Schroeder v. Pinterest Inc.
133 A.D.3d 12
N.Y. App. Div.2015Background
- Plaintiff Theodore Schroeder founded Rendezvoo and later Skoop Media to develop a novel social web application (bulletin-board style "boards," infinite scroll, product discovery model); he alleges he spent thousands of hours building the technology and retained confidential technical information.
- Cohen was introduced as an investor/mentor, joined as Chairman/CEO of Rendezvoo and Skoop Media, agreed to restrictive covenants, and allegedly had fiduciary duties to the companies and Schroeder.
- After internal disputes and an alleged strategic deadlock (2007–2008), Cohen purportedly left active involvement; plaintiffs allege he nonetheless retained confidential information and later provided it to Pinterest founders (met in 2009).
- Pinterest launched in 2010 with features plaintiffs say mirror Rendezvoo/Skoopwire (boards, pins, infinite scroll, product-discovery focus).
- Plaintiffs sued Cohen, NY Angels, and Pinterest (2013) asserting breach of fiduciary duty, trade-secret and idea misappropriation, misappropriation of skills/expenditures, promissory estoppel, unjust enrichment, and aiding-and-abetting; defendants moved to dismiss.
- The Appellate Division reinstated claims for breach of fiduciary duty, trade-secret and idea misappropriation, and misappropriation of skills/expenditures against Cohen (and vicarious liability for NY Angels), but affirmed dismissal of all claims against Pinterest except as to those pled with particularity; promissory estoppel against Cohen and aiding/unenrichment claims against Pinterest were dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of fiduciary duty (Cohen) | Cohen was an officer/CEO who owed loyalty and misused confidential info to benefit Pinterest | Cohen had abandoned/resigned before 2009, so no fiduciary duty at time of alleged transfer | Claim reinstated: pleadings plausibly allege Cohen remained a fiduciary or that wrongful acts had inception while fiduciary; factual question for later stage |
| Aiding & abetting breach (Pinterest) | Pinterest knowingly received and used Cohen's stolen ideas and thus knowingly participated | Pinterest lacked actual knowledge of Cohen's fiduciary status or that disclosure breached duties | Dismissed: plaintiffs failed to plead Pinterest's actual knowledge and participation with particularity |
| Trade-secret/idea misappropriation (Cohen; Pinterest) | Schroeder possessed confidential, valuable tech/ideas; Cohen gave them to Pinterest; Pinterest used them | Pinterest: no confidential relationship or improper means; Cohen: fiduciary misuse is actionable | Against Cohen: trade-secret and idea claims survive (limited to non-public confidential tech/ideas). Against Pinterest: dismissed for lack of direct relationship / improper acquisition allegations |
| Promissory estoppel (Cohen) | Cohen’s July 1, 2008 email promising not to profit from Schroeder's work induced reliance | No demonstrable detrimental reliance alleged | Dismissed: complaint fails to plead specific detrimental reliance or injury caused by the promise |
Key Cases Cited
- Beard Research, Inc. v. Kates, 8 A.3d 573 (Del. Ch. 2010) (elements and scope of fiduciary duty/breach under Delaware law)
- Agostino v. Hicks, 845 A.2d 1110 (Del. Ch. 2004) (officers/directors owe fiduciary duties to corporation and shareholders)
- William Penn P’ship v. Saliba, 13 A.3d 749 (Del. 2011) (manager duties in Delaware LLCs)
- Carsanaro v. Bloodhound Techs., Inc., 65 A.3d 618 (Del. Ch. 2013) (fiduciary loyalty and misuse of position)
- Omnicare, Inc. v. NCS Healthcare, Inc., 809 A.2d 1163 (Del. Ch. 2002) (breach must occur while fiduciary relationship exists; timing/inception principles)
- Kaufman v. Cohen, 307 A.D.2d 113 (1st Dept. 2003) (elements of aiding and abetting fiduciary breach under New York law)
- Georgia Malone & Co., Inc. v. Rieder, 19 N.Y.3d 511 (2012) (unjust enrichment requires sufficiently close relationship)
- Ashland Mgmt. v. Janien, 82 N.Y.2d 395 (1993) (trade-secret definition and multi-factor test)
- North Atl. Instruments, Inc. v. Haber, 188 F.3d 38 (2d Cir. 1999) (elements for trade-secret misappropriation)
- Leo Silfen, Inc. v. Cream, 29 N.Y.2d 387 (1972) (trade secret must be secret; not in public domain)
- Downey v. Gen. Foods Corp., 31 N.Y.2d 56 (1972) (idea-misappropriation requires novel, concrete idea and a legal relationship)