The opinion
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
MARINA DISTRICT DEVELOPMENT
COMPANY LLC., doing business 1:20-cv-15719-NLH-KMW
as BORGATA HOTEL CASINO &
SPA,
Plaintiff,
v. OPINION
AC OCEAN WALK LLC, doing
business as OCEAN CASINO
RESORT,
Defendant.
APPEARANCES:
JASON KYRLE ROBERTS
JOHN MICHAEL NOLAN, III
JACKSON LEWIS P.C.
1601 CHERRY STREET
SUITE 1350
PHILADELPHIA, PA 19102
On behalf of Plaintiff
DIANNA D. MCCARTHY
HEIDI MEGAN GOOTNICK
WINGET, SPADAFORA & SCHWARTZBERG, LLP
65 EAST ROUTE 4, SUITE 201
RIVER EDGE, NJ 07661
JEREMY NATHAN KOLMAN
LEIGH ANN BUZIAK
BLANK ROME LLP
ONE LOGAN SQUARE
130 NORTH 18TH ST
PHILADELPHIA, PA 19103
MICHAEL RAY DARBEE
STEPHEN M. ORLOFSKY
BLANK ROME LLP
300 CARNEGIE CENTER
SUITE 220
PRINCETON, NJ 08540
On behalf of Defendant
HILLMAN, District Judge
This matter concerns claims by Plaintiff Marina District
Development Company, LLC, doing business as Borgata Hotel Casino
& Spa (“Borgata”), that Defendant AC Ocean Walk, LLC, doing
business as Ocean Casino Resort (“Ocean”), has stolen both
employees and trade secrets from the Borgata. Presently before
the Court is Plaintiff’s motion for leave to file an amended
complaint, as well as Defendant’s prior motion to dismiss three
of the claims in the original complaint. For the reasons
expressed below, Plaintiff’s motion for leave to file its
amended complaint will be granted, and Defendant’s motion to
dismiss will be denied as moot.
BACKGROUND
Plaintiff Borgata is a hotel and casino operating in
Atlantic City, New Jersey. Defendant Ocean is a direct
competitor hotel and casino situated less than three miles away
from Borgata. A central aspect of Borgata’s business success is
its relationship with its most important customers, which it
refers to as “high-level patrons,” who are responsible for
approximately $25 million in revenue per year. Borgata
leverages its information about each of these patrons to
maintain their valuable relationships with the casino and the
revenue stream they provide.
As part of this effort, Borgata employs multiple
individuals whose jobs focus on high-level patrons. William
Callahan, for example, was Borgata’s Vice President of Marketing
and ran Borgata’s Relationship Marketing Department, where he
oversaw Borgata’s efforts to build and maintain relationships
with high-level patrons. To do this, Callahan communicated with
these patrons using his work-provided phone and learned
information about the players habits and preferences.
Similarly, Kelly Ashman Burke, Borgata's former Executive
Director of Marketing, maintained Borgata’s customer databases,
which contained extensive information about customer’s ties and
relationships to Borgata. Plaintiff further identifies multiple
other former employees who played important roles in this aspect
of Borgata’s business. Many of these employees, including
Callahan and Burke, had employment agreements that included
strict confidentiality, non-solicitation, and non-compete
provisions.
According to Plaintiff, beginning in May 2020, Mark Conboy,
a partner in Luxor Capital Group, Ocean’s owner, began
soliciting Borgata employees to leave and join Ocean instead.
Throughout the summer of 2020, Conboy specifically met with
Callahan and Burke to negotiate employment terms. And,
importantly, Plaintiff alleges that the parties discussed
potential methods to circumvent the restrictive covenants
contained in their employment agreements with Borgata; as Ocean
and the former Borgata employees were aware of the high value of
the customer information Callahan and Burke had access to,
Plaintiff alleges that this was a central purpose for Ocean in
soliciting their employment. After discussing these details
with Burke and Conboy, Callahan went so far as to purchase a
separate iPhone, on to which he then copied Borgata’s customer
information and other alleged trade secrets.
Ocean’s efforts were apparently successful, as Burke and
Callahan ultimately gave notice of their resignations in June
and July of 2020, after which they both went to work for Ocean.
