Medtech Products Inc. v. Ranir, LLC

Full title: MEDTECH PRODUCTS INC., Plaintiff, v. RANIR, LLC and CVS Pharmacy, Inc.…

Court: United States District Court, S.D. New York

Date published: Sep 30, 2008

596 F. Supp. 2d 778 (S.D.N.Y. 2008)

Opinion

Case No. 07-CV-3302 (KMK) (LMS).

September 30, 2008

W. Edward Ramage, Esq., Baker, Donelson, Bearman, Caldwell Berkowitz PC, Nashville, TN, for Plaintiff Medtech Products Inc.

Clinton P. Sanko, Esq., Micheline K. Johnson, Esq., Thomas O. Helton, Esq., John M. Phillips, Esq., Baker, Donelson, Bearman, Caldwell Berkowitz PC, Chattanooga, TN, for Plaintiff Medtech Products Inc.

Karl Geercken, Esq., Alston Bird, LLP, New York, NY, for Plaintiff Medtech Products Inc.

Samuel F. Miller, Esq., Baker, Donelson, Bearman, Caldwell Berkowitz PC, Memphis, TN, for Plaintiff Medtech Products, Inc.

John P. Fulco, Esq., Petek Gunay, Esq., Salon Marrow Dyckman Newman Broudy LLP, New York, NY, for Defendant Kelly M. Kaplan.

Michael A. Freeman, Esq., Greenberg Freeman, L.L.P., New York, NY, for Defendants Ray Duane and C.D.S. Associates, Inc.

James H. Shalek, Esq., Alan Federbush, Esq., Theodore K. Cheng, Esq., Proskauer Rose LLP, New York, NY, for Defendant DenTek Oral Care, Inc.

Gregory J. Sieczkiewicz, Esq., Proskauer Rose LLP, Boston, MA, for Defendant DenTek Oral Care, Inc.

OPINION AND ORDER

KENNETH KARAS, District Judge

Plaintiff Medtech Products Inc. ("Medtech") filed this consolidated action against Defendants DenTek Oral Care, Inc. ("DenTek"), Kelly M. Kaplan ("Kaplan"), Ray Duane ("Duane"), and C.D.S. Associates, Inc. ("C.D.S.") (collectively, "Defendants"), alleging patent, trademark, and copyright infringement, as well as unfair competition, breach of contract, tortious interference with contractual relations, civil conspiracy, trade secret misappropriation, and tortious interference with an advantageous business relationship. Before the Court are Defendants' various motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), as well as Medtech's Motion to Strike DenTek's Memorandum of Law, Medtech's Motion to Strike C.D.S.' Motion to Dismiss, and DenTek's Motion to Compel Medtech to disclose with particularity those trade secrets that were allegedly misappropriated.

I. Background

The Court assumes the Parties' familiarity with the factual and procedural background of this case as it is thoroughly set forth in Magistrate Judge Lisa Margaret Smith's Report Recommendation dated June 2, 2008 ("R R").¹

1 The case was referred to Magistrate Judge Smith for all purposes on April 24, 2007. The case was assigned to this Court on August 6, 2007.

In her R R, Magistrate Judge Smith has recommended that this Court adopt the following rulings with respect to the pending motions: (1) deny Medtech's Motion to Strike C.D.S.' Motion to Dismiss (R R 800 n. 3); (2) deny Medtech's Motion to Strike DenTek's Memorandum of Law (id. 802); (3) deny Defendants' Motions to Dismiss Medtech's trade secret misappropriation claims (id. 806; (4) grant Kaplan and Duane's Motions to Dismiss Medtech's claim for breach of the Proprietary Information and Inventions Agreement ("PIIA") (id. 810-11); (5) deny Duane and C.D.S.' Motion to Dismiss Medtech's breach of contract claim based on the non-compete and non-solicitation clauses of the Consulting Agreement (id. 811); (6) deny C.D.S.' Motion to Dismiss Medtech's breach of contract claim based on the confidentiality provisions of C.D.S.' PIIA (id.); (7) deny Duane and Kaplan's Motions to Dismiss Medtech's breach of contract claim based on their respective General Releases (id.); (8) grant Defendants' Motions to Dismiss Medtech's civil conspiracy claim (id. 812); (9) grant DenTek's Motion to Dismiss Medtech's claim for tortious interference with contractual relations (id. 814); (10) grant Duane's Motion to Dismiss Medtech's tortious interference with contractual relations claim (id. 814-15); (11) grant Defendants' Motions to Dismiss Medtech's claims for tortious interference with advantageous business relationship/economic advantage (id. 816); (12) deny DenTek's Motion to Dismiss Medtech's claims for unjust enrichment and unfair competition (id. 818); and (13) deny DenTek's Motion to Compel Medtech to disclose the precise trade secrets allegedly misappropriated until Medtech has had the opportunity to conduct limited discovery on the trade secret claim (id. 819-20). All Parties have filed timely and specific objections to the R R.

II. Discussion

A. Standard of Review

1. Review of Magistrate Judge's Report Recommendation

A district court reviewing a report and recommendation addressing a dispositive motion "'may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.'" Donahue v. Global Home Loans Fin., Inc., No. 05-CV-8362, 2007 WL 831816, at *1 (S.D.N.Y. Mar. 15, 2007) (quoting 28 U.S.C. § 636(b)(1)(c)). Under 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b), parties may submit objections to the magistrate judge's report and recommendation. The objections must be "specific" and "written," Fed.R.Civ.P. 72(b)(2), and must be made "[w]ithin 10 days after being served with a copy of the recommended disposition." Id.; see also 28 U.S.C. § 636(b)(1)(c).

Where a party submits timely objections to a report and recommendation, as the Parties have here, the district court reviews the parts of the report and recommendation to which the party objected under a de novo standard of review. See 28 U.S.C. § 636(b)(1)(c) ("A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made"); Fed.R.Civ.P. 72(b)(3) ("The district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to."); see also Donahue, 2007 WL 831816, at *1. The district court may adopt those portions of a report to which no objections have been made, as long as those portions are not clearly erroneous. See Pizarro v. Bartlett, 776 F.Supp. 815, 817 (S.D.N.Y. 1991).

With regard to a magistrate judge's decision on a non-dispositive matter, such as a discovery dispute between the parties, "[t]he district judge in the case must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law." Fed.R.Civ.P. 72(a). "Pursuant to this highly deferential standard of review, magistrates are afforded broad discretion in resolving discovery disputes." Aurora Loan Servs. v. Posner, 499 F.Supp.2d 475, 477 (S.D.N.Y. 2007) (internal quotation marks omitted).

2. Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6)

The Supreme Court has held that "[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007) (citations omitted and second alteration in original). In Twombly, id. at 1964-69, the Supreme Court also abandoned reliance on the oft-cited line from Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), that, "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." As the Court explained, a literal application of Conley's "no set of facts" rationale is improper because "a wholly conclusory statement of claim would survive a motion to dismiss whenever the pleadings left open the possibility that a plaintiff might later establish some 'set of [undisclosed] facts' to support recovery." Twombly, 127 S.Ct. at 1968 (alteration in original). Instead, the Court emphasized that "[f]actual allegations must be enough to raise a right to relief above the speculative level . . . [,]" id. at 1965, and "once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint[,]" id. at 1969. Plaintiffs must allege "enough facts to state a claim to relief that is plausible on its face." Id. at 1974. If Plaintiffs "ha[ve] not nudged their claims across the line from conceivable to plausible, [their] complaint must be dismissed." Id.; see also Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007) ("After careful consideration of the Court's opinion and the conflicting signals from it that we have identified, we believe the Court is not requiring a universal standard of heightened fact pleading, but is instead requiring a flexible 'plausibility standard,' which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible." (emphasis in original)).

A Rule 12(b)(6) motion to dismiss requires a court to "accept [] all factual allegations in the complaint and draw [] all reasonable inferences in the plaintiff's favor." Ruotolo v. City of New York, 514 F.3d 184, 188 (2d Cir. 2008); see also Grandon v. Merrill Lynch Co., 147 F.3d 184, 188 (2d Cir. 1998) (noting court must "accept as true the factual allegations made in the complaint and draw all inferences in favor of the plaintiffs"); Blimpie Int'l, Inc. v. Blimpie of the Keys, 371 F.Supp.2d 469, 470-71 (S.D.N.Y. 2005). "In adjudicating a Rule 12(b)(6) motion, a district court must confine its consideration 'to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken.'" Glidepath Holding B.V. v. Spherion Corp., 590 F.Supp.2d 435, 450 (S.D.N.Y. 2007) (quoting Leonard F. v. Israel Disc. Bank of N.Y., 199 F.3d 99, 107 (2d Cir. 1999)).

B. Analysis

1. Medtech's Motions to Strike

Magistrate Judge Smith recommended that this Court deny Medtech's Motion to Strike C.D.S.' Motion to Dismiss. (R R 800 n. 3.) Medtech has not objected to this recommendation. Having reviewed the recommendation for clear error and found none, the Court adopts Magistrate Judge Smith's recommendation and denies Medtech's Motion to Strike C.D.S.' Motion.

Medtech also moved to strike DenTek's Motion to Dismiss on the ground that it is "replete with information that cannot be considered in determining a motion to dismiss." (Pl. Medtech Products Inc.'s Mot. to Strike DenTek Oral Care, Inc.'s Mot. and Mem. of Law in Supp. of its Mot. for (A) Partial Dismissal of the Second Am. Compl. and (B) Entry of a Protective Order and Order Compelling Disclosure of Alleged Trade Secrets 1-2 (" PL's Mot. to Strike DenTek's Mot.").)² In the R R, Magistrate Judge Smith recommended that this Court deny Medtech's Motion to Strike, finding that "such drastic measures . . . need not be taken." (R R 803.) Instead, Magistrate Judge Smith excluded improper exhibits from consideration on this Motion. (Id.) ³ None of the Parties has objected to this portion of the R R. The Court adopts Magistrate Judge Smith's recommendation in this regard and denies Medtech's Motion to Strike DenTek's Motion to Dismiss.

2 More specifically, Plaintiff identifies the following documents as improperly relied upon and referenced in DenTek's Motion to Dismiss: (1) the Declaration of Brad Conley (Dkt. No. 112); (2) Paragraphs 3, 6, 7, 9, 10, 11, 12, and 13 of the Declaration of Theodore K. Cheng (Dkt. No. 113); and (3) Exhibits B, E, F, H, I, J, K, and L to the Declaration of Theodore K. Cheng (Dkt. No. 113).

3 Because discovery in this case is ongoing, Magistrate Judge Smith recommended that this Court decline to convert the Motion to one for summary judgment in light of DenTek's submissions. (R R 803.) This recommendation was not objected to by the Parties, and, in any case, the Court finds no clear error in this sensible conclusion.

2. Motions to Dismiss a. Trade Secret Misappropriation Claims

In the R R, Magistrate Judge Smith recommended that this Court deny Defendants' Motions to Dismiss Plaintiff's trade secret misappropriation claims. (R R 806.) Defendants have all filed timely objections to this portion of the R R, so this Court has reviewed de novo the issue of whether Plaintiff has sufficiently alleged a claim for trade secret misappropriation.⁴ For the reasons set forth in Magistrate Judge Smith's thorough R R, as well as for those stated below, the Court concludes that, for purposes of the present Motions, Medtech has adequately alleged a claim of trade secret misappropriation and, therefore, Defendants' Motions to Dismiss that claim should be denied.

4 Defendants C.D.S. and Duane (collectively, the "Duane Defendants") have adopted and incorporated by reference the objections filed by DenTek and Kaplan with regard to Magistrate Judge Smith's recommendation that their respective Motions to Dismiss Plaintiff's trade secret misappropriation claim be denied. (Objections by Defs. Ray Duane and C.D.S. Associates, Inc. to the Magistrate Judge's Report and Recommendation, Dated June 2, 2008 ("Duane Defs. Obj.") 8.)

"To succeed on a claim for the misappropriation of trade secrets under New York law, a party must demonstrate: (1) that it possessed a trade secret, and (2) that the defendants used that trade secret in breach of an agreement, confidential relationship or duty, or as a result of discovery by improper means." N. Atl. Instruments, Inc. v. Haber, 188 F.3d 38, 43-44 (2d Cir. 1999); see also Faiveley Transp. Malmo AB v. Wabtec Corp., 572 F.Supp.2d 400, 404 (S.D.N.Y. 2008) (citing N. Atl. Instruments). New York courts define a "trade secret" as "any formula, pattern, device or compilation of information which is used in one's business, and which gives [the owner] an opportunity to obtain an advantage over competitors who do not know or use it." N. Atl. Instruments, 188 F.3d at 44 (internal quotation marks omitted).⁵ A trade secret, however, "is not simply information as to single or ephemeral events in the conduct of the business; rather, it is a process or device for continuous use in the operation of the business." Sit-Up Ltd. v. IAC/InterActiveCorp., No. 05-CV-9292, 2008 WL 463884, at *8 (S.D.N.Y. Feb. 20, 2008) (quoting Softel, Inc. v. Dragon Med. Scientific Commc'ns, Inc., 118 F.3d 955, 968 (2d Cir. 1997)). "The most important consideration remains whether the information was secret." Payment Alliance Int'l, Inc. v. Ferreira, 530 F.Supp.2d 477, 481 (S.D.N.Y. 2007) (quoting Lehman v. Dow Jones Co., 783 F.2d 285, 298 (2d Cir. 1986)) (internal quotation marks omitted). Whether the information was secret is "generally a question of fact." Ashland Mgmt., 604 N.Y.S.2d 912, 624 N.E.2d at 1013 (internal citations omitted).

5 Courts use the following factors to determine whether information constitutes a trade secret:

(1) the extent to which the information is known outside of the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken by the business to guard the secrecy of the information; (4) the value of the information to the business and its competitors; (5) the amount of effort or money expended by the business in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.

N. Atl. Instruments, 188 F.3d at 44 (quoting Ashland Mgmt. v. Janien, 82 N.Y.2d 395, 604 N.Y.S.2d 912, 624 N.E.2d 1007, 1013 (1993)). These factors, however, are difficult to apply in the absence of discovery, making their consideration sometimes futile in the context of a motion to dismiss. See, e.g., SD Protection, Inc. v. Del Rio, 498 F.Supp.2d 576, 585-86 (E.D.N.Y. 2007) ("To consider these factors now [on a motion to dismiss] would be premature. . . . Without discovery, I cannot possibly weigh the six factors discussed in Ashland. . . .").

