Arkeyo, Llc v. Cummins Allison Corporation

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

E.D. Pa.November 18, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA ARKEYO, LLC, : : Plaintiff, : Civil Action : v. : : CUMMINS-ALLISON CORP., : No. 2:16-cv-04720 (ABB) : Defendant. : MOTION OF DEFENDANT, CUMMINS-ALLISON CORP., TO DISMISS COMPLAINT Pursuant to Federal Rules of Civil Procedure 12(b)(7) and 12(b)(6), Defendant, Cummins-Allison Corp. (“Cummins”), respectfully moves the Court to dismiss the Complaint, for the reasons set forth in the attached Memorandum of Law. /s/ Daniel R. Campbell William P. Schuman (pro hac vice) Daniel R. Campbell (pro hac vice) MCDERMOTT WILL & EMERY LLP 227 West Monroe Street, Suite 4400 Chicago, Illinois 60606 wschuman@mwe.com dcampbell@mwe.com Tel.: (312) 372-2000 Fax: (312) 984-7700 Lee A. Rosengard Chelsea A. Biemiller STRADLEY RONON STEVENS & YOUNG, LLP 2005 Market Street, Suite 2600 Philadelphia, Pennsylvania 19103 lrosengard@stradley.com cbiemiller@stradley.com Tel.: (215) 564-8000 Fax: (215) 564-8120 Attorneys for Defendant, Cummins-Allison Corp. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 1 of 30 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA ARKEYO, LLC, : : Plaintiff, : Civil Action : v. : : CUMMINS-ALLISON CORP., : No. 2:16-cv-04720 (ABB) : Defendant. : ORDER AND NOW, this ____day of _______________, 2016, upon consideration of the Motion of Defendant, Cummins-Allison Corp., to Dismiss Counts I through IV of Plaintiff’s Complaint, and any response thereto, it is hereby ORDERED that the Motion is GRANTED, and that Counts I through IV of Plaintiff’s Complaint are DISMISSED WITH PREJUDICE. BY THE COURT: ________________________________ Brody, J. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 2 of 30 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA ARKEYO, LLC, : : Plaintiff, : Civil Action : v. : : CUMMINS-ALLISON CORP., : No. 2:16-cv-04720 (ABB) : Defendant. : MEMORANDUM OF LAW IN SUPPORT OF MOTION OF DEFENDANT, CUMMINS-ALLISON CORP., TO DISMISS COMPLAINT William P. Schuman (pro hac vice) Daniel R. Campbell (pro hac vice) MCDERMOTT WILL & EMERY LLP 227 West Monroe Street, Suite 4400 Chicago, Illinois 60606 wschuman@mwe.com dcampbell@mwe.com Tel.: (312) 372-2000 Fax: (312) 984-7700 Lee A. Rosengard Chelsea A. Biemiller STRADLEY RONON STEVENS & YOUNG, LLP 2005 Market Street, Suite 2600 Philadelphia, Pennsylvania 19103 lrosengard@stradley.com cbiemiller@stradley.com Tel.: (215) 564-8000 Fax: (215) 564-8120 Attorneys for Defendant, Cummins-Allison Corp. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 3 of 30 - i - TABLE OF CONTENTS I. PRELIMINARY STATEMENT ........................................................................................ 1 II. FACTS PERTINENT TO CUMMINS’ MOTION TO DISMISS ..................................... 3 III. Legal Standard .................................................................................................................... 5 IV. THE COMPLAINT SHOULD BE DISMISSED BECAUSE ARKEYO FAILED TO JOIN METRO BANK ......................................................................................................... 5 A. Metro Bank Is a Required Party. ............................................................................. 6 B. Joinder of Metro Bank Is Not Feasible Due to Lack of Jurisdiction. ..................... 8 C. Because Joinder Is Not Feasible, Arkeyo’s Complaint Must Be Dismissed. ............................................................................................................... 9 V. ARKEYO fails to ALLEGE SUFFICIENT FACTS TO state a claim FOR RELIEF ...... 11 A. Arkeyo Fails to State a Claim for Breach of Contract. ......................................... 12 B. Arkeyo Fails to State a Claim for Misappropriation. ............................................ 13 C. Arkeyo’s Tortious Interference Claims in Courts III and IV Are Barred. ................................................................................................................... 16 1. Arkeyo’s Tortious Interference Claims Are Preempted by the ITSA .................................................................................................... 16 2. Arkeyo’s Tortious Interference Claims Are Barred by the “Gist of the Action” and Economic Loss Doctrines ................................. 17 D. Arkeyo’s Tortious Interference Allegations Fail to State a Claim. ...................... 19 VI. CONCLUSION ................................................................................................................. 21 Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 4 of 30 - ii - TABLE OF AUTHORITIES Page(s) Cases Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199 (3d Cir. 2009).....................................................................................................21 Alpha School Bus Co. v. Wagner, 391 Ill.App.3d 722 (1st Dist. 2009) .........................................................................................15 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................................................................................................11 Assembly Tech., Inc. v. Samsung Techwin Co., Ltd., 695 F.Supp.2d 168 (E.D. Pa. 2010) .........................................................................................21 Assicurazioni Generali, S.P.A. v. Clover, 195 F.3d 161 (3d Cir. 1999).....................................................................................................12 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .............................................................................................................5, 11 Chemtech Intern, Inc. v. Chemical Injection Technologies, Inc., 170 Fed.Appx. 805 (3d Cir. 2006) ...........................................................................................18 Cnty. of Hudson v. Janiszewski, 351 F. App’x 662 (3d Cir. 2009) ...............................................................................................5 Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263 (7th Cir. 1992) .................................................................................................14 Cronimet Holdings, Inc. v. Keywell Metals, LLC, 73 F.Supp.3d 907 (N.D. Ill. 2014) ...........................................................................................16 Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604 (3d Cir. 1995).......................................................................................................18 Ente Nazionale Idrocarburi v. Prudential Securities Group, Inc., 744 F.Supp. 450 (S.D.N.Y. 1990)..........................................................................................6, 9 Enza, Inc. v. We The People, Inc., 838 F.Supp. 975 (E.D. Pa. 1993) ...............................................................................................6 F&M Distributors, Inc. v. Am. Hardware Supply Co., 129 F.R.D. 494 (W.D. Pa. 1990) ...............................................................................................8 Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 5 of 30 - iii - First Health Group Corp. v. National Prescription Adm’rs, Inc., 155 F.Supp.2d 194 (M.D. Pa. 2001) ......................................................................12, 13, 14, 19 Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009).......................................................................................................5 Fox Controls, Inc. v. Honeywell, Inc., 2002 WL 1949723 (N.D. Ill. Aug. 22, 2002) ....................................................................16, 17 Glazer v Chandler, 200 A.2d 416,418 (Pa. 1964) ...................................................................................................18 Glenn v. Point Park College, 272 A.2d 895,899 (Pa. 1971) ...................................................................................................19 Gregoria v. Total Asset Recovery, Inc., 2015 WL 115501 (E.D. Pa. Jan. 8, 2015) ..................................................................................6 Hecny Transp., Inc. v. Chu, 430 F.3d 402 (7th Cir.2005) ....................................................................................................15 Homeamerican Credit, Inc. v. Vermillion, 1997 WL 793047 (E.D. Pa. Dec. 10, 1997) ...........................................................................8, 9 Jones v. ABN AMRO Mortg. Grp., Inc., 551 F. Supp. 2d 400 (E.D. Pa. 2008), aff’d, 606 F.3d 119 (3d Cir. 2010).................................8 Jones v. Philadelphia Parking Authority, 2015 WL 1378737 (E.D. Pa. Mar. 26, 2015) ...........................................................................11 Lawson v. CSX Corp., 1999 WL 778315 (E.D. Pa. Sept. 30, 1999) ............................................................................20 MSF, Inc. v. DiLazaro, 771 F.Supp.2d 382 (E.D. Pa. 2011) .........................................................................................20 Nat’l Auto Parts, Inc. v. Automart Nationwide, Inc., 2015 WL 5693594 (N.D.Ill. Sept. 24, 2015) ...........................................................................16 Neurosurgery & Spine Surgery, S.C. v. Goldman, 339 Ill.App.3d 177 (2d Dist. 2003) ..........................................................................................15 Patchen v. McGuire, No. CIV.A., 2012 WL 4473233 (E.D. Pa. Sept. 27, 2012) ............................................................................8 Peoples Mortgage Co., Inc. v. Federal Nat’l Mortgage Ass’n, 856 F.Supp. 910 (E.D. Pa. 1994) .............................................................................................19 Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 6 of 30 - iv - Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir. 2008).......................................................................................................5 Rashid v. Kite, 957 F.Supp. 70 (E.D. Pa. 1997) .................................................................................................8 Reger Dev., LLC v. National City Bank, 592 F.3d 759 (7th Cir. 2010) ...................................................................................................12 Sheinman Provisions, Inc. v. National Deli, LLC., 2008 WL 2758029 (E.D. Pa. July 15, 2008) ......................................................................17, 18 Strata Marketing, Inc. v. Murphy, 317 Ill.App.3d 1054 (1st Dist. 2000) .......................................................................................14 Thermal Zone Products Corp., v. Echo Engineering, Ltd., 1993 WL 358148 (N.D. Ill. Sept. 14, 1993) ............................................................................14 Thomas & Betts Corp. v. Panduit Corp., 108 F. Supp. 2d 968 (N.D. Ill. 2000) .......................................................................................16 Valley Forge Convention & Visitors Bureau v. Visitor’s Servs., Inc., 28 F. Supp. 2d 947 (E.D. Pa. 1998) .........................................................................................18 Whyham v. Piper Aircraft Corp., 96 F.R.D. 557 (M.D. Pa. 1982) ................................................................................................10 Wilson v. The Canada Life Assur. Co., 2009 WL 532830 (M.D. Pa. Mar. 3, 2009)................................................................................6 Wright v. Associated Ins. Companies Inc., 29 F.3d 1244 (7th Cir. 1994) ...................................................................................................11 Statutes 765 ILCS §§ 1065/1–1065/8 ....................................................................................................13, 15 Other Authorities 7 CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 1607 (3d ed. 2001) ..............................................................................................................................9 Federal Rule of Civil Procedure 12(b)(6) ..................................................................................5, 11 Federal Rule of Civil Procedure 12(b)(7) ................................................................................4, 5, 9 Federal Rule of Civil Procedure 19 ......................................................................................... 