Acosta, Inc. v. Navitsky et al

RESPONSE in Opposition re MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

E.D. Pa.October 19, 2017

95077677_4 IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA ACOSTA, INC., Plaintiff, v. JOSEPH NAVITSKY and JOHNSON O’HARE CO., INC., Defendants. CASE NO. 5:17-cv-03282-EGS JUDGE EDWARD G. SMITH PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT JOHNSON O’HARE CO., INC.’S MOTION TO DISMISS THE CORRECTED AMENDED COMPLAINT Plaintiff Acosta, Inc. (“Acosta”), by and through its undersigned counsel, for its opposition to Defendant Johnson O’Hare Co., Inc.’s (“Defendant” or “JOH”) Motion to Dismiss (ECF No. 39-1) (the “Motion”) Acosta’s Corrected Amended Complaint (ECF No. 35) (the “Complaint”) states as follows. I. INTRODUCTION JOH’s Motion should be denied because its arguments for dismissal are premised on the misguided notions that (1) because some of Acosta’s allegations are made on information and belief it cannot have stated a plausible claim for tortious interference; (2) the Non-Solicitation Agreement is not binding on Navitsky; and (3) JOH’s conduct is shielded by the “business competitors’ privilege; and (4) that Acosta is required to plead that some JOH agent other than Navitsky was involved in his trade secret misappropriation in order to state a claim. However, none of these premises are correct. First, Acosta’s inclusion of a handful of “information and belief” allegations do not prevent it from stating a claim where those allegations are supported by other well-pled facts and relate to matters that are peculiarly within JOH’s knowledge or control. Second, the Non-Solicitation Agreement is binding on Navitsky, but even if it were not, JOH still Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 1 of 24 2 95077677_4 does not challenge the validity of Brown’s and Levine’s contracts with Acosta, the breaches of which JOH has also facilitated. Third, the business competitors’ privilege does not protect the facilitation of breaches of contract, the very conduct alleged in this case. And finally, the Amended Complaint alleges not only that JOH has improperly received Acosta’s trade secret information in violation of Acosta’s rights, but also that its employee Navitsky has actively used that information on JOH’s behalf and for JOH’s benefit. For these reasons, JOH’s motion to dismiss should be denied. II. FACTUAL BACKGROUND1 The Food and Beverage Brokerage Industry Acosta and its affiliated companies are the leading outsourced sales and marketing agency serving consumer packaged goods companies and retailers across the United States and Canada. Compl. ¶ 2. Acosta’s brokerage business represents food and beverage manufacturers (known as “clients”) in marketing their products to major retailers and other channels (known as “customers”), including club stores, convenience stores, drug stores, food service, grocery stores, mass merchandisers, military sales, natural or other specialty stores, and value retailers. Id. Defendant JOH is a food and beverage broker that directly competes with Acosta. Id. ¶ 6. The food and beverage brokerage business is based substantially on relationships, both with clients and customers. Id. ¶ 9. Client relationships are particularly valuable because the client generally retains the broker as its representative in sales channels and pays brokers a commission based on product sales in those channels. Id. As a result, Acosta invests substantial amounts of money each year to develop, maintain, and enhance its client relationships. Id. 1 Acosta recasts here the allegations in its Complaint as relevant and applicable to JOH’s arguments in its Motion. Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 2 of 24 3 95077677_4 Because the number of potential clients is limited and brokers are constantly endeavoring to increase market share, the food and beverage brokerage business is also highly competitive. Id. ¶ 10. In each segment of the business, multiple brokers compete with Acosta for its clients. Id. Acosta maintains its competitive advantage not only through superior service and results, but also through its knowledge of its clients’ products, pricing, preferences, marketing plans and strategies, and market differentiators – which are confidential to both Acosta and its clients. Id.2 Acosta Acquires Dynamic and Employs Levine and Brown In February 2010, Morris Alper, LLC, a wholly owned subsidiary of Acosta with which Acosta has since merged, purchased the assets of Dynamic Food Marketing, LLC (“Dynamic”), a competing food brokerage business specializing in representing producers of meat, deli and cheese products. Id. ¶ 12. Morris Alper, LLC, Robert I. Levine (“Levine”), and Dynamic entered into an Asset and Brokerage Relationship Purchase Agreement (the “APA”) at that time. Id. Levine was a party to the APA because he was Dynamic’s principal and was heavily involved in Dynamic’s operations. Id. ¶ 13. Due to the client-centered nature of the food and beverage brokerage industry, a critical component of the purchase was Acosta’s acquisition of Dynamic’s and Levine’s existing personal relationships and contacts developed and maintained by Dynamic with its clients (the “Brokerage Relationships”). Id. ¶ 14. Among the Brokerage Relationships that Acosta acquired through its purchase of Dynamic were Lactalis American Group (“Lactalis”), Allen Foods (“Allen”), and part of the brokerage relationship with Kayem Foods (“Kayem”). Id. Acosta knew that the Brokerage Relationships were largely based on Levine’s personal relationships 2 JOH likewise considers this information to be confidential, as its Employee Handbook provides that “each employee should treat as confidential any information concerning [JOH’s] practices and procedures, plans and products, finances, prospects and customer lists, pricing information and its relationships with employees and principals.” Id. ¶ 11. Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 3 of 24 4 95077677_4 with the clients. Id. ¶ 15. Thus, to ensure that Acosta would realize the full benefit of the Brokerage Relationships it purchased, Acosta required Levine to become an Acosta employee and enter into an Employment Agreement (a true and correct copy of which is attached to the Complaint as Exhibit A) following the acquisition. Id. In Levine’s Employment Agreement, Levine acknowledged that he had access to certain Confidential Information about Acosta’s business and promised that he would not disclose, directly or indirectly, any of such Confidential Information to any person, firm, corporation, or other entity for any reason or purpose whatsoever unless specifically authorized to do so in writing by an authorized officer of Acosta. Id. ¶ 16, Ex. A. After the sale of Dynamic, Levine served for approximately seven years as a Vice President of Acosta’s Fresh Foods division. Id. ¶ 18. In this capacity, he managed a team of employees engaged in the brokerage of clients’ products, including Barbara Brown (“Brown”), a Business Manager who worked closely with Levine to service Acosta’s clients, and specifically the Brokerage Relationships that Acosta purchased from Dynamic and Levine. Id. On February 1, 2010, prior to and as a condition of her employment, Brown executed Acosta’s Non-Solicitation Agreement (a true and correct copy of which is attached to the Complaint as Exhibit C), pursuant to which she agreed, among other things, not to solicit Acosta’s clients on behalf of any other person for a period of twelve months after termination of her employment and not to disclose Acosta’s Confidential Information to any person, use it for any other person’s benefit, or provide it for use by any other person. Id. ¶ 19, Ex. C. Levine Resigns from Acosta and Conspires with JOH On January 25, 2017, less than two months before the final payment was due to Levine under the APA, Levine informed Acosta he would be resigning effective May 1, 2017. Id. ¶ 20. Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 4 of 24 5 95077677_4 The confidentiality obligations of Levine’s Employment Agreement continued beyond his employment with Acosta. Id. ¶ 21, Ex. A. During the time preceding the effective date of his resignation, Levine repeatedly requested assurances from Acosta that the non-competition covenants in the APA and his Employment Agreement were no longer in effect. Id. Acosta agreed that after the final purchase price installment on March 20, 2017, Levine would no longer be bound to his restrictive covenants, but the confidentiality obligations in his Employment Agreement and any other provisions of the APA that survived termination would continue. Id. Levine was repeatedly inquiring about his post-employment restrictions because he was planning to commence employment with JOH and to attempt to transfer his client relationships, including the Brokerage Relationships that JOH had purchased from Dynamic to JOH, and Levine is in fact now employed by JOH. Id. ¶ 22. However, Levine did not wait until he started his employment with JOH to launch his plan. Id. ¶ 23. Prior to the effective date of Levine’s resignation from Acosta, while he was still bound by the non-competition covenant in the APA (Ex. B) and by fiduciary duties to Acosta, Levine conspired with JOH to take from Acosta the Brokerage Relationships for which Acosta had paid Levine millions of dollars over the previous seven years, as well as other Acosta client relationships through the solicitation of key Acosta employees and via the misappropriation of Acosta Confidential Information. Id. Beginning approximately one month before Levine’s resignation and continuing through the present day, at least three key Acosta associates, including Defendant Joseph Navitsky (“Navitsky”) and Brown, who were directly involved in managing the relationships with Acosta’s clients, including the Brokerage Relationships, have resigned and accepted employment with JOH. Id. ¶ 24. Additionally, all of the Brokerage Relationships (Lactalis, Kayem, and Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 5 of 24 6 95077677_4 Allen) and another Acosta client with whom Navitsky worked, Sartori Company (“Sartori”), have terminated their brokerage relationships with Acosta and become clients of JOH. Id. ¶ 25. Suspecting foul play, given that multiple clients terminated their relationships with Acosta within weeks of each other to move to JOH, Acosta had its forensic experts review Levine’s computer. Id. ¶ 27. Those experts found an absence of any work activity, documents, or emails remaining on Levine’s computer, leading them to believe that the computer was intentionally “wiped clean” of all business information, documents, and emails. Id. Accordingly, Acosta believes that, prior to the effective date of Levine’s resignation from Acosta, while he was still bound by the non- competition covenant in the APA and by fiduciary duties to Acosta, Levine conspired with JOH to take from Acosta the Brokerage Relationships for which Acosta had paid him millions of dollars over the previous seven years, as well as other Acosta client relationships, through the solicitation of key Acosta employees and via the misappropriation of Acosta’s Confidential Information. Id. ¶ 23. Brown Resigns and Sends Acosta’s Confidential Information to JOH and Levine Brown resigned her employment with Acosta on May 12, 2017. Id. ¶ 28. On or about June 9, 2017, Acosta received an email inadvertently sent to Levine’s Acosta email account from Brown’s personal email account (a true and correct copy of which is attached to the Complaint as Exhibit D) (the “Client Email”). Id. ¶ 29. This email included contact information for a representative of a longtime Acosta client. Id. ¶ 30. In the email, Brown asked Levine – who was by then at JOH – to have JOH send the Acosta client some “info” and for JOH to contact the client. Id. ¶ 30, Ex. D. Navitsky’s Agreement and Employment with Acosta Defendant Navitsky joined Acosta in January 2015 as its Director of Fresh Foods for the Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 