 six months after its termination. Id. “In Washington, the non-compete statute explicitly excludes 6 7 non-solicitation agreements from its strict enforceability requirements.” A Place for Mom v. 8 Perkins, 475 F. Supp.3d 1217, 1230 (W.D. Wash. 2020); RCW 49.62.010(4) (“‘Noncompetition 9 covenant’ includes every written or oral covenant . . . by which an employee or independent 10 contractor is prohibited or restrained from engaging in a lawful profession, trade, or business of 11 any kind. A ‘noncompetition covenant’ does not include: (a) A nonsolicitation agreement . . . .”). 12 Defendants nevertheless argue that the nonsolicitation covenant at issue here is not enforceable 13 14 because it does not fall within the statutory definition of “nonsolicitation agreement.” 15 RCW 49.62.010(5) defines a “nonsolicitation agreement” as “an agreement between an 16 employer and employee that prohibits solicitation by an employee, upon termination of 17 employment: (a) Of any employee of the employer to leave the employer; or (b) of any customer 18 of the employer to cease or reduce the extent to which it is doing business with the employer.” 19 20 Because Affiliates are indisputably independent contractors, defendants argue that there is no 21 agreement between an employer and employee and that plaintiff cannot plausibly accuse the 22 Affiliates of soliciting “employees” or customers of an “employer.” Defendants therefore 23 conclude that the nonsolicitation provision at issue here falls within the general definition of 24 “noncompetition” under RCW 49.62.010(4) and is unenforceable unless the independent 25 contractor earns more than $250,000 per year.. 26 27 ORDER GRANTING IN PART 1 Neither party cites, and the Court has not found, any case or legislative history that 2 discusses this issue. Plaintiff alleges that RCW 49.17.020(4) and (5) provide the applicable 3 definitions for the terms “employer” and “employee” and that those definitions clearly 4 encompass independent contractors. Dkt. # 24 at ¶ 78. Although an assertion regarding statutory 5 interpretation and applicability is a legal conclusion that is “not entitled to the assumption of 6 7 truth,” Iqbal, 556 U.S. at 680, plaintiff is correct. The noncompetition statute expressly states 8 that “‘[e]mployee’ and ‘employer’ have the same meanings as in RCW 49.17.020.” RCW 9 49.62.010(2). Those definitions include in the term “employer” any business entity that contracts 10 with one or more persons for personal labor and include in the term “employee” a person who is 11 working under an independent contract. RCW 49.17.020(4) and (5). Thus the plain language of 12 the statute’s nonsolicitation carveout and the relevant definitions shows that nonsolicitation 13 14 agreements are enforceable as to both employees and independent contractors. Whatcom Cnty. v. 15 City of Bellingham, 128 Wn.2d 537, 546 (1996) (“When the statute’s meaning is plain on its 16 face, we give effect to the plain meaning of the statute as an expression of legislative intent.”) 17 (citation omitted). This construction is also consistent with the legislative findings “that 18 workforce mobility is important to economic growth and development” and “that agreements 19 20 limiting competition or hiring” may be unreasonable. RCW 49.62.005. The legislature’s goal of 21 ensuring that Washington laborers have the flexibility to change jobs (or are substantially 22 compensated if they give up that flexibility) is accomplished through the imposition of 23 restrictions on noncompete provisions regardless whether the same laborer is contractually 24 prevented from poaching employees or stealing customers once a new situation is acquired. 