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.

Von Rohr Equipment Corp. v. Tanner Bolt & Nut Corp.

United States District Court, E.D. New York

November 7, 2017

VON ROHR EQUIPMENT CORP., Plaintiff,
v.
TANNER BOLT & NUT CORP., JEFF TANNENBAUM and BRIAN SCHRODER, Defendants.

          MEMORANDUM & ORDER

          NICHOLAS G. GARAUFIS, United States District Judge.

         On May 12, 2017, Plaintiff Von Rohr Equipment Corp. filed this action seeking monetary and injunctive relief against Defendants Tanner Bolt & Nut Corp. ("Tanner"), Jeff Tannenbaum, and Brian Schroder. (Compl. (Dkt. 1).) Plaintiff alleges that Tanner and Tannenbaum obtained certain of Plaintiff's confidential business information from Schroder, who was formerly employed by Plaintiff, and used that information to achieve an unfair commercial advantage over Plaintiff. (See, e.g., id ¶ 1.)

         Before the court is Defendants' motion for partial dismissal of the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) (the "Motion"). (Mot. to Dismiss ("Mot.") (Dkt. 23).) For the following reasons, the court GRANTS IN PART and DENIES IN PART the Motion.

         I. BACKGROUND

         Plaintiff is a New Jersey-based construction equipment supplier that provides "tools and equipment to trade contractors in the highly competitive markets of New York, New Jersey, Pennsylvania, and Connecticut." (Compl. ¶ 12.) Plaintiff asserts that "[o]ne of [its] key competitive advantages ... is its substantial and longstanding customer relationships." (Id. ¶ 13.) Plaintiff further alleges that it "has ... invested heavily in procuring strategic assets to expand its market as well as recruiting, training and retaining, at considerable cost, a sales and management work force with dedicated subject matter expertise and whose members could be trusted with [Plaintiffs] proprietary sales data." (Id. ¶ 14.)

         In May 2014, Plaintiff acquired Kass Building Supply, Inc. ("Kass"), as part of a strategy to expand its business to new customers and products. (Id. ¶¶ 15-16.) Plaintiff alleges that, when it purchased Kass, it obtained lists of Kass's customers, those customers' previous purchases, and information about vendor identities and pricing. (Id. ¶¶ 17-18.) Plaintiff also "retained key Kass employees ... to manage and operate the former Kass business for [Plaintiff]." (IcL¶20.)

         Plaintiff hired Defendant Brian Schroder, a former Kass employee, roughly a year before it acquired Kass. (Id. ¶ 21.) Plaintiff avers that Schroder's role at Kass was "largely confined to ... maintaining customer relationships with Kass customers." (Id. ¶ 22.) Plaintiff alleges that Schroder's hiring was conditioned on his agreement to sign a confidentiality agreement, which he did in May 2013. (Id. ¶ 23-24.) According to Plaintiff, that agreement contained the following language (the "Confidentiality Provision"):

The protection of confidential business information and customer relationships is vital to the interest and the success of the Company.
Employees who improperly use or disclose trade secrets or confidential business information will be subject to termination and possible legal action. Such information includes, but is not limited to, the following: lists of customers and potential customers; identity of customers and potential customers; customer contact people and buyers; the particular preferences and predilections of customers and their representatives; customer usages and requirements; sources of supply; identity of vendors and vendor contact people; proprietary information; processes; product information, including specifications, capabilities, availability and inventories; computer programs; marketing methods, plans and systems; present and future marketing strategy; identity of markets; sales methods; sales plans; sales information; cost information, including overhead; pricing information; profit information; business methods; financial information; any portion of the Company's database; plans for future development; and any other non-public business information and data.
It is crucial that all employees abide by this policy in all respects.

(Id. ¶ 25 (emphasis added).)

         The primary dispute in this case stems from alleged efforts by one of Plaintiff s competitors and that company's principal, Defendants Tanner and Tannenbaum (together, the "Tanner Defendants"), to recruit Schroder and another of Plaintiff's employees, Anthony Vicari. (Id. ¶ 28.) Plaintiff contends that this recruitment effort was part of a "scheme to solicit and hire [Plaintiffs] employees with the purpose of obtaining an unfair competitive commercial advantage over [Plaintiff] by wrongfully obtaining [Plaintiffs] Confidential Information." (Id. ¶ 27.) Plaintiff asserts that the Tanner Defendants' recruitment efforts were driven by an expectation that, once employed by Tanner, Schroder and Vicari would provide confidential information regarding Plaintiffs business. (Id. ¶ 29.) In particular, Plaintiff alleges that the Tanner Defendants sought access to information including Plaintiffs "individual customer contact information, customer buying habits, customer pricing, and vendor identity and pricing formulas." (Id. ¶1.)