6 of 24 7 95077677_4 Northeast region, including Pennsylvania. Id. ¶ 37. Given the competitive nature of the food and beverage business, Navitsky – like all Acosta employees in his position – was required to and did agree to be bound by Acosta’s form Non-Solicitation Agreement (a true and correct copy of which is attached to the Complaint as Exhibit E) by signing Acosta’s employee Orientation Acknowledgement Form (a true and correct copy of which is attached to the Complaint as Exhibit F) (the “Acknowledgement Form”) prior to and as a condition of his employment with Acosta. Id. ¶ 38. In his capacity as the Director of Fresh Foods, Navitsky had substantial contact with and exposure to Acosta’s clients, as well as exposure to Acosta’s Confidential Information. Id. ¶ 39, Ex. E § 5(b). Recognizing that Navitsky would necessarily gain such access to Acosta’s valuable clients and Confidential Information in this competitive industry, the Agreement was and is designed to protect Acosta’s business by prohibiting Navitsky from soliciting Acosta’s clients and misappropriating Acosta’s Confidential Information. Id. ¶ 40, Ex. E § 2. The Agreement states: [I]n consideration of the Employee’s employment by Acosta, and/or the continuation of employment, the compensation paid and to be paid to Employee by Acosta, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Employee hereby warrants and agrees as follows: . . . Employee agrees that for a period of twelve (12) months following termination by Employee, for any reasons, including resignation, . . . Employee shall not, on Employee’s own behalf or on behalf of others, in any capacity whatsoever, including, without limitation, as an owner, salesperson, sales manager, consultant, or otherwise, directly or indirectly, engage in the business of selling, soliciting, or promoting the sale of the Clients that Employee represented while employed by Acosta. . . . Employee agrees that while Employee is employed by Acosta, and for a period of one (1) year following termination of such employment (whether voluntary or involuntary), Employee shall not (i) disclose to any other person or entity; (ii) use for the benefit of Employee or persons or entities other than Acosta; or (iii) provide for use by other persons or entities, the “Confidential Information” of Acosta. . . . Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 7 of 24 8 95077677_4 . . . This Agreement shall be construed as an agreement separate and apart from Employee’s other contracts and relationships, if any, with Acosta. . . . Compl. Ex. E §§ Background, 4(a)(i), 5, 7(b) (emphasis added). Acosta’s Acknowledgement Form, which Navitsky signed and initialed next to the reference to the Non-Solicitation Agreement acknowledging his review of the same, states, in reference to certain “policies and procedures” listed along with the Non-Solicitation Agreement: All policies and procedures outlined are subject to change or modification at the discretion of Acosta Sales & Marketing at any time that particular circumstances warrant. No provision or portion of these items constitutes an implied or expressed contract, guarantee, or assurance of employment or any right to an employment- related benefit or procedure. Acosta Sales & Marketing reserves the right to change, modify, eliminate, or deviate from any policy or procedure at any time and to hire, transfer, promote, discipline, terminate, and otherwise manage its associates as it deems appropriate. See Compl. Ex. F (emphasis added). However, the Acknowledgment lists the Non-Solicitation Agreement as an “Agreement” distinct from the other policies listed, which are specifically designated as “Policies.” See id. JOH Solicits Navitsky to Service Acosta’s Clients at JOH On or about May 15, 2017, less than a week after Lactalis terminated its brokerage relationship with Acosta, JOH’s Executive Vice President of its Fresh division, Chris Darmody, contacted Navitsky about potential employment at JOH. Compl. ¶ 43. Not coincidentally, Navitsky had worked closely with Lactalis at Acosta in placing Lactalis’ cheese products at Ahold Delhaize (“Ahold”), a large grocery retailer and Acosta customer which owns such chains as Food Lion, Stop and Stop, Hannaford’s, and Giant Carlisle in the Northeastern and Mid- Atlantic regions as well as online grocer Peapod. Id. On that same day, Navitsky sent his resume to Darmody and set up a dinner meeting for May 23, 2017. Id. ¶ 44. At their May 23, 2017 dinner, Acosta believes that Darmody and Navitsky specifically Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 8 of 24 9 95077677_4 discussed Navitsky joining JOH in order to service Lactalis at JOH and further discussed whether Navitsky had any agreements with Acosta that would prevent him from serving in that role. Id. ¶ 46. On May 24, 2017, the morning after their dinner, Navitsky sent to Darmody a copy of his Non-Solicitation Agreement “in extreme confidence.” Id. ¶ 45. Navitsky told Darmody that the Non-Solicitation Agreement “was the only agreement of concern -- I was not offered, nor did I sign any other ‘conflict of interest’ etc. agreements.” Id. Despite having received the Non-Solicitation Agreement, JOH made an offer of employment to Navitsky on June 12, 2017. Id. ¶ 47. JOH made a revised offer to Navitsky on June 22, 2017, which Navitsky accepted that day. Id. On or about June 26, 2017, Navitsky tendered his resignation to Acosta in order to accept a position with JOH. Id. ¶ 48. Because Acosta was aware that Navitsky was going to a competitor, Navitsky’s supervisors reminded him upon his departure, both verbally and in writing, of his contractual obligations under the Agreement not to solicit Acosta’s clients or misappropriate Acosta’s Confidential Information. Id. ¶ 49, Ex. G. Navitsky and JOH Misappropriate Acosta’s Confidential Information Following Navitsky’s departure, however, it soon became clear that, while employed by JOH, he proceeded to improperly solicit and work on the business of Acosta’s former clients, with