Adp, Llc v. Ultimate Software Group, Inc.

BRIEF in Opposition

D.N.J.February 7, 2017

MORGAN, LEWIS & BOCKIUS LLP (A Pennsylvania Limited Liability Partnership) 502 Carnegie Center Princeton, NJ 08540 (609) 919-6600 Richard G. Rosenblatt Thomas A. Linthorst Primitivo J. Cruz Robert A. Lewis (admitted pro hac vice) MORGAN, LEWIS & BOCKIUS LLP One Market, Spear Street Tower San Francisco, CA 94105-1596 (415) 442-1353 Attorneys for Plaintiff ADP, LLC IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY ADP, LLC, Plaintiff, v. ULTIMATE SOFTWARE GROUP, INC., Defendant. Civ. No. 2:16-cv-08664 CIVIL ACTION BRIEF OF PLAINTIFF ADP, LLC IN OPPOSITION TO DEFENDANT ULTIMATE SOFTWARE GROUP, INC.’S MOTION TO DISMISS COUNTS IV AND V OF THE COMPLAINT Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 1 of 28 PageID: 802 TABLE OF CONTENTS Page i I. PRELIMINARY STATEMENT ....................................................................1 II. LEGAL STANDARD ....................................................................................2 III. ARGUMENT..................................................................................................2 A. ADP Sufficiently Pleads a Claim for Corporate Raiding ....................2 1. ADP Need Only Plead Improper Motive or Improper Means .........................................................................................3 2. ADP Sufficiently Pleads “Improper Motive” ............................4 3. ADP Sufficiently Pleads “Improper Means”.............................8 B. ADP Sufficiently Pleads a Claim for Violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”)..................10 1. Florida Law Applies to the FDUTPA, and No Conflict of Law Exists................................................................................10 2. ADP Has Standing to Assert a FDUTPA Claim .....................11 3. ADP Sufficiently Alleges an Unfair Practice ..........................14 4. ADP Has Sufficiently Alleged Damages.................................18 IV. CONCLUSION.............................................................................................22 Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 2 of 28 PageID: 803 i TABLE OF AUTHORITIES Page(s) CASES A.S. Rampell, Inc. v. Hyster Co., 3 N.Y.2d 369 (1957) .............................................................................................7 Aceto Corp. v. TherapeuticsMD, Inc., 953 F. Supp. 2d 1269 (S.D. Fla. 2013) ...............................................................17 Akzo Nobel Coatings, Inc. v. Auto Paint & Supply of Lakeland, Inc., No. 8:09-CV-2453-T-30TBM, 2011 WL 5597364 (M.D. Fla. Nov. 17, 2011) .............................................................................................................12 Avtec Indus., Inc. v. Sony Corp. of Am., 205 N.J. Super. 189 (App. Div. 1985) ..........................................................3, 7, 8 Big Tomato v. Tasty Concepts, Inc., 972 F. Supp. 662 (S.D.Fla.1997) ........................................................................21 Bishop v. VIP Transportation Grp., LLC, No. 615CV2118ORL22KRS, 2016 WL 1253734 (M.D. Fla. Mar. 15, 2016) .............................................................................................................19 BPI Sports, LLC v. Labdoor, Inc., No. 15-62212-CIV-BLOOM, 2016 WL 739652 (S.D. Fla. Feb. 25, 2016) ...................................................................................................................19 Burger King Corp. v. Ashland Equities, Inc., 161 F.Supp.2d 1331 (S.D. Fla. 2001) .................................................................16 Caribbean Cruise Line, Inc. v. Better Bus. Bureau of Palm Beach Cty., Inc., 169 So. 3d 164 (Fla. Dist. Ct. App. 2015)..........................................................15 Coastal Physician Servs. of Broward Cty., Inc. v. Ortiz, 764 So. 2d 7 (Fla. Dist. Ct. App. 1999) ..............................................................14 Democratic Republic of the Congo v. Air Capital Grp., LLC, 614 F. App’x 460 (11th Cir. 2015) .....................................................................15 Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 3 of 28 PageID: 804 ii Dimartino v. BMW of N. Am., LLC, No. 15-8447 (WJM), 2016 WL 4260788 (D.N.J. Aug. 11, 2016) ...............11, 14 Dzielak v. Whirlpool Corp., 26 F. Supp. 3d 304, 340 (D.N.J. 2014)...............................................................11 Furmanite Am., Inc. v. T.D. Williamson, Inc., 506 F. Supp. 2d 1134 (M.D. Fla. 2007)..............................................................17 Grayson v. Mayview State Hosp., 293 F.3d 103 (3d Cir. 2002) .................................................................................2 Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250 (3d Cir. 1994) .................................................................................2 Lighthouse List Co., LLC v. Cross Hatch Ventures Corp., No. 13-60524-CIV, 2013 WL 11977916 (S.D. Fla. Aug. 13, 2013)............20, 21 Niles Audio Corp. v. OEM Sys. Co., 174 F. Supp. 2d 1315 (S.D. Fla. 2001) ...............................................................14 Phillips v. Cnty. of Allegheny, 515 F.3d 224 (3d Cir. 2008) .............................................................................2, 9 PNR, Inc. v. Beacon Property Management, Inc., 842 So. 2d 773 (Fla. 2003) ...........................................................................15, 16 Reckitt Benckiser Inc. v. Tris Pharma, Inc., 2011 WL 773034 (D.N.J. Feb. 28, 2011) .........................................................4, 5 Think Vacuums, Inc. v. March, 2011 WL 579201 (S.D. Fl. Feb. 9, 2011) (noting that the 2001 amendments effectively revised the traditional definition of “unfair or deceptive” acts previously recognized under the Act) .............................16, 17 Wear-Ever Aluminum, Inc. v. Townecraft Indus., Inc., 75 N.J. Super. 