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Parkland Services, Inc. T/B/D/A Freestech v. Maple Leaf Foods

April 18, 2013

PARKLAND SERVICES, INC. T/B/D/A FREESTECH,
PLAINTIFF,
v.
MAPLE LEAF FOODS, INC. AND STELLAR CORPORATION,
DEFENDANTS.



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

MEMORANDUM OF LAW RE: MOTIONS TO DISMISS

I.Introduction

Plaintiff Parkland Services, Inc., t/b/d/a Freestech ("Freestech") sued Defendants Maple Leaf Foods, Inc. ("MLF") and Stellar Corporation ("Stellar"), for breach of contract, fraudulent inducement, misappropriation of trade secrets, conspiracy, and unjust enrichment, alleging Defendants unlawfully exposed Freestech's proprietary design plans for the construction of a meat-packaging plant in Ontario, Canada, in violation of a non-disclosure agreement. On January 25, 2013, MLF filed a Partial Motion to Dismiss under Fed. R. Civ. P. 12(b)(6), contending Counts II and IV of the Complaint, for fraudulent and inducement and conspiracy, failed to state a claim. (ECF 9). On March 7, 2013, Stellar moved to dismiss the same Counts as well as Count I, for breach of contract, also under Rule 12(b)(6). (ECF 41). Freestech filed timely responses. (ECF 34, 44). For the reasons below, Defendants' motions are GRANTED.

II.Facts and Procedural History

Freestech is a Pennsylvania corporation, based in Sinking Spring, Pennsylvania, that provides mechanical and electrical design engineering services to companies in the food industry. MLF is a packaged-food company headquartered in Canada, with its principal place of business in Ontario, with operations throughout the United States, Mexico, Asia, and the United Kingdom. Stellar is a Florida-based corporation that provides design, engineering, construction and mechanical services to other companies.

In June 2011, MLF contacted Freestech, seeking its advice and expertise in designing a new, "state of the art" meat-processing facility. (Complaint ¶¶ 13-14) (ECF 1). MLF presented Freestech with basic plans and concept drawings for the facility (id. ¶ 15), and related that its objectives were to reduce the required floor space and labor at the facility, while maximizing the facility's sanitation standards. (Id. ¶ 14). Freestech told MLF it believed it could design a more efficient processing system than represented in MLF's concept drawing, that would meet MLF's objectives and specifications. MLF responded that Freestech should proceed with designing its proposal, which Freestech did. (Id. ¶¶ 16-17).

In early July 2011, MLF requested that Freestech send it a copy of the proposal for the facility in a computer-aided design format. (Id. ¶ 18). Freestech responded that before it would send any formal design or plan, MLF would have to enter a non-disclosure agreement. (Id. ¶ 19). On July 26, 2011, Craig Richardson, of MLF, sent Richard Greener, of Freestech, an email, agreeing that MLF would not disclose any of the proposed designs or layouts provided by Freestech to third parties. The email stated:

[W]e will NOT share your system specifications, layouts or budget costs with others and will not use it as the basis of bid packages to others. We will continue to use the bid package developed by MLF that we provided to you previously or a similar facsimile to that should process requirements or our needs change . . . . Any drawings provided may be dropped into our current layouts (developed either by Stellar or MLF) for internal purposes only. They will NOT be shared with other vendors or consultants (only select MLF and Stellar folks assisting MLF). (Id. Ex. A). Stellar was carbon-copied ("cc'd") on the email to Greener. (Id.). In late July 2011, Freestech provided MLF with complete design plans for MLF's facility. (Id. ¶ 24).

Between September and December 2011, Freestech, MLF and Stellar had ongoing communications about Freestech's proposed system. (Id. ¶¶ 25-26). The parties met in person in September 2011 to "review and discuss the particulars" of Freestech's proposal. (Id. ¶ 25). Freestech made several updates and revisions, to satisfy MLF's specifications. In December 2011, Freestech presented final design plans to MLF. (Id. ¶ 27).

In March 2012, MLF directed Stellar and a third-party consultant, St. Onge Company, to prepare a Request for Proposal ("RFP") for the meat-processing and storage system for the new facility. (Id. ¶ 29). The RFP was sent to several vendors, including Freestech. (Id. ¶ 30). According to Freestech, MLF, Stellar, and St. Onge included Freestech's designs for the facility in the RFP, rather than MLF's original designs. (Id. ¶ 31). On July 30, 2012, MLF informed Freestech that it had hired another vendor to build and install the system. (Id. ¶ 32). Freestech thus contends that MLF not only violated the non-disclosure agreement of July 26, 2011, by disclosing Freestech's trade secret to outside parties, but also denied Freestech the "reasonably expected fruits of its labors" by awarding the construction contract to another party. (Id. ¶¶ 32-35).

On December 5, 2012, Freestech filed a Complaint in this Court alleging the following causes of action against MLF and Stellar: (1) breach of contract, as to MLF and Stellar; (2) fraudulent inducement, as to MLF and Stellar; (3) misappropriation of trade secrets, as to MLF and Stellar; (4) conspiracy, as to MLF and Stellar; and (5) unjust enrichment, as to MLF. (ECF 1). On January 22, 2012, Freestech filed a Motion for a Preliminary Injunction, seeking to enjoin MLF "from installing any system" based on Freestech's plans or drawings at MLF's new facility. (ECF5). On February 4, 5, and 8, 2013, the Court held hearings on Plaintiff's request for a preliminary injunction, during which witnesses for both Freestech and MLF testified. (ECF 17-29). The Court announced its Findings of Fact after the record was closed on the final day of the hearings. (ECF 38). The parties subsequently reached a settlement on the preliminary injunction and requested a consent decree, which the Court granted on April 16, 2013. (ECF 48).

As the preliminary injunction request was being litigated, MLF filed a motion on January 25, 2013, seeking dismissal of Counts II and IV of the Complaint, for fraudulent inducement and conspiracy, under Fed. R. Civ. P. 12(b)(6). (ECF 9). Stellar also moved for dismissal of Counts II and IV, as well as of Count I, for breach of contract, under Rule 12(b)(6). (ECF 41). Freestech filed Responses in Opposition (ECF 34, 44), and MLF and Stellar filed Replies (ECF 40, 45).

III.Legal Standards

To survive a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6), a complaint must contain sufficient factual allegations that "state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A complaint will satisfy this threshold test for facial plausibility if "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678. Additionally, when the facts alleged equally support an "obvious alternative explanation" for what transpired, the plaintiff will not cross the plausibility threshold. Id. at 1951-52. "A complaint which pleads facts 'merely ...


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