AZIMA v. DEL ROSSO

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

FARHAD AZIMA, )

)

Plaintiff, )

)

v. ) 1:20CV954

)

NICHOLAS DEL ROSSO and )

VITAL MANAGEMENT SERVICES, )

INC., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., District Judge

This matter is before this court for review of the

Recommendation filed on August 9, 2021, by the Magistrate Judge

in accordance with 28 U.S.C. § 636(b). (Doc. 54.) In the

Recommendation, the Magistrate Judge recommends that Defendants

Nicholas Del Rosso and Vital Management Services, Inc.’s

(“Defendants”) Motion to Dismiss, (Doc. 31), be denied in part

as to Counts III, VIII, X, and XI of Plaintiff Farhad Azima’s

(“Plaintiff”) Complaint but granted in part as to Plaintiff’s

other seven claims. (Doc. 54.) The Recommendation was served on

the parties to this action on August 9, 2021, (Doc. 55). Both

Plaintiff and Defendants filed timely objections to the

Recommendation. (Docs. 56, 57.)

This court has appropriately reviewed the portions of the

Recommendation to which objections were made and has made a

de novo determination that the Magistrate Judge’s Recommendation

should be adopted in part and modified in part. This court finds

Defendants’ Motion to Dismiss as to Counts III and XI should be

granted, contrary to the findings of the Recommendation. All

other objections are overruled and the remainder of the

Recommendation will be adopted.

I. FACTUAL AND PROCEDURAL BACKGROUND

This court fully adopts and incorporates the Magistrate

Judge’s Recommendation’s factual and procedural case summary.

(Recommendation (Doc. 54) at 2-4.) It recommended that seven of

the eleven counts in the Complaint be dismissed. (Id. at 1.) The

four remaining counts that it did not recommend dismissing,

(together, the “Remaining Counts”), are for trade secret

misappropriation under federal law (Count III), trade secret

misappropriation under North Carolina law (Count VIII), civil

conspiracy under North Carolina law (Count X), and invasion of

privacy under North Carolina law (Count XI). (Id. at 38.)

On August 23, 2021, Plaintiff objected to the Magistrate

Judge’s recommendation that seven counts of the Complaint be

dismissed. (Doc. 56.) Conversely, also on August 23, 2021,

Defendants objected to the recommendation that the four

Remaining Counts not be dismissed. (Doc. 57.) Both parties

responded in opposition to the other’s objection. (Docs. 58,

59.)

II. STANDARD OF REVIEW

This court is required to “make a de novo determination of

those portions of the [Magistrate Judge’s] report or specified

proposed findings or recommendations to which objection is

made.” 28 U.S.C. § 636(b)(1)(c). This court “may accept, reject,

or modify, in whole or in part, the findings or recommendations

made by the [M]agistrate [J]udge. . . . or recommit the matter

to the [M]agistrate [J]udge with instructions.” Id.

III. ANALYSIS

This court has appropriately reviewed the portions of the

Recommendation to which objections were made and has made a

de novo determination as to each. This court concludes that the

only objection meriting written analysis is Defendants’

objection that a previous complaint filed by Plaintiff ought to

be considered in evaluating whether Plaintiff’s claims are time-

barred by the statute of limitations. All other objections are

rejected, as this court’s determination on those issues is in

accord with the Recommendation.

A. Whether the 2016 D.C. Complaint Should be Considered

The Recommendation concluded that Plaintiff’s September

2016 complaint filed in the United States District Court for the

District of Columbia (“2016 D.C. Complaint”) should not be

considered in evaluating Defendants’ statute of limitations

affirmative defense. (Recommendation (Doc. 54) at 8-9.) In the

2016 D.C. Complaint, (Ex. 5 (“2016 D.C. Complaint”) (Doc.

31-5)), Plaintiff accuses other parties — none of which are

joined to this case — of orchestrating the hacking and

publication of the hacked data. Thus, here, Defendants submitted

the 2016 D.C. Complaint to establish that Plaintiff was

sufficiently aware of this alleged wrongdoing to institute legal

action by September 2016. (See Doc. 32 at 14—15, 17.) The 2016

D.C. Complaint alleges, inter alia, that:

Based on the September 23, 2016, demand and threat

letter from Defendant’s counsel, and the disclosure of

two websites by Defendant on September 29, 2016, it is

clear that portions of the electronic data that had

been hacked and misappropriated from Mr. Azima and his

business associates on or about August 7, 2016, had

been downloaded or transferred to remote websites

known as “BitTorrent” sites and related micro-sites.