Over the next two months, Ocean’s activities continued, as it
hired away at least three more Borgata executives in August.
According to Plaintiff, Ocean’s solicitation efforts still have
not ceased, with five more Borgata employees having been hired
by Ocean in January and February of 2021.
Shortly after Plaintiff learned of Ocean’s hiring of Burke
and Callahan, it filed suit against Defendant, as well as the
two employees, in the District Court for the District of Nevada
on August 27, 2020. (ECF No. 1). Plaintiff simultaneously
moved for a temporary restraining order and preliminary
injunction, seeking to enjoin the use of Borgata’s trade secrets
and the individuals’ continued employment by Ocean. The
defendants opposed the motion for a TRO and preliminary
injunction, and shortly after filed two motions of their own: a
motion to compel arbitration of the claims against Burke and
Callahan, (ECF No. 17), and a separate motion to dismiss all
claims, which sought to (1) dismiss the claims for lack of
personal jurisdiction, (2) dismiss the claims for improper
venue, (3) transfer the case to the District of New Jersey if it
was not dismissed, and (4) to dismiss only Plaintiff’s trade
secrets and RICO claims for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6). (ECF No. 18).
The District Court for the District of Nevada ultimately
granted the motion to compel arbitration of Plaintiff’s claims
against Burke and Callahan, (ECF No. 86 at 102:10-20), and
granted in part and denied in part the motion for a preliminary
injunction. The Court, finding that Plaintiff was likely to
succeed on its claims regarding Burke’s noncompete clause and
its trade secrets misappropriation claim against Callahan,
enjoined Burke and Callahan from using or disclosing Borgata’s
trade secrets, and further enjoined Burke from working for Ocean
for eleven months. (ECF No. 96 at 114:20-115:25; 121:7-20).
The parties shortly after stipulated that, while the claims
against Burke and Callahan were proceeding in arbitration, the
claims against Ocean would be severed and transferred to the
District of New Jersey. (ECF No. 118). That stipulation
specifically stated that Ocean’s motion to dismiss under Rule
12(b)(6) remained active and would be transferred with the case
for this Court to rule on. Id. The action was therefore
transferred to this Court on November 9, 2020. (ECF No. 119).
A few months later, on February 5, 2021, Defendant filed a
motion to stay this action pending completion of Plaintiff’s
arbitration of its claims against Burke and Callahan, which are
closely related to its claims here. (ECF No. 130). Then, on
February 24, 2021, Plaintiff filed the presently pending motion
for leave to file an amended complaint. (ECF No. 136).
Plaintiff’s proposed amended complaint is based on the same
underlying factual allegations, but removes certain claims
against the individual employees and focuses its aim more
directly on the actions of Ocean. (ECF No. 136-1). The parties
ultimately stipulated that briefing and adjudication of the
motion to stay would be adjourned until this Court had ruled on
the motion for leave to amend. (ECF No. 138). Shortly after,
Defendant filed a brief opposing the motion to amend, (ECF No.
143), and Plaintiff filed its reply brief in further support of
the motion. (ECF No. 146). That motion has therefore been
fully briefed and the time for filing further briefing regarding
the motion to dismiss has expired. Both motions are ripe for
adjudication.
DISCUSSION
I. Subject Matter Jurisdiction
This Court has jurisdiction over Plaintiff’s federal claims
under 28 U.S.C. § 1331, and supplemental jurisdiction over
Plaintiff’s state law claims under 28 U.S.C. § 1367.
II. Legal Standard for Motion to Amend
Motions to amend a complaint are governed by Federal Rule
of Civil Procedure 15(a). That rule provides that once a party
has filed a responsive pleading to the complaint, as Defendant
has long-since done here, “a party may amend its pleadings only
with the opposing party's written consent or the court's leave.”
Fed. R. Civ. P. 15(a)(2). Although “[t]he decision to grant or
deny leave to amend under Rule 15(a) is ‘committed to the sound
discretion of the court,’” Arab African Int'l Bank v. Epstein,
10 F.3d 168, 174 (3d Cir. 1993), the federal rules mandate that
the Court “should freely give leave when justice so requires.”
Fed. R. Civ. P. 15(a)(2).
