NBTY, Inc. v Piping Rock Health Prods., LLC
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NBTY, Inc. v Piping Rock Health Prods., LLC 2015 NY Slip Op 32839(U) September 18, 2015 Supreme Court, Suffolk County Docket Number: 604639-15 Judge: Elizabeth H. Emerson Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: SUFFOLK COUNTY CLERK 09/28/2015 11:37 AM 1] NYSCEF DOC. NO. 70 INDEX NO. 604639/2015 RECEIVED NYSCEF: 09/28/2015 INDEX NO.: 604639-15 SHORT FORM ORDER SUPREME COURT - STATE OF NEW YO COMMERCIAL DIVISION TRIAL TERM PART 44 SUFFOLK CO TY PRESENT: Honorable Elizabeth H. Emerson MOTION DATE: 5-21- 5; 7-30-15 SUBMITTED: 7-16- 5; 7-30-15 MOT ION NO.: 001- ID 002- G 005- OT D NBTY, INC., Plaintiff, -againstPIPING ROCK HEALTH PRODUCTS, LLC, MICHAELS. MCNAMARA, and JAMES SZCZESNY, Defendants. Attorneys for Plaint ff 885 Third Avenue New York, New Yor 10022 JASP AN SCHLES GER LLP Attorneys for Defeo ants 300 Garden City Pia Garden City, New Y rk 11530 Upon the following papers numbered 1-36 read on this motions seekin sealing of confidential document, and to dismiss the complaint ; Notice of Motion/ supporting papers 1-5, 22-25, 26-32 ; Notice of Cross Motion and supporting pa Affidavits and s upporting papers 6-21, 33-35 ; Replying Affidavits and s upporti a reliminar in ·unction rder to Show Cause and rs_ _ ; Answering g papers ___JQ_; it is, ORDERED that the plaintiffs motions (001 , 002) and defendants motion (005) are consolidated for the purpose of this determination; and it is further ORDERED that the plaintiffs motion (001) seeking a prelimina defendants is denied; and it is further injunction against ORDERED that the plaintiff's motion (002) seeking an order to fi e a confidential exhibit under seal is granted unopposed; and it is further ORDERED that the defendants' motion (005) seeking an order di missing the complaint is granted to the extent that the fourth cause of action is dismissed; and it s further [* 2] Index No.: 604639-15 Page 2 ORDERED that the defendants are directed to serve their answer pursuant to CPLR 32 11 (f); and it is further ORDERED that the parties are directed to appear at a status conf rence in Supreme Court, Part 44, at 210 Center Drive, Riverhead, New York on Thursday, ovember 19, 2015 at 10:00 a.m. In this breach of contract action, plaintiff seeks damages from de ·ndants on the ground that defendants took clients and an allegedly confidential spreadsheet in rder to compete with plaintiff. Plaintiff discovered emails between defendant Michael McNa ara ("McNamara") and defendant James Szczesny ("Szczesny"), an employee of defendant Pipin Rock Health Products, LLC ("Piping Rock"} and commenced the instant action on May 1, 2015. The complaint alleges that McNamara emailed a list containing 4 of plaintiffs clients and other information to Szczesny while still employed with plaintiff, an shortly thereafter was hired by Piping Rock. The complaint further alleges that McNamara, wh was employed as a Regional Manager of plaintiff, violated a non disclosure agreement whic he signed in 2005, and violated a confidentiality and non-disclosure policy in the company empl yee handbook, which prohibited the disclosure of confidential information. The complaint con ins six causes of action: misappropriation of trade secrets, unfair competition, breach of co tract, breach of fiduciary duty, tortious interference with prospective economic advantag and unjust enrichment. Plaintiffs now move (00 1) for a preliminary injunction and also m ve (002) for an order sealing Exhibit Fin the Court's E-Filing System. Defendants move (005 pursuant to CPLR 32 11 (a) (7) to dismiss the complaint on the ground that the complaint fai s to state a cause of action. In reviewing plaintiff's motion for a preliminary injunction, an inj not be awarded unless the activity sought to be restrained is actionable, th is reasonably suited to abate such activity, and where the plaintiffs right i manifest (Sysco Corp. v Maines Paper & Food Scrv., 254 AD2d 611). has failed to meet its burden with respect to its request for injunctive retie is denied. ction will generally t the injunction issued clear and the wrong is t this time, plaintiff . Therefore, the motion Turning to plaintiffs motion to seal Exhibit F in the Court's E-fil ng system bye-filing a redacted customer list and placing an unredacted customer list under seal, plaintiff adheres to its belief that the customer list is a trade secret and should be kept confidenti 1. The court has the discretion to seal a record for good cause shown pursuant to 22 NYCRR 216. 