135 (Ch. Div. 1962) ..........................................................3, 5, 6, 7 Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 4 of 28 PageID: 805 iii Worldwide, LLC v. Google, Inc., 188 F. Supp. 3d 1265, 1277 (M.D. Fla. 2016), reconsideration denied, No. 2:14-CV-646-FTM-29CM, 2016 WL 4409338 (M.D. Fla. Aug. 19, 2016), and motion to certify appeal denied, No. 2:14- CV-646-FTM-29CM, 2016 WL 4409339 (M.D. Fla. Aug. 19, 2016) ...................................................................................................................16 Wyndham Vacation Resorts, Inc. v. Timeshares Direct, Inc., 123 So. 3d 1149 (Fla. 5th DCA 2012)................................................................21 XTec, Inc. v. Hembree Consulting Servs., Inc., 183 F. Supp. 3d 1245, 1263 (S.D. Fla. 2016).....................................................17 STATUTES Fla. Stat. § 501.211(1)..............................................................................................21 Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 5 of 28 PageID: 806 1 I. PRELIMINARY STATEMENT Plaintiff ADP, LLC (“ADP”) filed this lawsuit against defendant Ultimate Software Group, Inc. (“USG”) because it learned — through discovery in the lawsuits it had brought to enforce agreements with its former employees who were hired by competitor USG — that USG had orchestrated the violations of the former ADP employees’ agreements and had gained access to ADP trade secrets and confidential information. ADP’s Complaint against USG alleges six causes of action: violation of the Defend Trade Secrets Act, copyright infringement, state law misappropriation of trade secrets, violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), corporate raiding, and tortious interference. In summary, ADP alleges that USG engaged in a scheme to raid ADP’s sales force, placed the former ADP employees into positions that violate their non-competition and non-solicitation agreements with ADP, and encouraged the former ADP employees to violate their non-disclosure agreements with ADP and disclose ADP trade secrets and confidential information. (Compl. ¶¶ 2-4, 28-40, 46-52) USG has now brought a motion to dismiss two of the six causes of action in the Complaint — Count IV for violation of FDUTPA and Count V for corporate raiding. As we discuss below, ADP’s Complaint sufficiently alleges claims both Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 6 of 28 PageID: 807 2 for violation of the FDUTPA and for corporate raiding. USG’s motion therefore should be denied in its entirety. II. LEGAL STANDARD In determining the sufficiency of a complaint, the Court must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in favor of the non-moving party. See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). Additionally, in evaluating a plaintiff’s claims, “a court looks only to the facts alleged in the complaint and its attachments without reference to other parts of the record.” Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). Even if a defendant’s motion to dismiss is granted, the district court should grant the plaintiff leave to amend within a set period of time, unless amendment of the complaint would be inequitable or futile. Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002). III. ARGUMENT We address USG’s arguments in the order they are presented in its motion. A. ADP Sufficiently Pleads a Claim for Corporate Raiding. USG’s motion to dismiss Count V of the Complaint for corporate raiding is premised on its assertion that ADP must “plead both an improper motive as well as an improper means” and has failed to do so. (Mot. at 3) But USG misstates the Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 7 of 28 PageID: 808 3 applicable legal standard, ignores the holdings of the very cases it cites, and ignores the relevant allegations in ADP’s Complaint. USG’s motion to dismiss as to Count V is therefore meritless and should be denied. 1. ADP Need Only Plead Improper Motive or Improper Means USG cites two cases, Avtec Indus., Inc. v. Sony Corp. of Am., 205 N.J. Super. 189, 194 (App. Div. 1985) and Wear-Ever Aluminum, Inc. v. Townecraft Indus., Inc., 75 N.J. Super. 135, 141-42 (Ch. Div. 1962), for the proposition that ADP must plead both an improper motive and an improper means to state a claim for corporate raiding. (Mot. at 3) But both cases refute USG’s proposition. Avtec explicitly recognizes that a corporate raiding claim may properly be premised on either proof of improper purpose or proof of improper means. 205 N.J. Super. at 194 (“The general rule appears to be that the mere inducement of an employee to move to a competitor is not in itself actionable where the employment is terminable at will, but that such inducement is actionable if the party offering the inducement either has an unlawful or improper purpose or uses unlawful or improper means.” (emphasis added)). Nor does Wear-Ever require a plaintiff to prove both improper purpose and improper means. To the contrary, its holding— that a defendant may be liable for corporate raiding if it fails to prove justification as to either alleged improper purpose or improper means—confirms that a plaintiff can prevail on a raiding claim with proof of either. 