United States District Court, D. New Jersey
FASTSHIP, LLC and LIQUIDATING TRUST OF FASTSHIP, INC., Plaintiffs,
LOCKHEED MARTIN CORPORATION and GIBBS & COX, INC., Defendants.
CHRISTOPHER JOHN LEAVELL On behalf of Plaintiffs
RAYMOND HOWARD On behalf of Plaintiffs
GREGORY M. WILLIAMS (pro hac vice) RICHARD W. SMITH (pro hac
vice) SCOTT A. FELDER (pro hac vice) KATHERINE C. CAMPBELL
(pro hac vice) On behalf of Plaintiffs
E. STOUT (pro hac vice) On behalf of Plaintiffs
SIGMUND On behalf of Defendant Lockheed Martin Corporation
MICHAEL J. SONGER (pro hac vice) ASTOR H.L. HEAVEN (pro hac
vice) On behalf of Defendant Lockheed Martin Corporation
M. WALSH, CHRISTOPHER MATTHEW HEMRICK, COLLEEN M. MAKER On
behalf of Defendant Gibbs & Cox, Inc.
PASQUALE A. RAZZANO (pro hac vice), DOUGLAS SHARROTT JOSH
CALABRO (pro hac vice) On behalf of Defendant Gibbs &
L. HILLMAN, U.S.D.J.
matter concerns non-disclosure agreements (NDAs) between
FastShip, Inc. and Defendants Lockheed Martin Corporation
(“Lockheed”) and Gibbs & Cox, Inc.
(“G&C”) concerning the design of a
semi-planing monohull (“SPMH”). The design is
used in large ships to maintain higher speeds in heavy seas.
Plaintiffs FastShip, LLC and the Liquidating Trust of
FastShip, Inc. (“Liquidating Trust”) purport to
be the assignees of FastShip, Inc. pursuant to a confirmed
plan of reorganization (“Confirmed Plan”).
the Court are Lockheed's Motion to Dismiss and
G&C's Motion to Dismiss. For the reasons that follow,
the Court will deny both Motions to Dismiss. This matter will
proceed through a limited period of discovery on the issue of
the statute of limitations defense, and, if warranted,
dispositive motions on that isolated issue.
Court takes its facts from Plaintiffs' September 6, 2017
Second Amended Complaint. For both commercial and military
purposes, the faster a large ship can go in heavy seas the
better. Conventional wisdom says large ships should use
displacement hulls, which are limited in their capacity to
reach speeds over forty knots. David Giles, FastShip,
Inc.'s founder and technical director, considered
this problem and determined the solution was an enlarged SPMH
design, which had not been used for larger vessels, combined
with waterjets, rather than propellers.
the navies of Great Britain and the United States rejected
his idea, Giles established Thornycroft, Giles & Company
Inc. in March 1988. Giles and this company continued
developing the SPMH design and filed for patent protection in
the United Kingdom on October 11, 1989. This eventually
resulted in the issuance of U.S. patents 5, 080, 032 and 5,
231, 946 covering the SPMH design for large vessels.
FastShip, Inc. was the sole owner of these patents.
The patented concept used the shape of the hull and placement
of waterjets to provide lift for larger vessels to reduce
resistance and thus achieve higher speeds without impairing
stability or cargo capacity. The design allowed such higher
speeds without the need to increase the vessel's length
(which would have reduced seaworthiness and stability) or
decrease its beam (which would have reduced stability and the
available stern width for the installation of water jets), an
accomplishment long considered the equivalent of
“breaking the sound barrier” in aeronautical
continued skepticism in the field, FastShip, Inc. paid
experts for analysis and testing to prove the viability of
the design. FastShip, Inc. also prepared extensive drawings
to enable the construction of an SPMH vessel. FastShip, Inc.
engaged entities to run simulations of the design and to
conduct elaborate tank testing to prove the design's
viability. FastShip, Inc. paid approximately $40 million for
these tests and data. Plaintiffs refer to this testing and
data cumulatively as the “Trade Secrets.”