         Plaintiff avers that, during the recruitment effort, both Schroder and Vicari informed Tannenbaum that they were bound by the Confidentiality Agreement, and that Vicari "repeatedly" told Tanner that Plaintiff would likely bring legal action "on the assumption that [Vicari and Schroder] had been recruited with the intention of providing [Plaintiffs] Confidential Information to Tanner." (Id. ¶¶ 30-31.) Nevertheless, the Tanner Defendants offered jobs to Schroder and Vicari. (Id. ¶ 32.) Those offers included provisions that explicitly contemplated the possibility that Tanner would be required to defend Schroder and Vicari against litigation brought by Plaintiff, under which Vicari and Schroder's entitlement to discretionary bonus payments would be limited in any month in which Tanner incurred $5, 000 or more in legal fees defending against such litigation.[1] (Id. ¶ 33.)

         While Vicari declined the employment offer, Schroder allegedly accepted and, on February 4, 2017, resigned from his position with Plaintiff with immediate effect. (Id. ¶¶ 35-36.) Following Schroder's departure, on February 6, 2017, Plaintiff avers that it sent a letter to Schroder and Tannenbaum stating that, in Plaintiffs view, Schroder was subject to employment and post-employment obligations "not to use, disclose, or otherwise misappropriate any confidential business information that [Schroder] learned during his employment." (Id. ¶¶ 37-38.) However, within a month of Schroder's departure, Plaintiff claims that "longtime ... customers that Schroder serviced were either no longer buying from [Plaintiff] or were buying far less than in the past." (Id. ¶ 39.) Plaintiff then sent a "cease and desist" letter to Tanner, alleging that Schroder was violating his purported post-employment obligations to maintain the confidentiality of Plaintiff s propriety information and that "Tanner has, by implication, endorsed [Schroder's] unlawful conduct by virtue of its failure to stop him." (Id. ¶¶ 40-41.) Plaintiff alleges that the Tanner Defendants and Schroder have not complied with Plaintiffs demands as stated in its letters, have expressly denied having any post-employment obligation to refrain from using Plaintiffs confidential information, and have "continued to contact [Plaintiff's] customers, including through the use of Confidential Information stolen from Plaintiff]." (Id ¶¶ 42-44.)

         II. PROCEDURAL HISTORY

         Plaintiff filed its complaint in this court on May 12, 2017. (Compl.) Plaintiff asserts claims against all defendants under the Defend Trade Secrets Act, 18 U.S.C. §§ 1836 et seq, as well as common law claims of misappropriation of trade secrets, tortious interference with prospective business relations, unjust enrichment, and an action for accounting. (Id. ¶¶ 45-64, 72-78, 107-114.) Plaintiff also asserts separate breach of contract and breach of the duty of loyalty claims against Schroder (id. ¶¶ 86-99), and claims of tortious interference with contract, unfair competition, and aiding and abetting a breach of the duty of loyalty against the Tanner Defendants (Id. ¶¶ 65-71, 79-85, 100-06). Plaintiff seeks an order enjoining Defendants and their agents from using any of Plaintiff s trade secrets and requiring Defendants to destroy or return[2] to Plaintiff all documents or materials which contain any such trade secrets. (Id. at ECF p. 18). Plaintiff also seeks an award of actual, compensatory, and punitive damages in an unspecified amount, as well as costs and attorneys' fees. (Id. at ECF p. 19.)

         The complaint also seeks a preliminary injunction, to be converted to a permanent injunction at conclusion of trial. (Compl. at ECF 18). By separate motion filed on the same day that it filed the complaint, Plaintiff sought entry of a temporary restraining order and issuance of an order to show cause concerning the motion for a preliminary injunction. (Unsigned Order to Show Cause ("Unsigned OTSC") (Dkt. 3).) The court issued an order to show cause granting the temporary restraining order and directing the parties to appear before Magistrate Judge Ramon E. Reyes, Jr., for hearings on the motion for a preliminary injunction. (Order to Show Cause (Dkt. 9).) Following evidentiary hearings held on May 16 and 17, 2017, Judge Reyes recommended that the court deny Plaintiffs motion for a preliminary injunction. (May 17, 2017, R&R.) The court adopted Judge Reyes's recommendation in full. (June 9, 2017, Order Adopting R&R (Dkt. 19).)

         III. DISCUSSION

         Before the court is Defendants' motion to partially dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Mot.; see also Mem. in Supp. of Mot. ("Defs. Mem.") (Dkt. 24).) Defendants move to dismiss Plaintiffs claims for breach of contract, tortious interference with a contract, tortious interference with prospective business relations, and Plaintiffs action for an accounting. (See generally Defs. Mem.)

         For the following reasons, the court grants the Motion with respect to Plaintiffs claims for breach of contract, tortious interference with a contract, tortious interference with prospective business relations, and Plaintiffs action for an accounting as against the Tanner Defendants, but denies the Motion with respect to Plaintiffs action for an accounting against Schroder.

         A. ...


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.