(2016 D.C. Complaint (Doc. 31-5) ¶ 18.) In the initial briefing

before the Magistrate Judge, Plaintiff did not object to

Defendants’ proffering of the 2016 D.C. Complaint or to

consideration of any of the allegations contained therein.

The Recommendation asserted that “for a statute-of-

limitations defense to succeed at the motion to dismiss stage,

‘all facts necessary to show the time bar must clearly appear on

the face of the complaint.’” (Recommendation (Doc. 54) at 6

(some internal quotation marks omitted) (quoting Dickinson v.

Univ. of N.C., 91 F. Supp. 3d 755, 763 (M.D.N.C. 2015)).) Thus,

because Plaintiff’s complaint does not mention the 2016 D.C.

Complaint, the Magistrate Judge in the Recommendation found that

it should not be considered. Defendants object, stressing that

Plaintiff had never disputed that the “Court may take judicial

notice of his 2016 complaint.” (Defs.’ Partial Obj. to Order and

Recommendation on Defs.’ Mot. to Dismiss Pursuant to Rule

12(b)(6) (“Defs.’ Obj.”) (Doc. 57) at 2, 6-14.)1 Plaintiff

opposes the objection. (Pl.’s Br. in Opp’n to Defs.’ Objs. to

Order and Recommendation (“Pl. Opp’n Br.”) (Doc. 58) at 3-4.)

This court finds Defendants’ objection should be sustained

and that the 2016 D.C. Complaint should be considered at the

motion to dismiss stage in evaluating Defendants’ statute of

limitations affirmative defense. The Recommendation correctly

notes that “[g]enerally, an affirmative defense that a complaint

1 All citations in this Memorandum Opinion and Order to

documents filed with the court refer to the page numbers located

at the bottom right-hand corner of the documents as they appear

on CM/ECF.

is barred by a statute of limitations may not form the basis of

[a] Rule 12(b)(6) dismissal unless all of the facts necessary

for the defense appear on the face of the complaint.”

(Recommendation (Doc. 54) at 6-7 (quoting Morrison v. George

E.B. Holding, No. 7:11-CV-168-BO, 2012 WL 1132787, at *3

(E.D.N.C. Apr. 4, 2012)).) However, the Recommendation neglected

a key exception to that general rule repeatedly applied by

courts in this circuit. See Morrison, 2012 WL 1132787, at *3;

Mobley v. Estes, 1:17CV114, 2018 WL 704900, at *4 (M.D.N.C.

Feb. 2, 2018). The exception holds that the general “face of the

complaint” rule “[n]otwithstanding, the Court may also consider

information in the public record when reviewing a motion to

dismiss.” Morrison, 2012 WL 1132787, at *3 (evaluating a statute

of limitations affirmative defense); see also Mobley, 2018 WL

704900, at *4 (evaluating a statute of limitations affirmative

defense and holding that “[g]enerally speaking, a court may not

rely on extrinsic materials to adjudicate a motion to dismiss”

but nevertheless “a court may properly take judicial notice of

matters of public record.” (citations and internal quotation

marks omitted)).

While the Fourth Circuit has evidently not addressed the

specific issue of whether public records may be considered by

the court when evaluating a statute of limitation affirmative

defense at the motion to dismiss stage, other circuits have

explicitly approved the practice. See, e.g., Ennenga v. Starns,

677 F.3d 766, 773-74 (7th Cir. 2012) (rejecting an argument that

“the statute-of-limitations defense was not properly raised in a

motion to dismiss because the defense was not plain on the face

of the complaint,” because “the court [properly] took judicial

notice of the dates on which certain actions were taken . . . in

the earlier state-court litigation — facts readily ascertainable

from the public court record”); Arbogast v. Kansas, 752 F. App’x

582, 584 n.1 (10th Cir. 2018); Staehr v. Hartford Fin. Servs.

Grp., Inc., 547 F.3d 406, 425-26 (2d Cir. 2008). Moreover, the

Fourth Circuit has expressly held that judicial notice of public

records may be taken when evaluating motions to dismiss

asserting res judicata affirmative defenses. Q Int’l Courier,

Inc. v. Smoak, 441 F.3d 214, 216 (4th Cir. 2006); Andrews v.

Daw, 201 F.3d 521, 524 n.1 (4th Cir. 2000).

