United States District Court, M.D. North Carolina
TUCKER AUTO-MATION OF NORTH CAROLINA, LLC, Plaintiff/Counter Defendant,
RUSSELL RUTLEDGE & RUTLEDGE COMMERCIAL, LLC, Defendants/Counterclaimants,
PATRICK MERCIER & TUCKER AUTO-MATION HOLDINGS, USA, LLC Counterclaim Defendants.
MEMORANDUM OPINION AND ORDER
Loretta C. Biggs United States District Judge.
Tucker-Automation of North Carolina, LLC,
(“Tucker”) initiated this diversity action on
October 21, 2015 against Defendants, Russell Rutledge and
Rutledge Commercial, LLC, alleging claims arising under state
law. This matter is before the Court on Defendants'
Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure. (ECF No. 32.) For the reasons
stated below, Defendants' motion is granted in part and
denied in part.
in its Amended Complaint (“Complaint”), alleges
that it manufactures and distributes, among other things,
revolving automatic doors for commercial use. (ECF No. 31
¶ 10.) Defendant Russell Rutledge
(“Rutledge”) served as Tucker's president
from June 2013 to his resignation in September 2015.
(Id. ¶ 10.) Eight days following his
resignation, Tucker alleges that Rutledge filed paperwork
with the North Carolina Secretary of State to form Rutledge
Commercial, LLC. (Id. ¶ 32.) According to the
Complaint, Rutledge Commercial, LLC is “in the business
of providing automatic door solutions to commercial business
enterprises.” (Id. ¶ 62.) On October 21,
2015, Tucker filed this action, alleging the following claims
against Defendants: (Count 1) intentional interference with
actual and prospective contractual relations; (Count 2)
misappropriation of trade secrets in violation of N.C. Gen.
Stat. § 66-152; (Count 3) defamation; (Count 4) unfair
and deceptive trade practices in violation of N.C. Gen. Stat.
§ 75-1.1; (Count 5) conversion; and (Count
violation of North Carolina's Property Protection Act,
N.C. Gen. Stat. § 99A-2. (Id. at 11-16.)
move to dismiss Counts 1, 2, 4, and 6 for failure to state a
claim upon which relief can be granted pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure. (ECF No.
motion to dismiss under Rule 12(b)(6) “challenges the
legal sufficiency of a complaint, ” including whether
it meets the pleading standard of Rule 8(a)(2). Francis
v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). Rule
8(a)(2) requires a complaint to contain “a short and
plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). “[A]
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). A claim is plausible when the
complaint alleges facts that allow the court “to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. When evaluating the
complaint, the court views the facts in the light most
favorable to the plaintiff. United States ex rel. Oberg
v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 136
(4th Cir. 2014).
where, as in this case, subject matter jurisdiction is based
on diversity of citizenship, the court must apply the
substantive law of the forum state. See Private Mortg.
Inv. Servs., Inc. v. Hotel & Club Assocs., Inc., 296
F.3d 308, 312 (4th Cir. 2002). In doing so, the court has an
obligation to apply the law as determined by the state's
highest court, i.e., the North Carolina Supreme
Court. See Id. When the state's highest court
has not addressed directly or indirectly the issue before the
federal court, the state's appellate courts'
decisions, though not binding, constitute the best indicia of
what the state law is unless the court is convinced by other
persuasive data that the state's highest court would rule
otherwise. Id. The court must apply state laws as
they currently exist and cannot expand them. Burris
Chem., Inc. v. USX Corp., 10 F.3d 243, 247 (4th Cir.