4-7, 9 Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 7 of 30 - 1 - I. PRELIMINARY STATEMENT Plaintiff, Arkeyo, LLC (“Arkeyo”), alleges that non-party United Kingdom-based Metro Bank PC (“Metro Bank”) breached its License Agreement with Arkeyo to purchase coin counting machines that are manufactured by Defendant, Cummins-Allison Corp. (“Cummins”). Indeed, it is Metro Bank’s purported breach that is the root of Arkeyo’s claims against Cummins for tortious interference with Arkeyo’s contract with Metro Bank (Count III), tortious interference with Arkeyo’s prospective contractual relations with Metro Bank (Count IV), breach of Cummins’ 2009 non-disclosure agreement with Arkeyo (“NDA”) by purportedly providing Arkeyo’s IP to Metro Bank (Count I), and misappropriation of Arkeyo’s trade secrets by providing Arkeyo’s IP to Metro Bank (Count II). Arkeyo speculates, for it pleads no facts, that Cummins caused Metro Bank to breach Metro Bank’s License Agreement with Arkeyo so that Cummins could replace Arkeyo as the supplier of Arkeyo’s software-based animation that resides in a separate computer connected to the Cummins coin counting machines that are made for Metro Bank. Cummins sells the machines to Arkeyo and Arkeyo resells them, with its animation software attached, to Metro Bank. Compl., ¶ 10. Arkeyo, fatally, fails to name Metro Bank as a defendant. As a consequence, Arkeyo cannot fairly proceed against Cummins, for without Metro Bank, Arkeyo is precluded from proving the very breach of contract by Metro Bank that is a necessary predicate to Arkeyo’s alleged claims against Cummins. Moreover, it would be unduly prejudicial to Metro Bank for the case against Cummins to proceed here. Arkeyo’s claims should, instead, be addressed, at one time, by the UK courts where Arkeyo agreed to litigate. In addition, and irrespective of Arkeyo’s above-described failure, Arkeyo fails to plead sufficient facts to state a plausible claim against Cummins. Arkeyo fails to attach the Metro Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 8 of 30 - 2 - Bank contract with which Arkeyo claims Cummins interfered. So Cummins attaches a copy here of what it understands is the Agreement between Arkeyo and Metro Bank. The Agreement shows, among other things, that Arkeyo must bring its claims against Metro Bank in the UK, and litigate them under UK law. It also shows that Arkeyo pleaded no actual facts that support any breach by Metro Bank, thereby further condemning Arkeyo’s claims against Cummins. Arkeyo also fails to attach the NDA that Arkeyo claims Cummins breached. So Cummins, again, attaches it here. It shows on its face that Arkeyo’s factless assertions are insufficient to state a claim against Cummins. Nor does Arkeyo plead any facts showing that Cummins misappropriated Arkeyo’s trade secrets or that Arkeyo’s purported IP even constitutes trade secrets. Arkeyo’s allegation that Cummins acted wrongfully so Cummins could supply to Metro Bank the animation software that Arkeyo has been supplying is not plausible. Arkeyo does not plead facts showing how or why Cummins misappropriated anything. Arkeyo does not assert facts showing that Cummins is even in the animation software business. In fact, Cummins is not. Further, the tortious interference claims must also be dismissed based on Illinois Trade Secrets Act (“ITSA”) preemption and the “gist of the action” and economic loss doctrines. Notably, the ITSA, which Arkeyo agrees governs here, requires a plaintiff who proceeds with a misappropriation claim in bad faith under the Act to reimburse the prevailing party for reasonable attorneys’ fees and costs it incurs in defending against the claim. Arkeyo’s ITSA claim is baseless. Upon the dismissal of Arkeyo’s Complaint, the Court should order Arkeyo to pay Cummins’ attorneys’ fees and costs. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 9 of 30 - 3 - II. FACTS PERTINENT TO CUMMINS’ MOTION TO DISMISS Cummins manufactures and sells coin counting machines. Cummins sold coin counting machines to Arkeyo. Arkeyo created software-powered animation requested by Metro Bank that is compatible with Cummins’ machines and provided it to Cummins. Cummins physically connected the device containing the animation software to the machines Cummins sold to Arkeyo. Arkeyo then resold the machines to Metro Bank in the United Kingdom for installation in the UK. Arkeyo claims it serviced the machines at various locations in the United Kingdom. Compl., ¶¶ 6-14.1 Arkeyo claims that Cummins and Arkeyo entered into the NDA, dated June 17, 2009, pursuant to which Arkeyo provided to Cummins “coin bin clearing, reporting and settlement, customer transaction reporting, communications protocols, and Arkeyo’s [animation] software.” Compl., ¶¶ 7, 9. Cummins attaches the NDA as Ex. A hereto. Arkeyo claims it entered into a License Agreement with Metro Bank in April 2010. Arkeyo claims Metro Bank agreed the License Agreement would last for 10 years after the date of installation of each machine, and that Metro Bank was not permitted unilaterally to terminate the agreement, ever. So, according to Arkeyo, Metro Bank had to continue purchasing from Arkeyo, forever, and breached that promise. Id., ¶¶ 11-13, 19-20. Not surprisingly, Arkeyo does not attach the License Agreement, for it says no such thing. Cummins attaches it as Exhibit B hereto. On May 11, 2016, “Metro advised Arkeyo that Metro was purporting to terminate the License Agreement.” Id., ¶ 19. According to Arkeyo “the License Agreement did not permit Metro Bank’s May 11, 2016 purported termination.” Id., at ¶ 20. 1 By citing to Arkeyo’s Complaint, Cummins does not admit any allegation therein. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 10 of 30 - 4 - Arkeyo claims it “recently learned that [Cummins’] personnel in the United States and abroad have induced Metro Bank to terminate the License Agreement and to begin purchasing the coin counting machines directly from defendant.” Id., at ¶ 18. Arkeyo does not allege facts showing how or from whom Arkeyo learned of Cummins’ purported inducement, when the inducement occurred, who at Cummins did the inducing and who at Metro Bank was induced. Arkeyo does not allege who at Cummins was aware of any terms of any agreement between Arkeyo and Metro Bank, including a term that purportedly forbids Metro Bank from switching vendors forever. Arkeyo does not allege whether Cummins has sold a single machine to Metro Bank since May 11, 2016. Arkeyo does not allege that Cummins has the ability to make Arkeyo’s software, or whether Cummins is even in the business of making animation software. Nor has Arkeyo alleged that Cummins would make more money by selling directly to Metro Bank, or that Cummins had any plausible reason to interfere with Arkeyo’s Agreement with Metro Bank. Arkeyo alleges “on information and belief” that Cummins has “reverse engineer[ed] Arkeyo’s software and has sold product with Arkeyo’s IP to “other of defendant’s customers.” Id., at ¶¶ 23, 25. Of course, Arkeyo alleges not one fact in support of its bald conclusion and factless “belief” that Cummins is selling Arkeyo’s product to anyone. Not to be outdone by its baseless, factless, allegations of wrongdoing, Arkeyo’s alleged damages are pure fantasy. According to Arkeyo, Metro Bank’s breach of contract and Cummins’ tortious interference caused Arkeyo to suffer at least $129 million in lost sales, just to Metro Bank. Of course, Arkeyo supplies no facts in support of this claim. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 11 of 30 - 5 - III. LEGAL STANDARD The Court should dismiss a complaint under Federal Rule of Civil Procedure 12(b)(7) if the plaintiff fails to join a party required under Rule 19. For the action to be dismissed on this basis, Cummins must show that (1) Metro Bank is required to be joined under Rule 19(a); (2) Metro Bank cannot be joined in this case; and (3) in equity and good conscience the action should not proceed without Metro Bank. Id. Additionally, the Court should dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) if it fails to state a claim upon which relief can be granted. In deciding a 12(b)(6) motion, courts consider whether the complaint contains sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although the Court must accept as true a complaint's well-pleaded allegations of fact, Phillips v. County of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008), it need not accept a Plaintiff's bald assertions or legal conclusions. Cnty. of Hudson v. Janiszewski, 351 F. App'x 662, 667 (3d Cir. 2009); see Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009) (“bare-bones” allegations cannot survive a motion to dismiss). IV. THE COMPLAINT SHOULD BE DISMISSED BECAUSE ARKEYO FAILED TO JOIN METRO BANK Metro Bank is the counter-party to Arkeyo’s License Agreement with which Arkeyo claims Cummins interfered. Whether Metro Bank breached the License Agreement, and what rights Metro Bank has under that Agreement, will need to be determined before the Court can address Arkeyo’s allegation that Cummins caused a breach of, or interfered with, the Agreement. Thus, Metro Bank is a necessary and indispensable party and must be joined as a defendant. FRCP 19(a). Yet, Metro Bank cannot be joined under the terms of its Agreement with Arkeyo. As a consequence, Arkeyo’s attempt to adjudicate Arkeyo’s claims against Cummins in this Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 12 of 30 - 6 - Court will result in the inconsistent, incomplete and inaccurate determination of rights and responsibilities as to both Metro Bank and Cummins. In equity and good conscience, this action should not be permitted to proceed here. FRCP 19(b). Accordingly, the Complaint should be dismissed for failure to join Metro Bank as a party under Rule 12(b)(7) of the Federal Rules of Civil Procedure. A. Metro Bank Is a Required Party. Rule 19(a)(1) provides, in pertinent part: A person . . . must be joined as a party if (A) in that person’s absence, the court cannot accord complete relief among existing parties, or (B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence may (i) as a practical matter impair or impede the person’s ability to protect the interest or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the claimed interest. Under Rule 19(a)(1)(B), if the absent party has a legally protectable interest relating to the subject matter of the action, as does Metro Bank here, the absent party falls squarely within this Rule. See Gregoria v. Total Asset Recovery, Inc., 2015 WL 115501, at *6 (E.D. Pa. Jan. 8, 2015). An absent party to an underlying contract is a necessary party to litigation that addresses the rights and liabilities of the parties to the contract. See id. (holding that the rights and liabilities of the parties are premised on a contract between plaintiff and an absent party and that “where rights sued upon arise from a contract all parties to it must be joined”) (citing Caribbean Telecommunications Ltd. V. Guyana Tel. & Tel. Co., 594 F.Sup;p.2d 522, 532 (D.N.J. 2009)); Enza, Inc. v. We The People, Inc., 838 F.Supp. 975, 979 (E.D. Pa. 1993) (holding that party to the underlying contract that was allegedly breached was an indispensable party); see also Ente Nazionale Idrocarburi v. Prudential Securities Group, Inc., 744 F.Supp. 450, 457-460 (S.D.N.Y. 1990) (dismissing tortious interference claims for failure to join a contracting party because “it Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 13 of 30 - 7 - cannot be denied that it would be necessary for us to construe several of the critical provisions of the Agreement”; “[a]lthough [plaintiff] argues that it is suing . . . in tort here, and that the contract action . . . is entirely separate . . ., we believe that such an argument elevates form over substance. . . .”). In determining whether joinder is feasible, the Court must determine that it has jurisdiction over the absent, required party. See, e.g., Wilson v. The Canada Life Assur. Co., 2009 WL 532830, at *3–9 (M.D. Pa. Mar. 3, 2009) (finding beneficiary under the policy was a necessary party whose nonjoinder, due to the court's lack of personal jurisdiction over that party, required dismissal of the action). The Court cannot determine the rights of the parties in this case without first determining Metro Bank’s right to terminate its License Agreement with Arkeyo, and whether Metro Bank in fact breached the License Agreement. Thus, Metro Bank has a substantial interest in the subject of this action. Moreover, without Metro Bank the risk of inconsistent verdicts is substantial. For example, a finding that Cummins tortiously interfered with the License Agreement between Arkeyo and Metro Bank would require a finding that Metro Bank breached the Agreement with Arkeyo. In a later action by Arkeyo against Metro Bank, Metro Bank would surely contest that finding, and if Metro Bank prevailed, inconsistent judgments would result. Further, if Metro Bank were to prove in another court that it did not breach the License Agreement with Arkeyo, then a decision in this Court finding tortious interference with that Agreement would be wrong, yet Cummins would be left without a remedy. Thus, leaving Metro Bank out of this case would most certainly “impair or impede” Metro Bank’s ability to protect its contractual rights and interests, and would put Metro Bank and Cummins at risk of incurring “double, multiple, or otherwise inconsistent obligations because of the interest.” FRCP 19. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 14 of 30 - 8 - B. Joinder of Metro Bank Is Not Feasible Due to Lack of Jurisdiction. While Arkeyo must join Metro Bank under Rule 19(a), Arkeyo cannot join Metro Bank under the License Agreement. That is because, based on the allegations of Arkeyo’s Complaint, this Court does not have jurisdiction over Metro Bank. The Complaint alleges that Metro Bank is “a London based bank,” and the machines were sold by Arkeyo “for Metro’s branches in Great Britain.” Compl., ¶¶ 1, 11. There are no allegations in the Complaint, for example, showing that Metro Bank had sufficient contacts with Pennsylvania to convey personal jurisdiction on this Court. Patchen v. McGuire, No. CIV.A., 2012 WL 4473233, at *14 (E.D. Pa. Sept. 27, 2012) (failing to allege sufficient facts supportive of personal jurisdiction resulted in dismissal of action). Moreover, the License Agreement between Arkeyo and Metro Bank provides that jurisdiction and venue for disputes arising under the License Agreement are exclusively in the UK, to be decided under UK law. Ex. B, ¶¶ 11-11.2. Arkeyo, for obvious reasons, did not attach the License Agreement to the Complaint. But Cummins is permitted to do so, since Arkeyo has referred to the License Agreement and made it integral to Arkeyo’s claims. See, e.g., Jones v. ABN AMRO Mortg. Grp., Inc., 551 F. Supp. 2d 400, 405 (E.D. Pa. 2008), aff'd, 606 F.3d 119 (3d Cir. 2010) (“[A] court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document. Otherwise, a plaintiff with a legally deficient claim could survive a motion to dismiss simply by failing to attach a dispositive document on which it relied.”) (quoting Pryor v. National Collegiate Athletic Ass’n., 288 F.3d 548, 560 (3d Cir. 2002)). Where a party must be joined, but cannot be joined, the Court must dismiss the plaintiff’s claims. See, e.g., Homeamerican Credit, Inc. v. Vermillion, 1997 WL 793047, at *6 (E.D. Pa. Dec. 10, 1997) (dismissing case for failure to join necessary parties); F&M Distributors, Inc. v. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 15 of 30 - 9 - Am. Hardware Supply Co., 129 F.R.D. 494, 498 (W.D. Pa. 1990) (holding that a party to underlying contract that was allegedly breached due to defendant’s conduct was necessary and indispensable party, because absent party was “a crucial and active participant in the very” breach of contract triggering defendant’s liability); Rashid v. Kite, 957 F.Supp. 70, 73-74 (E.D. Pa. 1997) (dismissing case for failure to join necessary party that signed underlying contract). C. Because Joinder Is Not Feasible, Arkeyo’s Complaint Must Be Dismissed. Under Rule 12(b)(7), where joinder of a required party is not feasible, a case must be dismissed, unless “in equity and good conscience, the action should proceed.” Rule 19(b). See Homeamerican Credit, 1997 WL 793047 at *4. In determining “equity and good conscience,” the Court considers: (1) the extent to which a judgment rendered in the person's absence might prejudice that person or the existing parties; (2) the extent to which any prejudice could be lessened or avoided by: (A) protective provisions in the judgment; (B) shaping the relief; or (C) other measures; (3) whether a judgment rendered in the person's absence would be adequate; and (4) whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder. FED. R. CIV. P. 19(b). “These factors . . . are not mutually exclusive, nor are they the only consideration that may be taken into account by the court in a particular case.” 7 CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 1607 (3d ed. 2001). Here, each of these factors favors dismissal of Arkeyo’s Complaint. Metro Bank’s interests most certainly will be prejudiced by a ruling in this Court that the contract between Metro Bank and Arkeyo was breached, which the Court must address in order to decide Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 16 of 30 - 10 - Arkeyo’s claims against Cummins. The matter is even more complex, because UK law rather than US law is to be applied to disputes under the License Agreement. Ex. B, ¶¶ 11-11.2. UK and US law might compel different or inconsistent results. See Ente, 744 F.Supp. at 456. In addition, Cummins would be harmed if the case proceeds without Metro Bank, because the defense to breach of contract that would be wielded by Metro Bank cannot be presented effectively without the presence of Metro Bank. Nor is there an effective way to shape the relief in order to lessen the prejudice to Metro Bank and Cummins. Arkeyo has no claims against Cummins if Metro Bank did not breach, or has the right to terminate, the License Agreement. Moreover, Arkeyo claims, without pleading any facts, that both Metro Bank and Cummins misappropriated Arkeyo’s trade secrets. See, Compl., ¶ 15 (“The License Agreement prohibits Metro from . . . copying, making derivative works from, or reverse engineering any of the software Arkeyo is licensing to Metro.”). Therefore, a determination that Cummins misappropriated Arkeyo’s trade secrets would necessarily be a determination that Metro Bank misappropriated Arkeyo’s trade secrets. Metro Bank cannot be untangled from any of the claims in this case, and no limitation or shaping of the judgment will eliminate prejudice to Metro Bank and to Cummins should this action proceed in Metro Bank’s absence. Nor are there any protective provisions that could be practically included in a judgment to reduce or avoid prejudice to Metro Bank and Cummins. The determination of whether Metro Bank breached the License Agreement is a predicate to a determination of whether Cummins tortiously interfered with the License Agreement. And, plainly, a judgment rendered without Metro Bank as a participant will not be fair or adequate. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 17 of 30 - 11 - As for the last factor, Arkeyo can have all of its claims against all parties fully and fairly adjudicated at one time, in a single forum, i.e., the United Kingdom. Arkeyo selected UK as the exclusive forum. Ex. B, ¶¶ 11-11.2. Disputes should be resolved in a single proceeding, to avoid repeated lawsuits on the same essential subject matter. See Whyham v. Piper Aircraft Corp., 96 F.R.D. 557, 563-64 (M.D. Pa. 1982) (dismissing case for failure to join necessary and indispensable parties because disputes could be resolved in single proceeding in Scotland). For all of these reasons, the Complaint should be dismissed in its entirety. V. ARKEYO FAILS TO ALLEGE SUFFICIENT FACTS TO STATE A CLAIM FOR RELIEF Pursuant to Rule 12(b)(6), a complaint's factual allegations “must be enough to raise a right to relief above the speculative level,” such that relief is plausible – not just possible. Twombly, 550 U.S. at 545, 555. If the allegations are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs “have not nudged their claims across the line from conceivable to plausible . . . .” Id. at 570 (internal quotations omitted). Arkeyo’s factual allegations must “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555; see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (stating that a complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”) (quoting Twombly, 550 U.S. at 570) (emphasis added). Labels and conclusions or a “formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555; Jones v. Philadelphia Parking Authority, 2015 WL 1378737, at *2 (E.D. Pa. Mar. 26, 2015); see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“Threadbare recitals of the elements of a cause of action,” “bare assertions,” and “conclusory statements” need not be considered when ruling on a motion to dismiss.). Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 18 of 30 - 12 - A. Arkeyo Fails to State a Claim for Breach of Contract. As an initial matter, Arkeyo failed to attach to its Complaint the NDA that it claims Cummins breached. Cummins attached it here, as Ex. A. See Wright v. Associated Ins. Companies Inc., 29 F.3d 1244, 1248 (7th Cir. 1994) (holding that documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff’s complaint and are central to his claim). Illinois law applies to the NDA and the relationship between Arkeyo and Cummins arising therefrom. Ex. A, § 5.2. The parties’ choice of law should be respected. See Assicurazioni Generali, S.P.A. v. Clover, 195 F.3d 161, 165 (3d Cir. 1999) (“[A] contract’s references to the laws of a particular state may provide persuasive evidence that the parties to the contract intended for that state’s law to apply.”). Therefore, this Court should apply Illinois law to Arkeyo’s claims against Cummins for breach of contract and misappropriation of trade secrets. See First Health Group Corp. v. National Prescription Adm’rs, Inc., 155 F.Supp.2d 194, 215 (M.D. Pa. 2001) (applying Illinois law to breach of contract claims and misappropriation, and Pennsylvania law to tortious interference with contract claims). Under Illinois law, in order to adequately state a claim for breach of contract, the plaintiff must plead specific facts which show (1) the existence of a valid and enforceable contract; (2) the performance of the contract by the plaintiff; (3) breach of the contract by defendant; and (4) a resulting injury to plaintiff. See Reger Dev., LLC v. National City Bank, 592 F.3d 759, 764 (7th Cir. 2010) (affirming dismissal of plaintiff’s breach of contract claim because the complaint “appear[ed] vacuous”). Arkeyo alleges that the 2009 NDA with Cummins “prohibits either party from unauthorized disclosure or use of the other’s confidential information for a period of three years after disclosure of the confidential information.” Compl., ¶ 7. Arkeyo claims that it “made Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 19 of 30 - 13 - additional Arkeyo IP available to defendant to enable defendant to make a series of modifications to defendant’s machines to comply with Metro’s requirements,” the last time in January, 2016. Compl., ¶ 16. Arkeyo then alleges that “Arkeyo has become aware” that Cummins “has incorporated Arkeyo IP into the ‘mm2’ coin counting machines that defendant has sold to other of defendant’s customers in the United States and abroad, and has not compensated Arkeyo for the use of the Arkeyo IP in this manner.” Compl., ¶ 23. However, these allegations do not come close to stating a claim for breach of the NDA. Arkeyo does not allege when any wrongful disclosures of Arkeyo IP were made by Cummins, to whom they were made or how they were made. Nor does Arkeyo allege how it “has become aware” of this conjured-up, purported activity of Cummins. Nor does Arkeyo allege any facts that make its naked, conclusory claim plausible, for Arkeyo contends that the software installed on Cummins’ coin counting machines was customized for Metro Bank’s particular specifications. Compl., ¶¶ 8, 11, 16. Nor does Arkeyo allege facts showing that Cummins has made a single sale to Metro Bank, or to any other customer. To the contrary, Arkeyo does not even allege that Metro Bank’s purported termination was effective immediately, or whether Metro Bank has bought any machines from Cummins. Nor does Arkeyo allege what confidential information Cummins disclosed to Metro Bank, or when it was disclosed. Arkeyo states nothing but unsupported conclusions in Count I. Count I should be dismissed. B. Arkeyo Fails to State a Claim for Misappropriation. Arkeyo’s claim in Count II for misappropriation of trade secrets is governed by the ITSA. Compl., ¶¶ 37-38. See 765 ILCS §§ 1065/1–1065/8. Arkeyo recites in its complaint the bald conclusion that Cummins “has misappropriated the Arkeyo IP within the meaning of the Act.” Id., at ¶ 39. But, Arkeyo sets forth not one well-pleaded fact in support of the claim. Mere recitation of the elements of a misappropriation of trade secrets claim is not enough to withstand Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 20 of 30 - 14 - a motion to dismiss. See First Health Group Corp. v. National Prescription Adm’rs, Inc., 155 F.Supp.2d 194, 218 (M.D. Pa. 2001) (applying the ITSA). Here, Arkeyo pleads far less, impermissibly “short handing” the pleading by simply referring the Court to the statute. In order to obtain relief under the ITSA, a party must plead actual facts that show the existence of a trade secret, actual or threatened misappropriation, and that the trade secrets were used in the defendant’s business. Id. (citing PepsiCo, Inc. v. Redmond, 54 F.3d 1262, 1269-70 (7th Cir. 1995)); see Strata Marketing, Inc. v. Murphy, 317 Ill.App.3d 1054, 1068 (1st Dist. 2000). In testing the viability of claims brought under the ITSA, “the Seventh Circuit has required a degree of specificity when defining certain pieces of information as trade secrets.” See Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263, 1266 (7th Cir. 1992) (“[I]t is not enough to point to broad areas of technology and assert that something there must have been secret and misappropriated. The plaintiff must show concrete secrets.”). Here, Arkeyo fails to allege facts that specifically identify its purported IP, or that provide a basis for claiming its property is a “trade secret.” Moreover, Arkeyo failed to plead facts, as distinguished from unsupported conclusions, that show how Cummins misused Arkeyo trade secrets. To qualify as a trade secret, the information must be sufficiently secret to derive economic value from not generally being known to other persons, and “the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality.” See First Health, 155 F.Supp.2d at 217. However, Arkeyo does not explain what information constitutes a trade secret, warrants trade secret protection, or has economic value as a result of its secretive nature, nor what Arkeyo has done to maintain its secrecy. The Complaint does not contain any facts that meet the definition of trade secrets under the ITSA. See, e.g., Thermal Zone Products Corp., v. Echo Engineering, Ltd., 1993 WL 358148, at *5 (N.D. Ill. Sept. 14, 1993) (“Although Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 21 of 30 - 15 - Plaintiffs have made blanket generalizations regarding the information and documentation of their cooking ovens, they have failed to specify with any exactitude which pieces of information actually constitute trade secrets. In order for this court to attempt to categorize the alleged material as a trade secret, it is necessary for the court to be directed as to how this information is unique and protected.”). These allegations do not satisfy the federal pleading standards, either. See Alpha School Bus Co. v. Wagner, 391 Ill.App.3d 722, 743 (1st Dist. 2009) (noting that a conclusory allegation should be rejected when deciding a motion to dismiss); Neurosurgery & Spine Surgery, S.C. v. Goldman, 339 Ill.App.3d 177, 182 (2d Dist. 2003) (“If, after disregarding any legal and factual conclusions, the complaint does not allege sufficient facts to state a cause of action, the trial court must grant the motion to dismiss.”). To the contrary, Arkeyo impermissibly describes its purported IP in the most conclusory, obtuse fashion. According to Arkeyo, the Arkeyo IP relates to “coin bin clearing, reporting and settlement, customer transaction reporting, communications protocols, and Arkeyo’s software.” Compl., ¶ 9. Not one fact is averred that identifies any actual trade secret. Nor does Arkeyo allege any facts that show any misappropriation by Cummins through improper means, or that Cummins impermissibly disclosed Arkeyo trade secrets to anyone. Arkeyo’s allegations are transparently baseless. As a consequence, Cummins is entitled to reimbursement from Arkeyo of Cummins’ reasonable attorneys’ fees and costs under the ITSA. See 765 ILCS 1065/5. Cummins requests that the Court, upon dismissing Arkeyo’s complaint, order Arkeyo promptly to reimburse Cummins for the reasonable attorneys’ fees and costs Cummins has incurred in defending this case. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 22 of 30 - 16 - C. Arkeyo’s Tortious Interference Claims in Courts III and IV Are Barred. 1. Arkeyo’s Tortious Interference Claims Are Preempted by the ITSA The ITSA preempts Arkeyo’s claims in Courts III and IV for tortious interference, because they are premised on the same facts that form the basis of its claim for misappropriation of trade secrets. See 765 ILCS § 1065/8(a); Hecny Transp., Inc. v. Chu, 430 F.3d 402, 404 (7th Cir.2005) (“This statute abolishes claims other than those based on contract arising from misappropriated trade secrets, replacing them with claims under the Act itself.”); Nat'l Auto Parts, Inc. v. Automart Nationwide, Inc., 2015 WL 5693594, at *4, *7 (N.D.Ill. Sept. 24, 2015). “Under Section 8 of the ITSA, non-contract causes of action are preempted to the extent that they are based on a misappropriation of trade secrets.”); Thomas & Betts Corp. v. Panduit Corp., 108 F. Supp. 2d 968, 971 (N.D. Ill. 2000) (“In other words, facts constituting a misappropriation of trade secrets give rise to liability under the ITSA, but not under any other state law theory.”). If a claim is arguably cognizable under the ITSA, then any claim that might have been available on those facts in the past is no longer available. See id., at 974 (finding tortious interference claims preempted by the ITSA).2 In its tortious interference claims in Counts III and IV, Arkeyo specifically incorporates and relies on its ITSA allegations from Count II. Compl., ¶¶ 45, 52. Arkeyo then reemphasizes its breach of contract and trade secret claims as the basis for its tortious interference claims by claiming that, “[b]y its conduct” as described in Counts I and II, Cummins interfered with Arkeyo’s current and future contracts with Metro Bank. Compl., ¶¶ 47, 54. Indeed, Arkeyo specifically so stated in the opening paragraph of its Complaint: “This case arises from 2 Arkeyo’s tortious interference claims are preempted, even if this Court agrees with Cummins that the Complaint insufficiently alleges that the information at issue in this case is a trade secret. See Cronimet Holdings, Inc. v. Keywell Metals, LLC, 73 F.Supp.3d 907, 920 (N.D. Ill. 2014) (“Illinois courts have read the preemptive language in the ITSA to cover claims that are essentially claims of trade secret misappropriation, even when the alleged ‘trade secret’ does not fall within the Act's definition.”). Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 23 of 30 - 17 - defendant’s misappropriation of Arkeyo’s trade secret technology and use of that technology to induce . . . Metro . . . to breach its contract with Arkeyo.” Compl., ¶ 1. Fox Controls, Inc. v. Honeywell, Inc., 2002 WL 1949723 (N.D. Ill. Aug. 22, 2002), is directly on point. In Fox Controls, like Arkeyo here, the plaintiff alleged a failure to return certain equipment (Arkeyo Compl., ¶ 25); failure to compensate the plaintiff for the alleged unlawful use of misappropriated information (Arkeyo Compl., ¶ 23); and interference with current or prospective relationships (Arkeyo Compl., ¶¶ 18, 23.) See id., at *2. The court in Fox Controls concluded that all of the factual allegations relating to the claim of misuse of confidential and proprietary information were “simply restatements of plaintiff’s claim for misappropriation of trade secrets, and are thus preempted by the ITSA.” Id.3 Like Fox Controls, Arkeyo’s claims for tortious interference are “based entirely on . . . misuse or misappropriation of confidential information.” See id., at *3. Those claims are preempted and should be dismissed. 2. Arkeyo’s Tortious Interference Claims Are Barred by the “Gist of the Action” and Economic Loss Doctrines The “gist of the action” doctrine bars tort claims that essentially complain of breach(es) of contract. See Sheinman Provisions, Inc. v. National Deli, LLC., 2008 WL 2758029, at *5 (E.D. Pa. July 15, 2008). As this Court stated in Sheinman: Courts have held that this doctrine bars tort claims: 1) arising solely from a contract between the parties; 2) where the duties allegedly breached were created by and grounded in the contract itself; 3) where liability stems from a contract; or 4) where the tort claim essentially duplicates a breach of contract claim or the success of the tort claim is wholly dependent on the terms of a contract. If Plaintiff's claim essentially alleges a breach of duties that flow from an agreement between the parties, the claim is contractual in nature, whereas if the duties allegedly breached were a type imposed on members of society as a matter of 3 The court also noted that the “ITSA preempts all of these types of claims, where, as here, they are based on a misappropriation of trade secrets.” Id.at *2 (citing cases holding the ITSA preempted tortious interference claims). Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 24 of 30 - 18 - social policy, the claim is essentially tort-based, and will not be barred by the gist of the action doctrine. Id., at *5. The plaintiff in Sheinman alleged that the defendant intentionally interfered with its business and contractual relationships in order to cause plaintiff’s customers to discontinue purchasing from plaintiff and to instead deal directly with the defendant. Id. The court found these allegations insufficient, explaining that the tortious interference claim could only occur based on a breach of the agreement between plaintiff and defendant, and that the plaintiff had no right to be free from competition with others. Id. The same is true in this case. Arkeyo’s theory of liability is that Cummins reverse engineered and misappropriated Arkeyo’s trade secrets, and then used the trade secrets to steal Arkeyo’s business with Metro Bank. The theory is based on an alleged breach by Cummins of the NDA agreement and the ITSA. Accordingly, the tortious interference claims are nothing but a recycled version of the breach of contract claim and ITSA claim, with a different label. This is precisely the situation in which the “gist of the action” doctrine applies to bar the plaintiff’s claim. See id.; Chemtech Intern, Inc. v. Chemical Injection Technologies, Inc., 170 Fed.Appx. 805, 808-810 (3d Cir. 2006) (dismissing tortious interference claim under gist of action doctrine, because the alleged interference stemmed from alleged breach of contract and the only interfering behavior was competition that could be resolved through breach of contract claim). The economic loss doctrine provides an independent basis for dismissal of Counts III and IV. The doctrine bars claims based in tort that allege purely economic losses, because those losses can be compensated via breach of contract claims. See Valley Forge Convention & Visitors Bureau v. Visitor's Servs., Inc., 28 F. Supp. 2d 947, 951 (E.D. Pa. 1998). “There is no cause of action for tortious interference where the plaintiff's business relationships with third parties are adversely affected [merely] as a consequence of a defendant's breach of contractual Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 25 of 30 - 19 - obligations to the plaintiff.” Id. A tortious interference claim cannot be sustained when the interference was only an “incidental consequence” of a breach of contract. See Glazer v Chandler, 200 A.2d 416,418 (Pa. 1964); Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 618 (3d Cir. 1995) (explaining that the economic loss doctrine prohibits recovery in tort for “economic losses to which their entitlement flows only from contract”). Moreover, to state a viable claim for the tort of intentional interference, a plaintiff must allege that the defendant acted with a malevolent purpose. See Glenn v. Point Park College, 272 A.2d 895,899 (Pa. 1971) (holding that mere allegations that defendant “intentionally, wrongfully, and maliciously” interfered with business relations was insufficient to show “specific intent” to harm plaintiff). Here, Arkeyo’s tortious interference claims allege purely economic loss, and the claims are rooted in Cummins’ alleged breach of the NDA. Arkeyo alleges that the tortious interference occurred as a result of Cummins’ violation of the NDA. Arkeyo alleges no facts that show any intent by Cummins to harm Arkeyo, independent from Arkeyo’s breach of contract allegations. D. Arkeyo’s Tortious Interference Allegations Fail to State a Claim. If the Court does not dispose of Counts III and IV as a matter law on the bases described above, Counts III and IV nevertheless should be dismissed, because Arkeyo fails to assert sufficient facts to allow Arkeyo to proceed on either claim. Under Pennsylvania law, to state a claim for tortious interference with contractual relations or prospective contractual relations, Arkeyo must allege well-pleaded facts that satisfy the following elements: (1) a contractual or prospective contractual relationship between Arkeyo and Metro Bank; (2) Cummins’ purpose or intent to harm Arkeyo by preventing the relationship from occurring; (3) Cummins lacks a privilege or justification for its actions; and (4) Arkeyo suffered actual damages. See First Health, 155 F.Supp.2d at 232;. Peoples Mortgage Co., Inc. v. Federal Nat’l Mortgage Ass’n, Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 26 of 30 - 20 - 856 F.Supp. 910, 933 (E.D. Pa. 1994) (“A similar approach should be taken for analyzing claims of intentional interference with prospective contracts as is taken for claims of intentional interference with an existing contract.”). Arkeyo has failed to adequately plead its tortious interference claims for three, independent reasons: (1) Arkeyo did not allege facts showing that it had a plausible expectation for future contracts or business with Metro Bank, (2) Arkeyo failed to allege facts showing that Cummins intended to interfere with Arkeyo’s relationship with Metro Bank, and (3) Arkeyo failed to allege sufficient facts to show that Cummins’ alleged conduct was not privileged. First, Arkeyo makes the conclusory allegation that it “had a reasonable expectation of additional and continuing contractual relationships with Metro.” Compl., ¶ 53. However, Arkeyo alleges no facts to support this conclusion. Indeed, Arkeyo effectively concedes the opposite, for it declined to sue Metro Bank for breach of contract. Similarly, Arkeyo pleaded zero facts showing that it had a reasonable expectation of future contracts with Metro Bank, other than Arkeyo’s current relationship with Metro Bank. This is insufficient under Pennsylvania law. See MSF, Inc. v. DiLazaro, 771 F.Supp.2d 382, 459 (E.D. Pa. 2011) (explaining that in determining the reasonable likelihood or probability of a prospective contractual relationship, Pennsylvania courts have “consistently required more evidence than the existence of a current business or contractual relationship”). Second, Arkeyo fails to allege any facts showing that Cummins had an intent to harm Arkeyo’s relationship with Metro Bank. To establish intent, plaintiff must plead facts showing that the defendant “knows that the interference is certain or substantially certain to occur as a result of his actions.” See Lawson v. CSX Corp., 1999 WL 778315, at *4 (E.D. Pa. Sept. 30, 1999). Here, Arkeyo alleges, in conclusory fashion, only that “Cummins took purposeful action Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 27 of 30 - 21 - to interfere with and cause the termination of Arkeyo’s