Plaintiff argues that this Fourth Circuit precedent, such

as Q International Courier, Inc. and Andrews, only allowed

judicial notice of public records where the res judicata

“defense raise[d] no disputed issue of fact.” (Pl. Opp’n Br.

(Doc. 58) at 4 (alteration in original) (emphasis removed)

(internal quotation marks omitted) (quoting Q Int’l Courier, 441

F.3d at 216; Andrews, 201 F.3d at 524 n.1).) Plaintiff argues

that in contrast, here, Defendants’ statute of limitations

“affirmative defense requires resolution of competing factual

theories.” (Id.) Therefore, Plaintiff argues judicially noticing

a public record is inappropriate. (Id.) Plaintiff cites two

cases to argue that the court “should allow discovery to resolve

open factual questions rather than rely upon extrinsic documents

to read inferences into the Complaint.” (Id. (citing Waugh v.

Elan Fin. Serv., Civil Action No. 3:17-4378, 2018 WL 2976430

(S.D. W. Va. June 13, 2018), and Khoja v. Orexigen Therapeutics,

Inc., 899 F.3d 988 (9th Cir. 2018)).)

Neither case is relevant here. The first, Waugh, does not

address the issue of judicial notice. The second, Khoja, is an

out-of-circuit case that focuses on the risk of considering

extrinsic documents in “SEC fraud matters, where there is

already a heightened pleading standard, and the defendants

possess materials to which the plaintiffs do not yet have

access.” Khoja, 899 F.3d at 998 (citations omitted). Here,

Plaintiff’s allegations do not face a heightened pleading

standard nor do Defendants urge consideration of a document

which Plaintiff cannot access – rather, Defendants seek to

reference a publicly available record prepared for and filed on

behalf of Plaintiff.

Therefore, consistent with the practice of courts in this

circuit, e.g., Morrison, 2012 WL 1132787, at *3; Mobley, 2018 WL

704900, at *4, this court takes notice of the 2016 D.C.

Complaint in adjudicating the statute of limitations affirmative

defense asserted in Defendants’ Motion to Dismiss. Importantly,

this court’s notice does not draw any conclusions as to whether

the facts alleged in the 2016 D.C. Complaint are true or false.

Instead, this court simply notices the existence of those

factual allegations, which include that Plaintiff had been

hacked and his hacked confidential business data posted online.

(E.g., 2016 D.C. Complaint (Doc. 31-5) ¶¶ 10, 18.)

B. Whether the 2016 D.C. Complaint Establishes that the

Remaining Counts are Time-Barred

The four Remaining Counts all have three-year statutes of

limitations that accrue when the conduct underlying the

respective count was apparent or discovered, or reasonably ought

to have been apparent or discovered. (Recommendation (Doc. 54)

at 7-8.) This court concludes that Plaintiff’s factual

allegations in the 2016 D.C. Complaint — that he had been hacked

and his hacked confidential business data published online,

(e.g., 2016 D.C. Complaint (Doc. 31-5) ¶¶ 10, 18) — establish

that by 2016 Plaintiff had discovered the conduct underlying the

Remaining Counts. Accordingly, the Remaining Counts’ statutes of

limitations seemingly accrued in 2016 and lapsed in 2019 — prior

to this case’s filing in 2020. Hence, Defendants insist that the

Remaining Counts must be dismissed as time-barred.

Plaintiff responds with four arguments why the Remaining

Counts are not time-barred, even when the 2016 D.C. Complaint is

considered. (Pl.’s Opp’n Br. (Doc. 58) at 6-9.) Three of those

are unconvincing. The fourth, concerning Defendants’ alleged

2018-2019 conduct, has merit. This court will address each

argument in turn.

1. Knowledge of Defendants’ Role

First, Plaintiff argues that “nothing in the 2016 lawsuit

suggests that Azima was aware of Defendants’ conduct in 2016;

instead, Azima alleges in his Complaint that he ‘did not learn

of the role played by Del Rosso and Vital until recently[.]’”

(Id. at 6 (quoting Complaint (“Compl.”) (Doc. 1) ¶ 36).) That is

irrelevant. None of the Remaining Counts’ statutes of

limitations make accrual contingent on when a plaintiff

discovered (or should have discovered) a perpetrator’s role,2 but

rather when the misappropriation or harm itself was discovered

2 In contrast, the statutes of limitations for two counts

that the Magistrate Judge recommended dismissing on other

grounds — identity theft (Count VI) and publication of personal

information (Count VII) — do make accrual so contingent. N.C.