“An amendment must be permitted in the absence of undue
delay, bad faith, dilatory motive, unfair prejudice, or futility
of amendment.” Van Duyne v. Stockton University, No. 1:19-cv-
21091-NLH-KMW, 2020 WL 6144769, at *2 (D.N.J. Oct. 20, 2020)
(quoting Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d
Cir. 2002)). The futility of a proposed amended pleading is
evaluated under the same standard of legal sufficiency as a
motion to dismiss under Rule 12(b)(6). Travelers Indent. Co. v.
Dammann & Co., 594 F.3d 238, 243 (3d Cir. 2010). “To survive a
motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678,
129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929
(2007)). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
However, “[g]iven the liberal standard for the amendment of
pleadings, ‘courts place a heavy burden on opponents who wish to
declare a proposed amendment futile.’” Brainbuilders, LLC v.
Optum, Inc., No. 18-638, 2019 WL 2315389, at *5 (D.N.J. May 31,
2019) (quoting High 5 Games, LLC v. Marks, No. 13-7161, 2017 WL
349375, at *5 (D.N.J. Jan. 24, 2017)). Therefore, “[i]f a
proposed amendment is not clearly futile, then denial of leave
to amend is improper.” High 5 Games, LLC, 2017 WL 349375, at *5
(emphasis in original) (quoting Harrison Beverage Co. v. Dribeck
Importers, Inc., 133 F.R.D. 463, 468 (D.N.J. 1990)); see also 6
Wright, Miller & Kane, Federal Practice and Procedure § 1487 (3d
ed. 2012).
III. Analysis
As outlined above, presently pending before the Court are
both Defendant’s motion to dismiss, filed shortly after the
initial start of this action, and Plaintiff’s recently filed
motion for leave to amend the complaint. Since this Court’s
determination regarding Plaintiff’s motion to amend may well
resolve the pending motion to dismiss as well, the Court will
first address whether Plaintiff shall be granted leave to file
its proposed amended complaint.
Plaintiff’s proposed amended complaint is based on
substantially similar underlying allegations as those found in
its initial complaint, and puts forth five separate claims, for
violations of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. §
1831, et seq., the New Jersey Trade Secrets Act (“NJTSA”),
N.J.T.S.A. § 56:15-1 et seq., the Racketeer Influenced and
Corrupt Organizations Act (“RICO Act”), 18 U.S.C. § 1961, et
seq., as well as claims for tortious interference and unfair
competition. Defendant argues that leave to amend should be
denied because Plaintiff’s amended claims are futile for two
separate reasons: (1) Plaintiff failed to substantively respond
to Defendant’s earlier motion to dismiss the trade secrets and
RICO claims under Rule 12(b)(6), and (2) all five of Defendant’s
claims, as pled in the proposed amended complaint, fail to
sufficiently state a claim.
Defendant’s first argument is, essentially, that Plaintiff
waived its NJTSA, DTSA, and RICO claims by not substantively
opposing Defendant’s initial motion to dismiss. Defendant’s
12(b)(6) arguments were included in a larger motion, filed by
Defendant while the parties were simultaneously litigating
Plaintiff’s motion for a preliminary injunction. That motion
also sought to dismiss the complaint under Rule 12(b)(2) for
lack of personal jurisdiction, to dismiss under Rule 12(b)(3)
for improper venue, and to alternatively transfer the case to
the District of New Jersey. (ECF No. 18). When the District
Court for the District of Nevada ultimately granted a
preliminary injunction, the parties agreed to sever the claims
against Ocean and transfer the claims against Defendant to this
Court. That stipulated order explicitly left pending
Plaintiff’s motion to dismiss under 12(b)(6) for this Court to
rule on. As Defendant notes, Plaintiff’s response to the larger
motion to dismiss did not substantively grapple with the
12(b)(6) arguments; instead, it simply argued that “any motion
practice directed at the sufficiency of Plaintiff’s Complaint
must be brought before the arbitrator.” (ECF No. 63 at 13).
Defendant argues that based on this, the Court should find
that Plaintiff has waived any arguments in support of its
claims, and that therefore amendment would be futile. In
support of this argument, Defendant directs the Court to one
case in which a district court granted dismissal of claims when
the plaintiff had not contested certain arguments, Person v.