Medtech alleges that it, and its predecessor in interest, Dental Concepts LLC ("Dental Concepts"), "expended considerable time, effort, and money developing its trade secrets, including but not limited to manufacturing cost details, drawings, test data, and other information about the design and manufacturing process for its dental protectors." (Second Am. Compl. ("SAC") ¶ 275.) Medtech alleges that Kaplan and Duane were "involved extensively in every aspect of the NIGHTGUARD™ business including brand development and marketing, and the formulation of strategic sales and market goals and initiatives . . . [, and were] intimately familiar with Dental Concepts' consultants, brokers, designers, suppliers, product formulation and production sources, and marketing strategies." (Id. ¶ 41.) Further, Medtech alleges that it shared its trade secrets with Kaplan and Duane pursuant to confidentiality agreements, in which they "agreed not to divulge or appropriate for their own use or to the use of others any secret or confidential information or knowledge obtained by them or disclosed to them during their employment at Medtech." (Id. ¶ 278.) Despite these confidentiality agreements, according to Medtech, "Duane and Kaplan used Medtech's trade secrets in the performance of their duties at DenTek for their own benefit and disclosed Medtech's trade secrets to DenTek and its employees and officers." (Id. ¶ 280.) Medtech alleges that DenTek had "reason to know and, upon information and belief, did know at and/or after the time that Duane and Kaplan disclosed Medtech's trade secrets, and at and/or after the time DenTek made use of these trade secrets, that these trade secrets came from Medtech, and that Duane and Kaplan owed a duty to Medtech to maintain their secrecy." (Id. ¶ 281.)

According to Medtech, DenTek had no experience in the dental protector market (id. ¶ 127), yet "[b]y virtue of Duane and Kaplan's inside information, DenTek was able to virtually eliminate the development time normally associated with entering into a new line of products" ( id. ¶ 128). Further, Medtech alleges that "[a]ll evaluation and vetting processes were truncated based on Duane and Kaplan's inside information about suppliers, designers, consultants, and legal advisors." (Id. ¶ 129.) In sum, Medtech alleges that due to the confidential and proprietary information provided to DenTek by Duane and Kaplan, DenTek was aware of Medtech's strategic decisions (for example, to maintain a three-size platform for its product) and was able to create a competing product on an expedited basis, cutting out a time-consuming and expensive development process, and allowing DenTek to seize a limited opportunity with a large retailer. (R R 805; SAC ¶¶ 110, 123-124, 127-130, 163, 181-82, 275-77, 280.)

Magistrate Judge Smith recommended that this Court find these allegations sufficient to survive Defendants' Motions to Dismiss Plaintiffs trade secret misappropriation claims. (R R 805.) Defendants object to this recommendation, arguing that Plaintiff's vague and conclusory allegations do not sufficiently allege its possession of trade secrets. (Def. Kelly M. Kaplan's Objections to Magistrate Judge Smith's Report and Recommendation Dated June 2, 2008 Regarding, Among Other Things, Defs.' Mots. to Dismiss the Second Am. Compl. ("Kaplan Obj.") 4-5; Def. DenTek Oral Care, Inc.'s Objections to the Report Recommendation of Magistrate Judge Smith Dated June 2, 2008 ("DenTek Obj.") 6-9.) In particular, Defendants contend that Plaintiff never identified the allegedly misappropriated trade secrets. (Kaplan Obj. 4; DenTek Obj. 5 ("DenTek seeks a specific identification of the trade secrets allegedly used by DenTek now so that it may assess whether they are in fact trade secrets under the factors that apply under New York law, whether any use was ever made by DenTek of any such 'secrets,' and to forestall needless burden and expense.").) Further, Defendants argue that any trade secrets that can be gleaned from Plaintiff's allegations — such as Medtech's decision to maintain its three-size platform and its relationships with various vendors — do not qualify as trade secrets. (DenTek Obj. 10-15; Kaplan Obj. 5, 9-10.)⁶ Finally, Defendants object to Magistrate Judge Smith's conclusion that Plaintiff sufficiently alleged the second element of its trade secret misappropriation claim because, again, the trade secrets allegedly misappropriated are not identified, so, according to Defendants, Medtech has failed to allege that any particular trade secret was improperly disclosed by Kaplan and Duane and used by DenTek. (DenTek Obj. 17-18; Kaplan Obj. 10-12.)

6 DenTek argues that, at best, Medtech's Complaint can be read to identify the following three alleged trade secrets: (1) Medtech's strategic decision to maintain a three-size configuration for the NightGuard™; (2) Medtech's use of certain vendors and advisors (e.g., attorneys, manufacturers, etc.) in connection with the development of the Night-Guard™ dental protector; and (3) "'manufacturing cost details, drawings, test data, and other information about the design and manufacturing process for'" the Medtech dental protector. (DenTek Obj. 8.)
According to DenTek, "Medtech simply alleges a laundry list of independently unpro-tectable items, none of which are confidential, and does not allege that DenTek even used much of this information. . . . In sum, the specific 'combination of characteristics or components' which Medtech claims to be a trade secret allegedly used by DenTek is not actually identified within the SAC." (Id. 9.)
As Magistrate Judge Smith appropriately pointed out, however, "the secrecy of particular information is an issue of fact and cannot be decided at the motion to dismiss stage." (R R 805); see also SD Protection, Inc., 498 F.Supp.2d at 586 (stating that discovery is necessary before the court can determine whether the alleged trade secrets are protectable); Kosower v. Gutowitz, No. 00-CV-9011, 2001 WL 1488440, at *8-9 (S.D.N.Y. Nov. 21, 2001) (denying motion to dismiss where plaintiff alleged that certain items were trade secrets and noting that whether the items actually were trade secrets could not be determined on a motion to dismiss).

The Court recognizes that Medtech, for the most part, does not specify the particular trade secrets at issue in this case, but instead categorizes them generally as "manufacturing cost details, drawings, test data, and other information about the design and manufacturing process for its dental protectors." (SAC ¶ 275.) However, specificity as to the precise trade secrets misappropriated is not required in order for Medtech to defeat the present Motions to Dismiss. See SD Protection, Inc., 498 F.Supp.2d at 586 (denying motion to dismiss where plaintiff alleged the existence of legitimate trade secrets, and making clear that plaintiff "has no obligation to reveal those secrets in the Complaint simply to prove that they exist"); Am. Bldg. Maint. Co. of N.Y. v. Acme Prop. Servs., Inc., 515 F.Supp.2d 298, 309 (N.D.N.Y. 2007) (denying defendant's motion to dismiss plaintiffs claim for trade secret misappropriation, and finding plaintiffs allegations, "which the Court must accept at this stage of the litigation, suggest that it could prevail on this cause of action and entitle it to gather and present related evidence"); Gaetano Assocs. Ltd. v. Artee Collections, Inc., No. 05-CV-3329, 2006 WL 3026080, at *2 (S.D.N.Y. Oct. 25, 2006) (addressing argument that defendants' trade secret misappropriation counterclaim failed to specify certain details, by stating that "[u]nder the notice pleading standard, however, defendants are not required to do so").

The Court is no more persuaded by the claim that Medtech has failed to identify the trade secrets Kaplan and Duane revealed to the other Defendants. It is true that Medtech does not deny that the Second Amended Complaint for the most part fails to specify the particular trade secrets allegedly misappropriated by Defendants. Medtech nonetheless argues that "[t]o require any greater level of specificity in the Second Amended Complaint would place an onerous burden on Medtech, essentially requiring it to detail information to which it has no access outside of discovery." (Pl. Medtech Products Inc.'s Response to Defs.' DenTek Oral Care, Inc.'s, Kelly M. Kaplan's, Ray Duane's, and C.D.S. Associates, Inc.'s Mots. to Dismiss 20.) According to Medtech, identification of the allegedly misappropriated trade secrets is not required until Medtech has had the opportunity for discovery. (Id.) ⁷ In fact, the case principally relied on by Defendants for the proposition that specificity is required in the Complaint granted defendants' motion for summary judgment (and not a motion to dismiss), "following massive document discovery." See Sit-Up Ltd., 2008 WL 463884, at *5, 12.

7 As an alternative to its Motion to Dismiss Medtech's trade secret misappropriation claim, DenTek filed a Motion to Compel Medtech's identification of the alleged trade secrets at issue. Magistrate Judge Smith recommended that "Medtech should be allowed limited discovery on the trade secret claim prior to being required to identify the precise trade secrets it is alleging were misappropriated. However, . . . after Medtech's limited discovery on the trade secret claim, DenTek is entitled to receive a list of the specific trade secrets Medtech is alleging were misappropriated forthwith." (R R 820.)
Because this ruling deals with a non-dispositive, discovery matter, Defendants' objection to the ruling requires the Court to review the ruling and ensure that it is not "clearly erroneous or . . . contrary to law." Fed.R.Civ.P. 72(a). Having undertaken such a review here, the Court adopts Magistrate Judge Smith's recommendation that Medtech is entitled to limited discovery on its trade secret misappropriation claim, but that it will, shortly thereafter and in accordance with a schedule to be set by Magistrate Judge Smith, be required to identify the trade secrets Defendants are alleged to have misappropriated or risk dismissal of its trade secret misappropriation claim.

Here, there has been no discovery, but the Court finds that Medtech has stated a claim for trade secret misappropriation. Medtech alleges that Kaplan and Duane, who had extensive knowledge of Medtech's business and the production process for the NightGuard™, disclosed Medtech's trade secrets in violation of confidentiality agreements in place, and that, shortly thereafter, DenTek, a company with no experience in the dental protector market, was able to rush a dental protector to the market, without going through any development process. These allegations make Medtech's claim for trade secret misappropriation plausible. See Twombly, 127 S.Ct. at 1974. The question of whether it will ultimately be successful cannot be answered at this stage of the case. Thus, for these and the reasons outlined by Magistrate Judge Smith, Defendants' Motions to Dismiss Medtech's trade secret misappropriation claim are denied.

b. Breach of Contract Claims i. Application of the Non-Compete and Non-Solicitation Clause of the Consulting Agreement

Medtech alleges that the Duane Defendants breached the non-compete and non solicitation clause ("NC/NS clause") of the Consulting Agreement entered into by Dental Concepts and the Duane Defendants on September 30, 1999, by "working for a company competitive to Dental Concepts; and soliciting, enticing and inducing suppliers and accounts of Medtech; soliciting, enticing and inducing employees of Medtech." (SAC ¶ 231.)⁸ The Duane Defendants moved to dismiss this claim, arguing that the NC/NS clause was inapplicable in this case. (Mem. of Law by Defs. Ray Duane and C.D.S. Associates, Inc. in Supp. of Their Mot. to Dismiss the Second Am. Compl. and For Other Relief ("Duane Defs.' Mem.") 9-10.)

8 In pertinent part, the NC/NS clause provides:

[C.D.S.] and Duane agree that, commencing as of the date hereof and during the period of [C.D.S.'] engagement by [Dental Concepts] (whether under this Agreement or otherwise) and for a period of twenty-four (24) months from and after the date of termination of such engagement, if such engagement is terminated by [C.D.S.] or is terminated by [Dental Concepts] for Just Cause, neither [C.D.S.] nor Duane shall . . .(ii) . . . solicit, entice or induce, or cause, any person who presently is, or any time during [C.D.S.'] engagement by [Dental Concepts] shall be or shall have been, a client, customer, supplier or account of [Dental Concepts] . . .; [or] . . . (iv) become an employee, consultant, [etc.] . . . of . . . any other person or entity who is engaged in any line of business competitive with any of the Activities engaged in during the period of [C.D.S.'] engagement with [Dental Concepts] or during the 24-month period prior thereto. . . .

(SAC, Ex. A, ¶ 7(b)(ii), (iv).)

Magistrate Judge Smith, finding the Consulting Agreement and the NC/NS clause unambiguous, rejected the Duane Defendants' argument and recommended that this Court find that the NC/NS clause of the Consulting Agreement applied under the circumstances surrounding Duane and C.D.S.' termination from Dental Concepts. (R R 808.) In particular, Magistrate Judge Smith found that Plaintiffs allegation that "CDS and Duane declined continued employment in a sales position that was offered by Prestige" (SAC ¶ 88), the company that acquired Dental Concepts in 2005 and ultimately integrated Dental Concepts into Medtech, sufficiently alleged that the Consulting Agreement was terminated voluntarily by the Duane Defendants. (R R 808.)

The Duane Defendants object to Magistrate Judge Smith's recommendation, and argue that the NC/NS clause does not apply in this case because the Second Amended Complaint fails to allege that the Consulting Agreement was terminated by the Duane Defendants or by Dental Concepts for just cause, which are the only two triggering events for the clause. (Duane Defs. Obj. 9-10.) The Duane Defendants argue further that the allegation that they turned down "employment" offered to them by Prestige establishes only that the Duane Defendants were offered an inferior position to that which they held under the Consulting Agreement — one which Prestige knew the Duane Defendants would turn down. (Id. 11-12.)

Prestige acquired Dental Concepts in November 2005 (SAC ¶ 71), but Medtech alleges that "CDS and Duane continued consulting for Medtech through and including February 2006[, and that] Duane stayed on board until Dental Concepts was completely transitioned into Medtech" (id. ¶ 87). Moreover, Medtech alleges that "[t]he Consulting Agreement's Covenant Not to Compete and Non-Solicitation Agreement survived the acquisition and were applicable to any consulting work of Duane and CDS after the acquisition." (Id. ¶ 93.) Accepting all factual allegations in the Second Amended Complaint and drawing all reasonable inferences in the plaintiff's favor, the Court finds these allegations, combined with the allegation that the Duane Defendants "declined continued employment in a sales position that was offered by Prestige" (id. ¶ 88), sufficient to make plausible the fact that the NC/NS clause was triggered when the Duane Defendants declined continued employment with Prestige.

The Duane Defendants quibble with Medtech's use of the words "employment" and "sales position" (id. ¶ 88), and argue that their decision to "'decline[]'" such a position is not the same as terminating the engagement under the Consulting Agreement. (Duane Defs. Obj. 12.) According to the Duane Defendants, "the SAC does not allege that the 'sales position' offered to the Duane Defendants was comparable to the position they held under the Consulting Agreement." (Id.) Yet the fact that the Consulting Agreement describes the Duane Defendants' engagement with Dental Concepts as "direct[ing] and supervis[ing] the sales of [Dental Concepts'] products" (SAC, Ex. A, ¶ 1) undercuts the Duane Defendants' argument that the Court should somehow be able to glean from the term "sales position" that Medtech's allegation refers to something other than the consulting engagement. In any event, the Duane Defendants' factual arguments can be addressed at an appropriate time, when the Parties will have the opportunity to present evidence from which a determination can be made as to whether the Duane Defendants' declination of the sales position constituted their termination of the consulting engagement under the terms of the Consulting Agreement and its NC/NS clause. Thus, for these, and the reasons set forth in the R R, the Court finds that Medtech's allegations survive the Duane Defendants' Motion to Dismiss on the issue of the NC/NS clause's applicability.⁹

9 The Duane Defendants expressed concern that Magistrate Judge Smith's R R could be read to conclusively determine, as a matter of law, that the NC/NS clause was triggered in this case. (Duane Defs. Obj. 10 n. 6.) To alleviate any confusion, the Court finds that Medtech's allegations are sufficient to make the applicability of the NC/NS clause plausible and, therefore, to defeat the Duane Defendants' Motion to Dismiss on this ground. However, the Duane Defendants will have the opportunity to prove, during summary judgment or at trial, that the NC/NS clause actually does not apply because of the manner in which the consulting engagement was terminated.

ii. The Effect of the General Releases on the PIIAs

Duane (on behalf of himself and C.D.S.) and Kaplan each signed a PIIA with Dental Concepts in September 1999 (SAC, Exs. C, D), which contains a confidentiality provision that they are alleged to have breached by providing confidential and proprietary information to DenTek (id. ¶¶ 232, 241). Duane and Kaplan later each signed a General Release in November 2005 (id., Exs. G, H), the confidentiality provisions of which they are also alleged to have breached "by providing DenTek with Medtech's confidential and proprietary information" (id. ¶ 250). Defendant Kaplan and the Duane Defendants argue that Medtech's breach of contract claims based on the PIIAs should be dismissed because the confidentiality provisions of the PIIA were superseded by the confidentiality requirements in their respective General Releases.

