Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Transaero, Inc. v. Graham Chappell and International Aviation Services Pty Ltd.

United States District Court, E.D. New York

May 6, 2014

TRANSAERO, INC., Plaintiff,
v.
GRAHAM CHAPPELL AND INTERNATIONAL AVIATION SERVICES PTY LTD., Defendants.

Plaintiff is represented by Frank A. Andrea, III, and Robert L. Towsky, Andrea & Towsky, Esqs., Garden City, NY.

Defendants are represented by Gregory S. Lisi and Alesia J. Kantor, Forchelli Curto Deegan, Schwartz, Mineo & Terrana, LLP, Uniondale, NY.

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge.

Plaintiff Transaero, Inc. ("plaintiff' or "Transaero") brings this action against Graham Chappell ("Chappell") and International Aviation Services Pty Ltd. ("IAS") (collectively, "defendants"), alleging that defendants have unlawfully used plaintiff's confidential information and trade secrets to compete unfairly with plaintiff-Chappell's former employer. Specifically, plaintiff asserts the following causes of action under New York law: (1) broach of contract; (2) conversion; (3) unfair competition; (4) misappropriation of confidential and proprietary information; (5) tortious interference with business relations; and (6) breach of the duty of loyalty. Plaintiff seeks damages and injunctive relief.

Before the Court is defendants' motion to dismiss the complaint pursuant to Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, the Court concludes that plaintiff has made a prima facie showing of personal jurisdiction over Chappell, but not IAS. Accordingly, the Court grants the motion to dismiss brought under Rule 12(b)(2) with respect to IAS, only. However, the Court will give plaintiff leave to re-plead, so that plaintiff may attempt to provide additional allegations in order to address the personal jurisdiction issue as to IAS. Because the Court denies Chappell's motion to dismiss for lack of personal jurisdiction, it considers Chappell's motion to dismiss for failure to state a claim upon which relief can be granted. The Court grants that motion with respect to the conversion claim only, and denies the motion in all other respects.

I. BACKGROUND

A. Factual Background

The following facts are taken from the complaint. These are not findings of fact by the Court. Instead, the Court assumes these facts to be true for purposes of deciding the present motions and construes them in the light most favorable to plaintiff, the non-moving party. The Court provides a more detailed recitation of the facts in connection with the specific issues raised.

Transaero distributes aerospace products to airline, life support, and military industries around the world. (Compl. ¶ 12.) The company is based in Melville, New York. ( Id. ¶¶ 1, 12.)

Chappell was a sales representative for Transaero from September 1999 until December 2011. ( Id. ¶¶ 2, 11, 13, 23, 30.) Based in Australia, he was responsible for Transaero's sales in Australia, New Zealand, and Papua New Guinea. ( Id. ¶ 14.) According to plaintiff, Chappell operated through IAS, a company he organized. ( Id. ¶ 9.) As a Transaero sales representative, Chappell was paid a salary and received a commission on each sale he generated. ( Id. ¶ 16.) All most all products that Chappell sold were stored in Transaero's New York warehouse. ( Id. ¶ 9.) After completing all most every sale, Chappell, operating through IAS, placed an order with Transaero, who packaged and invoiced the products in its New York warehouse, and then sent those products from New York directly to the seller. ( Id. )

During his tenure with Transaero, Chappell gained access to a great deal of Transaero's confidential information, including "product bundling, numerous product and/or parts applications, pricing information, financial information and forecasts, sales analyses, global market analyses, quotations and the identity of Transaero's customer base and their purchasing history, including the names and addresses of contact persons, as well as sales and pricing history, and the identity of Transaero's vendors, suppliers and potential suppliers." ( Id. ¶ 18.) All of this information was maintained at Transaero's Melville, New York office. ( Id. )

