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Scherer Design Group, LLC v. Schwartz

United States District Court, D. New Jersey

July 25, 2018



          ANNE E. THOMPSON, U.S.D.J.


         This matter comes before the Court on an amended motion to dismiss by Plaintiff Scherer Design Group, LLC ("Plaintiff' or "SDG"). (ECF No. 23.) Defendants Chad Schwartz, Ahead Engineering LLC, Far Field Telecom LLC, Kyle McGinley, Daniel Hernandez, and Ryan Waldron (collectively, "Defendants") oppose. (ECF No. 43.) The Court has decided this Motion based on the written submissions and without oral argument pursuant to Local Civil Rule 78.1(b). For the reasons stated herein, Plaintiffs Motion is granted.


         Plaintiff is a consulting engineering firm in the telecommunications industry, founded by Colleen Connelly and Glenn Scherer. (Compl.¶¶ 11-12, ECF No. 1.) Plaintiff alleges that four of its former employees, Defendants Chad Schwartz, Daniel Hernandez, Kyle McGinley, and Ryan Waldron, coordinated the appropriation of SDG trade secrets prior to their mass resignation. (See, e.g., Id. ¶ 65.) Defendant Schwartz, a senior engineer and Director of Engineering at SDG who worked with SDG's predecessor since 2000, resigned on November 22, 2017, effective December 8, 2017. (Id. ¶¶ 48, 55; Am. Countercl. ¶ 3, ECF No. 28.) Defendant Schwartz continued to work with Plaintiff as a paid consultant to assist with projects on which he was designated as the Professional Engineer. (Compl. ¶ 62.) Defendant Schwartz then set-up two of his own engineering firms, Defendants Ahead Engineering LLC and Far Field Telecom LLC. (Id. ¶ 56.) Defendant Ahead Engineering is a self-described "full-service telecom engineering firm," and Defendant Far Field is a company that offers "innovative cost-effective solutions of oDAS and small cell site concealment." (Id. ¶¶ 57, 59 (quoting each company's Linkedln profile).) "On January 16, 2018, [Defendants] Hernandez, McGinley and Waldron resigned from their positions at SDG and officially became, respectively, Principal of [Defendant Far Field, Director of Engineering for [D]efendant Ahead Engineering, and Director of Business Processes for [Defendant Far Field." (Id. ¶ 98.)

         Plaintiff claims that Defendants Hernandez, McGinley, and Waldron took files and information from Plaintiffs self-described "proprietary relational database." (See, e.g., Id. ¶ 13.) While in Plaintiffs employ, Defendant Hernandez downloaded Facebook Messenger on his SDG company computer, which Plaintiff claims he failed to log out of upon his resignation. (Id. ¶¶ 71, 73.) Defendants assert that Defendant Hernandez logged out and cleared all browsing history from his SDG devices prior to his resignation on January 17, 2018. (Am. Countercl. ¶¶ 11, 13-14, 16.) After Defendant Hernandez's resignation, Plaintiff accessed Facebook messages and conversations from Defendant Hernandez's account (Compl. ¶ 74), which Defendants allege to have been done improperly and without permission (Am. Countercl. ¶¶ 19- 21). In particular, there was a Facebook messenger conversation, created December 20, 2017, with Defendants Schwartz, McGinley, Waldron, and Hernandez, as well as Preeyapon Chawpetdee, Taqi Khawaja, Robert Petriocola, and Craig Andrews. (Id. ¶¶ 6-7.) The conversation discusses the download of files from Plaintiffs database while Defendants were still employed by Plaintiff, (see Compl. ¶¶ 77-84 (exhibits of conversations between Defendants and others)), which Plaintiff asserts is corroborated by the removal and use of USB drives on SDG computers (id. ¶ 75). "On February 21, 2018, counsel for SDG corresponded with each of the defendants and demanded that they cease their unlawful conduct, return all materials and proprietary information to SDG, preserve all relevant documentation and confirm their compliance with those demands within three days of that date." (Compl. ¶ 99.)

         On March 12, 2018, Plaintiff filed this lawsuit against the four past employees and two new engineering firms, pleading seven Counts: (I) Misappropriation of Trade Secrets, N.J.S.A. 56:15-1, et seq.; (II) Violations of the Federal Defend Trade Secrets Act, 18 U.S.C. § 1839, et seq.; (III) Breach of Duty of Loyalty; (IV) Tortious Interference with Prospective Business Relationships; (V) Conversion; and (VI) Conspiracy. (See generally Compl.) With its Complaint, Plaintiff filed an Order to Show Cause for a temporary restraining order ("TRO") and preliminary injunction. Defendants removed to this Court. (ECF No. 1.) The Court issued a TRO on April 4, 2018 (ECF No. 14), and the preliminary injunction motion is currently pending.