2001, in contemplation of a commercial collaboration,
FastShip, Inc. and Lockheed entered into an NDA. In February
2003, FastShip, Inc. and Lockheed entered into another NDA in
connection with possibly collaborating on the U.S. Navy's
Littoral Combat Ship (LCS) Program (“LCS
Program”). Also in February 2003, FastShip, Inc. and
G&C entered into a separate NDA. These NDAs were
“for the purpose of sharing information regarding
potential collaboration on the LCS Program” and
“did not authorize or allow Defendants to use
FastShip's Trade Secrets on the LCS Program without
further written approval from FastShip.” Under the
February 2003 NDAs, and other confidentiality agreements
entered into, FastShip, Inc. shared its Trade Secrets with
to the 2003 NDAs, Lockheed had pursued the LCS Program
independently using a different hull design. In October 2002,
Lockheed withdrew that proposal and joined with G&C,
which was competing with another distinct design.
February 26, 2003, following a U.S. Navy announcement greatly
increasing its operational requirements for the LCS Program,
Lockheed invited FastShip, Inc. to give a detailed
presentation on its SPMH technology. FastShip, Inc. provided
the full details of its research and development. Following
this presentation, Lockheed verbally invited FastShip, Inc.
to participate in the LCS Program. The request was repeated
in writing on March 10, 2003. On March 20, 2003, FastShip,
Inc. agreed to be included in the Lockheed team for the LCS
Program, which also included G&C and later another
entity. A March 2003 announcement stated:
Lockheed and FastShip, Inc. are parties to a Memorandum of
Understanding dated November 2, 2001 relating to cooperation
with respect to commercialization of vessels to be built to a
patented design developed by FastShip, Inc. While this MOU
relates primarily to the development of the TG770
[commercial] vessel, it also contemplates cooperation in
marketing the FastShip design to the U.S. Military. Lockheed
has determined that a variant of the TG-770 patented design
and expertise developed by FastShip, Inc. in high speed ships
may be applicable to the Littoral Combat Ship. Lockheed
desires to have access to FastShip, Inc.'s technology and
technical expertise (1) to assist in responding to the FRP
(Request for Proposals) and, (2) should the Lockheed team be
selected as one of the preliminary design teams, for
development of the preliminary design for the Littoral Combat
parties agreed Lockheed was permitted to include FastShip,
Inc. as a participant on its team for the purpose of
responding to the LCS Program request for proposals. It was
also agreed that FastShip, Inc. would provide Lockheed and
G&C with information to help define FastShip, Inc.'s
involvement. It was agreed that all information was exchanged
subject to the 2003 NDAs.
Lockheed's submission to the U.S. Navy for the
preliminary design contract for the LCS Program, Lockheed
specifically noted the contributions of FastShip, Inc. On May
27, 2004, the U.S. Navy selected Lockheed to conduct the
preliminary design work for the LCS Program. However,
Lockheed did not include FastShip, Inc. on its team nor was
FastShip, Inc. included in the subsequent design and build
work Lockheed was awarded on the LCS Program.
allege Defendants “used FastShip's Trade Secrets to
perform the preliminary design contract and to win and
perform the subsequent aspects of the LCS Program” and
that such use “was without FastShip's permission
and thus was a breach of the February 2003 NDAs with those
parties as well as a misappropriation of FastShip's Trade
Secrets.” Plaintiffs allege Defendants conducted
extremely limited tank testing on its vessels. Plaintiffs
allege that the testing Defendants did conduct was largely to
fill a “gap” in FastShip, Inc.'s testing.
That Defendants did not conduct the extensive tank tests that
the U.S. Navy typically requires for a new hull design,
particularly when the LCS used a hull design that was not
only previously unused, but also previously rejected by the
Navy, strongly suggests that Defendants improperly relied on
FastShip's testing in connection with the LCS Program.