contract with Metro.” Compl., ¶ 47. Arkeyo does not allege that Cummins was aware of the terms of Arkeyo’s License Agreement with Metro Bank in general or of its termination provisions in particular. Nothing in Arkeyo’s complaint shows that Cummins acted with the intent to do harm to Arkeyo, or that Cummins had any motive to do so. Finally, Arkeyo failed to allege facts showing that Cummins’ alleged conduct was not justified or otherwise privileged. See Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 214 (3d Cir. 2009). Pennsylvania courts place the burden on the plaintiff to show that the defendant’s conduct is not justified. Id. at 214-215. Competitors are privileged in certain circumstances in the course of competition to interfere with prospective or existing contractual relationships under the business competitors’ privilege. Id. (holding that business competitors privilege applied as a matter of law to bar interference claim); see Assembly Tech., Inc. v. Samsung Techwin Co., Ltd., 695 F.Supp.2d 168, 173 (E.D. Pa. 2010) (“[E]ven if an entity has an existing contractual relationship with another entity, a stranger to the relationship must be privileged to seek to replace one of the entities lest competition be stifled.”). Here, Arkeyo plead only the conclusion, unsupported by well-pleaded facts, that Cummins’ alleged conduct was not privileged or justified. Compl., ¶ 48. For all of these reasons, Arkeyo’s tortious interference claims in Counts III and IV should be dismissed for failure to state a claim. VI. CONCLUSION Arkeyo’s Complaint against Cummins must be dismissed, because Arkeyo failed to join an indispensable party. The Complaint must also be dismissed because Arkeyo failed to plead sufficient facts necessary to state any viable claims for relief against Cummins. The tortious Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 28 of 30 - 22 - interference claims must be dismissed for the additional reasons that they are preempted by the ITSA and barred by the Gist of the Action and Economic Loss Doctrines. Cummins respectfully requests the Court to (1) dismiss all counts of the Complaint, with prejudice, (2) award to Cummins its attorneys’ fees and expenses incurred in the defense of this case under the Illinois Trade Secret Act, and (3) award to Cummins any other relief that the Court deems just and proper. Respectfully submitted, /s/ Daniel R. Campbell William P. Schuman (pro hac vice) Daniel R. Campbell (pro hac vice) MCDERMOTT WILL & EMERY LLP 227 West Monroe Street, Suite 4400 Chicago, Illinois 60606 wschuman@mwe.com dcampbell@mwe.com Tel.: (312) 372-2000 Fax: (312) 984-7700 Lee A. Rosengard Chelsea A. Biemiller STRADLEY RONON STEVENS & YOUNG, LLP 2005 Market Street, Suite 2600 Philadelphia, Pennsylvania 19103 lrosengard@stradley.com cbiemiller@stradley.com Tel.: (215) 564-8000 Fax: (215) 564-8120 Attorneys for Defendant, Cummins-Allison Corp. Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 29 of 30 - 23 - CERTIFICATE OF SERVICE I hereby certify that on this 18th day of November, 2016, I served a copy of the foregoing document upon all counsel of record via the ECF/CM document filing system. /s/ Chelsea A. Biemiller DM_US 77859430-1.047610.0038 # 3021772 Case 2:16-cv-04720-AB Document 7 Filed 11/18/16 Page 30 of 30 EXHIBIT A Case 2:16-cv-04720-AB Document 7-1 Filed 11/18/16 Page 1 of 4 NON-DISCLOSURE AGREEMENT PAGE 1 OF 3 VER 6.18.2009 NON-DISCLOSURE AGREEMENT This Agreement is made as of June 17, 2009 by and between Arkeyo , a ______________ corporation with a place of business at 196 West Ashland Street Doylestown, PA 18901 and Cummins-Allison Corp ("CA"), an Indiana corporation having a principal place of business at 852 Feehanville Drive, Mt. Prospect, Illinois, 60056 USA. Recitals A. ARKEYO and CA each possess certain proprietary and confidential information which is not generally available to the public. B. The parties wish to protect such proprietary and confidential information from disclosure to third parties and to prevent use or disclosure thereof except as authorized in accordance with this Agreement or otherwise in writing. THE PARTIES AGREE AS FOLLOWS: 1. Confidential Information. “Confidential Information” means any type of proprietary information, data, or knowledge which is disclosed at any time from one party hereto (the “Disclosing Party”) to the other party hereto (the “Receiving Party”) which pertains to the past, present, or future technology, business operations, or financial condition of the Disclosing Party and which the Disclosing Party desires to protect against unrestricted disclosure or unauthorized use, regardless of the form of disclosure (e.g., whether written (including e-mail), oral, graphic, electronic, or visual), the date of disclosure (e.g., whether before, on, or after the date of this Agreement), or the party through whom disclosure is made (e.g., whether direct or indirect disclosure). “Confidential Information” includes without limitation all technical information, customer information, financial information, business plans or projections, marketing information, and any other information pertaining to the past, present, or future business operations or financial condition of the Disclosing Party. 2. Nondisclosure and Permitted Uses. 2.1 The Receiving Party shall use the Confidential Information for the sole and exclusive purpose of analysis and / or consideration of a proposed or existing business relationship between the parties (the “Permitted Uses”). The Receiving Party shall maintain the confidentiality of the Confidential Information for a term of three (3) years, starting with the date of receipt of the Confidential Information by the Receiving Party. Confidential Information shall be returned or destroyed by the Receiving Party within 10 days of its receipt of a written request to do so by the Disclosing Party. 2.2 At all times, the Receiving Party will protect the confidentiality of the Disclosing Party’s Confidential Information. The minimum standard for protection thereof shall be that degree of protection, and those measures intended to implement such protection, as the Receiving Party affords its own confidential information, but in any event no lesser standard than that which a reasonable person would utilize with respect to trade secrets or highly confidential information. 2.3 The Receiving Party's restrictions under this Agreement shall not apply to Confidential Information which: (a) is or becomes publicly known through no wrongful act of the Receiving Party; or (b) is legally disclosed to the Receiving Party by a third party not under an obligation of confidentiality to or acting on behalf of the Disclosing Party; or (c) the Receiving Party can show, by written records, that such Information was in the Receiving Party's possession prior to disclosure by the Disclosing Party; or (d) is developed by the Receiving Party independent of any Information of the Disclosing Party; or (e) the Receiving Party is legally compelled to disclose by legal process, provided that the Receiving Party gives the Disclosing Party reasonable notice in advance of making any disclosure and assists Disclosing Party, at the latter’s expense, in attempting to obtain an appropriate protective order. Case 2:16-cv-04720-AB Document 7-1 Filed 11/18/16 Page 2 of 4 NON-DISCLOSURE AGREEMENT PAGE 2 OF 3 VER 6.18.2009 2.4 Notwithstanding the preceding section, the Disclosing Party consents in advance to the disclosure of its Confidential Information to those employees of the Receiving Party with a need to know the Confidential Information to carry out the Permitted Uses, provided that those employees of the Receiving Party have obligations of confidentiality regarding such Confidential Information at least as protective as those set forth in this Agreement. 2.5 Without the prior written consent of the Disclosing Party, neither the Receiving Party nor its Representatives will disclose to any person not authorized by the Disclosing Party that the Confidential Information has been made available to the Receiving Party, that the Receiving Party has inspected any portion of the Confidential Information, that any discussions by the Receiving Party with the Disclosing Party are taking place, or any other facts with respect to these discussions. The term "person" as used in this Agreement shall be broadly interpreted to include any legal entity and, without limitation, any corporation, company, partnership or individual. 2.6 Other than the Permitted Uses of Confidential Information, no license or any other right or property interest in the Confidential Information is granted to the Receiving Party by the Disclosing Party under this Agreement. This Agreement does not compel either party to disclose, or to continue to disclose, any Confidential Information to the other, nor to sell, license or transact business with the other party, and any such agreement shall be in a separate written agreement between the parties. 3. Warranty. The Receiving Party acknowledges that the Confidential Information is provided on an as-is basis. The Disclosing Party represents that it has the right to make the disclosure contemplated under this Agreement. OTHER THAN THE REPRESENTATION IN THE PRECEDING SENTENCE, THE DISCLOSING PARTY MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE CONFIDENTIAL INFORMATION. 4. Breach. The parties hereto recognize and agree that money damages are an inadequate remedy for breach of this Agreement by the Receiving Party and further recognize that breach of this Agreement by the Receiving Party would result in irreparable harm to the Disclosing Party. Therefore, in the event of a breach or threatened breach by the Receiving Party of this Agreement, the Receiving Party may be enjoined from engaging in any activity prohibited by this Agreement by injunction issued by a court of competent jurisdiction. Nothing herein shall be construed as prohibiting the Disclosing Party from pursuing any other remedies available to it for such breach or threatened breach of this Agreement, including the recovery of damages. 5. Other. 5.1 Export Restrictions. The parties shall adhere to the U.S. export laws and regulations and shall not export or re-export any technical data or products received pursuant to this Agreement unless authorized by U.S. export laws and regulations. 5.2 Governing Law. This Agreement shall be interpreted and governed in accordance with the laws of the state of Illinois, without reference to its conflicts of laws rules. Each party to this Agreement hereby irrevocably consents to and subjects itself to the non-exclusive jurisdiction of the courts of competent jurisdiction of the state of Illinois with respect to any claim or proceeding relating to this Agreement. 5.3 Entire Agreement; Modification. This Agreement together with all attached exhibits and / or schedules contains the entire understanding between the parties with respect to the safeguarding of Confidential Information. All additions, waivers or modifications to this Agreement shall not be effective unless made in writing and be signed by both parties. In the event any court of competent jurisdiction determines any provision herein is too broad to enforce as written, such court is authorized and directed by the parties hereto to construe, modify or reform such provision to the extent reasonably necessary to make such provision enforceable. *** Case 2:16-cv-04720-AB Document 7-1 Filed 11/18/16 Page 3 of 4 NON-DISCLOSURE AGREEMENT PAGE 3 OF 3 VER 6.18.2009 EXECUTED as of the date first set forth above by the undersigned AUTHORIZED REPRESENTATIVES of the parties. CA: ARKEYO: CUMMINS-ALLISON CORP. ARKEYO LLC By By Daniel C. Taylor Print Name Print Name President Title Title Case 2:16-cv-04720-AB Document 7-1 Filed 11/18/16 Page 4 of 4 EXHIBIT B Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 1 of 11 MAINTENANCE SERVICES /LICENSE AGREEMENT Maintenance Services/License Agreement ("Agreement") by and between Arkeyo LLC (“Arkeyo”), and Metro Bank UK (“Metro”) is made and entered into on April 20, 2010 and is effective as of April, 2010 (“Effective Date”). WHEREAS, Arkeyo is in the business of, inter alia, designing and developing software components, applications and related user experiences for use in connection with coin counting machines, as well as other devices and applications; and WHEREAS, Metro desires to engage Arkeyo, subject to the terms and conditions of this Agreement to provide various services in connection with the installation and maintenance of the Devices, all as more fully described in the Statement of Work ("SOW") attached as Exhibit A to this Agreement (and any future SOWs agreed to in writing by the parties); and NOW THEREFORE, for and in consideration of the mutual covenants and promises herein contained and intending to be legally bound, the parties hereby agree as follows: 1. INCORPORATION OF RECITALS; SCOPE OF SERVICES; FEES 1.1 The parties hereby incorporate the above recitals as though set forth fully herein. 1.2 Arkeyo shall perform the software development, equipment procurement and assembly, training, installation and maintenance and support services (hereinafter, collectively, the "Services") described in the SOW, in the time and manner described in the SOW, in exchange for Metro payment to Arkeyo of the fees described in the SOW (hereinafter the "Fees"). 