Wilcox Indust. V . Hansen, et a l . CV-11-551-PB 5/7/12 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Wilcox Industries Corp.
v. Case N o . 11-cv-551-PB Opinion N o . 2012 DNH 092 Mark Hansen, Advanced Life Support Technologies, Inc.
MEMORANDUM AND ORDER
Wilcox Industries Corporation (“Wilcox”) filed a complaint
against Mark Hansen and Advanced Life Support Technologies, Inc.
(“ALST”), alleging misappropriation of trade secrets and unfair
competition, among other state law claims. Defendants move to
dismiss all claims for failure to state a claim upon which
relief may be granted. Alternatively, they have filed a motion
for a more definite statement of claims. For the reasons
provided below, I grant in part and deny in part the motion to
dismiss and deny the motion for a more definite statement.
I. BACKGROUND
Wilcox manufactures military equipment, including a self-
contained breathing apparatus that can be used in hazardous or
contaminated environments. The device was initially called the SCOUT, and is now called the PATRIOT. Wilcox is currently
working on developing the next-generation PATRIOT.
Hansen served as a consultant to Wilcox from 2003 until
2005, when Wilcox hired him as a full-time employee. He
continued to work at Wilcox until June 2007, when he left the
company to work as President of ALST, a company he founded in
2006.
During his tenure at Wilcox, Hansen was a member of the
design teams that created the SCOUT/PATRIOT life support device.
He had access to confidential information regarding Wilcox’s
advanced life support technology, including technical
information relating to the development of the next-generation
PATRIOT product. To protect the confidentiality of Wilcox’s
proprietary information, Wilcox and Hansen entered into a
Nondisclosure and Nonsolicitation Agreement (“NDA”) in 2003,
whereby Hansen agreed to hold and maintain Wilcox’s
“confidential information” in the strictest confidence for the
sole and exclusive benefit of Wilcox. The NDA defines
confidential information to include all trade secrets,
proprietary information, inventions, discoveries, methods,
formulas, and the like. The NDA stipulates that the parties’
2 obligations under the agreement survive termination of the
business relationship.
At the same time, Hansen entered into a Royalty Agreement
with Wilcox, under which he agreed to assign to Wilcox “all
right[s], title, and interest in and to intellectual property,
including rights under patent and copyright law, relating to the
SCOUT or any products developed or relating to the SCOUT.”
Compl. ¶ 1 7 , Doc. N o . 1 . In exchange, Wilcox agreed to pay
Hansen a royalty amount based on the net billings for sales of
the SCOUT and related accessories.
In August 2004, Hansen and several other Wilcox employees
were named as inventors on a patent application for Wilcox’s
self-contained breathing apparatus technology that would later
be used to create the SCOUT/PATRIOT. Several months later,
Hansen entered into an Assignment Agreement with Wilcox, in
which he assigned to it the full and exclusive rights, title,
and interest to the patent application for the SCOUT technology.
Much of the technology encompassed in the device is contained in
Wilcox’s published patent. That patent, however, does not
disclose proprietary technical information about Wilcox’s next-
generation PATRIOT product.
3 Shortly after Hansen left Wilcox in 2006 to become the
President of ALST, Wilcox and ALST entered into a consulting
agreement. ALST agreed to serve as a consultant for Wilcox in
the design and manufacture of its respirator systems and to
provide training and support for those systems to Wilcox’s
customers. Hansen was the sole representative of ALST who
thereafter provided consulting services to Wilcox. He traveled
with Wilcox’s employees to various customer locations throughout
the world to market Wilcox’s current PATRIOT product and to
train customers on how to use the device. While serving as a
representative of Wilcox in his consulting role, Hansen
simultaneously marketed his own competing products and company
to Wilcox’s customers.
During the consulting relationship, Hansen also
participated in meetings and communications that made him privy
to confidential proprietary information regarding the
development of Wilcox’s next-generation PATRIOT device. Through
those activities, Hansen and ALST were entrusted with trade
secrets regarding the device, as well as confidential
information about Wilcox’s customers.
4 When the consulting relationship ended in February 2009,
Hansen and ALST began to capitalize on the know-how they
acquired while working with Wilcox. In spite of his obligations
under the NDA, Hansen incorporated Wilcox’s confidential and
trade secret information pertaining to its next-generation life
support device into ALST’s competing product known as the
SHIELD. In developing that product, Hansen also used the same
technology that he had assigned to Wilcox in the Royalty
Agreement, although he continued to receive royalties.
Hansen and ALST then began soliciting Wilcox’s existing and
prospective customers to purchase ALST’s competing product using
the confidential customer information and contacts that Wilcox
had entrusted to them. In one instance, ALST entered into a
contract to sell SHIELD units to the Los Angeles County
Sheriff’s Department. Hansen was aware that Wilcox was
marketing its own PATRIOT product to this prospective customer.
A final agreement was essentially in place between Wilcox and
the Sheriff’s Department when the contract was awarded instead
to ALST.