1. The motion is unopposed. Therefore, in the court's discretion and prior to determining hether this list qualifies as a trade secret, the motion is granted. [* 3] Index No.: 604639-15 Page 3 Turning to defendants' motion to dismiss, in support, defendants ubmit among other things, the pleadings, the personal affidavit of Albert Anastasi, Vice Pres ent of Sales and Marketing for Piping Rock, a copy of Exhibit F, and other documents. On a motion to dismiss pursuant to CPLR 3211 (a) (7), on the gro nd that the complaint fails to state a cause of action, the Court is limited to examining the plea ng to determine whether it states a cause of action (Guggenheimer v Ginzburg, 43 NY2 268). In examining the sufficiency of the pleading, the Court must accept the facts alleged th rein as true and interpret them in the light most favorable to the plaintiff (Board of Educ tion v State Education Dep't, 116 AD2d 939, later proc 135 AD2d 903). Thus, on s ch a motion, the Court's sole inquiry is whether the facts alleged in the complaint fit withi any cognizable legal theory, not whether there is evidentiary support for the complaint (Leon Martinez, 84 NY2d 83). Only affidavits submitted by the plaintiff in support of the causes of ction may be considered on a motion of this nature (Rovello v Orolmo Realty Co., 40 NY2d 633, 389 NYS2d 314). Therefore, under these circumstances, the court rejects the affidavit f Albert Anastasi on behalf of defendants. Turning to that branch of the motion to dismiss the first cause of ti on alleging misappropriation of trade secrets, the complaint alleges that defendants ar using the information found on the spreadsheet called "Exhibit F" which McNamara emailed to zc:tesny. In addition, the complaint alleges that this information is a trade secret inasmuch as it ontained confidential sales and customer preferences which was not available to the public. In upport of the motion, defendants contend that the list of clients did not contain any confidential ·nformation. Defendants further state that the list was comprised of publicly available i ormation and McNamara's recollections and not subject to trade secret protection. De£ ndants claim that the same information is available on several web sites which provide detailed sales data, and that the customers on the list are widely known within the nutritional supplement ndustry. Defendants seek judicial notice of the existence of this information on the internet. In determining whether a trade secret exists, several factors shoul be considered: "(l) the extent to which the information is known outside of [the] business; (2) th extent to which it is known by employees and others involved in [the] business; (3) the extent f measures taken by [the business] to guard the secrecy of the information; (4) the value of the information to [the business] and [its] competitors; (5) the amount of effort or money expend d by [the business] in developing the information; (6) the ease or difficulty with which the infer ation could be properly acquired or duplicated by others" (Ashland Mgmt. v Janien, 2 NY2d 395, 407). The existence of a trade secret is generally a question of fact (Big Vision rivatc, Ltd. v. E.I. Dupont De Nemours & Co., 1 FSupp3d 224, 267). Here, upon viewing e complaint in the light most favorable to plaintiff, the court finds that the first cause of acti was sufficiently stated. In addition, the court declines to take judicial notice of the facts d fendants contend exist on the internet on the ground that these facts do not have sufficient notori ty to make it proper to asume their existence without proof (Dollas v Grace, 225 AD2d 319, 320 quoting Ecco High [* 4] Index No.: 604639-15 Page4 Frequency Corp. v Amtorg Trading Corp., 81 NYS2d 610, 617, af(d 2 4 App Div 982). Thus, the motion to dismiss the first cause of action is denied. Turning to that branch of the motion to dismiss the second cause faction which alleges unfair competition by all defendants, an employee's illegal physical tak.in or copying of an employer's files or confidential information constitutes actionable unfair ompetition (see, Leo Silfen, Inc. v Cream, 29 NY2d 387, 391-392; Continental Dynamics C rp. v Kanter, 64 AD2d 975; see also, Levine v Bochner, 132 AD2d 532; Advanced Mag ification Instruments, Ltd. v Minuteman Optical Corporation, 135 AD2d 889) In general, in a claim for unfair