Adobe Systems Incorporated et al v. Gardiner et al

MOTION to Dismiss for Failure to State a Claim

D. Md.May 25, 2017

1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND ADOBE SYSTEMS INCORPORATED, et al. : : Plaintiffs : : v. : Case No. 8:17-cv-00648-GJH : JOHN GARDINER, et al. : : Defendants : DEFENDANT OPEN MARKET ENERGY LLC’S MOTION TO DISMISS PLAINTIFFS’ COMPLAINT COMES NOW, Defendant, Open Market Energy LLC, by and through its attorneys, Michael L. Rowan, Esquire, and Ethridge, Quinn, Kemp, McAuliffe, Rowan & Hartinger, brings this Motion to Dismiss Plaintiffs’ Complaint, pursuant to Federal Rules of Civil Procedure Rule 12(b)(6), and in support states as follows: 1. Plaintiffs have failed to state a claim as to Open Market Energy LLC upon which relief can be granted. 2. A Memorandum of Law in Support of Open Market Energy LLC’s Motion to Dismiss Plaintiffs’ Complaint is filed and incorporated as set forth herein. WHEREFORE, Defendant Open Market Energy LLC respectfully requests that Count IV (aiding and abetting breach of fiduciary duty), Count VIII (fraud) and Count IX (conspiracy to commit fraud) of Plaintiffs’ Complaint as to Defendant Open Market Energy LLC be dismissed. Case 8:17-cv-00648-GJH Document 19 Filed 05/25/17 Page 1 of 3 2 Respectfully submitted, ETHRIDGE, QUINN, KEMP, McAULIFFE, ROWAN & HARTINGER By:___________________________ Michael L. Rowan Bar No. 12980 33 Wood Lane Rockville, Maryland 20850 (301) 762-1696 Attorneys for Defendant Open Market Energy LLC REQUEST FOR HEARING Defendant Open Market Energy LLC respectfully requests a hearing on its Motion to Dismiss Plaintiffs’ Complaint. ______________________________ Michael L. Rowan /s/ Michael L. Rowan /s/ Michael L. Rowan Case 8:17-cv-00648-GJH Document 19 Filed 05/25/17 Page 2 of 3 3 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 25th day of May, 2017, a copy of the foregoing Defendant Open Market Energy LLC’s Motion to Dismiss Plaintiffs’ Complaint and Memorandum of Law in Support thereof were served, via the CM/ECF system, and first class mail, postage prepaid, upon: Kara L. Daniels (via CM/ECF) Michael A. Berta (via CM/ECF) Sean M. Callagy (via CM/ECF) Arnold & Porter Kay Scholer LLP 601 Massachusetts Ave., NW Washington DC 20001 Attorneys for Plaintiffs Craig James Franco (via CM/ECF) Odin Feldman & Pittleman, PC 1775 Wiehle Ave., Suite 400 Reston, VA 20190 Attorneys for Defendant Plurality Energy Solutions LLC VAR Solutions LLC (via first class mail) c/o Matthew Gardiner 4400 Fairfield Bethesda, MD 20814 ______________________________ Michael L. Rowan /s/ Michael L. Rowan Case 8:17-cv-00648-GJH Document 19 Filed 05/25/17 Page 3 of 3 1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND ADOBE SYSTEMS INCORPORATED, et al. : : Plaintiffs : : v. : Case No. 8:17-cv-00648-GJH : JOHN GARDINER, et al. : : Defendants : MEMORANDUM OF LAW IN SUPPORT OF OPEN MARKET ENERGY LLC’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT INTRODUCTION Plaintiffs, Adobe Systems Incorporated and Adobe Systems Federal, LLC, (collectively “Adobe Plaintiffs”) bring this action against Defendants John Gardiner, Open Market Energy LLC, Plurality Energy Solutions LLC, and VAR Solutions LLC, alleging a kickback scheme between Plaintiffs’ former salesperson employee, John Gardiner, and the three other entity Defendants. Plaintiffs’ Complaint seeks to recover monies alleged to have been “improperly paid” to Defendant Plurality Energy Solutions LLC, an entity which resold and licensed Plaintiffs’ Adobe Connect product to the federal government. (ECF No. 1, Plaintiffs’ Complaint ¶43). Specifically, as to Defendant Open Market Energy LLC, the Adobe Plaintiffs allege aiding and abetting breach of fiduciary duty (Count IV), fraud (Count VIII), and conspiracy to commit fraud (Count IX). Notably, within the sixteen pages of factual averments in forty-five numbered paragraphs leading up to the Adobe Plaintiffs’ causes of action, Defendant Open Market Energy LLC is mentioned only nine times. None of the factual averments state that Open Market Energy LLC ever took any action (or inaction); the Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 1 of 15 2 references merely identify what Open Market Energy is, who purportedly controls it, and where it is headquartered. (Plaintiffs’ Complaint ¶5, 7, 9, 16, 35, 36, 41, 44, 