Defendants also solicited Wilcox’s customers by offering to
service the PATRIOT products that had been previously purchased
5 from Wilcox. Because Hansen is not a certified technician of
Wilcox’s products, any service work he performs on those
products voids the warranty that Wilcox offers to its customers.
While marketing their own products, Hansen and ALST also made
“harmful false statements about Wilcox and its technology” to
Wilcox’s customers. Comp. ¶ 6 7 , Doc. N o . 1 .
II. STANDARD OF REVIEW
To survive a motion to dismiss under Rule 12(b)(6), a
plaintiff must make factual allegations sufficient to state a
claim to relief that is plausible on its face. See Ashcroft v .
Iqbal, 129 S . C t . 1937, 1949 (2009). A claim is facially
plausible when it 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.” Id.
(citations omitted).
In deciding a motion to dismiss, I must employ a two-
pronged approach. See Ocasio-Hernández v . Fortuño-Burset, 640
F.3d 1 , 12 (1st Cir. 2011). First, I must screen the complaint
6 for statements that “merely offer legal conclusions couched as
fact or threadbare recitals of the elements of a cause of
action.” Id. (citations, internal quotation marks, and
alterations omitted). A claim consisting of little more than
“allegations that merely parrot the elements of the cause of
action” may be dismissed. Id. Second, I must credit as true
all non-conclusory factual allegations and the reasonable
inferences drawn from those allegations, and then determine if
the claim is plausible. Id. The plausibility requirement
“simply calls for enough fact to raise a reasonable expectation
that discovery will reveal evidence” of illegal conduct. Bell
Atl. Corp. v . Twombly, 550 U.S. 5 4 4 , 556 (2007). The “make-or-
break standard” is that those allegations and inferences, taken
as true, “must state a plausible, not a merely conceivable, case
for relief.” Sepúlveda-Villarini v . Dep’t of Educ. of P.R., 628
F.3d 2 5 , 29 (1st Cir. 2010); see Twombly, 550 U.S. at 555
(“Factual allegations must be enough to raise a right to relief
above the speculative level . . . .” (citation omitted)).
7 III. ANALYSIS
Wilcox alleges the following claims against both
defendants: (1) misappropriation of trade secrets in violation
of New Hampshire’s version of the Uniform Trade Secrets Act; (2)
common-law unfair competition; (3) unfair competition in
violation of the New Hampshire Consumer Protection Act; and (4)
intentional interference with contractual relations. Wilcox
asserts four additional claims against Hansen: (1) breach of
contract; (2) breach of the implied covenant of good faith and
fair dealing; (3) breach of fiduciary duty; and (4) unjust
enrichment. Defendants move to dismiss all claims for failure
to state a claim upon which relief can be granted. They argue
that the common-law and statutory unfair competition,
intentional interference with contractual relations, unjust
enrichment, breach of fiduciary duty, and breach of the implied
covenant of good faith and fair dealing claims are all preempted
by the New Hampshire Uniform Trade Secrets Act (“NHUTSA”). In
addition, they contend that all claims are insufficiently pled.
I discuss the preemption argument and the sufficiency of
pleadings in turn.1
1 The parties treat all causes of action as subject to New 8 A. Preemption by NHUTSA
Defendants argue that the NHUTSA preempts Wilcox’s tort
claims. The NHUTSA “displaces conflicting tort, restitutionary,
and other law of this state providing civil remedies for
misappropriation of a trade secret.” N.H. Rev. Stat. Ann. §
350-B:7, I . The only exceptions to this provision are claims
for contractual remedies, criminal remedies, and “[o]ther civil
remedies that are not based on misappropriation of a trade
secret.” Id. § 350-B:7, I I .
The preemption provision was designed to “preserve a single
tort action under state law for misappropriation of a trade
secret as defined in the statute and thus to eliminate other
tort causes of action founded on allegations of misappropriation
of information that may not meet the statutory standard for a
trade secret.” Mortgage Specialists, Inc. v . Davey, 153 N.H
764, 776 (2006) (internal quotation marks omitted). In essence,
the NHUTSA classifies information either as a protected trade
secret, as defined in the statute, or as unprotected general
knowledge. Id. at 777. Claims based on unauthorized use of
Hampshire law. I adopt that assumption without conducting a choice of law analysis.
9 confidential information are preempted even if the information
at issue is not a trade secret. Id.
The preemption provision applies when a claim is “based
solely o n , or to the extent that it is based o n , the allegations
or the factual showings of unauthorized use of information or
misappropriation of a trade secret.” Id. at 778 (internal
quotation marks, alterations, and ellipses omitted). Thus, the
facts alleged in support of a claim, rather than the label
attached to i t , determine whether that claim is preempted. Id.
A claim survives to the extent that it alleges wrongful conduct
independent of any alleged unauthorized use of information,
provided that the independent allegations are sufficient to
plead all elements of the claim. See id.
