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Liberty Mutual Insurance Co. v. Gemma

United States District Court, W.D. Pennsylvania

March 19, 2018

VINCENT GEMMA, et al., Defendants


          Kane Judge.

         Before the Court are Defendants Vincent Gemma (“Gemma”), and Everest Insurance, LLC, Everest Consulting Group, L.P., [1] and Everest Consulting Group, LLC's (collectively, “Everest Defendants”), motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. Nos. 46, 49.) For the reasons that follow, the Court will grant in part and deny in part the motions to dismiss.

         I. BACKGROUND

         A. Procedural Background

         Plaintiff Liberty Mutual Insurance Company (“Liberty Mutual”), initiated the above-captioned action by filing a complaint against Gemma on April 22, 2016. (Doc. No. 1.) In its first complaint, Liberty Mutual asserted ten counts against Gemma, which set forth claims for breach of contract, breach of fiduciary duty/duty of loyalty, conversion, misappropriation of trade secrets under the Pennsylvania Uniform Trade Secrets Act, a violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, unjust enrichment, tortious interference with a contract, tortious interference with prospective economic advantage, and unfair competition, as well as a request for injunctive relief. (Id. at 22-29.) On the same date that it filed its complaint, Liberty Mutual also filed a motion for a preliminary injunction against Gemma. (Doc. No. 2.) On May 2, 2016, the Honorable Cathy Bissoon conducted a conference with the parties via telephone (Doc. No. 12), in which the court “encouraged the parties to attempt to reach agreement on Plaintiff's requested injunctive relief” (Doc. No. 16). Subsequently, the parties submitted a standstill agreement on May 10, 2016, under which Gemma agreed to adhere to certain restrictions pending an Order from the Court as to the status of Liberty Mutual's motion for injunctive relief. (Id.) The Court approved the standstill agreement on May 10, 2016. (Doc. No. 18.)

         On May 16, 2016, Gemma filed an answer to Liberty Mutual's complaint. (Doc. No. 22.) The Court then issued an Order dated June 6, 2016, which mandated that all expedited discovery would be due by July 29, 2016. (Doc. No. 26.) On the same date, Gemma filed an amended answer to Liberty Mutual's complaint. (Doc. No. 27.) On June 28, 2016, Liberty Mutual moved for a protective order (Doc. No. 28), which the court granted, subject to certain revisions (Doc. No. 29). On December 15, 2016, Liberty Mutual filed an amended complaint against Gemma and the Everest Defendants, setting forth ten counts. (Doc. No. 37.)

         Subsequently, on March 30, 2017, Gemma and the Everest Defendants each filed the instant motions to dismiss the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. Nos. 46, 49.) Gemma submitted a brief in support of his motion on March 30, 2017. (Doc. No. 47.) Liberty Mutual submitted a brief in opposition to Gemma's motion to dismiss on April 28, 2017. (Doc. No. 55.) Gemma did not submit a reply brief. As to their motion, the Everest Defendants submitted a brief in support on March 30, 2017. (Doc. No. 50.) Liberty Mutual submitted a brief in opposition to the Everest Defendants' motion to dismiss on April 28, 2017. (Doc. No. 54.) On May 5, 2017, the Everest Defendants filed a reply brief. (Doc. No. 56.) Accordingly, as they are either fully briefed, or the requisite time period for responsive briefing has expired, both motions are ripe for disposition.

         B. Factual Background[2]

         1. Liberty Mutual's Sale of Insurance

         The allegations in the amended complaint stem from events surrounding Gemma's former employment as a sales representative with Liberty Mutual, departure from Liberty Mutual, and subsequent professional involvement with the Everest Defendants. (Doc. No. 37.) Liberty Mutual “offers a wide range of property-casualty insurance products and services to both individuals and businesses, including personal[, ] automobile, homeowners, personality liability and life insurance.” (Id. ¶ 14.) Its customers “are its policyholders, ” and both current and prospective policyholders “seeking Liberty Mutual insurance provide sensitive and confidential information to Liberty Mutual in order to determine the extent of coverage.” (Id. ¶ 15.) Consequently, its revenues “are based, in large part, on the premiums it receives from its policyholders.” (Id. ¶ 17.) To that end, Liberty Mutual employs sales associates to market its products to customers and “develops group savings plus, affinity, marketing agreements or relationships with groups . . . that assist Liberty Mutual in advertising, marketing and selling Liberty Mutual products to the group members and/or their clientele.” (Id. ¶¶ 18-19.) Specifically, Liberty Mutual, which has a sales office located in Wexford, Pennsylvania, “had such relationships with Northwood, a residential real estate company serving the Greater Pittsburgh region.” (Id. ¶¶ 20-21.)