Gen. Stat. § 1-539.2C(c) (“Civil actions under this section must

be brought within three years from the date on which the

identity of the wrongdoer was discovered or reasonably should

have been discovered.” (emphasis added)).

(or should have been discovered). See 18 U.S.C. § 1836(d) (Count

III); N.C. Gen. Stat. § 66-157 (Count VIII); Sanders v.

Gilchrist, No. 3:10cv68, 2011 WL 9374866, at *2 (W.D.N.C.

Mar. 22, 2011) (Count X); Alexander v. City of Greensboro,

No. 1:09-CV-293, 2011 WL 3360644, at *13 n.21 (M.D.N.C. Aug. 3,

2011) (citing N.C. Gen. Stat. § 1–52(16)) (Count XI).

2. Fraudulent Concealment and Equitable Estoppel3

3 After the parties had fully briefed their objections to

the Recommendation, Plaintiff filed an “emergency motion”

seeking leave to file supplemental evidence related to his

fraudulent concealment argument. (Doc. 61.) The supplemental

evidence Plaintiff seeks to file are (1) text messages allegedly

sent in 2020 between Del Rosso and a Mr. Aditya Jain (“Jain”),

(2) a commercial contract, and (3) a letter from Plaintiff’s

U.K. counsel. (Exs. 1—3 (Docs. 61-1 — 61-3).) Plaintiff also

seeks leave to commence discovery early because this evidence

allegedly evinces “exigent circumstances.” (Doc. 61 at 7-8;

accord Doc. 64 at 1.)

First, this court admonishes Plaintiff that “attempts to

introduce new evidence after the magistrate judge has acted are

disfavored.” Galloway v. Rajjob, No. 1:20CV1033, 2021 WL

1248626, at *1 (M.D.N.C. Apr. 5, 2021) (internal quotation marks

omitted) (quoting Caldwell v. Jackson, 831 F. Supp. 2d 911, 914

(M.D.N.C. 2010)). This court has repeatedly stated that it “is

of the belief that untimely submission of evidence often serves

to undermine the magistrate review process rather than

illuminate the arguments already before the court.” Kielbania v.

Indian Harbor Ins. Co., No. 1:11CV663, 2012 WL 6554081, at *1

(M.D.N.C. Dec. 14, 2012); Universal Leather, LLC v. Koro AR,

S.A, No. 1:12CV604, 2013 WL 12327585, at *2 (M.D.N.C. Sept. 30,

2013), vacated on other grounds, 773 F.3d 553 (4th Cir. 2014).

Second, even if the supplemental evidence had been timely

submitted, there is no exception to the rule barring

consideration of extrinsic materials when adjudicating a motion

to dismiss under which the supplemental evidence may be

considered. None of the evidence qualifies as a public record,

cf., e.g., Morrison, 2012 WL 1132787, at *3, nor is any of it

(Footnote continued)

Next, Plaintiff argues that because the Complaint alleges

that “Defendants took multiple steps to fraudulently conceal

their involvement in hacking Azima. . . . Defendants should be

[equitably] estopped from arguing that Azima’s Complaint should

be dismissed on statute of limitations grounds.” (Pl.’s Opp’n

Br. (Doc. 58) at 7-8.) Three of the Remaining Counts arise under

North Carolina law (Counts VIII, X, and XI), and accordingly are

subject to North Carolina tolling doctrines. (See Recommendation

(Doc. 54) at 13.) To successfully toll these statutes of

limitations via either equitable estoppel or fraudulent

authenticated, cf., e.g., Sec’y of State For Defence v. Trimble

Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007) (Documents

not attached to a complaint may be considered at the motion to

dismiss stage if they are “integral to the complaint and

authentic.” (emphasis added)). As Defendants note, Plaintiff

“does not provide any sworn statements authenticating these

documents, as he has done in prior filings.” (Doc. 62 at 9-10

(citing Doc. 25).) In response, Plaintiff filed yet another

motion for leave, seeking to file U.K. court filings, which

Plaintiff seems to believe authenticate the proffered text

messages. (Doc. 64.) Leave will not be granted because the U.K.

filings do no such thing. Instead, they merely establish that

Del Rosso exchanged texts with Jain in 2020, (Doc. 64-1 ¶ 81(c);

