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Farm Journal, Inc. v. Johnson

United States District Court, W.D. Missouri, Western Division

April 24, 2019

FARM JOURNAL, INC. d/b/a FARM JOURNAL MEDIA Plaintiff,
v.
GREGORY JOHNSON and BLUE BOOK SERVICES, INC. d/b/a PRODUCE BLUE BOOK, Defendants.

          ORDER

          STEPHEN R. BOUGH UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendant Gregory Johnson's Motion to Dismiss (Doc. #26) and Defendant Blue Book Services, Inc. d/b/a Produce Blue Book's Motion to Dismiss (Doc. #27). For reasons discussed below the motions are denied.

         I. Legal Standard

         Defendants Gregory Johnson (“Johnson”) and Blue Book Services, Inc. d/b/a Produce Blue Book (“Blue Book”) filed the present motions to dismiss Plaintiff Farm Journal, Inc. d/b/a Farm Journal Media's (“Plaintiff”) Complaint under Federal Rule of Civil Procedure 12(b)(6), which allows courts to dismiss a claim for “failure to state a claim upon which relief can be granted.” To survive this kind of motion, “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) (internal citations and quotation marks omitted) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); Zink v. Lombardi, 783 F.3d 1089, 1098 (8th Cir. 2015). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ash v. Anderson Merchs., LLC, 799 F.3d 957, 960 (8th Cir. 2015) (internal citation quotation marks omitted) (quoting Iqbal, 556 U.S. at 678).

         The Court must accept all facts alleged in the complaint as true when deciding a motion to dismiss. See Data Mfg., Inc. v. United Parcel Serv., Inc., 557 F.3d 849, 851 (8th Cir. 2009) (noting “[t]he factual allegations of a complaint are assumed true and construed in favor of the plaintiff, even if it strikes a savvy judge that actual proof of those facts is improbable”). However, allegations that are “legal conclusions or formulaic recitation of the elements of a cause of action . . . may properly be set aside.” Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (internal quotation marks omitted) (quoting Iqbal, 556 U.S. at 677).

         II. Background

         Plaintiff's Complaint alleges the following facts, which the Court accepts as true for purposes of Defendant Johnson's and Blue Book's motions to dismiss. See Data Mfg., Inc., 557 F.3d at 851. Plaintiff is an “agricultural media company” that produces “a variety of respected publications” and is “a trusted source for agricultural information and news.” (Doc. #1, ¶¶ 11- 12). Defendant Johnson is a former employee of Plaintiff who served as editorial director for two of Plaintiff's publications: The Packer and Produce Retailer. (Doc. #1, ¶¶ 14-15). Defendant Johnson is a current employee of Defendant Blue Book, “another agricultural media company and [Plaintiff's] direct competitor.” (Doc. #1, ¶¶ 2, 31). This lawsuit is about Defendant Johnson's alleged conduct during his employment transition from Plaintiff to Defendant Blue Book.

         While working for Plaintiff, Defendant Johnson's employment responsibilities included handling Plaintiff's confidential information. To adequately perform his job, Defendant Johnson had “access to a substantial volume of [Plaintiff's] confidential, proprietary, and/or trade secret documents, files and information stored on its internal computer network, ” which “included, but was not limited to, market and industry research data, customer lists and information, pricing and financial information, information regarding advertisers, marketing strategies, competitive analysis, and information regarding new products and services under development.” (Doc. #1, ¶ 17). When Defendant Johnson accepted Plaintiff's employment offer on December 2, 2015, he “agreed in the offer letter he signed” (“offer letter”) not to disclose or use Plaintiff's confidential information “except in furtherance of” Plaintiff's business. (Doc. #1, ¶ 27). Plaintiff requires all new employees to sign such an agreement. (Doc. #1, ¶ 21). Another “integral part” of Defendant Johnson's work responsibilities was to “routinely update[] The Packer's Twitter account with posts and links to [Plaintiff's] content as part of the company's overall marketing strategy to build its profile and the visibility of its publications.” (Doc. #1, ¶ 30).

         “[A]s early as March of 2018, [Defendant] Johnson entered into discussions with” Defendant Blue Book's President and CEO “about the potential for [Defendant] Johnson to leave his job at [Plaintiff] and join [Defendant] Blue Book.” (Doc. #1, ¶ 32). On July 7, 2018, Defendant Blue Book “formally offered to [Defendant] Johnson a position as its new Director of Media Development, ” which Defendant Johnson soon accepted. (Doc. #1, ¶ 37). On July 16, 2018, Defendant Johnson gave Plaintiff his resignation letter and two-weeks' notice. (Doc. #1, ¶ 38). While Plaintiff paid Defendant Johnson his salary through the end of July 2018, Plaintiff relieved Defendant Johnson of his work responsibilities on July 17, 2018. (Doc. #1, ¶ 41). The next day, Defendant Johnson and his wife returned to Plaintiff's office one last time “to collect some personal items and return his company cell phone.” (Doc. #1, ¶ 44).