         2. Gemma's Employment with Liberty Mutual

         Gemma began his employment with Liberty Mutual as a sales representative in 1998 and was “assigned to and worked out of the Wexford office until his resignation on April 7, 2016.” (Id. ¶ 22.) After receiving multiple promotions over the course of his employment, at the time of his resignation, Gemma was an executive sales representative, “the highest level of sales representative in the company.” (Id.) In this capacity, he worked extensively on Liberty Mutual's “affinity/group savings and/or marketing programs, especially with Northwood, ” which is a “full-service real estate firm, with offices throughout the Greater Pittsburgh area . . . [that] provides services to its customers at all steps of the real estate process . . . assisting customers with their insurance needs.” (Id. ¶¶ 28-29.)

         In 2005, “Liberty Mutual entered into affinity/group savings and marketing relationships with Northwood, ” through which “Northwood markets Liberty Mutual by offering its customers the opportunity to receive quotes for insurance coverage underwritten by Liberty Mutual, and discounted affinity/group savings pricing.” (Id. ¶ 30.) Gemma played a central role in the beginning of this relationship between Liberty Mutual and Northwood, and served as “the lead contact person who directed and managed Liberty Mutual's affinity/group savings and marketing programs with Northwood.”[3] (Id. ¶ 31.) In this regard, Gemma “actively worked with Northwood on behalf of Liberty Mutual, frequently traveling to its offices and spending time there developing relationships and good will with Northwood personnel.”[4] (Id. ¶ 36.) Liberty Mutual “devoted significant resources” to the development of its relationship with Northwood, citing as examples Gemma's roles on the board of the Northwood Charitable Foundation and as the former chair of Northwood's golf tournament on multiple occasions. (Id. ¶ 37.)

         As a result of its relationship with Northwood, Liberty Mutual “received a significant number of customer leads and developed a significant number of policyholders.” (Id. ¶ 38.) In addition, “Liberty Mutual offered, and Northwood accepted, substantial discounts off Liberty Mutual's insurance pricing for Northwood and its customers.” (Id. ¶ 41.) Gemma continued to act as Liberty Mutual's primary contact person with respect to Northwood (Id. ¶ 42), and from November 9, 2015 to April 7, 2016 (the date of Gemma's resignation), Gemma “sold over 100 policies to customers of Northwood” on behalf of Liberty Mutual (Id. ¶ 44).

         3. Exchange of Confidential Information Related to Policyholders

         In his capacity as a sales representative, Gemma gained access to information regarding Liberty Mutual's current and prospective policyholders, and “[t]hose existing and prospective policyholder referral relationships are the lifeblood of Liberty Mutual's business.” (Id. ¶¶ 45-46.) Because of the nature of his position as a sales representative, Gemma communicated with current and prospective policyholders, “determin[ed] the needs and preferences of policyholders/referral sources, solicit[ed] those policyholders/referral sources, [and] introduc[ed] product lines to those policyholders/referral sources . . . all for Liberty Mutual.” (Id. ¶ 47.) Gemma was thus required to develop and gather information about policyholders, which “is treated by Liberty Mutual as highly confidential and valuable, ” and he “agreed expressly to ensure the confidentiality of that information.”[5] (Id. ¶¶ 48-49.)

         Further, “[s]ince the beginning of his employment with Liberty Mutual, ” and as a condition of his employment and eligibility for compensation and various benefits, Gemma “executed a series of agreements with Liberty Mutual containing confidentiality and restrictive covenant provisions.” (Id. ¶ 55.) According to Liberty Mutual, the most recent agreement of this type is the Gemma Agreement, which Gemma signed in relation to the Liberty Mutual 2016 U.S. Executive Sales Representatives Compensation Plan (“2016 Comp Plan”), “which provided Gemma the opportunity to earn substantial bonus compensation beyond his base salary as well as bonus compensation beyond what he received in 2015.” (Id. ¶ 56.) His signing of the Gemma Agreement was required in order for him to receive any benefits under the 2016 Comp Plan, and in 2016, he was paid by Liberty Mutual according to the terms of the 2016 Comp Plan. (Id. ¶ 57.) The agreement required, inter alia, that Gemma “maintain the confidentiality of Liberty Mutual's confidential information and . . . abide by certain post-employment restrictive covenants.” (Id. ¶ 58.)