Magistrate Judge Smith recommended this Court conclude that "because the confidentiality provisions of the PIIAs and the General Releases cover the same rights of the parties and address precisely the same subject matter — confidentiality — and in light of the integration and merger clause in the General Releases, the confidentiality provisions of the PIIAs are superseded by the General Releases with respect to Duane and Kaplan[, and therefore that] Medtech's claim against Duane and Kaplan for breach of the PIIAs should be dismissed." (R R 811.)¹⁰

10 Magistrate Judge Smith also recommended that this Court find that the "confidentiality provision of the PIIA survived the execution of the General Release with regard to CDS." (R R 809 n. 7.) No Party has objected to this recommendation, and the Court adopts it for the reasons set forth in the R R.

Medtech objects to this recommendation, arguing that "the terms of the General Release do not supersede the PIIA, and that its claims for breach of the PIIA are proper causes of action," because "[t]he PIIA and the General Release were intended to serve different purposes and, accordingly, cover different subject matters." (Pl. Medtech Products Inc.'s Objections to Magistrate Judge's Report and Recommendation Regarding Defs.' Mots. to Dismiss ("Medtech Obj.") 9-10.) In its objections, Medtech parses the PIIA and General Release in an effort to demonstrate to the Court the ways in which the PIIA's scope exceeds that of the General Release and covers subject matters not dealt with by the General Release. (Id. 10-12.) Indeed, Medtech appears to be objecting to what it perceives as Magistrate Judge Smith's recommendation that this Court conclude that the PIIA in its entirety was superseded by the General Release.

The Court does not read the R R quite as broadly as does Medtech, making certain aspects of Medtech's objections irrelevant. In particular, the Court does not read the R R as suggesting the PIIAs were superseded in their entirety by the General Releases. Instead, Magistrate Judge Smith recommended that this Court find that the confidentiality provisions in the PIIAs (SAC, Exs. C ¶ D(1), D ¶ D(1)), were superseded by the confidentiality provisions in the General Releases (id., Exs. G ¶ 7, H ¶ 7). (R R 810.)

Though "[i]t is a well settled principle of contract law that a new agreement between the same parties on the same subject matter supercedes the old agreement," Ottawa Office Integration, Inc. v. FTF Bus. Sys., 132 F.Supp.2d 215, 219 (S.D.N.Y. 2001), "a subsequent agreement supersedes only those terms of the earlier contract that are of the same subject matter." CreditSights, Inc. v. Ciasullo, No. 05-CV-9345, 2007 WL 943352, at *6 (S.D.N.Y. Mar. 29, 2007); see also Kreiss v. McCown De Leeuw Co., 37 F.Supp.2d 294, 301 (S.D.N.Y. 1999) (finding that provisions in new agreement superseded provisions in older agreement only to the extent that they covered the same subject matter where new agreement contained merger and integration clause providing: "This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior arrangements or understandings . . . with respect thereto." (alterations and emphasis in original)). Therefore, as pointed out by Medtech, there are certain terms in the PIIA that are not covered in, and are therefore not superseded by, the General Release. With respect to the confidentiality provisions in particular, however, the Court is persuaded by Magistrate Judge Smith's careful analysis and comparison of the two provisions, as well as by her ultimate conclusion that the terms cover the same subject matter — confidentiality owed to Medtech, both during and after Kaplan's and Duane's respective engagements with Medtech. Therefore, the Court finds, for reasons laid out by Magistrate Judge Smith, that the confidentiality provisions of the PIIAs are superseded by the confidentiality provisions of the General Releases. Because Medtech has alleged that Duane and Kaplan breached the confidentiality provisions of their PIIAs, those claims are dismissed. (SAC ¶¶ 232, 241.) See CreditSights, Inc., 2007 WL 943352, at *6 (stating "a plaintiff must identify what provisions of the contract were breached as a result of the acts at issue").

iii. Allegations of Breach

Magistrate Judge Smith recommended that this Court conclude that Medtech has sufficiently alleged breaches of the following: (1) the NC/NS clause of the Consulting Agreement by the Duane Defendants;¹¹ (2) the confidentiality provisions of the PIIA by C.D.S.; and (3) the confidentiality provisions of the General Releases by Kaplan and Duane. (R R 811.)

11 The Duane Defendants urged this Court to dismiss Medtech's breach of contract claim premised on the NC/NS clause of the Consulting Agreement on the ground that Medtech did not adequately allege the applicability of the NC/NS clause in this case. Having already rejected that argument above, the Court denies the Duane Defendants' Motion to Dismiss Medtech's claim for breach of the Consulting Agreement.

The Duane Defendants and Kaplan object to these recommendations, arguing that the Second Amended Complaint fails to adequately allege that they divulged Medtech's trade secrets to DenTek. (Duane Defs. Obj. 13; Kaplan Obj. 14-15.) As already discussed in the trade secret misappropriation section above, the Court finds that Medtech has sufficiently alleged that Kaplan, Duane, and C.D.S. (through Duane) divulged Medtech's trade secrets to DenTek. Therefore, as Magistrate Judge Smith recommended, this Court denies Duane's Motion to Dismiss Medtech's breach of contract claim premised on the General Release, C.D.S.' Motion to Dismiss the breach of contract claim premised on the PIIA, and Kaplan's Motion to Dismiss the breach of contract claim premised on the General Release.

c. Civil Conspiracy Claims

"To establish its claim of civil conspiracy, the [plaintiff] must demonstrate the primary tort, plus the following four elements: (1) an agreement between two or more parties; (2) an overt act in furtherance of the agreement; (3) the parties' intentional participation in the furtherance of a plan or purpose; and (4) resulting damage or injury." World Wrestling Fed'n Entm't, Inc. v. Bozell, 142 F.Supp.2d 514, 532 (S.D.N.Y. 2001)

In her R R, Magistrate Judge Smith recommended that Medtech's claim for civil conspiracy should be dismissed on the ground that Plaintiff had not sufficiently alleged the first element of the claim: "[t]here are no allegations in the complaint that the Defendants specifically agreed to use[] the trade secrets that Duane and Kaplan gleaned from their employment with Medtech in order to produce DenTek's competing product." (R R 812.) Medtech objects to this recommendation, first, by identifying allegations that it contends sufficiently allege, under the liberal pleading standards against which they are to be considered, an agreement among Defendants to misappropriate Medtech's trade secrets (Medtech Obj. 6 (citing SAC ¶¶ 120, 128, 130, 163, 270)), and second, and in the alternative, by arguing that "[t]he allegations in the SAC were made at a time when virtually no discovery had taken place, and thus any requirement that Medtech state with specificity the exact time, place, and manner of the agreement between DenTek, Duane, and Kaplan is unrealistic" (id. 7).

The Court has thoroughly reviewed the allegations flagged by Medtech in its objections, and finds them too conclusory and lacking in factual detail to survive Defendants' Motions to Dismiss the civil conspiracy claim. Though a claim for civil conspiracy is measured against the liberal pleading requirements of Federal Rule of Civil Procedure 8(a), and not the more rigorous requirements of Rule 9(b), merely conclusory allegations are insufficient. See Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 26 n. 4 (2d Cir. 1990) ("[T]he complaint must allege some factual basis for a finding of a conscious agreement among the defendants."); Grove Press, Inc. v. Angleton, 649 F.2d 121, 123 (2d Cir. 1981) ("The damage for which recovery may be had in a civil action is not the conspiracy itself but the injury to the plaintiff produced by specific overt acts. Accordingly, a bare conclusory allegation of conspiracy does not state a cause of action." (internal quotation marks and citations omitted)); Fierro v. Gallucci, No. 06-CV-5189, 2008 WL 2039545, at *16 (E.D.N.Y. May 12, 2008) ("[T]o survive a motion to dismiss, a complaint must contain more than general allegations in support of the conspiracy. Rather, it must allege the specific times, facts, and circumstances of the alleged conspiracy." (internal quotation marks omitted)); Brownstone Inv. Group v. Levey, 468 F.Supp.2d 654, 661 (S.D.N.Y. 2007) (same); see also Ciambriello v. County of Nassau, 292 F.3d 307, 325 (2d Cir. 2002) (finding allegations of conspiracy to violate plaintiff's constitutional rights too conclusory to survive motion to dismiss because plaintiff did "not provide[] any details of time and place, and he has failed to specify in detail the factual basis necessary to enable [defendants] intelligently to prepare their defense" (internal quotation marks and citations omitted)).¹²

12 The Court is cognizant of the line of cases — some of which are cited by Medtech — that state that courts should give plaintiffs particular leeway in pleading conspiracy. See, e.g., Maersk, Inc. v. Neewra, Inc., 554 F.Supp.2d 424, 458 (S.D.N.Y. 2008) ("In order to plead the conspiracy, it is important that within the pleader's ability to do so, and without going into unnecessary detail, the opposing party be informed of the nature of the conspiracy charged. . . . Where possible, there should be some details of time and place and the alleged effect of the conspiracy . . . Moreover, great leeway should be allowed the pleader, since by the nature of the conspiracy, the details may not be readily known at the time of pleading." (internal quotation marks omitted) (alterations in original)); In re Harvard Knitwear, Inc., 153 B.R. 617, 628 (E.D.N.Y. 1993) ("It should be recognized that the nature of conspiracies often make it impossible to provide details at the pleading stage. A plaintiff therefore should be allowed to resort to the discovery process and not easily be subject to dismissal of his complaint alleging conspiracy"). The Court does not, however, read these cases as giving plaintiffs carte blanche to plead the existence of conspiracy through solely conclusory allegations. In fact, even the cases calling for leeway contemplate allegations beyond the purely conclusory. See id. at 628 ("[A] complaint alleging civil conspiracy must contain sufficient information for the court to determine whether or not a valid claim for relief has been stated and to enable the defendant to prepare an adequate responsive pleading.").

The only allegation that can be fairly read to allege an agreement among Defendants to misappropriate Medtech's trade secrets reads as follows: "Upon information and belief, DenTek, Duane, CDS, and Kaplan conspired, agreed, and planned to use Medtech's confidential and proprietary information. . . ." (SAC ¶ 270). This Court, like Magistrate Judge Smith, finds that Medtech's Second Amended Complaint merely concludes that an agreement existed without any factual basis to make the allegation plausible. See Twombly, 127 S.Ct. at 1968 (rejecting notion that "a wholly conclusory statement of claim [c]ould survive a motion to dismiss whenever the pleadings left open the possibility that a plaintiff might later establish some 'set of [undisclosed] facts' to support recovery"). Therefore, Medtech's civil conspiracy claims are dismissed without prejudice.

d. Tortious Interference Claims i. Tortious Interferences with Contractual Relations

With respect to Medtech's claims for tortious interference with contractual relations, Magistrate Judge Smith recommended that this Court grant both DenTek's and Duane's Motions to Dismiss. (R R 814.) Medtech's claim against DenTek is premised on DenTek's alleged interference with the Consulting Agreement, the PIIAs, and the General Releases between Dental Concepts and Kaplan and Dental Concepts and Duane. With regard to Medtech's claim against Duane, he is alleged to have tortiously interfered with the PIIA and General Release between Dental Concepts and Kaplan by inducing Kaplan to breach the confidentiality provisions contained therein.

"Under New York law, the elements of tortious interference with contract are (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of the contract; (3) the defendant's intentional procurement of the third-party's breach of the contract without justification; (4) actual breach of the contract; and (5) damages resulting therefrom." Kirch v. Liberty Media Corp., 449 F.3d 388, 401-402 (2d Cir. 2006) (citing Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 646 N.Y.S.2d 76, 668 N.E.2d 1370, 1375 (1996)) (internal quotation marks omitted).

Medtech has filed objections to Magistrate Judge Smith's recommendation that this Court dismiss its tortious interference with contractual relations claims based on Medtech's failure to adequately allege the second and third elements with respect to DenTek and the third element with respect to Duane. Medtech argues that DenTek's knowledge of the agreements is a question of fact that cannot be resolved on a motion to dismiss (Medtech Obj. 2), that Magistrate Judge Smith applied an incorrect standard by insisting that Medtech must allege that the tortious interference was accomplished by "wrongful means," and that, in any case, the issue of whether the alleged interference was done without justification cannot be appropriately determined on a motion to dismiss (id. 4-5). Therefore, the Court has undertaken a de novo review of this portion of the R R.

With respect to the second element, "[a]lthough a defendant need not be aware of all the details of a contract, it must have actual knowledge of the specific contract." LinkCo, Inc. v. Fujitsu Ltd., 230 F.Supp.2d 492, 495 (S.D.N.Y. 2002) (internal quotation marks omitted). Medtech alleges DenTek's knowledge as follows: (1) "DenTek knew or should have known of the valid contracts between Duane and Dental Concepts/Medtech and Kaplan and Dental Concepts/Medtech" (SAC ¶ 258); and (2) "DenTek is a sophisticated entity well aware of the industry practice of securing confidentiality agreements, as evidenced by its own conduct with Duane, Kaplan and the Tufts Doctors" (id. ¶ 259).¹³

13 The Court notes that Medtech similarly alleged Duane's knowledge as follows: "Duane knew or should have known of the valid contract between Kaplan and Dental Concepts/Medtech." (SAC ¶ 265.) Allegations that DenTek and Duane "should have known" of the contracts, however, even if proven, will not ultimately satisfy the second element of this claim, and are therefore stricken from the Second Amended Complaint with prejudice. New York law is clear on its requirement that a defendant charged with tortiously interfering with a contractual relationship have actual knowledge of the breached contract. See LinkCo, Inc., 230 F.Supp.2d at 496 (in context of motion for judgment as a matter of law, rejecting notion that "actual knowledge" of a specific contract can be presumed because such contracts were "a matter of course" and "common practice" in employment); A A Tube Testing Co. v. Sohne, 20 A.D.2d 639, 246 N.Y.S.2d 247, 248 (1964) ("[T]he plaintiff must allege that the defendants had actual knowledge; an allegation that they 'should have known' of the existence of the contract is insufficient.").
In support of its argument that an allegation that DenTek and Duane "should have known" of the agreements at issue is sufficient to survive Defendants' Motions to Dismiss, Medtech cites Rahl v. Bande, 328 B.R. 387 (S.D.N.Y. 2005). Rahl is unhelpful, however, because it did not involve a tortious interference with contract claim. In particular, the Rahl court denied a motion to dismiss the plaintiff's claim that a defendant caused a company to issue an illegal dividend, because the plaintiff sufficiently alleged that the defendant "should have known" that the company was insolvent; under the applicable law in that case, actual knowledge of insolvency was not required. Id. at 422.

