United States District Court, D. Oregon
J. CRONAN CRONAN LAW LLC ATTORNEY FOR PLAINTIFF
CHRISTOPHER G. LUNDBERG HAGLUND KELLY LLP ATTORNEY FOR
DEFENDANTS HOWARD GEE, SCOTT MILLER, BORIS LUTSKOVSKY
K. HOULIHAN JON P. STRIDE TONKON TORP LLP ATTORNEYS FOR
DEFENDANT MICHAEL ERICKSON
OPINION & ORDER
A HERNÁNDEZ UNITED STATES DISTRICT JUDGE
Catalinbread LLC alleges that four former employees,
Defendants Howard Gee, Scott Miller, Boris Lutskovsky, and
Michael Erickson, conspired to misappropriate Plaintiff's
intellectual property, tangible property, and protected trade
secrets. Plaintiff brings eight claims against Defendants-two
pursuant to federal statutes, the Computer Fraud and Abuse
Act (“CFAA”) and the Defend Trade Secrets Act
(“DTSA”); and six based on state statutes or
common law. Defendants move to dismiss Plaintiff's complaint.
Defendants argue that Plaintiff fails to state a claim under
the CFAA or the DTSA, and that the Court should decline to
exercise supplemental jurisdiction over Plaintiff's state
and common law claims. The Court grants Defendants'
motion in part by dismissing the CFAA claim. However, the
Court denies the remainder of Defendants' motion and
grants Plaintiff leave to amend.
produces “unusual and innovative” guitar pedals
which are sold across the United States and internationally.
First Am. Compl. (“FAC”) ¶ 12. Plaintiff was
founded in 2003 by Nicholas Harris, who passed away
unexpectedly on March 9, 2016. FAC ¶¶ 3, 10, 17.
Mr. Harris' mother, Mary Burkett, assumed control of the
company in June of 2017. FAC ¶¶ 17-18.
are former employees of Plaintiff. Mr. Miller was
Plaintiff's Sales Representative and temporary manager
after Mr. Harris passed away. FAC ¶ 3. Mr. Gee designed
guitar pedals. FAC ¶ 4. Mr. Lutskovsky provided
information technology and computer support. FAC ¶ 5.
Mr. Erickson provided customer service and artist relations.
FAC ¶ 6.
alleges that it developed and continues to maintain the
following proprietary and confidential information:
- Build of Material (“BOM”), specifying exactly
which parts are required for each pedal manufactured;
- Cost of Goods (“COG”), the proprietary list of
wholesale cost for each component of the pedals, since
Plaintiff's costs necessarily vary from other
manufacturers because the sources and purchase prices are
- Schematics, describing the circuit structure and signal
flow of the pedals, which are confidential and protected
information, especially for new or unreleased pedals, because
a competitor would require significant time and effort to
reverse engineer them; - Product structures, defining the
exact measurements and methods for building the pedals;
- Project files, including the application or program
specific files that allow Plaintiff to design and test
schematics, product structures, printed circuit boards,
program microchips and even the images printed on the pedal
- Data files, which are the final exported versions of the
project files, used primarily to cut circuit boards, shape
enclosures, flash machine code onto microchips, and print
graphics on the pedals.
FAC ¶ 13. Collectively, this information constitutes
Plaintiff's trade secrets. FAC ¶ 14. Plaintiff took
steps to secure and protect the trade secrets, including
adopting confidentiality policies and procedures in its
employee handbook; maintaining a secure computer network,
protected by passwords and limiting user accounts to
employees with password requirements; and deprovisioning
employees who left employment. FAC ¶ 16.
to Plaintiff, once Ms. Burkett assumed control of the company
in June of 2017, production suddenly and without explanation
fell significantly below prior levels. FAC ¶ 18. At the
same time, Defendants were conspiring to force Ms. Burkett to
sell them the company by making it difficult, if not
impossible, to continue the operations if she refused. FAC
¶ 20. In approximately August of 2017, Mr. Miller and
Mr. Gee began insisting that Ms. Burkett sell them the
company and that she provide financing for the sale. FAC
approximately September of 2017, Defendants started taking
the following steps towards founding a company to compete
- Using Plaintiff's laptops to communicate privately on
the online messaging service Slack;
- Removing components for building product, including
proprietary development parts;
- Making plans to raise money for their competing venture;
- Purchasing domain names for use with the competing company;
- Continuing to work for Plaintiff while surreptitiously
planning their competing company.
FAC ¶¶ 20, 23, 24.
approximately October of 2017, concerned that Plaintiff would
discover their plans, Defendants accessed Plaintiff's
Slack account and Plaintiff's on-site computers and,
without authorization, deleted information that could reveal
their plans for a new company. FAC ¶ 25. At the same
time, Mr. Gee and Mr. Lutskovsky created a second Slack
channel that allowed Defendants to communicate outside of
Plaintiff's system. FAC ¶ 26. Defendants began using
Plaintiff's proprietary engineering to develop a line of
competing products. FAC ¶ 28. They also initiated a
smear campaign against Plaintiff. FAC ¶ 40.
about October 13, 2017, Defendants conspired to coerce Ms.
Burkett to sell Plaintiff to them or they would cause the
company to self-destruct. FAC ¶ 29. The following day,
Defendants resolved to stop producing, in order to coerce
Plaintiff to fire them or sell them the business. FAC ¶
about October 16, 2017, Defendants “falsely and without
authorization mark[ed] supplies as out of stock and
download[ed] protected build of material (“BOM”),
cost of goods (“COG”) schematics, product
structures, files, and other data from Catalinbread computers
and ma[de] copies for later appropriation.” FAC ¶
32. They also expressed their plans on Slack to destroy or
render inaccessible critical and proprietary information. FAC
¶ 35. Defendants purged their company phones, deleted
information from Plaintiff's computers, changed and
deleted online passwords, purged Plaintiff's laptops, and
took Plaintiff's property. FAC ¶ 39. Then, Mr.
Miller, Mr. Gee, and Mr. Erickson quit. FAC ¶ 39. Mr.
Lutskovsky was fired a few days later. FAC ¶ 39.
to Plaintiff, “[f]ollowing the end of Defendants'
employment with Plaintiff, there was evidence of unusual
traffic on the Catalinbread network, including multiple
instances where some of the shop computers showed signs that
someone had attempted to login to the computer and/or the
company network. One of the primary targets was the main shop
computer discussed in the Slack threads as a target for
deletion.” FAC ¶ 41. Based on the plans discussed
over Slack by Defendants as well as the “targeted
nature of the actions, ...