Kaabooworks Services, LLC v. Pilsl

          RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          KRISTEN L. MIX MAGISTRATE JUDGE

         This matter is before the Court on Defendant's Motion to Dismiss [#21]^[1] (the “Motion”).^[2] Plaintiff filed a Response [#25] in opposition to the Motion, and Defendant filed a Reply [#40]. The Motion has been referred to the undersigned for a recommendation regarding disposition pursuant to 28 U.S.C. § 636(b)(1)(A) and D.C.COLO.LCivR 72.1(c)(3). See [#37]. The Court has reviewed the Motion, Response, Reply, the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Court respectfully RECOMMENDS that the Motion [#21] be GRANTED in part and DENIED in part.

         I. Background

         The well-pled facts of the Complaint [#1] are construed in a light most favorable to Plaintiff. Barnes v. Harris, 783 F.3d 1185, 1191-92 (10th Cir. 2015). Plaintiff is a Delaware limited liability company with its principal place of business in Colorado. Compl. [#1] ¶ 4. Plaintiff is a live-music and entertainment company that organizes high-end music and adult cultural festivals in California with plans to expand geographically. Id. ¶ 12. Defendant served as Plaintiff's Senior Vice President of Business Development from October 1, 2015, until October 10, 2017. Id. ¶ 2. During his employment, Defendant lived and worked primarily from his home in Florida while traveling often to Colorado and maintaining constant communication with the Colorado office. Id. ¶ ¶ 6, 17.

         Plaintiff “fiercely protects” proprietary information about its business and operating system to protect its competitive advantage. Id. ¶ 13. Information including the identities of partners for upcoming events, prospective partners and their primary contacts, pricing information, attendee information, and financial information is protected by several procedures. Id. These procedures include notifying each employee in his offer letter that he will be required to sign a confidentiality agreement, providing only restricted access to proprietary information, outlining the company's confidentiality requirements and the importance of confidentiality to Plaintiff's business model in the Employee Handbook, withdrawing access to restricted information upon termination of any employee's employment, and requiring each employee to certify that he has returned all confidential information on his departure from the company. Id. ¶ 15.

         As Senior Vice President of Business Development, Defendant had and allegedly retains access to nearly all proprietary information listed above. Id. ¶ ¶ 16, 25. Specifically, Plaintiff maintains that Defendant has access to:

“(1) the entire attendee list for the [Del Mar, California] festival, including their contact information, preferences, and demographic information; (2) the festival budget information; (3) the names of prospective partners; (3) information about the pricing and other deal terms offered to the existing corporate partners; (4) analyses of the festival results; (5) prospective locations and plans for expansion of the KAABOO brand; (6) hospitality pricing information; (7) contract templates for hospitality, culinary, and corporate partnerships; (8) sales team reports; (9) strategies for identifying corporate partners; (9) payment and financial information related to corporate partners; (10) information related to specific needs and preferences of the corporate partners; and (11) sponsorship pricing, sales data and sales strategy.”

Id. ¶ 16. Plaintiff further contends that Defendant has certain confidentiality obligations with KAABOO, namely that Defendant was aware of what information was considered confidential and that he may not use or disclose that information. Id. ¶ 19. According to Plaintiff, Defendant also knew that on termination of his employment he would be required to return any confidential company information. Id. ¶ 20.

         In October 2017, Plaintiff terminated Defendant's employment and requested that he sign a certification acknowledging that he had returned all company “property in his possession, including confidential, proprietary, and trade secrets information, in any form (electronic and hard copy) and that he did not keep copies of such information.” Id. ¶ 24. Defendant did not sign the certification and informed the CEO of KAABOO that he planned to restart his prior business named Sprocket, which would be a potential competitor with KAABOO. Id. Plaintiff maintains that Defendant has not returned KAABOO's property and that he remains in possession of trade secrets and confidential information. Id. ¶ 25.

         Plaintiff has asserted three claims against Defendant. First, Plaintiff asserts a claim for violation of the Colorado Trade Secrets Act. Id. ¶ ¶ 26-35. Second, Plaintiff asserts a claim for violation of the Defend Trade Secrets Act. Id. ¶ ¶ 36-45. Finally, Plaintiff asserts that Defendant converted its property. Id. ¶ 46-49. Plaintiff seeks an Order requiring Defendant to deliver Plaintiff's confidential information and trade secrets; entering preliminary and permanent injunctions that enjoin Defendant from using, disclosing, or misappropriating Plaintiff's trade secrets and confidential information; entering judgment in favor of Plaintiff and against Defendant; awarding Plaintiff compensatory damages; awarding Plaintiff the value of unjust enrichment to Defendant; awarding Plaintiff punitive and exemplary damages for the intentional harm inflicted on Plaintiff by Defendant; awarding Plaintiff its reasonable attorneys' fees and costs; and awarding Plaintiff all such further and other relief that is just and adequate. Id. at 14.

         II. Standard of Review

         A. Fed.R.Civ.P. 12(b)(2)

         The Court analyzes an argument that the Court lacks personal jurisdiction under Fed.R.Civ.P. 12(b)(2). A plaintiff bears the burden of establishing personal jurisdiction over a defendant. Behagen v. Amateur Basketball Ass'n of the United States, 744 F.2d 731, 733 (10th Cir. 1984). Before trial, a plaintiff need only make a prima facie showing of jurisdiction. Id. The Court accepts the well-pled allegations (namely the plausible, nonconclusory, and nonspeculative facts) of the operative pleading as true to determine whether the plaintiff has made a prima facie showing that the defendant is subject to the Court's personal jurisdiction. Dudnikov v. Chalk & Vermillion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). The Court “may also consider affidavits and other written materials submitted by the parties.” Impact Prods., Inc. v. Impact Prods., LLC, 341 F.Supp.2d 1186, 1189 (D. Colo. 2004). However, any factual disputes are resolved in the plaintiff's favor. Benton v. Cameco Corp., 375 F.3d 1070, 1074-75 (10th Cir. 2004).

         Exercise of personal jurisdiction over a nonresident defendant must satisfy the requirements of the forum state's long-arm statute as well as constitutional due process requirements. Doe v. Nat'l Med. Servs., 974 F.2d 143, 145 (10th Cir. 1992). Colorado's long-arm statute “is to be interpreted as extending jurisdiction of our state courts to the fullest extent permitted by the due process clause of the United States Constitution.” Mr. Steak, Inc. v. Dist. Court In & For Second Judicial Dist., 194 Colo. 519, 521 (1978). Therefore, if jurisdiction is consistent with the due process clause, Colorado's long-arm statute authorizes jurisdiction over a nonresident defendant. See Id. Under the due process clause of the Fourteenth Amendment, personal jurisdiction may not be asserted over a party unless that party has sufficient “minimum contacts” with the state, so that the imposition of jurisdiction would not violate “traditional notions of fair play and substantial justice.” Helicopteros Nacionales De Columbia, S.A. v. Hall, 466 U.S. 408, 414 (1984) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

         B. ...