Even if the Court were inclined to accept Medtech's wholly conclusory allegation that DenTek knew of the contracts at issue, see Kirch, 449 F.3d at 402 (finding plaintiff's allegation that defendants "were aware" of the contract at issue insufficient to plead defendant's actual knowledge of the contract) — and assuming that this allegation is consistent with counsel's Fed.R.Civ.P. 11 obligation that there be a good faith basis for the allegation — Medtech is not out of the woods. The Second Amended Complaint contains specific allegations that are hardly consistent with the conclusory claim that DenTek had actual knowledge of the contracts with which it allegedly interfered. For instance, Medtech alleges that "DenTek did not ask to see any employment agreements with Dental Concepts," and that "Duane allegedly failed to inform [the DenTek representative with whom he met] . . . that he was bound by the terms of a non-competition covenant." (SAC ¶¶ 13, 116.) From these allegations, it cannot be said that Plaintiff is claiming that DenTek saw the governing contracts and therefore was aware of the limitations they imposed on Duane and Kaplan. Given these allegations, the Court finds inadequate the general claim of DenTek's knowledge of the contracts. See Elliot v. City of New York, No. 06-CV-296, 2008 WL 4178187, at *4 (S.D.N.Y. Sept. 8, 2008) (noting that an adequately stated claim "'may be supported by showing any set of facts consistent with the allegations in the complaint'" (quoting Twombly, 127 S.Ct. at 1979)). Therefore, for these and the reasons set forth in the R R, Medtech has failed to adequately allege the second element in its tortious interference with contractual relations claim against DenTek.

With respect to the third element — the defendant's intentional procurement of the third-party's breach of the contract without justification — the Court finds Medtech's allegations inadequate to survive DenTek and Duane's Motions to Dismiss. Even accepting as true Medtech's conclusory allegations that "DenTek procured Duane's and Kaplan's breaches of [the contracts at issue]" (SAC ¶ 260), and that "Duane procured Kaplan's breach of [the General Release]" ( id. ¶ 266), Medtech does not allege in the Second Amended Complaint that the alleged procurement by DenTek and Duane was done without justification.¹⁴ Where a plaintiff alleges interference with a valid, enforceable contract, as Medtech has here, there is legal authority establishing that it is not necessary to allege that the interference was malicious or done through wrongful means. See, e.g., Cerveceria Modelo, 2008 WL 1710910, at *4 ("[T]o state a claim for tortious interference with contract under New York law, [plaintiff] need not allege malice on the part of [defendants] or that [defendants] used wrongful means to procure the breach. [Plaintiff] need only allege facts that show that [defendants'] procurement of the breach was without justification."); NBT Bancorp Inc. et al. v. Fleet/Norstar Fin. Group., 87 N.Y.2d 614, 641 N.Y.S.2d 581, 664 N.E.2d 492, 496 (1996); cf. Carvel Corp. v. Noonan, 3 N.Y.3d 182, 190, 785 N.Y.S.2d 359, 818 N.E.2d 1100 (N.Y. 2004) ("[W]here a suit is based on interference with a non-binding relationship, the plaintiff must show that defendant's conduct was not 'lawful' but 'more culpable.'").¹⁵ Because Medtech has not pled that the alleged interferences were unjustified, the Court dismisses Medtech's tortious interference with contractual relations claims against DenTek and Duane, again, without prejudice.

Cerveceria Modelo, S.A. De C.V. v. USPA Accessories LLC,

14

the nature of the conduct of the person who interferes, the interest of the party being interfered with, the relationship between the parties, the motive and interests sought to be advanced by the one who interferes, the social interests in protecting the freedom of action of that person, the contractual interests of the party interfered with and the proximity or remoteness to the interference of the conduct complained of.

2008 WL 1710910
see id.

15 DenTek argues that, in order to state a claim for tortious interference with contractual relations, Medtech must allege that DenTek used "wrongful means" to procure the breach of the contracts at issue. (Def. DenTek Oral Care, Inc.'s Response to Pl. Medtech's Objections to the Report Recommendation of Magistrate Judge Smith Dated June 2, 2008 ("DenTek Resp.") 4.) In support of this proposition, DenTek cites Wolff v. Rare Medium, Inc., 171 F.Supp.2d 354 (S.D.N.Y. 2001) (hereinafter, "Wolff I"), and this Court's opinion in Darby Trading Inc. v. Shell Int'l Trading Shipping Co., 568 F.Supp.2d 329 (S.D.N.Y. 2008). Neither case requires Medtech to allege "wrongful means" in order to state a claim for tortious interference with contractual relations.
In Wolff I, the court stated that under New York law, a party claiming tortious interference with contractual relations must plead that defendant employed "wrongful means" to procure a third-party's breach. 171 F.Supp.2d at 359. In a later proceeding, the Wolff court again stated that plaintiff "must plead that a defendant used 'wrongful means' to induce the third party to breach the contract." Wolff v. Rare Medium, Inc., 210 F.Supp.2d 490, 499 (S.D.N.Y. 2002) (hereinafter "Wolff II"), aff'd, 65 Fed.Appx. 736 (2d Cir. 2003). The Wolff court's dismissal of plaintiff's tortious interference claim in Wolff II was affirmed by the Second Circuit in an unpublished opinion, in which the Second Circuit clarified the requirement that tortious interference with contractual relations claims allege "unjustified procurement of a breach," but that tortious interference with a prospective business relationship claims allege the "use of dishonest, unfair, or improper means." Wolff, 65 Fed.Appx. at 739.
With regard to this Court's opinion in Darby, DenTek quotes the following language from the Court's discussion of plaintiff's tortious interference with contractual relations claim: "[A]s with Plaintiff's previous tortious interference claim [with business relations]. Plaintiff has failed to properly allege 'wrongful means,' a necessary element of the claim." (DenTek Resp. 4 (quoting Darby, 568 F.Supp.2d at 348) (internal quotation marks omitted) (alteration in DenTek Resp.)). However, in Darby, plaintiff was required to allege "wrongful means" because the contract with which defendant was alleged to have interfered was found to be unenforceable and voidable. Darby, 568 F.Supp.2d at 348 (stating that "unenforceable contracts contain no legal guarantee of future performance, and so should only be allowed limited tort protection," and therefore that they "must satisfy the more demanding standard [of 'wrongful means'] required of claims of tortious interference with business relations" (internal quotation marks omitted)). Because Plaintiff alleges the breach of enforceable contracts, Darby is inapposite.

ii. Tortious Interference with Advantageous Business Relationship/Economic Advantage

Magistrate Judge Smith also has recommended that this Court grant DenTek's Motion to Dismiss Plaintiffs claim based on tortious interference with advantageous business relationship/economic advantage. Medtech explicitly does not object to this recommendation. (Medtech Obj. 1 n. 2.) Thus, the Court, finding no clear error in Magistrate Judge Smith's analysis, adopts her recommendation and grants DenTek's Motion to Dismiss this claim.¹⁶

16 Medtech requested that, if this Court dismisses any of its claims, the Court do so without prejudice and with leave for Medtech to amend the Second Amended Complaint upon discovery of additional information supporting the dismissed claims. (Medtech Obj. 1.) Defendants vehemently oppose this request on grounds of waiver and futility. (Def. Kelly M. Kaplan's Response to PL's Objections to Magistrate Judge Smith's Report and Recommendation Regarding Defs.' Mots. to Dismiss ("Kaplan Resp.") 10-11; DenTek Resp. 7-10.)
The Court finds it appropriate at this juncture to dismiss these claims without prejudice, see Van Buskirk v. N.Y. Times Co., 325 F.3d 87, 91 (2d Cir. 2003) ("[A] court granting a 12(b)(6) motion should consider a dismissal without prejudice when a liberal reading of the complaint gives any indication that a valid claim might be stated." (internal quotation marks omitted)), but the Court believes it unnecessary, at this time, to decide whether an amendment to the Second Amended Complaint, if sought, will be permitted. If Medtech wishes to seek leave to amend the Second Amended Complaint, it shall do so by way of a motion to amend, consistent with the Court's Individual Practices. Defendants, at that time, will have the opportunity to oppose any such request.

e. Unfair Competition and Unjust Enrichment Claims

Finally, Magistrate Judge Smith recommended that this Court conclude that Medtech's allegations "sufficiently support Medtech's theory that its unjust enrichment and unfair competition claims are based on an 'additional element' of breach of duty or trust and therefore are sufficient to survive DenTek's motion to dismiss on the basis of preemption." (R R 818.) This recommendation was not objected to by any party, so the Court reviewed it only for clear error. Having found none, the Court adopts Magistrate Judge Smith's recommendation that DenTek's Motion to Dismiss Medtech's claims for unfair competition and unjust enrichment be denied for the reasons thoroughly set forth in the R R.

III. Conclusion

For the reasons stated herein, Magistrate Judge Smith's R R dated June 2, 2008, is adopted to the extent that it is consistent with this Opinion. Defendants' Motions to Dismiss are granted in part and denied in part, with the following claims having been dismissed without prejudice: (1) breach of the PIIA against Duane (Count VII); (2) breach of the PIIA against Kaplan (Count VIII); (3) tortious interference with contractual relations against DenTek (Count X); (4) tortious interference with contractual relations against Duane (Count XI); and (5) tortious interference with advantageous business relationship/economic advantage against all Defendants (Count XIV). Medtech's Motions to Strike the Motions to Dismiss filed by C.D.S. and DenTek are denied.

The Clerk of Court is respectfully directed to terminate the pending Motions (Dkt. Nos. 104, 109, 116, 121, 137).

SO ORDERED.

REPORT RECOMMENDATION

LISA MARGARET SMITH, United States Magistrate Judge.

TO: THE HONORABLE KENNETH M. KARAS, UNITED STATES DISTRICT JUDGE

Plaintiff Medtech Products, Inc. ("Medtech") brings this consolidated action pursuant to 35 U.S.C. § 271, 15 U.S.C. §§ 1116- 1118, 1125(a), 17 U.S.C. § 101. et seq., New York General Business Law §§ 349(h) and 360-o, and New York common law against DenTek Oral Care, Inc. ("DenTek"), Kelly M. Kaplan ("Kaplan"), Ray Duane ("Duane"), C.D.S. Associates, Inc. ("CDS") (collectively, "Defendants"), and Power Products, Inc ("Power Products").^1a In its Amended Complaint ("Amended Complaint"), ^2a Plaintiff claims that Defendants DenTek, Kaplan, Duane, and CDS engaged in unfair competition, breach of contract, tortious interference with contractual relations, civil conspiracy, trade secret misappropriation, tortious interference with an advantageous business relationship, and patent, trademark, and copyright infringement.

1a On June 25, 2007, Medtech, Ranir, and CVS Pharmacy signed a voluntary stipulation of dismissal pursuant to Rule 41(a). See Docket entry 36. Medtech and Power Products signed a voluntary stipulation of dismissal pursuant to Rule 41(a) on November 15, 2007. Docket entry 101.

2a Earlier in the case, Medtech made a motion to amend the Complaint and attached a "First Amended Complaint." Medtech's motion was stayed and the First Amended Complaint was never filed. Thus, although the parties refer to the Complaint at issue here as the "Second Amended Complaint," or "SAC," there is only one Amended Complaint, which has been docketed as docket number 66. Thus, I will refer to the Complaint at issue here as the Amended Complaint.

This case was referred to me for all purposes on April 24, 2007. Docket entry 3. On November 21, 2007, Kaplan and DenTek separately filed motions to dismiss the Amended Complaint under Federal Rule of Civil Procedure ("FRCP") 12(b)(6). Docket entries 104-13. DenTek also filed a motion, in the alternative, to compel Medtech to disclose with particularity the alleged misappropriated trade secrets. Docket entry 109. Duane, acting pro se, attempted to file a motion to dismiss on his own behalf and on behalf of CDS, Duane's consulting company, on November 21, 2007. Subsequently, however, Duane and CDS obtained counsel and, on March 6, 2008, submitted a new motion to dismiss, withdrawing the prior motion to dismiss. Docket entries 137-39. In conjunction with their motions, Kaplan, Duane, and CDS seek attorneys' fees. Medtech opposed the motions to dismiss and also moved the Court to strike DenTek's memorandum of law in support of its motion to dismiss.^3a Docket entries 116-18, 145. The following Report and Recommendation addresses each of the motions.

3a Medtech also moved the Court to strike CDS's motion to dismiss because CDS was not represented by counsel. Because CDS has now obtained counsel and resubmitted its motion to dismiss, I conclude, and respectfully recommend that Your Honor should conclude, that Medtech's motion to strike CDS's motion should be denied.

I. BACKGROUND

A. Summary of Relevant Facts ^4a

4a The facts herein are taken from the Amended Complaint, the allegations of which are taken as true for the purposes of ruling on Defendants' motions to dismiss pursuant to Rule 12(b)(6). McCarthy v. Dun Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007).

Medtech markets, distributes, and sells an over-the-counter ("OTC") dental device called The Doctor's (r) Nightguard TM ("the Nightguard") throughout the United States. Amended Complaint at ¶ 1. The device is designed to protect the teeth and jaw from the detrimental affects of grinding, or bruxing, and clenching teeth. Id. at ¶ 2. Although Medtech's predecessor-in-interest, Dental Concepts LLC ("Dental Concepts"), had been selling the Nightguard since 1997, Dental Concepts obtained U.S. Patent No. 6, 830, 051 ("the 051 Patent") entitled "Interocclusal Appliance," in 2004 to cover a new version of the Nightguard and its improved technology. Id. at ¶ 47, 58-59.

Medtech alleges that in mid-March 2007, DenTek brought an OTC dental device to the market, called the DenTek Nightguard, which infringes on its 051 Patent. Id. at ¶¶ 6, 193. According to Medtech, DenTek was able to manufacture the allegedly infringing product quickly because it recruited Kaplan and Duane, Dental Concepts' Vice Presidents of Marketing and Sales, respectively, and Kaplan and Duane divulged confidential and proprietary information and material to DenTek. Id. at ¶¶ 7, 129, 163.

Specifically, Medtech alleges that its predecessor-in-interest, Dental Concepts, hired Kaplan, Duane, and CDS, in September 1999; that prior to leaving Dental Concepts, Kaplan and Duane were involved in and financially interested in growing Dental Concepts so that it could eventually be sold; and that because of Kaplan and Duane's executive positions at Dental Concepts, Kaplan and Duane both had access to confidential and proprietary information and material relating to the Nightguard. Id. at ¶¶ 31-41. In particular, Medtech alleges that through their involvement in developing and marketing Dental Concepts' products, they learned confidential information and material about Medtech's marketing strategy, suppliers, designers, consultants, and product formulation and production sources. Id. at ¶ 41.

Medtech further alleges that when they were hired, Duane and CDS signed a Consulting Agreement with Dental Concepts ("Consulting Agreement") that included a twenty-four month non-compete provision and a non-solicitation provision. Id. at ¶¶ 31-34. In addition, Plaintiff alleges that Duane, on his own behalf and on behalf of CDS, and Kaplan, signed Proprietary Information and Inventions Agreements which required them to keep Medtech's proprietary information secret. Id. at ¶¶ 42-46. Furthermore, Medtech alleges that in November 2005, when Dental Concepts was eventually sold to a company called Prestige (which subsequently integrated Dental Concepts into Medtech), Duane and Kaplan each executed a General Release in which both agreed to keep secret any confidential and proprietary information learned while they were employed with Dental Concepts. Id. at ¶¶ 65-81.