         On April 19, 2018, Defendants answered Plaintiffs Complaint and counterclaimed (ECF No. 21), and on May 21, 2018, filed an Amended Answer and Counterclaim, pleading: (I) Invasion of Privacy by Intrusion Upon Seclusion, (II) Invasion of Privacy by Public Disclosure of Private Facts, (III) False Light Invasion of Privacy, and (IV) Tortious Interference with Contractual and Business Relations. (See generally id.) On April 25, 2018, Plaintiff filed the instant Motion to Dismiss (ECF No. 23), and Defendants sought an extension to oppose (ECF No. 26). Defendants then filed an Amended Answer on May 21, 2018 pleading the same four Counts (ECF No. 28), in response to which Plaintiff submitted a "Reply Brief to Opposition Motion" (ECF No. 30), although no opposition had yet been filed. Pursuant to Defendants' requests, the Court set this Motion on an amended briefing schedule, and indicated it would consider Plaintiffs two briefs, in conjunction, in support of its Motion, and that Defendant should oppose by June 28, 2018. (ECF Nos. 34, 36.) Defendants opposed timely, and Plaintiff replied. (ECF Nos. 43, 44.) This Motion is presently before the Court.


         A motion under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3dCir. 1993). The defendant bears the burden of showing that no claim has been presented. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). When considering a Rule 12(b)(6) motion, a district court should conduct a three-part analysis. See Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). "First, the court must 'take note of the elements a plaintiff must plead to state a claim.'" Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009)). Second, the court must accept as true all of a plaintiffs well-pleaded factual allegations and construe the complaint in the light most favorable to the plaintiff. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009); see also Connelly v. Lane Constr. Corp., 809 F.3d 780, 786-87 (3d Cir. 2016). The court, however, may disregard any conclusory legal allegations. Fowler, 578 F.3d at 203.

         Finally, the court must determine whether the "facts are sufficient to show that plaintiff has a 'plausible claim for relief" Id. at 211 (quoting Iqbal, 556 U.S. at 679). If the complaint does not demonstrate more than a "mere possibility of misconduct," it must be dismissed. See Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 (3d Cir. 2009) (quoting Iqbal, 556 U.S. at 679).


         Plaintiff moves to dismiss Counts II (Invasion of Privacy by Public Disclosure of Private Facts) and III (False Light Invasion of Privacy) of Defendants' Counterclaim, arguing that these counterclaims are barred by the New Jersey litigation privilege. (See generally PL's Br., ECF No. 23-1.) In response to Defendants' Amended Counterclaim which included the additional fact that Plaintiff allegedly shared information and communications with one of its clients (compare Countercl. ¶¶ 38-52, with Am. Countercl. ¶¶ 38-54 (adding that Plaintiff shared information with Tilson official)), Plaintiff further argues that communication to one person does not qualify as publicity to adequately state a claim for either Count. (See generally PL's Reply, ECF No. 30.) In opposition, Defendants argue that the litigation privilege does not apply because Plaintiff shared Defendants' private Facebook communications with a third party outside of the scope of litigation, and because the counterclaim alleges that the statements were publicly disclosed both in the complaint and to a third party such that the claims are legally sufficient. (See generally Defs.' Opp'n, ECF No. 43.) Plaintiff argues that the instant Motion should be granted with prejudice because Defendants amended with this new allegation following Plaintiffs initial motion to dismiss. (PL's Reply Mem. to Opp'n at 1-2, ECF No. 44.)

         Under New Jersey law, a claim for invasion of privacy by public disclosure of private facts occurs where: "One [] gives publicity to a matter concerning the private life of another... if that matter publicized is of a kind that (a) would be highly offensive to a reasonable person, and (b) is not of legitimate concern to the public." Catsro v. NYT Television,895 A.2d 1173, 1178 ( N.J.Super.Ct.App.Div. 2006) (quoting Restatement (Second) of Torts § 652D (Am. Law Inst. 1977)). False light invasion of privacy occurs where a party "gives publicity to a matter concerning [another party] in a manner that places the [other] before the public in a false light," such that "(a) the false light in which the [other] was placed would be highly offensive to a reasonable person, and (b) the actor had knowledge of or acted with reckless disregard as to the falsity of the publicized matter and the false light in which the [other] would be placed.'" Ingris v. ...

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