Doc. 64-2 ¶ 81(c)); they do not establish that those text

messages include the particular messages proffered by Plaintiff

here, (Doc. 61-1). In lieu of averments or other support

credibly verifying, inter alia, the supplemental evidence’s

provenance, chain of custody, and date, this court finds that it

remains unauthenticated. Therefore, because the supplemental

evidence cannot be considered at this juncture, leave to file it

will be denied. Accordingly, this court will deny as moot

Plaintiff’s corresponding request for early discovery.

concealment4 under North Carolina law, Plaintiff must establish

that he relied on Defendants’ conduct. (Id. at 14 n.4.) This

court agrees with the Magistrate Judge’s conclusion that

Plaintiff has failed to do so. (Id. at 14-15 n.4.) Thus, neither

equitable estoppel nor fraudulent concealment will toll the

statutes of limitations for the three North Carolina law

Remaining Counts.

The one other remaining count, Count III (misappropriation

of trade secrets), arises under federal law. Hence, it is

subject to federal tolling doctrines — most relevantly,

fraudulent concealment and equitable estoppel.5 See generally

Edmonson v. Eagle Nat’l Bank, 922 F.3d 535, 559 (4th Cir. 2019).

4 The exact elements of North Carolina fraudulent

concealment are murky, but “to the extent that fraudulent

concealment has been recognized by North Carolina courts as a

tolling doctrine, a plaintiff must still ‘allege reliance on the

defendant’s misrepresentations or omissions.’” (Recommendation

(Doc. 54) at 14-15 n.4 (quoting Wilkerson v. Christian, No.

1:06CV00871, 2008 WL 483445, at *12 (M.D.N.C. Feb. 19, 2008)).)

5 This court notes the existence of an additional similar

tolling doctrine known as “equitable tolling.” Edmonson, 922 at

551. However, unlike fraudulent concealment and equitable

estoppel, equitable tolling does not require defendant

misconduct. Id. at 449. Plaintiff’s invocation of tolling

doctrines is premised on Defendants’ alleged misconduct, (Pl.’s

Opp’n Br. (Doc. 58) at 7-8), and thus is more appropriately

analyzed within “the domain of fraudulent concealment and

equitable estoppel.” Edmonson, 922 F.3d at 549 (quoting

Shropshear v. Corp. Counsel of City of Chicago, 275 F.3d 593,

597 (7th Cir. 2001) (characterizing “tolling of the statute of

limitations . . . on the basis of defendant misconduct” as “the

domain of fraudulent concealment and equitable estoppel”)).

Neither are applicable here. Fraudulent concealment has three

elements: “(1) the party pleading the statute of limitations

fraudulently concealed facts that are the basis of the

plaintiff’s claim, and (2) the plaintiff failed to discover

those facts within the statutory period, despite (3) the

exercise of due diligence.” Id. at 548 (quotation marks omitted)

(quoting Supermarket of Marlinton, Inc. v. Meadow Gold Dairies,

Inc., 71 F.3d 119, 122 (4th Cir. 1995)). Plaintiff cannot

establish the second element because the 2016 D.C. Complaint’s

factual allegations demonstrate that during the statutory period

Plaintiff discovered the supposedly concealed facts undergirding

Count III. To toll the statute of limitations via federal

equitable estoppel, a plaintiff must establish that “failure to

timely file his claim derives . . . from conduct taken by the

defendant to induce the plaintiff not to timely file his claim.”

Id. at 549. In essence, a plaintiff must show reliance on a

defendant’s misconduct. As stated, supra Part III.B.1, this

court agrees with the Magistrate Judge’s conclusion that

Plaintiff has not “alleged sufficient facts in his complaint to

establish the element of reliance.” (Recommendation (Doc. 54) at

15 (rejecting Plaintiff’s invocation of equitable estoppel under

North Carolina law).) Thus, Plaintiff has failed to establish

the elements required for either fraudulent concealment or

equitable estoppel to toll the statute of limitations for the

remaining count arising under federal law.

3. Judicial Notice of Other Public Records

Plaintiff argues that “if the Court accepts Defendants’

argument that judicial notice is appropriate” for the 2016 D.C.

Complaint, “the Court should then also take judicial notice of

the public record referred to in Azima’s previous filings.”

(Pl.’s Opp’n Br. (Doc. 58) at 9.) Plaintiff insists that these

additional public records defeat Defendants’ statute of

limitations defense because they contain facts that show “Azima

could not have been aware of [Defendants’ violations] in 2016.”

(Id.) Specifically, Plaintiff urges the court to take notice of

two matters of public record.