Medtech alleges that Duane and Kaplan violated these agreements by divulging Dental Concepts' trade secrets. Id. at ¶¶ 123-24, 128-30. Specifically, Medtech alleges that Duane, through CDS, began working with DenTek to develop a product that would compete with the Nightguard in August 2006, prior to the completion of the twenty-four month non-compete period; that Duane contacted Medtech employees seeking confidential information; that Duane recruited Kaplan and attempted to recruit other Medtech employees; that Duane and Kaplan contacted and developed relationships with Medtech's suppliers, consultants, and legal counsel; and that Duane and Kaplan disclosed Medtech's confidential information and material to help DenTek create a competing Nightguard. Id. at ¶¶ 120-162, Exhibit M.

II. DISCUSSION

A. Standard of Review for 12(b)(6) Motions to Dismiss

Under Rule 8(a)(2) of the FRCP, a plaintiff must only plead "a short and plain statement of the claim showing that [he or she] is entitled to relief' in order to give the defendant "fair notice of what the . . . claim is and the grounds upon which it rests." Fed.R.Civ.P. 8(a)(2). In evaluating whether a plaintiff has met this standard pursuant to a motion to dismiss under 12(b)(6), the court must determine whether the plaintiff has pleaded "factual allegations [sufficient to] raise a right to relief above a speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007) (internal citations omitted). Furthermore, when considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted, a district court must accept the allegations in the complaint as true and draw all reasonable inferences in the plaintiffs favor. McCarthy, 482 F.3d at 191.

B. Motion to Strike DenTek's Memorandum of Law

In response to DenTek's motion to dismiss, Medtech filed a motion to strike DenTek's motion and memorandum in support without leave to refile arguing that the documents attached to DenTek's motion and referenced throughout its memorandum in support were beyond the scope of a 12(b)(6) motion. See generally Medtech Memorandum in Support of Motion to Strike. Indeed, in deciding a motion to dismiss under Rule 12(b)(6), the court's review is "limited to the facts asserted within the four corners of the complaint, the documents attached to the complaint as exhibits, and any documents incorporated in the complaint by reference." McCarthy, 482 F.3d at 191. The court may also look to matters of which judicial notice may be taken, or to documents that the plaintiff has possession or knowledge of or that plaintiff relied upon in drafting the complaint. See Global Network Commc'ns v. City of New York, 458 F.3d 150, 156-57 (2d Cir. 2006); Henschke v. New York Hosp.-Cornell Med. Ctr., 821 F.Supp. 166, 169 (S.D.N.Y. 1993). When matters outside the pleading are presented to the court on a Rule 12(b)(6) motion to dismiss, and do not fall into one of the categories mentioned above, the court may either exclude such matters, or convert the motion to a motion for summary judgment under Rule 56 of the FRCP. Friedl v. City of New York, 210 F.3d 79, 83 (2d Cir. 2000). If the court decides to convert the motion, the court must give all parties "reasonable opportunity to present all material made pertinent to such a motion by Rule 56.'" Global Network, 458 F.3d at 154 (quoting FRCP 12(b)).

DenTek offers the Declaration of Brad Conley, a DenTek employee; portions of a deposition of Duane and Noshir Mehta, one Medtech's alleged consultants ("the Tufts Doctors"); and printouts from various websites in support of its motion to dismiss. Medtech argues that the Court may not consider these exhibits in determining the motions to dismiss and that because the exhibits are discussed in DenTek's memorandum in support, both the motion and the memorandum in support should be stricken without leave to refile.^5a Although I agree with Medtech that the exhibits offered in support of DenTek's motion should not properly be considered on a motion to dismiss under Rule 12(b)(6), I conclude, and respectfully recommend that Your Honor should conclude, that such drastic measures as those recommended by Medtech need not be taken. I will simply exclude DenTek's improper exhibits for the purposes of this motion. Accordingly, I conclude, and respectfully recommend that Your Honor should conclude, that Medtech's motion to strike DenTek's motion and Memorandum of Law should be denied. I also conclude, and respectfully recommend that Your Honor should conclude, that because discovery is still ongoing in this case, the motions should not be converted to motions for summary judgment.

5a In addition, it should be noted that Kaplan submits transcripts, briefing material, and panel materials from a dental products panel hearing conducted on October 12, 2005, before the Food and Drug Administration, which she argues the Court may take judicial notice of and consider for the purposes of her 12(b)(6) motion because they are public records. Kaplan Memorandum in Support at pages 5, 7. Medtech does not dispute the Court's consideration of Kaplan's additional materials. However, a court may take judicial notice of public records on a motion to dismiss "only to establish the existence of the [record], not for the truth of the facts asserted in [it]." Although she argues otherwise, Kaplan submits the additional submissions for the purposes of informing the Court of their contents and not simply to alert the Court of their existence. See Kaplan's Memorandum in Support at pages 8-11. Thus, I will not consider Kaplan's exhibits in determining her motion to dismiss under 12(b)(6).

C. Kaplan, DenTek, Duane, and CDS Motions to Dismiss

In the Amended Complaint, Medtech alleges the following causes of action against Kaplan: breach of contract, civil conspiracy, trade secret misappropriation, and tortious interference with advantageous business relationship/economic advantage. Amended Complaint at Counts VIII, IX, XII, XIII, and XIV. Medtech brings the following claims against Duane: breach of contract, tortious interference with contractual relations, civil conspiracy, trade secret misappropriation, and tortious interference with advantageous business relationship/economic advantage. Amended Complaint at Counts VII, IX, XI, XII, XIII, and XIV. Medtech brings the following claims against CDS: breach of contract, civil conspiracy, trade secret misappropriation, and tortious interference with advantageous business relationship/economic advantage. Amended Complaint at Counts VII, XII, XIII, and XIV. Kaplan, Duane, and CDS move the Court to dismiss all of the claims against them, arguing that the Amended Complaint fails to state a claim as to each cause of action against them.

Medtech alleges the following claims against DenTek: patent infringement, violation of the Lanham Act, copyright infringement, unfair competition, unjust enrichment, violation of section 349(H) of New York Act for Consumer Protection From Deceptive Acts and Practices, tortious interference with contractual relations, civil conspiracy, trade secret misappropriation, and tortious interference with advantageous business relationship/economic advantage. Amended Complaint at Counts I, II, III, IV, V, VI, X, XI, XII. DenTek moves the Court to dismiss Medtech's claims of unfair competition, unjust enrichment, tortious interference with contractual relations, civil conspiracy, trade secret misappropriation, and tortious interference with advantageous business relationship/economic advantage.

1. Medtech's Trade Secret Misappropriation Claims Against Kaplan, Duane, CDS, and DenTek

In order to state a claim for trade secret misappropriation under New York law, a plaintiff must establish the following elements: "(1) that it possessed a trade secret, and (2) that the defendants used that trade secret in breach of an agreement, confidential relationship or duty, or as a result of discovery by improper means." N. Atl. Instruments, Inc. v. Haber, 188 F.3d 38, 43-44 (2d Cir. 1999). "A trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives [the owner] the opportunity to obtain an advantage over competitors who do not know or use it." Restatement of Torts § 757, comment b (1930) (adopted as the definition of a trade secret by the Second Circuit in Softel, Inc. v. Dragon Med. Scientific Communications. Inc., 118 F.3d 955, 968 (2d Cir. 1997)). The following factors may be used to determine whether a particular piece of information is a trade secret:

(1) the extent to which the information is known outside of the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken by the business to guard the secrecy of the information; (4) the value of the information to the business and its competitors; (5) the amount of effort or money expended by the business in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.

N. Atl. Instruments, 188 F.3d at 44 (internal citations omitted). Of course, the most important consideration in determining whether a piece of information qualifies as a trade secret is whether the information was actually a secret. Lehman v. Dow Jones Co., 783 F.2d 285, 298 (2d Cir. 1986).

Although certain aspects of a product that would be easily ascertainable upon inspection once the product is placed on the market, such as the design of a product, have been found to not constitute trade secrets, see LinkCo, Inc. v. Fujitsu, Ltd., 230 F.Supp.2d 492, 498-99 (S.D.N.Y. 2002), and marketing concepts, new product ideas, and business possibilities and goals have likewise been found not to constitute trade secrets, id. at 499-500, lists of suppliers, Howard Berger Co. v. Ye, 272 A.D.2d 445, 708 N.Y.S.2d 310 (2d Dept. 2000); strategic information regarding price, distribution, and marketing; brand strategies, Estee Lauder Cos. v. Batra, 430 F.Supp.2d 158, 175-76 (S.D.N.Y. 2006); and confidential business relationships, A G Healthplans, Inc. v. Nat. Network Servs., Inc., No. 99 CV 12153(GBD), 2003 WL 1212933, *3 (S.D.N.Y. Mar. 14, 2003), have been found to constitute trade secrets. In addition, "[i]t is well-settled that 'a trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process and operation of which, in unique combination, affords a competitive advantage and is a protectable secret.'" Integrated Cash Mgmt. Servs., Inc. v. Digital Transactions, Inc., 732 F.Supp. 370, 376 (S.D.N.Y. 1989) (quoting Imperial Chem. Indus. Ltd. v. Nat. Distillers Chem. Corp., 342 F.2d 737, 742 (2d Cir. 1965)), aff'd, 920 F.2d 171 (2d Cir. 1990).

For example, in Head Ski Company, Inc. v. Kam Ski Company, Inc., 158 F.Supp. 919 (D.C.Md. 1958), which was cited by the Second Circuit in Imperial Chemical in support of the proposition that it is well-settled that "a trade secret can exits in a combination of characteristics and components[,]" 342 F.2d at 742, the plaintiff alleged that its former employees started their own company and produced a competing metal ski using the knowledge they gained by working for the plaintiff, the maker of the first metal ski. Head Ski, 158 F.Supp. at 920. The defendants argued that all of the materials, processes, and methods they used were well known to aircraft mechanics and engineers and therefore could not be the plaintiff's trade secrets. Id. at 923. In finding that the materials, methods, and processes used by the plaintiff constituted trade secrets, the court stated,

'[t]he mere fact that the means by which a discovery is made are obvious, that experimentation which leads from known factors to an ascertainable but presently unknown result may be simple, we think cannot destroy the value of the discovery to one who makes it, or advantage the competitor who by unfair means, or as the beneficiary of a broken faith, obtains the desired knowledge without himself paying the price in labor, money, or machines expended by the discoverer.'

Id. (quoting A.O. Smith Corp. v. Petroleum Iron Works Co., 73 F.2d 531, 538-39 (6th Cir. 1934)). The court noted that the defendants used the plaintiffs methods "from the beginning of their operation, without the need for experimenting" and that "[a]lthough the materials used [were] available for purchase by anyone, the choice of a particular material was dictated by years of experimenting" that would be "most unlikely to result from an independent approach to the problem by two separate groups." Id. at 922.

Medtech alleges that DenTek, like the defendant in Head Ski, was able to create a competing nightguard on an expedited basis because of the knowledge it gained from Kaplan and Duane, thereby cutting out the research and development phase of the process. Amended Complaint at ¶¶ 129, 163. Specifically, Medtech alleges that Kaplan and Duane were involved in "brand development and marketing" and "formulation of strategic sales and market goals and initiatives," that they were "intimately familiar with Dental Concepts' consultants, brokers, designers, suppliers, product formulation and production sources, and marketing strategies," that they were privy to business plans for marketing the Nightguard, that Kaplan was included in high-level discussions about the strategy for the Nightguard, and that Duane and Kaplan had "access to . . . manufacturing cost details, drawings, test data, and other information about the design and manufacturing process for [the] dental protectors." Id. at ¶¶ 9, 41, 89, 137-39, 277. Additionally, Medtech alleges that Kaplan and Duane knew Medtech's strategic decision to maintain its three-size platform. Id. at ¶ 123. Medtech alleges that because of Duane and Kaplan's disclosure of such information to DenTek, DenTek was able to truncate its evaluation and vetting process and that "[s]uch information was critical because of a limited window of opportunity with the largest retailer. . . ." Id. at ¶ 129. I conclude, and respectfully recommend that Your Honor should conclude, that such allegations sufficiently allege that Medtech possessed trade secrets sufficient to satisfy the first prong of Medtech's trade secret misappropriation claim.

Defendants argue that all of the information Medtech alleges that Kaplan and Duane had access to, such as Medtech's relationship with the consultants and suppliers and Medtech's decision to maintain a three-size platform, was information easily obtained through public sources. DenTek Memorandum in Support at pages 9-18; Kaplan Memorandum in Support at pages 8-16; Duane and CDS Memorandum in Support at pages 8-9. However, the secrecy of particular information is an issue of fact and cannot be decided at the motion to dismiss stage. Kosower v. Gutowitz, No. 00 Civ. 9011(JGK), 2001 WL 1488440, *8 (S.D.N.Y. Nov. 21, 2001) (citing Lehman v. Dow Jones Co., 783 F.2d 285, 297 (2d Cir. 1986)).^6a

6a It should also be noted that Defendants argue that the Amended Complaint fails to allege trade secrets with sufficient specificity. As pointed out by Medtech, however, a plaintiff need not reveal the alleged trade secrets in the Complaint. See Gaetano Assocs. Ltd. v. Artee Collections, Inc., No. 05 Civ. 3329(DLC), 2006 WL 3026080, *2 (S.D.N.Y. Oct. 25, 2006). Defendants' concerns in this regard, however, are addressed in Part II.D infra.

With regard to the second element of Medtech's trade secret misappropriation claim, I conclude, and respectfully recommend that Your Honor should conclude, that Medtech has adequately alleged wrongful use of the alleged trade secrets by Kaplan, Duane, and DenTek. Specifically, Medtech alleges, inter alia, that "DenTek, Duane, and Kaplan systematically called upon and recruited various persons and companies known to Duane and Kaplan only because they had the confidential and proprietary information that they had from their time at Dental Concepts. . . ." Amended Complaint at ¶ 130. Medtech goes on to allege that Duane called Item, Stelray, and Proman Products, who were suppliers known to Duane only because of his association with Dental Concepts, and that Kaplan solicited the Tufts Doctors to do work for DenTek's Nightguard as consultants and advised DenTek of Medtech's strategic decision to maintain its three-size platform, despite the confidentiality agreements each entered into at the beginning of their employment with Dental Concepts and the General Releases they each entered into at the end of their employment with Dental Concepts. Amended Complaint at ¶¶ 128-162. Furthermore, as noted supra, Medtech alleges that DenTek used inside information gleaned from Duane and Kaplan to "eliminate the development time normally associated with entering into a new line of products." Id. at ¶ 128. Such allegations are sufficient to put Defendants on notice of the second element of Medtech's trade secret misappropriation claim. I therefore conclude, and respectfully recommend that Your Honor should conclude, that Defendants' motions to dismiss Medtech's trade secret misappropriation claims against them should be denied.