75 N.J. Super. at 142 (“The Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 8 of 28 PageID: 809 4 justification [for poaching] . . . must cover not only the motive and the purpose, or, in other words, the object sought, but also the means used.’”) Therefore, New Jersey law recognizes that it is sufficient for a plaintiff to plead either improper purpose or improper means to state a raiding claim. In any event, as discussed below, ADP has pleaded both sufficiently. 2. ADP Sufficiently Pleads “Improper Motive” USG offers scattershot arguments to support its assertion that ADP fails to sufficiently plead improper motive. None has any merit. USG first argues that ADP fails to allege “malice” beyond a mere conclusory allegation. (Mot. at 3) That argument is unavailing as a matter of law, since “malice” is a question of fact regarding the defendant’s state of mind that is not appropriate for resolution on a motion to dismiss. Reckitt Benckiser Inc. v. Tris Pharma, Inc., 2011 WL 773034, at *8 (D.N.J. Feb. 28, 2011) (denying motion to dismiss where complaint alleged intentional interference with plaintiffs’ expectation of economic benefit by wrongfully “tak [ing] and implement[ing] Plaintiffs’ trade secrets, and confidential information.”) Here, ADP alleges, among other things, that: USG has recruited and hired 15 former ADP employees (Compl. at ¶¶ 32-33); USG knowingly placed the employees into territories/positions that violated their agreements with ADP (id. at ¶¶ 32- 33, 38, 47, 49); USG did so to leverage the former employees’ knowledge Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 9 of 28 PageID: 810 5 of ADP’s confidential and trade secret information to harm ADP for USG’s own competitive advantage (id. at ¶¶ 36, 48, 50); USG’s conduct was a deliberate and coordinated strategy seeking to interfere with ADP’s ability to compete with USG in the market for what USG identifies as its “mid-market” and “strategic” customer segments (id. at ¶¶ 37, 46). Therefore, ADP’s Complaint sets forth “enough factual matter (taken as true) . . . to raise a reasonable expectation that discovery will reveal evidence of the necessary element . . . ‘malice,’” and thus, this is an issue of fact, “not appropriately decided on a motion to dismiss.” Reckitt Benckiser Inc., 2011 WL 773034, at *8. In any event, ADP does not allege a mere conclusion as to “malice,” but pleads facts that satisfy the definition of “malice.” That definition, although USG fails to mention it, is set out in the Wear-Ever case in the context (like the context here) of a defendant persuading a competitor’s employees to breach their contracts: “[I]f the persuasion be used for the indirect purpose of injuring the plaintiff, or of benefiting the defendant, at the expense of the plaintiff, it is a malicious act.”1 75 N.J. Super. at 141–42 (quoting Louis Kamm, Inc. v. Flink, 113 N.J.L. 582, 587-89 (E. & A. 1934)). The Wear-Ever court further explained: 1 This definition of “malice” – encompassing either “the purpose of injuring the plaintiff, or of benefiting the defendant” – refutes USG’s argument (Mot. at 3) that it could not act with “malice” because as ADP’s competitor it “hired former ADP employees for the benefit of [USG], not to harm ADP.” Either is sufficient to establish “malice.” Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 10 of 28 PageID: 811 6 Self-enrichment or fraternal interest, and not personal ill will, may well have been the motive; but it is malice nevertheless. While ill will toward a person is malice in its common acceptation or popular sense, in the technical, legal sense it is the intentional doing of a wrongful act without justification or excuse. * * * And a ‘wrongful act,’ within the intendment of this definition, is any act which, in the ordinary course, will infringe upon the rights of another to his damage. . . . Id. at 142 (quoting Louis Kamm). Thus, to sufficiently plead “improper motive” ADP need only allege facts that USG intentionally engaged in a wrongful act or acts, without justification or excuse, that infringed upon ADP’s rights and caused ADP damage. Indeed, the entirety of the Complaint is comprised of such allegations, including the allegations referenced above, and thus ADP easily satisfies this requirement. (Compl. ¶¶ 2-4, 32-50, 53-112) While USG may be correct that “merely persuading an employee to change jobs is not wrongful” (Mot. at 4), ADP alleges specific facts that go far beyond “mere persuasion” on the part of USG. Ignoring these allegations entirely, USG claims that “ADP makes the unsupported assertion that Ultimate acted with ‘malice.’” (Mot. at 3) But ignoring ADP’s allegations doesn’t make them disappear. ADP’s allegations are more than sufficient to establish “malice” under Wear-Ever and satisfy the “improper motive” pleadings requirement. USG half-heartedly asserts that its conduct cannot be construed as corporate raiding because USG did not poach “an entire sales department,” but only 15 sales Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 11 of 28 PageID: 812 7 persons from the thousands of persons that ADP employs