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Bioquell, Inc. v. Feinstein

November 23, 2010

BIOQUELL, INC., PLAINTIFF,
v.
STEVEN FEINSTEIN, ET AL., DEFENDANTS.



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

MEMORANDUM OPINION

Presently before the Court are Defendants Steven Feinstein, Robert Buscher and Six Log Corporation's Motion to Partially Dismiss Plaintiff's Complaint Pursuant to Fed. R. Civ. P 12(b)(6) (Doc. 10); Plaintiff Bioquell Inc.'s Response in Opposition thereto (Doc. 14); Defendants' Motion for Partial Judgment on the Pleadings (Doc. 22); Plaintiff Bioquell Inc.'s Response in Opposition thereto (Doc. 23); and Defendants' Motion for Leave to File a Reply Partial Judgment on the Pleadings (Doc.18).

For the reasons set forth below, this Court will grant Defendants' Motion to Partially Dismiss Plaintiff's Complaint. Additionally, this Court denies Defendants' Motion For Partial Judgment on the Pleadings and Motion for Leave to File a Reply.

INTRODUCTION

The instant action arises out of allegations of breach of a non-compete provision of an Employment Agreement. The Employment Agreement was entered into between Plaintiff Bioquell, Inc. ("Plaintiff"), as employer, and Defendants, Steven Feinstein ("Defendant Feinstein") and Robert Buscher ("Defendant Buscher"), as employees. Plaintiff alleges that Defendants Feinstein and Buscher misappropriated trade secrets acquired during the course of said employment when they were employed by Defendant SixLog Corporation ("Defendant SixLog").

On June 10, 2010 Defendants collectively filed a Motion to Partially Dismiss the Complaint pursuant to Fed. R. Civ. P. 12 (b)(6) for failure to state a claim upon which relief can be granted. Thereafter, on September 22, 2010 Defendants filed a Motion for Partial Judgment on the Pleadings pursuant to Fed. R. Civ. P. 12 (c). These Motions are the subject of this opinion.

FACTUAL BACKGROUND

Plaintiff is in the business of providing hydrogen peroxide decontamination equipment and services to the healthcare, life sciences, food production, and defense sectors. (Compl. ¶ 8.) Plaintiff hired Defendant Feinstein to serve as the Western Regional Sales Manager out of his home in Arizona. Defendant Feinstein's employment with Plaintiff commenced on October 1, 2008. (Compl. ¶ 9.) In addition, Plaintiff hired Defendant Buscher, with employment commencing on December 1, 2008, to serve as the Vice-President of Operations of Bioquell Inc. (Compl. ¶ 10.) During their employment with Bioquell Defendants Feinstein and Buscher had access to Plaintiff's confidential and proprietary information. As a condition of their employment, both Defendants Feinstein and Buscher were required to sign an Employment Agreement, which contained confidentiality and non-compete provisions. (Compl. ¶ 11.)

The Employment Agreement contained the following non-compete provision:

You undertake and covenant to us that in order to protect BIOQUELL's legitimate business interests, for a period of two years from the date you cease to be an employee of BIOQUELL Inc. you will not in North America work for or be employed by or receive directly or indirectly any remuneration or consultancy fee or equity participation from: (i) other manufacturers of hydrogen peroxide vapor generators; (ii) companies or organizations selling hydrogen peroxide vapor generators; (iii) companies or organizations selling the servicing of hydrogen peroxide vapor generators; or (iv) companies or organizations selling a bio-decontamination service whether for buildings or rooms or equipment. (Compl. ¶ 12.)

In addition, the Employment Agreement contains the following confidentiality provisions:

You agree and acknowledge that you will have access to information which has significant value to the Company. This information includes, but is not limited to, customer information, proprietary BIOQUELL Group Information, product and technology know-how, trade secrets, business methods and details (including pricing and margin) and elements of the BIOQUELL Group's and the Company's strategy (together "Confidential Information"). You confirm and undertake to us that, in addition to your common law and/or statutory obligations, during or after your employment ceases with the Company you will not divulge any Confidential Information in whole in part directly or indirectly to third parties, whether to competitors of the Company or others. (Compl. ¶ 12.) (Doc. 11, Exs. A & B.)