whom he worked while employed by Acosta, and to misappropriate Acosta’s Confidential Information in breach of his obligations under the Agreement. See Compl. ¶50. For example, on or about July 14, 2017, Acosta received an email inadvertently sent to Navitsky’s Acosta email account from Acosta client Sartori attaching a spreadsheet containing forms for the brokerage of Sartori products to customers (the “Sartori Email”). Id. ¶ 51. Two of the three forms were blank, but the first request form detailed the sale of Sartori products to Acosta customer Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 9 of 24 10 95077677_4 Wakefern Food Corporation (“Wakefern”), listing JOH as the broker and Navitsky as the originator. (A true and correct copy of the Sartori Email is attached to the Complaint as Exhibit H and is fully incorporated herein by reference). Id. Further, on or about July 18, 2017, Acosta received another email inadvertently sent to Navitsky’s Acosta email account from Ahold (the “Lactalis Email”). Id. ¶ 52. This email attached a calendar invite for an August 1, 2017 joint “planning discussion” involving representatives from Ahold, Lactalis, Navitsky, and another JOH representative. (A true and correct copy of the Lactalis Email is attached to the Complaint as Exhibit I and is fully incorporated herein by reference.) Id. As it turns out, despite being reminded of his obligations not to retain Acosta Confidential Information, Navitsky in fact retained over 10,000 pages of Acosta documents, including over 1300 spreadsheets, on a hard drive and on his personal computer. Id. ¶ 54. Sometime after commencing employment at JOH, Navitsky transferred the Acosta Confidential Information to his JOH-issued computer. Id. ¶ 57. Navitsky continued to have access to this information on both his personal and JOH computers until after this action was filed. Id. Thus, until Acosta took legal action to prevent Navitsky’s further breaches of his Non- Solicitation Agreement, Navitsky was soliciting the sale of Lactalis and Sartori’s products to the same customers with whom he had worked at Acosta (Ahold and Wakefern, respectively), using not only the Confidential Information that he learned during the course of his employment at Acosta but with access to all or virtually all of Acosta’s own files and documentary Confidential Information that he accumulated during his employment. Id. ¶ 58. JOH has allowed Navitsky to continue working on the business of these former Acosta clients despite JOH’s knowledge of Navitsky’s contractual obligations under the Agreement and his misappropriation of Acosta Confidential Information. Id. ¶ 63. Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 10 of 24 11 95077677_4 III. LEGAL STANDARD “The defendant bears the burden of demonstrating that a plaintiff has failed to state a claim upon which relief can be granted. This Court must accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Target Glob. Logistics Servs., Co. v. KVG, LLC, No. 5:15-CV-04960, 2015 WL 8014752, at *1 (E.D. Pa. Dec. 3, 2015) (Leeson, J.) (citations and quotation marks omitted) (denying motion to dismiss); see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210–11 (3d Cir. 2009) (vacating dismissal). IV. ARGUMENT A. The Complaint Contains Facts Sufficient to Allege a Tortious Interference Claim Against JOH. JOH first argues that Acosta’s “information and belief” allegations do not suffice to state a tortious interference claim against it. However, this argument focuses on the two information and belief allegations contained in Acosta’s Complaint and ignores the many facts asserted in the other paragraphs which support Acosta’s tortious interference claim against JOH. Acosta has pled more than enough facts to proceed, particularly as the facts necessary to substantiate Acosta’s limited “information and belief” allegations are peculiarly within JOH’s knowledge or control. “[P]leading upon information and belief is permissible where it can be shown that the requisite factual information is peculiarly within the defendant’s knowledge or control – so long as there are no boilerplate and conclusory allegations and plaintiffs accompany their legal theory with factual allegations that make their theoretically viable claim plausible.” McDermott v. Clondalkin Grp., Inc., 649 F. App’x 263, 267–68 (3d Cir. 2016) (citation, alterations, and quotation marks omitted) (vacating dismissal). This “plausibility” determination will be “a Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 11 of 24 12 95077677_4 context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Fowler, 578 F.3d at 210–11 (citation omitted). “In these circumstances, allegations of fact pled ‘upon information and belief’ are entitled to the same presumption of truth as other factual allegations.” DePuy Synthes Sales, Inc. v. Globus Med., Inc., No. CV 17- 1068, 2017 WL 1493365, at *10 (E.D. Pa. Apr. 26, 2017) (O’Neill, J.) (denying motion to dismiss tortious interference claim). “Accordingly, the Court will not dismiss Plaintiff’s complaint based on the allegations being pled upon information and belief, so long as there is a proper factual basis asserted to support the beliefs pled. However, where these averments are merely a formulaic recitation of the elements of a cause of action reliance by Plaintiff on information and belief cannot transform legal conclusions into plausible factual allegations.” Wright v. Lehigh Valley Hosp. & Health Network, No. CIV.A. 10-431, 2011 WL 2550361, at *3 (E.D. Pa. June 23, 2011) (Rapoport, M.J.) (citations, alterations, and quotation marks omitted). Here, Acosta alleges a single cause of action against JOH for tortious interference with existing and prospective business and contractual relationships. See Compl. ¶¶ 57–63. JOH takes particular issue with Acosta’s “on information and belief” characterization of JOH’s conduct as “conspiring” with Levine to “take from Acosta the Brokerage Relationships for which Acosta had paid Levine millions of dollars over the