2. Medtech's Breach of Contract Claims Against Kaplan, Duane, and CDS

In the Amended Complaint, Medtech asserts several breach of contract claims against Kaplan, Duane, and CDS. Specifically, in Count VII, Medtech asserts that Duane and CDS breached the non-compete and non-solicitation clause in their Consulting Agreement, executed on September 30, 1999, at the start of Duane and CDS's relationship with Dental Concepts, by working for DenTek within twenty-four months of their termination from Dental Concepts and by soliciting Medtech's suppliers, accounts, and employees. Amended Complaint at ¶ 229-238. Medtech also claims that Duane and CDS breached the confidentiality provision of the Proprietary Information and Inventions Agreement ("PIIA"), which was also executed on September 30, 1999, by providing confidential and proprietary information to DenTek. Id. In Count VIII of the Amended Complaint, Medtech alleges that Kaplan breached the confidentiality provision in an almost identical PIIA that Kaplan and Dental Concepts executed on September 13, 1999, at the start of Kaplan's employment relationship with Dental Concepts. Id. at ¶ 239-245. Finally, in Count IX of the Amended Complaint, Medtech claims that Duane and Kaplan breached a General Release signed by Duane on November 10, 2005, and by Kaplan on November 14, 2005, at the conclusion of their employment relationships with Dental Concepts. Id. at ¶¶ 246-255.

Duane and CDS argue that Counts VII and IX should be dismissed because the non-compete and non-solicitation clause in the Consulting Agreement was not triggered by the way in which the Consulting Agreement was terminated, because the Consulting Agreement terminated automatically upon the sale of the Company, because the confidentiality provision in the PIIA was superseded by the confidentiality provision in the General Release, and because Medtech has not alleged that Duane disclosed trade secrets in breach of the confidentiality provision in the General Release. Duane and CDS Memorandum in Support at pages 9-11. Similarly, Kaplan argues that Counts VIII and IX should be dismissed because the PIIA was superseded by the General Release and because Medtech did not sufficiently allege that Kaplan disclosed trade secrets in breach of the confidentiality provision in the General Release. Kaplan Memorandum in Support at pages 19-21.

Medtech argues that, under the plain language of the contract, the Consulting Agreement was not terminated automatically by the sale of the Company. Medtech's Memorandum in Opposition to Duane and CDS Motion at pages 6-8. Rather, Medtech argues, the Consulting Agreement was terminated by Duane and CDS opting to decline further employment after the sale of the Company, thereby triggering the non-compete and non-solicitation clause. Id. Additionally, Medtech argues that the General Releases did not supersede the PIIAs because the confidentiality provisions of the General Releases and PIIAs work in tandem. Id. at pages 10-14; Medtech's Memorandum in Opposition to DenTek and Kaplan Motions at pages 22-25. Furthermore, Medtech points out that CDS was not a party to Duane's General Release so its obligation under the PIIA continued under the PIIA regardless of the General Release. Medtech's Memorandum in Opposition to Duane and CDS Motion at page 14. Finally, Medtech argues that it has properly pleaded the disclosure of trade secrets by Duane and Kaplan in violation of the confidentiality provisions in the General Releases. Id. at page 17; Medtech's Memorandum in Opposition to DenTek and Kaplan Motions at pages 24-25.

Under New York law, a plaintiff making a claim for breach of contract must allege: (1) the existence of a contract; (2) that the plaintiff has performed his or her obligations under the contract; (3) that the defendant failed to perform his or her obligations under the contract, and (4) that the plaintiff suffered damages because of the breach. CreditSights, Inc. v. Ciasullo, No. 05 CV 9345(DAB), 2007 WL 943352, *6 (S.D.N.Y. Mar. 29, 2007). Here, only the third element is in dispute. With regard to whether or not Duane, CDS, and Kaplan breached their contracts with Medtech, the arguments of the parties raise three issues: (1) whether the non-compete and non-solicitation clause applied to Duane and CDS under the alleged circumstances of their termination from employment from Dental Concepts as alleged in the Amended Complaint, (2) whether the confidentiality provisions of the PIIAs were superseded by the General Releases, and (3) whether the Amended Complaint adequately alleges that Duane, CDS, and Kaplan disclosed confidential information in violation of their contracts with Medtech.

a) Application of the Non-Compete and Non-Solicitation Clause

The issue of whether the non-compete and non-solicitation clause applied to Duane and CDS under the alleged circumstances of their termination from employment from Dental Concepts is an issue of contract interpretation. Because contract interpretation "is generally a question of law, it is suitable for disposition on a motion to dismiss." Reinhardt v. Wal-Mart Stores, Inc., 547 F.Supp.2d 346, 353 (S.D.N.Y. 2008) (internal quotations omitted). However, a court should only construe a contract as matter of law if the contract is unambiguous on its face. See Metro. Life Ins. Co. v. RJR Nabisco Inc., 906 F.2d 884, 889 (2d Cir. 1990). A contract is unambiguous on its face if it "has 'a definite and precise meaning, unattended by danger of misconception in the purport of the [contract] itself, and concerning which there is no reasonable basis for a difference of opinion.'" Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Plan, 7 F.3d 1091, 1095 (2d Cir. 1993) (quoting Breed v. Ins. Co. of N. Am., 46 N.Y.2d 351, 355, 413 N.Y.S.2d 352, 385 N.E.2d 1280 (1978)). Contractual language is not ambiguous simply because the parties "urge different interpretations in the litigation," Metro. Life, 906 F.2d at 889, rather, contractual language is ambiguous only if it is subject to more than one reasonable interpretation. Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568, 573 (2d Cir. 1993).

I conclude, and respectfully recommend that Your Honor should conclude, that the Consulting Agreement is unambiguous with regard to the applicability of the non-compete and non-solicitation clause. Specifically, the Consulting Agreement states that

for a period of twenty-four (24) months from and after the date of termination of such engagement, if such engagement is terminated by the Consultant or is terminated by the Company for Just Cause, neither [CDS] nor Duane shall, . . . solicit . . . any person who presently is, or any time during [CDS's] engagement by the Company shall be or shall have been, an employee of the Company or any of its Affiliates. . . .; or initiate communications with . . . any client, customer, supplier or account of the Company . . .; sell any product or provide any service which is competitive with any of the business . . . of . . . the Company . . .; become an employee . . . of . . . business competitive with any of the Activities engaged in during the period of [CDS's] engagement. . . .

Amended Complaint, Exhibit A at 7(b) (emphasis added). Thus, the non-compete and non-solicitation clause unequivocally states that it applies if the Consultant — CDS — terminates the relationship or if the Company — Dental Concepts — terminates the relationship for Just Cause. Id. Because the Amended Complaint alleges that Duane and CDS ended the employment relationship by declining further employment from Prestige, Amended Complaint at ¶ 88, I conclude, and respectfully recommend that Your Honor should conclude, that the non-compete and non-solicitation clause applied under the circumstances of Duane and CDS's termination from Dental Concepts.

Although Duane and CDS urge the Court to conclude that the entire Consulting Agreement, including the non-compete and non-solicitation clause, terminated automatically when Dental Concepts was sold to Prestige because CDS and Duane were specifically retained to grow the company so that it could be sold, see Duane and CDS Memorandum in Support at page 10 and Reply at pages 2-4, such an interpretation is not a reasonable one. First, nothing in the Consulting Agreement indicates that the Consulting Agreement was to automatically terminate upon the sale of Dental Concepts. See generally Amended Complaint, Exhibit A, Section 6. Indeed, the only relevant provision states that the Consulting Agreement "shall terminate . . . at the option of the Company, upon the sale of the Company. . . ." Id. at Section 6(a)(vi) (emphasis added). There is no allegation in the Amended Complaint that Dental Concepts exercised the option to terminate the Consulting Agreement at the time of the sale. See generally Amended Complaint at ¶¶ 82-93. Indeed, the Amended Complaint alleges that Duane and CDS continued working for Prestige for several months after the sale. Id. at ¶ 87.

Additionally, the Consulting Agreement states that "[t]he Company hereby engages [CDS], and [CDS] hereby accepts the engagement, to direct and supervise the sales of the Company's products. . . ." indicating that Duane and CDS were not hired exclusively to grow the company so that it could be sold. Id. at Exhibit A at page 1. Furthermore, the Consulting Agreement states that it "shall be binding upon and inure to the benefit of the respective heirs, personal representatives, successors and assign [sic] of the parties hereto," id. at Exhibit A, Section 8, indicating that the Consulting Agreement was intended to continue after the sale of the Dental Concepts. Finally, the Consulting Agreement provides for the survival of the non-compete and non-solicitation clause after "the termination or expiration of [the Consulting Agreement] and/or the Term, irrespective of the reason therefor . . .," id. at Exhibit A, Section 7(c), indicating that the non-compete and non-solicitation clause was to survive even if the Consulting Agreement terminated upon the sale of Dental Concepts to Prestige. Accordingly, I cannot conclude, and respectfully recommend that Your Honor should not conclude, that CDS and Duane's interpretation of the Consulting Agreement is reasonable.

b) The Effect of the General Releases on the PIIAs

As explained supra, Duane, CDS, and Kaplan argue that the confidentiality provisions in the PIIAs were superseded by the confidentiality requirements of the General Releases.^7a Duane and CDS Memorandum in Support at pages 10-11; Kaplan Memorandum in Support at pages 1920. "New York law gives full effect to integration and merger clauses." Kreiss v. McCown De Leeuw Co., 37 F.Supp.2d 294, 301 (S.D.N.Y. 1999) (citing Health-Chem Corp. v. Baker, 915 F.2d 805, 811 (2d Cir. 1990)). Thus, "[w]hen the parties to a contract enter into a new agreement that expressly supersedes the previous agreement, the previous agreement is extinguished, thereby reducing the remedy for breach to a suit on the new agreement." Health-Chem, 915F.2d at 811. Additionally, "under New York law, 'a subsequent contract regarding the same subject matter supersedes the prior contract'" even where there is no integration and merger clause in the subsequent contract. CreditSights, 2007 WL 943352, at *6. "However, a subsequent contract not pertaining to 'precisely the same subject matter' will not supersede an earlier contract unless the subsequent contract has definitive language indicating it revokes, cancels or supersedes that specific prior contract." Id. (quoting Globe Food Servs. Corp. v. Consol. Edison Co. of New York, Inc., 184 A.D.2d 278, 584 N.Y.S.2d 820 (1st Dept. 1992)). Additionally, "the fact that a subsequent contract contains provisions which are of the same subject matter as those in an earlier agreement is not sufficient to supersede the entire contract; rather, a subsequent agreement supersedes only those terms of the earlier contract that are of the same subject matter." Id. In order for the court to determine whether or not a particular provision is superseded by a provision in a subsequent contract, the court should consider whether there is an integration and merger clause that explicitly indicates that the prior provision is superseded, whether the two provisions have the same general purpose or address the same general rights, and whether the two provisions can coexist or work in tandem. See CreditSights, 2007 WL 943352, at *7-9 (finding the initial agreement not superseded by a subsequent agreement because, although the subsequent agreement had an integration and merger clause, the merger clause did not indicate an intent to revoke the prior agreement, and the agreements addressed different rights and served dissimilar purposes); Indep. Energy Corp. v. Trigen Energy Corp., 944 F.Supp. 1184, 1196-97 (S.D.N.Y. 1996) (finding a prior oral agreement superseded by a subsequent written agreement when the terms of the agreement were inconsistent with each other and, although there was no merger clause, the language of the written agreement indicated an intention that the parties be bound only by the written agreement).

7a As an initial matter, it is important to point out, as Medtech does, that, unlike the PIIA, Duane did not sign the General Release on behalf of himself and on behalf of CDS. Compare Amended Complaint, Exhibit B at page 5 with Amended Complaint, Exhibit G at page 5. Duane signed the General Release only on behalf of himself. Id. at Exhibit G at page 5. Additionally, unlike the Duane and CDS PIIA, the General Release does not contain language indicating that CDS was to be bound by the agreement. Compare Amended Complaint, Exhibit B (referring throughout to "the Consultant and Duane") with Amended Complaint, Exhibit G (referring throughout to "the Employee"). Although Duane and CDS state that Duane was the only employee of CDS and therefore "Medtech achieved the same result as if both of the Duane Defendants had signed the General Release," Duane and CDS Reply at pages 6-7, Duane and CDS do not provide, and the undersigned cannot conclude from the four corners of the Amended Complaint, any legal basis for finding that the General Release binds both Duane and CDS. Accordingly, I conclude, and respectfully recommend that Your Honor should conclude that the confidentiality provision of the PIIA survived the execution of the General Release with regard to CDS.

I conclude, and respectfully recommend that Your Honor should conclude, that the confidentiality provisions in the PIIAs and the General Releases cover precisely the same subject matter. First, the confidentiality provisions of both the PIIAs and the General Releases cover the time period after the termination of Duane and Kaplan's employment. Compare Amended Complaint, Exhibit C, Section D. 1 ("At all times, both during Consultant's engagement by the Company and after its termination, Obligors will keep in confidence. . . .") and Amended Complaint, Exhibit D, Section D. 1 ("At all times, both during my employment by the Company and after its termination, I will keep in confidence. . . .") with Amended Complaint, Exhibits G and H, at page 1 ("Employee will receive the Consideration . . . as severance and contractual payout. . . . on the terms contained in this Release as fully set forth below."). Next, and most importantly, both the PIIAs and the General Releases prohibit Duane and Kaplan from disclosing trade secrets and confidential information "including, but not limited to" information regarding manufacturing, marketing, sales, customers, methods, and processes. Compare Amended Complaint, Exhibits C and D, Sections B-D with Amended Complaint, Exhibits G and H, Section 7. Additionally, both the PIIAs and the General Releases require Duane and Kaplan to surrender documents pertaining to the Company's business or work at the time of their termination of employment. Id. Both the PIIAs and the General Releases further provide that if Duane or Kaplan violate the confidentiality provision, the Company could request an injunction and that Duane or Kaplan would concede that such a violation would cause irreparable harm. Id. Finally, the General Releases include an integration and merger clause that states that "[t]he parties hereto acknowledge that this Release constitutes a full, final, and complete settlement of their differences and supersedes and replaces any and all other written or oral exchanges, agreements, understandings, arrangements, or negotiations between or among them relating to the subject matter hereof. . . ." Amended Complaint, Exhibits G and H at Section 10. Accordingly, although the PIIAs were executed at the start of Duane and CDS's engagement and Kaplan's employment with Dental Concepts and the General Releases were executed at the termination of such engagement/employment, and therefore the context and purpose of the two contracts are different, I conclude, and respectfully recommend that Your Honor should conclude that because the confidentiality provisions of the PIIAs and the General Releases cover the same rights of the parties and address precisely the same subject matter — confidentiality — and in light of the integration and merger clause in the General Releases, the confidentiality provisions of the PIIAs are superseded by the General Releases with respect to the Duane and Kaplan. Thus, I conclude, and respectfully recommend that Your Honor should conclude, that Medtech's claim against Duane and Kaplan for breach of the PIIAs should be dismissed.

c) Allegations of a Breach

The Amended Complaint alleges that CDS entered into a consulting agreement with DenTek and Duane solicited Dental Concepts' employees, suppliers, and consultants in violation of the non-compete and non-soli citation claim. Amended Complaint at ¶¶ 120, 130-162, 231, Exhibit M. Accordingly, because I have concluded that the non-compete and non-solicitation clause applied under the alleged circumstances, I conclude, and respectfully recommend that Your Honor should conclude, that Medtech has sufficiently alleged a breach of contract claim against Duane and CDS on the basis of the non-compete and non-solicitation clause in the Consulting Agreement. Additionally, because I have already concluded supra that the Amended Complaint sufficiently alleges that Duane, CDS, and Kaplan disclosed trade secrets, I likewise conclude, and respectfully recommend that Your Honor should conclude, that the Amended Complaint also sufficiently alleges a breach under the breach of contract claims involving the confidentiality provisions of CDS's PIIA and Duane and Kaplan's General Releases. Thus, in sum, should Your Honor adopt my recommendation regarding the breach of contract claims, the remaining breach of contract claims would be Medtech's claim against Duane and CDS for breach of the non-compete and non-solicitation clause in the Consulting Agreement, Medtech's claim against Duane for breach of the confidentiality provision in the General Release, Medtech's claim against CDS for breach of the confidentiality provision of the PIIA, and Medtech's claim against Kaplan for breach of the confidentiality provision in the General Release.