25 Defendants argue that reading the term “employee” to mean employees and independent 26 27 ORDER GRANTING IN PART 1 contractors would vitiate RCW 49.62.030, making it “meaningless” or “nonsensical.” Dkt. 29 at 2 15. The Court disagrees for two reasons. First, there is no ambiguity in the statutory adoption of 3 RCW 49.17.020(4) and (5) for purposes of the noncompetition statute. Defendants would have 4 the Court ignore RCW 49.62.010(2) in its entirety, which it is not free to do. Second, interpreting 5 the word “employee” to mean employees and independent contractors has no impact on RCW 6 7 49.62.030 or this case. Where the legislature intended to make a distinction between the way in 8 which employees and independent contractors are treated, it used the term “independent 9 contractor.” RCW 49.62.030, for example, clearly and unambiguously applies to independent 10 contractors, and defendants’ status as independent contractors is not in dispute. While the 11 incorporated definitions may create an ambiguity in RCW 49.62.020 (i.e., a court may ultimately 12 have to apply Washington’s rules of statutory interpretation to determine whether that subsection 13 14 applies only to employees or to employees and independent contractors), it does not invalidate or 15 make meaningless the statutory provision prohibiting enforcement of noncompetition 16 agreements against independent contractors who make less than $250,000. 17 In the alternative, defendants argue that Section 5.4 of the Affiliate Agreement is a 18 nonsolicitation clause in name only and/or that plaintiff has not adequately alleged a breach. 19 20 Defendants assert that Section 5.4 in fact bars former Affiliates from working for any other 21 direct sales company. The contractual language belies this argument, however: “Affiliates are 22 free to participate in other direct sales, social selling, multilevel or network marketing business 23 ventures or marketing opportunities,” but they “may not recruit any Tori Belle Affiliate” or 24 customer to enroll or participate in such ventures or opportunities. Dkt. # 24-1 at 64. This is a 25 classic nonsolicitation provision. 26 27 ORDER GRANTING IN PART 1 With regards to the adequacy of plaintiff’s allegations, plaintiff alleges that defendant 2 Meek reached out to other Tori Belle Affiliates, including the other former Affiliates named as 3 defendants in this lawsuit, to solicit them to leave Tori Belle with her and/or to encourage them 4 to speak to defendants Scott Seedall and his company, Juvenae. Dkt. # 24 at ¶¶ 91 and 118. 5 Meek allegedly promoted Juvenae’s compensation plan, personnel, and business opportunities 6 7 while assuring Tori Belle Affiliates that the Affiliate Agreement was unenforceable. Dkt. # 24 at 8 ¶ 93. Meek organized a Zoom meeting, inviting other Affiliates to “Meet Scott Seedall & 9 Juvenae” and touting the benefits of working for the new company. Dkt. # 24 at ¶¶ 94 and 96. 10 Following the termination of her agreement with Tori Belle, Meek used the same 11 communication networks through which she had conducted Tori Belle business to (1) announce 12 her termination, thank her Tori Belle team and express her hope that “[t]his isn’t goodbye, it is 13 14 see you later,” and provide a teaser regarding next steps (Dkt. # 24 at ¶ 106); (2) announce that 15 she had joined Juvenae and was looking forward to sharing “great things coming in the near 16 future” with her readers (Dkt. # 24 at ¶¶ 109 and 111); (3) praise her Tori Belle team and 17 promise “we will have that again friends” (Dkt. # 24 at ¶ 119); (4) announce the Juvenae product 18 launch and solicit orders for Juvenae lashes (Dkt. # 24 at ¶ 124); (5) invite and encourage her 19 20 readers to become Juvenae Ambassadors (Dkt. # 24 at ¶¶ 124 and 133); (6) fawn over Juvenae 21 and its corporate staff (Dkt. # 24 at ¶ 131); and (7) congratulate former Tori Belle Affiliates on 22 hitting sales targets and earning bonuses with Juvenae (Dkt. # 24 at ¶ 141.f.). 23 With regards to the other former Affiliate defendants, plaintiff alleges that: 24 (1) Russo used her Tori Belle communication channel to let people know that she had 25 decided to resign from Tori and to invite them to a Juvenae party so they could see if it “could be a wonderful fit for you!” (Dkt. # 24 at ¶¶ 113 and 122); 26 27 ORDER GRANTING IN PART 1 (2) Meek and/or Russo solicited defendant Hone to leave Tori Belle and join Juvenae (Dkt. # 24 at ¶ 121); 2 3 (3) Meek, Russo, Hone, and Rutledge solicited defendant Jones to leave Tori Belle and join Juvenae (Dkt. # 24 at ¶ 127); 4 (4) Jones used her Tori Belle communication channel to let people know that she had 5 joined a new direct sales company (Dkt. # 24 at ¶ 125); 6 (5) Russo and Jones, using the same communication channels they had used as Tori Belle 7 Affiliates, fawned over Juvenae and its corporate staff (Dkt. # 24 at ¶ 131); 8 (6) Rutledge used her Tori Belle communication channel to advertise a new lash product and invite her readers to purchase the product and/or join her in her new business 9 opportunity (Dkt. # 24 at ¶¶ 135 and 145); and 10 (7) Russo and Jones congratulated former Tori Belle Affiliates on hitting sales targets and 11 earning bonuses with Juvenae (Dkt. # 24 at ¶ 141.d., e., and g.). 