Here, Wilcox contends that defendants misappropriated
confidential and trade secret information related to its next-
generation PATRIOT device and its customers. To the extent that
Wilcox relies on the same factual allegations for its remaining
tort claims, those claims are preempted by the NHUTSA. Wilcox,
however, makes further factual allegations that are not related
to unauthorized use of information, namely that: (1) defendants
marketed ALST and its competing SHIELD product to Wilcox’s
10 customers while ALST was acting as a consultant to promote
Wilcox’s PATRIOT device; (2) after the consulting relationship
ended, defendants made “harmful false statements” about Wilcox
and its technology to Wilcox’s customers; and (3) defendants
solicited Wilcox’s customers by offering to service Wilcox’s
products without being certified to do s o . I analyze the
elements of each non-NHUTSA tort claim to determine whether the
factual allegations supporting the claim are sufficient to state
a claim for relief.2
1. Unfair Competition
Wilcox asserts claims for unfair competition at common law
and under the New Hampshire Consumer Protection Act. I analyze
each claim in turn to determine whether Wilcox has stated a
claim upon which relief can be granted.
2 I rely on a different rationale in rejecting defendants’ argument that Wilcox’s claim for breach of the implied covenant of good faith and fair dealing is preempted. The type of good faith and fair dealing claim at issue here is a contract claim rather than a tort claim. See, e.g., Bennett v . ITT Hartford Group, Inc., 150 N.H. 753, 757 (2004) (distinguishing contract and tort claims for a breach of the duty of good faith and fair dealing). Thus, it is exempt from the NHUTSA preemption provision. See N.H. Rev. Stat. Ann. § 350-B:7, I I . 11 a. Common-Law Unfair Competition (Count III)
Wilcox contends that the defendants are liable for unfair
competition because, in competing with Wilcox for business,
defendants: (1) improperly used Wilcox’s trade secret and
property information; (2) used intellectual property that Hansen
had assigned to Wilcox in exchange for royalty payments; and (3)
made “harmful false statements” about Wilcox to its customers.
Wilcox’s first argument is preempted by the NHUTSA because it
turns on the contention that defendants injured Wilcox through
the unauthorized use of confidential information. Its second
argument is a nonstarter because it is either (i) a
straightforward claim that defendants have infringed its patent
rights, which is maintainable if at all under federal patent
laws, see generally Mass. Eye & Ear Infirmary v . QLT
Phototherapeutics, Inc., 412 F.3d 215, 235 (1st Cir. 2005)
(discussing general issue of patent preemption), or (ii) it is
an attempt to transform a claim for breach of the royalty
agreement into a tort claim for unfair competition. The New
Hampshire Supreme Court has given no sign that it would
recognize a claim for unfair competition in either case.
Assuming without deciding, however, that New Hampshire would
12 recognize a viable unfair competition in a case where someone
“engages in conduct which deceives the general buying public,”
Optical Alignment Sys. & Inspection Servs., Inc. v . Alignment
Servs. of N . Am., Inc., 909 F. Supp. 5 8 , 61 (D.N.H. 1995)
(quoting Salomon S.A. v . Alpina Sports Corp., 737 F. Supp. 7 2 0 ,
722–23 (D.N.H. 1990)), Wilcox has stated a minimally sufficient
claim for unfair competition by commercial disparagement.
Accordingly, I decline to dismiss its claim for unfair
competition.
b. New Hampshire Consumer Protection Act (Count IV)
The New Hampshire Consumer Protection Act (“NHCPA”)
prohibits the use of “any unfair method of competition or any
unfair or deceptive act or practice in the conduct of any trade
or commerce within this state.” N.H. Rev. Stat. Ann. § 358–A:2.
The Act provides a non-exhaustive list of prohibited practices,
including “[d]isparaging the goods, services, or business of
another by false or misleading representation of fact.” Id. §
358–A:2, VIII. In addition to the expressed prohibitions,
courts use the so-called “rascality” test to determine which
non-delineated commercial actions fall within the Act. Under
this test, “the objectionable conduct must attain a level of
13 rascality that would raise an eyebrow of someone inured to the
rough and tumble of the world of commerce.” George v . Al Hoyt &
Sons, Inc., 162 N.H. 123, 129 (2011).
