United States District Court, D. Oregon
For Plaintiff: Erick J. Haynie, Joanna T. Perini-Abbott (pro hac vice), Stephen F. English, PERKINS COIE, LLP, Portland, OR.
For Defendants: Bruce G. Vanyo (pro hac vice), Yonaton M. Rosenzweig, KATEEN MUCHIN ROSENMAN, LLP, Los Angeles, CA.
For Defendants: Joshua L. Ross, Robert A. Shlachter, Timothy S. DeJong, STOLL STOLL BERNE LOKTING & SHLACHTER, PC, Portland, OR.
OPINION & ORDER
MARCO A. HERNÁNDEZ, United States District Judge.
Plaintiff Vesta Corporation brings this action against Defendants Amdocs Management Limited and Amdocs, Inc. (collectively, " Defendants" ), alleging breach of contract, trade secret misappropriation, and fraud. Defendants move to dismiss the Complaint for failure to state a claim. For the reasons that follow, Defendants' motion to dismiss is denied in part and granted in part.
Plaintiff is an electronic payments and fraud prevention technology company. Compl. Intro. Defendants are telephone billing software and services companies. Id. Both Plaintiff and Defendants provide services to national and international mobile phone network operators (MNOs). Compl. ¶ 9. Payment solutions, such as those provided by Plaintiff; and billing platforms, such as those provided by Defendants; " are distinct in the MNO support services marketplace." Id. ¶ 11. Payment solutions facilitate an MNO's receipt of payments from the end-users of mobile devices, whereas billing platforms maintain account status and account information for the MNO and its customers. Id. Until recently, Defendants were not providers of payment solutions. Id. ¶ 12. Because MNOs generally require both payment solutions and billing platforms to serve their customers, Plaintiff and Defendants collaborated with one another to integrate their services and platforms in order to appeal to their shared customer base. Id. ¶ ¶ 13, 14.
Plaintiff alleges that, beginning in 2006, Plaintiff and Defendants entered into a series of Non-Disclosure/Confidentiality Agreements (NDAs) to preserve confidentiality while sharing information in their effort to develop joint services and products. Id. ¶ ¶ 13-15. Plaintiff further alleges that, in 2009, the parties executed an NDA to capture their understanding that " all of their meetings and discussions after June 24, 2009, would remain confidential and not be used or disclosed by the other party[.]" Id. ¶ 19. In addition, every time one of Defendants' employees visited Plaintiff's headquarters, the employee had to sign-in and agree that all of the information acquired while on the premises was confidential. Id. ¶ 20 (describing the " Sign-In NDAs" ). On July 3, 2012, the parties executed an additional NDA. Id. ¶ 41.
Plaintiff alleges that from 2010 to 2012, the parties worked together to market their products to Metro PCS, a large MNO, and explored the possibility of Defendants acquiring Plaintiff. Id. ¶ ¶ 24, 28-35. In 2010, Defendants' employees made several trips to Plaintiff's headquarters and Plaintiff's Chief Executive Officer traveled to Tel Aviv to meet with Defendants' Chief Executive Officer. Id. ¶ ¶ 25-27. In 2012, the parties worked through a third-party investment banking firm to explore the possibility of acquisition. Id. ¶ 38.
In the course of jointly collaborating on marketing and the possibility of acquisition, Plaintiff shared information with Defendants including " proprietary information about [Plaintiff's] payment solution" and " confidential and proprietary business and financial information." Id. ¶ 17. Specifically, Plaintiff alleges that Defendants obtained two types of confidential information from Plaintiff: 1) " Solutions Methods," which include " detailed information about the architecture and design of the solutions, including proprietary payment routines, methodologies and processes" ; and 2) " Risk Information," which includes detailed statistical information about " the prevalence of fraudulent payment transactions in the prepaid mobile device market place" and how Plaintiff " uses fraud data to price its payment solutions." Id. ¶ ¶ 22, 51.
Additional facts relevant to particular claims are discussed below.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the claims. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). " All allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Am. Family Ass'n, Inc. v. City & Cnty. of S.F., 277 F.3d 1114, 1120 (9th Cir. 2002). However, the court need not accept conclusory allegations as truthful.
See Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) (" [W]e are not required to accept as true conclusory allegations which are contradicted by documents referred to in the complaint, and we do not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations." ) (internal quotation marks, citation, and alterations omitted). Rather, to state a plausible claim for relief, the complaint " must contain sufficient allegations of underlying facts" to support its legal conclusions. Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).
A motion to dismiss under Rule 12(b)(6) will be granted if a plaintiff alleges the " grounds" of his " entitlement to relief" with nothing " more than labels and conclusions, and a formulaic recitation of the elements of a cause of action[.]" Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). " Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)[.]" Id. (citations and footnote omitted).
To survive a motion to dismiss, a complaint " must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face[,]" meaning " when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted). A complaint must contain " well-pleaded facts" which " permit the court to infer more than the mere possibility of misconduct[.]" Id. at 679.
Plaintiff brings three claims: (1) breach of contract, (2) trade secret misappropriation, and (3) fraud. Defendants move to dismiss the claims. The Court denies Defendants' motion to dismiss the breach of contract and trade secret misappropriation claims, but grants the motion to dismiss the fraud claim.
I. Incorporation by Reference
The doctrine of incorporation by reference allows " a district court to consider documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleading." In re Silicon Graphics, Inc. Sec. Litig. (SGI), 183 F.3d 970, 986 (9th Cir. 1999) (internal quotation omitted). Because these documents have essentially been adopted as part of the complaint, the Court may consider them without converting the motion to dismiss into a motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (" Even if a document is not attached to a complaint, it may be incorporated by reference into a complaint if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim." ).
The parties ask the Court to incorporate by reference nondisclosure agreements (NDAs). Costley Decl. Ex. A, J; Haynie Decl. Ex. A. Defendants submit the 2012 NDA and a page of a 2006 NDA, and Plaintiff submits the 2009 NDA. Because the NDAs are referred to extensively in the Complaint and are the basis of Plaintiff's breach of contract claim, the Court incorporates them by reference.
II. Judicial Notice
Courts may take judicial notice of information " not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed.R.Evid. 201(b). Courts may take judicial notice of SEC filings, press releases, or contents of a website, when they are " matters of public record." See Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001);
see also Nw. Pipe Co. v. RLI Ins. Co., No. 3:09-CV-01126-BR, 2014 WL 1406595, at *5 (D. Or. Apr. 10, 2014). When a court takes judicial notice of a public record, " it may do so not for the truth of the facts recited therein, but for the existence of the [record], which is not subject to reasonable dispute over its authenticity." Klein v. Freedom Strategic Partners, LLC, 595 F.Supp.2d 1152, 1157 (D. Nev. 2009) (quoting Lee, 250 F.3d at 690)
Defendants submit four forms reflecting Defendants' financial statements, downloaded from the SEC's publicly available electronic data gathering and retrieval database; two of Defendants' press releases; and two printouts from Plaintiff's website. Costley Decl. Exs. B-I. The Court takes judicial notice of the SEC filings, press releases, and website pages, not for the truth of the facts recited therein but for the existence of the records.
III. Breach of Contract
A. Choice of Law
As an initial matter, New York law governs the substantive merits of Plaintiff's breach of contract claim. The 2009 and 2012 NDAs contain the following clauses:
2009 NDA: " This Agreement shall be governed by and construed under the laws of New York, without giving effect to such laws' provisions regarding conflict of laws.
2012 NDA: " This letter agreement . . . shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to the conflict of laws principles thereof.
This language makes clear that the parties intended for New York law to apply in a dispute regarding an alleged breach of these NDAs. Both Oregon and New York law follow the principle that the parties may choose the law that is to govern their contracts. See, e.g., Young v. Mobil Oil Corp.,85 Or.App. 64, 68, 735 P.2d 654 (1987); A.S. Rampell, Inc. v. Hyster Co.,3 N.Y.2d 369, 144 N.E.2d 371, 165 N.Y.S.2d 475 (1957). Furthermore, ...