The first is “Del Rosso’s first witness statement in the UK

trial.” (Id.) Plaintiff argues that this is relevant because it

“shows the first time Azima learned that Del Rosso provided

Azima’s hacked data to Neil Gerrard and Dechert LLP.” (Id.) Even

if that is true, it is irrelevant to Defendants’ statute of

limitations defense. As explained, supra Part III.B.1, accrual

for the Remaining Counts’ statutes of limitations is not

contingent on when Plaintiff learned of Defendants’ roles in the

alleged wrongdoing. Rather, accrual occurs when Plaintiff

discovered the wrongdoing itself. Id. Thus, the Remaining

Counts’ statutes of limitations accrued in 2016 because the 2016

DC Complaint’s allegations show Plaintiff had discovered the

hacking and misappropriation by that time. Indeed, the 2016 D.C.

Complaint even specifically alleges that Dechert had acquired

Azima’s hacked data. (E.g., 2016 D.C. Complaint (Doc. 31-5)

¶ 12.) That Plaintiff may not have uncovered Defendants’ roles

in that misappropriation until later, does not alter the accrual

analysis. Therefore, this court declines to judicially notice

Del Rosso’s first U.K. trial witness statement because it is

immaterial to Defendants’ statute of limitations affirmative

defense.

Plaintiff also urges this court to judicially notice that

“during the pendency of the motion to dismiss, Del Rosso

admitted to paying CyberRoot.” (Pl.’s Opp’n Br. (Doc. 58) at 9.)

That Del Rosso paid CyberRoot is alleged in Plaintiff’s

Complaint, (Compl. (Doc. 1) ¶ 5), and thus already assumed true

for the purposes of evaluating Defendants’ Motion to Dismiss.

Therefore, even if this court were to take the notice Plaintiff

urges, it would have no bearing on this court’s present

analysis. Hence, this court declines to notice Del Rosso’s

alleged admission to paying CyberRoot.

4. Defendants’ Alleged 2018-2019 Conduct

Plaintiff further argues that Defendants’ alleged 2018-2019

conduct means the Remaining Counts are not time-barred, even

considering the 2016 D.C. Complaint. Plaintiff insists that “the

Complaint alleges multiple violations by Defendants independent

of and long after the filing of the 2016 lawsuit.” (Pl.’s Opp’n

Br. (Doc. 58) at 7.) Specifically, Plaintiff stresses that

“[t]he Complaint alleged that Defendants disclosed and used

Azima’s hacked data in 2018 and 2019.” (Id. (citing Compl.

(Doc. 1) ¶¶ 24, 26).) Plaintiff argues that “each disclosure in

2018 and 2019 was a separate violation of the” Remaining Counts,

and “[t]hus, the statutes of limitation did not begin to run on

those claims until at least 2018 or 2019, when the conduct

occurred.” (Id.) Therefore, “[j]udicial notice of the 2016

lawsuit could not have provided any information relevant to the

statutes of limitation for Defendants’ later conduct.” (Id.)

Defendants anticipated this argument and contend that

“Azima’s allegations simply do not link Defendants to the

alleged 2018-19 conduct, so that conduct cannot be the basis for

any claim against Defendants.” (Defs.’ Obj. (Doc. 57) at 18

n.6.) This court disagrees. For purposes of surviving a motion

to dismiss, the Complaint sufficiently links Defendants to the

2018-2019 conduct. Critically, the Complaint alleges that

Del Rosso hired the Indian hacking firm CyberRoot

. . . .

. . . .

Acting at Defendants’ direction, CyberRoot

created, uploaded, and transmitted multiple

unauthorized copies of Azima’s data. . . . [A]t least

some of that data was provided to Del Rosso . . . .

. . . .

CyberRoot created BitTorrent links that contained

Azima’s stolen data and those links were posted on the

blog sites alleging fraud by Azima. . . .

. . . .

In May and June 2018, the blog sites were

modified to include new links to WeTransfer sites that

contained copies of Azima’s stolen data.

CyberRoot regularly used WeTransfer links to

transfer data to Vital. . . .

In June 2019, the links on the blog sites were

modified to include new WeTransfer links containing

some of Azima’s stolen data.

