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Neopart Transit LLC v. CBM N.A. Inc.

United States District Court, E.D. Pennsylvania

June 13, 2018

NEOPART TRANSIT, LLC, Plaintiff,
v.
CBM N.A. INC.; CBM U.S. INC.; WALTER SUPPLEE; and CBM SAS, Defendants.

          OPINION DEFENDANT WALTER SUPPLEE'S MOTION TO DISMISS, ECF NO. 29-GRANTED IN PART MOTION TO DISMISS OF DEFENDANTS CBM N.A. INC., CBM U.S. INC., AND CBM SAS, ECF NO. 30-GRANTED IN PART

          Joseph F. Leeson, Jr. United States District Judge.

         In this case, the plaintiff, Neopart Transit, LLC, a distributor of parts for transit busses, alleges that a former employee of its predecessor stole Neopart's confidential and proprietary information and resigned to work for another entity, which used Neopart's information to compete and harm its business. The plaintiff brings numerous claims against both the former employee, Walter Supplee, the entity he left to work for, CBM U.S. Inc., that company's parent corporation, CBM SAS, and its affiliate, CBM N.A. All of the defendants move to dismiss on various grounds: Supplee for failure to state a claim and the corporate defendants for improper service and lack of personal jurisdiction. For the reasons discussed below, Supplee's motion is granted in part and denied in part, and the corporate defendants' motion is granted in part and denied without prejudice in part to allow the parties to conduct jurisdictional discovery.

         I. BACKGROUND

         The following facts are drawn from Plaintiff's Amended Complaint. Plaintiff Neopart Transit, LLC, is the successor of Neopart, LLC, which was founded as the parts-supply division of Neoplan USA, a manufacturer of transit buses.[1] Plaintiff purchases transit bus parts from suppliers and resells them to operators of transit bus systems in the United States and Canada. Plaintiff takes great care to protect proprietary information surrounding its operations, such as the unique part numbers it assigns to the parts it sells, the cross references between Neopart part numbers and its suppliers' part numbers, pricing arrangements with suppliers, customer purchasing patterns, and knowledge of which transit bus operators use which parts.

         Defendant Walter Supplee began working for Neopart in 1997 as a salesman, and had access to Plaintiff's supplier and parts-related information. He signed a Confidentiality Agreement and Security Policy in 2012 which prohibited him from divulging Neopart's confidential and proprietary information outside of Neopart. In 2014, Supplee resigned and, according to Plaintiff, took Neopart's confidential and proprietary information with him.

         Plaintiff alleges that Supplee began working for Defendant CBM SAS and its affiliates after he left Neopart. Defendant CBM SAS, a French corporation, distributed spare parts for transit buses. Defendant CBM N.A., a subsidiary of CBM SAS headquartered in Canada, operates as CBM SAS's North American distributor. By September 2014, Supplee had started working with Defendant CBM SAS and Defendant CBM N.A. to grow their business in the United States. Later that month, CBM SAS formed Defendant CBM U.S. as a subsidiary to market and distribute after market transit bus parts. According to Plaintiff, CBM[2] had no material presence in the market for transit bus parts in the United States before it hired Supplee.

         Plaintiff alleges that Supplee used the information he took from Neopart to help CBM gain an unfair competitive advantage, causing Neopart to lose business from both the Massachusetts Bay Transit Authority (MBTA) and the Southeastern Pennsylvania Transit Authority (SEPTA), two longtime customers. According to Plaintiff, the knowledge of Neopart's supply chain, pricing methods, and part number cross references that Supplee took with him enabled CBM U.S. to obtain SEPTA contracts that Neopart historically had won. Plaintiff also argues that Defendants used Neopart's information to interfere with its existing business relationships. Neopart entered an agreement with John Bruce UK Ltd. in 2006 to act as John Bruce's exclusive parts distributor in the United States. Plaintiff contends that Supplee knew which Neopart customers had approved Neopart's John Bruce products, as well as the product number cross references for John Bruce components, and that CBM used this information to interfere with Neopart's agreement. Plaintiff alleges that John Bruce breached the exclusive distribution agreement with Neopart as a result. Plaintiff also alleges that CBM interfered with its relationship with USSC Group, a supplier of seats and seat parts to Neopart, which prevented Neopart from securing future competitive pricing and service arrangements from USSC Group.

         Plaintiff brought suit against Supplee, CBM SAS, CBM N.A., and CBM US, alleging a violation of the Defend Trade Secrets Act of 2016, misappropriation of trade secrets, tortious interference with the exclusive distribution agreement, tortious interference with prospective contractual relations, unfair competition, and civil conspiracy. Additionally, Plaintiff alleges breach of the Confidentiality Agreement and breach of fiduciary duty against Supplee, and claims for aiding and abetting breach of fiduciary duty and tortious interference with the Confidentiality Agreement against the three CBM defendants.

         II. LEGAL STANDARDS

         A. Rule 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction

         The Honorable Mitchell S. Goldberg of this Court aptly described the Rule 12(b)(2) motion to dismiss standard as follows:

When reviewing a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), I must accept the plaintiff's allegations as true and resolve disputed facts in favor of the plaintiff. Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002). However, once a defendant has raised a jurisdictional defense, the plaintiff must “prove by affidavits or other competent evidence that jurisdiction is proper.” See Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009). If an evidentiary hearing is not held, a plaintiff “need only establish a prima facie case of personal jurisdiction.” Id. A plaintiff meets this burden by “establishing with reasonable particularity sufficient contacts between the defendant and the forum state.” Provident Nat. Bank v. California Fed. Sav. & Loan Assoc., 819 F.2d 434 (3d Cir. 1987).