Teamster Local Union 863, 2013 WL 5676802, at *2 (D.N.J. Oct.
17, 2013), and a separate case where the Third Circuit held that
a separate district court had not abused its discretion in doing
the same.
As demonstrated by Defendant’s own cited case law, even
were the Court to hold that Plaintiff had waived its arguments
regarding the three claims in its initial complaint that
Defendant moved to dismiss, it would still be within this
Court’s discretion to determine whether the claims should still
be assessed through a merits analysis of the 12(b)(6) arguments.
This Court has previously stated that “[t]he lack of opposition
to a motion to dismiss does not automatically compel a finding
in the moving party's favor,” even though “when a plaintiff is
represented by counsel, a court may dismiss a plaintiff's claims
without an analysis of the merits of the claims. Chamberlain v.
United States Postal Service, National Association of Letter
Carriers Local Branch 370, No. 16-cv-04941-NLH-AMD, 2018 WL
1327106, at *6 (D.N.J. March 15, 2018) (citing Jones v.
Unemployment Compensation Bd. of Review, 381 F. App’x. 187, 189
(3d Cir. 2010) (discussing Stackhouse v. Mazurkiewicz, 951 F.2d
29, 30 (3d Cir. 1991), which explained that a Rule 12(b)(6)
motion should not be granted without an analysis of the merits
of the underlying complaint notwithstanding local rules
regarding the granting of unopposed motions, except that “some
cases” could be dismissed as unopposed, “particularly if the
party is represented by an attorney” or if the party failed to
comply with a court's order).
Here, the Court finds that it would be inappropriate to
simply deny leave to amend — and in Defendant’s ideal world, to
further grant the initial motion to dismiss — without an
analysis of the merits of the claims as pled. The procedural
history of this case, despite being less than a year old, is
complex, and the parties have now fully briefed the issue of
whether Plaintiff’s claims as stated in the amended complaint
are sufficiently pled to avoid being declared clearly futile.
And the Court recognizes the strong judicial “preference that
cases be disposed of on the merits whenever practicable.” Mrs.
Ressler's Food Products v. KZY Logistics LLC, 675 F. App'x 136,
137–38 (3d Cir. 2017). Accordingly, the Court will exercise its
discretion and fully address the arguments put forth by the
parties and the sufficiency of Plaintiff’s claims.
A. Plaintiff’s Proposed Trade Secrets Claims
Plaintiff’s proposed amended complaint includes trade
secrets claims under both the DTSA and the NJTSA. The DTSA
provides that “[a]n owner of a trade secret that is
misappropriated may bring a civil action ... if the trade secret
is related to a product or service used in, or intended for use
in, interstate or foreign commerce.” 18 U.S.C. § 1836(b)(1).
The analysis of claims under both statutes fold into each other,
and the Court will therefore consider the two claims together.
Austar Int'l Ltd. v. AustarPharma LLC, 425 F. Supp. 3d 336, 355
(D.N.J. 2019)
Defendant’s single argument for why these claims are both
futile is straightforward: that Plaintiff has not sufficiently
alleged that Defendant actually used any of Plaintiff’s trade
secrets. In support of its argument that such allegations are
necessary to state a claim under both statutes, Defendant refers
the Court to Oakwood Labs., LLC v. Thanoo, No. 3:17-cv-05090-
PGS-LHG, 2019 WL 5420453 (D.N.J. Oct. 23, 2019), which stated
that “[b]oth the DTSA and the NJTSA require a plaintiff ‘to
demonstrate . . . misappropriation of [a trade] secret, defined
as the knowing improper acquisition and use or disclosure of the
secret.” Id. at *3 (quoting Par Pharm., Inc. v. QuVa Pharma,
Inc., 764 F. App’x 273, 278 (3d Cir. 2019)).
Based on this quote, Defendant pursues its argument that,
without a sufficiently pled allegation that Ocean used
Plaintiff’s trade secrets, Plaintiff has failed to adequately
plead misappropriation and its claims are therefore futile.