1.3 Metro may engage Arkeyo to provide additional services pursuant to additional statements of work under this Agreement, on terms and conditions mutually agreeable to the parties. 1.4 The terms hereof and those in the SOW shall be interpreted to the extent possible to be complementary of each other. To the extent of any direct conflict between a provision hereof and a provision of a SOW, the provision of the SOW will control to the extent of the conflict. 2. SALE OF EQUIPMENT AND DEVICES 2.1 Except to the extent the SOW expressly states otherwise, Arkeyo shall procure the equipment, hardware and other components that are part of the Devices (the "Equipment") and shall integrate and interface the Software with such Equipment to create integrated Devices. Pursuant to the terms and conditions of this Agreement and the SOW, Arkeyo shall sell and Metro shall purchase the Devices, at the prices specified in the SOW. 2.2 Metro will be the owner of the Equipment and all replacements thereto and hold title thereto. 3. TITLE; LICENSES; RESTRICTIONS ON USE 3.1 Definitions. In addition to other terms defined elsewhere in this Agreement or the SOW, the following terms shall be defined as follows: (a) "GUI" shall mean the initial touch screen graphical user interface for the Device that is to be delivered by Arkeyo to Metro pursuant to this Agreement, and any future modifications, versions and enhancements thereof (whether or not enabled on a touch screen format). (b) "IP" shall mean rights protectable under the patent, copyright, trademark and trade secret laws. (c) "Metro Bank UK Content" shall mean (i) any and all existing and future trademarks, trade names, trade dress and service marks of Metro Bank UK or used in connection with Metro Bank UK business, and the trade dress of Metro Bank UK coin counting machines; (ii) all characters, content, story lines, designs, look and feel and animations for the GUI; (iii) all materials, content, story boards, Metro Bank- specific requirements and specifications, designs, artwork, Metro Bank-specific concepts and information, and any discoveries, Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 2 of 11 2 developments, improvements or inventions that are, in each case, provided or made accessible to Arkeyo or Arkeyo's contractors by Metro Bank UK or Metro Bank UK's contractors or agents in connection with or for the purpose of providing the services and deliverables contemplated under this Agreement; and all deliverables provided by Arkeyo or an Arkeyo contractor to Metro Bank UK or a Metro Bank UK contractor or agent with respect to the work under this Agreement, excluding the Software (other than the GUI). (d) "Software" shall mean the firmware, middleware, and application software to be delivered by Arkeyo to Metro Bank UK pursuant to the SOW or future statements of work hereunder, whether developed by Arkeyo or its contractors, and including any third party software incorporated in such software. 3.3 During the term of this Agreement, Metro Bank UK hereby grants to Arkeyo a non- exclusive license to use, modify, enhance, edit, translate, adapt, copy, display, perform, and otherwise create derivative works from Metro Bank UK Content and GUI, within the United States and Great Britain, solely for the purposes of performing services, creating deliverables and providing Devices under this Agreement for Metro Bank UK and designees of Metro Bank UK. The parties agree and understand that Arkeyo and Arkeyo's contractors shall not make any use or distribution thereof. To the extent that, by operation of law or otherwise, Arkeyo or one of its contractors acquire or are vested with any IP rights in or to any Metro Bank UK Content or GUI, Arkeyo (for itself and its contractors) hereby assigns all right, title and interest thereto to Metro Bank UK. 3.4 Except as expressly granted and specified in this Agreement, title to the Software (other than the GUI) and all IP rights therein shall remain the sole property of Arkeyo. Metro Bank UK acknowledges and agrees that no right, title, or interest in or to the Software or any IP rights therein is granted under this Agreement by implication or otherwise, except as expressly granted and specified in this Agreement. Except as expressly granted in this Agreement or as later agreed by the parties, Metro Bank UK agrees that it shall not directly or indirectly use, deploy or employ, or directly or indirectly enable the use, deployment or employment, of any or all of the Software (other than the GUI) for the purpose of developing any other coin counting equipment or application without Arkeyo's express written permission. Except as expressly granted in this Agreement or as permitted by law, Metro Bank UK agrees not to translate, disassemble, decompile, reverse assemble, reverse engineer, analyze for composition or structure all or any part of the Software (other than the GUI) without the written consent of Arkeyo. 3.5 Arkeyo hereby grants to Metro Bank UK a non-exclusive, and upon Metro Bank's payment to Arkeyo of all fees due in connection with Arkeyo's Software license as set forth in the SOW, right and license to the Software (other than the GUI which is owned by Metro Bank UK) as follows: (a) The license shall be for the use and benefit of Metro Bank UK, its present and future direct and indirect parents, subsidiaries and affiliates (including any banking and financial services businesses acquired by Metro Bank UK or a subsidiary or affiliate or into which they are merged or integrated) regardless of whether under Metro Bank UK name or a different name, and the successors and assigns to all or parts of Metro Bank UK business (the "Metro Bank UK "); (b) For the purposes of this section 3.5, (i) "Event of Default" shall mean Arkeyo's failure to cure a breach of its warranties pursuant to sections 6.1 or 6.4 within thirty (30) days after receiving written notice of the breach from Metro Bank, or a termination by Metro Bank UK pursuant to Section 8.3; and (ii) "Option Event" shall mean (x) Arkeyo's failure or refusal to enter into an agreement to modify all or part of the Software to provide updates, content changes, functionality or features in addition to those set forth in the SOW, or to enter into an agreement to integrate or incorporate all or part of the Software into or with equipment or devices from third parties other than those referenced in the SOW, on terms mutually agreeable to the parties, within sixty (60) days after Metro Bank UK’s written request for Arkeyo to do so; or (y) an event described in the SOW whereby Metro Bank UK has the right to cease procuring all or some Maintenance Services from Arkeyo or to provide maintenance and/or support of the Software or the Devices other than through Arkeyo (including after the Ten years of Maintenance Services). Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 3 of 11 3 (c) Metro Bank UK shall have the right to use, execute, copy, display (with respect to such parts of the Software that are visible externally) and otherwise operate the Software as necessary in connection with the normal operation, support and maintenance of the Devices (or such replacement devices as are installed per this Agreement or in the exercise of rights when an Event of Default or Option Event Occurs). (d) Upon the occurrence of an Event of Default or an Option Event, Metro Bank UK shall have the perpetual right and license to copy, use, display, perform, distribute copies and create derivative works of the Software, but only as necessary in connection with Metro Bank UK use, support and maintenance of the Devices, including any replacements or modifications of the Devices; provided, however, that in the event that Metro Bank UK does not engage Arkeyo to perform the creation of derivative works, replacement or modification described in this subparagraph, Arkeyo's warranties with respect to any such Software or Devices that are modified or replaced shall be extinguished, and Arkeyo shall have no duty to provide Maintenance Services (as that term is defined in the SOW) with respect to such Software or Devices; (e) Upon the occurrence of an Event of Default or an Option Event, Metro Bank UK shall have the perpetual right to procure Devices (whether the same as are delivered by Arkeyo or modified versions) from third parties and to integrate and incorporate the Software and exercise the licensed rights granted in this Agreement in connection therewith but only in connection with Metro Bank UK use, support and maintenance of the Devices, including any replacements or modifications of the Devices; provided, however, that in the event that Metro Bank UK does not engage Arkeyo to perform the integration and incorporation described in this subparagraph, Arkeyo's warranties with respect to any such Software or Devices that are modified or replaced shall be extinguished, and Arkeyo shall have no duty to provide Maintenance Services (as that term is defined in the SOW) with respect to such Software or Devices; (f) Upon the occurrence of an Event of Default or an Option Event, Metro Bank UK shall have the perpetual right and license to modify the content of any Software, including changing or updating any Metro Bank UK Content enabled by the Software, but only in connection with Metro Bank UK’s use, support and maintenance of the Devices, including any replacements or modifications of the Devices; provided, however, that in the event that Metro Bank UK does not engage Arkeyo to perform the modification, changing or updating described in this subparagraph, Arkeyo's warranties with respect to any such Software or Devices that are modified or replaced shall be extinguished, and Arkeyo shall have no duty to provide Maintenance Services (as that term is defined in the SOW) with respect to such Software or Devices; (g) Upon the occurrence of an Event of Default or an Option Event, Metro Bank UK shall have the right to disassemble the Devices, replace or fix/repair any components of the Device and remove the Software or any portion thereof from the Devices and replace it with different software but only in connection with Metro Bank UK’s use, support and maintenance of the Devices, including any replacements or modifications of the Devices; provided, however, that in the event that Metro Bank UK does not engage Arkeyo to perform the disassembly, replacement, fixing, removal or replacement described in this subparagraph, Arkeyo's warranties with respect to any such modified or replaced Software or Devices shall be extinguished, and Arkeyo shall have no duty to provide Maintenance Services (as that term is defined in the SOW) with respect to such Software or Devices; (h) Metro Bank UK may exercise the rights granted in this Section 3.5 directly through its own employees and through their respective contractors and agents (provided such contractors and agents may not use or modify the Software for any purpose other than their work for Metro Bank UK entities, and provided that such contractors and agents agree to be bound to confidentiality obligations not less restrictive than those in Article 5 of this Agreement). (i) In the event that any license conveyed by Arkeyo pursuant to this Agreement with respect to all or any part of the Software terminates or is deemed or construed to have terminated by operation of law, order of court or otherwise, Metro Bank UK shall have the right to Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 4 of 11 4 remove the Software and operate the Devices without the Software. In such an event, Arkeyo's warranties with respect to any such modified Device shall be extinguished, and Arkeyo shall have no duty to provide Maintenance Services (as that term is defined in the SOW) with respect to such Devices. 3.6 Metro Bank UK shall have the right to receive, and Arkeyo agrees to provide promptly, a full and complete copy of the source code of the Software, and the technical data relating thereto, from Arkeyo or its successors or representatives promptly upon request in order to exercise the rights granted in this Agreement, for use in accordance with and subject to Article 15 herein (including providing an up to date copy of the source code and technical materials in the event those provided pursuant to Article 15 are not current or are corrupted or have errors). 3.7 Arkeyo hereby assigns to Metro Bank UK all right, title and interest in and to the GUI, including the IP rights therein. 3.8 In the event that Metro Bank UK exercises any of its rights granted pursuant to sections 3.5 (b)-(g) in connection with an Option Event, Metro Bank UK shall pay Arkeyo a one-time license fee of £9,500 for each new copy of the Software or modified Software (other than the GUI), that places into service in connection with Metro Bank UK exercise of any such rights (but excluding with respect to modification or updates made to already licensed copies of the Software that remain in use in the Devices provided by Arkeyo). 