worldwide.2 (Mot. at 4- 5) USG fails to cite any case law setting a minimum poaching threshold for corporate raiding, requiring the poaching of an entire department, or defining a “raid” as poaching more than 15 employees. Rather, USG cites dicta from Avtec (Mot. at 4) stating that “[a]n examination of the cases in which interference has been found discloses egregious conduct directed toward destruction of a competitor's business” (205 N.J. Super. at 195) and discussing the facts of Wear- Ever and another case. But USG’s conduct at issue here is significantly more egregious than the conduct at issue in Wear-Ever. There, plaintiff’s raiding claim was upheld even though defendant’s conduct was limited to using a “hidden persuader” to convince plaintiff’s at-will employees to join the defendant.3 75 N.J. Super. at 144. The Wear-Ever facts pale in comparison to USG’s orchestrated poaching of ADP employees with the intent to assign them to duties that necessarily violate their 2 As USG knows, the number of poached ADP sales employees (in about 20 months) is now up to at least 17, with two more joining USG after this case was filed and becoming defendants in individual lawsuits filed by ADP. Should ADP be granted leave to amend, it will add these allegations to an amended complaint. 3 The conduct in Avtec, the other case cited by USG, doesn’t help USG either. There the court overturned a jury’s finding of liability where defendant hired only one employee from plaintiff and proffered no supporting evidence of improper purpose or improper means. 205 N.J. Super. at 196. Nor do the facts of A.S. Rampell, Inc. v. Hyster Co., 3 N.Y.2d 369 (1957), the other case discussed in the Avtec dicta, help USG. There the plaintiff, a dealer-distributer of industrial equipment, alleged poaching of only three employees. 3 N.Y.2d at 375. Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 12 of 28 PageID: 813 8 non-competition and non-solicitation agreements with ADP and to use them to violate their non-disclosure agreements with ADP and disclose ADP trade secrets and confidential information. Because ADP has sufficiently alleged an improper motive, USG’s motion to dismiss Count V should be denied. 3. ADP Sufficiently Pleads “Improper Means” Even if ADP did not sufficiently plead “improper motive,” its claim for corporate raiding stands if it sufficiently pleaded that USG used improper means to poach ADP employees. Avtec, 205 N.J. Super. at 194. ADP does sufficiently plead “improper means.” USG cites Avtec for the definition of “improper means”: “Improper means includes ‘fraud, misrepresentation, intimidation, obstruction and molestation,’ as well as ‘conduct which fails to accord with generally accepted standards of morality.’” (Mot. at 6) Unable to credibly argue that ADP fails to allege “improper means” under that broad definition, USG instead focusses on just two of ADP’s allegations (Compl. ¶¶ 50, 93) and asserts that they are each “conclusory” and a “legal conclusion.” (Mot. at 6) On their face, both are fact allegations that are neither conclusory nor legal conclusions. But more importantly, those are not the only two allegations to plead “improper means.” Rather, the entirety of ADP’s Complaint contains fact allegations that USG used improper means – a failure to Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 13 of 28 PageID: 814 9 act in accord with generally-accepted standards of business morality – by adopting a strategy to poach ADP’s employees in order to have them violate their non- disclosure, non-competition and non-solicitation agreements with ADP. (Compl. ¶¶ 2-4, 32-50, 53-112) The Complaint alleges, among other things, that USG management knew that the ADP employees it solicited and hired had binding contractual non- competition, non-solicitation and non-disclosure duties with ADP, knowledge that came from involvement in lawsuits ADP brought in 1996 and 2008-2009 and from numerous management members’ former employment with ADP. (Id. at ¶¶ 2, 34, 39, 40-46) Despite that knowledge, USG’s management placed the former ADP employees into positions that necessarily breached their non-competition and non- solicitation agreements with ADP and encouraged the breach of the non-disclosure agreements by using and disseminating ADP trade secrets and confidential information in order to benefit USG and damage ADP. (Id. at ¶¶ 32-33, 47-50) Those are all specific factual allegations that must be taken as true for the purposes of a motion to dismiss. See Phillips, 515 F.3d at 234.4 4 USG also appears to argue that ADP is somehow required to allege a level of detail acceptable to USG, such as specific details about the personal relationships between the 15 ADP employees that USG poached and what they would have known. (Mot. at 7) USG cites no authority for its assertion that ADP must plead this or any particular level of specificity. Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 14 of 28 PageID: 815 10 ADP’s allegations go far beyond “mere recitations of the elements.” (Mot. at 7) They are more than sufficient to plead “improper means.” Therefore, USG’s motion to dismiss Count V should be denied. B. ADP Sufficiently Pleads a Claim for Violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”). USG offers four arguments to support its motion to dismiss Count IV, ADP’s claim for violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”): (1) Florida law does not apply, (2) ADP lacks standing, (3) ADP does not sufficiently allege an unfair practice, and (4) ADP does not plead damages. None of the arguments has merit. 