45). Open Market Energy is never named in the factual averments detailing the kickback scheme that the Adobe Plaintiffs allege was orchestrated by Defendants John Gardiner and Plurality Energy Solutions LLC. The Adobe Plaintiffs make no allegations that Open Market Energy LLC entered into a contract with Adobe, nor do Plaintiffs allege that Open Market Energy had any relationship, business or otherwise, with Adobe. Of further importance, besides conclusory statements, Plaintiffs’ Complaint fails to allege how and when any conduct of Open Market Energy caused harm to the Adobe Plaintiffs. Plaintiffs should not be granted leave to amend their Complaint as to Open Market Energy. The totality of facts regarding Open Market Energy are already known to Plaintiffs and Plaintiffs were unable to formulate any cause of action which should withstand dismissal. The Adobe Plaintiffs’ allegations as to Open Market Energy LLC in the aiding and abetting, fraud, and civil conspiracy causes of action fail to state a claim upon which relief can be granted. Accordingly, for the reasons set forth herein, the Adobe Plaintiffs’ Complaint must be dismissed as to Defendant Open Market Energy LLC. LEGAL STANDARD Defendant Open Market Energy LLC brings this Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Federal Rule of Civil Procedure 12(b)(6) requires that a motion to dismiss be granted if “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Gray v. Metts, 203 F. Supp. 2d 426, 428 (D. Md. 2002) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99 (1957)). Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 2 of 15 3 Under Rule 12(b)(6), a court is to accept all well-pled allegations of the complaint as true and to construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff. Id. at 430 (citing Ibarra v. United States, 120 F.3d 472, 473 (4th Cir. 1997)). A court, however, need not accept unsupported legal allegations, Revene v. Charles County Comm'rs, 882 F.2d 870, 873 (4th Cir. 1989), legal conclusions couched as factual allegations, Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932 (1986), or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979). “While 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 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (C.A.7 1994)). “Factual allegations must be enough to raise a right to relief above the speculative level.” Id. Federal Rule of Civil Procedure 9(b) applies a heightened pleading standard for fraud and requires that “in alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Plaintiffs’ Complaint fails to meet the pleading requirements and, thus, Counts IV, VIII, and IX alleged against Open Market Energy LLC must be dismissed. Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 3 of 15 4 ARGUMENT 1. Plaintiffs’ Aiding and Abetting Breach of Fiduciary Duty claim (Count IV) must be dismissed as to Open Market Energy LLC for failure to state a claim upon which relief can be granted. A. The Adobe Plaintiffs fail to allege any facts to support a claim for aiding and abetting as to Open Market Energy LLC. The Adobe Plaintiffs’ pleading of Count IV is precisely what the Rules of Civil Procedure seek to prevent and Courts have consistently dismissed: a barebones recitation of the elements of the cause of action. As the Supreme Court of the United States stated in Ashcroft v. Iqbal, Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. (Although for the purposes of a motion to dismiss we must take all the factual allegations on the complaint as true, we ‘are not bound to accept as true a legal conclusion couched as a factual allegation’). [Federal Rule of Civil Procedure] Rule 8 marks a notable and generous departure from the hypertechnical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2009); Fed. Rule Civ. Pro. 8(a)(2). To overcome a Motion to Dismiss and succeed on a claim of aiding and abetting, the following elements must be sufficiently pled: 1) Independent tortious conduct by the direct perpetrator of the tort; 2) Substantial assistance, aid, or encouragement to the principal tortfeasor; and 3) Actual knowledge of the aider and abettor of the wrongful conduct and his or her role in furthering such conduct. Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 4 of 15 5 Gray v. Kern, 124 F. Supp. 3d 600, 620 (D. Md. 2015) (citing Legacy Inv. & Mgmt., LLC v. Susquehanna Bank, 2014 WL 5325757 at *4 (D. Md. Oct 17, 2014)); Alleco, Inc. v. Harry & Jeanette Weinberg Found., 340 Md. 176 (Md. 1995). The Adobe Plaintiffs pled exactly, and only, that: Open Market Energy LLC “had actual knowledge of Mr. Gardiner’s breaches of fiduciary duties,” “provided substantial assistance or encouragement to Mr. Gardiner’s breaches,” and Open Market Energy LLC’s “conduct [was] a substantial factor in causing harm to Adobe.” (Plaintiffs’ Complaint ¶67, 68, 69). There is not a single fact pled by the Adobe Plaintiffs in Count IV, or the preceding forty-five numbered paragraphs, supporting that Open Market Energy had actual knowledge of any breach of fiduciary duty, substantially aided anyone breach a fiduciary duty, or that its conduct caused any harm to the Adobe Plaintiffs. In fact, Plaintiffs fail to state anywhere in the Complaint what exactly Open Market Energy’s conduct was, other than purportedly loaning1 $20,000 to Plurality Energy Solutions LLC. (Plaintiffs’ Complaint ¶36). Whether or not this allegation is accurate, the Adobe Plaintiffs have failed to make any connection how a loan at some unknown date by Open Market Energy LLC to Plurality Energy Solutions LLC caused harm to the Adobe Plaintiffs, let alone had anything to do with the Adobe Plaintiffs. The Plaintiffs’ Complaint is completely devoid of any other factual allegations regarding Defendant Open Market Energy LLC. 1 Defendant Open Market Energy disputes the allegation that it loaned $20,000 to Defendant Plurality Energy Solutions LLC, but at this Motion to Dismiss stage, the Court shall accept well-pleaded allegations as true. Fed. Rule Civ. Pro. 12(b)(6). Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 5 of 15 6 B. The underlying tort claims that the Adobe Plaintiffs allege Open Market Energy aided and abetted are not cognizable causes of action in Maryland and Plaintiffs have failed to state a claim as to the underlying tortfeasor (Defendant John Gardiner). Defendant Open Market Energy LLC adopts and incorporates the argument advanced by Defendant John Gardiner in Section 1 of his Memorandum in Support of his Motion to Dismiss (moving to dismiss Counts I, II, and III). While Maryland recognizes tort liability for aiding and abetting, it does not and cannot recognize the aiding and abetting of causes of action that do not exist under Maryland law nor causes of action that fail to state a claim as to the underlying tortfeasor. This Court has held that there is no independent cause of action for a breach of fiduciary duty when 1) the action seeks compensatory damages as opposed to equitable relief, and 2) the allegations in the breach of fiduciary duty count are relevant to and/or duplicative of other causes of action alleged. See Swedish Civil Aviation Admin. v. Project Management Enterprises, Inc., 190 F. Supp. 2d 785, 801 (D. Md. 2002) (citing Bresnahan v. Bresnahan, 115 Md. App. 226 (1997); Kann v. Kann, 244 Md. 689 (1997)). This Court in Kerby v. Mortgage Funding Corp., dismissed a breach of a fiduciary duty claim, holding that Maryland recognizes no “’universal or omnibus tort for the redress of breach of fiduciary duty,’ at least in a situation where other remedies exist, which is the case here as shown by the [Plaintiffs’] RESPA, TILA, breach of contract and various fraud claims.” 992 F. Supp. 787, 803 (D. Md. 1998) (citing Kann, 244 Md. at 803). The Court went on to dismiss the Plaintiffs’ aiding and abetting count, “as it alleges that the other defendants aided and abetted Mortgage Funding’s breach of fiduciary duty.” Id. Similarly, the Adobe Plaintiffs in this matter pled breach of fiduciary duty claims that are not independent causes of action and they have failed to state a claim upon which relief can be Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 6 of 15 7 granted as to the alleged tortfeasor, Defendant John Gardiner, thus Defendant Open Market Energy could not have aided and abetted those underlying claims. The underlying claims alleged are not cognizable causes of action in Maryland nor do they state a claim as to the underlying tortfeasor, and even if they did, the Adobe Plaintiffs have failed to state any facts supporting a claim for aiding and abetting by Open Market Energy. Accordingly, Plaintiffs’ Count IV as to Defendant Open Market Energy must be dismissed. 