         Specifically, Section 1 of the Gemma Agreement states: “I also agree not to divulge to, share with, or permit access by any person, company or organization not currently employed by or affiliated with the [Liberty Mutual] to such [p]roperty both during and after my tenure as an employee of [Liberty Mutual].”[6] (Id. ¶ 60.) In addition, pursuant to Section 2 of the Gemma Agreement, Gemma agreed not to engage in certain activities “for two years following the termination of his employment” with Liberty Mutual. (Id. ¶ 61.) Such activities include the following:

[S]ell or attempt to sell products or services of the type or kind offered by or through the Company to any person, company or organization to whom [he] previously provided any service or to whom [he] previously quoted or sold insurance products offered by or through the Company during the last twelve months of [his] employment with the Company.
[C]ontact, advise, induce or assist any policyholder or prospective policyholder of the Company, to whom insurance obtained from or through the Company was sold or quoted, be it a person, company or organization, to reduce, replace, lapse, surrender or cancel any insurance obtained from or through the Company.
[S]olicit or attempt to solicit the purchase of products or services of the type or kind offered by or through the Company by, or contact, any person, company or organization to whom [he] previously provided any service or to whom [he] previously quoted or sold insurance products offered by or through the Company during the last twelve months of [his] employment with the Company.

(Id.) (alterations in original) (citations omitted). Additionally, in regard to marketing/affinity accounts, including those associated with Northwood, Gemma agreed that during the two-year period following the termination of his employment with Liberty Mutual, he would not:

contact, solicit or attempt to solicit the purchase of products or services of the type or kind offered by or through the Company, or the establishment of any group discount program with any affinity account, group savings plus account, marketing or networking account (including but not limited to mortgage companies, auto dealers, and real estate companies) for whom [he] served as the Company contact during the last twelve months of [his] employment with the Company.

(Id. ¶ 62) (alterations in original).

         4. Gemma's Relationship with the Everest Defendants

         Prior to his resignation from Liberty Mutual in April of 2016, Gemma and the Everest Defendants “secretly discussed and planned Gemma's departure from Liberty Mutual and the establishment of a competing insurance agency, ” and “[a] centerpiece of their plan was Gemma's involvement in the planned solicitation of Northwood personnel for customers for the new insurance agency.” (Id. ¶ 66.) According to Liberty Mutual, this collaboration among Defendants involved Northwood's Executive Vice President and Member of Everest Insurance, Wendy West, “sen[ding] Gemma the contact information for the law firm that is representing Gemma” in the above-captioned action because “Everest was aware of the . . . Gemma Agreement and understood that Gemma working with and joining Everest would implicate the Gemma Agreement . . . and/or Gemma's common law obligations to Liberty Mutual.” (Id. ¶ 67.) In addition, approximately ten months before Gemma's resignation, “Defendants reserved the ‘Everest Insurance, LLC' name, ” and “[a]t least as early as 2015, Defendants began working on behalf of Everest Insurance . . . [with] Gemma performing such work during normal business hours when he was being paid by, and should have been working on behalf of, Liberty Mutual.” (Id. ¶¶ 69-70.)

         Liberty Mutual also alleges that prior to his resignation, Gemma “actively encourag[ed] Everest to take actions that would negatively affect the Liberty Mutual-Northwood relationship, such as removing Liberty Mutual from the Northwood website and discontinuing the discount.” (Id. ¶ 73.) In addition, Gemma and Everest “worked together to marginalize other Liberty Mutual sales representatives in Northwood offices so that when Gemma eventually resigned from Liberty Mutual, he would be in a position to steer future business to Everest, ” and due to “misleading comments and representations” from Defendants, “Liberty Mutual assigned Gemma additional Northwood offices at the expense of other Liberty Mutual Sales representatives.”[7] (Id. ¶ 74.)

         In addition, Liberty Mutual asserts that “[i]n competing with Liberty Mutual, Defendants also utilized confidential Liberty Mutual information, ” alleging that in October of 2015, Gemma “emailed to his personal email account an Excel file entitled ‘10-07-15 book.xlsx, '” which “contained Liberty Mutual confidential information, such as premium amounts.” (Id. ¶ 77.) He then deleted the email from the “sent” folder of his Liberty Mutual email account and forwarded that email from his personal email account to an Everest employee on November 10, 2015, therefore also transmitting the Excel spreadsheet. (Id. ¶¶ 78-79.) Liberty Mutual maintains that Defendants “used and/or disclosed information contained in the Excel spreadsheet in connection with the planning and/or operation of Everest insurance.”[8] (Id.) Along with this alleged correspondence, “Gemma had numerous communications with numerous Northwood personnel concerning Defendants' new venture in competition with Liberty Mutual and Gemma attended a meeting of Northwood managers to discuss Everest Insurance and . . . solicited them to direct potential insurance business away from Liberty Mutual and/or to Everest.”[9] (Id. ¶ 82.) In addition, the Everest Insurance LLC Operating Agreement “was effective at least as of April 1, 2016 and . . . Gemma was a Member and Manager” of Everest Insurance LLC. (Id. ¶ 81.) Accordingly, while still employed by Liberty Mutual, Gemma “was a 25% owner of, and executive of, Everest, a direct competitor to Liberty Mutual, ” and he “had a conflict of interest[, ] which was known to Everest.” (Id.)