Campbell v. Fast Retailing USA, Inc., No. CV 14-6752, 2015 WL 9302847, at *2 (E.D. Pa. Dec. 22, 2015).

         B. Rule 12(b)(5) Motion to Dismiss for Improper Service

         A federal court may dismiss a complaint for “insufficient service of process.” Fed.R.Civ.P. 12(b)(5). “[T]he party asserting the validity of service bears the burden of proof on that issue.” Grand Entm't Group, Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 488 (3d Cir. 1993). See also White v. Green, 2009 WL 3209647, at *1 (E.D. Pa. Oct. 6, 2009) (“In resolving a motion under Rule 12(b)(5), the party making the service has the burden of demonstrating its validity when an objection to service has been made.”) (quotation omitted), aff'd, 382 Fed.Appx. 199 (3d Cir. 2010).

         C. Rule 12(b)(6) Motion to Dismiss for Failure to State a Claim

         In rendering a decision on a motion to dismiss, this Court must “accept all factual allegations as true [and] construe the complaint in the light most favorable to the plaintiff.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)) (internal quotation marks omitted). Only if “the ‘[f]actual allegations . . . raise a right to relief above the speculative level'” has the plaintiff stated a plausible claim. Id. at 234 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 540, 555 (2007)). However, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining that “[d]etermining whether a complaint states a plausible claim for relief . . . [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense”). The defendant bears the burden of demonstrating that a plaintiff has failed to state a claim upon which relief can be granted. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)).

         III. ANALYSIS

         A. Supplee's Motion to Dismiss

         Supplee moves to dismiss the claims against him (Counts III, IV, VI, VIII, and IX). He argues that Plaintiff bases all its claims against him on the assertion that he was an employee of Plaintiff Neopart Transit, LLC, and that he entered a Confidentiality Agreement with Neopart Transit; however, Neopart Transit, LLC, did not yet exist at the time of the events at issue. According to Supplee, he worked for a company called Neopart, LLC, until September 2014, and began working for CBM U.S. in October 2014. Supplee Mot. 3, ECF No. 29. He points out that, according to public records searches, Plaintiff Neopart Transit, LLC, was not created until February 2016. Id. Therefore, according to Supplee, Plaintiff cannot state any claim against him concerning the Confidentiality Agreement or his employment with Neopart.

         1. Supplee's motion to dismiss Count III is denied because Plaintiff has sufficiently alleged that Supplee breached the Confidentiality Agreement.

         Supplee argues that Plaintiff's breach of contract claim fails because he was never Plaintiff's employee nor a party to a contractual agreement with Plaintiff. The Complaint alleges that Supplee began employment with “Neopart and its affiliates in 1997” and signed the Confidentiality Agreement on January 16, 2012. Amend. Compl. ¶¶ 41-42. Plaintiff alleges that Neopart, LLC, was the original owner of the claims in this case to the extent that the claims accrued prior to March 11, 2016, when Neopart, LLC assigned all its claims to Plaintiff. Amend. Compl. ¶ 8.

         Supplee concedes that Plaintiff asserts in the Complaint that it is bringing claims formerly belonging to Neopart, LLC, but points out that the Amended Complaint repeatedly refers to Supplee's employer as “Neopart, ”[3] which the Amended Complaint explicitly defines as Plaintiff Neopart Transit, LLC, not its predecessor, Neopart, LLC. Thus, Supplee insists, Plaintiff alleges employment and contractual relationships between Plaintiff and Supplee that cannot have existed because they predated Plaintiff's formation.

         Although creative, Supplee's argument is overly formalistic. Plaintiff's Complaint is less than precise in its drafting, and is ambiguous as to whether “Neopart” in the statement of its claims refers to Plaintiff Neopart Transit, LLC, or its predecessor, Neopart, LLC. The preamble to the Amended Complaint specifically defines “Neopart” as referring to Plaintiff Neopart Transit, LLC. Amend. Compl. 1 (“Plaintiff Neopart Transit, LLC (‘Plaintiff' or ‘Neopart') brings this action against Defendants . . . .”). However, the Amended Complaint also clarifies that Neopart, LLC is the original owner of the claims to the extent that they accrued before March 11, 2016, and alleges that Supplee entered the Confidentiality Agreement in 2012 and breached it in 2014 when he went to work for CBM. Amend Compl. ¶¶ 8, 45-47, 90-91. According to the Amended Complaint, then, Neopart, LLC, was the original owner of any action arising from the breach of the Confidentiality Agreement and Supplee's employment prior to 2014. Plaintiff's use of “Neopart” throughout the Amended Complaint could be read as a shorthand for “Plaintiff Neopart Transportation, LLC, and, to the extent the claim arose before March 11, 2016, Neopart, LLC.” Mindful that ambiguities should be construed in favor of the pleader, this Court concludes that Plaintiff has stated a claim for breach of the Confidentiality Agreement against Supplee. See Walsh v. Corzine, No. 06-CV-6075(WJM), 2008 WL 2277098, at *3 (D.N.J. June 2, 2008) (“All doubts and ambiguities in a complaint should be resolved in the pleader's favor.”) (citing Herman v. Mut. Life Ins. Co. of N.Y., 108 F.2d 678, 679 (3d Cir. 1939)); see also Llewellyn v. Shearson Fin. Network, Inc., 622 F.Supp.2d 1062, 1074 (D. Colo. 2009) (interpreting complaint in light most favorable to plaintiff and denying motion to dismiss where it was not always clear which of similarly-named corporate entities short-form names in complaint referred to). Supplee's motion is denied with respect to the breach of contract claim.

         2. The motion to dismiss Count IV is denied because the gist of the action doctrine does not bar ...


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