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Metaformers, Inc. v. Innofin Solutions, LLC

United States District Court, E.D. North Carolina, Western Division

July 21, 2017

METAFORMERS, INC., Plaintiff,
v.
INNOFIN SOLUTIONS LLC, Defendant.

          ORDER

          LOUISE W. FLANAGAN UNITED STATES DISTRICT JUDGE

         This matter is before the court on defendant's motion to dismiss count two of complaint for failure to state a claim. (DE 12). The motion has been fully briefed, and the issues presented are ripe for ruling. For the reasons that follow the motion is denied.

         STATEMENT OF THE CASE

         Plaintiff filed amended complaint March 10, 2017, seeking damages, injunctive relief, and other ancillary relief based upon defendant's alleged violations of the Lanham Act, 15 U.S.C. § 1125(a)(1) (“count one”); breach of confidentiality agreement (“count two”); and breach of covenant not to compete (“count three”) in connection with defendant's solicitation of a contract to provide software services adverse to plaintiff's competing bid for the same. Defendant filed the instant motion April 7, 2017, seeking dismissal of count two.

         STATEMENT OF THE FACTS

         The facts alleged in the complaint pertinent to count two may be summarized as follows. Plaintiff is a provider of enterprise software, including software designed to enable government organizations to track resource usage for budgeting and planning purposes. Defendant is engaged in consulting services to facilitate implementation of resource management software marketed by non-party Oracle.

         Over the past ten years, plaintiff has performed several contracts involving implementation, maintenance, and improvement of enterprise resource planning software for client Lexington-Fayette Urban County Government (“Lexington Metro”), which is the municipal city-county embracing Lexington, Kentucky.

         On or about September 1, 2015, plaintiff entered into a contract with Lexington Metro to design, configure, test, and deploy a cloud computing system to be used by the Lexington Metro Department of Budgeting (“Lexington Metro prime contract”). On or about October 12, 2015, plaintiff entered into a subcontract with defendant to support the Lexington Metro prime contract (“Lexington Metro subcontract”). The Lexington Metro subcontract included a confidentiality agreement, which reads, in relevant part, as follows:

All documents, software, reports, data, records, forms and other materials developed by [defendant] for [plaintiff] or Client or obtained by [defendant] in the course of performing any Services (including, but not limited to, Client records and [plaintiff's] client list furnished to [defendant]) are the proprietary, confidential and trade secret information of [plaintiff] . . . . [defendant] shall not use or disclose . . . any proprietary, confidential or trade secret information of [plaintiff] or Client without [plaintiff's] express, prior written permission.

(DE 5-1 ¶ 14) (emphasis added).

         In early 2016, the City of Raleigh, North Carolina (“Raleigh”) and the State of Georgia (“Georgia”) solicited contract proposals seeking services similar to those involved in the Lexington Metro prime contract. In response, defendant submitted a contract proposal to Raleigh in or around March 2016, and submitted a proposal to Georgia in May 2016. In both proposals, defendant represented that it was the prime contractor in the Lexington Metro prime contract and represented that Lexington Metro was defendant's client. Plaintiff submitted competing proposals to both governments. Plaintiff never granted permission for defendant to disclose the identity of Lexington Metro. Defendant rejected plaintiff's demands to cease and desist disclosure of Lexington Metro's identity in connection with the Lexington Metro prime contract. This action followed.

         COURT'S DISCUSSION

         A. Standard of Review

         A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of the complaint but “does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party v. Martin,980 F.2d 943, 952 (4th Cir. 1992). A complaint states a claim if it contains “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)). ÔÇťAsking for plausible grounds . . . does not impose a probability requirement at the pleading ...


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