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Frutta Bowls Franchising, LLC v. Bitner

United States District Court, D. New Jersey

December 10, 2018

FRUTTA BOWLS FRANCHISING LLC, Plaintiff,
v.
JUSTIN BITNER, et. al., Defendants.

          OPINION

          Freda L. Wolfson United States District Judge.

         This matter comes before the Court on defendants Grain & Berry Cafe, LLC, and Acai Group LLC's (the “Florida LLCs”) Motion to dismiss Plaintiff Frutta Bowls Franchising, LLC's (“Plaintiff” or “Frutta”) First Amended Complaint against the Florida LLCs, Justin Bitner (“Bitner”), [1] Douglas Lang (“Lang”), and Jake E. Kessler, III (“Kessler”) (cumulatively, “Defendants”), pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6).[2] Plaintiff's claims arise from Defendants' alleged infringement of Plaintiff's trade secrets, as well as its confidential and proprietary information, through Lang and Kessler's development of a substantially similar business. For the reasons set forth below, the Florida LLCs' Motion is GRANTED.

         I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         Frutta “is a franchise system that operates fruit bowl and smoothie locations[, ]” and its principal place of business is located in Monmouth County, New Jersey. Amended Complaint (“Am. Compl.”), ¶ 7. Bitner is a New Jersey resident who was formerly employed with Frutta, and is alleged to be Lang's brother. Id. ¶¶ 8-9. Lang and Kessler reside in Florida and wholly and exclusively control the Florida LLCs, both of which are Florida limited liability companies.[3] Id. ¶¶ 9-13.

         In February 2016, Brooke Gagliano (“Brooke”) and her father, Patrick Gagliano (“Pat”), developed a business model for Frutta, described as a tropical fruit bowl and smoothie eatery, with the intention of franchising the business nationwide. Id. ¶¶ 17, 22, 28. In June 2017, Brooke, Pat, and Bitner formally executed an employment agreement, pursuant to which Bitner was hired as an executive employee and provided with an equity interest in Frutta. Id. ¶¶ 30-31. His responsibilities included growing the franchise. Id. ¶ 29.

         During the course of his employment, Bitner allegedly communicated Frutta's confidential and proprietary information to Lang, through either “daily phone calls” or electronic correspondences. Id. ¶¶ 37, 49. Specifically, Bitner is alleged to have provided Lang with highly sensitive materials including Frutta's “Franchise Construction Process Manual” (“Construction Manual”) and the Operations Manual. Id. ¶¶ 37, 48. The Construction Manual is comprised of the following materials:

instructions of ‘how to' build out a store[, ] . . . contact information for vendors[, ] . . . architectural drawings[, ] . . . photographs that demonstrate . . . how to ensure electrical and ductwork are efficiently installed[, ] . . . and precise dimensions and illustrations regarding the aesthetic features that make the Frutta franchises distinctive and identifiable[.]

Id. ¶¶ 38-40. Moreover, the Operations Manual includes a “comprehensive reference for nearly all facets of operating a location with a comprehensive checklist, exhaustive lists of inventory and supplies, and a closing checklist for daily tasks, employment documents, and social media procedures.” Id. ¶ 40. The communications between Bitner and Lang allegedly continued through July 2017, subsequent to which a Grain & Berry, developed by Lang, opened in Florida. Certification of Brooke Gagliano (dated July 9, 2018) (“Brooke Cert.”), ¶ 7; Certification of Patrick Gagliano (dated July 8, 2018) (“Pat Cert.”), ¶ 7. Grain & Berry is similarly in the business of selling fruit and smoothie products. Am. Compl., ¶ 1.

         Following its opening, Frutta “received evidence” which “suggest[ed] that Grain & Berry had . . . used Frutta's trade secrets and knowhow in making [its] fruit products including information from [Frutta's] Operating Manual and Construction Manual.” Id. ¶¶ 2, 51, 59. In this regard, Grain & Berry is alleged to share a “striking resemblance” with Frutta, such that the similarities between the two businesses are likely to cause confusion among ordinary customers in terms of “the source, sponsorship, affiliation, and quality of the products sold by Frutta and Defendants.” Id. ¶ 3.

         As a result, on February 21, 2018, Frutta brought the instant action against Defendants. Frutta subsequently filed its First Amended Complaint on May 30, 2018, in which the following nine counts are alleged against Defendants: (1) violation of Defense of Trade Secrets Act; (2) trade dress infringement; (3) violation of New Jersey Trade Secrets Act; (4) tortious interference with prospective economic advantage; (5) civil conspiracy to commit tort; (6) fraud in the inducement; (7) breach of fiduciary duty; (8) judicial expulsion under RULLCA; and (9) unjust enrichment. Id. ¶¶ 79-165.

         Currently, the Florida LLCs move to dismiss Frutta's First Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), for lack of personal jurisdiction and failure to state a claim. Frutta opposes the motion.

         II. DISCUSSION

         A. Standard of Review

         To withstand a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), a plaintiff bears the burden of establishing the court's personal jurisdiction over the moving defendant by a preponderance of the evidence. D'Jamoos ex rel. Estate of Weingeroff v. Pilatus Aircraft Ltd., 566 F.3d 94, 102 (3d Cir. 2009); see Cerciello v. Canale, 563 Fed.Appx. 924, 925 n.1 (3d Cir. 2014) (noting that the plaintiff “‘bears the burden to prove, by a preponderance of the evidence,' that personal jurisdiction is proper.”) (citation omitted). “However, when the court does not hold an evidentiary hearing on the motion to dismiss, the plaintiff need only establish a prima facie case of personal jurisdiction and the plaintiff is entitled to have its allegations taken as true and all factual disputes drawn in its favor.” Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004). Still, to meet its burden, the plaintiff must establish “jurisdictional facts through sworn affidavits or other competent evidence. . . . [A]t no point may a plaintiff rely on the bare pleadings alone in order to withstand a defendant's Rule 12(b)(2) motion to dismiss for lack of in personam jurisdiction.” Id. at 101 (citation and internal quotation marks omitted). If the ...


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