United States District Court, District of Columbia
ROSEMARY M. COLLYER UNITED STATES DISTRICT JUDGE.
Holdings, LLC of the District of Columbia complains that
Boston-based GHP Advisors, LLC, d/b/a Good Harbor Partners,
and Catalist, LLC of D.C., misappropriated
TargetSmart’s trade secrets under the guise of merger
negotiations. TargetSmart alleges that Catalist obtained its
trade secrets through GHP, which expressed interest in
TargetSmart on behalf of anonymous donors to Democratic Party
causes, when GHP actually represented Catalist. TargetSmart
asserts that Catalist used the TargetSmart trade secrets to
compete improperly and to defame TargetSmart. It seeks
damages and injunctive relief.
lawsuit was initially filed in the district court of
Massachusetts. It was transferred here after Judge Douglas P.
Woodlock granted Catalist’s Motion to Dismiss for lack
of personal jurisdiction. Judge Woodlock also transferred the
case against GHP, over whom jurisdiction was proper in
Massachusetts, to D.C. Catalist’s motion to dismiss
from this Court is ripe.
I, II, III, VI, VIII, and IX of the Second Amended Complaint
are directed, in part, to Catalist. The Court will grant its
Motion to Dismiss as to Counts II, III, VI, VIII, and IX and
deny it as to Count I.
Holdings, LLC (TargetSmart) is a District of Columbia-based
technology and consulting firm that specializes in providing
Democratic and progressive campaigns, candidates, and
organizations with data and software to help expand their
audiences. Second Am. Compl. (SAC) [Dkt. 36] Introductory
Statement, ¶¶ 1, 11.
LLC, is a District of Columbia-based firm that, like
TargetSmart, focuses on serving Democratic and progressive
candidates. Id. Introductory Statement, ¶¶
4, 35. Catalist is a competitor of TargetSmart. Id.
Advisors, LLC, d/b/a Good Harbor Partners (GHP), is a
Boston-based investment firm. Id. Introductory
The Letter Agreement Between Catalist and GHP
early November 2017, Catalist and GHP entered into a letter
agreement (Letter Agreement) for GHP to “‘serve
as advisor [to Catalist] in connection with the potential
acquisition of a specific, pre-identified target
company.’” Id. ¶ 13; see
Ex. 1, Catalist Mot., Letter Agreement [Dkt. 39-1] at 1,
§ 1. TargetSmart alleges that it was the
“‘pre-identified target company.’”
SAC ¶ 14. The Letter Agreement stated that GHP would
provide Catalist “with financial advice and
assistance,” including managing the due diligence
process. Letter Agreement at 1, § 2. The Letter
Agreement provided that GHP would keep Catalist
“‘informed of the activities undertaken by
GHP’” and of “‘all performance of
Services required of GHP’” under the Agreement.
SAC ¶ 19; Letter Agreement at 4, § 6. It further
stated that GHP was not an employee or agent of Catalist and
would perform services as an “independent
contractor.” Letter Agreement at 4, § 6.
GHP Contacts TargetSmart
December 2017, a third-party supplier emailed TargetSmart
stating that it was aware of a potential new
“‘business opportunity.’” SAC ¶
21. The supplier offered to introduce TargetSmart to GHP to
obtain further details. Id. ¶ 22. TargetSmart
had an initial call with GHP on December 13, 2017. GHP told
TargetSmart that it had been retained by individual political
donors who wanted to combine TargetSmart with other companies
in order to improve the data infrastructure in the Democratic
and progressive markets. Id. ¶ 24. Thereafter,
TargetSmart and GHP entered into a Mutual Nondisclosure
Agreement (Mutual NDA). Id. ¶ 27. The Mutual
NDA allowed the parties to exchange non-public, confidential,
trade secret and proprietary information (Non-Public
Information) but prevented both parties from using or
disclosing such information without the other party’s
prior written consent. Id. ¶¶
the Mutual NDA was signed, GHP and TargetSmart scheduled an
in-person meeting in Boston. Id. ¶ 31. In
preparation for the meeting and at GHP’s request,
TargetSmart sent GHP a memorandum on December 20, 2017, which
included Non-Public Information about TargetSmart’s
data, products, services, and clients, as well as information
about its finances and possible growth opportunities.
Id. ¶ 32. The memorandum specifically stated
that the information was covered by the Mutual NDA.
met with GHP on December 21, 2017. GHP again stated that it
represented wealthy donors who wanted to combine established
companies in the Democratic and progressive markets.