12 Plaintiff further alleges on information and belief that the majority of the communications that 13 constitute unlawful solicitation “occurred not in public Facebook posts like those excerpted [in 14 the First Amended Complaint], but rather via Facebook DMs and messenger groups, private and 15 secret Facebook groups of which Defendants or any of them are admins, text message and email 16 17 communications, phone calls, and video chats.” Dkt. # 24 at ¶ 144. There is evidence that the 18 repeated communications had an impact on Tori Belle Affiliates. Between Thanksgiving and 19 Christmas 2020, “scores” of Tori Belle Affiliates defected to Juvenae, resulting in nearly $1 20 million in lost sales revenue over the holiday season. Dkt. # 24 at ¶ 146. In January 2021, an 21 Affiliate posted to her own social network that she had been watching Meek and Russo develop 22 the Juvenae lash line and had decided to join them. Dkt. # 24 at ¶ 141.b. 23 24 Section 5.4 prohibits recruitment, which it defines as, inter alia, the “encouragement[] or 25 effort to influence in any other way, either directly, indirectly, or through a third party” other 26 Affiliates or customers to participate in or patronize another direct sales network marketing 27 ORDER GRANTING IN PART 1 venture. Id. The allegations regarding the former Affiliates’ conduct are sufficient to raise a 2 plausible inference that they have run afoul of the nonsolicitation agreement set forth in Section 3 5.4 of the Affiliate Agreement. 4 3. Confidential and Proprietary Information 5 Section 11 of the Affiliate Agreement designates as confidential, inter alia, contact 6 7 information regarding customers, any and all information regarding Affiliates (including their 8 upline and downline affiliations), business materials, promotions, compensation plans, and all 9 information contained in a password protected area of Tori Belle’s website (including training 10 materials). Dkt. # 24-1 at 71-72. The contract prohibits Affiliates from disclosing confidential 11 information to third parties, using the information to compete with Tori Belle, or using the 12 information to convince an Affiliate or Customer to alter their business relationship with Tori 13 14 Belle. Dkt. # 24-1 at 72. Plaintiff alleges on information and belief that its former Affiliates used 15 Tori Belle’s trade secret training materials, customer and Affiliate contact lists, and confidential 16 information regarding “product plans, upcoming initiatives, [and] financials” to create Juvenae’s 17 competing line of false eyelash products, to train its nascent sales force, and to acquire a sales 18 force and customers. Dkt. # 24 at ¶¶ 83 and 154-56.1 19 20 Defendants argue that Tori Belle’s proprietary training materials have not been kept in 21 confidence and therefore cannot be the basis of a breach of confidentiality claim. In particular, 22 defendants point out that Tori Belle allowed its Affiliates to publish the training materials to a 23 Facebook group (“Team Lash Out”) which had thousands of members. Based solely on this 24 25 26 1 Plaintiff has apparently abandoned its contractual claim that defendants’ Facebook contact lists (made up of each Affiliate’s friends and followers) are Tori Belle’s confidential information. 27 ORDER GRANTING IN PART 1 allegation, defendants assert that “[i]nformation posted to the world’s largest social media 2 website is, by definition, not confidential (and certainly not a trade secret).” Dkt. # 31 at 9. 