437 F.Supp.3d 367
S.D.N.Y.2020Background:
- In Oct. 2016 Iacovacci sued Brevet entities in New York state court alleging wrongful termination and that Brevet accessed his personal computer, external drives, and email; state defendants asserted multiple counterclaims including trade-secret misappropriation.
- Iacovacci filed a separate federal action in Sept. 2018 alleging CFAA, Wiretap Act, SCA, and common-law conversion/trespass based on alleged hacking of his devices.
- Defendants asserted ten counterclaims in the federal case (nine state-law claims and one DTSA claim), many mirroring counterclaims in the State Action; BCM is a counterclaim-plaintiff in federal suit but not formally a party in state court.
- Iacovacci moved to dismiss the federal counterclaims under Rule 12(b)(1) (Colorado River abstention) and Rule 12(b)(6) (attack on DTSA and NY trade-secret claims for lack of specificity and temporal scope).
- The state action had considerably advanced (filed ~2 years earlier, produced ~270,000 pages of discovery and numerous motions), but the federal court previously found the federal claims non-duplicative; this motion was reassigned and decided by Judge Pauley.
- Court denied dismissal: Colorado River abstention not warranted on balance of factors; DTSA and New York trade-secret counterclaims survive Rule 12(b)(6) for pleading trade secrets and misappropriation (including alleged post-enactment conduct).
Issues:
| Issue | Plaintiff's Argument (Iacovacci) | Defendant's Argument | Held |
|---|---|---|---|
| Whether court should abstain under Colorado River because federal counterclaims mirror state counterclaims | Federal court should abstain; concurrent state action will resolve same issues | Cases are not sufficiently different to require abstention; DTSA claim and BCM's non-party status in state court weigh against abstention | Denied; actions are parallel but overall Colorado River factors do not favor dismissal — federal jurisdiction retained |
| Whether DTSA and NY trade-secret claims plead a protectable trade secret with requisite specificity | Pleadings are vague, generic, and therefore fail to identify trade secrets | Complaint alleges specific categories and documents, protective measures, and economic value | Denied; allegations plausibly identify trade secrets and steps taken to protect them |
| Whether DTSA applies given alleged misappropriation pre-dates DTSA enactment (May 11, 2016) | DTSA inapplicable because misappropriation occurred before enactment | Complaint alleges misappropriation continued through Oct. 2016 (post-enactment) | Denied; DTSA claim survives because complaint plausibly alleges post-May 11, 2016 misuse |
Key Cases Cited
- Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (U.S. 1976) (establishes doctrine permitting exceptional abstention when parallel state litigation warrants it)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (directs pragmatic, flexible Colorado River analysis and emphasizes strong presumption in favor of federal jurisdiction)
- Niagara Mohawk Power Corp. v. Hudson River-Black River Regulating Dist., 673 F.3d 84 (2d Cir. 2012) (reiterates federal courts’ "virtually unflagging" obligation to exercise jurisdiction)
- Woodford v. Cmty. Action Agency of Greene Cty., Inc., 239 F.3d 517 (2d Cir. 2001) (discusses Colorado River factors and relevance of differing remedies such as attorneys’ fees)
- De Cisneros v. Younger, 871 F.2d 305 (2d Cir. 1989) (federal-law presence disfavors abstention)
- Integrated Cash Mgmt. Servs., Inc. v. Digital Transactions, Inc., 920 F.2d 171 (2d Cir. 1990) (sets New York trade-secret factors for analyzing secrecy, value, and protectiveness)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading must state a plausible claim for relief)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must raise claim above speculative level)