previous seven years, as well as other Acosta client relationships, through the solicitation of key Acosta employees and via the misappropriation of Acosta’s Confidential Information.” See Compl. ¶ 23. JOH argues that Acosta has pled no facts whatsoever to support that conclusion. See Motion 7. However, JOH and the Court need look no further than the immediately succeeding allegations in the Complaint to find facts supporting this belief: Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 12 of 24 13 95077677_4 Beginning approximately one month before Levine’s resignation and continuing through the present day, at least three key Acosta associates, including Navitsky, who were directly involved in managing the relationships with Acosta’s clients, including the Brokerage Relationships, have resigned and accepted employment with JOH. Additionally, all of the Brokerage Relationships (Lactalis, Kayem, and Allen) and an additional Acosta client with whom Navitsky worked, Sartori Company (“Sartori”), have terminated their brokerage relationships with Acosta and become clients of JOH. . . . Multiple clients terminating their relationships with Acosta within weeks of each other, and all moving to JOH, is highly suspect. Suspecting foul play following Levine’s departure, Acosta had its forensic experts review Levine’s computer. They found an absence of any work activity, documents, or emails remaining on Levine’s computer. Acosta’s forensics experts accordingly believe that the computer was intentionally “wiped clean” of all business information, documents, and emails. Compl. ¶¶ 24–27. Acosta further alleges that another employee who worked closely with Levine, Barbara Brown, downloaded confidential information about Acosta’s clients prior to her departure. Compl. ¶¶ 29–30. Brown then sent an email to Levine containing contact information for an Acosta client and asked Levine to “have JOH send them some info and reach out to [him].” Compl. ¶ 30; Ex. D. This email directly connects Levine to JOH and to the solicitation of Acosta clients on behalf of JOH using Acosta confidential information. These allegations, coupled with the conclusions they support, “clearly state a plausible claim for tortious interference with existing contracts.” See DePuy Synthes Sales, Inc., 2017 WL 1493365, at *15. Acosta’s claim is not merely “a formulaic recitation of the elements of” tortious interference but is supported from facts sufficient to infer a conspiracy between Levine and JOH or, at the very least, that JOH induced Levine to breach his confidentiality obligations to Acosta. Compare Wright, 2011 WL 2550361, at *3. Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 13 of 24 14 95077677_4 The cases cited by JOH in support of its contention that Acosta has failed to allege sufficient facts are distinguishable because those cases each involved conclusory allegations made on information and belief accompanying bare-bones, boilerplate recitations of the elements of the claims involved therein.3 The Third Circuit and district courts within this circuit have repeatedly denied motions to dismiss where, as here, sufficient facts have been alleged to support conclusions raised “on information and belief,” and particularly where the facts necessary to substantiate allegations made on information and belief are peculiarly within the defendant’s knowledge or control. See, e.g., McDermott, 649 F. App’x 263; Fowler, 578 F.3d 203; DePuy Synthes Sales, Inc. v. Globus Med., Inc., No. CV 17-1068, 2017 WL 1493365, at *14 (E.D. Pa. Apr. 26, 2017); Coface N. Am. Ins. Co. v. Reed Saul, Inc., No. CV 14-1044, 2016 WL 3406068 (W.D. Pa. June 21, 2016); Hess v. Nationwide Life Ins. Co., No. CIV.A. 15-692, 2015 WL 5472897 (W.D. Pa. Sept. 17, 2015); Greene v. BMW of N. Am., No. 2:11-04220 WJM, 2014 WL 47940 (D.N.J. Jan. 7, 2014); Saullo v. Borough of Nesquehoing, No. 3:10-CV-00824, 2011 WL 320566 (M.D. Pa. Jan. 28, 2011). JOH’s Motion to Dismiss should likewise be denied as a result. 3 See Vacaflor v. Pa. State Univ., No. 4:13-CV-00601, 2014 WL 3573593, at *5 (M.D. Pa. July 21, 2014) (declining to pierce corporate veil where plaintiff alleged that he believed his degree would come from Penn State rather than Penn College, without having alleged any facts whatsoever to support that conclusion); Wright, 2011 WL 2550361, at *2–3 (denying leave to amend complaint where, “after substantial fact discovery,” plaintiff sought to allege “on information and belief” that individual board members of her former company were her “employers” subject to liability under the FLSA, without having alleged any “facts showing how each additional defendant personally participated in the events giving rise to the alleged FLSA violation”); Shenango Inc. v. Am. Coal Sales Co., No. 2:06-CV-149, 2007 WL 2310869, at *2 (W.D. Pa. Aug. 9, 2007) (finding that plaintiff failed to state a claim under the heightened pleading standard required to pierce the corporate veil under Pennsylvania law, where plaintiff merely alleged that defendant “treated the assets of [the company in question] as his own, failed to observe corporate formalities, and that [the company] was a corporate shell that was operationally and financially dependent upon other entities controlled by” the defendant, and the plaintiff failed to otherwise allege “any facts regarding the time, place or manner of actual conduct that would support these conclusions” as required by the standard). Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 14 of 24 15 95077677_4 B. Acosta Enjoys Valid Contractual Relationships with Navitsky, Brown, and Levine. JOH next argues that Acosta has failed to state a claim for tortious interference because Navitsky’s Non-Solicitation Agreement is non-binding. JOH adopts the arguments that Navitsky made in his own motion to dismiss (Dkt # 17), that: (i) the Non-Solicitation Agreement is merely an employment policy that disclaims any contractual obligations and (ii) Navitsky’s execution of the Acknowledgement Form did not bind him to the Non-Solicitation Agreement’s terms. However, as more fully set forth in Acosta’s Response in Opposition to Navitsky’s Motion to Dismiss (Dkt # 23), which is expressly incorporated herein by reference: (i) the Acknowledgement Form sufficiently references and incorporates the Non-Solicitation Agreement such that Navitsky’s execution of the former binds him to the latter; (ii) the Non- Solicitation Agreement is a binding agreement and not merely an employment policy so the contract disclaimer language of the Acknowledgment Form is inapplicable, and (iii) JOH / Navitsky’s argument does nothing more than raise ambiguities in the language which would require a factual inquiry into the parties’ intent which would be inappropriate at this juncture. Each of these arguments is described briefly below. Moreover, importantly, Navitsky admitted that the Non-Solicitation Agreement was a binding contract, forwarding it to JOH “in extreme confidence” as “the only agreement of concern” as it related to Navitsky’s defection to JOH. See Compl. ¶ 45. Not to mention, JOH does not challenge the validity of Acosta’s contracts with Brown and Levine, which also serve as the basis for Acosta’s tortious interference claims. Thus, even if this Court were to find that the Non-Solicitation Agreement was not a valid contract as between Navistsky and Acosta, the tortious interference claim against JOH should still survive this Motion based on the existence of undisputed contractual relations between Acosta and Brown Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 15 of 24 16 95077677_4 and Levine. 1. The Acknowledgement Form Incorporates the Non-Solicitation Agreement. The Acknowledgement Form states: “After viewing/reading the required items listed below, initial next to the item. After completing all required items, sign this form and tum it in with your completed Employment Paperwork.” Compl. Ex. F. The Non-Solicitation Agreement is listed below such language, and Navitsky initialed next to the Non-Solicitation Agreement’s listing and signed at the bottom of the Form as instructed. See id. Florida law is clear that a party can enter into an agreement and be bound by its terms by signing another document that refers to it. See, e.g., Paucar v. MSC Crociere S.A., No. 13- 20235-CIV, 2013 WL 1345403, at *2 (S.D. Fla. Apr. 3, 2013), aff’d, 552 F. App’x 872 (11th Cir. 2014) (“Here, there is no dispute over the fact that Plaintiff signed the Agreement that incorporates the arbitration provision contained in the CBA.”); Rhein v. Kevelson, No. 14-61830- CIV, 2014 WL 6694744, at *3 (S.D. Fla. Nov. 26, 2014) (“Plaintiffs consented to the state court’s jurisdiction by signing the Waiver, which explicitly adopted and incorporated the February Settlement Agreement and July Settlement Agreement.”); Kote v. Princess Cruise Lines, Ltd., No. 10-61146-CIV, 2011 WL 4434858, at *1 (S.D. Fla. Sept. 23, 2011) (“Prior to beginning his employment with Defendant, Kote signed a contract which contained an arbitration provision and incorporated a separate terms & conditions of employment pamphlet.”); Sims v. Royal Carribean Cruises, Ltd., No. 08-22927-CIV, 2009 WL 10668496, at *2 (S.D. Fla. Jan. 21, 2009) (“Although the arbitration provision is found in the CBA, which is not signed by Plaintiff, “[a]n agreement in writing to arbitrate exists even where the arbitration language is not stated in the main contract itself but, rather, is contained in a separate contract that is incorporated by reference into the main contract.”) (citation omitted). Pennsylvania law is no Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 16 of 24 17 95077677_4 different. See, e.g., Sheet Metal Workers, Local 19 v. 2300 Grp., Inc., 949 F.2d 1274, 1286 (3d Cir. 1991) (“Because the Specialty Agreement incorporates by reference the terms of the Employer Agreement, A1–B1 is bound to the Employer Agreement as though it were an original signatory.”); see also U.S. Claims, Inc. v. Saffren & Weinberg, LLP., No. CIV.A. 07-0543, 2007 WL 4225536, at *5, *10 (E.D. Pa. Nov. 29, 2007) (Buckwalter, J.) (“It is axiomatic, under federal law, that ‘[w]here a writing refers to another document, that other document, or so much of it as is referred to, is to be interpreted as part of the writing.’ . . . The two agreements at issue are interdependent, as the acknowledgment agreements signed by the Defendants incorporate all of the terms of the purchase agreements signed by the clients. It is precisely these acknowledgment agreements that give rise to Defendants’ obligation to turn over the requested sums of money to Plaintiff.”) (citations omitted). Accordingly, through his review of the Non-Solicitation Agreement’s terms and his execution of the Acknowledgement Form, Navitsky agreed to be bound by the Non-Solicitation Agreement. 2. The Non-Solicitation Agreement is Not a Policy. Both JOH’s and Navitsky’s motions to dismiss contend that the Non-Solicitation Agreement is merely an employment policy and thus is subject to the Acknowledgement Form’s disclaimer language. JOH, like Navitsky, selectively highlights that language and tries to use it to establish, as a matter of law, that the Non-Solicitation Agreement is non-binding. However, the language relied upon expressly refers to Acosta’s “policies and procedures” listed on the form above, and not the “Non-Solicitation Agreement.” See Compl. Ex. E (emphasis added). The Non-Solicitation Agreement is not a policy or procedure and is neither identified as one on the Acknowledgement Form nor intended as such. Although the Non-Solicitation Agreement is Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 17 of 24 18 95077677_4 listed under the heading “Policies,” the Non-Solicitation Agreement is appropriately described as a “Non-Solicitation Agreement” – unlike every other document in that section, each of which is expressly described as a “policy.” See id. (emphasis added). “Contract headings do not constitute controlling evidence of a contract’s substantive meaning.” In re G-I Holdings, Inc., 755 