Here, the only allegations not preempted by the NHUTSA are
Wilcox’s claims that (i) defendants made “harmful false
statements” to its customers, (ii) marketed ALST’s competing
products to those customers while purporting to promote Wilcox’s
products as consultants for the company, and (iii) solicited
Wilcox’s customers by offering to service its products without
being certified to do s o . Assuming without deciding that this
conduct qualifies as “unfair or deceptive” conduct as defined by
the statute, Wilcox’s claim still must fail. The NHCPA permits
relief only for unfair competition that occurs “within this
state.” N.H. Rev. Stat. Ann. § 358–A:2. Wilcox has not alleged
that defendants made any false statements about Wilcox to
customers in New Hampshire, nor has it asserted that they
marketed competing products or services to New Hampshire
customers. There is simply no allegation that any offending
conduct occurred in New Hampshire. Although Wilcox alleges that
the harm from defendants’ conduct occurred in New Hampshire,
where Wilcox has its principal place of business, that fact
14 alone is insufficient to bring the offending conduct within the
fold of the NHCPA. See Mueller C o . v . U.S. Pipe & Foundry Co.,
N o . Civ. 03-170-JD, 2003 WL 22272135, at *6 (D.N.H. Oct. 2 ,
2003) (“In the absence of any alleged unfair method of
competition or unfair or deceptive act or practice which took
place within New Hampshire, the harm suffered by [the plaintiff]
within the state does not state a claim under RSA 358–A:2.”);
see also Environamics Corp. v . Ferguson Enters., Inc., N o . Civ.
00-579-JD, 2001 WL 1134727, at *4 (D.N.H. Sept. 2 4 , 2001) (“The
limitation in RSA 358–A:2 to ‘conduct of any trade or commerce
within this state’ has been interpreted to mean that the statute
only applies to offending conduct that took place within New
Hampshire.”); Pacamor Bearings, 918 F. Supp. at 504 (noting that
“other courts interpreting similar language have found that the
‘in this state’ language clearly indicates that the statute is
only applicable if the offending conduct took place within the
territorial borders of the state” (internal quotation marks and
alterations omitted)).
In the absence of an allegation not otherwise preempted by
the NHUTSA that defendants engaged in unfair or deceptive acts
within New Hampshire, Wilcox can prove no set of facts which
15 would entitle it to relief on the statutory claim of unfair
competition. Accordingly, I grant defendants’ motion to dismiss
that count from the complaint.
2. Intentional Interference with Contractual Relations (Count VIII)
In its complaint, Wilcox asserts a claim for intentional
interference with contractual relations. New Hampshire
recognizes two distinct tortious interference theories:
intentional interference with existing contractual relations and
intentional interference with prospective contractual relations.
See Nat’l Emp’t Serv. Corp. v . Olsten Staffing Serv., Inc., 145
N.H. 1 5 8 , 162 (2000); Baker v . Dennis Brown Realty, Inc., 121
N.H. 6 4 0 , 644 (1981). Wilcox appears to combine both torts into
a single claim. A close analysis of its allegations, however,
demonstrates that Wilcox has asserted a viable claim only for
intentional interference with prospective contractual relations.
a. Intentional Interference with Existing Contractual Relations
To state a claim for intentional interference with existing
contractual relations under New Hampshire law, Wilcox must show
that: “(1) it had a contractual relationship with [a third
party]; (2) [defendants] knew of the contractual relationship;
16 (3) [defendants] wrongfully induced [the third party] to breach
the contract; and (4) [Wilcox’s] damages were proximately caused
by [defendants’] interference.” Alt. Sys. Concepts, Inc. v .
Synopsys, Inc., 229 F. Supp. 2d 7 0 , 73 (D.N.H. 2002) aff’d, 374
F.3d 23 (1st Cir. 2004) (citing Roberts v . Gen. Motors Corp.,
138 N.H. 5 3 2 , 539 (1994)). Wilcox must, therefore, allege that
defendants improperly and intentionally interfered with an
existing contract between Wilcox and a third party by causing
either party to commit a breach. See id. (“Because [the third
party] never breached its [contract] with [the plaintiff], [the
defendant] cannot be liable on [the] interference with
contractual relations claim, even if it improperly attempted to
interfere with the relationship between [the third party] and
[the plaintiff].”); see also Demetracopoulos v . Wilson, 138 N.H.
371, 373-74 (1994); Montrone v . Maxfield, 122 N.H. 7 2 4 , 726
(1982); Restatement (Second) of Torts § 766 (1979).
Wilcox alleges generally that defendants interfered with
its customer relationships but it does not allege any existing
contract that was terminated as a result of defendants’
misconduct. Accordingly, I treat Wilcox’s interference claim as
a claim for interference with prospective contractual relations.
17 b. Intentional Interference with Prospective Contractual Relations
A claim for intentional interference with prospective
contractual relations exists under New Hampshire law when “[o]ne
who, without a privilege to do s o , induces or otherwise
purposely causes a third person not to . . . enter into or
continue a business relation with another” and thereby causes
harm to the other.” Synopsys, 229 F. Supp. 2d at 73-74 (quoting
Baker, 121 N.H. at 6 4 4 ) . To prevail on such a claim, Wilcox
must show that: “(1) [it] had an economic relationship with a
third party; (2) the defendant[s] knew of this relationship; (3)
the defendant[s] intentionally and improperly interfered with
this relationship; and (4) [Wilcox] was damaged by such
interference.” M & D Cycles, Inc. v . Am. Honda Motor Co., Inc.,
208 F. Supp. 2d 115, 119 (D.N.H. 2002) aff’d, 70 F. App’x 592
(1st Cir. 2003). The asserted economic relationship must “give
rise to a reasonable expectation of economic advantage.” Preyer
v . Dartmouth Coll., 968 F. Supp. 2 0 , 26 (D.N.H. 1997) (quoting
Heritage Home Health, Inc. v . Capital Region Health Care Corp.,
Civ. N o . 95–558–JD, 1996 WL 655793, at *4 (D.N.H. Oct. 1 ,
1996)).