Id. ¶ 33. GHP indicated that its clients were
most interested in combining TargetSmart with its competitor,
Catalist. Id. ¶ 35. TargetSmart told GHP that
it would only consider a merger of TargetSmart with Catalist
if the donors or funders acquired both companies, if
TargetSmart remained in control, and if the Catalist
leadership team would not have a role in the combined entity.
the meeting, GHP notified TargetSmart that it would like to
proceed with due diligence for a potential transaction. GHP
asked for information about TargetSmart’s book of
business, its third-party relationships and vendor
agreements, and its costs and expenses. Id. ¶
36. TargetSmart advised GHP that it was uncomfortable with
the request, as TargetSmart believed it exceeded the
information required to appraise TargetSmart’s business
for purposes of a merger. Id. ¶ 37. TargetSmart
asked GHP to provide a rough estimate of the proposed
purchase price for TargetSmart’s “political
business” in exchange for access to TargetSmart’s
financials. Id. ¶¶ 37-39. GHP agreed to
the proposal, “subject to further due diligence,”
and TargetSmart provided financial information to GHP.
Id. ¶¶ 38-39. In January 2018, the very
next month, GHP informed TargetSmart that TargetSmart’s
financials showed that it was “‘bigger than
expected’” and that GHP would need some time to
raise capital to acquire TargetSmart. Id. ¶ 40.
TargetSmart Learns of Third-Party Disclosures
February 8, 2018, TargetSmart learned that a writer with ties
to Laura Quinn, the Chief Executive Officer (CEO) of
Catalist, “was contacting TargetSmart’s employees
and asking a number of pointed questions about TargetSmart
and its relationship with certain specified clients.”
Id. ¶ 41. TargetSmart alleges that certain
questions “were based upon [N]on-[P]ublic Information
provided to GHP and covered by the Mutual NDA.”
asked GHP if the writer’s inquiries were part of
GHP’s due diligence or if the writer were acting for
Catalist. GHP stated that “the inquiries were not part
of the due diligence process” and that “they
would be ‘shocked’ if Catalist was [sic] behind
the writer’s inquiries.” Id. ¶ 44.
TargetSmart then contacted Mike Podhorzer, a member of
Catalist’s Board of Directors, and repeated its
concerns about the inquiries and potential disclosures by Ms.
Quinn. Mr. Podhorzer stated that he would speak to Ms. Quinn.
Id. ¶ 45. When he called back, Mr. Podhorzer
“stated that he did not agree with Ms. Quinn’s
actions, and promised that the inquiries would stop.”
February 21, 2018, TargetSmart discovered that a third-party
source had told a TargetSmart client that “Catalist was
in the process of buying TargetSmart.” Id.
contacted GHP and again expressed its concerns about
compliance with the Mutual NDA. GHP responded that it would
“‘reinforce’” confidentiality with
its clients. Id. ¶ 47.
March 2018 Meeting Between TargetSmart, GHP and
March 14, 2018, TargetSmart met with GHP and Catalist in the
District of Columbia to discuss the potential acquisition.
Id. ¶¶ 49-50. Catalist was represented at
the meeting by its Board Members Mark Steitz and Mr.
Podhorzer. Id. ¶ 50. At the outset of the
meeting, Mr. Podhorzer stated that he was not covered by an
NDA and offered to leave the room during the discussion.
Id. ¶ 51. GHP then explained to TargetSmart that
it could not raise enough capital for the acquisition because
of TargetSmart’s size. Id. ¶ 53. Mr.
Steitz thanked TargetSmart for participating in
“‘the process’” and stated that
Catalist was “‘respectful’ . . . of the
NDA.” Id. However, Mr. Steitz further
indicated that one of Catalist’s funders had
“‘broke[n] the NDA.’” Id.
TargetSmart asked who else at Catalist had received
TargetSmart’s Non-Public Information. TargetSmart was
told that Mr. Steitz had received all of the Non-Public
Information and that Ms. Quinn had received some of it.
Id. ¶ 55.
TargetSmart Seeks Assurances From GHP and Catalist
April 10, 2018, TargetSmart sent GHP a letter in which it
accused GHP of violating the Mutual NDA. TargetSmart demanded
that GHP comply with certain requests including return of all
Non-Public Information. Id. ¶ 59. In response,
GHP denied that it had breached the Mutual NDA but at the
same time admitted that it had shared the Non-Public
Information with Mr. Steitz and Ms. Quinn. GHP stated that
both Catalist individuals were bound by separate NDAs with
TargetSmart and, further, that GHP had destroyed all of the
Non-Public Information and had instructed Catalist to do the
same. Id. ¶¶ 60, 62-63.
its response, GHP enclosed documents that indicated that
Catalist had agreed to NDAs with TargetSmart. TargetSmart
alleges that GHP had altered the Mutual NDA signed by
TargetSmart by replacing GHP’s signature line with a
signature line for Mr. Steitz and Ms. Quinn but retaining a
signature line for TargetSmart. Id. ¶ 61.
