United States District Court, District of Columbia
MEMORANDUM OPINION AND ORDER
TIMOTHY J. KELLY UNITED STATES DISTRICT JUDGE .
CopyWatch, Inc. (“CopyWatch”) is a consulting
firm that advises businesses how they can reduce their
copying and printing expenses. CopyWatch claims that it
provided such advice to Defendant American National Red Cross
(“Red Cross”). According to CopyWatch, Red Cross
improperly and unjustly used that advice without paying for
it, in breach of express and implied agreements between the
Cross has moved to dismiss under Federal Rule of Civil
Procedure 12(b)(6), arguing that CopyWatch has failed to
state a claim. ECF No. 15; see also ECF No. 15-1
(“Def's Br”); ECF No. 17 (“Pl.'s
Opp'n”); ECF No. 18 (“Def's
Reply”). For the reasons explained below, the motion is
Factual and Procedural Background
a corporation headquartered and incorporated in New York,
alleges that it is “an industry leader in document
expense auditing and reduction services.” ECF No. 13
(“Am. Compl.”) ¶¶ 5, 11. It claims to
have developed a “confidential and proprietary audit
and document management process” that allows its
clients to reduce their document-related expenses, including
through its expertise in negotiating with vendors.
Id. ¶¶ 13-15. CopyWatch asserts that its
customary fee is 30% of the cost savings achieved, which
clients often prefer because “it does not require any
new expenditures on their part.” Id. ¶
Cross is a corporation chartered by Congress and
headquartered in the District of Columbia. Id.
¶ 6; see 36 U.S.C. § 300101. In June 2015,
CopyWatch personnel met with Red Cross's “IT
Procurement leader, ” Michael Macon, to discuss a
possible business relationship. Am. Compl. ¶¶
21-22. Shortly before the meeting, the parties executed a
Non-Negotiable Confidential Disclosure Agreement (the
“NDA”). Id. ¶ 23; see also
ECF No. 15-2 (“Wright Decl.”) App. 1, at 5-6
(copy of NDA). The NDA provided, among other things, that
the parties would not disclose any “Confidential
Information, ” defined as “certain confidential
information relating to copier and printer cost recovery
service.” Wright Decl. App. 1, at 5. The NDA further
provided that the parties would “only use the
Confidential Information to the extent necessary to achieve
or advance the Purpose, ” defined as “explor[ing]
business opportunities of mutual interest.”
Id.; see Am. Compl. ¶ 25.
to CopyWatch's Amended Complaint, Red Cross agreed during
the June 2015 meeting that CopyWatch “would provide its
services to [Red Cross], including auditing [Red Cross's]
document expense costs for all copiers . . .,
multi-functional devices, and printers.” Am. Compl.
¶ 28. The parties also agreed that CopyWatch would
prepare a written audit report detailing Red Cross's
costs and proposing strategies for reducing them.
Id. ¶ 29. Moreover, CopyWatch alleges, Red
Cross agreed that it would handle all information arising
from the audit “in accordance with the NDA” and
that CopyWatch “would be paid, ” although the
parties did not reach an agreement regarding the specific
terms of payment. Id. ¶¶ 30-31.
the June 2015 meeting, Macon allegedly “sent
correspondence to CopyWatch reflecting that [Red Cross]
understood that CopyWatch expected to be compensated for its
services” and “confirming that CopyWatch would
begin work while the parties worked out payment terms.”
Id. ¶ 32. CopyWatch claims that it relied on
these commitments in pursuing its work, which included
talking to copier and printer vendors. Id.
¶¶ 33-37. Red Cross has attached what it represents
is the Macon email to its motion to dismiss. See
Wright Decl. App. 3, at 12.
original complaint described the interactions between the
parties in the summer of 2015 somewhat differently. As set
forth in the original complaint, the parties reached their
understanding that CopyWatch would perform the audit not at
the June 2015 meeting, but on “August 10, 2015.”
See ECF No. 1 (“Orig. Compl.”) ¶
25. According to Red Cross, this was an implicit reference to
a Memorandum of Understanding (the “MOU”)
executed by the parties on that same date. See
Def.'s Br. at 5. Red Cross has now attached the MOU to
its motion to dismiss. Wright Decl. App. 2, at 8-10.
to its terms, the MOU was “an expressly non-binding set
of understandings” between CopyWatch and Red Cross.
