Silver Fern Chemical Inc v. Lyons
2:23-cv-00775
W.D. Wash.Dec 19, 2023Background
- Silver Fern Chemical, Inc. sued former employees and a competing company, alleging misappropriation of trade secrets, breach of contract, and other claims.
- Key facts involve defendants (Lyons, Kinto, Holmes—former employees—now working for Ambyth Chemical) allegedly deleting thousands of work emails and using confidential customer and vendor databases.
- Plaintiff claims extensive time and resources were invested in developing and protecting its customer and vendor data, stored with password protection and subject to confidentiality agreements.
- Defendants filed a motion to dismiss, arguing the federal Computer Fraud and Abuse Act (CFAA) and trade secret claims were inadequately pled.
- The court previously denied a motion for a temporary restraining order, and now addresses sufficiency of Plaintiff's claims at the motion to dismiss stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether deletion of emails by former employees states a CFAA claim | Defendants exceeded authorized access by deleting protected data | Deletion violated usage, not access restrictions—no CFAA liability | CFAA claim dismissed, no claim for exceeding access under current facts |
| Whether trade secrets were identified with sufficient particularity | Customer and vendor compilations are identified as the trade secrets | Allegations vague, insufficiently particular, unsupported conclusions | Sufficient particularity for pleading stage; claim proceeds |
| Whether claims against Ambyth/Morgan for misappropriation are adequately pled | Communications and customer contact establish plausible claim | Insufficient factual connection, speculative liability | Plaintiff stated a plausible claim; claim not dismissed |
| Whether court should retain supplemental jurisdiction | Federal claims exist; state claims should remain | If no federal claims, court should not retain state law claims | Court retains jurisdiction due to viable trade secrets claims |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (establishes plausibility standard for pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (explains standard for stating a claim)
- LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009) (CFAA requires exceeding authorized access, not misuse)
- United States v. Nosal, 676 F.3d 854 (9th Cir. 2012) (en banc) (distinguishes between access and use restrictions under CFAA)
- Van Buren v. United States, 141 S. Ct. 1648 (2021) (CFAA applies to exceeding access restrictions, not use violations)