(Count 1) Intentional Interference with Actual and
Prospective Contractual Relations
Court first considers Defendants' motion to dismiss
Tucker's claim of tortious interference with contract and
prospective economic advantage. Though raised as a single claim,
the Court notes that Count 1 actually includes two separate
claims- one for tortious interference with contract and one
for tortious interference with prospective economic
advantage. See Superior Performers, Inc. v. Phelps,
154 F.Supp.3d 237, 248 (M.D. N.C. 2016). Defendants argue
both claims should be dismissed because the Complaint fails,
among other things, to “specifically identify any
contracts that have been breached or any particular contract
that any customer has been induced to refrain from entering
into with Tucker.” (ECF No. 33 at 18.) The Court
state a claim of tortious inference with contract, a
plaintiff must allege: “(1) a valid contract between
the plaintiff and a third person which confers upon the
plaintiff a contractual right against a third person; (2) the
defendant knows of the contract; (3) the defendant
intentionally induces the third person not to perform the
contract; (4) and in doing so acts without justification; (5)
resulting in actual damage to plaintiff.” Beverage
Sys. of the Carolinas, 784 S.E.2d at 462 (quoting
United Labs., Inc. v. Kuykendall, 370 S.E.2d 375,
387 ( N.C. 1988)). “A tortious interference with
prospective economic advantage claim has the same elements
except that instead of an existing contract, there must be a
contract that would have been entered into but for the
defendant's conduct.” BioSignia, Inc. v. Life
Line Screening of Am., Ltd., No. 1:12CV1129, 2014 WL
2968139, at *7 (M.D. N.C. July 1, 2014) (citing Beck v.
City of Durham, 573 S.E.2d 183, 191 ( N.C. Ct. App.
Complaint, Tucker alleges that in the automated door industry
“it is not customary for customers to sign written
contracts for a specified term with their manufacturer and/or
supplier.” (ECF No. 31 ¶ 46.) Rather, according to
Tucker, it is common practice for an automated door company
to provide technical and administrative service on a
going-forward basis as needed, once a product is installed.
(Id. ¶¶ 46-47.) Tucker alleges that,
before Rutledge's resignation, its customers included
Asheville-Buncombe Technical Community College, UNC Heart and
Vascular at Meadowmont, Moses H. Cone Memorial Park, Duke
University Hospital, and Sampson Regional Medical Center.
(See Id. ¶ 45.) These clients, Tucker alleges,
provided over $500, 000 in business in the last two years,
but after Rutledge's resignation, they elected to retain
Rutledge Commercial, LLC to fulfill their needs on a
going-forward basis. (Id. ¶¶ 45, 48.)
According to the Complaint, it was Defendants' actions
that induced these customers to transition their business
from Tucker to Defendants. (See Id. ¶¶ 44,
these allegations, viewed in the light most favorable to
Tucker, demonstrate an ongoing business relationship between
Tucker and its former customers, an ongoing business
relationship, without any contractual obligations between the
parties, is insufficient to state a claim of tortious
interference with contract under North Carolina law. See
Phelps, 154 F.Supp.3d at 249, 250 (dismissing the
plaintiff's tortious interference with contract claim
because the plaintiff failed to sufficiently allege a valid
contract between itself and a third party, but rather
“refers to its ‘relationships' with its
customers, which is insufficient under North Carolina
law”); Beverage Sys. of the Carolinas, 784
S.E.2d at 462-63 (dismissing the tortious interference with
contract claim, holding that although it was the
“industry custom . . . for owners of
beverage-dispensing equipment” to engage repair
companies “on an as-needed basis only, ” rather
than via contract, the plaintiff had failed to establish a
legal obligation between it and the customers it acquired);
Sports Quest, Inc. v. Dale Earnhardt, Inc., Nos. 02
CVS 0140, 01 CVS 2200, 2004 WL 742918, at *6 ( N.C. Super.
Ct. Mar. 12, 2004) (explaining that the “fatal
flaw” in the plaintiff's tortious interference
claim is that “not all of [the plaintiff's]
relationships with third parties included contracts”
and thus plaintiff cannot maintain its tortious interference
claim with respect to the “existing business
relations” in the absence of a “contractual
obligation to [the plaintiff]”). Nor are Tucker's
allegations sufficient to allege a claim of tortious
interference with prospective economic advantage under North
Carolina law, because Tucker has failed to sufficiently
allege that a contract would have resulted with a third party
but for Defendants' tortious interference. See
Phelps, 154 F.Supp.3d at 249-50; Beverage Sys. of
the Carolinas, 784 S.E.2d at 463. At best, Tucker's
allegations reveal an expectation that its customers would
continue to do business with it. However, a mere expectation
customers “would continue to do business with [a]
plaintiff” is “insufficient to support a claim
for either tortious interference with contract or tortious
interference with prospective economic advantage.”