1. Florida Law Applies to the FDUTPA, and No Conflict of Law Exists USG makes the unsupported assertion that Count IV creates a conflict of law (Mot. at 9) and then pointlessly spends four pages of its brief offering an inapplicable conflict of law analysis (id. at 9-12). No conflict of law issue is created by the FDUTPA claim. ADP explicitly asserts a claim for violation of a Florida statute, the FDUTPA. (Compl. ¶¶ 85-90) As alleged in the Complaint (¶ 8) and as admitted by USG in its answer (Ans. ¶ 9) and its motion (Mot. at 9), the Court has supplemental jurisdiction over this claim. There is only one body of law applicable to a Florida statute, and that is the law of Florida. Therefore, no conflict Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 15 of 28 PageID: 816 11 of law exists, and there is no need for a conflict of law analysis. USG is simply wrong when it states, without citing any authority, that the Court “must apply the substantive law of the state to determine which substantive tort law applies to Count IV.”5 (Id.) The law of Florida applies to a claim for violation of a Florida statute, including the FDUTPA. Indeed, New Jersey federal courts can and do adjudicate FDUTPA claims, without the need for any conflict of law analysis. See Dzielak v. Whirlpool Corp., 26 F. Supp. 3d 304, 340 (D.N.J. 2014) (holding on a motion to dismiss that plaintiffs had stated a claim under the FDUTPA, as well as under New Jersey, California, Michigan, Ohio, and Indiana consumer protection laws, without requiring any conflict of law analysis); Dimartino v. BMW of N. Am., LLC, No. 15- 8447 (WJM), 2016 WL 4260788, at *5-7 (D.N.J. Aug. 11, 2016). 2. ADP Has Standing to Assert a FDUTPA Claim USG next argues that ADP lacks standing because ADP fails to allege that either (1) the actions causing injury occurred in Florida, or (2) the injury occurred 5 USG erroneously refers to the FDUTPA claim as a “state law tort claim” (Mot. at 9); the claim is for violation of a Florida statute, not a tort claim. USG is also wrong that, even if one were to apply the “most significant relationship” test, it would favor New Jersey. (Mot. at 11) To the contrary: (a) injury occurred in various places, including Florida (Compl. ¶¶ 33(i), (n), 85, 87-88); (b) the conduct causing injury occurred in Florida, where USG’s management is based (Compl. ¶¶ 2, 6); (c) USG’s place of business is Florida, where ADP also has offices, and (d) there is no “relationship” between the parties, although USG has poached ADP employees in Florida (Compl. ¶ 33(i), (n)). Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 16 of 28 PageID: 817 12 in Florida.6 (Mot. at 13-14) But that’s wrong because ADP sufficiently alleges both, even though either is enough to support the claim. The entirety of ADP’s Complaint alleges that USG’s management orchestrated the wrongful acts against ADP. While the Complaint frequently calls out USG management specifically, it generally refers to USG management as “USG.”7 ADP alleges (and USG admits) that USG’s principal place of business is in Florida. (Compl. ¶ 6; Ans. ¶ 6) ADP alleges that USG’s “unfair competition strategy is encouraged and directed by USG’s senior management, many of whom are former ADP employees” and that USG’s “senior management has participated in the wrongful conduct.” (Compl. ¶ 2) USG’s unfair competition strategy and wrongful acts toward ADP are described in paragraphs 2-4, 28-52 and 87-90 of the Complaint. ADP alleges that USG’s national sales and corporate leadership encouraged and acquiesced in USG’s regional sales directors’ assistance to and encouragement of former ADP employees to willfully violate their non- competition, non-solicitation and non-disclosure agreements with ADP. (Compl. ¶¶ 47-48) 6 Despite USG’s suggestions to the contrary, the FDUTPA is applicable to out-of-state residents. See Akzo Nobel Coatings, Inc. v. Auto Paint & Supply of Lakeland, Inc., No. 8:09-CV-2453-T-30TBM, 2011 WL 5597364, at *3-4 (M.D. Fla. Nov. 17, 2011) (holding that an out-of-state plaintiff has standing to sue under FDUTPA when the alleged wrongful acts occurred in Florida). 7 Should ADP be granted leave to amend, it would clarify, if necessary, that most references to “USG” in the Complaint relate to USG management in Florida. Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 17 of 28 PageID: 818 13 These actions by USG management harmed ADP and caused damages. (Compl. ¶ 89-90) Because USG’s management is located in Florida, the conduct of USG’s management that injured ADP occurred in Florida. ADP therefore sufficiently alleges that the actions causing injury occurred in Florida. ADP also alleges that it was injured in Florida because at least two of the sales employees poached by USG worked for ADP in Florida and because USG targeted and misappropriated ADP customers in Florida. ADP alleges that USG poached Stacy Farsolas, who was “based out of the Florida Panhandle covering the surrounding region for ADP’s National Account Services division,” and poached Mark Fesperman, who worked as a “geo district manager for the Alabama/Mississippi/Florida region.” (Compl. ¶ 33(i), (n)) Additionally, ADP alleges that USG “poached these employees and others and deployed them in breach of their ADP employment agreements, using ADP’s misappropriated trade secrets, to target and misappropriate ADP’s customers in Florida and elsewhere.”8 (Compl. ¶¶ 85, 87-88) Therefore, ADP also sufficiently alleges that injury occurred to ADP in Florida.9 8 Should ADP be granted leave to amend, it could provide more-detailed allegations supporting injury occurring to ADP in Florida. 