3. Medtech's Civil Conspiracy Claims Against Kaplan, Duane, CDS, and DenTek

In Count XII of the Amended Complaint, Medtech asserts a claim of civil conspiracy against all Defendants. Amended Complaint at ¶¶ 269-273. Specifically, Medtech alleges that Defendants conspired to use Medtech's trade secrets to bring DenTek's infringing nightguard to the market. Id. at ¶¶ 269-273. As Defendants point out, New York does not recognize an independent tort of civil conspiracy. Baker v. R.T. Vanderbilt Co., 260 A.D.2d 750, 688 N.Y.S.2d 726, 729 (3d Dept. 1999). Rather, a plaintiff may only make a claim of civil conspiracy if he or she adequately states a claim for an underlying tort. Id. Additionally, a plaintiff making a claim of civil conspiracy must also allege: "(1) an agreement between two or more parties, (2) an overt act in furtherance of the agreement, (3) the parties' intentional participation in the furtherance of the plan or purpose, and (4) resulting damage or injury." World Wrestling Fed'n Entm't, Inc. v. Bozell, 142 F.Supp.2d 514, 532 (S.D.N.Y. 2001). "'[T]o survive a motion to dismiss, a complaint must contain more than general allegations in support of the conspiracy. Rather, it must allege the specific times, facts, and circumstances of the alleged conspiracy.'" Brownstone Invest. Group, LLC v. Levey, 468 F.Supp.2d 654, 661 (S.D.N.Y. 2007) (quoting Fitzgerald v. Field, No. 99-3406(RWS), 1999 WL 1021568, *4 (S.D.N.Y. Nov. 9, 1999)). "Bare conclusory allegation[s] of conspiracy do[] not state a cause of action." Grove Press, Inc. v. Angleton, 649 F.2d 121, 123 (2d Cir. 1981) (citing Goldstein v. Siegel, 19 A.D.2d 489, 244 N.Y.S.2d 378 (1963)).

Here, although I have concluded supra that the Amended Complaint states a claim against each of the Defendants for the underlying tort of trade secret misappropriation, I conclude, and respectfully recommend that Your Honor should conclude, that Plaintiff has not sufficiently alleged an agreement among the Defendants to engage in such tortious conduct to survive Defendants' motion to dismiss the civil conspiracy claim. In support of its argument that the Amended Complaint adequately states an agreement among the Defendants to misappropriate Medtech's trade secrets, Medtech only points to allegations in the Amended Complaint that state that Duane and Kaplan each engaged in employment discussions with DenTek and signed employment agreements with DenTek following their employment with Dental Concepts. Medtech's Memorandum in Opposition to DenTek and Kaplan's Motion at page 27. However, merely hiring the employees of a competitor is not indicative of an agreement to misappropriate trade secrets. See, e.g., In re Dana Corp., No. 06-10354(BRL), 2007 WL 3376882, *7 (Bankr.S.D.N.Y. Nov. 6, 2007) (finding that a company's employment of its competitor's former employees was not sufficient proof of a conspiracy or of trade secret misappropriation). Indeed, "conduct that is as consistent with permissible competition as with illegal conspiracy does not, without more, support even an inference of conspiracy." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 597 n. 21, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). There are no allegations in the complaint that the Defendants specifically agreed to used the trade secrets that Duane and Kaplan gleaned from their employment with Medtech in order to produce DenTek's competing product. Accordingly, I conclude, and respectfully recommend that Your Honor should conclude, that Medtech's claim of civil conspiracy should be dismissed in favor of Defendants.

4. Medtech's Tortious Interference Claims

In Count X of the Amended Complaint, Medtech asserts a claim of tortious interference with contractual relations against DenTek, alleging that DenTek induced Duane, CDS, and Kaplan to breach the confidentiality provisions in the Consulting Agreement, PIIA, and General Releases. Amended Complaint at ¶¶ 256-262. In Count XI of the Amended Complaint, Medtech also asserts a claim of tortious interference with contractual relations against Duane, alleging that Duane induced Kaplan to breach the confidentiality provision of the General Release. Id. at ¶¶ 263-268. Additionally, in Count XIV of the Amended Complaint, Medtech asserts a claim of tortious interference with advantageous business relationship/economic advantage against all Defendants, alleging that Kaplan, Duane, and DenTek knew of a relationship between Medtech and its consultants, the Tufts Doctors, and that Kaplan, Duane, and DenTek intentionally interfered with that relationship. Id. at ¶¶ 284-289.

a) Tortious Interference with Contractual Relations

Under New York law, in order to state a claim of tortious interference with contractual relations, a plaintiff must allege five elements: "(1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of the contract; (3) the defendant's intentional procurement of the third-party's breach of the contract without justification; (4) actual breach of the contract; and (5) damages resulting therefrom." Kirch v. Liberty Media Corp., 449 F.3d 388, 401 (2d Cir. 2006) (internal quotations omitted); see also Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 94, 595 N.Y.S.2d 931, 612 N.E.2d 289 (1993).

With regard to the second element, the plaintiff must "provide specific allegations" of the defendant's knowledge and cannot survive a motion to dismiss by making merely a "conclusory assertion" of knowledge. Wolff v. Rare Medium, Inc., 171 F.Supp.2d 354, 359 (S.D.N.Y. 2001). "Although a defendant need not be aware of all the details of a contract to be liable for tortious interference, it must have actual knowledge of a specific contract." Int'l Minerals Res., Inc. v. Pappas, No. 87 Civ. 3988(PKL), 1992 WL 354504, *3 (S.D.N.Y. Nov. 17, 1992); see also Burns Jackson Miller Summit Spitzer v. Lindner, 88 A.D.2d 50, 72, 452 N.Y.S.2d 80 (2d Dept. 1982). Indeed, "to avoid dismissal of a tortious interference with contract claim a plaintiff must support his [or her] claim with more than mere speculation." Burrowes v. Combs, 25 A.D.3d 370, 373, 808 N.Y.S.2d 50 (1st Dept. 2006).

"[T]he third element [of a tortious interference with contractual relations claim] involves a defendant's 'improper intentional interference with [] performance' of an existing contract." Wolff, 171 F.Supp.2d at 359 (quoting Imtrac Indus., Inc. v. Glassexport Co., No. 90 Civ. 6058, 1996 WL 39294, *7 (S.D.N.Y. Feb. 1, 1996)). In other words, a plaintiff alleging a tortious interference with contractual relations claim must allege that the defendant used "wrongful means" to procure the third party's breach. Id. The New York Court of Appeals has defined "wrongful means" to include "physical violence, fraud, or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure." Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 191, 428 N.Y.S.2d 628, 406 N.E.2d 445 (1980). "Wrongful means" do not, however, include persuasion alone, even if such persuasion is "knowingly directed at interference with the contract." Id.

DenTek argues that Medtech's claim of tortious interference with contractual relations against it should be dismissed because the Amended Complaint contains no allegations that DenTek had any knowledge of the confidentiality provisions of the Consulting Agreement, PIIAs, or General Releases. DenTek's Memorandum in Support at page 23. In opposition to DenTek's argument, Medtech points to paragraphs 258 and 259 of the Amended Complaint. These paragraphs state:

DenTek knew or should have known of the valid contracts between Duane and Dental Concepts/Medtech and Kaplan and Dental Concepts/Medtech. DenTek is a sophisticated entity well aware of the industry practice of securing confidentiality agreements, as evidenced by its own conduct with Duane, Kaplan and the Tufts Doctors.

Amended Complaint at ¶¶ 258-259. I conclude, and respectfully recommend that Your Honor should conclude that these paragraphs are insufficient to alleged actual knowledge of the contracts on behalf of DenTek. There are no allegations in the Amended Complaint that Duane or Kaplan told DenTek about the Consulting Agreement, PIIAs, or General Releases, that DenTek saw copies of the contracts, or any other allegations stating that DenTek was otherwise informed of the contracts. In fact, the Amended Complaint states that Duane told DenTek that he was not bound by any non-competition covenants and that Duane failed to inform DenTek that he could not work on DenTek's competing nightguard because of the non-compete agreement. Amended Complaint at ¶¶ 113, 116. Thus, the allegations that DenTek "knew or should have known" about the contracts because it is a "sophisticated entity" familiar with the concept of confidentiality agreements is mere speculation unsupported by the specific allegations of actual knowledge necessary to survive a motion to dismiss a claim of tortious interference with contractual relations.

Additionally, there are no allegations in the Amended Complaint stating that DenTek used wrongful means to induce Duane or Kaplan to breach their confidentiality agreements with DenTek. With regard to DenTek's interactions with Duane, the Amended Complaint merely states that "DenTek contacted Duane and asked if he would be interested in participating in a new project with DenTek," that DenTek told Duane that the project was "bringing an OTC bruxism device to the market that would compete with [Medtech's product]," and that "DenTek and Duane finalized the terms of their arrangement and signed an agreement pursuant to which Duane agreed to assist DenTek with the development of an OTC bruxism device to compete with [Medtech's product]." Amended Complaint at ¶¶ 111, 114, 120. With respect to DenTek's contact with Kaplan, the Amended Complaint merely alleges that Duane recruited Kaplan on DenTek's behalf and that "DenTek and Duane were successful in recruiting Kaplan." Id. at ¶¶ 133, 156. These allegations amount to nothing more than persuasion for the benefit of DenTek's business, not wrongful means intended to injure Medtech. Accordingly, I conclude, and respectfully recommend that Your Honor should conclude, that DenTek's motion to dismiss Medtech's tortious interference with contractual relations claim against it should be granted.

Duane argues that Medtech's claim of tortious interference with contractual relations against him should be dismissed because the Amended Complaint does not allege that Duane intentionally induced Kaplan to breach the confidentiality provisions of the PIIA or General Release.^8a Duane and CDS Memorandum in Support at pages 12-13. I conclude, and respectfully recommend that Your Honor should conclude, that Duane is correct. Just as there are no allegations in the Amended Complaint regarding DenTek's inducement of Duane and Kaplan's breach, there are no allegations in the Amended Complaint that Duane coerced, persuaded, or even asked Kaplan to breach her confidentiality agreement with Dental Concepts. The Amended Complaint merely states that Duane recruited Kaplan to work for DenTek. Amended Complaint at ¶ 133. Indeed, there is no provision prohibiting Kaplan from working for a competitor in either her PIIA or her General Release, and thus, such an allegation cannot form the basis of "intentional inducement." See generally Amended Complaint, Exhibits D and H. Additionally, there is no allegation in the Amended Complaint that Duane used wrongful means to procure Kaplan's breach. Accordingly, I conclude, and respectfully recommend that Your Honor should conclude, that Duane's motion to dismiss Medtech's claim of tortious interference with contractual relations against him should be granted.

8a In its opposition to Duane and CDS's motion, Medtech does not explicitly address Duane's argument with regard to the tortious interference with contractual relations claim. See generally Medtech Opposition to Duane and CDS Motion to Dismiss. However, Medtech incorporates its arguments made in response to DenTek's motion. Id. at page 3.

b) Tortious Interference with Advantageous Business Relationship/Economic Advantage

As explained supra, in Count XIV of the Amended Complaint, Medtech asserts a claim of tortious interference with advantageous business relationship/economic advantage against all of the Defendants, alleging that Kaplan, Duane, and DenTek knew of a relationship between Medtech and the Tufts Doctors and that Kaplan, Duane, and DenTek intentionally interfered with that relationship. Amended Complaint at ¶¶ 284-289. Under New York law, a plaintiff asserting a claim of tortious interference with a business relationship must allege that "'(1) it had a business relationship with a third party; (2) the defendant knew of that relationship and intentionally interfered with it; (3) the defendant acted solely out of malice, or used dishonest, unfair, or improper means; and (4) the defendant's interference caused injury to the relationship.'" Kirch v. Liberty Media Corp., 449 F.3d 388, 400 (2d Cir. 2006) (quoting Carvel Corp. v. Noonan, 350 F.3d 6, 17 (2d Cir. 2003)).

The New York Court of Appeals has explained that because "[g]reater protection is accorded an interest in an existing contract . . . than to the less substantive, more speculative interest in a prospective relationship . . . liability will be imposed only on proof of more culpable conduct on the part of the interferer" under a tortious interference with business relationship claim. Guard-Life Corp., 50 N.Y.2d at 191, 428 N.Y.S.2d 628, 406 N.E.2d 445. Thus, a plaintiff must allege "'more culpable conduct on the part of the defendant'" for such a claim than for a claim for tortious interference with contractual relations. Wolff, 171 F.Supp.2d at 360 (quoting NBT Bancorp Inc. v. Fleet/Norstar Fin. Group, Inc., 87 N.Y.2d 614, 621, 641 N.Y.S.2d 581, 664 N.E.2d 492 (1996)). As a general rule, unless the "defendant engaged in conduct for the sole purpose of inflicting intentional harm on plaintiffs," the defendant's conduct must amount to a crime or an independent tort. Carvel Corp. v. Noonan, 3 N.Y.3d 182, 190-91, 785 N.Y.S.2d 359, 818 N.E.2d 1100 (2004). "Conduct that is not criminal or tortious will generally be 'lawful' and thus insufficiently 'culpable' to create liability for interference with prospective contracts or other nonbinding economic relations." Id. Additionally, "mere suspicions are inadequate to support a claim of tortious interference with business relations claim." Scutti Enterps. v. Park Place Entm't Corp., 322 F.3d 211, 217 (2d Cir. 2003).

Defendants argue that the Amended Complaint fails to adequately allege the third element of Medtech's tortious interference with a business relationship claim because it does not allege that Defendants communicated with the Tufts Doctors solely out of malice or by using wrongful means. DenTek Memorandum in Support at page 25; Duane and CDS Memorandum in Support at pages 14-15; Kaplan Memorandum in Support at pages 24-26. I conclude, and respectfully recommend that Your Honor should conclude, that Defendants are correct. First, there are no allegations in the Amended Complaint stating that when Kaplan, Duane, and DenTek contacted the Tufts Doctors, they were acting solely out of malice. Rather, the allegations in the Amended Complaint establish that Defendants were motivated by their own economic and competitive interests when they contacted the Tufts Doctors to help DenTek develop its nightguard. See Amended Complaint at ¶¶ 130(d), 140-150. "A motive of 'normal economic self-interest' is inconsistent with a sole purpose of inflicting intentional harm." Hassan v. Deutsche Bank A.G., 515 F.Supp.2d 426, 430 (S.D.N.Y. 2007).