18 Because the law provides greater protection to a party’s
interest in an existing contract than in a prospective one, the
scope of actionable conduct is narrower in the latter instance.
Restatement (Second) of Torts § 767 cmt. j (1979). Thus,
certain types of conduct such as fraud or threats of physical
violence ordinarily will be sufficient to support a claim for
interference with a prospective contractual relationship, but
the use of ordinary means of persuasion or the exertion of
limited economic pressure will not, by itself, be sufficient.
Id.
Wilcox has pled both that it had relationships with its
existing customers that gave rise to a reasonable expectation of
economic advantage, and that defendants had firsthand knowledge
of those relationships through Hansen’s employment with Wilcox.
With respect to the third prong of the claim, Wilcox alleges
that in the course of soliciting business from Wilcox’s
customers, defendants made “harmful false statements” about
Wilcox and its products. Inducing a third person by fraudulent
misrepresentations or defamatory statements not to do business
with the plaintiff can constitute wrongful conduct sufficient to
support an interference with a prospective contractual
19 relationship claim. Restatement (Second) of Torts § 767 cmt. c
& § 768 cmt. e ; see Liberty Leather Corp. v . Callum, 653 F.2d
694, 699 (1st Cir. 1981) (“Undoubtedly a cause of action for
tortious interference with business relations may rest upon
defamatory remarks.”).
Therefore, Wilcox has stated a viable claim for intentional
interference with prospective contractual relations based on the
above-described theory.
3. Breach of Fiduciary Duty (Count VI)
Wilcox asserts a claim for breach of fiduciary duty against
Hansen. Under New Hampshire law, a fiduciary relationship is
defined broadly and “exists wherever influence has been acquired
and abused or confidence has been reposed and betrayed.” Lash
v . Cheshire Cnty. Sav. Bank, Inc., 124 N.H. 435, 438 (1984)
(quoting Cornwell v . Cornwell, 116 N.H. 205, 209 (1976)).
Wilcox asserts that Hansen, as a Vice President of Wilcox, owed
fiduciary duties to the company. In the course of its
relationship with Hansen, Wilcox reposed a special confidence in
Hansen not to disclose or otherwise improperly use Wilcox’s
confidential and trade secret information regarding its next-
generation PATRIOT product or its customers. The complaint also
20 alleges that Hansen breached his obligations as a fiduciary by
using the entrusted information to develop a competing life
support device and to market and sell this device to Wilcox’s
customers through ALST. Wilcox does not assert that ALST
breached any fiduciary duty it may have owed to Wilcox as a
consultant.
Assuming that Wilcox’s allegations are sufficient to state
a claim against Hansen for breach of fiduciary duty, the claim
is preempted by the NHUTSA. To evade preemption, Wilcox makes
two arguments, both equally meritless. First, it argues that
the information it entrusted to Hansen is not limited to trade
secrets or confidential information, but includes other
“proprietary information,” and thus its breach of fiduciary duty
claim is not based “solely on” the allegations of trade secret
misappropriation. As I have explained, however, claims based on
unauthorized use of information are preempted even if the
information at issue is not a trade secret. Mortgage
Specialists, 153 N.H. at 776-77. Second, Wilcox contends that
the elements of its breach of fiduciary duty claim require it to
show that the parties were engaged in a fiduciary relationship,
which is an element independent of the allegations that also
21 form the basis for its misappropriation claim. Again, Wilcox
misconstrues the effect of the preemption provision. A claim is
preempted when it is dependent upon facts necessary to establish
a misappropriation claim, regardless of whether surplus elements
or proof are necessary to establish i t . See id. Interpreting
the NHUTSA as preempting only those claims that have the same
elements as a misappropriation of trade secrets claim would
render the preemption provision meaningless. See id.
Because Wilcox has failed to base its breach of fiduciary
duty on facts independent of the claim that defendants
misappropriated Wilcox’s trade secrets, the claim is preempted
by NHUTSA.
4. Unjust Enrichment (Count VII)
Wilcox also asserts a claim for unjust enrichment, alleging
that Hansen has been unjustly enriched by receiving royalties
while simultaneously (1) using the same intellectual property he
assigned to Wilcox in the Royalty Agreement to compete unfairly
against Wilcox, and (2) soliciting Wilcox’s customers to sell a
competing product that incorporates the assigned technology.
