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Lux Global Label Co., LLC v. Shacklett

United States District Court, E.D. Pennsylvania

July 31, 2019

LUX GLOBAL LABEL COMPANY, LLC Plaintiff,
v.
JAMES H. SHACKLETT, IV CCL INDUSTRIES, INC.; CCL INDUSTRIES USA CORP.; CCL INDUSTRIES CORPORATION; CCL LABEL INC.; CCL LABEL CORP.; CCL TUBE WILKES-BARRE, INC.; and, XYZ CCL COMPANIES 1-100 Defendants.

          MEMORANDUM

          C. Darnell Jones, II J.

         I. INTRODUCTION

         Plaintiff Lux Global Company (hereinafter “Lux”), commenced this action against Defendants (hereinafter “CCL Defendants”) alleging misappropriation of trade secrets under both federal and state law, along with various contract claims and a conspiracy claim.[1]Defendants filed the instant Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), seeking dismissal of all counts of the Complaint. For the reasons set forth below, Defendants' Motion shall be granted as to all claims against CCL Industries (USA) Corp., CCL Label Corp., CCL Industries Corporation, CCL Label, Inc., and XYZ CCL Companies 1-100. Defendants' Motion shall be denied as to Counts I, II, IV, VI, and VII against Defendants CCL Industries, Inc., CCL Tube (Wilkes-Barre), Inc. and James H. Shacklett, IV. Plaintiff shall be granted leave to amend Count III. Lastly, Count V shall be dismissed as to Defendants CCL Industries, Inc. and CCL Tube (Wilkes-Barre), Inc. only.[2]

         II. FACTUAL & PROCEDURAL BACKGROUND

         Lux filed this Complaint against a group of eight entities under the umbrella of “CCL.” (Compl. ¶¶ 1-9.)[3] CCL and Lux are competitors in the label printing industry. (Compl. ¶ 3.) Defendant James H. Shacklett, IV, previously ran the National Label Singapore operations as CEO of National Label Co. (“NLC”) Asia until NLC was purchased by Lux in April 2017. (Compl. ¶ 17.) Prior to the sale of NLC, it was owned and operated by the Shacklett family. (Compl. ¶ 16.) After this transaction, Shacklett's new position from April 2017 until August 2017 became Chief Operating Officer for Lux. (Compl. ¶ 21.)

         While working for Lux, Shacklett was in communication with Ben Rubino, President of Home and Personal Care Worldwide of CCL Industries, Inc. and Geoff Martin, the President and CEO of CCL Industries, Inc. (Compl. ¶¶ 34-37.) On August 2, 2017, Shacklett submitted a written resignation to Lux and immediately began working for CCL Tube (Wilkes-Barre), Inc., a division of CCL Industries. (Compl. ¶¶ 2, 26.) Although Shacklett was employed by CCL Tube, Inc., the extent of his employment went beyond this entity and intertwined with the complex corporate web of entities under CCL. (Compl. ¶¶ 2, 34.)

         Days prior to his resignation from Lux, Shacklett used a thumb drive to acquire “confidential, proprietary, and trade secret information” from his work computer and never returned any of the information taken. (Compl. ¶¶ 28, 39.) Shacklett downloaded records including: pricing lists, key contact information, customer needs and demands, marketing strategies, and data comparisons. (Compl. ¶ 28.)

         Prior to filing the lawsuit, Lux sent numerous warnings and demands for CCL to return the information obtained on the thumb drive, and CCL concurrently attempted to engage in a discussion regarding the purchase of the Lux Singapore operations. (Compl. ¶¶ 34-41.) In early September 2017, Shacklett was communicating with Rubino and Martin with regard to CCL's interest in acquiring Lux Singapore operations, while also looking at the Singapore documents contained on the thumb drive. (Compl. ¶¶ 34-37.) Further, while in possession of the thumb drive, Shacklett discussed the Lux Singapore operations with CCL representatives, gave advice on potential applicants that worked for Lux, and interfered with Lux's bargain and agreement to purchase NLC. (Compl. ¶¶ 67-69.)