Beverage Sys. of the Carolinas, 784 S.E.2d at 463.
Tucker has failed to specifically identify a contract that
confers a contractual right between Tucker and any third
party or any specific contract Defendants induced a third
party to refrain from entering into with Tucker,
Complaint fails to state a claim of tortious interference
with contract or tortious interference with prospective
economic advantage. Thus, Defendants' motion to dismiss
these claims must be granted.
(Count 2) Misappropriation of Trade Secrets
of Tucker's Complaint alleges that Defendants
misappropriated various trade secrets in violation of the
North Carolina Trade Secrets Protection Act
(“TSPA”), N.C. Gen. Stat. § 66-152. (ECF No.
31 ¶¶ 77-88.) Defendants seek dismissal,
contending, among other things, that Tucker: (1) has not
identified any alleged trade secrets with the requisite
particularity; and (2) has not alleged acts of
misappropriation with the requisite particularity. (ECF No.
33 at 9.) The Court disagrees.
the TSPA, an “owner of a trade secret shall have remedy
by civil action for misappropriation of his trade
secret.” N.C. Gen. Stat. § 66-153. “A trade
secret is business or technical information that
‘[d]erives independent actual or potential commercial
value from not being generally known or readily ascertainable
through independent development . . . and [is] the subject of
efforts that are reasonable under the circumstances to
maintain its secrecy.'” Sunbelt Rentals, Inc.
v. Head & Engquist Equip., L.L.C., 620 S.E.2d 222,
226 ( N.C. Ct. App. 2005) (alterations in original) (quoting
N.C. Gen. Stat. § 66-152(3)(a)- (b)). Courts consider
the following factors in determining whether an item
constitutes a trade secret:
(1) the extent to which information is known outside the
business; (2) the extent to which it is known to employees
and others involved in the business; (3) the extent of
measures taken to guard secrecy of the information; (4) the
value of information to business and its competitors; (5) the
amount of effort or money expended in developing the
information; and (6) the ease or difficulty with which the
information could properly be acquired or duplicated by
Id. (quoting State ex rel. Utils. Comm'n v.
MCI Telecomms. Corp., 514 S.E.2d 276, 282 ( N.C. Ct.
App. 1999)). “Misappropriation, ” under the TSPA,
is defined as the “acquisition, disclosure, or use of a
trade secret of another without express or implied authority
or consent, unless such trade secret was arrived at by
independent development, reverse engineering, or was obtained
from another person with a right to disclose the trade
secret.” N.C. Gen. Stat.§ 66-152(1).
state a claim for misappropriation of trade secrets, the
complaint “must identify [the] trade secret with
sufficient particularity so as to enable a defendant to
delineate that which he is accused of misappropriating and a
court to determine whether misappropriation has or is
threatened to occur.” Washburn v. Yadkin Valley
Bank & Tr. Co., 660 S.E.2d 577, 585 ( N.C. Ct. App.
2008) (quoting Vision AIR, Inc. v. James, 606 S.E.2d
359, 364 ( N.C. Ct. App. 2004)). “The complaint must
also set forth with sufficient specificity the acts by which
the alleged misappropriation occurred.” Bldg. Ctr.,
Inc. v. Carter Lumber, Inc., No. 16 CVS 4186,
2016 WL 6142993, at *3 ( N.C. Super. Ct. Oct. 21, 2016).
“[A] complaint that makes general allegations in
sweeping and conclusory statements, without specifically
identifying the trade secrets allegedly misappropriated,
” is insufficient under North Carolina law to state a
claim for misappropriation of trade secrets.
Washburn, 660 S.E.2d at 585- 86.
Complaint identifies the following trade secrets allegedly