Hansen contends that the claim is preempted by the NHUTSA.3
3 The parties treat the unjust enrichment claim as a tort claim, 22 To prevail on the claim, Wilcox would have to “show[] that
there was unjust enrichment either through wrongful acts or
passive acceptance of a benefit that would be unconscionable to
permit the defendant to retain.” R. Zoppo Co., Inc. v . City of
Manchester, 122 N.H. 1109, 1113 (1982). Assuming that Hansen’s
actions would constitute wrongful conduct sufficient to entitle
Wilcox to restitution, the claim nonetheless fails because all
of the allegations are based on the same facts as the
misappropriation claim. Hansen’s unauthorized use of
information about the device to develop a competing product and
his unauthorized use of information about Wilcox’s customers to
solicit their business are the actions that form the basis of
the misappropriation claim. In the absence of an allegation of
unjust enrichment independent of misappropriation, the claim is
preempted by the NHUTSA.
rather than a contract claim. Accordingly, I analyze whether the NHUTSA preempts i t . I note, however, that even if the claim is not preempted, I would grant the motion to dismiss because the claim merely restates Wilcox’s breach of contract claim. See Clapp v . Goffstown Sch. Dist., 159 N.H. 206, 210-11 (2009) (“It is a well-established principle that the court ordinarily cannot allow recovery under a theory of unjust enrichment where there is a valid, express contract covering the subject matter at hand.”). 23 B. Sufficiency of Pleading as to Remaining Claims
With respect to the claims to which the NHUTSA preemption
does not apply, defendants move for dismissal on the basis of
the insufficiency of the pleadings. I examine each remaining
claim to determine whether Wilcox has alleged facts that state a
plausible case for relief.
1. Misappropriation of Trade Secrets Claim (Count V )
Wilcox’s chief claim is that defendants misappropriated its
trade secrets in violation of the NHUTSA. The NHUTSA defines
“misappropriation,” in relevant part, as “use of a trade secret
of another without express or implied consent by a person who,”
at that time, “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.” N.H. Rev. Stat. Ann. §
350–B:1, I I . A trade secret is defined as information that
“[d]erives independent economic value . . . from not being
generally known” and that “[i]s the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.”
Id. § 350–B:1, IV. The term “improper means” includes “breach
or inducement of a breach of a duty to maintain secrecy.” Id. §
350–B:1, I .
24 To state a claim for misappropriation under the NHUTSA,
Wilcox must plead facts sufficient to establish that (1) it had
a trade secret; (2) defendants used i t ; and (3) defendants knew
or had reason to know that they obtained knowledge of the trade
secret through a breach of confidence reposed in them. See id.
§ 350–B:1.
Defendants argue that Wilcox’s complaint fails to plausibly
allege all elements of the claim, particularly the existence of
a trade secret. Accepting as true all the factual allegations
that Wilcox makes, and drawing reasonable inferences in its
favor, I find otherwise.
First, Wilcox has sufficiently pled the existence of trade
secrets. It describes the misappropriated trade secrets as
various features of its next-generation PATRIOT device,
including: design specifications; materials specifications; and
information relating to the development of parts and components,
and to the manufacturing and assembly processes. In addition,
Wilcox contends that its customer information, marketing
strategies, and details of its contracts and communications with
its current and prospective customers are protected trade
secrets. Although defendants argue that those allegations do
25 not sufficiently identify the trade secrets at issue, the level
of specificity is sufficient at this stage of the case because
Wilcox identifies the trade secrets in relation to a specific
product – its next-generation PATRIOT device. See, e.g.,
Eastman Chem. C o . v . AlphaPet Inc., Civ.A. 09-971-LPS-CJB, 2011
WL 5402767, at *6 (D. Del. Nov. 4 , 2011) (refusing to dismiss a
misappropriation claim where the plaintiff identified trade
secrets as information relating to a particular product and
noting that “[w]hen trade secrets are identified by reference to
a trade name . . . courts in this circuit have refused to
dismiss misappropriation claims”); Brocade Commc’ns Sys., Inc.
v . A10 Networks, Inc., N o . 10–cv–032428–LHK, 2011 WL 1044899, at
*5 (N.D. Cal. Mar. 2 3 , 2011) (finding that the complaint
plausibly alleged trade secrets where it broadly alleged the
defendant’s misappropriation of the plaintiff’s “design of its
ServerIron and ADX products, related software including source
code, customer information, and employee information”); Reckitt
Benckiser Inc. v . Tris Pharma, Inc., Civ. N o . 09–3125(FLW), 2011
WL 773034, at *4 (D.N.J. Feb. 2 8 , 2011) (refusing to dismiss
trade secret claim where the confidential information was
identified as “the Delsym® manufacturing process, Delsym®
26 formulations, and other private information concerning Delsym®
and related research and development”).
Furthermore, Wilcox’s allegations are sufficient to meet
both prongs of the trade secret definition. Information
regarding its next-generation product and its customers derives
independent economic value from not being generally known. See
Contour Design, Inc. v . Chance Mold Steel Co., LTD., Civ. N o .