9 The cases USG cites do not support its argument. Ajose v. Interline Brands, Inc. holds that the FDUTPA “protects non-Florida consumers only when the Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 18 of 28 PageID: 819 14 3. ADP Sufficiently Alleges an Unfair Practice USG erroneously argues that ADP does not sufficiently allege an “unfair practice” under the FDUTPA because it requires an allegation of “injury or detriment to a consumer.” (Mot. at 15) USG ignores the stated intent of the Florida Legislature in amending the FDUTPA in 2001 to extend it to competitors, misstates the case law, and disregards the litany of cases that have upheld FDUTPA claims similar to those alleged by ADP here. The FDUTPA after 2001 does not require injury to a consumer. Although USG fails to mention it, in amending the FDUTPA in 2001 “the Florida Legislature's replacement of the word consumer with the word person demonstrates an intent to allow a broader base of complainants, including competitors” to sue under the Act. Niles Audio Corp. v. OEM Sys. Co., 174 F. Supp. 2d 1315, 1319–20 (S.D. Fla. 2001) (emphasis added). Indeed, the post-2001 FDUTPA requires that it “be construed liberally to . . . protect the consuming alleged wrongful conduct occurred within the State of Florida.” 187 F. Supp. 3d 899, 910 (M.D. Tenn. 2016). While USG cites this case for the proposition that ADP must allege that the “actions causing injury occurred predominantly or entirely within Florida,” Ajose makes no such holding and the phrase “predominantly or entirely” is a quote from the plaintiff’s complaint. Coastal Physician Servs. of Broward Cty., Inc. v. Ortiz, 764 So. 2d 7 (Fla. Dist. Ct. App. 1999), makes no mention of any standard applicable to out-of-state defendants alleging in-state conduct. In Stein v. Marquis Yachts, LLC, unlike here, no conduct relevant to plaintiff’s FDUTPA claim occurred in Florida. No. 14-24756-CIV, 2015 WL 1288146, at *6 (S.D. Fla. Mar. 20, 2015) (“Plaintiff's FDUTPA claims, by their own language, arise out of the sale of the goods, which occurred in Canada, not Florida.”) Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 19 of 28 PageID: 820 15 public and legitimate business enterprises from those who engage in . . . unconscionable, deceptive, or unfair acts.” Democratic Republic of the Congo v. Air Capital Grp., LLC, 614 F. App’x 460, 468 (11th Cir. 2015) (quoting Fla. Stat. § 501.202(2)) (emphasis added). USG’s argument relies on pre-amendment language. USG references PNR, Inc. v. Beacon Property Management, Inc., 842 So. 2d 773, 777 (Fla. 2003), that cites pre-2001 cases for a definition of “unfair practice” as “one that ‘offends established public policy’ and one that is ‘immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers’.”10 (Mot. at 15) The cases from which the PNR court takes its language all pre-date Florida’s July 1, 2001 amendment of the FDUTPA, which amendment expressly removed the consumer requirement for bringing private causes of action seeking damages.11 Therefore, 10 The PNR language is also dicta, not a binding holding as USG implies. The sole issue presented to and decided by the court was whether “the FDUTPA applies to private causes of action arising from single unfair or deceptive acts in the conduct of any trade or commerce, even if it involves only a single party, a single transaction, or a single contract.” PNR, Inc., 842 So. 2d at 775. The definition of “unfair practice” was not before the court. 11 Another case USG cites, Caribbean Cruise Line, Inc. v. Better Bus. Bureau of Palm Beach Cty., Inc., 169 So. 3d 164, 169 (Fla. Dist. Ct. App. 2015), confirms that case holdings as to consumer requirements under the pre-July 1, 2001 FDUTPA are “no longer applicable based on [an] analysis of the statute as amended.” Despite the necessary recognition that pre-2001 cases cannot support a consumer-harm requirement for a post-2001 FDUTPA claim, that court in its own dicta reiterated the PNR definition dicta. Even if injury to a consumer were Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 20 of 28 PageID: 821 16 even if PNR recited the pre-2001 definition of “unfair practice,” the reference to “injurious to consumers” cannot survive in the definition once the consumer requirement was removed from the FDUTPA in 2001.12 Modern Florida opinions acknowledge the appropriate use of a broad standard to evaluate unfair or deceptive practices under the post-2001 FDUTPA, noting that harm to “competitors or other businessmen” are viable injuries that fall under an “unfair” or “deceptive” practice. See Think Vacuums, Inc. v. March, 2011 WL 579201 (S.D. Fl. Feb. 9, 2011) (emphasis added) (noting that the 2001 amendments effectively revised the traditional definition of “unfair or deceptive” acts previously recognized under the Act). Cases decided after the 2001 amendment have interpreted the FDUTPA to find that allegations of tortious business conduct by a plaintiff’s competitor sufficiently plead unfair or uncompetitive practices under the Act. See, e.g., e- ventures Worldwide, LLC v. Google, Inc., 188 F. Supp. 3d 1265, 1277 (M.D. Fla. 2016), reconsideration denied, No. 2:14-CV-646-FTM-29CM, 2016 WL 4409338 (M.D. Fla. Aug. 19, 2016), and motion to certify appeal denied, No. 2:14-CV-646- required for a FDUTPA claim after 2001, should ADP be granted leave to amend, it could provide such allegations. 