Furthermore, in the event of breach, the Employment Agreement provides, "BIOQUELL shall be entitled to the remedies of injunction, specific performance and other equitable relief for any threatened, anticipatory or actual breach of this Agreement," and further provides that Defendants "agree in advance to the granting of injunctive relief in BIOQUELL's favour without proof of actual damage." (Doc. 11, Exs. A & B.) Plaintiff avers that during their employment Defendants became familiar with Bioquell Inc.'s proprietary information, including customer information, proprietary group information, product and technology know-how, trade secrets and other information.

In August 2009, Defendant Feinstein resigned from his position with Bioquell Inc., contending that Plaintiff misrepresented the terms of compensation in its offer of employment, and advised Plaintiff that he intended to contract for employment with Astro Pak Corporation ("Astro Pak"). (Compl. ¶ 16.) On August 28, 2009, Plaintiff and Defendant Feinstein entered into a Release of Claims Agreement, wherein Defendant Feinstein agreed to release Plaintiff from any claims relating to the alleged misrepresentation. (Compl. ¶ 17.) Additionally, Plaintiff agreed to release Defendant Feinstein from the non-compete provision as to Defendant Feinstein's prospective employment with Astro Pak. (Compl. ¶ 18.) The Release of Claims Agreement provided, "FEINSTEIN understand[s] and agrees that the Non-compete shall remain in full force and effect with regards to any other employer or third party pursuant to the terms of such Non-compete." (Compl. ¶ 19.) Plaintiff claims that, prior to entering into the Release of Claims Agreement, Defendant Feinstein represented to Plaintiff that Astro Pak was not a competitor. (Compl. ¶ 20.) Specifically, Plaintiff avers that in an email to Mike Heard, Bioquell Inc.'s Vice-President, Defendant Feinstein stated, "[a]s you know, we have never run in to Astro Pak on any project. They concentrate their business on the on-site passivisation and parts cleaning (in their cleanrooms)." (Compl. ¶ 21.)

On September 10, 2009, after Defendant Feinstein had commenced employment with Astro Pak, Astro Pak formed Defendant SixLog to provide rapid on-site biological decontamination services utilizing proprietary ionized hydrogen peroxide technology. (Compl. ¶ 22.) Defendant Feinstein then became employed as the Director of Technology at SixLog. (Compl. ¶ 23.) Plaintiff avers that Defendant Feinstein was aware that he would be entering into an employment agreement with the newly incorporated SixLog at the time that he entered into the Release of Claims Agreement. (Compl. ¶ 35.) Plaintiff alleges that Defendant SixLog's business is in direct competition with that of Plaintiff. Compl. ¶ 24.)

After Defendant Feinstein began working for SixLog, on October 23, 2009, Plaintiff terminated Defendant Buscher's employment as a result of unsatisfactory job performance. (Compl. ¶ 26.) Defendant Buscher was not released from either the confidentiality provision or the non-compete provision of the Employment Agreement. (Compl. ¶ 27.) Plaintiff believes that Defendant Feinstein was substantially involved in Defendant Buscher's employment at SixLog. (Compl. ¶ 29.) Plaintiff also believes that Defendants Feinstein and Buscher have conspired in misappropriating trade secrets learned during their respective employments with Plaintiff, have tortiously interfered with Plaintiff's business relations, and have acted in concert with Defendant SixLog in doing so. (Compl. ¶ 30.) Consequently, Plaintiff sent correspondence to Defendants Feinstein and Buscher requesting that they cease and desist from their respective employments with SixLog. Neither Defendant Feinstein or Buscher responded to Plaintiff's request. (Compl. ¶¶ 30-31.)

Based on the foregoing, Plaintiff brings the following claims for relief: (1) intentional misrepresentation claim against Defendant Feinstein; (2) breach of contract claim against Defendant Feinstein; (3) breach of fiduciary duty claim against Defendant Feinstein; (4) claim for violation of Pennsylvania's Uniform Trade Secrets Act against Defendant Feinstein; (5) claim for tortious interference with business relations against Defendant Feinstein; (6) conspiracy claim against Defendant Feinstein; (7) breach of contract claim against Defendant Buscher; (8) breach of fiduciary duty claim against Defendant Buscher; (9) claim for violation of Pennsylvania's Uniform Trade Secrets Act against Defendant Buscher; (10) claim for tortious interference with business relations against Defendant Buscher; (11) conspiracy claim against Defendant Buscher; (12) claim for tortious interference with business relations against Defendant SixLog; and (13) conspiracy claim against Defendant SixLog.

LEGAL STANDARD

A. Motion to Dismiss Pursuant to Federal ...


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