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Feinberg v. Eckelmeyer

December 16, 2009

LENNY FEINBERG, PLAINTIFF,
v.
DAVID A. ECKELMEYER AND ROBERT FEINBERG, DEFENDANTS.



The opinion of the court was delivered by: Yohn, J.

Memorandum

Plaintiff, Lenny Feinberg, brings this action for damages and injunctive relief against his brother and former business partner, Robert "Randy" Feinberg, and their former bookkeeper, David A. Eckelmeyer. Defendants move to dismiss plaintiff's complaint under Fed. R. Civ. P. 12(b)(6). They argue that a release contained in a Separation Agreement between the Feinberg brothers bars plaintiff's claims and, alternatively, that plaintiff fails to state any claims upon which the court can grant relief. For the reasons discussed below, (1) I will deny defendants' motion to dismiss plaintiff's claims for violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (the "CFAA"), for breach of fiduciary duty, and for civil conspiracy, but (2) I will grant defendants' motion to dismiss plaintiff's claims for misappropriation of trade secrets and for invasion of privacy, without prejudice for plaintiff to file an amended complaint within twenty days.

I. Factual And Procedural Background

Plaintiff alleges that defendants conspired to copy and to destroy his confidential business and personal information (1) to gain advantage over him in the negotiation of the Separation Agreement that split the Feinberg brothers' shared business ventures, and (2) to gain advantage over him in competition over future business. (Compl. 1-2.) Plaintiff seeks injunctive relief, damages, attorneys' fees, and punitive damages. (Id. ¶ 2.) Plaintiff brings five causes of action: Count I alleges violation of the CFAA; Count II alleges breach of fiduciary duty; Count III alleges violation of Pennsylvania's Uniform Trade Secrets Act ("PUTSA"); Count IV alleges invasion of privacy; and Count V alleges a civil conspiracy. (Id.)

A. The Separation Of The Feinberg Brothers' Partnership Interests

Plaintiff alleges in his complaint that he and Randy Feinberg shared partnerships in real estate development ventures for more than twenty years. (Id. ¶¶ 4, 6.) He claims that "effective on June 30, 2008," he and Randy Feinberg "separated most of their partnership interests" (hereinafter, the "Feinberg brothers' partnership interests") pursuant to a Separation Agreement.*fn1

(Id. ¶ 7.) He alleges that he "agreed to pay $1 Million and his interests in five properties known as 'Locker Room Self-Storage' in exchange for [Randy] Feinberg's interests in various partnerships, and then adjustments to incomes/debits from the transferred partnerships based on rent, property taxes and property expenses through June 30,2008 [sic] which were being calculated and adjusted by Defendant Eckelmeyer from July through September 2008." (Id. ¶ 13.)

B. The Feinberg Brothers' Employment Of Eckelmeyer

Plaintiff alleges that Eckelmeyer was the accountant and bookkeeper for the Feinberg brothers' partnerships until June 30, 2008. (Id. ¶ 10.) According to plaintiff, the parties agreed that after June 30, 2008, Eckelmeyer would continue to work for both plaintiff and Randy Feinberg, splitting his time equally between the two, "but not disclosing any confidential business information between the former partners other than as necessary for the final accounting on the transferred partnership interests." (Id. ¶ 14.) Plaintiff alleges that he trusted Eckelmeyer to remain loyal to him during the period of "the crucial transition accounting." (Id. ¶ 20.) Plaintiff further alleges that Eckelmeyer "repeatedly represented" that he understood his obligation to protect plaintiff's trade secrets and confidential and proprietary information from all unauthorized use and not to misappropriate such information. (Id. ¶ 21.) Plaintiff alleges that after October 3, 2008, he no longer employed Eckelmeyer, but that Randy Feinberg continued to do so. (Id. ¶¶ 5, 6, 10.)

Plaintiff alleges that from June 30 to October 3, 2008, Eckelmeyer had access to one of plaintiff's computers but "was not authorized to access information unrelated to the partnerships except with Plaintiff's express consent" (Id. ¶ 16.) Plaintiff also alleges that Eckelmeyer "did not have access to Plaintiff's personal computer in Plaintiff's office." (Id. ¶ 17.) Plaintiff alleges that after October 3, 2008, Eckelmeyer "had no authority to access the Plaintiff's Bala Cynwyd office, or any of Plaintiff's files without Plaintiff's consent." (Id. ¶ 25.)