3 Defendants’ argument ignores both the realities of the on-line communication platform and 4 plaintiff’s allegations. Facebook allows users to control the audience that gets to see their posts 5 and messages. While a user may opt to have all of his or her information and communications 6 7 open to the public, the user may also choose to have a particular communication seen by only 8 selected individuals, by only those whom they have accepted as friends, or by only those who 9 have been admitted into a private group. Courts have evaluated the actual selections made and 10 the nature of the communications when determining whether confidences were adequately 11 maintained (Finder v. Leprino Foods Co., No. 1:13-CV-2059-AWI-BAM, 2017 WL 1272350, at 12 *6 (E.D. Cal. Jan. 20, 2017)) and have allowed suits to proceed based on allegations that a user’s 13 14 privacy choices have been circumvented (Jackson v. Amazon.com, Inc., No. 20-CV-2365-WQH- 15 BGS, 2021 WL 4197284, at *1 (S.D. Cal. Sept. 15, 2021) (Amazon.com allegedly spying on 16 members of a private Facebook group); Campbell v. Facebook Inc., 77 F. Supp. 3d 836, 838–39 17 (N.D. Cal. 2014) (challenging Facebook’s scanning of “private” messages)). Plaintiff alleges 18 that “Team Lash Out” was a private Facebook group which was used for training purpose, that 19 20 only Tori Belle Affiliates were permitted to join the group, and that each Affiliate had agreed to 21 keep the training materials that were shared in the group confidential. Dkt. # 24 at ¶¶ 88 and 150. 22 Taken as true, the allegations of the First Amended Complaint adequately state a breach of 23 defendants’ promise to keep the training materials confidential. 24 With regards to Tori Belle’s Affiliate, customer, and prospective customer lists, 25 defendants assert, without citation to authority, that their ownership interests in their Facebook 26 27 ORDER GRANTING IN PART 1 profile (and the friends and followers the profile has attracted) precludes plaintiff’s 2 confidentiality claim, as does the fact that each defendant’s Facebook friends can see the rest of 3 their friend network. The fact that an employee or independent contractor contributed to or 4 created a customer list does not preclude him or her from agreeing that the list was generated on 5 behalf of the company and that he or she will not use it for the benefit of a third party. That is the 6 7 agreement that defendants made, and allegedly breached, in this case: the Affiliate Agreement 8 clearly identifies customer and affiliate lists as confidential and precludes their disclosure or use 9 in competition with Tori Belle. Dkt. # 24-1 at 72. Nor does the fact that one facet of a contact list 10 may be publicly available destroy the confidentiality of compilations of data that includes the 11 public information. In this case, defendants argue that their Facebook friends and followers can 12 see the information plaintiff claims is confidential. There is no evidence to support this assertion, 13 14 however. What Facebook users can see depends entirely on a profile’s privacy settings and the 15 nature of the connection, be it as a “friend,” a webpage “like,” or a “message.” Generally, the 16 most revealing settings would show each friend the name and profile picture of other friends. 17 But the value of a compilation is rarely one particular item. Tori Belle seeks to protect the list of 18 Affiliates as opposed to the list of customers, their respective phone numbers and addresses, and 19 20 their Affiliates’ performance reports, compensation, upline networks, and downline networks. 21 Plaintiff has adequately alleged that the compiled information has been kept in confidence and 22 that the former Affiliates breached their promise to keep that confidence.2 23 24 2 If, despite the allegations of the First Amended Complaint, plaintiff’s breach of confidentiality 25 claim is based solely on its former Affiliate’s use of a Facebook contact list that is visible to persons who 26 have not signed the Affiliate Agreement, defendants may renew this argument in the context of a motion for summary judgment. 27 ORDER GRANTING IN PART 1 Finally, plaintiff’s allegations that its former Affiliates were privy to high-level corporate 2 discussions regarding product plans, upcoming initiatives, and financials (Dkt. # 24 at ¶ 83) and 3 that defendants Meek and Russo used this information to develop Juvenae’s competing eyelash 4 product line (Dkt. # 24 at ¶ 156) adequately pleads a plausible claim of breach of the 5 confidentiality provision with regards to those two defendants. 