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Insight Global, LLC v. McDonald

United States District Court, D. Colorado

April 30, 2018

INSIGHT GLOBAL LLC, Plaintiff,
v.
MARY MCDONALD, and BEACON HILL STAFFING GROUP LLC, Defendants.

          OPINION AND ORDER ON MOTIONS TO DISMISS

          Marcia S. Krieger Chief Judge

         THIS MATTER comes before the Court on the Defendants' Motions to Dismiss (## 14, 15), the Plaintiff's responses (## 23, 24), and the Defendants' replies (## 31, 32). For the reasons that follow, the first motion is granted and the second motion is denied.

         I. JURISDICTION

         The Court has jurisdiction to hear this case under 28 U.S.C. § 1331.

         II. BACKGROUND

         The following general allegations are drawn from the Complaint and for purposes of these Motions are taken as true. They are supplemented as necessary as part of the Court's analysis.

         Defendant Mary McDonald worked for Plaintiff Insight Global, a staffing company, in its Boston office for close to two years. She started as a recruiter-in-training and was subsequently promoted to recruiter and then to account manager. During her employment, Ms. McDonald had access to extensive confidential business information and trade secrets regarding Insight's business, services, customers, clients, pricing, strategies and financial information. Insight ended its employment relationship with Ms. McDonald in May 2017. Ms. McDonald then relocated to Denver and accepted employment with Defendant Beacon Hill Staffing, performing a similar job to what she did at Insight.

         Ms. McDonald's original employment agreement with Insight imposed several restrictions that restricted her use and disclosure of Insight's trade secret information during and after her employment. Among these restrictions were provisions limiting use of 1) Insight's trade secrets; 2) Insight's confidential business information; 3) a “no competition” provision operative for two years within the “Territory” which is defined as the lesser of 35 miles from Ms. McDonald's business location (Boston) or the length of a straight line between Ms. McDonald's business location and her most distant customer or client; 4) an agreement not to solicit customers or clients for whom she has provided services; 5) an obligation to return Insight's property and information on written demand; and 6) to provide a copy of the employment agreement to any employer for whom Ms. McDonald works in the 2 year period following her employment with Insight. After her employment with Insight ended, Ms. McDonald entered into a Separation Agreement with Insight, in which she reaffirmed her commitment to abide the restrictions in her employment agreement (the Reaffirmation Provision). She also affirmed that she had returned all of Insight's property (the Return of Property Affirmation).

         In violation of the restrictions in the various agreements, Ms. McDonald misappropriated Insight's confidential and trade secret information including the names of customers in the Denver area. In her new employment with Beacon Hill, Ms. McDonald is allegedly using or disclosing Insight's trade secrets and confidential business information in violation of her contractual obligations, and that she has failed to give appropriate notice of her employment with Beacon Hill.

         As to Beacon Hill, the Complaint alleges that it has knowledge of Ms. McDonald's contractual obligations to Insight, but that it has instructed Ms. McDonald that she does not need to comply with these obligations. Beacon Hill has coordinated with Ms. McDonald to cover up her breaches of the Separation Agreement.[1] In addition, Beacon Hill is engaging in unfair competition.

         In its Complaint, Insight states the following causes of action against Ms. McDonald: (1) breach of employment agreement, (2) misappropriation of trade secrets under three statutes, (3) breach of separation agreement, (4) fraud, and (5) breach of duty of loyalty. The Complaint also alleges two causes of action against Beacon Hill: 1) tortious interference with Ms. McDonald's employment agreement; and 2) unfair competition.

         Ms. McDonald moves to dismiss only the fraud claim (# 15). Beacon Hill moves to dismiss both the tortious-interference and unfair-competition claims (# 14).

         III. LEGAL STANDARD

         In reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court must accept all well-pleaded allegations in the complaint as true and view those allegations in the light most favorable to the nonmoving party. Stidham v. Peace Officer Standards & Training, 265 F.3d 1144, 1149 (10th Cir. 2001) (quoting Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999)). The Court must limit its consideration to the four corners of the complaint, any exhibits attached thereto, and any external documents that are incorporated by reference. See Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009). However, a court may consider documents referred to in the complaint ...


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