F.3d 195, 203 (3d Cir. 2014) (citation omitted). Further, the substance of the Non-Solicitation Agreement itself is unquestionably structured and presented as a binding contract intended to survive beyond Navitsky’s employment. See, e.g., Compl. Ex. E § 4(a)(i) (“Employee agrees that for a period of twelve (12) months following termination by Employee, for any reasons, including resignation. . . .”) (emphasis added). If there was any doubt that the Non-Solicitation Agreement is intended to be a contract, such doubt should be resolved by the fact that the Non-Solicitation Agreement expressly extends beyond the term of Navitsky’s employment at Acosta because an employment policy, by its very nature, controls only during a term of employment.4 The Non-Solicitation Agreement, read as a whole, cannot be reasonably construed as merely a policy or procedure. Accordingly, each of the cases cited by JOH in support of this argument, including O’Brien v. Fifth Third Mortg. Co., No. CIV.A. 14-4776, 2015 WL 2337394 (E.D. Pa. May 14, 2015), which deal with contract disclaimers within employment policy handbooks, are inapposite. See Motion 10; O’Brien, 2015 WL 2337394 at * 10 (granting summary judgment on grounds that a “Severance Policy” contained within employee handbook 4 Moreover, the Non-Solicitation Agreement is identified within its own text as a “Non-Solicitation Agreement” in two places and states in its preamble that it is “entered by and between” Acosta and Employee. See Compl. Ex. E. Its preamble goes on to recite consideration and states that “Employee warrants and agrees as follows. . . .” Id. Throughout the body of the Non-Solicitation Agreement, some form of the verb “agree” is used at least nine other times, including in reference to the restrictive covenants contained in Paragraphs 3, 4, and 5. Id. The Non-Solicitation Agreement also contains sections labeled “Governing Law,” “Separate Agreement,” and “Effect on Prior Agreements,” each of which make clear that the Non-Solicitation Agreement is intended to be a legally binding contract and not a policy. Id. Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 18 of 24 19 95077677_4 dubbed a “Policy Manual” that expressly disclaimed the formation of a contract and required no signature or acknowledgement was not a binding agreement). 3. Contract Formation Is A Question of Fact. At best, the language of the Acknowledgement Form on which JOH relies creates ambiguity about the contract’s formation. However, resolving any question about whether the parties intended for the Non-Solicitation Agreement to be a valid and binding contract would require a factual inquiry, which would be inappropriate at this juncture and can only be resolved at trial. See Novoneuron Inc. v. Addiction Research Inst., Inc., 326 F. App’x 505, 508 (11th Cir. 2009) (“Rule 12(b)(6) should not be used to answer an apparent ambiguity, and the analysis of a 12(b)(6) motion is limited primarily to the face of the complaint and attachments thereto.”) (citation and quotation marks omitted) (reversing grant of motion to dismiss). Therefore, a Rule 12(b)(6) motion is not the proper vehicle for resolving any dispute about whether the Non- Solicitation Agreement is in fact an agreement, and JOH’s Motion should be denied. C. The Business Competitor’s Privilege Does Not Shield JOH from Tortious Interference with a Restrictive Covenant. JOH finally argues that its conduct, which it insists is merely “competition,” is protected by Pennsylvania’s “business competitors’ privilege.” However, the business competitor’s privilege does not apply where, as here, the competitor facilitates a breach of contract. The business competitors’ privilege “does not shield a company from tortious interference with an employee bound by a” restrictive covenant. See DePuy Synthes Sales, Inc. v. Globus Med., Inc., No. CV 17-1068, 2017 WL 1493365, at *14 (E.D. Pa. Apr. 26, 2017) (citations omitted). An employment contract may be only partially terminable at will. Thus it may leave the employment at the employee’s option but provide that he is under a continuing obligation not to engage in competition with his former employer. Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 19 of 24 20 95077677_4 Under these circumstances a defendant engaged in the same business might induce the employee to quit his job, but he would not be justified in engaging the employee to work for him in an activity that would mean violation of the contract not to compete. Id. (citation and alteration omitted) (denying motion to dismiss tortious interference claim). Here, JOH’s argument completely overlooks the primary aspect of Acosta’s tortious interference claim – JOH’s facilitation of Navitsky’s, Brown’s, and Levine’s breaches of their respective restrictive covenants and/or confidentiality agreements with Acosta. See Compl. ¶¶ 57–63. JOH’s contention that its conduct merely constitutes “competition” ignores the fact that it is alleged to have facilitated breaches of binding contractual relationships. Indeed, to highlight a different portion of the rule cited by JOH: “There is in general nothing wrong with one sports agent trying to take a client from another if this can be done without precipitating a breach of contract.” Speakers of Sport, Inc. v. ProServ., Inc., 178 F.3d 862, 865 (7th Cir. 1999) (emphasis added) (citations omitted); see also Motion 13. Navitsky and Brown may have had employment arrangements terminable at will but they were and still are subject to binding non-solicitation and confidentiality obligations for one year after such employment terminated. Levine remains subject to confidentiality obligations as well. These are the contracts alleged to have been breached with JOH’s tortious encouragement and assistance. Acosta alleges both that JOH tortiously interfered with: (1) Acosta’s contractual relationships with Navitsky, Brown and Levine, insofar as JOH facilitated the breaches of their restrictive covenants and confidentiality obligations; and (2) Acosta’s business