That the limited testing Defendants did conduct was directed
at calm water conditions for which FastShip did not test
further strengthens that conclusion.
allege Defendants concealed their use of the Trade Secrets,
in one instance stating that the LCS ship design was a
multi-chined hull and not based on FastShip, Inc.'s hull
November 8, 2008, the U.S. Navy commissioned the USS Freedom
(LCS-1), a ship publicly claimed by the U.S. Navy and
Lockheed to incorporate a revolutionary semi-planing
monohull. On September 22, 2012, the Navy commissioned the
USS Fort Worth (LCS-3). Eleven other Lockheed vessels are
under construction or on order.
separately filed a patent suit against the United States
under 28 U.S.C. § 1498 based on the LCS-1 vessel. On
April 28, 2017, the court found the LCS-1 infringed the
Second Amended Complaint asserts two counts: (1) breach of
contract (Count I) and (2) misappropriation of trade secrets
(Count II). On September 27, 2017, Defendants separately
filed Motions to Dismiss Plaintiffs' Second Amended
federal court generally may not rule on the merits of a case
without first determining that it has jurisdiction over the
category of claim in suit (subject-matter jurisdiction) and
the parties (personal jurisdiction).” Sinochem
Int'l Co. v. Malay. Int'l Shipping Corp., 549
U.S. 422, 430-31 (2007). “'Without jurisdiction the
court cannot proceed at all in any cause'; it may not
assume jurisdiction for the purpose of deciding the merits of
the case.” Id. at 431 (quoting Steel Co.
v. Citizens for Better Env't, 523 U.S. 83, 94
(1998)). Accordingly, the Court must first determine that it
has subject matter jurisdiction over this matter and personal
jurisdiction over Defendants.
of its inquiry into subject matter jurisdiction, the Court
must determine whether Plaintiffs have standing to pursue
this action. Petroleos Mexicanos Refinacion v. M/T King A
(EX-TBILISI), 377 F.3d 329, 334 (3d Cir. 2004)
(“Standing is a question of subject matter
jurisdiction.”). As “[s]ubject matter
jurisdiction is ‘fundamentally preliminary' to both
the issues of personal jurisdiction and venue, ” the
Court begins there. See Tifa, Ltd. v. Republic of
Ghana, 692 F.Supp. 393, 398 (D.N.J. 1988) (quoting
Leroy v. Great W. United Corp., 443 U.S. 173, 180
Subject Matter Jurisdiction
Court has subject matter jurisdiction over this matter
pursuant to 28 U.S.C. § 1332. FastShip, LLC is a limited
liability company whose sole member is the Liquidating Trust.
See Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d
412, 418 (3d Cir. 2010) (stating that the citizenship of an
LLC is determined by the citizenship of each of its members).
The Liquidating Trust is pleaded as a “traditional
trust.” “[T]he citizenship of a traditional trust
is only that of its trustee . . . .” GBForefront,
L.P. v. Forefront Mgmt. Grp., LLC, No. 16-3905, 2018 WL
1866693, at *7 (3d Cir. Apr. 19, 2018). The trustee of the
Liquidating Trust is the Brownstein Corporation, which is
incorporated, and has its principal place of business, in
Pennsylvania. See 28 U.S.C. § 1332(c)(1)
(“[A] corporation shall be deemed to be a citizen of
every State and foreign state by which it has been
incorporated and of the State or foreign state where it has
its principal place of business . . . .”). Accordingly,
both Plaintiffs are citizens of Pennsylvania.
is incorporated in Maryland and has its principal place of
business there. G&C is incorporated in New York and has
its principal place of business in Virginia. Accordingly, the
citizenship of Plaintiffs is diverse from the citizenship of
Defendants. Plaintiffs plead an amount in controversy in
excess of $75, 000, exclusive of interest and costs, giving
this Court diversity jurisdiction under 28 U.S.C. §
Article III Standing
motion to dismiss for want of standing is . . . properly
brought pursuant to Rule 12(b)(1), because standing is a
jurisdictional matter.” Constitution Party v.
Aichele, 757 F.3d 347, 357 (3d Cir. 2014) (quoting
Ballentine v. United States, 486 F.3d 806, 810 (3d
Cir. 2007)). “A district court has to first determine,
however, whether a Rule 12(b)(1) motion presents a
‘facial' attack or a ‘factual' attack on
the claim at issue, because that distinction determines how
the pleading must be reviewed.” Id.