Additionally, there are no allegations in the Amended Complaint stating that Defendants engaged in criminal or tortious activities in order to procure a relationship with the Tufts Doctors. In support of its argument in opposition to DenTek's motion to dismiss, Medtech points to paragraph 150 of the Amended Complaint which states that "DenTek never revealed to the Tufts Doctors the goals of DenTek's project. If the goals reflected in Exhibit N had been conveyed to the Tufts Doctors, DenTek would have been unsuccessful in procuring any consulting relationship with the Tufts Doctors." Medtech Memorandum in Opposition to DenTek's Motion to Dismiss at page 29; see Amended Complaint at ¶ 150. Exhibit N contains a list of four of DenTek's objectives, only one of which has to do with Medtech's device. Amended Complaint, Exhibit N. It states, "newly designed NightGuard device to compete with and maybe even replace The Doctor's Nightguard in retail stores." Id. I conclude, and respectfully recommend that Your Honor should conclude, that these allegations do not amount to fraud or misrepresentation; rather, they allege only that Defendants failed to tell the Tufts Doctors that DenTek intended to create a device to compete with Medtech's device. Indeed, other allegations in the Amended Complaint seem to imply the Tufts Doctors were aware of DenTek's goal, regardless of DenTek's failure to disclose its precise goal to compete with Medtech. See Amended Complaint at ¶¶ 130(d), 149 (Kaplan and Duane "personally called and solicited the Tufts Doctors to work for DenTek and provide information and feedback on the one-size-fits-all protector that DenTek was developing" and Dr. Mehta told Medtech that "he had 'discuss[ed] with [DenTek] that [the Tufts Doctors] would work with [DenTek] on an OTC bruxism guard that verbally [the Tufts Doctors] had agreed to do . . . only with [DenTek].'"). Accordingly, I conclude, and respectfully recommend that Your Honor should conclude, that Defendants' motion to dismiss the tortious interference with business relations claim should be granted.

5. Medtech's Unfair Competition and Unjust Enrichment Claims Against DenTek

In Counts IV and V of the Amended Complaint, Medtech asserts claims of unfair competition and unjust enrichment against DenTek. Amended Complaint at ¶¶ 212-21. DenTek argues that these claims should be dismissed "[t]o the extent that these claims rest on the enforcement of rights provided in the federal patent and copyright laws." DenTek's Memorandum in Support at page 27.

In order to state a claim of unfair competition under New York law, a plaintiff must allege that the defendant "misappropriated the plaintiffs' labors, skills, expenditures, or good will and displayed some element of bad faith in doing so." Abe's Rooms, Inc. v. Space Hunters, Inc., 38 A.D.3d 690, 692, 833 N.Y.S.2d 138 (2d Dept. 2007). The elements of unjust enrichment under New York law are: "(1) defendant was enriched, (2) at plaintiff's expense, and (3) equity and good conscience militate against permitting defendant to retain what plaintiff is seeking to recover." Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296, 306 (2d Cir. 2004) (citing Clark v. Daby, 300 A.D.2d 732, 751 N.Y.S.2d 622, 623 (2002)). These state law claims are preempted, however, by federal copyright and patent law when the rights to be protected by the state law claim "would infringe one of the exclusive rights" provided by federal copyright or patent law. Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d Cir. 1992). In order to determine if a state law claim is preempted, the court must engage in a two-prong test. Briarpatch, 373 F.3d at 305. It must determine: (1) if "the particular work to which the claim is being applied falls within the type of works protected by the [federal copyright or patent law]," and (2) if "the claim seeks to vindicate legal or equitable rights that are equivalent to one of the bundle of exclusive rights already protected by [federal copyright or patent law]." Id. "The first prong of the test is called the 'subject matter requirement,' and the second prong is called the 'general scope requirement.'" Id. Additionally, courts use the "extra element" test to determine if a claim is preempted. Computer Assocs., 982 F.2d at 716. "A state law claim is not preempted if the 'extra element' [required by the state law claim] changes the 'nature of the action so that it is qualitatively different from a copyright [or patent] infringement claim.'" Id. (emphasis in original). "To determine whether a claim meets this standard, we must determine 'what plaintiff seeks to protect, the theories in which the matter is thought to be protected and the rights sought to be enforced.'" Id. (quoting 1 Roger M. Milgrim, Milgrim on Trade Secrets § 2.06A[3], at 2-150 (1992)).

In Briarpatch, for example, the Second Circuit concluded that the plaintiffs' unjust enrichment claim was preempted by the Copyright Act. Briarpatch, 373 F.3d at 305-307. Specifically, the Second Circuit noted that the plaintiffs were attempting to protect their interests under the theory that the defendant "was unjustly enriched by turning [a] novel and [a] screenplay into a motion picture without compensating [the plaintiff] or obtaining [the plaintiff's] permission." Id. at 306. The court identified this theory as one that was really an attempt to "enforce the right of adaptation — i.e., the right to prepare or authorize preparation of a derivative work based on a novel or screenplay," which, the Second Circuit concluded, was one of the bundle of rights protected by the Copyright Act. Id. at 306.

In Computer Associates, however, the Second Circuit found that the district court erred in finding that the plaintiff's unfair competition claim was preempted. The Second Circuit concluded that it was possible that the plaintiff's claim contained an "extra element" not included in the rights protected under the Copyright Act. Computer Assocs., 982 F.2d at 717-18. The Second Circuit noted that "[f]ollowing [the] extra element test, [it] has held that unfair competition and misappropriation claims grounded solely in the copying of a plaintiffs protected expression are preempted by [the Copyright Act]," while "unfair competition claims based upon breaches of confidential relationships, breaches of fiduciary duties and trade secrets" are not. Id. at 717. The Second Circuit pointed out that "[t]he defendant's breach of duty is the gravamen of such trade secret claims, and supplied the 'extra element' that qualitatively distinguishes such trade secret causes of action from claims for copyright infringement that are based solely on copying." Id. Thus, the Second Circuit found that the plaintiffs claim alleging that a former employee stole a code and used it to design a program for the defendant, his new employer, in violation of an agreement with the plaintiff, could state a claim of unfair competition that was not preempted by the Copyright Act. Id. at 717-18; see also Computer Assocs. Int'l, Inc. v. Altai, Inc., 775 F.Supp. 544, 553-554 (E.D.N.Y. 1991). Accordingly, the Second Circuit remanded the case back to the district court to more fully consider the "factual and theoretical bases of [the plaintiffs] trade secret claims" to determine whether they were based on the same theory as the plaintiff's copyright infringement claim. Id. at 718.

In Count IV of the Amended Complaint, Medtech states that by "misappropriating the commercial advantage gained by Medtech in the Nightguard trademark, the Copyright Registration, and the 051 Patent, DenTek has competed unfairly in violation of the common law of New York, as preserved by N.Y. Gen. Bus. Law 360-O." Amended Complaint at ¶ 213. In Count V of the Amended Complaint, Medtech further states that "DenTek has received substantial benefits and profited from its unlawful use of Medtech's Nightguard trademark, its copyrighted material, and its patented invention, but has not compensated Medtech for the benefits DenTek received." Id. at ¶ 219. Although these allegations suggest that Medtech is trying to use the unfair competition and unjust enrichment claims to hold DenTek liable for violation of rights already protected by federal copyright and patent law, in its Memorandum of Law, Medtech argues that its theory or "underlying purpose" of the unjust enrichment and unfair competition claims "is that DenTek has engaged in unfair competition through the misappropriation and use of Medtech's intellectual property and proprietary information, whether trade secrets, confidential information, trademarks, patents, copyright, business relationships, or contacts." Medtech Memorandum in Opposition to DenTek and Kaplan Motions to Dismiss at page 33. Indeed, Counts IV and V incorporate the facts alleged earlier in the Amended Complaint, which include allegations that DenTek wrongfully obtained Medtech's methods, processes, suppliers, consultants, and product formulation and production strategies, through Duane and Kaplan's improper disclosure and was therefore able to short-circuit the research and development phase of producing its competing nightguard. Amended Complaint at ¶¶ 128-162, 212 and 222. I conclude, and respectfully recommend that Your Honor should conclude, that these allegations sufficiently support Medtech's theory that its unjust enrichment and unfair competition claims are based on an "additional element" of breach of duty or trust and therefore are sufficient to survive DenTek's motion to dismiss on the basis of preemption.

D. DenTek's Motion for a Protective Order

As an alternative to its motion to dismiss Medtech's trade secret misappropriation claim, DenTek submitted a motion for an order compelling Medtech to list with specificity the trade secrets it claims DenTek misappropriated. DenTek's Memorandum in Support at pages 28-37. DenTek argues that it has not been put on fair notice of the particular trade secrets that Medtech claims DenTek misappropriated and states that requiring Medtech to disclose them will "assist both the parties and the Court in narrowing discovery, avoiding undue expense, and fairly and efficiently conducting discovery in this case." DenTek's Memorandum in Support at page 29.

In response, Medtech asserts that it "is not resisting reasonable disclosure of its trade secrets" and that "[o]nce an adequate protective order ensuring that its proprietary information remains confidential is entered, Medtech anticipates providing DenTek additional detail concerning the relevant trade secrets."^9a Medtech Response to DenTek's Motion for an Order to Compel at page 3. Medtech additionally states, however, that "[u]ntil Medtech has time to fully explore the issues in this case, it will not know what information was ultimately acquired and used by DenTek." Id.

9a A protective order was filed on January 31, 2008, establishing a procedure for handling discovery of confidential material. Docket entry 133.

It should also be noted that Medtech filed a motion for a preliminary injunction in this case in large part based on its trade secret misappropriation claim. See Docket entries 82, 85. In the motion for a preliminary injunction, Medtech asks the Court to issue an order enjoining DenTek, Duane, and Kaplan "(i) from continuing to improperly use Medtech's trade secrets, (ii) from continuing to breach any contractual agreements with Medtech or its predecessor-in-interest, and (iii) from marketing and selling any dental protector products or other products in which Duane or Kaplan has had any involvement or provided any assistance to DenTek." Medtech's Memorandum in Support of Preliminary Injunction at page 1. After hearing brief oral argument on the motion, the undersigned stayed the motion pending further discovery.

Contrary to DenTek's assertion, I conclude, and respectfully recommend that Your Honor should conclude, that there is no "universal rule" that a plaintiff asserting a trade secret misappropriation claim must disclose the precise trade secrets it alleges were misappropriated before being allowed to proceed with the claim. See DenTek's Memorandum in Support at pages 29-30. Rather, in striking the balance between a plaintiffs right to conduct discovery with respect to information relevant to its claims and a defendant's right to be protected from the plaintiff discovering the defendant's trade secrets "under the guise of seeing whether [the plaintiff's] trade secrets have been misappropriated," Struthers Sci. Int. Corp. v. Gen. Foods Corp., 51 F.R.D. 149, 151 (D.Del. 1970), "courts have implemented various procedures, depending on the facts of a given case." Microwave Research Corp. v. Sanders Assocs., Inc., 110 F.R.D. 669, 672 (D.Mass. 1986) (noting that courts have delayed disclosure until trial, delayed disclosure until the plaintiff has done enough discovery to survive a summary judgment motion, required disclosure in detail during discovery, and appointed an independent expert to control discovery). There is some support, however, for DenTek's position that it is entitled to know at some point during discovery in this case the precise trade secrets Medtech is asserting were misappropriated. Xerox Corp. v. Int'l Bus. Machs. Corp., 64 F.R.D. 367, 371 (S.D.N.Y. 1974). In Xerox, the court found that after almost a year of discovery the plaintiff was able to and should identify the precise trade secrets it alleged were misappropriated. Id. at 371-72. The court pointed out that "[a]t the very least, a defendant is entitled to know the bases for plaintiff's charges against it" and "[t]he burden is upon the plaintiff to specify those charges, not upon the defendant to guess at what they are." Id. at 371.

Here, discovery regarding Medtech's trade secret claim has been stayed pending the resolution of Defendants' motions to dismiss. Accordingly, I conclude that Medtech should be allowed limited discovery on the trade secret claim prior to being required to identify the precise trade secrets it is alleging were misappropriated. However, in order to defend against Medtech's preliminary injunction motion and for both sides to prepare for the evidentiary hearing to be held in conjunction with the motion, ^10a I conclude that after Medtech's limited discovery on the trade secret claim, DenTek is entitled to receive a list of the specific trade secrets Medtech is alleging were misappropriated forthwith. As the parties have already sent letters to the undersigned regarding the discovery Medtech believes it will need in order to identify the trade secrets and Defendants' objections to such discovery, the parties are directed to attend the conference scheduled before the undersigned on June 23, 2008, prepared to discuss and resolve the limited trade secret discovery issues. The undersigned will supervise such discovery and set a briefing schedule and hearing date for the preliminary injunction motion at an appropriate time thereafter.

10a "It is an established principle that where issues of fact are in conflict, a preliminary injunction should not be issued without an evidentiary hearing." IMelvin F. Jager, Trade Secrets Law § 7:4 (2007). As noted supra, there are issues of fact regarding whether the trade secrets that Medtech alleges were misappropriated actually qualify as trade secrets. Accordingly, I find that an evidentiary hearing is appropriate in this case.

III. CONCLUSION

For the foregoing reasons, I conclude, and respectfully recommend that Your Honor should conclude, that Medtech's motion to strike should be denied, that Kaplan and Duane's motions for attorneys' fees should be denied without prejudice to refile at an appropriate time, and that Defendants' motions to dismiss as to the following claims should be granted: civil conspiracy against all Defendants, tortious interference claims against all Defendants, breach of the PIIA against Duane, and breach of the PIIA against Kaplan. Thus, I conclude, and respectfully recommend that Your Honor should conclude, that Medtech's claims for trade secret misappropriation against all Defendants, unjust enrichment and unfair competition against DenTek, breach of the General Release against Kaplan and Duane, breach of the Consulting Agreement against Duane and CDS, and breach of the PIIA against CDS, should survive Defendants' motions to dismiss.

IV. NOTICE

Pursuant to 28 U.S.C. § 636(b)(1), as amended, and Fed.R.Civ.P. 72(b), the parties shall have ten (10) days, plus an additional three (3) days, pursuant to Fed.R.Civ.P. 6(e), or a total of thirteen (13) working days, see Fed.R.Civ.P. 6(a), from the date hereof, to file written objections to this Report and Recommendation. Such objections, if any, shall be filed with the Clerk of the Court with extra copies delivered to the chambers of The Honorable Kenneth M. Karas at the United States Courthouse, 300 Quarropas Street, White Plains, New York, 10601, and to the chambers of the undersigned at the same address.

Failure to file timely objections to this Report and Recommendation will preclude later appellate review of any order of judgment that will be entered.

Requests for extensions of time to file objections must be made to Judge Karas.