However, the definition of “misappropriation” put forth by
Defendant is simply inaccurate. The Oakwood Labs opinion relied
upon by Plaintiff quotes from a Third Circuit opinion, Par
Pharm., Inc. v. QuVa Pharma, Inc., 764 F. App’x 273 (3d Cir.
2019). In support for the quote above, the Third Circuit there
simply cited to the relevant definitions of misappropriation for
both statutes, found at 18 U.S.C. §§ 1836(b)(1), 1839(3), (5);
N.J.S.A. § 56:15-2.
However, Par Pharm., Inc. is a non-precedential opinion,
and a close reading of the statutory definitions it cited shows
that the quote above is phrased with an unfortunate lack of
specificity. Simply put, misappropriation does not require a
party to demonstrate both acquisition and disclosure or use.
Instead, the DTSA defines misappropriation as requiring the
“acquisition of a trade secret of another by a person who knows
or has reason to know that the trade secret was acquired by
improper means,” or the “disclosure or use of a trade secret
that was acquired by improper means.” 18 U.S.C. § 1839(5)(A)
and (B). The NJTSA similarly defines misappropriation, using
almost identical language, as meaning “(1) Acquisition of a
trade secret of another by a person who knows or has reason to
know that the trade secret was acquired by improper means; or
(2) Disclosure or use of a trade secret of another without
express or implied consent of the trade secret owner by a person
. . .” N.J.S.A. § 56:15-2(1)-(2).
As other courts have recognized, these statutes therefore
“contemplate[] three theories of liability: (1) acquisition, (2)
disclosure, or (3) use.” Bramshill Investments, LLC v. Pullen,
No. 19-18288, 2020 WL 4581827, at *3 (D.N.J. Aug. 10, 2020)
(quoting AUA Priv. Eq. Partners, LLC v. Soto, No. 17-8035, 2018
WL 1684339, at *4 (S.D.N.Y. Apr. 5, 2018)). This Court itself
has previously recognized misappropriation claims based on the
acquisition theory. See NVR, Inc. v. Davern, No. 15-5059
(NLH/KMW), 2015 WL 9450831, at *2 (D.N.J. Dec. 23, 2015) (“[T]he
Court finds that NVR is likely to prove that Davern acquired
NVR's trade secrets and knew, or had reason to know, that the
trade secrets were acquired by improper means.”) (citing
N.J.S.A. § 56:15-2).
With this correct definition in mind, the Court easily
finds that Plaintiff’s proposed amended claims are not clearly
futile. Defendant has not disputed here that the information it
obtained through Burke and Callahan qualifies as trade secrets,
and has further put forward no argument that Plaintiff has not
adequately pled that Defendant knew or had reason to know that
these trade secrets were obtained by improper means. Nor could
Defendant likely put forth a reasonable argument on this second
point, as Plaintiff has straightforwardly and explicitly alleged
that Defendant worked together with Burke and Callahan to
determine how to circumvent the restrictive covenants in their
contracts, and that Callahan thereafter copied Borgata’s trade
secrets onto a separate personal phone that he brought with him
to Ocean. Plaintiff’s claims for misappropriation of trade
secrets under both the DTSA and NJTSA are therefore not clearly
futile at this stage, and its motion to amend will be granted as
to these claims.1 As the Court will permit Plaintiff to proceed
with its amended trade secrets claims, Defendant’s motion to
dismiss those claims as originally pled in the initial complaint
will be denied as moot.
B. Plaintiff’s Proposed RICO Claim
The Court turns next to Plaintiff’s proposed RICO claim.
Defendant again argues that Plaintiff’s proposed amended claim
is futile, and therefore leave to amend should be denied.
Defendant puts forward two arguments for why Plaintiff’s RICO
claim is clearly futile.
First, Defendant contends that “Plaintiff does not plead a
‘person’ separate and distinct from an ‘enterprise’ as required
by RICO.” (ECF No. 143 at 9). While the amended complaint does
not specify which specific prong of the RICO Act the claim is
brought under, given the parties’ discussions in their briefs
the Court will assume, for the purpose of adjudicating this
1 As the central question before the Court at this stage is
simply whether Plaintiff should be granted leave to file an
amended complaint, the Court therefore finds it unnecessary to
further address whether Plaintiff’s claims would have been
clearly futile under the use theory and makes no finding on that
question.
motion, that Plaintiff intends to assert a claim under 18 U.S.C.
