The complaint sets out the following claims: tortious interference with contractual relations against Equitas (Count I); tortious interference with contractual relations against French (Count II); tortious interference with advantageous business relations against all defendants (Count III); trade secret misappropriation under the common law and Massachusetts General Laws chapter 93, section 42 ("chapter 93") against Equitas and the Former Employees (Count IV);
On March 13, 2017, defendants remоved this action on the basis of diversity jurisdiction pursuant to
FACTUAL BACKGROUND
Plaintiff is incorporated in North Carolina with a principal place of business in Raleigh, North Carolina. (Docket Entry # 1-1). Equitas is a Delaware limited liability company with a principal place of business in Cambridge, Massachusetts. (Doсket Entry # 1-1). Defendants assert that Equitas' members are not citizens of Massachusetts.
Plaintiff provides "strategic management consulting services to biopharmaceutical and medical technology companies." (Docket Entry # 1-1). Plaintiff's clients are pharmaceutical and/or biotechnology companies, medical device companies, and diagnostics companies in North America, Europe, and Japan. (Docket Entry # 1-1). Plaintiff's consulting services include:
[N]ew product planning for development-stage assets, launch planning for assets in the critical product launch window, strategy development and tactical solutions for in-line produсts, portfolio strategy, and organizational development.
(Docket Entry # 1-1). Plaintiff also helps clients develop commercialization strategies and market development plans for new products. (Docket Entry # 1-1). Over 85% of plaintiff's business consists of repeat clients. (Docket Entry # 1-1). Plaintiff's employees bear responsibility for developing and maintaining relationships with its clients. (Docket Entry # 1-1). Plaintiff invested "considerable amounts of time, money and effort" to maintain and develop goodwill with its clients. (Docket Entry # 1-1).
According to the complaint, throughout the course of its business, plaintiff "developed, accumulated, maintained, and refined trade secrets and othеr confidential and proprietary information" at "great expense." (Docket Entry # 1-1). Such trade secrets and information include:
[B]usiness plans, account plans, business policies, client proposals, client deliverables, financial plans and forecasts, research, pricing information, business forecasts, product information, expert data and reports, business strategies, statements of work, market access strategies, value propositions, client and prospect lists and information, client usage, data sources, industry and company analyses, market information and analysis, methodologies, templates, techniques, and other infоrmation relating to inVentiv, its clients, and its contractors ....
(Docket Entry # 1-1). Plaintiff protects its trade secrets and confidential and proprietary information on secure, password-protected computer systems. (Docket Entry # 1-1). Plaintiff terminates its employees' access to such systems "immediately upon termination of employment" and requires the employees to return company property and information upon termination. (Docket Entry # 1-1). Plaintiff also requires employees to sign an employment agreement, which includes covenants regarding
This Agreement shall be subject to and governed by the laws of the State of North Carolina, without regard to the conflicts of law rules of such states. All disputes pertaining to this Agreement shall be decided exclusively by a state or federal court located in Wake County, North Carolina, and Employee hereby consents to personal jurisdiction of such courts.
(Docket Entry # 1-1, Ex. A).
French formerly served as a managing director for plaintiff. (Docket Entry # 1-1). In this role, French supervised a numbеr of plaintiff's employees, including other Former Employees. (Docket Entry # 1-1). While employed by plaintiff, each of the Former Employees signed an employment agreement, which included restrictive covenants regarding the "confidentiality and protection of inVentiv's information," customer relationships, and goodwill. (Docket Entry # 1-1, Ex. A). The employment agreements also contained noncompete covenants, which prohibited the Former Employees from "competing against inVentiv for at least one year" following termination of employment. (Docket Entry # 1-1). The confidentially restriction prohibited the Former Employees from disclosing confidentiаl information belonging to plaintiff, or "using such information on behalf of anyone other than inVentiv." (Docket Entry # 1-1).
From 2013 to 2016, French served as the primary point of contact for two of plaintiff's clients ("the Clients"), with whom plaintiff had relationships prior to French's involvement. (Docket Entry # 1-1). The Clients generated "several million dollars" in revenue for plaintiff between 2013 and 2016. (Docket Entry # 1-1). One of the Clients, "Client A," was plaintiff's second largest client in terms of annual revenue and, from 2014 to 2015, plaintiff's revenue from Client A significantly increased. (Docket Entry # 1-1). While employed by plaintiff, French worked on a specific project for Client A called "Project One."
Meletiche was employed by Client A during thе time that Client A was plaintiff's client. (Docket Entry # 1-1). In or around "the summer of 2014," French informed plaintiff's employee, Keith Kelly ("Kelly"), about a discussion or discussions with Meletiche concerning the formation of a new health economics and outcomes research company. (Docket Entry # 18-2). According to Kelly's affidavit, a health economics and outcomes research company provides companies in pharmaceutical and biotech industries with information needed to "demonstrate the value of their innovations to providers, healthcare decision makers, payers, and ultimately, stakeholders."