TargetSmart asserts that “Catalist never received
countersigned copies of the false NDAs (or any true NDAs)
signed by a TargetSmart representative because TargetSmart
was not in fact involved in the creation of the false NDAs
and was unaware of their creation until receiving the letter
from GHP.” Id. TargetSmart further argues that
“[t]he supposed [NDAs] so blatantly misrepresent their
true nature that Catalist knew or should have known that
TargetSmart did not request that Catalist or any of its
representatives sign an NDA with TargetSmart.”
April 13, 2018, TargetSmart wrote to Catalist and asserted
that Catalist was unlawfully using TargetSmart’s
Non-Public Information to compete with TargetSmart.
Id. ¶ 65. TargetSmart demanded that Catalist
comply with several requests, including providing the
identity of persons to whom TargetSmart’s business
information had been disclosed. Catalist responded that both
Ms. Quinn and Mr. Steitz had received Non-Public Information.
Id. ¶¶ 67-68. Catalist clarified that Mr.
Steitz had received Non-Public Information “in his role
as ‘liaison’ with ‘Catalist
Investors’ and ‘Representatives of
TargetSmart.’” Id. ¶ 68. Catalist
represented that Mr. Steitz had not distributed or shared any
Non-Public Information. However, Catalist did not make the
same representation about Ms. Quinn. Id. Catalist
told TargetSmart that it had destroyed all TargetSmart
materials. Id. ¶ 69.
28, 2018, TargetSmart filed suit against GHP and Catalist in
the U.S. District Court for the District of Massachusetts.
Compl. [Dkt. 1]. TargetSmart brought claims against GHP and
Catalist for misappropriation of trade secrets, in violation
of the federal Defend Trade Secrets Act (occasionally, DTSA),
18 U.S.C. § 1831 et seq., the Massachusetts
Trade Secrets Act, the Massachusetts Unfair and Deceptive
Practices Act, and Massachusetts common law. Compl.
¶¶ 67-91, ¶¶ 128-33. TargetSmart raised
additional claims for breach of contract, breach of the
covenant of good faith and fair dealing, and fraudulent
misrepresentation by GHP, id. ¶¶ 92-107,
¶¶ 122-27; tortious interference with contractual
relations by Catalist, id. ¶¶ 108-14; and
unjust enrichment by GHP and Catalist. Id.
September 11, 2018, GHP filed its Answer and Catalist filed a
motion to dismiss for lack of personal jurisdiction, on
forum non conveniens grounds, and for failure to
state a claim. TargetSmart filed a First Amended Complaint on
October 2, 2018. The First Amended Complaint dropped the
claim for tortious interference with contractual relations
and added a defamation claim against Catalist. GHP answered
and Catalist again filed a motion to dismiss for lack of
personal jurisdiction and failure to state a claim in
mid-October 2018. Shortly after, TargetSmart filed, and the
court granted, a motion to amend the complaint further in
nonmaterial ways. TargetSmart filed its Second Amended
Complaint on December 13, 2018.
Second Amended Complaint is the operative pleading before
this Court. SAC [Dkt. 36]. Count I alleges misappropriation
of trade secrets under the federal Defend Trade Secrets Act
against both Defendants; Count II alleges misappropriation of
trade secrets in violation of Massachusetts common law
against both Defendants; Count III alleges misappropriation
of trade secrets under the Massachusetts Trade Secrets Act
against both Defendants; Count IV alleges breach of contract
against GHP; Count V alleges breach of the covenant of good
faith and fair dealing against GHP; Count VI alleges unjust
enrichment against both Defendants; Count VII alleges
fraudulent misrepresentation against GHP; Count VIII alleges
violations of the Massachusetts Unfair and Deceptive
Practices Act against both Defendants; and Count IX alleges
defamation against Catalist. Only the immediate Catalist
motion to dismiss [Dkts. 38 and 39] will be addressed here,
involving that Defendant and Counts I, II, III, VI, VIII and
December 20, 2018, Catalist filed a motion to dismiss in
Massachusetts or, in the alternative, to transfer venue to
the District of Columbia. It argued that the Massachusetts
District Court lacked personal jurisdiction over Catalist and
that all counts against Catalist were infirm. In the
alternative, Catalist asked that the case against it be
transferred to D.C. for the convenience of the parties. GHP
filed an opposition to transfer on January 4, 2019, but took
no position with regard to personal jurisdiction or failure
to state a claim. TargetSmart opposed Catalist’s motion
to dismiss on January 11, 2019.
