United States District Court, District of Columbia
MEMORANDUM OPINION [DKT. #29]
RICHARD J. LEON United States District Judge.
Economic Research Services ("plaintiff or
"ERS") commenced the instant action against
defendants Resolution Economics, LLC
("Resolution"), Paul White ("White"), and
Ali Saad ("Saad") (collectively,
"defendants") in August 2015. In its Verified
Complaint ("Complaint") [Dkt. #1], ERS
poses a veritable kitchen sink full of claims related to
White departing from ERS to Resolution and the corresponding
phenomenon of ERS's employees and clients doing the same.
Presently before the Court is defendants' Motion to
Dismiss the Complaint in its entirety. Defs.' Mot. to
Dismiss [Dkt. #29]. Upon consideration of the pleadings, the
relevant law, and the entire record herein, the Court GRANTS
IN PART and DENIES IN PART defendants' Motion for the
reasons set forth below.
ERS provides economic research and statistical analysis for
corporations and law firms in a variety of disciplines,
including employment discrimination, fair lending, insurance
coverage, and intellectual property. See Compl.
¶ 19. White began a twenty-two year stint at ERS in
1993, when he was hired as an Economist. Compl.
¶¶21, 25. He thereafter moved up the ranks,
receiving a promotion to Vice President in 1998 before
ultimately becoming a Managing Director of ERS's Labor
and Employment ("L&E") Group in ERS's
Washington, D.C. office in 2010. Compl. ¶¶21, 25.
In that role, White provided economic research, statistical
analysis, and expert services related to the field of labor
and employment to ERS's clients. Compl. ¶¶ 1,
3. White supervised the nine ERS employees in the L&E
Group, interfaced directly with the clients, and was exposed
to and had access to ERS's trade secrets and confidential
and propriety information. Compl. ¶¶ 3, 27.
condition of his employment, White signed periodic contracts
with ERS, including the 2015 Managing Directors'
Compensation Plan consummated on June 29, 2015 (the
"2015 Employment Agreement" or the
"Agreement"). Compl. Ex. 3 [Dkt. #1-3];
see Compl. ¶¶ 28-32; see also
Compl. Ex. 1 [Dkt. #1-1]; Compl. Ex. 2 [Dkt.
#l-2]. The 2015 Employment Agreement contains
several restrictive covenants that are applicable to White
given his role as a director, only a few of which are
relevant here. First, the Agreement bars directors from
disclosing ERS's confidential information to third
parties at any time following their departure from
Compl. Ex. 3 § 3(i). Second, it prohibits directors from
soliciting ERS employees or clients for the twelve months
following their separation. Compl. Ex. 3 §§
3(k)(i)-(ii). Third, and finally, the Agreement precludes
Directors, once again for a period of twelve months after
leaving ERS, from performing "any act that [the]
Director[s] knew, know, or reasonably should have known
might directly injure ERS or its parents and affiliates in
any material respect." Compl. Ex. 3 § 3(k)(iv).
6, 2015, shortly after signing the 2015 Employment Agreement,
White resigned from his position at ERS and, effective July
17, 2015, left to manage ERS's competitor
Resolution's nascent Washington, D.C. office. Compl.
¶¶ 38-39. ERS then spoke with Saad, an owner and
managing director of Resolution, about potentially selling
the remainder of ERS's Washington, D.C.-based L&E
Group and its related infrastructure to Resolution. Compl.
¶¶ 14, 49. Plaintiff alleges that Saad initially
expressed interest in an acquisition of the whole group but
then stated that since ERS's employees were free to
simply leave ERS and work elsewhere it did not make sense to
do so. Compl. ¶ 50. Thereafter, on July 17, 2015,
White's first day at Resolution, Resolution sent an
"email blast" directly to ERS's clients
announcing that White had joined Resolution as a Partner and
inviting them to contact White at his new phone numbers or
email address. Compl. ¶¶ 42, 46; Compl. Ex. 5 [Dkt.
#1-5]. ERS claims that White and Resolution's objective
in sending the email announcement was to solicit ERS's
clients, Compl. ¶ 45, and that White and Resolution then
made additional attempts to win over ERS's clients by
reaching out to them individually, Compl. ¶¶ 45-47.
According to ERS, defendants' efforts were immediately
successful, and ERS began to receive formal notices from its
clients requesting that their files be transitioned to
Resolution. See Compl. ¶ 46.
exodus was not limited to ERS's clients. In the wake of
White's resignation, several other members of ERS's
Washington, D.C. L&E Group, all of whom had worked for
White, quit their jobs at ERS and joined
Resolution. See Compl. ¶ 52. By August
10, 2015, nine of the ten employees in the practice group had
resigned their posts. Compl. ¶¶ 53-62. ERS places
the blame for this defection squarely at White's feet,
asserting that "White either actively solicited the
Washington, D.C. [Labor and Employment] Group to join
Resolution or, at the least, influenced Resolution to hire
them in breach of his nonsolicitation obligations."
Compl. ¶ 63. ERS contends, in short, that defendants
"decimated" its Washington, D.C. office. Compl.
commenced this suit on August 10, 2015, by filing a Complaint
alleging breach of contract, numerous commercial torts,
violations of the Computer Fraud and Abuse Act, 18 U.S.C.
§ 1030, et seq, and violations of the District
of Columbia's Uniform Trade Secrets Act, D.C. Code §
36-401, et seq. That same day, ERS moved for a
preliminary injunction, which I denied on October 21, 2015.
