International Paper Company v. Midland Paper Company et al, No. 2:2011cv02139 - Document 34 (W.D. Wash. 2012)
Court Description: ORDER denying 31 Defendant's Motion to Dismiss by Judge James L. Robart.(MD)
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International Paper Company v. Midland Paper Company et al Doc. 34 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 INTERNATIONAL PAPER COMPANY, 11 Plaintiff, 12 CASE NO. C11-2139JLR ORDER DENYING DEFENDANTS’ MOTION TO DISMISS v. 13 PAUL STUIT, et al., 14 Defendants. 15 I. INTRODUCTION 16 This matter comes before the court on Defendants Paul Stuit, Robin Burr, and 17 Midland Paper Company’s (“Midland”) motion to dismiss Counts II and III of Plaintiff 18 International Paper Company’s (“IP”) amended complaint pursuant to Federal Rule of 19 Civil Procedure 12(b)(6). (Mot. (Dkt. # 31).) Having considered the submissions of the 20 parties, the balance of the record, and the relevant law, and no party having requested oral 21 argument, the court DENIES Defendants’ motion (Dkt. # 31). 22 ORDER- 1 Dockets.Justia.com 1 II. BACKGROUND 2 A. Facts 1 3 IP is a leading producer of printing paper, among other things. (Am. Compl. (Dkt. 4 # 29) ¶ 12.) Xpedx is a division of IP that includes the Strategic Paper Group (“SPG”) 5 and specializes in serving the needs of magazine, catalogue, and book publishers. (Id. ¶¶ 6 3-4, 13.) Mr. Stuit was employed by xpedx from April 2005 until his resignation, 7 without notice, on December 14, 2011. (Id. ¶ 8.) At the time of his resignation, he was 8 the Vice President of SPG. (Id.) Ms. Burr was employed by xpedx from February 2004 9 until her resignation, without notice, on December 14, 2011. (Id. ¶ 9.) Ms. Burr was a 10 Customer Service Representative for SPG. (Id.) While working for xpedx, Mr. Stuit and 11 Ms. Burr serviced six accounts, one of which was for an international membership 12 warehouse operator and another of which was for a leading national department store 13 retailer, both based in Seattle. (Id. ¶ 33.) 14 Midland is a direct competitor of xpedx. (Id. ¶ 38.) On December 14, 2011, the 15 same day that they resigned from xpedx, Mr. Stuit and Ms. Burr began working for 16 Midland. (Id.) Within two days of Mr. Stuit’s and Ms. Burr’s departure from xpedx and 17 employment with Midland, the membership warehouse operator and the department store 18 retailer informed xpedx that they would be terminating their relationships with xpedx, 19 20 1 Because the court must accept all well-pleaded allegations of material fact on a motion to dismiss pursuant to Rule 12(b)(6), Wyler Summit P’ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 662 (9th Cir. 1998), the court sets forth the factual allegations in the amended complaint 22 below as if they are true. 21 ORDER- 2 1 even though they had not yet met the minimum purchase obligation in their contracts 2 with xpedx. (Id. ¶ 53.) 3 B. Procedural History 4 On December 21, 2011, IP filed the instant lawsuit against Mr. Stuit, Ms. Burr, 5 and Midland. (Compl. (Dkt. # 3).) IP asserts claims for: (1) breach of contract against 6 Mr. Stuit and Ms. Burr; (2) misappropriation of trade secrets pursuant to RCW chapter 7 19.108 against Mr. Stuit and Ms. Burr; (3) interference with actual and prospective 8 business relationship with clients and prospects against Mr. Stuit and Ms. Burr; (4) 9 interference with actual and prospective business relations with clients and prospects 10 against Midland; (5) interference with employee confidentiality agreements against 11 Midland; and (6) unfair competition pursuant to the Washington Consumer Protection 12 Act (“CPA”), RCW chapter 19.86, against Mr. Stuit and Ms. Burr. (Compl. ¶ 1.) 13 Defendants moved to dismiss IP’s complaint (Dkt. # 21), which the court granted 14 in part and denied in part on May 21, 2012 (Order (Dkt. # 28)). In its order, the court 15 dismissed all of IP’s claims except for its misappropriation of trade secrets claim, but 16 granted leave to amend. (See generally Order.) On June 5, 2012, IP filed an amended 17 complaint that included claims for misappropriation of trade secrets and interference with 18 actual and prospective business relations. (See generally Am. Compl.) On June 19, 19 2012, Defendants filed the motion to dismiss that is currently before the court, claiming 20 that IP’s amended tortious interference claims suffer from the same defects as the original 21 claims, namely that they are preempted by Washington’s Uniform Trade Secrets Act 22 ORDER- 3 1 (“the UTSA”), RCW 19.108.010 et seq. (See generally Mot.) IP opposes Defendants’ 2 motion. (Resp. (Dkt. # 32).) 3 III. ANALYSIS 4 A. Legal Standard 5 When considering a motion to dismiss under Rule 12(b)(6), the court construes the 6 complaint in the light most favorable to the non-moving party. Livid Holdings Ltd. v. 7 Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The court must accept 8 all well-pleaded allegations of material fact as true and draw all reasonable inferences in 9 favor of the plaintiff. Wyler Summit P’ship v. Turner Broad. Sys., 135 F.3d 658, 661 (9th 10 Cir. 1998). The court, however, need not accept as true a legal conclusion presented as a 11 factual allegation. Ashcroft v. Iqbal, 556 U.S. 622, 129 S. Ct. 1937, 1949-50 (2009). 12 Dismissal under Rule 12(b)(6) can be based on the lack of a cognizable legal theory or 13 the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. 