French and Meletiche incorporated Equitas more than a year later on November 3, 2015, at which time French was still employed by plaintiff. (Docket Entry # 1-1). French requested to work part time for plaintiff in November 2015, citing his desire to "devote more time to completing his doctorate." (Docket Entry # 1-1). Plaintiff approved French's request, after which French began working part time in or around February 2016. (Docket Entry # 1-1). The complaint alleges that French requested to work part time in order to devote more time to Equitas. (Docket Entry # 1-1).
Equitas' application for registration, filed with the Massachusetts "Secretary of the Commonwealth Corporations Division," lists French and Meletiche as the founding members of Equitas and Equitas' focus as " 'consulting in the life sciences industry.' " (Docket Entry # 1-1, Ex. B). The domain name "equitasls.com" was created on December 3, 2015. (Docket Entry # 1-1). On December 17, 2017, Equitas applied for an H-1B Visa to allow Equitas to hire a foreign workеr to fill a managing director position. (Docket Entry # 1-1). The H-1B Visa application listed Meletiche's home as Equitas' business address. (Docket Entry # 1-1). Equitas' principal place of business was located in Meletiche's home as recently as February 2017. (Docket Entry # 1-1).
In early 2016, French informed plaintiff that business with Client A "was winding down." (Docket Entry # 1-1). Plaintiff subsequently experienced a corresponding decline in revenue from Client A. (Docket Entry # 1-1). Beginning in January 2016, several of plaintiff's employees, supervised by French, began submitting resignations. (Docket Entry # 1-1). Gogia resigned as of January 15, 2016, stating that she needed "to take out some time to both focus on her family and take a break to think about her careеr direction." (Docket Entry # 1-1).
On March 22, 2016, Client A sent an email to French at his Equitas email, "adf@equitasls.com," at which time French was still employed by plaintiff. (Docket Entry # 1-1). French neither sought nor obtained authorization from plaintiff to work on behalf of Equitas or to perform work for Client A on the side. (Docket Entry # 1-1).
On May 25, 2016, Equitas posted a classified advertisement seeking a managing director, which directed applicants to send applications to Meletiche's home address. (Docket Entry # 1-1). The advertisement described the managing director's role as, among other responsibilities, "[s]erv[ing] as a subject-matter expert at global prices" and market access, including "European, Asian, & Latin American" markets. (Docket Entry # 1-1). As set out in the advertisement, Equitas required applicants to have a master's degree in "health policy, health care [management], public health, health econ[omics], pharmacy/biotech, bus[iness] admin[istration], or a relevant discipline ...." (Docket Entry # 1-1). The advertisement further required a minimum six years of management consulting experience "focusing on the pharmaceutical/biotech industry." (Docket Entry # 1-1).
Atkinson resigned as of May 27, 2016, citing her desire to "enter graduate school." (Docket Entry # 1-1). Around June 2106, French requested an unpaid leave of absence claiming he "was dealing with family medical issues that were cаusing him stress." (Docket Entry # 1-1). French's unpaid leave lasted approximately six weeks. (Docket Entry # 1-1). On June 3, 2016, Equitas amended its application for registration with the Massachusetts Secretary of the Commonwealth Corporations
Debasitis resigned as of July 8, 2016, claiming a personal reason for "why [he] sought employment elsewhere." (Docket Entry # 1-1). French resigned as of July 25, 2016 to "focus on [his] own health and wellbeing." (Docket Entry # 1-1). In total, between January 15 and July 25, 2016, eight of plaintiff's employees resigned "citing personal reasons for their departure." (Docket Entry # 1-1).
The complaint asserts, upon information and belief, that French orchestrated "at least some of" plaintiff's employees' resignations and encouraged the Former Employees to work for Equitas. (Docket Entry # 1-1). None of the Former Employees informed plaintiff that they were resigning to work for Equitas and each of the Former Employees began working for Equitas after resigning. (Docket Entry # 1-1).
On January 18, 2017, plaintiff received an electronic calendar invitation from Client A. (Docket Entry # 1-1). The calendar invitation was addressed to French's previous inVentiv email address, "Alan.French@inventivhealth.com." (Docket Entry # 1-1). The calendar invitation was also addressed to Atkinson at "ssa@equitasls.com" and Gogia at "pmg@equitasls.com." (Docket Entry # 1-1). On Januаry 19, 2017, a Client A employee addressed an email to French's previous inVentiv email address and Atkinson's Equitas email address. (Docket Entry # 1-1). This second email concerned work on Project One by both Client A and Equitas. (Docket Entry # 1-1). It was this second email, according to the complaint, that provided the first indication to plaintiff that the Former Employees were employed by Equitas and that French, Gogia, and Atkinson were working with Client A on Project One. (Docket Entry # 1-1).