competition, the complaint must allege the bad faith misapprop iation of a commercial advantage belonging to another by exploitation of proprietary informatio or trade secrets (Eagle Comtronics, Inc. v Pico Prods., Inc., 256 AD2d 1202, 1203). Here, th complaint alleges that the McNamara's behavior of emailing a document from company files de onstrates bad faith and an intent to use the information to plaintiffs disadvantage. In suppo of the motion, defendants contend that the information which was taken by McNamara ·d not consist of trade secrets and there is no allegation that defendants acted with the sole purp se of harming plaintiff. In addition, defendants state that the information is not proprietary and th t there is widespread information regarding these customers on the internet. The court finds th t, in viewing the cause of action in the light most favorable to the plaintiff, that the second cause faction was adequately stated. Thus, the motion to dismiss the second cause of action is denied. Turning to that branch of the motion to dismiss the third cause of ction, a complaint adequately states a cause of action for breach of contract when it alleges ( ) the existence of a contract; (2) the plaintiff's performance under the contract; (3) the defend t's breach of that contract; and (4) damages as a result of the breach (JP Morgan Chase v .H. Electric of N.Y., Inc., 69 AD3d 802). The complaint alleges that McNamara executed a r strictive covenant in 2005 and that McNamara breached the agreement. While the defendants ay refute the factual allegations, the allegations set forth are clearly sufficient to state claims der the general category of breach of contract. Thus, the motion to dismiss the third cause of action is denied. Turning to that branch of the motion to dismiss the fourth cause o action, alleging a breach of fiduciary duty by McNamara, such a claim cannot survive when it is premised upon allegations substantially identical to a pied claim for breach of contract ( illiam Kaufman Org., Ltd. v Graham & James LLP, 269 AD2d 171 ). Accordingly, the ourth cause of action is dismissed. Turning to that branch of the motion to dismiss the fifth cause of a tion, alleging tortious interference with a prospective economic economic advantage against all efendants, under New York law, "the plaintiff must allege that it had a business relationship with a third party, that the defendant knew of that relationship and intentionally interfered with it, th the defendant acted solely out of malice, or used dishonest, unfair, or improper means, and tha the defendant's interference caused injury to the relationship" (Kirch v Liberty Media C rp., 2449 F.3d 388, [* 5] Index No.: 604639-15 Page 5 400). In the complaint, plaintiff alleges that McNamara stole a client list with the intention of using it in his new employment to contact the clients and induce them to rder Piping Rock's products. At this stage of the litigation, accepting the allegations as true, the Court finds that plaintiff has set forth causes of action for tortious interference with existi g and future contracts based on allegations that go far beyond those for breach of contract. Thu ', the motion to dismiss the fifth cause of action is denied. Turning to that branch of the motion to dismiss the sixth cause of ction, alleging unjust enrichment, New York law provides that the defendant was enriched at p aintiff's expense, and that it is against equity and good conscience to permit the defendant to re ain what is sought to be recovered (Robertson v Wells, 95 AD3d 862). Although defendants arg e that this cause of action must be dismissed as duplicative of the breach of contract claim, s ch is not the case. Where there is a bona fide dispute as to the existence of a contract plainti f may proceed upon a theory of quasi contract and breach of contract and will not be required t elect its remedies. Plumitallo v Hudson Atlantic Land Co., 74 AD3d 1038); AHA Sales, nc. v Creative Bath Prods., Inc., 58 AD3 d 6). Moreover, it is well settled that a plaintiff ma plead both breach of contract and unjust enrichment claims in the alternative (see, e.g., Augu ton v Spry, 282 AD2d 489). Thus, the motion to dismiss the sixth cause of action is denied. Accordingly, the motion to dismiss the complaint is granted to th extent that the fourth cause of action is dismissed. Dated: September 18, 2015 t ... .... ~• • ·,«. · - ., ..
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