4. ASSIGNMENT 4.1 Arkeyo may assign or transfer this Agreement to a third party together with all or substantially all its assets, provided such party assumes the obligations of the assigning party under this Agreement. Metro Bank UK may assign or transfer this Agreement to any entity in Metro Bank UK or in connection with a sale or other disposition of some or all of the business relating to Metro Bank UK banking operations or in connection with a transfer required by regulatory authorities, provided such party assumes the obligations of the assigning party under this Agreement. 5. CONFIDENTIALITY 5.1 The parties may disclose to each other and their respective contractors and agents (who have a need to know) confidential and proprietary information and trade secrets, including without limitation, software and hardware designs and specifications, software (including not by way of limitation source and binary code), plans, drawings, data, prototypes, discoveries, research, developments, processes, procedures, intellectual property, information relating to customers, marketing plans and future products, business data, internal organizational structure, methods of operations, business processes, forecasts, and financial information and such other information disclosed pursuant to conditions of confidentiality, whether disclosed prior to, upon or after execution of this Agreement, as well as the terms and conditions (but not the mere existence) of this Agreement (hereinafter "Proprietary Information"). Each party agrees that it will not in any manner use, disclose or otherwise communicate any Proprietary Information of the other party (or of Metro Bank) to any person or entity (except the contractors and agents who have a need to know and to Metro Bank UK personnel in the case of Metro Bank) without the prior written consent of the other party except as necessary to exercise rights and comply with obligations hereunder. 5.2 To the extent either party copies or reproduces any Proprietary Information belonging to the other party, such copies or reproductions shall bear the copyright or proprietary notices contained in the original provided by the disclosing party. The inclusion of any copyright notice on any such material shall not cause, or be construed to cause, the material to be a published work. 5.3 Each party shall advise the other party promptly in writing if the first party has actual knowledge of any unauthorized use or disclosure of Proprietary Information, or other violation of its intellectual property rights by any of the first party's employees, contractors or agents and shall provide the second party reasonable assistance in enforcing its confidentiality or intellectual property rights at the second party's expense. 5.4 The parties' obligations pursuant to this Section 5 shall survive termination of this Agreement. Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 5 of 11 5 6. WARRANTIES 6.1 Arkeyo warrants that beginning on the date that the Devices are installed as described in the SOW, and continuing through to the end of the applicable Maintenance Period as provided in the SOW, the Devices shall operate in material conformity with the functionality and performance standards described in the SOW. 6.2 The warranty provided in the preceding paragraph shall not apply to the extent that: (i) the Software or Devices are improperly installed, maintained, altered, modified or converted by Metro Bank UK or any unauthorized third party engaged by Metro Bank UK without the written approval of Arkeyo, unless Metro Bank UK demonstrates that the defect or error in question is not attributable to such improper installation, maintenance, or alteration, modification or conversion; (ii) any of the equipment not provided by Arkeyo or its suppliers or any unauthorized third party software not provided by Arkeyo or its suppliers shall malfunction, unless Metro Bank UK demonstrates that the defect or error in question has not been caused by such malfunction; or (iii) a feature or function of the Software or Devices becomes inoperative due to the negligence of Metro Bank UK or an unauthorized third party engaged by Metro Bank UK , unless Metro Bank UK demonstrates that the defect or error in question has not been caused by such negligence. Provided, however, that for the avoidance of doubt, the foregoing exclusions shall not apply to the acts, omissions and conduct of any third party contractor that Arkeyo engages to perform services in connection with the Software or Devices or of any third party supplier to Arkeyo of equipment or software. 6.3 Arkeyo does not warrant that the Software or Devices or the features contained therein are designed to meet all of Metro Bank's business requirements, will allow Metro Bank UK to obtain any particular income, revenue or other business result or that the Software and/or Coin Counting Machine(s) will be totally free from defects or errors. 6.4 Any Services Arkeyo performs pursuant to this Agreement shall be performed in a professional, good and workman like manner. 6.5 With respect to the Equipment, Arkeyo shall assign to Metro Bank UK Arkeyo's rights under any warranties with respect to the Equipment provided by the manufacturers of the Equipment. 6.6 UNLESS RESULTING FROM INTENTIONAL MISCONDUCT, AND SUBJECT TO ARTICLE 10 HEREIN, THE EXTENT OF ARKEYO'S LIABILITY UNDER ANY WARRANTIES PROVIDED IN CONNECTION WITH SECTIONS 6.1 AND 6.4 HEREIN, TO THE EXCLUSION OF ALL OTHER REMEDIES IN CONTRACT, TORT, OR OTHERWISE, SHALL BE LIMITED TO THE PROMPT CORRECTION OR REPLACEMENT OF ANY DEFECTIVE ITEM(S) OR ERRORS IN THE SERVICES, SOFTWARE, EQUIPMENT AND/OR DEVICES AT ARKEYO'S OWN COST AND EXPENSE, PROVIDED WRITTEN NOTICE OF SUCH DEFECTIVE ITEM(S) IS GIVEN TO ARKEYO DURING THE APPLICABLE MAINTENANCE PERIOD AS PROVIDED IN THE SOW. 6.7 THE FOREGOING WARRANTIES AND THOSE IN ARTICLE 12 BELOW ARE IN LIEU OF ALL OTHER WARRANTIES BY EITHER PARTY, STATUTORY, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS AGREEMENT, THE SERVICES, SOFTWARE, EQUIPMENT AND/OR DEVICES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 7 LIMITATION OF LIABILITY, REMEDY 7.1 EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ARKEYO AND METRO BANK UK SHALL NOT BE LIABLE FOR ANY INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING LOST OR ANTICIPATED PROFITS, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, REGARDLESS OF WHETHER IT WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 7.2 WITHOUT LIMITATION OF SECTION 7.1 HEREIN, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT ARKEYO'S AND METRO BANK’S MAXIMUM AGGREGATE LIABILITY TO EACH OTHER FOR DAMAGES WITH RESPECT TO ANY DEFAULT IN THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, SHALL BE LIMITED TO AN AMOUNT EQUAL Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 6 of 11 6 TO THE FEES PAID BY METRO BANK UK TO ARKEYO UNDER THIS AGREEMENT WITH RESPECT TO THE SERVICES, SOFTWARE, EQUIPMENT AND/OR DEVICES AFFECTED BY THE DEFAULT, BUT IN ANY EVENT NOT LESS THAN £500,000. 7.3 SOME JURISDICTIONS DO NOT ALLOW FOR THE EXCLUSION OF CERTAIN WARRANTIES OR LIMITATIONS ON LIABILITY; CONSEQUENTLY, SOME OF THE FOREGOING DISCLAIMERS OR LIMITATIONS MAY NOT BE APPLICABLE TO METRO BANK UK, IN WHOLE OR IN PART. 8. TERM AND TERMINATION 8.1 The term of this Agreement shall commence by both parties, and shall continue through to the end of the last applicable Maintenance Period described in the SOW, unless terminated earlier in accordance with this Article 8. The ownership and license rights do not terminate upon termination of Maintenance Services. 8.2 Arkeyo may, at its option, terminate this Agreement immediately upon delivery of written notice to Metro Bank UK in the event Metro Bank UK breaches any material obligation under this Agreement relating to the license to use the Software (other than the GUI) or to Metro Bank UK’s failure to pay any undisputed Fee or other amount due to Arkeyo in connection with this Agreement or in connection with the SOW, and fails to remedy such breach within thirty (30) days after written notice from Arkeyo. Metro Bank UK shall have a period of up to one hundred eighty (180) days (the "Transition Period") to transition to other coin counting software in the event of a termination pursuant to this section, contingent upon Metro Bank UK’s payment on a monthly, prorated basis, at the beginning of each thirty (30) day period during the Transition Period, one twelfth (1/12) of any annual fees that would be otherwise due under the Agreement absent the termination and that have not already been paid prior to the termination. 8.3 Metro Bank UK may, at its option, terminate this Agreement immediately upon delivery of written notice to Arkeyo in the event that Arkeyo breaches any material obligation under this Agreement and fails to remedy such breach within thirty (30) days after written notice from Metro Bank UK. Metro Bank UK shall retain the licenses under this Agreement in the event of a termination pursuant to this section. 8.4 TERMINATION OF THIS AGREEMENT DOES NOT NEGATE THE PARTIES' OBLIGATIONS TO MAINTAIN THE CONFIDENTIALITY OF ANY OF THE OTHER PARTY'S PROPRIETARY INFORMATION. 8.5 THE PROVISIONS OF THIS AGREEMENT THAT BY THE VERY NATURE OF THOSE OBLIGATIONS EXTEND BEYOND THE TERMINATION OF THIS AGREEMENT SHALL SURVIVE AND REMAIN IN FULL FORCE AND EFFECT IRRESPECTIVE OF THE TERMINATION OF THIS AGREEMENT PURSUANT TO THIS SECTION 8, INCLUDING, WITHOUT LIMITATION, METRO BANK UK’S OBLIGATION TO PAY THE AMOUNTS SET FORTH IN THE SOW ACCRUED UP TO THE DATE OF TERMINATION, INDEMNIFICATION OBLIGATIONS, THE PARTIES’ RESPECTIVE OWNERSHIP RIGHTS, AND RIGHTS IN AN EVENT OF DEFAULT AND ANY RIGHTS THAT RESULT FROM AN OPTION EVENT THAT HAS ALREADY OCCURRED. 9 NOTICES 9.1 Any notices, requests and other communications shall be in writing and shall be deemed to be delivered (a) when delivered personally to the party or to an officer of the party to whom the same is directed, or (b) when sent by facsimile (with confirmation of receipt and a copy sent by first class Royal Mail) or registered or certified Royal Mail, return receipt requested, postage prepaid, addressed as specified on the first page of this Agreement. Changes in address or designated representative of the parties may be effectuated by written notice pursuant to, and in accordance with this Section 9.1. 10 INDEMNITY 10.1 Subject to Section 10.4, Arkeyo shall indemnify and hold Metro Bank UK and members of Metro Bank UK harmless from any claim, damages, settlements (approved by Arkeyo), liability, loss, cost or expense (including reasonable attorneys' fees) arising from any claim of infringement or misappropriation of any copyright, patent, trade secret or other proprietary right as a result of the services provided hereunder to Metro Bank UK or the use Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 7 of 11 7 by Metro Bank UK or a member of Metro Bank UK of the Software or the Devices in accordance with this Agreement . 10.2 Should any injunction on use by Metro Bank UK of any portion of the Software or the Device be issued based on a third-party infringement or misappropriation claim described in Section 10.1 or such a claim be sustained in a final judgment from which no further appeal is taken or possible, Arkeyo shall, at Arkeyo's election: (i) procure for Metro Bank UK the right to continue to use the Software or Device, as applicable; or (ii) replace or modify the Software or Device to make it non-infringing. Provided that Arkeyo fulfills its obligations in this Article 10, the foregoing states the entire liability of Arkeyo with respect to infringements of any patents, copyrights, trade secrets or other proprietary rights by the Software, or any part thereof. 10.3 Arkeyo shall have no liability and, subject to Section 10.5, Metro Bank UK shall indemnify and hold harmless Arkeyo for any claim or suit based upon copyright, patent, or the trademark, or trade secret rights of a third party based on (1) Metro Bank’s implementation or use of any changes or modifications to the Software not performed by Arkeyo or Arkeyo’s contractors or authorized in advance in writing by Arkeyo if the claim or suit would not have resulted but for the changes or modifications; or (2) based on Arkeyo's integration or incorporation of any Metro Bank UK Content that has been provided by Metro Bank UK to Arkeyo for incorporation into the Software if the claim or suit would not have resulted but of such content provided by Metro Bank UK . Provided that Metro Bank UK fulfills its obligations in this Article 10, the foregoing states the entire liability of Metro Bank UK with respect to infringements of any patents, copyrights, trade secrets or other proprietary rights by the Software, or any part thereof. 