(Compl. (Doc. 1) ¶¶ 16, 19, 22, 24-26.) At the motion to dismiss

stage, these allegations - construed “in the light most

favorable to the plaintiff” - more than “allow[] the court to

draw the reasonable inference that” Defendants are sufficiently

linked to the 2018-2019 conduct. (Recommendation (Doc. 54) at 4,

5, 34 (quoting Nemet Chevrolet, Ltd. v. Consumeraffairs.com,

Inc., 591 F.3d 250, 255 (4th Cir. 2009), and Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009)).)

a. Count XI (Invasion of Privacy under North

Carolina Law)

However, this 2018-2019 conduct only relates to three of

the four Remaining Counts. It does not relate to Count XI

(invasion of privacy under North Carolina law). That invasion of

privacy count is “tied to the actual hacking in 2016 (and not

the subsequent dissemination of the data).” (See Recommendation

(Doc. 54) at 16 n.5 (discussing Counts IV (computer trespass)

and V (conversion)).) Therefore, because the 2018-2019 conduct

does not relate to the invasion of privacy count and the 2016

D.C. Complaint shows that Plaintiff discovered the hacking in

2016, this court concludes that the invasion of privacy count

accrued in 2016. Hence, its three-year statute of limitations

lapsed in 2019, before this action was filed in 2020. Thus,

Count XI must be dismissed as time-barred. This court will

modify the Magistrate Judge’s Recommendation that Defendants’

Motion to Dismiss be denied as to Count XI and instead will

grant the Motion to Dismiss as to Count XI.

b. Count III (Misappropriation of Trade Secrets

under Federal Law)

Even if the federal and state trade secret misappropriation

counts (Counts III and VIII) are implicated by the 2018-2019

conduct, Defendants still maintain that dismissal is necessary.

Defendants assert that “trade secrets claims accrue with the

original incident,” (Defs.’ Obj. (Doc. 57) at 18 n.6), meaning

that despite the later 2018-2019 conduct, these claims accrued

in 2016 when the original misappropriation was discovered. This

argument is valid as to the federal misappropriation count,

Count III. That count’s statute of limitations holds that “a

continuing misappropriation constitutes a single claim of

misappropriation.” 18 U.S.C. § 1836(d). This means that:

the first discovered (or discoverable)

misappropriation of a trade secret commences the

limitation period . . . . [A]lthough the initial

wrongful acquisition of the trade secret and each

subsequent misuse are separate acts of

misappropriation, a claim for misappropriation arises

only once . . . at the time of the initial

misappropriation, subject to the discovery rule.

B&P Littleford, LLC v. Prescott Mach., LLC, Nos. 20-1449/1451

2021 WL 3732313, at *6 (6th Cir. Aug. 24, 2021) (internal

citations and quotation marks omitted); see also In re

Outsidewall Tire Litig., Nos. 1:09cv1217/1218, 2010 WL 11474981,

at *2 (E.D. Va. June 29, 2010) (interpreting Virginia’s

misappropriation of trade secret law’s statute of limitations,

which has the same “continuing misappropriation” language that

the federal law has, and concluding that “the limitations period

for claims alleging misappropriation of a single trade secret

begins to run when the plaintiff discovers or reasonably should

have discovered the first act of misappropriation, even if the

misappropriation continues for an extended period of time”).

Therefore, the new links to Plaintiff’s data that were posted in

2018 and 2019 constituted a “continuing misappropriation” and

thus did not re-accrue the statute of limitations for the

federal misappropriation of trade secrets count. Rather, that

count maintained an accrual date of 2016, when Plaintiff first

discovered that links to his data had been posted — as alleged

in the 2016 D.C. Complaint. Hence, the count’s three-year

statute of limitations lapsed in 2019, and Count III must be

dismissed as time-barred. Therefore, this court will modify the

Magistrate Judge’s Recommendation that Defendants’ Motion to

Dismiss be denied as to Count III and instead will grant the

Motion to Dismiss as to Count III.

c. Count VIII (Misappropriation of Trade Secrets

under North Carolina Law)

In contrast to federal law, the North Carolina trade secret

misappropriation law’s statute of limitations does not include

language addressing continuing misappropriations. See N.C. Gen.

Stat. § 66-157. In lieu of such language, general North Carolina

claim accrual doctrines apply. North Carolina law features a

“continuing wrong” doctrine. Quality Built Homes, Inc. v. Town

of Carthage, 371 N.C. 60, 70, 813 S.E.2d 218, 226 (2018). The

North Carolina Supreme Court has described this doctrine as

unexceptional and part of “the usual rules governing the

operation of statutes of limitations.” Id. North Carolina’s

continuing wrong doctrine holds that “the applicable limitations

period starts anew in the event that an allegedly unlawful act

is repeated.” Id. Importantly, “the continuing wrong doctrine

does not restart the statute of limitations period for earlier

unlawful acts, it just provides that the limitations period

starts anew for subsequently committed unlawful acts of the same

nature.” Lau v. Constable, No. 16 CVS 4393, 2019 WL 6051554,

¶ 34 (N.C. Super. Ct. Sept. 24, 2019); see also Sample v. Roper

Lumber Co., 150 N.C. 161, 166, 63 S.E. 731, 732 (1909) (“[E]very

wrong invasion of plaintiffs’ property amounted to a distinct,

separate trespass day by day, and for any and all such

trespasses coming within the three years the defendant is

responsible.”).

