L-3 Communications Corp. v. Jaxon Engineering & Maintenance, Inc.
863 F. Supp. 2d 1066
D. Colo.2012Background
- L3 (plaintiffs) allege trade secrets and confidential information were misused by former L3 employees who formed Jaxon Engineering and Maintenance, Inc.
- Defendants include Randall White, his wife Joni White, and other former L3 employees now involved with Jaxon, plus non-employee defendants.
- In 2007 Randall White conceived leaving L3 to start a competing business; in 2008 Jaxon was formed; White and others allegedly diverted L3 equipment and trade secrets to Jaxon.
- In 2009 Jaxon allegedly won Serco contracts through alleged collusion with a Serco representative, using L3’s trade secret information.
- L3 asserted a wide array of claims including RICO/COCCA, patent infringement, trade secrets, contract breaches, conversion, Lanham Act, tortious interference, fiduciary duty, unjust enrichment, civil conspiracy, civil theft, Sherman Act, and unfair competition.
- Defendants moved to dismiss, and discovery proceeded, including a protective order allowing a L3 technical advisor to access certain confidential information.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of RICO/COCCA predicate acts | L3 pleads a scheme to defraud via mail/wire fraud and an associated enterprise | L3 fails to plead with required particularity | RICO/COCCA predicate acts dismissed for lack of particularity |
| Patent infringement pleading sufficiency | L3 identified the patents and devices allegedly infringing | Pleading lacked details on how infringement occurred | Patent claims adequately pled to put the Defendants on notice |
| Trade secrets claim viability under U.S. § 7-74-101 et seq. | L3 pleads specific trade secrets misappropriated by Defendants | L3 failed to identify all misappropriated secrets and misidentified defendants | Trade secrets claim not dismissed; sufficient specificity at pleading stage |
| Lanham Act false advertising liability | Liability should extend to certain employees under aiding/abetting or agency theory | No vicarious/agency liability under properly limited Lanham Act theories; some defendants should be dismissed | Lanham Act claims dismissed as to named employees (agency theory not established) but allowed against some others at this stage |
| Tortious interference with prospective economic advantage | Defendants rigged bidding to divert Serco contracts from L3 to Jaxon | Insufficient specificity and lack of clear and proximate causation | Claim sustained against Jaxon, Randall White, and Susan Rettig; dismissed as to others |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for Rule 12(b)(6))
- Bixler v. Foster, 596 F.3d 751 (10th Cir. 2010) (elements of a RICO/COCCA claim)
- McZeal v. Sprint Nextel Corp., 501 F.3d 1354 (Fed.Cir.2007) (pleading patent infringement requires notice of asserted claims)
- Tara Woods Ltd. Partnership v. Fannie Mae, 731 F.Supp.2d 1103 (D. Colo. 2010) (RICO/COCCA pleading standards in Colorado context)
- Sitkin Smelting & Refining Co. v. FMC Corp., 575 F.2d 440 (3d Cir. 1978) (concept of sham bidding and its antitrust implications)