C. The Final Accounting Of The Feinberg Brothers' Partnership Interests

Plaintiff alleges that he relied on Eckelmeyer "to provide him with accurate and complete financial information concerning the revenues, taxes, expenses and financial status of the partnerships." (Id. ¶ 19.) Plaintiff alleges that "[i]n reasonable reliance" on Eckelmeyer's financial reports, "Plaintiff agreed to resolve the final accountings for the transferred partnerships, including a resolution of real estate tax issues on two Philadelphia properties being transferred to Plaintiff." (Id. ¶ 22.) Plaintiff claims that based on Eckelmeyer's calculations plaintiff "agreed to a final payment to be made at month-end October 2008...." (Id. ¶ 23.) According to plaintiff, in early November 2008, after the Feinberg brothers had reached "final accounting numbers and set-offs in their previously transferred partnerships and assets," plaintiff signed the Separation Agreement and agreed to pay $1 million to Randy Feinberg "in reliance upon Defendants' good faith, alleged full disclosures and accountings." (Id. ¶ 26.)

D. Defendants' Alleged Conspiracy

Plaintiff claims that in early 2009 he began to question Eckelmeyer's calculations regarding at least one property subject to the Separation Agreement. (Id. ¶ 27.) Plaintiff claims that in reviewing the data for the calculations, he "reviewed electronic communications and discovered that Defendants had been secretly conspiring to join forces to harm him and directing Defendant Eckelmeyer to violate his fiduciary duties to Plaintiff." (Id. ¶ 28.) Plaintiff claims that the goal was "to assist Defendants' adversarial position in financially sensitive negotiations in June to October 2008, and now to aid their business competition against Plaintiff." (Id. at 1.) Plaintiff explains further that defendants conspired "to manipulate the value of set-offs and accounting reconciliations arising from the separation of partnership interests in the third quarter 2008 by, inter alia, illegally accessing, deleting and copying Plaintiff's trade secrets, proprietary information, business and personal data from Plaintiff's computers" and that defendants conspired "to steal his trade secrets and conceal material information relating to the financial terms of the Separation Agreement." (Id. ¶¶ 1, 48.)

Plaintiff claims that, in furtherance of the conspiracy, defendants: (1) copied and destroyed confidential trade secrets and other information through unauthorized use of plaintiff's computers, including evidence of a $150,000 loan from Randy Feinberg to Eckelmeyer and other evidence of the alleged conspiracy (id. ¶¶ 29, 36, 38, 40-41, 44-46); (2) concealed from plaintiff an "accountant's introduction" to financial information concerning the Feinberg brothers' partnership interests (id. ¶ 30); (3) convinced plaintiff that taxes had been paid on two properties Randy Feinberg was transferring to him (id. ¶ 33); and (4) read a privileged communication between plaintiff and his lawyers regarding the tax and indemnity treatment of the two properties (id. ¶ 34).

E. The Separation Agreement

Defendants attached to their motion a copy of the Separation Agreement that plaintiff references throughout his complaint. (Defendants' Memorandum of Law in Support of Their Joint Motion to Dismiss Complaint ("Defs.' Mem.") Ex. B.)

The Separation Agreement defines its "Effective Date" as "the 30th day of June, 2008" and states that "[t]he closing for all transactions under this Agreement (the 'Closing') shall be held on October 27, 2008, and be effective as of June 30, 2008." (Id. at 3.) The Separation Agreement describes actions the Feinberg brothers agreed to take "[b]etween the Effective Date of this Agreement and the date of Closing" including execution and delivery of stock powers, resignation forms, resolutions, dissolution documents, and withdrawal and indemnification agreements. (Id. at 9-10.) The Separation Agreement contains exhibits in which Randy Feinberg agreed, effective June 30, 2008, to sell "all of his shares of capital stock of Feinberg and Feinberg Administration, Inc., a Pennsylvania corporation ("F&F"), representing a 50% ownership interest" and to resign as an employee of F&F. (Id. at internal exhibits F and H.) The Separation Agreement states that the sale would take place "[a]t the Closing." (Id. at 5.)

The Separation Agreement also contains mutual releases of the Feinberg brothers. (Id. at 13.) Plaintiff's release of Randy Feinberg states as follows: Lenny [Feinberg]... hereby releases, remises, and forever discharges Randy [Feinberg] and his heirs, executors, administrators and assigns (each a "Randy Releasee"), of and from any and all actions, causes of action, suits, claims, demands, accountings, covenants, contracts, agreements, debts, liabilities and obligations of any nature, fixed or contingent, known or unknown, whether at law or in equity, by reason of any event, occurrence, circumstances or matter of any nature that occurred, arose or existed at any time on or before the Closing date; provided, however, that this release shall not in any manner affect or release any agreement, liability or obligation of Randy [Feinberg] or any Randy Releasee (I) under this Agreement or the Related Agreements, or (ii) for fraud or intentional misrepresentation.

(Id.) (Emphasis added.)

II. Standard Of Review

A. The Factual Allegations And Legal Conclusions In The Complaint

The Third Circuit recently encapsulated the "two-part analysis" by which a court should consider a motion to dismiss for failure to state a claim:

First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.' In other words, a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to "show" such an entitlement with its facts.... This ...


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