Id. at 8. The MOU explained that CopyWatch would
prepare its audit report and that each party
“intend[ed] to be solely responsible for its own costs
incurred in connection with its efforts under this
MOU.” Id. The MOU further stated that the
parties' exchange of confidential information would be
governed by the previously executed NDA. Id. Article
VII of the MOU read as follows:
This MOU simply memorializes the Parties' current intent
and does not constitute a legally binding agreement of the
Parties to consummate any transaction outlined herein nor
does it create any legal obligations on or provide any rights
in favor of the Parties. If further discussions and
negotiations occur, neither Party to the proposed
transactions will be under any legal obligation with respect
to the proposed transactions or any similar transactions
unless and until the final, written agreements providing for
the transaction have been executed and delivered by all
Parties intending to be bound. No. offer, commitment,
estoppel, undertaking or obligation of any nature whatsoever
shall be implied in fact, law or equity until such final
written agreements have been executed and delivered.
The Red Cross in its sole discretion shall decide whether or
not to pursue any recommendations made by CopyWatch.
Id. at 9-10. Article VIII stated that the MOU
“supersede[d] all prior agreements and
understandings” related to the same subject matter.
Id. at 10. The MOU concluded by reiterating:
“Intending not to be bound by anything herein, the
Parties intend this MOU to be a memorialization of their
current intent and an aid to any future negotiations.”
Amended Complaint claims that, on October 16, 2015, CopyWatch
delivered its audit report, which explicitly stated that it
was “confidential.” Am. Compl. ¶ 38. The
report, by applying CopyWatch's “unique and
proprietary industry expertise and know-how, ”
allegedly told Red Cross how it could “substantially
reduce its document expenses.” Id. ¶ 39.
Red Cross has filed a copy of the audit report under seal.
ECF No. 11 (“Audit Report”).
delivering the report, CopyWatch claims, it provided Red
Cross with further helpful advice. Red Cross's Chief
Information Officer allegedly “thanked CopyWatch for
the ‘great' report” and asked several
follow-up questions “concerning how CopyWatch would
execute its plan.” Am. Compl. ¶ 44. In response,
CopyWatch provided additional “details concerning
execution of the strategies outlined in the Report.”
Id. CopyWatch also delivered a “draft lease
buyout letter” that Red Cross could send to its current
vendor. Id. ¶ 45. CopyWatch claims that it had
contacted the vendor directly over the previous months to
negotiate better terms for Red Cross. Id. ¶ 47.
alleges that Red Cross subsequently “us[ed] and
rel[ied] on CopyWatch's audit analysis and findings to
seek reduced copying and document expenses.”
Id. ¶ 55. In addition, Macon allegedly sent the
lease buyout letter CopyWatch had drafted to Red Cross's
vendor. Id. ¶ 46. CopyWatch further claims that
Red Cross's Director for Decision Support and Business
Planning “made an unsolicited telephone call” to
CopyWatch's president “boasting that, since having
CopyWatch's work product, [Red Cross] had been able to
drive down its cost-per-copy rate to 2.7 cents.”
Id. ¶ 56. According to CopyWatch, that
represented a total cost savings of over $15 million.
Id. ¶ 57. CopyWatch's customary 30% fee
would have therefore earned it over $4.5 million, and in May
2016, CopyWatch sent an invoice to Red Cross for that amount.
Id. ¶ 60. Red Cross has attached what it
represents is a copy of the invoice to its motion to dismiss.
Wright Decl. App. 5, at 16-17.
Cross refused to pay. According to CopyWatch, Red Cross had
in fact schemed to avoid payment starting shortly after it
began using CopyWatch's work product. Macon left Red
Cross around that time, and CopyWatch asserts on
“information and belief” that Red Cross
“fired Mr. Macon as part of [Red Cross's] attempt
to use CopyWatch's audit, analysis, and recommendations
without compensating CopyWatch.” Am. Compl. ¶ 50.
CopyWatch claims it sought to “finalize payment
terms” with other Red Cross employees, id.
¶ 51, who “continued to seek and accept
CopyWatch's services while stringing CopyWatch
along” with respect to those terms, id. ¶
Amended Complaint, CopyWatch has brought three claims for
relief under District of Columbia law. In Count I, it claims
that Red Cross violated the NDA by “exploit[ing]
CopyWatch's confidential and proprietary know-how,
analysis, work product, and strategies for its own personal
gain . . . without permission from CopyWatch.”
Id. ¶ 65. In Count II, CopyWatch claims that
its dealings with Red Cross gave rise to an
“implied-in-fact contract” that Red Cross
breached by refusing to pay for CopyWatch's services.
Id. ¶¶ 68-76. Similarly, in Count III,
CopyWatch claims in the alternative that Red Cross unjustly
enriched itself by retaining the benefit of CopyWatch's
services without paying for them. Id. ¶¶
Cross has moved to dismiss all three claims. ECF No. 15. Red
Cross argues that CopyWatch's allegations that it
breached the NDA are too conclusory to survive a motion to
dismiss. See Def's Br. at 8-11. Red Cross
further argues that CopyWatch's claims for breach of an
implied-in-fact contract and unjust enrichment are untenable
because express contracts (the NDA and the MOU) govern the