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White House/Black Market, Inc. v. Cache Inc.

July 27, 2010

WHITE HOUSE/BLACK MARKET, INC. AND CHICO'S FAS, INC., PLAINTIFFS,
v.
CACHE INC., RABIA FARHANG, AND CHRISTINE BROAD, DEFENDANTS.



The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.

MEMORANDUM OPINION & ORDER

ECF

Plaintiffs White House/Black Market, Inc. and Chico's FAS, Inc. bring this action against Defendants Cache Inc., Rabia Farhang and Christine Broad asserting claims arising from Defendants' alleged misappropriation of trade secrets and confidential information relating to White House/Black Market's retail business selling women's apparel and accessories.

Plaintiffs move to remand this action to state court pursuant to 28 U.S.C. § 1447. For the reasons set forth below, Plaintiffs' motion to remand will be GRANTED.

BACKGROUND

White House/Black Market ("WHBM"), which was acquired by Chico's in 2003, operates 337 retail stores and 17 outlet stores, along with an e-commerce website, selling "fashionable clothing and accessory items" catering to "women 25 years of age and over with a moderate to high income level." (FAC ¶¶ 28-29) Cache is a direct competitor of WHBM. (FAC ¶ 1)

The Amended Complaint alleges that Defendants Farhang and Broad are "close professional colleagues as well as social friends." (FAC ¶ 36) Farhang was employed by WHBM from 1997 through October 2009. (FAC ¶ 34) At the time of her departure from WHBM, Farhang served as Vice President and General Merchandise Manager and functioned as Divisional Merchandise Manager. (Id.) Board was employed by WHBM from 1998 through November 2009, leaving WHBM as Merchant of Sweaters. (FAC ¶ 35) Both Farhang and Board are currently employed by Cache. (FAC ¶¶ 21-22)

As employees of WHBM, both Farhang and Board executed non-disclosure agreements and signed acknowledgements that they would abide by Chico's Code of Ethics and Chico's HQ Associate Handbook. (FAC ¶¶ 58-62)

Farhang and Board are alleged to have been "intimately involved in the conceptualization and development of WHBM's 2010 Spring, Summer and Fall season lines." (FAC ¶ 44)

The Amended Complaint alleges that Cache, in light of "its poor performance," undertook to "emulate its successful competitor, WHBM." (FAC ¶ 73) A critical component of that effort was hiring Farhang and Board away from WHBM. (FAC ¶¶ 75, 83) Defendant Board allegedly printed confidential documents proprietary to WHBM days before her departure, including documents disclosing the Company's marketing plans, sales strategy, shipping and release dates for its clothing lines, suppliers, sales forecasts, costs and profit margins, operational calendars, and information about trends used in formulating upcoming clothing lines. (FAC ¶¶ 82, 84)

After Farhang and Board's arrival, Cache released, at what the Amended Complaint terms "unprecedented speed," a Spring 2010 line including garments that "are identical or virtually identical to products designed by WHBM while Farhang and Board were employed by WHBM." (FAC ¶ 89) These garments utilized color palettes and prints similar or identical to those planned for WHBM's lines. (FAC ¶¶ 93-94)

Cache's Summer 2010 line allegedly utilized WHBM's trade secrets "to a much more extensive and sophisticated level . . . made possible by the longer lead time for Defendants Farhang and Board to take advantage of the trade secret materials they brought over to Cache." (FAC ¶ 96) The Amended Complaint alleges that Cache's Summer 2010 line appropriated the color palette and design themes WHBM had adopted for the same season and lists several garments in Cache's Summer 2010 line alleged to be "identical or nearly identical" to those designed by WHBM. (FAC ¶¶ 98, 99)

The Amended Complaint avers that the "commonalities between WHBM's Spring and Summer 2010 product lines, and Cache's Spring and Summer 2010 product lines, [are] sufficient to suggest that Farhang and Board disclosed WHBM's trade secret information concerning the design, and timing of delivery, of WHBM's Spring and Summer products." (FAC ¶ 107) Cache's alleged use of WHBM's trade secrets has resulted in improved sales. (FAC ¶¶ 110-11)

Plaintiffs bring claims for breach of contract (FAC ¶¶ 120-138), tortious interference with contractual relations (FAC ¶¶ 139-143), misappropriation of trade secrets (FAC ¶¶ 144-147), breach of fiduciary duty (FAC ¶¶ 148-157), and civil conspiracy (FAC ¶¶ 158-162). Plaintiffs seek, inter alia, an injunction preventing Cache from designing, manufacturing, marketing and selling garments in Cache's Spring, Summer and Fall 2010 lines, or any seasonal line released thereafter, derived from Plaintiffs' ...


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