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Redox Tech, LLC v. Earthworks Solutions, LLC

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

April 10, 2018

REDOX TECH, LLC, Plaintiff,
v.
EARTHWORKS SOLUTIONS LLC and EDWARD ESCOCHEA, SR., Defendants and Counterclaimants,
v.
REDOX TECH, LLC, and JOHN S. HASELOW, Counterclaim Defendants.

          ORDER

          KIMBERLY A. SWANK United State Magistrate Judge.

         This matter is before the court on the following motions, the parties having consented to magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c):

1. Defendants' Motion to Dismiss Plaintiff's claims, pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim [DE #71]; and
2. Motion to Dismiss Claim and Purported Claim against Counterclaim Defendants, pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim [DE #96].

         The parties have filed appropriate responses and replies, and the time for further filings has expired. The motions are, therefore, ripe for ruling.

         BACKGROUND

         Plaintiff Redox Tech LLC (Redox) is a North Carolina limited liability company in the business of providing environmental remediation products and services. Defendant Edward Escochea, Sr. (Escochea) is a member and former employee of Redox. Counterclaim Defendant John S. Haselow (Haselow) is a member and the manager of Redox. Escochea formed Earthworks Solutions LLC (Earthworks), a Georgia limited liability company, on or about July 10, 2017, and thereafter gave notice he would be leaving Redox's employ, effective August 16, 2017. On August 21, 2017, Redox brought an action against Escochea and Earthworks in the General Court of Justice, District Court Division of Guilford County, North Carolina, asserting claims for misappropriation of trade secrets, breach of fiduciary duty, and unjust enrichment. Redox also sought and obtained a temporary restraining order (TRO) prohibiting Escochea, Earthworks, their employees, agents, representatives, and anyone acting in concert with them from

•using, retaining, disseminating, or disclosing . . . [Redox's] Trade Secrets as defined in the Verified Complaint;
• soliciting, bidding on, or performing work on any projects initiated at Redox up to and including August 15, 2017;
• communicating with any former or existing customers of Redox using [Redox's] Trade Secrets as defined in the Verified Complaint;
• communicating any of [Redox's] Trade Secrets as defined in the Verified Complaint to [Redox's] competitors; and
• maintaining possession of, without returning, all [Redox's] Trade Secrets as defined in the Verified Complaint and information related to [Redox's] Trade Secrets as defined in the Verified Complaint.

(TRO, Ex. C to Pet. Removal [DE #1-5] at 2.) Defendants removed the state-court action to the United States District Court for the Middle District of North Carolina on August 28, 2017. Redox Tech LLC v. Earthworks Solutions LLC, No. 1:17-CV-783-LCB-LPA (M.D. N.C. Aug. 28, 2017). On Redox's motion and with Defendants' consent, the action was transferred to this court on September 5, 2017. (Order Transferring Venue [DE #5].) Orders were entered extending the TRO upon payment of $10, 000 security and scheduling the matter for a preliminary injunction hearing. (Order dated Sept. 8, 2017 [DE #14]; Order dated Sept. 12, 2017 [DE #27].)

         When the matter came on for hearing of Redox's preliminary injunction motion on October 3, 2017, the parties announced they had reached a settlement of all matters in controversy among them. Redox withdrew its motion for preliminary injunction conditioned upon Defendants' representation that they would not work on certain jobs without Plaintiff's approval. The parties consented to the withdrawal of all other pending motions and requested a sixty-day stay to finalize the settlement, which the court granted. (Order dated Oct. 4, 2017 [DE #62].)

         The parties have since informed the court of their inability to finalize a settlement of this action. By notice filed December 6, 2017, the parties advised they have been unable to agree on the value of Escochea's ownership interest in Redox and that, as a result, Escochea has initiated a separate action in the Superior Court of Wake County, North Carolina. (Status Reports [DE #69 & #70].) In the state-court action, Escochea seeks, among other things, an independent accounting, valuation of Escochea's interest in Redox, and judicial dissolution of Redox. See Escochea v. Redox Tech, LLC, No. 17-CVS-14675 ( N.C. Super. Ct. filed Dec. 5, 2017).

         On December 6, 2017, Defendants filed a motion to dismiss Redox's claims [DE #71], as well as an answer and counterclaims against Redox and Haselow [DE #73]. Redox and Haselow filed a motion to dismiss the counterclaims against them on January 26, 2018 [DE #96].

         DISCUSSION

         I. ...


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