931 F. Supp. 2d 514
S.D.N.Y.2013Background
- Plaintiffs allege CFAA, Lanham Act, and state-law fraud, contract, tort, and accounting claims arising from Janou Pakter’s alleged misappropriation and competing enterprise.
- JBC purchased substantially all assets of JPI in 2012; JPI’s assets included personal property and intellectual property under the Asset Purchase Agreement (APA).
- Janou agreed to continue in the business and non-compete; she allegedly set up Janou Talent Advisory International (JTAI) and solicited clients while employed by JBC.
- June–July 2012 email and other communications allegedly show Janou’s involvement with clients and fee-sharing with Puglia and Theobalt to divert business.
- Court granted in part and denied in part, dismissing CFAA against all; Lanham Act against Puglia and Theobalt; fraud against Janou and Tavin; and others as described in the opinion.
- Ginger Puglia’s motion to dismiss all claims was granted in full; remaining defendants’ claims were resolved with various dismissals and survivals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CFAA scope for employee misuse | CFAA covers misused access to employer data by employees. | CFAA requires lack of authorization or exceedance of access; misuse of allowed access not covered. | CFAA claims dismissed; narrow interpretation applied. |
| Lanham Act ownership of use right to Janou’s name | APA transferred rights to use Janou’s name as a trade name. | APA does not clearly convey rights to Janou’s personal name. | Discovery required on ownership; Lanham Act claim against Tavin dismissed. |
| Fraud in the inducement sufficiency | Defendants made false forward-looking revenue projections to induce the APA. | Forward-looking statements are not actionable without strong inference of intent. | Fraud claim dismissed for lack of strong inference of scienter. |
| Tortious interference with contract viability | Defendants’ actions induced Janou and Tavin to breach the APA. | Defendants were not third parties to the contract; claims fail for lack of causation. | Dismissed as to Janou and Tavin; also dismissed as to JTAI due to lack of direct causation by non-parties. |
| Tortious interference with business relations viability | Puglia interfered with clients’ relationships for competitive gain. | Interference must be more than lawful competitive actions. | Dismissed as to Puglia; not pleaded to state a cognizable claim. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard; need factual allegations)
- United States v. Nosal, 676 F.3d 854 (9th Cir. 2012) (narrow vs broad CFAA interpretation; misuse of authorized access)
- Abboud v. JA Apparel Corp., 682 F. Supp. 2d 294 (S.D.N.Y. 2010) (descriptive use and fair use under Lanham Act; use of name)
- Madrigal Audio Labs., Inc. v. Cello, Ltd., 799 F.2d 814 (2d Cir. 1986) (scope of rights conveyed in personal-name/trade-name contexts)
- Cohen v. Koenig, 25 F.3d 1168 (2d Cir. 1994) (fraud pleading standards and misrepresentation elements)
- Carvel Corp. v. Noonan, 3 N.Y.3d 182 (NY 2004) (interference with prospective relationships requires improper conduct)
- Wall v. CSX Transp., Inc., 471 F.3d 410 (2d Cir. 2006) (elements of common-law fraud in NY context; 9(b) standards)