2. Plaintiffs’ Fraud and Conspiracy to Defraud claims (Counts VIII and IX) must be dismissed as to Open Market Energy LLC for failure to state a claim upon which relief can be granted. Fraud (Count VIII): To overcome a Motion to Dismiss and succeed on a claim of fraud, which is governed by a heightened pleading standard,2 the following elements must be sufficiently pled: 1) The defendant made a false representation to the plaintiff; 2) Its falsity was either known to the defendant or the representation was made with reckless indifference to the truth; 3) The misrepresentation was made for the purpose of defrauding the plaintiff; 4) The plaintiff relied on the misrepresentation and had the right to rely on it; and 5) The plaintiff suffered compensable injury resulting from the misrepresentation. 2 “Where a claim alleges fraud or mistake, a party must ‘state with particularity the circumstances constituting fraud or mistake.” Fed. Rule Civ. Pro. 9(b). “To satisfy Rule 9(b)’s heightened pleading standard, a plaintiff must allege facts establishing the ‘who, what, when, where, and how’ of the claimed fraud.” In re Municipal Mortg. & Equity, LLC, Securities and Derivative Litigation, 876 F. Supp. 2d 616, 625 (D. Md. 2012) (citing U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc. 525 F. 3d 370, 379 (4th Cir. 2008)). Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 7 of 15 8 Ellerin v. Fairfax Sav., F.S.B., 337 Md. 216, 229 (1995); Nails v. S & R, 334 Md. 398, 415- 416 (1994). The Adobe Plaintiffs have not even pled the first element: that Open Market Energy made a false representation to Plaintiffs, let alone any representation. The entirety of the undetailed factual allegations related to Open Market Energy contained in Adobe Plaintiffs’ Complaint include: • Defendant Plurality Energy Solutions LLC “remitted portions of the improperly received rebates to a company owned and controlled by Mr. Gardiner, called Open Market Energy LLC…” (Complaint ¶5); • “When Adobe learned of this [kickback] scheme, it promptly investigated the conduct of Mr. Gardiner, Plurality, OME, and VAR Solutions…Mr. Gardiner denied his connections with Plurality, OME and VAR solutions.” (Complaint ¶7); • “On information and belief, the building located at 7625 Wisconsin Avenue is the headquarters of Plurality, OME, and VAR Solutions, and Mr. Gardiner owns a stake in that building via a separate real estate investment vehicle... On October 5, 2012, Mr. Gardiner organized a meeting with Plurality officers at the headquarters of Plurality and OME…” (Complaint ¶35); • “On information and belief, Mr. Gardiner made this loan by causing his wholly- owned company OME to wire $20,000 to Plurality…” (Complaint ¶36); • “On information and belief, VAR Solutions subsequently transferred payments relating to the deal registrations to Mr. Gardiner, either directly, via transfers to OME, or via investments made on Mr. Gardiner’s behalf in other investment vehicles, such as the entity that owns the building in Bethesda, Maryland where OME and Var Solutions are headquartered.” (Complaint ¶41); • “On information and belief, VAR Solutions then remitted the funds to Mr. Gardiner, either directly, via OME, or by investing or depositing the funds on Mr. Gardiner’s behalf. In this manner, substantial investments were made on Mr. Gardiner’s behalf in various investment funds, one of which owned, among other properties, the building in which Plurality, OME and VAR Solutions were headquartered.” (Complaint ¶44); • Defendant John Gardiner “concealed” his connection with Open Market Energy and claimed that it was “solely owned and operated by Mr. Gardiner’s wife.” (Complaint ¶45). Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 8 of 15 9 None of the above allegations support any of the necessary elements of fraud as to Open Market Energy, and certainly do not rise to the Federal Rules of Civil Procedure 9(b) heightened pleading requirement, which requires details establishing the “who, what, when, where, and how” of the fraud. In re Municipal, 876 F. Supp.2d at 625. A “lack of compliance with Rule 9(b)’s pleading requirement is treated as a failure to state a claim under Rule 12(b)(6).” Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 FN 5 (4th Cir. 1999) (citing United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 901 (5th Cir. 1997)). The argument submitted and case law cited by the Adobe Plaintiffs’ in their opposition to Defendant Plurality Energy Solution’s Motion to Dismiss further supports a dismissal of Defendant Open Market Energy LLC. (ECF No. 16). While the Adobe Plaintiffs provide facts which they contend support each of the elements of fraud against Plurality, the Complaint contains nothing close to support for the elements of fraud as to Open Market Energy LLC. Plaintiffs agree that the “time, place, speaker, and contents” of misrepresentations must be pled to satisfy Rule 9(b), as well as an explanation how the misrepresentations caused harm, yet they have completely failed to do so as to Open Market Energy. Ellerin v. Fairfax Sav., F.S.B., 337 Md. 216, 229 (1995); Currie v. Wells Fargo Bank, N.A., 950 F. Supp.2d 788, 799 (D. Md. 2013). Conspiracy to Defraud (Count IX): As with the other two counts alleged against Open Market Energy, the Adobe Plaintiffs again pled only the barebone elements in an effort to state a claim for civil conspiracy. A civil conspiracy to commit fraud claim is also subject to the heightened pleading standard. “Claims of conspiracy to commit fraud must abide by Rule 9(b)’s Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 9 of 15 10 particularity requirement.” Hill v. Brush Engineered Materials, Inc., 383 F. Supp. 2d 814, 823 (D. Md. 2005) (citing Adams v. NVR Homes, Inc., 193 F.R.D. 243, 250 (D. Md. 2000)). To establish a claim for civil conspiracy, a plaintiff must allege: 1) A confederation of two or more persons by agreement or understanding; 2) Some unlawful or tortious act done in furtherance of the conspiracy or use of unlawful or tortious means to accomplish an act not in itself illegal; and 3) Actual legal damage resulting to the plaintiff. Van Royen v. Lacey, 262 Md. 94 (1971). To withstand dismissal, a plaintiff must “specifically allege the agreement itself, including its time, place, and the identity of the co-conspirators. Plaintiff must also allege what [the Defendant] specifically did to carry the conspiracy into effect.” Hill, 383 F. Supp. 2d at 825. The principal element of civil conspiracy is an agreement between parties. Brady v. Livingood, 360 F.Supp.2d 94, 104 (D.D.C. 2004) (citing Graves v. United States, 961 F. Supp. 314, 320 (D.D.C. 1997)). A “plaintiff must set forth more than just conclusory allegations of [the] agreement.” Jones v. Pohanka Auto North, Inc., 43 F.Supp.3d 554, 566 (D. Md. 2014) (quoting Brady v. Livingood, 360 F.Supp.2d 94, 104 (D.D.C. 2004)). “The complaint should include factual allegations that provide an indication of when and how the agreement was brokered and how each of the defendants specifically were parties to the agreement.” Jones v. Pohanka Auto North, Inc., 43 F.Supp.3d 554, 566 (D. Md. 2014) (citing Day v. DB Capital Grp., LLC, No. DCK 10-1658, 2011 WL 887554 at *6 (D. Md. Mar. 11, 2011)). Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 10 of 15 11 Plaintiffs’ Complaint merely alleges: • OME, along with the three other Defendants, “knowingly and intentionally misled Adobe by engaging in a scheme to obtain deals and submit fraudulent deal registrations to Adobe.” (Complaint ¶98); • OME and the three other Defendants “agreed to aid one another and participate in a common plan or scheme to participate in deals and submit fraudulent deal registrations to Adobe…” and “portions of Adobe’s payments for the fraudulent deal registrations were paid to OME and VAR Solutions, who then paid such fees to Mr. Gardiner…” (Complaint ¶99); • OME and the three other Defendants “were aware of the scheme to submit fraudulent deal registrations to Adobe and each Defendant intended to aid in the scheme.” (Complaint ¶100). Nowhere in these conclusory statements do Plaintiffs allege the requisite facts to support that Open Market Energy entered into an agreement with another party to commit unlawful or tortious acts done in furtherance of any conspiracy. Simply stating that “on information and belief, [the four Defendants] agreed to aid one another and participate in a common plan…” and “agreed to join in the common scheme…” does not support the existence of an agreement entered into by Open Market Energy LLC and any other Defendant or party. (Plaintiffs’ Complaint ¶99, 101). Even the