Mem. Op. [Dkt. #33]. In the meantime, defendants filed the
present Motion to Dismiss.
Rule of Civil Procedure] 8(a) sets out a minimum standard for
the sufficiency of complaints . . . ." Brown v.
Califano, 75 F.R.D. 497, 498 (D.D.C. 1977). It requires
"a short and plain statement of the claim" and is
intended "to give fair notice of the claim being
asserted so as to permit the adverse party the opportunity to
file a responsive answer, prepare an adequate defense and
determine whether the doctrine of res judicata is
applicable." Id. It also "serves to
sharpen the issues to be litigated and to confine discovery
and the presentation of evidence at trial within reasonable
bounds." Id. The rule "is by no means
exacting, " and it "accords the plaintiff wide
latitude in framing his claims for relief." Id.
Rule 12(b)(6), meanwhile, "a complaint must contain
sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face." Ashcrofi
v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation
marks omitted). "A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged." Id.; see also
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
("Factual allegations must be enough to raise a right tc
relief above the speculative level . . . ."). A court
must "treat the complaint's factual allegations as
true" and "grant plaintiff the benefit of all
inferences that can be derived from the facts
alleged[.]" Sparrow v. United Air Lines, Inc.,
216 F.3d 1111, 1113 (D.C. Cir. 2000) (internal quotation
marks omitted). However, the court need not "accept
legal conclusions cast in the form of factual
allegations." Kowal v. MCI Commc 'ns
Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). "In
ruling on a 12(b)(6) motion, a court may consider facts
alleged in the complaint, documents attached to or
incorporated in the complaint, matters of which courts may
take judicial notice, and documents appended to a motion to
dismiss whose authenticity is not disputed, if they are
referred to in the complaint and integral to a claim."
Harris v. Amalgamated Transit Union Lobal 689, 825
F.Supp.2d 82, 85(D.D.C2011).
Count I: Breach of Contract
Count I, plaintiff alleges that White breached his
contractual obligations under the 2015 Employment Agreement
not to solicit ERS clients, not to solicit ERS employees, not
to disclose ERS's propriety or confidential data, and not
to take action that he knew or reasonably should have known,
might directly injure ERS. Compl. ¶¶ 68-71. The
2015 Employment Agreement provided that it "shall be
construed according to the laws of the State of Virginia,
" Compl. Ex. 3 § 3(f), and the parties assume
Virginia law will apply to plaintiffs breach of contract
claim. When determining which state law to apply, "the
Court applies the District of Columbia's choice-of-law
rules." Essroc Cement Corp. v. CTI/D.C, Inc.,
740 F.Supp.2d 131, 141 (D.D.C. 2010). Under those rules as
applied by District of Columbia courts, "parties to a
contract may specify the law they wish to govern, as part of
their freedom to contract, as long as there is some
reasonable relationship with the state specified."
Id. As White is a resident of Virginia, the
'"reasonable relationship' threshold" is
satisfied, and the Court will apply Virginia law to
plaintiffs breach of contract claim.Id.
Virginia law, the elements of a breach of contract claim are:
"(1) a legally enforceable obligation of a defendant to
a plaintiff; (2) the defendant's violation or breach of
that obligation; and (3) injury or damage to the plaintiff
caused by the breach of obligation." Filak v.
George, 594 S.E.2d 610, 614 (Va. 2004). Defendants argue
plaintiff has failed to state a claim of breach of any of the
provisions of the 2015 Employment Agreement. After careful
evaluation of the parties' respective arguments, I deny
defendants' Motion as it pertains to plaintiffs claims
that White breached the non-solicitation of clients,
non-solicitation of employees, and do no harm provisions of
with defendants, however, that plaintiff failed to state a
claim that White breached his obligation not to disclose
ERS's confidential information. The Complaint alleges
that White breached the Agreement by sharing ERS's
customers' identities and non-public contact information
with Resolution. Compl. ¶¶ 43, 70. But the
Complaint does not sufficiently specify which aspect of the
Agreement's confidentiality provision White violated by
doing so. The 2015 Employment Agreement defines
"Confidential Information" as
any and all information that is proprietary and/or
confidential, secret or otherwise not generally known to
those in ERS's industry and pertains directly or
indirectly to ERS and its operations and activities,
products, services, employees, contractors, consultants and
suppliers, including any and all formulae, methods,
techniques, processes, know-how and data, technical or
non-technical whether written, graphic, computer-generated or
orally furnished to [White] by ERS or any of ERS's
authorized Representatives. This Confidential Information
does not include matters that are owned by the client or that
have been paid for by the client as part of the fees for
using the services of ERS . . . Confidential Information does
not include information that (i) is or becomes publicly
known; or (ii) is known to [White] other than from ERS (and
became known legally and without the violation of any rights
of ERS) and is without any proprietary or confidentiality
restrictions at the time [White] receives such information.
Compl. Ex. 3§ 3(i). As it failed to identify where the
names and contact information of ERS's customers fit into
this definition, plaintiff failed to state a plausible claim
of breach of the non-disclosure obligation. Cf. Compel v.
Citi Mortgage, Inc., Civ. No. 04-1377, 2005 WL 4904816,
at *2 (E.D. Va. Feb. 23, 2005) (explaining that in order to
state a claim of breach of contract, the plaintiff "must
identify which provisions imposed the purportedly breached
obligation" and that "[t]he absence of such detail
prejudices defendant's understanding of the defenses
available to it and how it should proceed"). Count I is