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Information Strategies, Inc. v. Dumosch

United States District Court, District of Columbia

February 10, 2014

INFORMATION STRATEGIES, INC., Plaintiff,
v.
RONALD C. DUMOSCH, JR., Defendant. Re Document No. 18

MEMORANDUM OPINION

RUDOLPH CONTRERAS, United States District Judge

Denying Defendant’s Motion to Dismiss for Lack of Subject Matter Jurisdiction

I. INTRODUCTION

In this breach of contract case, the plaintiff brings suit under this Court’s diversity jurisdiction against the defendant, a former employee, alleging breach of a non-competition covenant and misappropriation of trade secrets. The plaintiff seeks injunctive relief, monetary damages, and statutory and contractual attorneys’ fees. The defendant moves to dismiss the plaintiff’s claim under Federal Rule of Civil Procedure 12(b)(1), asserting that this Court does not have subject matter jurisdiction over the dispute because the amount in controversy does not exceed $75, 000. For the reasons discussed below, the Court denies the defendant’s motion.

II. FACTUAL BACKGROUND

Plaintiff Information Strategies, Inc. (“InfoStrat”) is a Delaware corporation with its principal place of business in Washington, D.C. See Compl. ¶ 4, ECF No. 1. It provides consulting services to public entities and private companies. See Id . ¶ 6. A significant portion of its work involves Microsoft Corporation’s Customer Relationship Management (“CRM”) software. See Id . InfoStrat employed the defendant, Ronald Dumosch, a citizen of Virginia, for more than five years. See id ¶ 7. On March 12, 2007, Mr. Dumosch executed a Non-Disclosure/Non-Compete Agreement (the “Agreement”) with InfoStrat. See id ¶ 19. The noncompete provision of the Agreement prohibits the employee from providing comparable services to any competitor of InfoStrat in the Washington, D.C. metropolitan area for a period of twelve months following the termination of his employment. See Compl. Ex. 1, ¶ III, ECF No. 1-1. The non-disclosure provision of the Agreement requires that the employee refrain from disclosing any technical knowledge, inventions, or trade secrets belonging to the company during the employee’s employment and at all times afterwards. See id ¶ II.A. In addition, the Agreement contains an arbitration clause, which mandates that any disputes relating to the Agreement be resolved by arbitration except in a situation where InfoStrat seeks injunctive relief See id ¶ IX. It also contains a clause that allows InfoStrat to recover reasonable attorneys’ fees incurred by InfoStrat in any successful action to enforce the terms of the agreement. See id ¶ IV.C.

In December 2012, Mr. Dumosch resigned from InfoStrat and took a job with Booz Allen Hamilton (“Booz Allen”). See Compl. ¶ 21. InfoStrat maintains that before Dumosch left for Booz Allen, InfoStrat was in negotiations to work with Booz Allen on a project for the Veterans Administration (“VA”) in Washington, D.C. See Kolm Decl. ¶¶ 6-9, ECF No. 11-4. This project, according to InfoStrat, involves the integration of modified CRM software with other VA information technology systems. See Compl. ¶ 25. InfoStrat had modified the software in a previous engagement with the VA. See id InfoStrat says that a VA employee had recommended that Booz Allen employ InfoStrat to perform the part of the project involving the modified CRM software because InfoStrat had modified the software in the first place. Compl. ¶ 26.

According to Richard Kolm, a project manager for InfoStrat, Booz Allen reached out to InfoStrat in December 2012, asking whether InfoStrat would work with Booz Allen on the VA project. See Kolm Decl. ¶ 6. Shortly after that, Booz Allen learned that InfoStrat was competing with Booz Allen for a separate contract with the VA, and the question of Booz Allen subcontracting out work to InfoStrat was dropped. See Id . ¶ 7. But, according to Mr. Kolm, in January 2013 Booz Allen reached out to InfoStrat again, scheduling two meetings with Kolm for the stated purpose of potentially retaining InfoStrat to do the CRM-related work on the VA project. See Id . ¶ 8. InfoStrat’s hopes of a second chance of becoming Booz Allen’s subcontractor were soon diminished, however, as Booz Allen representatives informed Mr. Kolm at a January 9, 2013 meeting that Booz Allen did not have enough money to hire InfoStrat. See id. ¶ 9.

At a second meeting on January 9th, Kolm continued the earlier discussion with representatives from Booz Allen. See Id . ¶ 11. Mr. Dumosch, now employed by Booz Allen, joined in on the meeting. Id. At the meeting, Mr. Kolm maintains, Mr. Dumosch made clear that he was working on CRM matters for Booz Allen, and that he was specifically working on the VA project that InfoStrat had lost out on. See Id . ¶ 12. At the same meeting, Mr. Kolm maintains that Mr. Dumosch discussed an InfoStrat-designed coding template, the architecture that InfoStrat uses for specific projects, and the manner in which InfoStrat uses its employees on projects, all in front of other Booz Allen employees. See Id . ¶¶ 13-15. InfoStrat considers all of the disclosed information proprietary. See id.

InfoStrat alleges that Booz Allen hired the defendant for his knowledge of CRM customization. See Compl. ¶ 28. Further, InfoStrat contends that Booz Allen intended to use him on the VA project, to avoid the need to retain InfoStrat. See id. ¶ 30. InfoStrat also alleges that Booz Allen hired the defendant to use InfoStrat’s knowledge and design solutions on other projects, information that InfoStrat considers to be trade secrets. See id.

On March 11, 2013, InfoStrat filed a complaint against Mr. Dumosch alleging breach of contract and misappropriation of trade secrets, with claims for monetary and injunctive relief for each count. See id. ¶¶ 51, 54, 63, 69. InfoStrat asserts that the value of the injunctive relief sought exceeds $75, 000, that they are seeking damages in excess of $75, 000, and that they reasonably believe their attorneys’ fees will exceed $75, 000. See Id . ¶ 2. Defendants have moved to dismiss all counts under Federal Rule of Civil Procedure 12(b)(1), on the grounds that the amount in controversy is less than $75, 000. See generally Def.’s Mot. Dismiss, ECF No. 18.

III. LEGAL STANDARD

Federal courts are courts of limited jurisdiction, and the law presumes that “a cause lies outside this limited jurisdiction . . . .” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); see also Gen. Motors Corp. v. Envtl. Prot. Agency, 363 F.3d 442, 448 (D.C. Cir. 2004) (“As a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction.”). It is the plaintiff’s burden to establish by a preponderance of the evidence that the court has subject matter jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).

Because subject matter jurisdiction focuses on the Court’s power to hear a claim, the Court must give the plaintiff’s factual allegations closer scrutiny than would be required for a Rule 12(b)(6) motion for failure to state a claim. See Macharia v. United States, 334 F.3d 61, 64, 69 (D.C. Cir. 2003); Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13 (D.D.C. 2001). Thus, the court is not limited to the allegations contained in the complaint. Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on other grounds, 482 U.S. 64 (1987). Instead, “where necessary, the court may consider the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts ...


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