Transaero's relationship with Chappell "entered a new phase" on February 7, 2011. ( Id. ¶ 19.) Transaero decided to "move in another direction in the Australian market, " meaning it decided to hire a new sales representative to service the region. ( Id. ) Transaero and Chappell entered into a Letter Agreement on February 7, 2011, pursuant to which Chappell remained employed by Transaero through the end of 2012 in order to assist the new sales representative's transition to Transaero. ( Id. ) In particular, the Letter Agreement prohibited Chappell "from entering into any business that [would] conflict with the interests of Transaero for a period of two (2) years after the conclusion of the transition period." ( Id. ¶ 22.) This prohibition covered "(i) representing, owning or consulting with any company that markets products that would interfere with Transaero's business in the Australian market; (ii) contacting existing customers or principals without the written consent of Transaero; and (iii) making disparaging remarks to customers, contacts or principals regarding Transaero, its employees and/or principals." ( Id. )

Transaero alleges that Chappell broached the Letter Agreement. ( Id. ¶¶ 23, 51.) Specifically, in December 2011, Transaero learned that Chappell had failed to inform Transaero about two former employees who had been competing unlawfully with Transaero. ( Id. ¶ 23.) Instead of informing Transaero about these two employees, Chappell attempted to participate in the unlawful competition. ( Id. ¶ 24.) In particular, Transaero discovered an e-mail from December 2010, in which Chappell was attempting to sell certain products to the Filipino army. ( Id. ¶ 25.) The Filipino army is a customer of Transaero. ( Id. ¶ 26.) When Transaero uncovered the December 2010 e-mail, it terminated Chappell's employment. ( Id. ¶ 30.)

In addition, Transaero alleges that Chappell and IAS have unlawfully solicited the business of other Transaero customers, including the Australian military. ( Id. ¶¶ 36, 46.) Transaero also claims that three of its suppliers-Communication and Ear Protection, Inc. ("CEP"), Signature Industries, and Aqua Lung-have terminated their agreements with Transaero, and have turned to Chappell and IAS to distribute their products. ( Id. 31-35, 38-43.) According to Transaero, Chappell and IAS are using Transaero's confidential information in order to compete unlawfully with Transaero. ( Id. ¶ 44.)

B. Procedural Background

Plaintiff commenced this action in the Supreme Court of the State of New York, County of Suffolk, on June 13, 2013. Defendants removed the action to this Court on October 21, 2013.

Defendants filed the instant motion on February 2, 2014. Plaintiff filed its opposition to the motion on April 8, 2014, defendants replied to the opposition on April 22, 2014, and the Court heard oral argument on May 2, 2014. The Court has fully considered the submissions of the parties.

II. STANDARD OF REVIEW

A. Personal Jurisdiction

On a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2), the "plaintiff bears the burden of showing that the court has jurisdiction over the defendant." In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir. 2003); see, e.g., Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). However, before discovery and on a motion to dismiss that challenges the sufficiency of the factual allegations, the plaintiff need only make a prima fade showing of jurisdiction through its own affidavits and supporting materials to defeat the motion. Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84-85 (2d Cir. 2013); see also Welinsky v. Resort of the World D.N.V., 839 F.2d 928, 930 (2d Cir. 1988) (quoting Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)). In considering a Rule 12(b)(2) motion, the pleadings and affidavits are to be construed in the light most favorable to plaintiff, the non-moving party, and all doubts are to be resolved in plaintiff's favor. Distefano v. Caroms N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001). However, the Court will neither "draw argumentative inferences in the plaintiff's favor, " nor "accept as true a legal conclusion couched as a factual allegation." Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 59 (2d Cir. 2012) (internal quotation marks and citations omitted).

B. Failure to State a Claim

In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the plaintiff. See, e.g., Cleveland v. Caplaw Enters, 448 F.3d 518, 521 (2d Cir. 2006); Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir. 2005). "In order to survive a motion to dismiss under Rule 12(b)(6), a complaint must allege a plausible set of facts sufficient to raise a right to relief above the speculative level.'" Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86, 91 (2d Cir. 2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). This standard does not require "heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570.

The Supreme Court clarified the appropriate pleading standard in Ashcroft v. Iqbal, setting forth two principles for a district court to follow in deciding a motion to dismiss. 556 U.S. 662 (2009). First, the Court instructed district courts to "identify[ ] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 679. "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. Second, if a complaint contains "well-pleaded ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.