allegation that Open Market Energy received funds from Plurality and was “aware of the scheme to submit fraudulent deal registrations to Adobe,” is not a sufficient showing that Open Market Energy entered into an agreement with another party to commit unlawful or tortious acts done in furtherance of a conspiracy. (Plaintiffs’ Complaint ¶99, 100). Allegations of conspiracy have been found sufficient where the plaintiff’s complaint referenced specific instances when alleged co-conspirators met and engaged in acts to defraud plaintiff. Day v. DB Capital Grp., LLC, No. DCK-10-1658, 2011 WL 887554 at *6 (D. Md. Mar. 11, 2011). The Adobe Plaintiffs’ Complaint alleges no details whatsoever regarding any meetings between Open Market Energy LLC and the other Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 11 of 15 12 Defendants to enter an agreement or how Open Market Energy LLC became a party to any agreement. Plaintiffs allege that a meeting in 2012 occurred at the office building where Open Market Energy is headquartered, but Plaintiffs do not allege that Open Market Energy participated in any meeting, let alone the substance of said meeting. (Plaintiffs’ Complaint ¶35). Again, the Adobe Plaintiffs’ own argument in support of their opposition to Defendant Plurality Energy Solution’s Motion to Dismiss supports a dismissal of the conspiracy claim brought against Open Market Energy. (ECF No. 16). Adobe contends that it provided the requisite level of detail to support a conspiracy claim against Plurality, but Plaintiffs’ Complaint is completely devoid of any detail of an agreement to which Open Market Energy LLC was a party. Adobe alleges “that Mr. Gardiner and Plurality actively coordinated the submission and approval of fraudulent deal registrations over the course of several years.” (ECF No. 16, Page 14). However, the Adobe Plaintiffs did not, and simply cannot, make those same allegations against Open Market Energy LLC. Punitive Damages: As the Adobe Plaintiffs have not even pled any factual allegations supporting a single element of fraud or conspiracy to commit fraud by Open Market Energy, their demand for punitive damages must be stricken. In Maryland, punitive damages may only be recovered for intentional torts, and then only if there is clear and convincing evidence of actual malice, i.e. malice characterized by evil motive, intent to injure, ill will, or fraud. Bowden v. Caldor, Inc., 350 Md. 4, 23 (1998). A request for punitive damages is also governed by a heightened pleading burden. See Scott v. Jenkins, 345 Md. 21, 34-35 (1997). Plaintiffs’ Complaint is completely devoid of specific facts establishing actual malice on Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 12 of 15 13 the part of Open Market Energy LLC. Bald assertions that purported conduct by Open Market Energy harmed the Adobe Plaintiffs do not suffice. The Adobe Plaintiffs have failed to state any facts supporting a claim of fraud or conspiracy to commit fraud. Accordingly, Plaintiffs’ Counts VIII and IX, and the request for punitive damages, as to Defendant Open Market Energy must be dismissed. 3. Plaintiffs’ Complaint should be dismissed as to Open Market Energy LLC with prejudice and Plaintiffs should not be granted leave to amend. Defendant Open Market Energy LLC anticipates that in the event this Court dismisses any or all of Plaintiffs’ claims, Plaintiffs will seek leave to amend pursuant to Federal Rule of Civil Procedure Rule 15(a)(2). Any amendment by the Adobe Plaintiffs as to Defendant Open Market Energy LLC will be futile, as Plaintiffs were already privy to the universe of facts related to Open Market Energy prior to filing their initial Complaint by virtue of owning Defendant John Gardiner’s computer. Defendant Gardiner, formerly employed by Adobe, is a member of Open Market Energy LLC. Upon Mr. Gardiner’s termination, Adobe took possession of his work computer and had access to all of the communications and documents contained therein (as well as any cloud-based data), including information pertaining to Open Market Energy LLC. In fact, the Adobe Plaintiffs had access to Defendant Gardiner’s computer and the information contained therein at all times during his employment. Defendant Gardiner made no attempt to hide his involvement with Open Market Energy LLC. Even with the information regarding Open Market Energy LLC, Plaintiffs were unable to sufficiently formulate viable causes of action and should not be given another bite at the apple. The Court is vested with the discretion to grant or deny leave to amend and denial should occur when “the amendment would be prejudicial to the opposing party, there has Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 13 of 15 14 been bad faith on the part of the moving party, or the amendment would be futile.” Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986). “The standard for futility is the same as a motion to dismiss under Fed. R. Civ. P. 12(b)(6).” Washington Gas Light Co. v. Prince George’s County Council Sitting as Dist. Council, 784 F. Supp.2d 565, 570 (2011) (citing Perkins v. United States, 55 F.3d 910, 917 (4th Cir. 1995) (amendment is futile if the amended claim would fail to survive the motion to dismiss). “Leave to amend should be denied on the ground of futility only when the proposed amendment is clearly insufficient or frivolous on its face.” Id. (quoting Cappetta v. GC Servs. Ltd. P’ship, No. 3:08 CV 288, 2009 WL 482474 at *4 (E.D. Va. Feb. 24, 2009)). It cannot be disputed that there is not, and never has been, any relationship, contractual or otherwise, between the Adobe Plaintiffs and Defendant Open Market Energy LLC. Additionally, Defendant Open Market Energy has never owed a duty to the Adobe Plaintiffs. The facts alleged in the Complaint cannot support any viable claim, rooted in contract or tort, against Defendant Open Market Energy. “Conduct is tortious in nature when it violates a duty owed to another individual, where that duty is imposed by law and not by contract.” Wilmington Trust Co. v. Clark, 289 Md. 313, 327 (1981). Specifically, as to fraud, one of the purposes of the Rule 9(b) heightened pleading standard is “to eliminate fraud actions in which all the facts are learned after discovery.” Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999) (citing United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Blue Cross Blue Shield of Georgia, Inc., 755 F. Supp. 1055, 1056-57 (S.D. Ga. 1990)). In declining to dismiss a fraud count, the Court must be satisfied that the plaintiff “has substantial prediscovery evidence of those facts.” Id. Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 14 of 15 15 The Adobe Plaintiffs have failed to state any claim upon which relief can be granted as to Defendant Open Market Energy and the Plaintiffs should not be granted leave to amend, as any amendments would be futile. CONCLUSION As the Adobe Plaintiffs’ Complaint is completely devoid of any factual allegations as to Open Market Energy LLC, Plaintiffs’ aiding and abetting breach of fiduciary duty (Count IV), fraud (Count VIII), and conspiracy to commit fraud (Count IX) claims brought against Defendant Open Market Energy LLC must be dismissed with prejudice. The claims are legally insufficient and fail to state a claim upon which relief can be granted, and, accordingly, Defendant Open Market Energy LLC respectfully requests that this Court grant its Motion to Dismiss Counts IV, VIII, and IX with prejudice. Respectfully submitted, ETHRIDGE, QUINN, KEMP, McAULIFFE, ROWAN & HARTINGER By:___________________________ Michael L. Rowan Bar No. 12980 33 Wood Lane Rockville, Maryland 20850 (301) 762-1696 mlr@eqkmrh.com Attorneys for Defendant Open Market Energy LLC /s/ Michael L. Rowan Case 8:17-cv-00648-GJH Document 19-1 Filed 05/25/17 Page 15 of 15 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND ADOBE SYSTEMS INCORPORATED, et al. : : Plaintiffs : : v. : Case No. 8:17-cv-00648-GJH : JOHN GARDINER, et al. : : Defendants : ORDER UPON CONSIDERATION of Defendant Open Market Energy LLC’s Motion to Dismiss Plaintiffs’ Complaint, and any opposition thereto, it is this the ______ day of _______________, 2017, by the United States District Court for the District of Maryland, hereby ORDERED, that Defendant Open Market Energy LLC’s Motion to Dismiss Plaintiffs’ Complaint be, and hereby, is GRANTED; and it is further ORDERED, that Count IV, VIII, and IX as to Defendant Open Market Energy LLC be, and hereby, are DISMISSED, with prejudice. _____________________________ George J. Hazel, Judge United States District Court for the District of Maryland Case 8:17-cv-00648-GJH Document 19-2 Filed 05/25/17 Page 1 of 1