         Shortly after July 19, 2018, Plaintiff “discovered that [Defendant] Johnson deliberately changed the ‘handle' of The Packer's Twitter account from ‘"gregofthepacker' to ‘"gregofthebluebook'” and thereby “redirect[ed]” Plaintiff's “followers to Blue Book content.” (Doc. #1, ¶¶ 47, 115). Plaintiff also “obtained a forensic image of the hard drive of [Defendant Johnson's] company laptop computer.” (Doc. #1, ¶ 51). The forensic image revealed that on June 11, 2018, -after Defendant Johnson had begun employment discussions with Defendant Blue Book but before he stopped working for Plaintiff-Defendant Johnson “surreptitiously copied more than 11, 000 files from [Plaintiff's] internal computer network to a personal ‘Dropbox' account” without Plaintiff's knowledge or permission. (Doc. #1, ¶ 52) (emphasis omitted). The forensic image also showed that Defendant Johnson “attached a USB storage device to his [company] laptop, ” though Plaintiff “cannot determine what additional information [Defendant] Johnson may have copied to this USB storage device because [Plaintiff] does not have the USB storage device despite repeated requests for the same.” (Doc. #1, ¶ 53).

         In November and December 2018, Plaintiff sent letters to Defendants Johnson and Blue Book informing them of what Plaintiff had learned since Defendant Johnson's departure and demanding their cooperation in returning Plaintiff's property. (Doc. #1, ¶¶ 57, 59). Defendant Johnson “never substantively responded to any of [Plaintiff's] letters, ” and Defendant Blue Book “largely declined to meet any of [Plaintiff's] demands.” (Doc. #1, ¶¶ 72, 75-76). Plaintiff then filed this lawsuit. (Doc. #1, ¶ 76). Plaintiff brings Counts I-V against Defendant Johnson only. Plaintiff brings Counts VI-IX against Defendants Johnson and Blue Book.

         III. Discussion

         A. Count I: Violation of DTSA

         In Count I, Plaintiff alleges Defendant Johnson “misappropriated [Plaintiff's] trade secrets by intentionally and willfully copying, without [Plaintiff's] authorization, more than 11, 000 files” to his personal DropBox account in violation of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836, et seq. (Doc. #1, ¶¶ 78, 82). “The DTSA creates a private right of action for an owner of a trade secret when that secret has been misappropriated, if the secret relates to a product used in interstate commerce.” CMI Roadbuilding, Inc. v. Iowa Parts, Inc., No. 18-1075, 2019 WL 1474022, at *2 (8th Cir. Apr. 4, 2019) (citing 18 U.S.C. § 1836). The DTSA defines “trade secret” as “all forms and types of financial, business, scientific, technical, economic, or engineering information” as long as 1) “the owner thereof has taken reasonable measures to keep such information secret” and 2) “the information derives independent economic value . . . from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.” § 1839(3)(A)-(B). “Misappropriation” under the DTSA means, among other things, “disclosure or use of a trade secret of another without express or implied consent by a person who . . . used improper means to acquire knowledge of the trade secret.” § 1839(5)(B). “[I]mproper means” for DTSA purposes “includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means” but “does not include reverse engineering, independent derivation, or any other lawful means of acquisition.” § 1839(6)(A).

         Defendant Johnson argues that Plaintiff makes only conclusory allegations that the uploaded files contained trade secrets and that, because the offer letter's confidentiality provision did not include a survival clause, the offer letter “expressly permitted” him to cease maintaining the confidentiality of Plaintiff's information once his employment ended. (Doc. #28, pp. 13-15). Defendant Johnson further argues that because he owed Plaintiff no confidentiality obligation at the moment his employment with Plaintiff ended, Plaintiff's information lost its trade secret status and Plaintiff's DTSA claim fails as a matter of law. (Doc. #28, pp. 12-13) (citing Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1006-1007) (1984)). Plaintiff argues that “[t]here is nothing in the confidentiality provision suggesting it terminates with [Defendant] Johnson's employment, ” that Defendant Johnson “stole [Plaintiff's] confidential information while he was still employed, ” and that it “specifically pled that the files Johnson stole included trade secrets.” (Doc. #17, pp. 14-17) (emphasis in original).

         Here, Plaintiff states a DTSA claim. Plaintiff's Complaint contains many allegations that the 11, 000 uploaded files contained trade secrets. Plaintiff alleges that it has taken reasonable measures to maintain the secrecy of this information, (Doc. #1, ⁋⁋ 17-29, 80), which derives independent economic value from not being generally known to Plaintiff's competitors. (Doc. #1, ⁋⁋ 17-18, 80, 79, 89). Defendant Johnson's conduct, as alleged by Plaintiff, shows the use of improper means-either theft or a breach of a duty to maintain secrecy-to misappropriate those files by using them or disclosing them. (Doc. #1, ⁋⁋ 82-84). Defendant Johnson's motion to dismiss Count I is denied.

         B. Count II: Violation of KUTSA

         In Count II, Plaintiff alleges that this same conduct by Defendant Johnson also violates the Kansas Uniform Trade Secrets Act (“KUTSA”), Kan. Stat. Ann. § 60-3320, et seq., because Defendant Johnson “stole the trade secrets while working for [Plaintiff] in its Lenexa, Kansas[, ] office and he uploaded them from [Plaintiff's] computer server that is located in that office.” (Doc. #1, ¶ 88). To prevail on a claim under the KUTSA, a plaintiff must show 1) “that the defendants employed theft or breached a duty to maintain secrecy in order to acquire trade secrets that had an independent economic value, ” 2) that “these secrets were not readily ascertainable by proper means by the defendants, ” and 3) “that [the plaintiff] made reasonable efforts under the circumstances to maintain the secrecy of the trade secrets.” Progressive Prod.,Inc. v. Swartz, 258 P.3d 969, 976 (Kan. 2011) (“[T]he act tells us that it seeks uniformity with other jurisdictions that have adopted the Uniform Trade Secrets Act.”). The KUTSA's definitions of “trade secret, ” “misappropriation, ” and “improper means” are ...


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