09-cv-451-JL, 2010 WL 174315, at *5 (D.N.H. Jan. 1 4 , 2010) (“A
number of courts have applied the [Uniform Trade Secrets] Act to
confidential disclosures of concepts, or as yet-untested, ideas
for a new product or a new process.”) (internal quotation marks
omitted); Mortgage Specialists, 153 N.H. at 771-72 (assuming
that confidential customer information has economic value and
discussing whether the plaintiff’s efforts to maintain secrecy
were reasonable); Carriage Hill Health Care, Inc. v . Hayden, N o .
CIV. 96-101-SD, 1997 WL 833131, at * 5 , *7 (D.N.H. Apr. 3 0 , 1997)
(noting that some information about the plaintiff’s customers
derives economic value due to “the expenditure of time, money,
and energy necessary to initiate creative and individualized
plans of marketing fostering constructive competitive results,”
and is thus protectable as a trade secret).
27 Wilcox’s complaint, moreover, sets forth specific factual
allegations as to the actions it took to protect confidential
information regarding its next-generation device and its
customers. Wilcox required employees exposed to the information
to sign confidentiality agreements as a condition of their
employment, and it outfitted its facilities that contain
confidential information with security systems that restricted
access to specific employees. Those actions suggest that the
information was subject to reasonable efforts to prevent it from
being generally known to the public. See MedioStream, Inc. v .
Microsoft Corp., 749 F. Supp. 2d 5 0 7 , 516 (E.D. Tex. 2010)
(holding that factual allegation regarding the specific steps
that the plaintiff implemented to protect the information
rendered plausible the allegation that the information was not
generally known to the public). Hence, Wilcox has sufficiently
pled the existence of trade secrets.
With regard to the second prong of its misappropriation
claim, Wilcox has alleged that defendants incorporated trade
secret information regarding its next-generation PATRIOT device
into a competing product and that they used its confidential
customer information to solicit the business of those customers.
28 It has thus sufficiently pled that defendants are using its
trade secrets.
The third prong of the claim requires Wilcox to allege that
its trade secrets were misappropriated. It must make sufficient
factual averments that defendants used its trade secrets despite
knowing or having reason to know that they obtained knowledge of
those trade secrets through improper means. See N.H. Rev. Stat
Ann. § 350–B:1. Wilcox has met its burden with respect to this
element as well. It has alleged that defendants gained
knowledge of the trade secrets through their confidential
relationships with Wilcox, namely Hansen’s prior employment and
ALST’s subsequent consulting arrangement with Wilcox. Both
relationships gave rise to a duty to maintain secrecy,
especially in light of the nondisclosure agreement between
Hansen and Wilcox and a similar understanding with ALST during
the consulting arrangement. See Burten v . Milton Bradley Co.,
763 F.2d 4 6 1 , 463 (1st Cir. 1985) (“a confidential relationship
typically will be implied where disclosures have been made in
business relationships between employers and employees,
purchasers and suppliers, or prospective licensees and
licensors” (internal citations omitted)). Defendants are
29 alleged to have breached the confidence reposed in them by using
Wilcox’s trade secrets for their own benefit. Thus, Wilcox has
sufficiently pled the last element of the claim.
Because Wilcox has plausibly alleged sufficient facts to
allow me to reasonably infer both the existence of trade secrets
and that defendants misappropriated those secrets, I deny
defendants’ motion with respect to the NHUTSA claim.
2. Breach of Contract Claim (Count I )
Hansen also moves to dismiss Wilcox’s breach of contract
claim against him as insufficiently pled. Specifically, he
argues that Wilcox has failed to sufficiently identify a breach
because it did not allege “what confidential information [ ]
Hansen has allegedly disclosed, how such disclosures have been
made, or to whom the disclosures were made.” D.’s Mem. in Supp.
of Summ. J. at 1 8 , Doc. N o . 1 1 . In addition, in its reply to
Wilcox’s memorandum in opposition to the motion, Hansen argues
that Wilcox has inadequately pled damages. Neither argument is
persuasive.
In order to state a breach of contract claim under New
Hampshire law, Wilcox must allege sufficient facts to show (1)
that a valid, binding contract existed between the parties, and
30 (2) that Hansen breached the terms of the contract. See
Lassonde v . Stanton, 157 N.H. 5 8 2 , 588 (2008); Bronstein v . GZA
GeoEnvironmental, Inc., 140 N.H. 253, 255 (1995). “A breach of
contract occurs when there is a failure without legal excuse to
perform any promise which forms the whole or part of a
contract.” Lassonde, 157 N.H. at 588 (quoting Poland v . Twomey,
156 N.H. 4 1 2 , 415 (2007) (alterations omitted)).
Notwithstanding Hansen’s argument to the contrary, damages
need not be pled separately from breach in a claim for breach of
contract. See Bronstein, 140 N.H. at 255 (“[A] cause of action
arises once all the necessary elements are present. In the case
of torts, it would be when the causal negligence is coupled with
harm to the plaintiff. In the case of a contract action, it
would be when the breach occurs.” (internal quotation marks,
alterations, and ellipses omitted)); see also RealTrust IRA
Alts., LLC v . Entrust Group, Civ. N o . 10-CV-382-LM, 2011 WL
1033706, at *4 (D.N.H. Mar. 2 1 , 2011) (“[A]ccording to
Bronstein, it would appear in a tort claim, breach of duty and
injury are separate elements while, in a breach of contract
claim, a breach is presumed to cause injury.”). Although Wilcox
would have to prove damages to prevail on the contract claim, it
31 need not allege damages separately from an allegation of breach.