12 USG also cites Burger King Corp. v. Ashland Equities, Inc., 161 F.Supp.2d 1331 (S.D. Fla. 2001), but it was decided in March, 2001 referencing the pre- amendment version of the FDUTPA and is therefore inapposite. Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 21 of 28 PageID: 822 17 FTM-29CM, 2016 WL 4409339 (M.D. Fla. Aug. 19, 2016) (denying motion to dismiss because FDUTPA claim was sufficiently pleaded by alleging anticompetitive and punitive reasons for interference by competitor); Furmanite Am., Inc. v. T.D. Williamson, Inc., 506 F. Supp. 2d 1134, 1146–47 (M.D. Fla. 2007) (denying summary judgment for defendant on FDUTPA claim involving allegations of unfair practices from competitors’ plan to raid plaintiff’s employees as a method to gain access to confidential and trade secret information and holding that FDUTPA “allow[s] a plaintiff to seek damages despite a failure to allege that the unfair and deceptive conduct arose from a ‘consumer transaction.’”); XTec, Inc. v. Hembree Consulting Servs., Inc., 183 F. Supp. 3d 1245, 1263 (S.D. Fla. 2016) (denying competitor’s motion for judgment as a matter of law finding alleged wrongful solicitation of plaintiff’s former sub-contractor to gain access to confidential and proprietary information supported a claim under FDUTPA distinct from the alleged trade secret misappropriation claims); Think Vacuums, Inc., 2011 WL 579201, at *2 (granting summary judgment in favor of plaintiff finding FDUTPA claim can be maintained where harm arose from unfair practice to competitors or other businessmen); Aceto Corp. v. TherapeuticsMD, Inc., 953 F. Supp. 2d 1269, 1287 (S.D. Fla. 2013) (denying motion to dismiss where plaintiff alleged that it is a legitimate business enterprise and that defendants engaged in wrongful activities in trade and commerce). Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 22 of 28 PageID: 823 18 These cases confirm that the unfair and anti-competitive acts alleged in the Complaint are sufficient to support a plausible FDUTPA claim by ADP against its competitor USG. ADP has sufficiently alleged an unfair practice in the coordinated plan by USG to raid ADP employees and violate their binding restrictive covenants with ADP to gain an uncompetitive advantage and unlawful access to confidential and trade secret information. 4. ADP Has Sufficiently Alleged Damages USG argues that ADP has failed to allege that USG’s conduct proximately caused actual damages to ADP, but that argument both ignores ADP’s allegations and misstates the applicable law. Moreover, since ADP also seeks injunctive relief under the FDUTPA, USG’s argument cannot support dismissal of the claim on this ground in any event. USG characterizes ADP’s damages claim as an allegation that ADP has “incurred damages.” (Mot. at 16) To the contrary, ADP alleges that USG poached ADP employees and induced them to violate their agreements with ADP and disclose ADP’s trade secrets so that USG could take ADP’s current and prospective customers. (Compl. ¶¶ 2-4, 26-28, 37, 47, 85-90) These allegations sufficiently allege actual damages that ADP suffered due to USG’s acts. USG argues that the FDUTPA permits recovery only of “actual damages” and that what ADP alleges all come within the category of consequential damages. Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 23 of 28 PageID: 824 19 For support, USG cites BPI Sports, LLC v. Labdoor, Inc., No. 15-62212-CIV- BLOOM, 2016 WL 739652 (S.D. Fla. Feb. 25, 2016), where plaintiff BPI, a dietary supplements maker, complained that it lost customers as a result of defendant Labdoor’s improper ranking and grading of BPI’s supplements. In that circumstance, any claimed lost profits resulting from customers reacting to adverse rankings and gradings would properly be considered consequential damages, which the BPI court defined as those “which do not necessarily result from the injury complained of or which the law does not imply as the result of that injury.” 2016 WL 739652, at *6. The holding of the BPI case is therefore inapplicable here. USG didn’t issue a rank or grade to ADP that caused ADP to lose business. Rather, USG poached ADP’s sales employees and then solicited and won ADP customers and potential customers in violation of the former ADP employees’ agreements with ADP. No case says Florida law characterizes that as consequential damages. Those are actual damages.13 Case law is replete with instances in which courts have upheld damage awards under the FDUTPA in fact circumstances similar to ADP’s allegations. In 13 Nor is this a circumstance where “it is not clear from the face of the complaint exactly what ‘expenses’ and ‘economic damage’ Plaintiff contends she suffered as a result of the alleged FDUTPA violation.” Bishop v. VIP Transportation Grp., LLC, No. 615CV2118ORL22KRS, 2016 WL 1253734, at *3 (M.D. Fla. Mar. 15, 2016) USG’s citation to Bishop is therefore also inapposite. Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 24 of 28 PageID: 825 20 E-Z Pack Manufacturing, LLC v. RDK Truck Sales & Service, Inc., the court denied a motion to dismiss a FDUTPA claim finding damages were sufficiently alleged in the form of lost sales, business goodwill and reputation, and lost business opportunities. No. 8:10-CV-1870-T-27AEP, 2011 WL 4343790, at *8 (M.D. Fla. Aug. 10, 2011), report and recommendation adopted, 2011 WL 3841631 (Aug. 30, 2011). The court in E-Z Pack found that such damages allegations plausibly supported a FDUTPA claim where the allegations stated fact demonstrating unfair trade practices from use of confidential information to solicit and interfere with the plaintiff’s customers and hire former employees. Id.; see also Lighthouse List Co., LLC v. Cross Hatch Ventures Corp., No. 13-60524-CIV, 2013 WL 11977916, at *9 (S.D. Fla. Aug. 13, 2013) (denying motion to dismiss where alleged damages for “lost sales, lost business good will and reputation, and lost business opportunities” were sufficient to state a FDUTPA claim relating to unfair practices surrounding the use of plaintiff’s confidential and proprietary information). In Britt Green Trucking, Inc. v. FedEx Nat’l, LTL, Inc., the court refused to dismiss a FDUTPA claim on summary judgment based on the characterization of plaintiffs’ damages when the fact of damages was in dispute. 2014 WL 3417569 (M.D. Fla. 2014) (“To what extent, if at all, Plaintiffs are to be awarded consequential damages is a question for the jury to decide, based on their Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 25 of 28 PageID: 826 21 determination of the weight to give the testimony of each expert.”) The plaintiffs in Britt alleged damages resulting from defendant's withdrawal of all work during the contractual notice period and propounded expert testimony to support its damages calculations. Id. at *9, 12. Finally, because ADP seeks injunctive relief under the FDUTPA, no basis to dismiss the FDUTPA claim exists even if ADP were unable to sufficiently allege actual damages. Regardless of whether ADP eventually proves actual damages, the FDUTPA also provides an injunctive relief remedy: “anyone aggrieved by a violation of this part may bring an action to . . . enjoin a person who has violated, is violating, or is otherwise likely to violate this part.” Fla. Stat. § 501.211(1). Thus, the statute allows “‘anyone aggrieved’ by a FDUTPA violation to seek injunctive relief, while only persons who have ‘suffered a loss’ may seek actual damages.” Id.; see Wyndham Vacation Resorts, Inc. v. Timeshares Direct, Inc., 123 So. 3d 1149, 1152 (Fla. 5th DCA 2012) (“[R]egardless of whether an aggrieved party can recover ‘actual damages’ under section 501.211(2), it may obtain injunctive relief under section 501.211(1)”); Big Tomato v. Tasty Concepts, Inc., 972 F. Supp. 662, 664 (S.D. Fla. 1997) (finding although the plaintiff did not have standing to pursue monetary damages under FDUTPA’s section 501.211(2), it properly pled a claim for injunctive relief under section 501.211(1)). Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 26 of 28 PageID: 827 22 ADP has sufficiently pleaded damages and/or injunctive relief under the FDUTPA, and therefore USG’s motion to dismiss Count IV should be denied. IV. CONCLUSION For the reasons stated, the Court should deny USG’s motion to dismiss in its entirety. Should the Court be inclined to grant any portion of USG’s motion, ADP asks that it be granted leave to amend its Complaint. Respectfully submitted, MORGAN, LEWIS & BOCKIUS LLP Dated: February 7, 2017 /s/ Primitivo J. Cruz Richard G. Rosenblatt Thomas A. Linthorst Primitivo J. Cruz 502 Carnegie Center Princeton, New Jersey 08540-7814 Telephone: (609) 919-0000 Facsimile: (609) 919-6701 richard.rosenblatt@morganlewis.com thomas.linthorst@morganlewis.com primitivo.cruz@morganlewis.com Robert A. Lewis (admitted pro hac vice) MORGAN, LEWIS & BOCKIUS LLP One Market, Spear Street Tower San Francisco, CA 94105-1596 (415) 442-1353 robert.lewis@morganlewis.com Attorneys for Plaintiff ADP, LLC Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 27 of 28 PageID: 828 CERTIFICATE OF SERVICE I hereby certify that on this 7th day of February, 2017, the foregoing Brief of Plaintiff ADP, LLC’s in Opposition to Defendant USG’s Motion to Dismiss Counts IV and V of the Complaint and accompanying Proposed Form of Order were filed via the Court’s ECF filing system and served upon the following: David Ward, Esquire Kluger Healey, LLC 106 Apple Street, Ste. 302 Tinton Falls, NJ 07724 dward@klugerhealey.com Charles C. Cantine, Esquire Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, NY 10038 ccantine@stroock.com Attorneys for Defendant and Counterclaim Plaintiff Ultimate Software Group, Inc. /s/ Primitivo J. Cruz Primitivo J. Cruz Case 2:16-cv-08664-KM-MAH Document 41 Filed 02/07/17 Page 28 of 28 PageID: 829 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY ADP, LLC, Plaintiff, v. ULTIMATE SOFTWARE GROUP, INC., Defendant. Civil Action No. 2:16-cv-8664 [PROPOSED] ORDER Document Electronically Filed AND NOW, this day of February, 2017, upon consideration of the partial Motion to Dismiss of defendant Ultimate Software Group, Inc. (“USG”) and plaintiff ADP, LLC’s (“ADP”) Brief in opposition thereto, it is hereby ORDERED that USG’s motion to dismiss Counts IV and V of the Complaint is DENIED; and it is FURTHER ORDERED that USG shall fully respond to the allegations set forth in the Complaint regarding Counts IV and V. It is so ORDERED. The Honorable Kevin McNulty, U.S.D.J. Case 2:16-cv-08664-KM-MAH Document 41-1 Filed 02/07/17 Page 1 of 1 PageID: 830