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Micronics Filtration Holdings, Inc. v. Miller

United States District Court, D. New Hampshire

October 4, 2018

Micronics Filtration Holdings, Inc.,
v.
Timothy Miller, Peter Kristo, and Pure Filtration, LLC

          W. Fulton Broemer, Esq. Matthew R. Johnson, Esq. Mark B. Rosen, Esq.

          MEMORANDUM ORDER

          JOSEPH N. LAPLANTE, UNITED STATES DISTRICT JUDGE.

         This trade-secrets case involves the adequacy of factual allegations in a complaint, as well as preemption under the New Hampshire Uniform Trade Secrets Act (“NHUTSA”) and the heightened pleading requirements of Rule 9(b). Plaintiff Micronics Filtration Holdings, Inc. brought this suit against two former Micronics sales executives, Tim Miller and Peter Kristo, and the competing business they have formed, Pure Filtration, LLC. Micronics alleges that the defendants have misappropriated its trade secrets and confidential information, disparaged Micronics to third parties, and violated other contractual obligations. Micronics' amended complaint brings a federal claim under the Defend Trade Secrets Act (“DTSA”), a claim under the NHUTSA, and several other state law claims.

         This court has subject-matter jurisdiction over this action under 28 U.S.C. § 1331 (federal question) in light of the plaintiff's DTSA claim, and over plaintiffs' state-law claims under § 1367 (supplemental jurisdiction). Defendants have moved to dismiss all claims. After oral argument, the court grants this motion in part and denies it in part. Specifically, the court denies defendants' motion with respect to Micronics' trade secret claims under the DTSA and the NHUTSA and its claims for breach of contractual confidentiality agreements against Miller and Kristo. But claims for intentional interference with contractual relations and violation of the New Hampshire Consumer Protection Act (“NHCPA”) are dismissed because of a combination of NHUTSA preemption and failure to meet the heightened pleading requirements of Rule 9(b) for claims sounding in fraud. And claims for defamation and breach of employee non-solicitation provisions are also dismissed because the allegations in the amended complaint are insufficient to state these claims.

         I. Applicable legal standard

         “A pleading that states a claim for relief must contain, ” among other things, “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). To satisfy this requirement, a plaintiff must include “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Martinez v. Petrenko, 792 F.3d 173, 179 (1st Cir. 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). In other words, the complaint must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” SEC v. Tambone, 597 F.3d 436, 442 (1st Cir. 2010) (quoting Iqbal, 556 U.S. at 678).

         At the Rule 12(b)(6) stage, the court must “take the complaint's well-pleaded facts as true, ” and “draw all reasonable inferences in the plaintiffs' favor.” Barchock v. CVS Health Corp., 886 F.3d 43, 48 (1st Cir. 2018). But “[w]ell-pleaded facts must be ‘non-conclusory' and ‘non-speculative.'” Id. “If the factual allegations in the complaint are too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture, the complaint is open to dismissal.” Id. (quoting Iqbal, 556 U.S. at 678).

         Documents outside of the pleadings are generally not considered in ruling on a motion to dismiss. Flores v. OneWest Bank, F.S.B., 886 F.3d 160, 167 (1st Cir. 2018). The court may, however, consider documents attached to or explicitly incorporated in the complaint, and “narrow exceptions [exist] for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint.” Id. (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993)).[1]

         II. Analysis

         A. Trade secret claims

         Micronics brings both federal and state claims for trade secret misappropriation under the DTSA and the NHUTSA. The parties agree that the requirements to state a claim under the DTSA and the NHUTSA are not meaningfully different for this case and have argued the claims together.[2] For the reasons set forth on the record at the hearing, Micronics has stated claims under both statutes and the motion to dismiss is denied as to these counts.[3]

         B. State-law claims

         Micronics also brings several state-law claims under the following theories: (1) intentional interference with existing contractual relations; (2) violation of the NHCPA; (3) confidentiality-related breach of contract; (4) employee-solicitation-related breach of contract; and (5) defamation. The defendants move to dismiss these claims for failure to state a claim. As discussed below, Micronics has pleaded factual allegations such that it states a claim for confidentiality-related breach of contract, but not for intentional interference with contractual relations, violation of the NHCPA, employee-solicitation-related breach of contract, or defamation.

         1. Intentional interference with existing contractual relations

         Under New Hampshire law:

To establish liability for intentional interference with contractual relations, a plaintiff must show: (1) the plaintiff had an economic relationship with a third party; (2) the defendant knew of this relationship; (3) the defendant intentionally and improperly interfered with this relationship; and (4) the plaintiff was damaged by such interference.

Hughes v. N.H. Div. of Aeronautics, 152 N.H. 30, 40-41 (2005); Greenwood ex rel. Estate of Greenwood v. N.H. Pub. Utils. Comm'n, 527 F.3d 8, 14 (1st Cir. 2008). “Mere interference, in itself, is legally insufficient to state a claim. Rather, ‘[o]nly improper interference is deemed tortious in New Hampshire.'” Kitty v. Worth Development Corp., 184 Fed.Appx. 17, 19 (1st Cir. 2006) (quoting Roberts v. Gen. Motors Corp., 138 N.H. 532, 540 (1994)).

         Micronics alleges that it has existing economic and contractual relations with “customers, consultant, and vendors, ” and that defendants were aware of these relations though Miller and Kristo's employment with Micronics.[4] It further alleges that defendants intentionally and improperly interfered with these relations “by maliciously reporting to Micronics' customers, consultants, and vendors, that Micronics was going out of business and could no longer satisfy its existing or future contractual obligations” and by “wrongfully leveraging Micronics' customers, consultants, and vendors, to move their business to Pure Filtration.” [5] Drawing all reasonable inferences in Micronics' favor, then, it alleges two means by which defendants improperly interfered: misuse of confidential information and deceptive statements to customers, vendors, and consultants. Micronics also specifically alleges interference in its relationships with consultants Dewatering Solutions and Ferotex and vendors Ishigaki and JVK.[6] But it does not provide any additional specifics on how the alleged interference with these specific customers was improper. The only means of improper interference Micronics alleges are misuse of confidential information and deceptive statements. But neither alleged means ultimately allows Micronics to state a claim for improper interference.

         a) Misuse of confidential information

         Micronics attempts to base an intentional interference claim on the misuse of trade secrets or other confidential information. But the NHUTSA preempts tort claims relying on misuse of confidential information. The NHUTSA “displaces conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret.” N.H. Rev. Stat. Ann. § 350-B:7. It provides exceptions only for:

(a) Contractual remedies, whether or not based upon misappropriation of a trade secret;
(b) Other civil remedies that are not based upon misappropriation of a trade secret; or
(c) Criminal remedies, whether or not based upon misappropriation of a trade secret.

Id. This provision “preempts claims that are based upon the unauthorized use of information, regardless of whether that information meets the statutory definition of a trade secret.” Mortg. Specialists, Inc. v. Davey,153 N.H. 764, 777 (2006); Wilcox Indus. Corp. v. Hansen,870 F.Supp.2d 296, 303 (Barbadoro, J.) (“Claims based on unauthorized use of confidential ...


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