Hedgeye Risk Management, LLC v. Heldman
271 F. Supp. 3d 181
D.D.C.2017Background
- Hedgeye purchased Potomac Research Group’s assets in December 2015; Paul Heldman worked briefly for Hedgeye (≈5 weeks) then left to form Heldman Simpson Partners (HSP).
- Hedgeye alleges Heldman, while still employed, solicited clients and employees, used Hedgeye resources, connected USB devices, accessed many files on the Hedgeye network, performed contact searches and sent meeting-request emails; a forensic exam by Setec informed these allegations.
- Hedgeye’s operative amended complaint asserts breach of fiduciary duty, tortious interference with business relations, and seeks a constructive trust; Hedgeye later moved to add CFAA and conversion claims.
- Defendants moved to dismiss or for summary judgment; Heldman submitted a declaration denying misuse, solicitation, or unauthorized access. Hedgeye requested discovery under Rule 56(d) to oppose summary judgment.
- The court (Moss, J.) denied summary judgment as premature under Rule 56(d), denied leave to amend to add a CFAA claim and conversion claim as futile (but allowed refiling if defects cured), dismissed tortious interference as conceded (without prejudice), and dismissed the constructive-trust count as a remedy rather than a standalone claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of fiduciary duty | Heldman solicited clients/employees and misused proprietary information and Hedgeye instrumentalities while employed | Activities were legitimate transition efforts; no factual showing of disloyal conduct | Complaint plausibly states breach; motion to dismiss denied (survives Iqbal/Twombly) |
| Tortious interference | Heldman induced clients/employees to leave Hedgeye | Insufficient factual allegations of causation/damages | Claim dismissed without prejudice as Hedgeye did not oppose defense argument (treated as conceded) |
| Constructive trust (pleading as cause of action) | Equitable remedy sought for profits from alleged wrongdoing | Constructive trust is a remedy, not an independent cause of action | Count dismissed; request converted to prayer for relief |
| CFAA (proposed amendment) | Heldman accessed protected computers and files beyond authorization to obtain value for HSP | Hedgeye fails to allege access to a "protected computer" or that Heldman accessed without/exceeded authorization | Amendment denied as futile: protected-computer element met, but allegations insufficient to show ‘‘without authorization’’ or ‘‘exceeds authorized access’’ under court’s CFAA reading |
| Conversion (proposed amendment) | Heldman/HSP converted Hedgeye’s customer lists, research, payments, etc. | Allegations are conclusory; no specific acts showing dominion or deprivation | Amendment denied as futile; complaint lacks factual allegations showing exercise of dominion or specific misappropriation |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading plausibility standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (complaint must state plausible claim)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standards)
- Convertino v. U.S. Dep’t of Justice, 684 F.3d 93 (Rule 56(d) affidavit requirements)
- United States v. Nosal, 676 F.3d 854 (CFAA: statute targets unauthorized access, not mere misuse)
- LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (employer authorizes employee access to company computer)
- United States v. John, 597 F.3d 263 (broader CFAA interpretation—circuits split)
- United States v. Valle, 807 F.3d 508 (CFAA focuses on access, not misuse)
- WEC Carolina Energy Sols., LLC v. Miller, 687 F.3d 199 (narrow reading of "exceeds authorized access")
- Foman v. Davis, 371 U.S. 178 (leave to amend: futility grounds)