January 23, 2019, Judge Woodlock held a hearing on
Catalist’s motion, during which he indicated an
inclination to transfer. See 1/23/2019 Docket Entry;
see also TargetSmart Holdings, LLC v. GHP Advisors,
LLC, 366 F.Supp. 3d 195');">366 F.Supp. 3d 195, 205 (D. Mass. 2019).
TargetSmart responded that it would not oppose transfer to
D.C. if Judge Woodlock found that personal jurisdiction over
Catalist were unavailable in Massachusetts.
TargetSmart, 366 F.Supp. 3d at 205. GHP objected
that venue would not lie over GHP in D.C. if the case were
transferred in its entirety. Id. GHP filed a
supplemental opposition arguing that Massachusetts was a
preferable venue to D.C. TargetSmart responded by asking
Judge Woodlock to retain the case against GHP, even if he
transferred the case against Catalist to D.C.
Woodlock issued a Memorandum and Order on February 6, 2019.
See TargetSmart, 366 F.Supp. 3d 195');">366 F.Supp. 3d 195. The court found
that Catalist lacked sufficient contacts with Massachusetts
to establish personal jurisdiction in the Commonwealth.
See Id. at 213 (“The three factors set forth
in Foster-Miller, Inc. v. Babcock & Wilcox
Canada, 46 F.3d 138 (1st Cir. 1995), all indicate that
the exercise of personal jurisdiction as to Catalist by this
court would be improper under the Due Process
Clause.”). Therefore, Judge Woodlock transferred the
case against Catalist to D.C. Id. at
Additionally, while he recognized that personal jurisdiction
existed over GHP, which is based in Boston, Judge Woodlock
transferred all claims against GHP to D.C. Id. at
219. Judge Woodlock found that the D.C.
District Court would have personal jurisdiction over all
parties. TargetSmart, 366 F.Supp. 3d at 216.
he did not directly rule on whether TargetSmart stated a
claim against Catalist under Massachusetts law, Judge
Woodlock opined that Massachusetts law did not apply. See
Id. at 212 n.2. Judge Woodlock noted that the question
“ha[d] three distinct dimensions . . . because
TargetSmart has brought three kinds of state law claims
against Catalist-claims under the common law of torts, claims
under the common law of contracts, and claims under
Massachusetts statutory law.” Id. He suggested
that application of Massachusetts choice-of-law principles
would favor applying D.C. law to the common-law claims,
rather than Massachusetts law, because D.C. appeared to have
a greater interest in adjudicating the dispute. Id.
(citing Graham v. Malone Freight Lines, Inc., 948
F.Supp. 1124, 1131 (D. Mass. 1996)). In this regard, Judge
Woodlock observed that “the wrong allegedly took place
in the District of Columbia, where Catalist is
headquartered,” and that “‘various
choice-influencing considerations,’” such as the
place of business of the parties, favored the application of
D.C. law. Id.
respect to the Massachusetts statutory claims, Judge Woodlock
noted that both the Massachusetts Trade Secrets Act and the
Massachusetts Unfair and Deceptive Practices Act have narrow
jurisdictional limits. See Id. (citing Mass. Gen.
Laws ch. 93, § 3 (Massachusetts Trade Secrets Act)
(applying to “any course of conduct, pattern of
activity, or activities [that] occur and have their
competitive impact primarily and predominantly within
[Massachusetts]”); Mass. Gen. Laws ch. 93A, § 11
(Massachusetts Unfair and Deceptive Practices Act) (requiring
that “the actions and transactions constituting the
alleged unfair method of competition or the unfair or
deceptive act or practice occurred primarily and
substantially within [Massachusetts].”). He then stated
that “[s]ince TargetSmart has not alleged that
Catalist’s violations of the two statutes took place in
Massachusetts, Massachusetts statutory law does not appear to
transfer to D.C., this Court held a status hearing on May 8,
2019. During the status hearing, TargetSmart requested leave
to address the impact of Judge Woodlock’s transfer
order on Catalist’s pending motion to dismiss, to which
this Court agreed. TargetSmart’s Supplemental Reply
argues that Count VIII, alleging that Catalist violated the
Massachusetts Unfair and Deceptive Practices Act, should not
be dismissed. It also contends that Judge Woodlock’s
statements about the scope of Massachusetts law should not
control this Court’s treatment of Count VIII because
the record was incomplete and is now being developed in