Applying this doctrine to the original misappropriation of

Plaintiff’s trade secrets in 2016 and the more recent

misappropriations in 2018-2019, “gives rise to multiple discrete

claims corresponding to each act of misappropriation, and

[b]ecause each act violates the law on its own, each act

separately triggers its own limitations period.” Heraeus Med.

GmbH v. Esschem, Inc., 927 F.3d 727, 737 (3d Cir. 2019)

(internal quotation marks omitted) (concluding that because

Pennsylvania’s misappropriation of trade secrets law’s statute

of limitations lacked language addressing “continuing

misappropriations,” each misappropriation started the

limitations period anew). Therefore, for purposes of the North

Carolina misappropriation of trade secrets count (Count VIII),

the 2016, 2018, and 2019 conduct each separately triggered

accrual of a respective three-year limitations period for that

particular conduct. Consequently, Plaintiff’s 2020 filing of

this case fell outside the three-year period for the 2016

conduct, but within the three-year period for the 2018-2019

conduct. Therefore, as to the 2018-2019 conduct, Count VIII is

not time-barred. Thus, this court will ultimately accept, albeit

for different reasons, the Magistrate Judge’s recommendation

that Defendants’ Motion to Dismiss Count VIII be denied.

d. Count X (Civil Conspiracy under North

Carolina Law)

The final remaining count is for civil conspiracy under

North Carolina law (Count X). “A claim for conspiracy . . .

cannot succeed without a successful underlying claim,” Swain v.

Elfland, 145 N.C. App. 383, 387, 550 S.E.2d 530, 534 (2001)

(alteration in original) (quoting Jay Group, Ltd. v. Glasgow, 139

N.C. App. 595, 599, 534 S.E.2d 233, 236 (2000)). Therefore,

here, the civil conspiracy claim only survives because this

court has found that Count VIII (misappropriation of trade

secrets under North Carolina law) remains viable, supra Part

III.B.4.c. But, as “the statute of limitations for a civil

conspiracy claim is governed by the underlying claim,” Lau, 2019

WL 6051554, at *8 (citation omitted), Plaintiff’s dependent

civil conspiracy claim is likewise limited to the 2018-2019

conduct – the only allegations that are not time-barred. Thus,

this court will ultimately accept, albeit for different reasons,

the Magistrate Judge’s recommendation that Defendants’ Motion to

Dismiss Count X be denied.

IV. CONCLUSION

For the foregoing reasons,

IT IS THEREFORE ORDERED that the Magistrate Judge’s

Recommendation, (Doc. 54), is ADOPTED IN PART and MODIFIED IN

PART. The Magistrate Judge’s Recommendation to deny Defendants’

Motion to Dismiss Pursuant to Rule 12(b)(6), (Doc. 31), as to

Counts III and XI is MODIFIED and instead the Motion to Dismiss

as to Counts III and XI will be granted. The remainder of the

Magistrate Judge’s Recommendation is ADOPTED.

IT IS FURTHER ORDERED that Defendants’ Motion to Dismiss

Pursuant to Rule 12(b)(6), (Doc. 31), is DENIED IN PART as to

Counts VIII and X of Plaintiff’s Complaint but GRANTED IN PART as

to Counts I, II, III, IV, V, VI, VII, IX, and XI.

IT IS FURTHER ORDERED that Plaintiff’s Emergency Motion for

Leave to File Supplemental Information Related to Objection to

Recommended Ruling and for Leave to Commence Discovery in Light

of Newly Discovered Evidence, (Doc. 61), is DENIED.

IT IS FURTHER ORDERED that Plaintiff’s Motion for Leave to

File Supplemental Information Related to Defendants’ Opposition

to Emergency Motion for Leave to File Supplemental Information,

(Doc. 64), is DENIED.

This the 10th day of December, 2021.

Wy Uirm L. Blu,

‘United States District Ju

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