6 7 4. Nondisparagement 8 Section 2.13 of the Affiliate Agreement governs Affiliate conduct and precludes 9 Affiliates from making disparaging remarks to any member of the public regarding Tori Belle or 10 any personnel associated with the company. “Disparaging remarks” is defined to include “any 11 unfavorable remarks regarding Company, Company products or Company services or any 12 unfavorable remarks regarding the Company business opportunity, support, earning potential, 13 14 reputation or image . . . .” Dkt. # 24-1 at 42. To the extent the remarks about which plaintiff 15 complains were made after defendants were no longer Affiliates, there is no language in Section 16 2.13 suggesting that the provision survives the termination of the contract. The promises and 17 obligations set forth in the agreement are generally undertaken “[a]s an independent Affiliate” 18 (Dkt. # 24-1 at 36), and Section 16 of the agreement specifies that its term is month-to-month 19 20 (Dkt. # 24-1 at 74). Where a promise extends beyond the termination of the Agreement, such as 21 in the case of the nonsolicitation provision, the contract specifies the applicable post-termination 22 period. See Dkt. # 24-1 at 64. No such language is included in Section 2.13. 23 With regards to defendant Meek, plaintiff alleges on information and belief that she 24 “began to disparage and complain about Tori Belle and its CEO, Laura Hunter, in various posts 25 within the Team Lash Out group” a few months before her contract was terminated. Dkt. # 24 at 26 27 ORDER GRANTING IN PART 1 ¶ 89. Team Lash Out, as described in the First Amended Complaint, was a private forum for Tori 2 Belle Affiliates. Dkt. # 25 at ¶ 150. Plaintiff has not, therefore, alleged a disparaging remark to 3 the public and has not adequately alleged a disparagement claim under the contract. 4 B. Tortious Interference Claims (Counts III, IV, and V) 5 Plaintiff alleges that the former Affiliate defendants, Seedall, and the Juvenae entities 6 7 tortiously interfered with its contracts and prospective business expectancies. The contract claim 8 is based on “contracts with various Affiliates as well as contracts for sale with various customers 9 who purchase or have purchased or placed orders for Tori Belle products.” Dkt. # 24 at ¶¶ 175, 10 185, and 195. The prospective business expectancy claim is based on Tori Belle’s anticipation of 11 “economic benefit in the form of recruiting new Tori Belle Affiliates and making additional 12 sales to prospective and repeat customers and to Affiliates.” Dkt. # 24 at ¶ 176, 186, and 196. 13 14 Defendants argue that these claims fail because they are simply an end run around Washington’s 15 noncompetition statute, which makes noncompetition clauses unenforceable unless the 16 independent contractor earns at least $250,000 per year. RCW 49.62.090(1)(a) provides that the 17 noncompetition statute “displaces conflicting tort, restitutionary, contract, and other laws of 18 [Washington] state pertaining to liability for competition by employees or independent 19 20 contractors . . . .” Plaintiff cannot, therefore use its tortious interference claim to pursue the 21 unenforceable noncompetition covenant. It may, however, base its tortious interference claim on 22 allegations that defendants interfered with plaintiff’s contracts with other Affiliates when they 23 solicited their participation in the Juvenae venture and caused them to terminate their agreements 24 with Tori Belle. 25 In order to state a plausible tortious interference claim, plaintiff must allege “(1) the 26 27 ORDER GRANTING IN PART 1 existence of a valid contractual relationship or business expectancy; (2) that defendants had 2 knowledge of that relationship; (3) an intentional interference inducing or causing a breach or 3 termination of the relationship or expectancy; (4) that defendants interfered for an improper 4 purpose or used improper means; and (5) resultant damage. Leingang v. Pierce Cty. Med. 5 Bureau, Inc., 131 Wash. 2d 133, 157 (1997).3 Plaintiff has adequately alleged the existence of 6 7 contracts with Affiliates (in the form of the Affiliate Agreements), that defendants knew of those 8 contracts, that they nevertheless encouraged other Affiliates to terminate those contracts and join 9 Juvenae in violation of their nonsolicitation provision, and that the resulting defections caused 10 plaintiff a substantial loss of revenue. Defendants have not attempted to show that their conduct 11 was justified or privileged. 