         On November 21, 2018, Plaintiff filed a Complaint seeking a preliminary injunction, permanent injunction, and other relief against CCL Defendants. The first three Counts of Plaintiff's Complaint are against all Defendants. Counts I and II involve the misappropriation of trade secrets under federal and Pennsylvania law, and Count III involves tortious interference with business relationships. (Compl. 11-12, 15.) Count IV alleges a breach of fiduciary duty, good faith and loyalty against Defendant Shacklett. (Compl. 17.) Lastly, Plaintiff's remaining claims involve: conversion (Count V), unjust enrichment (Count VI), and civil conspiracy (Count VII) against all Defendants. (Compl. 19, 20-22.) Upon referral of the request for Preliminary Injunction to United States Magistrate Judge Lynne A. Sitarski, the parties were ordered to conduct preliminary discovery, and reached a stipulation to prevent further litigation on the Motion for Preliminary Injunction. (ECF No. 53-1.) Defendants also agreed to refrain from using the thumb drive and that CCL would not interfere with Lux's employment, customers, or business relationships. (ECF No. 53-1.)

         Defendants filed the instant Motion pursuant to Federal Rules of Civil Procedure 12(b)(6), arguing Lux “has not sufficiently pled a single claim against any CCL entity.” (Mot. Dismiss 1.) For the reasons set forth below, Defendants' Motion shall be granted in part and denied in part.

         III. STANDARD OF REVIEW

         In deciding a Rule 12(b)(6) motion, courts must “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (internal quotation marks and citation omitted). “[A]ll civil complaints must now set out sufficient factual matter to show that the claim is facially plausible.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (internal quotation marks omitted). “A claim has facial plausibility when 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) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

         It is incumbent upon a plaintiff to plead with clarity. Iqbal, 556 U.S. at 678. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Phillips, 515 F.3d at 233 (internal quotations marks and citation omitted). This standard, which applies to all civil cases, “asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.

         IV. DISCUSSION

         A. Defendants

         1. Claims Against CCL Industries (USA) Corp. and CCL Label Corp.

         Defendants maintain that CCL Industries (USA) Corp. was merged out of existence on May 13, 2016, and CCL Label Corp. was merged out of existence on December 31, 2000. (Mot. Dismiss 3.) Plaintiff's Brief in opposition to the instant Motion sheds no light on this issue. The Third Circuit has clearly established that an issue which is not briefed is consequently waived. Gorum v. Sessoms, 561 F.3d 179, 185 n.4 (3d Cir. 2009). Accordingly, all claims against these two defunct CCL entities shall be dismissed.

         2. Remaining CCL Entities

         A parent company cannot be liable for the operations of a subsidiary unless that corporate parent “actively participated in and exercised control over the operations” of the subsidiary facility. United States v. Bestfoods, 524 U.S. 51, 55 (1998). Only then can the corporate veil be pierced. Id. In Bestfoods, the Supreme Court held that any parent corporation's liability as an operator stems directly from its control over the subsidiary alleged of wrongful conduct. Id. at 68.

         Here, the alleged wrongful conduct stems from Defendant Shacklett, an employee of CCL Tube (Wilkes-Barre), Inc., and Shacklett's communication with high-level employees of CCL Industries, Inc. (Compl. ¶¶ 34, 37, 59.) Any CCL entity directly involved in the operations of CCL Tube (Wilkes-Barre), Inc. and the alleged conduct would fall within the confines of this liability. While working for Lux, Shacklett was in communication with Ben Rubino, President of Home and Personal Care Worldwide of CCL Industries, Inc. and Geoff Martin, the President and CEO of CCL Industries, Inc. (Compl. ¶¶ 34-37.) Further, while in possession of the thumb drive, Shacklett discussed the Lux Singapore operations with Rubino and Martin, gave advice on potential applicants that worked for Lux, and interfered with Lux's bargain and agreement to purchase NLC. (Compl. ...


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