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Gates Corp. v. CRP Industries, Inc.

United States District Court, D. Colorado

November 28, 2017



          Kristen L. Mix United States Magistrate Judge.

         This matter is before the Court on Defendant's Rule 12(b)(6) Motion to Dismiss [#54][1] (the “Motion”). Plaintiff filed a Response [#55] in opposition to the Motion to Dismiss, and Defendant filed a Reply [#56]. The Court has reviewed the Motion, the Response, the Reply, the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#54] is DENIED.[2]

         I. Background[3]

         A. Factual Background

         Plaintiff is a Delaware corporation that manufactures power transmission belts and fluid power products that are used in diverse industrial and automotive applications. Am. Compl. [#49] ¶ 8. Defendant is a New Jersey corporation that distributes and sells automotive and other industrial products. Id. ¶ 9. The parties are direct competitors. Id.

         Plaintiff has created an electronic database of confidential business information, which Plaintiff describes as the “backbone of [its] sales.” Id. ¶¶ 10, 13. The database includes information about products that Plaintiff plans to offer before the information is made public, as well as valuable market research. Id. ¶ 13. The database also stores Vehicles in Operation (“VIO”) data, which is non-public, proprietary data for which Plaintiff pays an annual premium to access from another source. Id. ¶ 12. Plaintiff's database is stored in a password-protected file on a password-protected server. Id. ¶¶ 10-11. Certain employees are given access to the database after they have signed confidentiality agreements, and unauthorized or anonymous access is not permitted. Id. ¶ 11. Select customers are permitted to access only certain classes of information in the database. Id. Plaintiff pays researchers a combined salary of over $50, 000 per month to keep the information updated. Id. ¶ 13.

         Laura Bale (“Bale”) was Plaintiff's employee for 25 years. Id. ¶ 15. While employed by Plaintiff, Ms. Bale developed software and was involved with storage of the automotive parts list in the database. Id. She was assigned a personal username and password to access the database. Id. On August 25, 2009, Plaintiff terminated Ms. Bale's employment, at which time her username and password were deactivated and she signed an “Employee Termination Statement, ” which stated her agreement to turn over all confidential and trade secret information to Plaintiff and agreed not to share that information with anyone. Id. ¶16.

         Ms. Bale began working for the Defendant in February 2010. Id. ¶17. Plaintiff sent Ms. Bale a letter on February 15, 2010, reminding her to keep Plaintiff's information confidential. Id. Plaintiff copied Defendant on the letter. Id. Two years later, on February 8, 2012, Plaintiff became aware that Ms. Bale had unlawfully accessed Plaintiff's database. Id. ¶18. Ms. Bale's former supervisor, David Haun (“Haun”), received an e-mail from Ms. Bale that attached VIO data and had the subject line “Present, ” with text that read “Check this out . . . [.]” Id. Mr. Haun suspected that the e-mail was intended for David Hirschhorn (“Hirschhorn”), Defendant's Director of Brand Management who was Ms. Bale's supervisor at the time, and that Plaintiff had unlawfully accessed Plaintiff's database and attempted to send the information to Mr. Hirschhorn. Id. ¶¶ 19, 20. Mr. Haun confirmed that the attachment to the e-mail contained information that matched VIO data, and on reviewing the server logs, discovered that the same IP address in the header of Ms. Bale's e-mail had been used on several previous occasions to access Plaintiff's server. Id. ¶ 20. Plaintiff thereafter notified the Federal Bureau of Investigations (“FBI”), which commenced an investigation. Id. ¶ 21.

         On March 16, 2012, approximately one month after Plaintiff discovered Ms. Bale's unlawful database access, Plaintiff sent a letter to Defendant's President, informing him of the e-mail that Plaintiff had received from Ms. Bale and asking whether Defendant possessed any software or other information that Ms. Bale had downloaded. Id. ¶ 52. On April 29, 2012, Plaintiff received a response letter stating that Defendant was investigating the matter. Id. ¶ 53. On June 6, 2012, Defendant followed up and informed Plaintiff that (1) the investigation was complete and Defendant had confirmed that no one affiliated with Defendant had downloaded and/or used the confidential information referenced in Plaintiff's letter, (2) Defendant did not have any record of the confidential information in either electronic or hard copy form, and (3) Ms. Bale had represented to Defendant that she had not used or disclosed any of the confidential information referenced in the March 16, 2012 letter. Lastly, Defendant informed Plaintiff that Ms. Bale was no longer employed by Defendant. Id.

         Defendant later released a new product line of hoses that consisted mostly of products that Plaintiff did not offer. Id. ¶ 54. Plaintiff became suspicious that Defendant had in fact used the information gleaned by Ms. Bale, because “it would have taken a substantial amount of time and money to create such a product line without access to [Plaintiff's] trade secrets.” Id. On January 10, 2013, Plaintiff's counsel wrote to Defendant's counsel informing them of Plaintiff's suspicions and requesting that Defendant undertake a new investigation. Id. ¶ 55. On January 24, 2013, Defendant responded that it had confirmed that none of Plaintiff's data referenced in the letters had been used in the development of Defendant's hoses or any other product line. Id. ¶ 56.

         After the FBI and the United States Attorneys' Office completed their investigation in the spring of 2016, the United States Attorneys' Office provided Plaintiff with a draft statement of facts, where it was allegedly revealed that Defendant was involved in the unlawful accessing and downloading of Plaintiff's trade secrets. Id. ¶ 58. On May 11, 2016, Ms. Bale pled guilty to unauthorized access to a protected computer, in violation of 18 U.S.C. §§ 1030(a)(2)(C) and 1030(c)(2)(B). See Id. ¶ 1; see also United States v. Laura Bale, No. 16-cr-00112-WJM.

         B. Procedural Background

         Plaintiff filed the Complaint [#1] initiating this action on May 17, 2016. The Court granted Plaintiff's request for leave to amend, and on April 10, 2017, Plaintiff filed the Amended Complaint [#49]. Plaintiff raises four claims: (1) misappropriation of trade secrets under the Colorado Uniform Trade Secrets Act (“CUTSA”), (2) a Colorado tort claim for misappropriation of business value, (3) a Colorado tort claim for interference with a contract, and (4) a federal claim under the Computer Fraud and Abuse Act. See generally Am. Compl. [#49]. Plaintiff seeks a preliminary and permanent injunction prohibiting Defendant from using any of Plaintiff's trade secret information and mandating that Defendant return any such information in its possession. Plaintiff also demands compensatory damages, punitive damages, reasonable attorneys' fees and costs, and pre-and post-judgment interest on any award of damages. Id. at 25.

         Defendant filed the Motion [#54] on April 24, 2017. Defendant argues that all four of Plaintiff's claims fail because they are each barred by the applicable statutes of limitations, and therefore must be dismissed pursuant to Fed.R.Civ.P. 12(b)(6). Motion [#54] at 11-18. In the alternative, Defendant argues that Plaintiff's misappropriation of business values and tortious interference with contract claims should be dismissed because they are preempted by the CUTSA claim, as all three claims arise out of the same facts. Id. at 18-19.

         II. ...

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