Labor & Employment – Breach of Contract – Misappropriation of Trade Secrets

Plaintiff company failed to identify its trade secrets with sufficient particularity.

The Court granted in part and denied in part Defendants’ motion to dismiss.

Defendant Ryan McCray was once an employee of Plaintiff Financial Carrier Services LLC (FCS). In 2024, he resigned and began working for a competitor, Defendant Kingpin Capital Inc. FCS alleged that McCray and Kingpin are competing unfairly by using its trade secrets and confidential information to solicit its customers. FCS’s amended complaint included claims against McCray for breach of contract and misappropriation of trade secrets. It also included claims against both McCray and Kingpin for tortious interference with contract, unfair or deceptive trade practices under N.C.G.S. § 75-1.1, fraud, and injunctive relief. McCray and Kingpin moved to dismiss the amended complaint in its entirety.

Among other things, McCray and Kingpin contended the amended complaint fails to meet this standard. The Court agreed. FCS identifies its trade secrets in vague, conclusory terms: “customer lists, information concerning FCS’s customers and business partners, internal operational information, business and marketing strategies, and other non-public, proprietary information.” At no point does the amended complaint “put defendants on notice as to the precise information allegedly misappropriated.” Accordingly, the Court concluded FCS has not identified its trade secrets with sufficient particularity and granted the motion to dismiss the claim for misappropriation of trade secrets.

FCS claimed McCray breached the noncompetition, customer nonsolicitation, and confidentiality clauses in his employment agreement. McCray contended the noncompetition and customer nonsolicitation clauses are unenforceable and that FCS has not adequately alleged a breach of the confidentiality clause. McCray’s noncompetition clause is facially overbroad. Because the noncompetition clause is facially overbroad and unenforceable, the Court granted the motion to dismiss FCS’s claim for breach of the clause. The customer nonsolicitation clause is also facially broad and unenforceable and, therefore, the Court granted the motion to dismiss FCS’s claim for breach of the clause.

Courts do not scrutinize confidentiality clauses as heavily as restrictive covenants. McCray and Kingpin did not contend that the confidentiality clause in McCray’s employment agreement is unenforceable. Rather, they contended that FCS has not adequately alleged a breach. The Court disagreed. Claims for breach of contract are not subject to heightened pleading standards. The particularity requirement that applies to trade-secret claims does not apply here, for example. FCS has alleged that McCray acquired confidential business and financial information, that he disclosed this information to Kingpin, and that McCray and Kingpin used this information to steal clients and otherwise compete unfairly. These allegations are not conclusory, and taken as true, they suffice to state a claim. The Court therefore denied the motion to dismiss the claim for breach of the confidentiality clause in McCray’s employment agreement.

Next, FCS claimed that Kingpin tortiously interfered with McCray’s employment agreement by causing him to breach its noncompetition, customer nonsolicitation, and confidentiality clauses. It also claimed that McCray and Kingpin unlawfully induced its customers to terminate their contracts with it. McCray and Kingpin argued that these claims must be dismissed because they are based on unenforceable restrictive covenants and because any interference with FCS’s customer contracts was justified. Having held that McCray’s noncompetition and nonsolicitation clauses are unenforceable, the Court concluded that they “cannot support” FCS’s “claim for tortious interference with contract.”

But the claim for breach of the confidentiality clause remains. Market competition may justify “interference in another’s business relations” but only “so long as it is carried on in furtherance of one’s own interests and by means that are lawful.” As alleged, McCray and Kingpin competed by unlawful means. Liberally construed, the amended complaint alleges that Kingpin knew of McCray’s nondisclosure obligation, Kingpin induced McCray to breach that obligation, and Kingpin and McCray used FCS’s confidential information to induce its customers to terminate their contracts. The Court concluded that these allegations, taken as true, suffice to state a claim. Accordingly, the Court granted the motion to dismiss the claims for tortious interference to the extent premised on the noncompetition and customer nonsolicitation clauses but otherwise denied the motion to dismiss the claims.

Injunctions are remedies, not independent causes of action. The Court therefore granted the motion to dismiss the standalone claim for injunctive relief. That said, FCS may be able to seek injunctive relief as a remedy if it prevails on its other remaining claims. Thus, the dismissal is without prejudice to FCS’s ability to move for an injunction as a remedy at the appropriate time.

Granted in part, denied in part.

Financial Carrier Services LLC v. Kingpin Capital Inc. (Lawyers’ Weekly No. 020-027-25, 13 pp.) (Adam M. Conrad, J.) 2025 NCBC 27. Taylor English Duma, LLP, by Ryan M. Arnold, and Buchalter, a Professional Corporation, by Alison M. Ballard and Andrew H. Pinter, for Plaintiff Financial Carrier Services LLC d/b/a TBS Charlotte. Bradley Arant Boult Cummings LLP, by C. Bailey King, Jr. and Tamara R. Boles, for Defendants Kingpin Capital Inc. and Ryan McCray. North Carolina Business Court