12 To the extent the interference claims are based on plaintiff’s loss of customers, the 13 14 analysis is less straightforward. Plaintiff does not argue that it had contracts for the purchase of 15 false eyelashes with which defendants interfered, but rather that it expected future business from 16 existing customers. “A valid business expectancy includes any prospective contractual or 17 business relationship that would be of pecuniary value.” Newton Ins. Agency & Brokerage, Inc. 18 v. Caledonian Ins. Grp., Inc., 114 Wn. App. 151, 158 (2002). Although an enforceable contract 19 20 is not required to support a tortious interference claim, plaintiff must allege “a relationship 21 between parties contemplating a contract, with at least a reasonable expectancy of fruition.” 22 23 3 The Washington Supreme Court had previously established a four element analysis, omitting 24 the “improper purpose or improper means” element and instead shifting the burden to defendants to show that its interference was justified or privileged if plaintiff established the other four elements. Pleas 25 v. City of Seattle, 112 Wn.2d 794, 800-01 (1989) (en banc) (quoting Calborn v. Knudtzon, 65 Wn.2d 26 157, 162-63 (1964)). Regardless whether improper purpose/means is an element of the claim or an affirmative defense, plaintiff’s pleading is sufficient. 27 ORDER GRANTING IN PART 1 Scymanski v. Dufault, 80 Wn.2d 77, 84-85 (1971). “Courts allow tortious interference claims 2 where a defendant’s acts destroy a plaintiff’s opportunity to obtain prospective customers. 3 Washington courts require a plaintiff to show only that its future business opportunities are a 4 reasonable expectation and not merely wishful thinking.” Greensun Grp., LLC v. City of 5 Bellevue, 7 Wn. App. 2d 754, 768-69 (2019). Read in the light most favorable to plaintiff, the 6 7 First Amended Complaint adequately alleges a valid business expectancy. Plaintiff was a fully 8 functional venture with existing customers, a sales track record, and reasonable expectations for 9 the 2020 holiday season which were allegedly not met because of defendants’ interference. 10 Interference is intentional under the third element of a tortious interference claim “if the 11 actor desires to bring it about or if he knows that the interference is certain or substantially 12 certain to occur as a result of his action.” Newton Ins. Agency, 114 Wn. App. at 158. 13 14 “Interference is for an improper purpose if it is wrongful by some measure beyond the 15 interference itself, such as a statute, regulation, recognized rule of common law, or an 16 established standard of trade or profession.” Bombardier Inc. v. Mitsubishi Aircraft Corp., 383 17 F. Supp. 3d 1169, 1188–89 (W.D. Wash. 2019). Merely “[a]sserting one’s rights to maximize 18 economic interests does not create an inference of ill will or improper purpose” (Birkenwald 19 20 Distrib. Co. v. Heublein, Inc., 55 Wn. App. 1, 12 (1989)), but plaintiff has alleged that the means 21 defendants employed – namely the solicitation of both plaintiff’s sales force and its customers – 22 was wrongful under the Affiliate Agreement. Plaintiff has, therefore, adequately alleged tortious 23 interference with its expectancy of business from its former customers. 24 25 26 27 ORDER GRANTING IN PART 1 C. Defend Trade Secrets Act (Count VI) 2 The Defend Trade Secrets Act confers a private cause of action on “an owner of a trade 3 secret that is misappropriated . . . if the trade secret is related to a product or service used in, or 4 intended for use in, interstate or foreign commerce.” 18 U.S.C. § 1836(b)(1). “Misappropriation” 5 is defined to include “disclosure or use of a trade secret of another without express or implied 6 7 consent by a person who . . . at the time of disclosure or use, knew or had reason to know that 8 the knowledge of the trade secret was . . . derived from or through a person who owed a duty to 9 the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade 10 secret . . . .” 