Joshua David Mellberg LLC v. Will
4:14-cv-02025
| D. Ariz. | Mar 14, 2016Background
- JDM (Joshua David Mellberg, LLC and its owner) alleges former employees and associates stole trade secrets and confidential marketing/training materials related to annuity sales and internet-based lead generation.
- Individual defendants (Will, Fine, Arceo, Godinez, Latham, Uretz) worked at JDM, signed confidentiality agreements (some), accessed and allegedly exported proprietary materials, then worked for or with a venture called JFI/Annuity Angel/Cashflow College.
- Impact Partnership (Georgia LLC) is accused of operating or benefiting from JFI and using JDM’s materials (call-center processes, training slides, marketing/adwords, client/agent lists); plaintiffs allege Impact knew or should have known the materials were improperly acquired.
- Plaintiffs asserted claims against Impact for misappropriation under the Arizona Uniform Trade Secrets Act (AUTSA), unfair competition (alternative), civil conspiracy, and aiding and abetting; Impact moved to dismiss for failure to state a claim.
- Magistrate Judge Pyle recommended denying dismissal; Impact objected; the district court reviewed de novo and adopted the R&R, overruling Impact’s objections and denying Impact’s motion to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SAC sufficiently identifies protectable trade secrets and pleads misappropriation under AUTSA | JDM: SAC alleges specific categories (internet marketing funnels, email/AdWords strategies, call-center metrics, training slides, client/agent lists) and facts showing use by Impact | Impact: Allegations are legal conclusions, many items (websites/marketing materials) not protectable, prior ruling found insufficiency, and plaintiffs rely on allegations about separate entity JFI | Denied dismissal: court finds prior findings accepted, grouped elements can be trade secrets, and SAC plausibly alleges trade secrets and circumstantial facts of misuse by Impact |
| Whether Impact can be held liable for acts tied to JFI or other non-party entities | JDM: Misappropriation includes use or disclosure by a party who knows trade secret was improperly acquired; need not be the initial thief if it uses secrets | Impact: JFI is distinct; Bischofshanusen precludes imputing a separate entity’s acts absent more than ownership/financing | Held: Allegations go beyond mere ownership/financing—pleaded coordination, transfers, meetings, contracts and subscriber agreement linking JFI and Impact are sufficient at pleading stage |
| Whether plaintiffs alleged Impact’s knowledge or reason to know trade secrets were improperly acquired | JDM: Pleads meetings while employees still at JDM, rapid replication of programs, transfers of files, same AdWords purchases, hires of former employees, and confidentiality clauses in JFI materials | Impact: No specific factual showing Impact knew of improper acquisition | Held: SAC alleges a ‘‘web’’ of circumstantial facts making Impact’s knowledge plausible; discovery allowed |
| Whether conspiracy / aiding-and-abetting and unfair competition claims survive | JDM: Pleads concerted action, coordination, and substantial assistance supporting conspiracy and aiding liability; unfair competition pleaded alternatively if information not a trade secret | Impact: Claims insufficiently pleaded; some preemption arguments raised late | Held: Claims survive pleading challenge; conspiracy and aiding reasonably inferred from coordinated conduct; unfair competition preserved as alternative theory |
Key Cases Cited
- MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir.) (plaintiff must identify trade secrets and carry burden of showing they exist)
- Imax Corp. v. Cinema Techs., Inc., 152 F.3d 1161 (9th Cir.) (trade secret description must separate secret from general or skilled knowledge)
- Enterprise Leasing Co. v. Ehmke, 197 Ariz. 144 (Ariz. Ct. App. 1999) (a compilation of public elements can be a trade secret if integrated to produce competitive advantage)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S.) (legal conclusions not entitled to assume truth; pleading must include well-pleaded factual allegations)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (U.S.) (court must assess allegations holistically when evaluating plausibility)
- Bischofshanusen, Vasbinder & Luckie v. D.W. Jaquays Min. & Equip. Contractors Co., 145 Ariz. 204 (Ariz. Ct. App. 1985) (corporate separateness can preclude imputing subsidiary acts absent sufficient connecting allegations)