Tort/Negligence – Conspiracy — Unfair Trade Practices – Misappropriation of Trade Secrets — Deceased Defendant – Beer Growlers

Koch Measurement Devices, Inc. v. Armke (Lawyers Weekly No. 13-15-1001, 14 pp.) (John R. Jolly Jr., Ch.J.) 2013 NCBC 48

Holding: Even though plaintiff has dismissed its claims against its now-deceased former employee, plaintiff’s claims against its former graphic design contractor remain, supported by allegations that the graphic designer and the employee conspired to steal plaintiff’s business.

The court denies the motion to dismiss filed by defendants Walsak and Tote Glass, Inc.

Plaintiff’s misappropriation of trade secrets claim identifies and sufficiently describes as confidential business information the following: (a) customer lists including names, contact persons, addresses and phone number of plaintiff’s customers; (b) the ordering habits, history and needs of plaintiff’s customers and (c) plaintiff’s pricing and inventory management strategies. Such information may constitute a trade secret under N.C. law.

Plaintiff’s unfair trade practices claim adequately alleges that Walsak collaborated with the late Kenneth Armke to form Tote Glass, Inc. and to divert or convert certain business opportunities, assets and information rightfully belonging to plaintiff. The complaint’s allegations describe and allege, essentially, unfair competition on the part of Walsak and Tote that falls outside of the employer/employee relationship and does not directly concern any employment agreement that may have existed between Armke and plaintiff.

While, as defendants argue, there may not be a legal entitlement to customers, plaintiff’s constructive trust claim alleges that defendants are in the wrongful possession of certain tangible business assets and inventory rightfully belonging to plaintiff. Further, the complaint alleges that defendants are in possession of those assets by virtue of the fact that Armke, while in league with Walsak, breached the fiduciary duty of care he owed to plaintiff as its officer and director.

Plaintiff’s conversion claim alleges that defendants wrongfully took possession of (a) plaintiff’s inventory; (b) the email account [email protected] and all emails and information associated with that account; (c) computer equipment, hard drives and web server and (d) client files. It is further alleged that these assets rightfully belonged to plaintiff and that defendants exercised unauthorized authority and control over the assets to the exclusion of plaintiff. The court is unable to determine as a matter of law that plaintiff has failed to state a claim for conversion.

Plaintiff’s civil conspiracy claim alleges a common scheme between Walsak and Armke to divert certain corporate assets and opportunities of plaintiff. Further, plaintiff has alleged certain overt acts committed by both Walsak and Armke in furtherance of that common scheme. If proven, these allegations could result in liability for Walsak regardless of the presence of Armke in this action.

Motion denied.