AUA Private Equity Partners, LLC v. Soto
1:17-cv-08035
S.D.N.Y.Apr 5, 2018Background
- AUA hired Astrid Soto as VP of Business Development in 2014; Soto signed an offer letter, a Compliance Manual acknowledgement, and an Employee Policies & Procedures handbook that imposed confidentiality and email/cloud-storage restrictions.
- During employment Soto had access to confidential investor information, investor reports, and other material AUA alleges are trade secrets.
- On Sept. 8, 2017 (after the DTSA enacted), Soto allegedly uploaded AUA files from her work laptop to her personal Google Drive, deleted local files and browser history, and later was terminated on Sept. 11, 2017.
- AUA sent demand and cease-and-desist letters; Soto’s counsel acknowledged she possessed AUA documents but Soto did not return them; forensic review confirmed the uploads and forwarded emails to personal accounts and to a competitor’s employee.
- AUA sued under the Defend Trade Secrets Act (DTSA) and for New York state claims (breach of contract, misappropriation); the court previously issued temporary restraining order and preliminary injunction; Soto moved to dismiss (and alternatively for summary judgment).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint pleads misappropriation under the DTSA | AUA: uploading employer files to personal Google Drive and retaining them after termination plausibly alleges acquisition by improper means | Soto: AUA fails to plead disclosure or use; DTSA requires use/disclosure, so pleading acquisition alone is insufficient | Court: Denied dismissal — DTSA’s definition of misappropriation includes acquisition by improper means; AUA plausibly pleaded acquisition (uploading in violation of duties) |
| Whether AUA adequately pleaded a "trade secret" | AUA: alleges information derived independent value and reasonable secrecy measures (confidentiality agreements, policies) | Soto: did not contest at motion to dismiss that pleading on trade-secret element was sufficient | Court: Assumed trade-secret allegations sufficient for purposes of motion |
| Whether alleged uploads constitute “acquisition” under DTSA | AUA: uploading files gave Soto possession/control in violation of duties — qualifies as acquisition | Soto: During employment she merely had "access," not possession or control; acquisition requires dominion/exclusion | Court: Uploading to personal cloud while breaching confidentiality plausibly amounts to acquisition by improper means (citing UTSA/precedent) |
| Whether case should be decided on summary judgment now | AUA: discovery needed; factual record not complete | Soto: moved alternatively for summary judgment based on existing record | Court: Declined to decide summary judgment now — motion premature before close of discovery |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard: courts accept factual allegations as true but not legal conclusions)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility pleading standard)
- RKI, Inc. v. Grimes, 177 F. Supp. 2d 859 (N.D. Ill. 2001) (employee downloading employer trade secrets to personal computer can constitute acquisition/misappropriation)
- LeJeune v. Coin Acceptors, Inc., 849 A.2d 451 (Md. 2004) (transfer of confidential employer files to personal media on last day of employment supports misappropriation)
- Chen v. Major League Baseball Props., Inc., 798 F.3d 72 (2d Cir. 2015) (statutory interpretation starts with plain meaning of terms)