10.4 In the event either party receives written notice of a claim or demand made by a third party against it that would reasonably be expected to entitle such party (the "Indemnified Party") to indemnification under this Section 10 (a "Third-Party Claim"), the Indemnified Party shall promptly give or cause to be given notice to the other party (the "Indemnifying Party") of such Third-Party Claim, specifying the nature of such claim or demand and the amount claimed, if known. The Indemnified Party may participate in the defense or appeal of any Third-Party Claim at its own expense (such expense not being indemnified by the Indemnifying Party except in the event that the Indemnifying Party fails to provide a prompt defense) and with attorneys of its own choice, provided, however, that the Indemnifying Party shall have sole control and authority with respect to any such defense, compromise, settlement, appeal or similar action. The Indemnified Party shall provide the Indemnifying Party such reasonable assistance in such defense as the Indemnifying Party reasonably requests, at the Indemnifying Party's expense. In the event that the Indemnifying Party, within a reasonable time after notice of the Third-Party Claim, elects not to defend the Indemnified Party against such Third-Party Claim, whether by failing to give the Indemnified Party notice or otherwise, then the Indemnified Party shall, upon further notice to the Indemnifying Party, have the right to undertake the defense of the Third-Party Claim for the account of the Indemnifying Party, subject to the right of the Indemnifying Party to assume the defense of the same with counsel reasonably satisfactory to the Indemnifying Party at any time prior to the final determination thereof. Notwithstanding anything in this Section 10 to the contrary, without the Indemnifying Party's prior written consent, which consent shall not be unreasonably withheld, the Indemnified Party shall not settle or compromise any claim, suit or action for anything other than money paid by the Indemnifying Party for damages. 11 GOVERNING LAW; DISPUTE RESOLUTION 11.1 This Agreement shall be construed and enforced in accordance with the laws of Great Britain applicable to contracts made and to be fully performed therein. 11.2 Any legal action or proceeding arising under this Agreement will be brought exclusively in the Courts of London England and the parties hereby irrevocably consent to the jurisdiction and venue of said courts. 12 ADDITIONAL REPRESENTATIONS OF PARTIES 12.1 Arkeyo represents and warrants to Metro Bank UK that (i) Arkeyo has the full power, authority and legal right to enter into and perform this Agreement; (ii) the Agreement is a legal, valid and binding obligation of Arkeyo, Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 8 of 11 8 enforceable against Arkeyo in accordance with its terms; (iii) Arkeyo has all necessary rights and licenses to perform the services and provide the Devices for use by Metro Bank UK as contemplated in this Agreement and that the grant to Metro Bank UK of the licenses in Article 3 does not and will not violate or infringe any right of any person or entity, and (iv) with respect to actions not encompassed within Arkeyo's warranty obligations pursuant to sections 6.1 and 6.4 herein, Arkeyo has not taken and will not take any action that interferes in any manner with Metro Bank UK’s rights under this Agreement or that is otherwise inconsistent with the terms of this Agreement. 12.2 Metro Bank UK represents and warrants to Arkeyo that (i) Metro Bank UK has the full power, authority and legal right to enter into and perform this Agreement; (ii) the Agreement is a legal, valid and binding obligation of Metro Bank UK, enforceable against Metro Bank UK in accordance with its terms; (iii) Metro Bank UK’s grant to Arkeyo of the license described in Section 3.3 herein with respect to Metro Bank UK Content (other than such content that is work product created by Arkeyo pursuant to this Agreement) does not and will not violate or infringe any right of any person or entity; and (iv) Metro Bank UK has not taken and will not take any action that interferes in any manner with Arkeyo's rights under this Agreement or that is otherwise inconsistent with the terms of this Agreement. 13 TAXES 13.1 Metro Bank UK agrees to pay any sales, use, or similar taxes that may be imposed in Great Britain based upon Metro Bank UK’s use of the Services, Software, Equipment or Devices or any other goods and services provided by Arkeyo in accordance with this Agreement, other than taxes based on the net income or the property of Arkeyo. If Arkeyo is required by applicable law to collect such taxes from Metro Bank UK, Arkeyo agrees to include such taxes in a timely basis on the applicable Metro Bank UK invoices and Metro Bank UK agrees to pay such invoiced taxes. If Arkeyo is not required by applicable law to collect such taxes from Metro Bank UK, then Metro Bank UK will make direct payments of such taxes and shall provide, upon request, direct pay certificates or certificates evidencing such payments. 14 MISCELLANEOUS 14.1 The headings in this Agreement are included for convenience only and shall not be used to interpret the terms and conditions of this Agreement. 14.2 This Agreement and the exhibits attached to this Agreement contain the entire understandings and agreements of Arkeyo and Metro Bank UK with respect to the subject matter hereof and supersedes all prior agreements, purchase orders (if any) or understandings related to the subject matter herein, oral or written (excluding any previously executed non-disclosure agreement or the like). Notwithstanding the foregoing, this Agreement shall not affect any other written agreement between the parties on any other subject unless expressly provided in writing and referred to in this Agreement. 14.3 Except as specifically set forth herein, this Agreement may be amended or terminated only by a written instrument executed by an authorized officer of Arkeyo and Metro Bank UK. 14.4 Neither party shall not be deemed to be in default of any provision of this Agreement or for any failure in the performance required to the extent caused by reason of fire, explosion, accidents, civil disorder, acts of government, or Acts of God, or any other causes beyond the party’s reasonable control (‘force majeure”). When a party is affected by force majeure it shall promptly notify the other and make all reasonable commercial efforts to mitigate the adverse impact of the force majeure on the activities relating to this Agreement. Non- performance by a party affected by force majeure shall relive the other party of any related performance until such time as the party affected by force majeure performs. The acts or omissions of a contractor of Arkeyo shall not be deemed force majeure with respect to Arkeyo. 14.5 If any provision of this Agreement is declared invalid, illegal or unenforceable, such decision shall not have the effect of invalidating or avoiding the remainder of this Agreement, it being the intent and agreement of the parties that this Agreement shall be deemed amended by modifying such provision to the extent necessary to render it valid, legal and enforceable while preserving its intent, or, if such modification is not possible, by substituting therefor another provision that is valid, legal and enforceable and achieves the same objective. Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 9 of 11 9 14.6 This Agreement may be executed simultaneously in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 14.7 Nothing in this agreement shall be construed to constitute or create a joint venture, partnership, or formal business organization of any kind and the rights and obligations of each party shall be only those expressly set forth herein. Neither party shall have authority to bind the other party, and neither party assumes any liabilities of the other party. 14.8 Arkeyo and Metro Bank UK agree to announce upon execution of this Agreement via a mutually agreed to press release the signing of this Agreement by the parties and such other mutually agreed press releases from time-to- time related to this Agreement. Arkeyo will have the right, with the prior written approval of Metro Bank UK, to make reference to Metro Bank UK in connection with information Arkeyo may be asked to provide to third parties in the preparation of articles, essays, case studies or other writings concerning Arkeyo's business. Notwithstanding the foregoing, Arkeyo may make reference to the fact of Metro Bank‘s use of the Software and/or Devices by listing Metro Bank’s name and logo on a customer list, but Arkeyo shall not discuss any of the terms hereof or make any representation or commitment on behalf of Metro Bank, in discussions and other communications, with its clients and prospective clients in connection with Arkeyo's marketing and sale of its services to prospective customers. Upon request by Metro Bank, Arkeyo shall cease using Metro Bank’s name and/or logo. 14.9 There are no third party beneficiaries, express or implied, under this Agreement (other than the rights granted to Metro Bank UK hereunder). 14.10 The parties agree that Metro Bank, as licensee of any software and materials licensed by Arkeyo pursuant to this Agreement or any Statement of Work, shall retain and may fully exercise all of its rights under the Great Britain Bankruptcy Code, as may be amended or supplemented from time to time (the “Code”). The parties further agree that, in the event of the commencement of bankruptcy proceedings by or against Arkeyo under the Code, Metro Bank UK shall be entitled to retain all of its rights under this Agreement. Without limiting the foregoing, the Parties agree that any software and materials licensed by Arkeyo to Metro Bank UK pursuant to this Agreement or any Statement of Work are “intellectual property” as defined in 11 U.S.C. 101(35A) which have been licensed hereunder in a contemporaneous exchange for value and that this Agreement shall be governed by 11 U.S.C. 365(n), as the same may be amended or supplemented from time to time, if Arkeyo files for bankruptcy or has such a filing made against it. 15. SOFTWARE DEPOSIT. 15.1 Arkeyo will provide and Metro Bank UK may retain one (1) copy of the source code to the Software and related technical materials and instructions necessary for a trained programmer to understand and modify the source code (hereinafter the "Deposit Materials") for the purposes set forth in this Article 15. Arkeyo hereby transfers to Metro Bank UK the title to the media upon which the Deposit Materials are written or stored. However, this transfer does not include the ownership of the proprietary information and materials contained on the media such as any copyright, trade secret, patent or other intellectual property rights. Metro Bank UK shall have the right, at its expense, to engage a third party escrow company or a third party contractor who is not a competitor of Arkeyo, to review and validate the accuracy and completeness of the Deposit Materials. 15.2 Metro Bank UK shall maintain the Deposit Materials in a secure, environmentally safe, locked facility which is routinely accessible only to the executives and senior management of Metro Bank. Arkeyo shall provide Metro Bank UK with updates, if any, to the Deposit Materials on a quarterly basis (such updates to include any changes or modifications to the software that have been made upon request of Metro Bank UK or by Arkeyo on its own to correct defects or errors). Metro Bank UK shall have the obligation to reasonably protect the confidentiality of the Deposit Materials. Except as provided in this Agreement, Metro Bank UK shall not disclose, transfer, make available, or use the Deposit Materials. If Metro Bank UK receives a subpoena or other order of a court or other judicial tribunal pertaining to the disclosure or release of the Deposit Materials, Metro Bank UK will immediately notify Arkeyo. It shall be the responsibility of Arkeyo to challenge any such order, provided, however, that Metro Bank UK does not waive its rights to present its position with respect to any such order. Metro Bank UK will not be required to disobey any court or other judicial tribunal order. 15.3 As used in this Agreement, "Release Conditions" shall mean the following: (a) Arkeyo's failure to fulfill obligations imposed on it pursuant to this Agreement or any SOW, where such failure has a material adverse impact on Metro Bank UK, subject to the Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 10 of 11 10 thirty day cure period set forth in Section 8.3; (2) Arkeyo's failure to continue to do business in the ordinary course; (3) a filing by Arkeyo of a voluntary petition in bankruptcy or a petition or an answer seeking reorganization, or an arrangement with creditors, or the entering against Arkeyo of a court order approving a petition filed against it under the Code, which order shall not have been enacted or set aside or otherwise terminated within sixty days, provided, however, that this release condition shall not be applicable where Arkeyo, as debtor in possession, or otherwise, is permitted to continue to fulfill its obligations pursuant to this Agreement and does in fact continue to fulfill all its obligations under this Agreement and has cured the prior defaults; or (4) the occurrence of a Default Event or an Option Event. 15.4 Upon the occurrence of a Release Condition, Metro Bank UK shall have the right to use, create derivative works of and exercise such other rights granted herein with respect to the Deposit Materials for the sole purpose of continuing the benefits afforded to Metro Bank UK by this Agreement and any applicable SOW, subject to all terms and conditions contained therein. Metro Bank UK shall be obligated to maintain the confidentiality of the released Deposit Materials. Case 2:16-cv-04720-AB Document 7-2 Filed 11/18/16 Page 11 of 11