A facial attack, as the adjective indicates, is an argument
that considers a claim on its face and asserts that it is
insufficient to invoke the subject matter jurisdiction of the
court, because, for example, it does not present a question
of federal law, or because there is no indication of a
diversity of citizenship among the parties, or because some
other jurisdictional defect is present. . . . A factual
attack, on the other hand, is an argument that there is no
subject matter jurisdiction because the facts of the case -
and here the District Court may look beyond the pleadings to
ascertain the facts - do not support the asserted
jurisdiction. . . . In sum, a facial attack “contests
the sufficiency of the pleadings, ” “whereas a
factual attack concerns the actual failure of a
[plaintiff's] claims to comport [factually] with the
Id. at 358 (alterations in original) (citations
omitted) (first quoting In re Schering Plough Corp.
Intron, 678 F.3d 235, 243 (3d Cir. 2012); and then
quoting CNA v. United States, 535 F.3d 132, 139 (3d
Rule 12(b)(1) standing challenge may attack the complaint
facially or may attack the factual basis for standing.”
Askew v. Trs. of the Gen. Assembly of the Church of the
Lord Jesus Christ of the Apostolic Faith, Inc., 684 F.3d
413, 417 (3d Cir. 2012). The Court finds that, in light of
recent case law within the Third Circuit, it must consider
any challenge at this stage of the litigation to be facial.
Third Circuit cases suggest that only facial attacks, and not
factual attacks, can be brought in a motion to dismiss before
an answer is filed.” Bustamante v. D.O. Prods.,
LLC, No. 16-4618, 2017 WL 3782793, at *2 (D.N.J. Aug.
30, 2017); accord Curlin Med. Inc. v. ACTA Med.,
LLC, No. 16-2464, 2016 WL 6403131, at *2 (D.N.J. Oct.
27, 2016) (“[T]he Third Circuit's recent cases
suggest that only facial attacks, and not factual attacks,
can be brought in a motion to dismiss before an answer is
filed.”); Smalls v. Jacoby & Myers, LLP,
No. 15-6559, 2016 WL 354749, at *2 (D.N.J. Jan. 26, 2016)
(“While [Berardi v. Swanson Memorial Lodge No. 48
of the Fraternal Order of Police, 920 F.2d 198 (3d Cir.
1990)] does appear to support Defendants' proposition
[that “both facial and factual attacks may occur prior
to an answer being filed”], the Third Circuit's
recent cases do not.”); see, e.g.,
Aichele, 757 F.3d at 358 (“The Commonwealth
filed the attack before it filed any answer to the Complaint
or otherwise presented competing facts. Its motion was
therefore, by definition, a facial attack.”);
Hendrick v. Aramark Corp., 263 F.Supp.3d 514, 517
(E.D. Pa. 2017) (“Where a Rule 12(b)(1) motion is filed
prior to an answer, . . . it will be considered a facial
challenge to jurisdiction.”).
Court finds that, in light of recent case law from this
Circuit, it must consider Defendants' standing argument
to be a facial attack, as Defendants have not yet filed an
answer. Nonetheless, as in considering any Rule 12(b)(6)
motion, the Court will consider matters of public record and
undisputed documents that form the basis of Plaintiffs'
Second Amended Complaint.
Constitution confines the power of federal courts as
extending only to “Cases” and
“Controversies.” Art. III, § 2. “No
principle is more fundamental to the judiciary's proper
role in our system of government than the constitutional
limitation of federal-court jurisdiction to actual cases or
controversies.” Raines v. Byrd, 521 U.S. 811,
818 (1997) (quoting Simon v. E. Ky. Welfare Rights
Org., 426 U.S. 26, 37 (1976)).
There are three well-recognized elements of Article III
standing: First, an “injury in fact, ” or an
“invasion of a legally protected interest” that
is “concrete and particularized.” Second, a
“causal connection between the injury and the conduct
complained of[.]” And third, a ...