Plaintiff performed forensic analysis of the computers previously used by certain Former Employees. (Docket Entry # 1-1). Plaintiff discovered that French accessed plaintiff's confidential information on July 23, 2016, two days prior to his resignation. (Docket Entry # 1-1). When French accessed such confidential information, he immediately inserted a USB device into the computer. (Docket Entry # 1-1). Plaintiff contends that the USB device could be used to transport a copy of confidential information elsewhere. (Docket Entry # 1-1). Based on these findings, the complaint alleges that defendants used, or are currently using, plaintiff's confidential information and goodwill in connection with operating Equitas. (Docket Entry # Docket Entry # 1-1).
On January 24, 2017, plaintiff delivered demand letters to French, Gogia, and Atkinson. (Docket Entry # 1-1). The letters stated that French, Gogia, and Atkinson were working for Equitas in violation of their employment agreemеnts with plaintiff. (Docket Entry # 1-1). The letters requested a written response by January 27, 2017. (Docket Entry # 1-1). The response from the Former Employees was to include: "a description of their work for Equitas"; "written assurance that they will honor their obligations to inVentiv and not solicit or service any clients of inVentiv-including Client A"; "written assurances that they will not solicit other employees of inVentiv to leave the company"; "written assurances that they will cease and desist from further solicitation of, or work for, inVentiv's clients, including the Clients"; and "written assurances that they have returned or destroyed all confidential or proprietary information, as well as other information, that belongs to inVеntiv." (Docket Entry # 1-1). French, Gogia, and Atkinson responded to the demand letters on February 16, 2017, but did not provide the requested information or the written
DISCUSSION
I. Jurisdiction and Standard of Review
In general, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed" by a defendant to federal court.
Plaintiff, however, "may not thwart the exercise of a defendant's right of removal by fraudulently joining a non-diverse defendant who has no real connection to the case." In re Fresenius Granuflo/Naturalyte Dialysate Prods. Liability Litig.,
[U]nder the doctrine of fraudulent joinder, removal is not defeated by the joinder of a non-diverse defendant where there is no reasonable possibility that the state's highest court would find the complaint states a cause of action upon which relief may be granted.
Universal Truck & Equip Co., Inc. v. Southworth-Milton, Inc.,
[B]y clear and convincing evidence either that there has been outright fraud committed in the plaintiff's pleadings, or that there is no possibility, based on the pleadings, that the plaintiff can state a cause of action against the non-diverse defendant in state court.
Surabian Realty Co., Inc. v. CUNA Mutual Group & CUMIS,
The doctrine of fraudulent joinder requires this court to consider whether "there is no reasonable possibility that the state's highest court would find that the complaint states a cause of action upоn which relief may be granted against the non-diverse defendant." In re: Stryker LFIT,
A fraudulent joinder analysis is similar to a Rule 12(b)(6) analysis, but is "more lenient than that for a motion to dismiss." Rosbeck,
II. Plaintiff's Arguments
Plaintiff contends that this case must be remanded pursuant to
A. Tortious Interference with Business Relations against Meletiche
Plaintiff asserts a tortious interference with advantageous business relations claim and a civil conspiracy claim against Meletiche. (Docket Entry # 18). With respect to the tortious interference claim, defendants initially argue that plaintiff fails to allege that Meletiche ever "personally engaged in any business contact with any of [p]laintiff's customers on behalf of Equitas." (Docket Entry # 20) (emphasis in original). Defendants note that plaintiff did not list Meletiche as one of the Former Employees and did not include Melеtiche in the allegation that Equitas and the Former Employees failed to comply with their " 'contractual, common law, and statutory obligations.' " (Docket Entry # 20) (quoting Docket Entry # 1-1, ¶ 85).
Plaintiff counters that the complaint "alleges sufficient facts to support a claim for tortious interference against Meletiche." (Docket Entry # 24). Plaintiff points out that it had a "beneficial business relationship with Client A," Meletiche knew of the relationship, and he "misappropriated inVentiv's confidential information," and currently uses such confidential information to service plaintiff's former clients. (Docket
Under the doctrine of fraudulent joinder, " 'removal is not defeated by the joinder of a non-diverse defendant where there is no reasonable possibility that the state's highest court would find that the complaint states a cause of action upon which relief may be granted against the non-diverse defendant.' " In re: Stryker,
"(1) [T]he plaintiff has a business relationship for economic benefit with a third party, (2) the defendants knew of that relationship, (3) the defendant interfered with that relationship through improper motive or means, and (4) the plaintiff's loss of the advantage resulted directly from the defendants' conduct."