         In addition, Liberty Mutual alleges that in the two days prior to Gemma's resignation, Gemma “sent at least 25 emails from his Liberty Mutual email account to his personal Gmail account.” (Id. ¶ 90.) According to Liberty Mutual, the emails “included a total of 25 attachments containing Liberty Mutual's confidential, trade secret information concerning more than one thousand (1, 000) Liberty Mutual policyholders, and dozens of Liberty Mutual referral sources.” (Id. ¶ 91.) More specifically, the first twenty-four emails each included an attached Excel document “contain[ing] confidential, trade secret information concerning Liberty Mutual policyholders, ” and the twenty-fifth email included an Excel spreadsheet “from the June 15, 2015 Northwood golf outing, containing contact information for dozens of Northwood personnel, and other actual or potential referral sources.” (Id. ¶ 92.) For purposes of reference, Liberty Mutual's amended complaint places the documents into three separate categories: “(1) Category A - Property and Casualty Insurance; (b) Category B - Life Insurance; and (c) Category C - Marketing Account Personnel.” (Id. ¶ 93.) The documents in Category A include “Excel documents listing policyholder information related to insurance sales that Gemma made from 2001 through 2003, and 2005 through 2016, ” and those in Category B include similar information.[10] (Id. ¶¶ 94, 103.) Additionally, Category C consists of an Excel document that “includes the phone numbers and email addresses for dozens of individuals, along with their company affiliation, including at least 56 Northwood agents, ” and those listed in the spreadsheet “were participants in the June 15, 2015 golf tournament by Northwood.” (Id. ¶¶ 105-06.)

         5. Gemma's Resignation from Liberty Mutual

         Gemma resigned from his position with Liberty Mutual on April 7, 2016, one day “after he emailed massive amounts of Liberty Mutual confidential, trade secret information to his personal Gmail account.” (Id. ¶ 110.) Subsequently, Liberty Mutual's area manager reviewed the Gemma Agreement with Gemma and “remind[ed] him of its restrictions with respect to existing or prospective policyholders and affinity and marketing accounts, as well as its confidentiality and return of information provisions.” (Id. ¶ 111.) The area manager specifically stated that the restrictions “would apply to Northwood relationships, and also stated that, if Gemma had kept any policyholder information, it must be returned.”[11] (Id.) During this meeting, Gemma responded by stating that he did not have any policyholder information, and also referred to “relationships at Northwood [as] being ‘fair game, ' or words to that effect.” (Id. ¶ 113.) Lastly, after resigning from Liberty Mutual, Gemma remained involved with Northwood personnel by, for example, teaching insurance-related classes to Northwood personnel and “with Defendants' assistance, [] actively prospecting Northwood personnel for business.” (Id. ¶ 115.)


         Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes a defendant to move to dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). The legal standards governing pleading practice in federal court have shifted to a “more heightened form of pleading, requiring a plaintiff to plead more than the possibility of relief to survive a motion to dismiss.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). To avoid dismissal, all civil complaints must set out “sufficient factual matter” to show that the claim is facially plausible. Id. The plausibility standard requires more than a mere possibility that the defendant is liable for the alleged misconduct. Indeed, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not ‘show[n]' - ‘that the pleader is entitled to relief.'” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (citing Fed.R.Civ.P. 8(a)(2)). Factual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         The United States Court of Appeals for the Third Circuit has identified the following steps a district court must take when evaluating the sufficiency of a complaint's allegations as tested against a Rule 12(b)(6) motion: (1) identify the elements a plaintiff must plead to state a claim; (2) discard any conclusory allegations contained in the complaint “not entitled” to the assumption of truth; and (3) determine whether any “well-pleaded factual allegations” contained in the complaint “plausibly give rise to an entitlement to relief.” See Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010) (citation and quotation marks omitted).

         In evaluating whether a complaint fails to state a claim upon which relief may be granted, the court must accept as true all factual allegations in the complaint and construe all reasonable inferences to be drawn therefrom in the light most favorable to the plaintiff. See In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 314 (3d Cir. 2010). A court “need not credit a complaint's ‘bald assertions' or ‘legal conclusions' when deciding a motion to dismiss, ” Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997), and must disregard any “formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. Additionally, a court may not assume that a plaintiff can prove facts that the plaintiff has not alleged. Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). In deciding a Rule 12(b)(6) motion, the court may consider, in addition to the facts alleged on the face of the complaint, any exhibits attached to the complaint, “any ‘matters incorporated by reference or integral to the claim, items subject to judicial notice, [and] matters of public record.'” Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006) (quoting 5B Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure, § 1357 (3d ed. 2004)).


         Liberty Mutual's amended complaint sets forth ten counts.[12] (Doc. No. 37.) The Court will address each claim in turn, beginning ...

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