14 Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). “To survive a motion to 15 dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a 16 claim to relief that is plausible on its face.’” Iqbal, 129 S. Ct. at 1949 (quoting Bell Atl. 17 Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see Telesaurus VPC, LLC v. Power, 623 18 F.3d 998, 1003 (9th Cir. 2010). “A claim has facial plausibility when the plaintiff pleads 19 factual content that allows the court to draw the reasonable inference that the defendant is 20 liable for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949. “A pleading that offers 21 ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action 22 ORDER- 4 1 will not do.’ . . . Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of 2 ‘further factual enhancement.’” Id. (quoting Twombly, 550 U.S. at 555). 3 B. Tortious Interference Claims 4 The elements of tortious interference with contractual relations or business 5 expectancy are: (1) the existence of a valid contractual relationship or business 6 expectancy; (2) that defendants had knowledge of that relationship; (3) an intentional 7 interference inducing or causing a breach or termination of the relationship or 8 expectancy; (4) that defendants interfered for an improper purpose or used improper 9 means; and (5) resultant damages. Commodore v. Univ. Mech. Contractors, Inc., 839 10 P.2d 314, 322 (Wash. 1992). “To be improper, interference must be wrongful by some 11 measure beyond the fact of the interference itself, such as a statute, regulation, recognized 12 rule of common law, or an established standard of trade or profession.” Moore v. 13 Commercial Aircraft Interiors, LLC, 278 P.3d 197, 200 (Wash. Ct. App. 2012). 14 Additionally, interference for an “improper purpose” includes interference with an intent 15 to harm. Thola v. Henschell, 164 P.3d 524, 530 (Wash. Ct. App. 2007). 16 Here, IP’s amended complaint alleges that Defendants knew of IP’s actual and 17 prospective contractual relationships and business expectancies (Am. Compl. ¶¶ 72-74, 18 80-82), Defendants “wrongfully, improperly and maliciously” interfered with these 19 contractual relationships and business expectancies (id. ¶¶ 75-76, 83-84), and 20 Defendants’ interference caused IP harm (id. ¶¶ 77, 85). These allegations sufficiently 21 allege that Defendants tortiously interfered with IP’s contractual relations and business 22 expectancies. ORDER- 5 1 Defendants nevertheless argue that IP’s tortious interference claims are preempted 2 by the UTSA. (Mot. at 6-9.) The UTSA “displaces conflicting tort, restitutionary, and 3 other law of [Washington] state pertaining to civil liability for misappropriation of a trade 4 secret.” RCW 19.108.900(1). The UTSA does not, however, affect contractual or other 5 civil liability or relief that is not based upon misappropriation of a trade secret. RCW 6 19.108.900(2)(a). Washington courts have interpreted these provisions of the UTSA to 7 mean that a plaintiff “may not rely on acts that constitute trade secret misappropriation to 8 support other causes of action.” Thola, 164 P.3d at 530 (quoting Ed Nowogroski Ins., 9 Inc. v. Rucker, 44 P.2d 1093, 1097 (Wash. Ct. App. 1997), aff’d, 971 P.2d 936 (1999)). 10 A majority of UTSA jurisdictions, including Washington: (1) assess the facts that 11 support the plaintiff’s civil claim; (2) ask whether those facts are the same as those that 12 support the plaintiff’s UTSA claim; and (3) hold that the UTSA preempts liability on the 13 civil claim unless the common law claim is factually independent from the UTSA claim. 14 Id.; Ultimate Timing, LLC v. Simms, 715 F. Supp. 2d 1195, 1208 (W.D. Wash. 2008). 15 “[P]roper application of this three-step analysis precludes duplicate recovery for a single 16 wrong.” Thola, 164 P.3d at 530. 17 In its May 21, 2012 order on Defendants’ first motion to dismiss, the court 18 concluded that IP’s UTSA claim preempted the tortious interference claims because the 19 “improper purpose” or “improper means” alleged in the complaint was the allegation that 20 Defendants wrongfully used IP’s confidential information (alleged to be a trade secret). 21 (Order at 13-14.) As such, the common law claim was not factually independent from 22 the UTSA claim. (Id.) In IP’s amended complaint, however, there is no allegation that ORDER- 6 1 the fourth element of the tortious interference claim is satisfied by the misappropriation 2 of trade secrets; rather, IP alleges that the fourth element is satisfied by the improper 3 purpose of acting “maliciously,” that is, with an intent to harm. (Am. Compl. ¶¶ 75-76, 4 83-84.) Such an allegation is independent of IP’s UTSA claim, and therefore IP’s 5 tortious interference claims are not preempted by the UTSA as it is currently pled. If, at 6 some point in the future, it becomes clear that IP is relying on acts that constitute trade 7 secret misappropriation to support its tortious interference claims, Defendants may raise 8 their preemption argument again. 9 IV. 10 CONCLUSION For the foregoing reasons, the court DENIES Defendants’ motion to dismiss (Dkt. 11 # 31). 12 Dated this 15th day of August, 2012. 13 15 A 16 JAMES L. ROBART United States District Judge 14 17 18 19 20 21 22 ORDER- 7
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