Brewster Wallcovering Co. v. Blue Mountain Wallcoverings, Inc.,
Under the first element, a defendant's interference must be with an advantageous business relationship between plaintiff and a third party. See Cavicchi v. Koski,
Regarding the third element of an "improper motive or means," the improper conduct must extend " 'beyond the interference itself.' " Cavicchi v. Koski,
Courts, however, inquire whether the defendant "interfered with a restrictive covenant governing a competitor's employee" and such interference "creates a presumption that [the defendant] had an improper motive." TalentBurst Inc.,
Defendants' argument that Meletiche did not contact any of plaintiff's customers is misguided in light of the facts and reasonable inferences in the complaint. Meletiche founded a competing company and operated it out of his home. (Docket Entry # 1-1). Drawing reasonable inferences, see In re: Stryker,
A reasonable possibility exists that Meletiche improperly solicited one or more of the Former Employees to leave plaintiff in order to work for Equitas in violation of their noncompetition agreements. Meletiche's reasonably inferred intimate familiarity with Equitas and his relationship with French render it more than a reasonable possibility that French informed Meletiche about the noncompete restriction in one or more of the Former Employee's employment agreements. The reasonable possibility of an improper motive on the part of Meletiche is further bolstered by the Kelly affidavit, which demonstrates that Meletiche spoke to at least one of plaintiff's employees about the prospect of leaving plaintiff to join a new company covering the same business as plaintiff. (Docket Entry # 18-2). With respect to the fourth element, the complaint states that plaintiff experienced a decline in its advantageous and economically beneficial relationship with Client A, and other clients, as a result of Meletiche's and the other defendants' actions. (Docket Entry # 1-1).
Hence, although defendants are correct that the complaint did not include Meletiche as a "Former Employee" or in certain allegations of wrongdoing, the complaint and the record as a whole presents a reasonable possibility of a tortious interference with business relations claim against Meletiche. Based on the facts set out in the factual background, there is a "reasonable possibility that the state's highest court would find that the complaint states a cause of action" for tortious interference with business relations against Meletiche. In re: Stryker,
2. Civil Conspiracy by Meletiche
Plaintiff also alleges that Meletiche committed civil conspiracy because he was aware of plaintiff's restrictive covenants by virtue of his "long-standing working relationship with French" and his role, together with French, in forming Equitas. (Docket Entry # 18). Plaintiff submits that Meletiche used, or at least knew the other defendants were using, plaintiff's confidential information to service plaintiff's clients, namely Client A. (Docket Entry # 18). Furthermore, plaintiff argues that Meletiche provided "substantial assistance in furthering the scheme" because "he founded Equitas, hired the Former Employees, and runs Equitas from his home." (Docket Entry # 18).
Defendants dispute such allegations, claiming that plaintiff was required to, and failed, to show "substantial assistance, with the knowledge that such assistance is contributing to a common tortious plan." (Docket Entry # 20); (citing Kurker v. Hill,
To establish a civil conspiracy, plaintiff must "show an underlying tortious act in which two or more persons acted in concert and in furtherance of a common design or agreement." Bartle v. Berry,
With respect to defendants' allegation that Meletiche did not provide any "substantial assistance" in assisting with a "tortious plan," as established above, there is a reasonable possibility that Meletiche engaged in tortious interference with plaintiff's advantageous business relations and such tortious interference satisfies the "underlying tort" requirement for civil conspiracy. See Orellana,
In sum, based on the facts in the complaint, there is a reasonable possibility that thе Massachusetts Supreme Judicial Court would find that the "complaint states a cause of action upon which relief may be granted against the non-diverse defendant," Meletiche, both as to the interference with business relations claim and the civil conspiracy claim. In re: Stryker,
CONCLUSION
In acсordance with the foregoing discussion, the motion to remand (Docket Entry # 17) is ALLOWED and this case is REMANDED to the Massachusetts Superior Court Department (Middlesex County). In light of the remand and lack of diversity jurisdiction, this court declines to address either the motion to dismiss (Docket Entry # 4) or the motion to transfer venue (Docket Entry # 6).
Notes
In the complaint, Count IV is erroneously listed as a second Count III.
Because the complaint lists two Count IIIs, Count V is mislabeled as Count IV.
Because the complaint lists two Count IIIs, Count VI is mislabeled as Count V.
"The citizenship of a limited liability company 'is determined by the citizenship of all of its members.' " D.B. Zwirn Special Opportunities Fund, L.P. v. Mehrotra,
Plaintiff began offering health economics and research services in November 2015. (Docket Entry # 18-2).
"An 'advantageous relation[,]' " however, "is a 'contemplated contract' or prospective business relationship." Buster v. George W. Moore, Inc.,