18 U.S.C. § 1839(5). Plaintiff alleges that it is the owner of a training program and 11 contact lists that are related to false eyelashes, the sale of which generates millions of dollars in 12 revenue. Dkt. # 24 at ¶¶ 212-13. Plaintiff further alleges that it has taken reasonable efforts to 13 14 maintain the secrecy of this information through the use of nondisclosure and confidentiality 15 agreements, password-protected access, and closed/private group training sessions. Dkt. # 24 at 16 ¶ 214. The former Affiliate defendants used these trade secrets in service of Juvenae, causing 17 plaintiff financial harm, despite having agreed that the information was confidential and that 18 they owed a duty to maintain the secrecy of the information. Notwithstanding defendants’ 19 20 arguments that the training program has not been maintained in secrecy, that defendants’ 21 Facebook profiles, posts, and friends and followers lists do not belong to plaintiff, that they did 22 not misappropriate the training program or contact lists, and that plaintiff has not shown 23 damages, the Court finds that plaintiff has adequately alleged a Defense of Trade Secrets Act 24 25 26 27 ORDER GRANTING IN PART 1 violation.4 2 D. Civil Conspiracy (Count VII) 3 Defendants argue that “Tori Belle’s conspiracy claim fails because its other claims fail.” 4 Dkt. # 31 at 11. For the reasons discussed above, however, plaintiff’s nonsolicitation, 5 confidentiality, tortious interference, and trade secret claims survive defendants’ motion to 6 7 dismiss. Plaintiff’s allegations of a conspiracy are sufficient. 8 E. Conversion (Count VIII) 9 Plaintiff alleges that it has a property interest in Team Lash Out, the private Facebook 10 group the former Affiliate defendants were required to develop on Tori Belle’s behalf. Dkt. # 24 11 at ¶ 240. Pursuant to Section 2.10 of the Affiliate Agreement, the former Affiliate defendants 12 were expected to “share [their experiences in sales techniques, product knowledge, and 13 14 understanding of the Tori Belle Cosmetic’s program] with lesser experienced Affiliates within 15 their organization” and were required to “establish[] a venue for group communication such as a 16 Facebook group, messenger group, email threat, etc. and respond[] to those communications in a 17 positive and helpful manner.” Dkt. # 24-1 at 40-41. Elsewhere, the Affiliate defendants 18 acknowledged that “[a]ny and all information regarding Affiliate’s Personal Team, Affiliate’s 19 20 Downline, and Affiliate’s Upline” was confidential and would not be used “for any reason other 21 than for pursuing [the Affiliate’s] Tori Belle Business.” Dkt. # 24-1 at 71. Plaintiff alleges that, 22 following their departure from Tori Belle, the Affiliate defendants kicked out those 23 24 4 To the extent defendants are arguing that plaintiff must show that they acquired the trade secrets through improper means, they are mistaken. The definition of misappropriation covers a wide array of 25 conduct. Here, plaintiff has adequately alleged that defendants, being fully aware of their contractual 26 obligations, used plaintiff’s training materials, Affiliate lists, and customer lists without permission and for the benefit of a competitor. 27 ORDER GRANTING IN PART 1 administrators of Team Lash Out who remained loyal to Tori Belle, effectively hijacking a 2 forum that had been developed as a Tori Belle asset and converting it into a Juvenae recruiting 3 and training site. The conversion claim is not based on defendants’ retention of their own 4 Facebook profile and friends/followers, but rather on their refusal to turn over the administrative 5 keys to a private Facebook group they (and others) had developed on plaintiff’s behalf. Plaintiff 6 7 has adequately alleged conversion. 8 9 For all of the foregoing reasons, defendants’ motion to dismiss (Dkt. # 29) is GRANTED 10 in part and DENIED in part. Plaintiff’s noncompetition/anti-moonlighting and nondisparagement 11 breach of contract claims are dismissed. Defendants’ motion to stay discovery (Dkt. # 32) is 12 DENIED as moot. 13 14 15 Dated this 7th day of March, 2022. 16 17 18 Robert S. Lasnik 19 United States District Judge 20 21 22 23 24 25 26 27 ORDER GRANTING IN PART