relationships with its customers, who left Acosta to follow Navitsky, Brown, and Levine to JOH. These two independent aspects of Acosta’s tortious interference claims are necessarily intertwined. Therefore, no matter how one views Acosta’s tortious interference claims, the improper conduct alleged is based on the same unprivileged facilitation of Navitsky’s, Brown’s, and Levine’s Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 20 of 24 21 95077677_4 breaches of their respective restrictive covenants and confidentiality obligations with Acosta. Accordingly, JOH’s alleged conduct is not privileged, and its Motion to Dismiss should be denied. D. The Complaint Sufficiently Alleges Trade Secret Misappropriation and Unjust Enrichment Claims Against JOH. Finally, JOH incorrectly contends that Acosta failed to plead plausible claims for trade secret misappropriation (and unjust enrichment) against it because Acosta did not allege that JOH was involved in Navitsky’s misappropriation of Acosta’s trade secrets. Not only does JOH misrepresent the definition of “misappropriate” under both Pennsylvania and federal law, but it also clearly fails to realize that, as its employee, Navitsky acted on behalf of JOH. Thus, JOH’s liability for its misappropriation of Acosta’s trade secrets is two-fold: (1) Navitsky’s transferring of Acosta trade secret information onto JOH information systems and the use thereof, as a JOH employee; and (2) JOH’s mere receipt of such trade secret information. Acosta simply does not need to allege, as JOH seems to suggest, that another JOH employee was somehow involved in the misappropriation and/or use of Acosta’s trade secret information. Navitsky’s use of this information as a JOH employee or JOH’s receipt of such information, in and of themselves, is enough. JOH claims that “to establish misappropriation of a trade secret, plaintiff must show that the defendant used or disclosed information,” which is not necessarily the case. Rather, under both PUTSA and DTSA, the definition of “misappropriation” also includes the mere “acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means.” See 12 Pa.C.S. § 5302; 18 U.S.C. § 1839(5)(A). At the very least, JOH acquired Acosta’s trade secrets through Navitsky’s transfer of that information onto JOH’s information systems, knowing (or at least being charged with Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 21 of 24 22 95077677_4 knowledge) that this information was placed onto its systems in violation of Navitsky’s Non- Solicitation Agreement and Acosta’s rights under Pennsylvania and federal law. JOH’s contention that “Navitsky’s actions alone form the basis” for Acosta’s trade secret misappropriation claims (Counts III and IV) is thus misleading. The Amended Complaint specifically alleges misappropriation by Navitsky while he was a JOH employee, specifically, his transfer of Acosta trade secrets to his JOH laptop. Not only is JOH vicariously liable for Navitsky’s actions undertaken as a JOH employee, but also JOH generally received and housed Acosta’s trade secrets on its information systems when Navitsky transferred them there. See Bouton v. BMW of North America, Inc., 29 F.3d 102, 106 (3d Cir. 1994) (“Section 219(1) [of the Restatement 2d of Agency] holds employers responsible for torts committed by their employees within the scope of their employment”); Bro-Tech Corp. v. Thermax, Inc., 651 F. Supp. 2d 378, 419 (E.D. Pa. 2009) (Rufe, J.) (denying summary judgment on claim for vicarious liability against employer for employee’s trade secret misappropriation). The misappropriation of Acosta’s trade secrets accordingly goes beyond Navitsky’s mere copying and transfer of the data, to include JOH’s receipt of such information with knowledge of its impropriety – and the same is reflected in Acosta’s allegations within the Complaint. See, e.g., Compl. ¶¶ 43–47, 50–52, 57– 64. Similarly, Acosta has sufficiently alleged a cause of action against JOH for unjust enrichment. Just as JOH is liable for trade secret misappropriation via JOH employee Navitsky’s transfer of stolen data onto JOH’s information systems, Navitsky’s use of such information in connection with his employment with JOH in order to specifically benefit JOH constitutes the unjust enrichment of JOH. See Sovereign Bank v. B.J.’s Wholesale Club, Inc., 533 F.3d 162, 180–81 (3d Cir. 2008) ("To sustain a claim of unjust enrichment, a claimant must show that the Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 22 of 24 23 95077677_4 party against whom recovery is sought either wrongfully secured or passively received a benefit that it would be unconscionable for her to retain.") (citing Torchia v. Torchia, 499 A.2d 581, 582 (Pa. Super. Ct. 1985); Coplay Aggregates, Inc. v. Bayshore Soil Management, LLC, 2011 WL 2003689 at *5-6 (E.D. Pa. May 23, 2011) (allegation that one commercial party was unjustly enriched by receiving benefits from another party without paying for them was sufficient to state plausible claim for unjust enrichment). V. CONCLUSION Given the foregoing, JOH’s Motion to Dismiss should be denied. Respectfully submitted, Dated: October 19, 2017 /s/ Michael R. Phillips Michael R. Phillips (admitted pro hac vice) MCGUIREWOODS LLP 77 West Wacker Drive, 41st Floor Chicago, IL 60601 (312) 849-8100 (312) 849-3690 (Facsimile) mphillips@mcguirewoods.com Karla L. Johnson Admitted in the E.D. of Pennsylvania Pa. Id. No. 307031 MCGUIREWOODS LLP 625 Liberty Avenue, 23rd Floor Pittsburgh, Pennsylvania 15222 (412) 667-6000 (412) 667-6050 (Facsimile) kjohnson@mcguirewoods.com Counsel for Plaintiff Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 23 of 24 24 95077677_4 CERTIFICATE OF SERVICE I hereby certify that on this 19th day of October, 2017, a copy of the foregoing document was electronically filed with the Court’s electronic filing system, which will provide notice of the same to all parties indicated on the electronic filing receipt. /s/ Michael R. Phillips Case 5:17-cv-03282-EGS Document 43 Filed 10/19/17 Page 24 of 24