See RealTrust IRA Alts., 2011 WL 1033706 at *4 (“[R]equiring a
plaintiff [to] prove damages in a contract action is hardly the
same thing as requiring that plaintiff to allege injury
separately from an allegation of breach.”).
With respect to the two elements that Wilcox must plausibly
allege – a valid contract and a breach of that contract – it has
met its burden at this stage of the case. Wilcox alleges that
it entered into two enforceable agreements with Hansen: the
Nondisclosure and Nonsolicitation Agreement (“NDA”) and the
Royalty Agreement. It further alleges that Hansen breached both
of those agreements: (1) he breached the NDA by disclosing to
ALST the confidential information about Wilcox’s technology that
he agreed not to disclose; and (2) he breached the Royalty
Agreement by using the same technology that he assigned to
Wilcox to develop a competing product. Because these
allegations are sufficient to meet the plausibility requirement
of Iqbal, I deny Hansen’s motion with respect to the breach of
contract claim.
3. Breach of Implied Covenant of Good Faith and Fair Dealing (Count III)
32 Lastly, Hansen moves to dismiss the claim for breach of the
implied covenant of good faith and fair dealing. Because the
factual allegations made in support of this claim distinguish it
from those in which a good faith and fair dealing claim has been
held appropriate, I grant the motion.
In Centronics Corp. v . Genicom Corp., the New Hampshire
Supreme Court explained that it has “relied on such an implied
duty in three distinct categories of contract cases: those
dealing with standards of conduct in contract formation, with
termination of at-will employment contracts, and with limits on
discretion in contractual performance.” 132 N.H. 133, 139
(1989). Wilcox argues that its claim against Hansen falls into
the third category. After describing several cases in the third
category, the Centronics court summarized:
Despite the variety of their fact patterns, these cases illustrate a common rule: under an agreement that appears by word or silence to invest one party with a degree of discretion in performance sufficient to deprive another party of a substantial proportion of the agreement’s value, the parties’ intent to be bound by an enforceable contract raises an implied obligation of good faith to observe reasonable limits in exercising that discretion, consistent with the parties’ purpose or purposes in contracting.
Id. at 143.
33 Here, Wilcox has not sufficiently alleged that the
agreements at issue vest Hansen with discretion in performance
or that he exercised such discretion in a manner that denied
Wilcox an essential benefit of the bargain. On the contrary,
Wilcox alleges that the agreements expressly bar Hansen from
disclosing or using confidential information pertaining to
Wilcox’s life support technology. In asserting the claim,
Wilcox thus fails to recognize that “the duty of good faith and
fair dealing ordinarily does not come into play in disputes
between commercial actors if the underlying contract plainly
spells out both the rights and duties of the parties and the
consequences that will follow from a breach of a specified
right.” Milford-Bennington R.R. Co., Inc. v . Pan Am Railways,
Inc., N o . 10-CV-00264-PB, 2011 WL 6300923, at *5 (D.N.H. Dec.
1 6 , 2011); see Centronics, 132 N.H. at 143-45.
In stating the claim, Wilcox merely complains in a general
manner that “Hansen has breached this implied covenant by acting
in bad faith in performance of his obligations pursuant to [the
two agreements].” Compl. ¶ 3 4 , Doc. N o . 1 . The implied
covenant of good faith and fair dealing does not provide a
remedy when the plaintiff alleges only that the defendant
34 breached the contract in bad faith. Therefore, Wilcox has
insufficiently pled the claim and I grant Hansen’s motion to
dismiss it from the complaint.
IV. CONCLUSION
For the aforementioned reasons, I grant defendants’ motion
to dismiss (Doc. N o . 11) with respect to Counts I I , IV, V I , V I I ,
and VIII (to the extent it asserts a claim for intentional
interference with existing contractual relations). I deny the
motion with respect to Counts I , I I I , V , and VIII (to the extent
it asserts a claim for intentional interference with prospective
contractual relations). Because I have determined that Wilcox
has sufficiently pled Counts I and V of the complaint, I also
deny defendants’ motion for a more definite statement (Doc. N o .
12).
SO ORDERED. Paul Barbadoro Paul Barbadoro United States District Judge
May 7 , 2012
cc: Jeremy Walker, Esq. Nicholas Casolaro, Esq. Stephen Mosier, Esq. Todd Sullivan, Esq.