§ 1962(c), which provides that “[i]t shall be unlawful for any
person employed by or associated with any enterprise engaged in,
or the activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or indirectly, in
the conduct of such enterprise's affairs through a pattern of
racketeering activity or collection of unlawful debt.”
“[T]o establish liability under § 1962(c) one must allege
and prove the existence of two distinct entities: (1) a
‘person’; and (2) an ‘enterprise’ that is not simply the same
‘person’ referred to by a different name.” Cedric Kushner
Promotions, Ltd. v. King, 533 U.S. 158, 161 (2001). Stated
otherwise, “a claim simply against one corporation as both
‘person’ and ‘enterprise’ is not sufficient.” Jaguar Cars, Inc.
v. Royal Oaks Motor Car Co., 46 F.3d 258, 268 (3d Cir. 1995).
“Person” is defined by § 1961(3) to mean “any individual or
entity capable of holding a legal or beneficial interest in
property,” whereas an entity is “any individual, partnership,
corporation, association, or other legal entity, and any union
or group of individuals associated in fact although not a legal
entity.” Id. at § 1961(3).
Defendant’s argument, at its core, is that Plaintiff’s RICO
claim improperly relies on Ocean as both the person and the
enterprise involved in the underlying predicate acts. The
parties do not dispute here that Ocean is the “person” that
Defendant seeks to hold liable, nor that Ocean qualifies as a
person under the statutory definition. However, Plaintiff
argues that Ocean is not, by itself, alleged to be the separate
“enterprise” at the center of the amended complaint’s claim.
Indeed, as Plaintiff points out, the amended complaint
explicitly alleges that Ocean “conspired with Burke, Callahan,
and other former Borgata employees” to steal trade secrets from
Plaintiff. (ECF No. 136-2 at ¶ 45). Accordingly, Plaintiff’s
amended complaint asserts that the “enterprise” here was a group
consisting of both Ocean and the individual Borgata employees
with whom Ocean allegedly conspired to steal trade secrets — not
simply Ocean by itself.
To counter this, Defendant further argues that such an
enterprise cannot exist, because “there is no distinct RICO
enterprise where the corporation and its employees or agents are
alleged to associate or act together. (ECF No. 143 at 9)
(citing Association of N.J. Chiropractors v. Aetna, Inc., No.
09–3761 (JAP), 2011 WL 2489954, at *6 (D.N.J. June 20, 2011)).
In general, this is an accurate description of the law;
although, as Plaintiff has further noted, Defendant’s own cited
case law clarifies that even though “a claim simply against one
corporation as both ‘person’ and ‘enterprise’ is not
sufficient[,]... alleging conduct by officers or employees who
operate or manage a corporate enterprise satisfies this
requirement.” Jaguar Cars, Inc. v. Royal Oaks Motor Car Co., 46
F.3d 258, 268 (3d Cir. 1995).
However, the Court need not go so far as to address whether
any of the individuals listed here as part of the enterprise
might also qualify under this second concept. More simply,
Plaintiff’s amended complaint does not claim, as Defendant
implies, that the enterprise consisted of Ocean and its
employees. Instead, the amended complaint explicitly alleges
that Ocean conspired with Burke, Callahan, and other employees
of Borgata prior to hiring them. In fact, nearly all of the
factual allegations of specific conduct in the amended complaint
relate to alleged actions taken prior to Ocean’s hiring of
Burke, Callahan, and other former Borgata employees. These
factual allegations detail discussions regarding how to
circumvent the restrictive covenants in the Borgata employment
contracts and actions taken to preserve access to the alleged
trade secrets, all conducted while Burke and Callahan were still
employees of Borgata. As Plaintiff points out, Defendant has
provided absolutely no case law supporting the idea that that
conspirators can avoid RICO liability by going into business
together, or that an entity like Ocean can avoid RICO liability
simply by later hiring other members of the RICO enterprise.
Second, Defendant, in a single throw-away sentence, asserts
that “[t]he RICO claim fails in other respects, including the
failure to plead at least two predicate racketeering acts.”
(ECF No. 139 at 10). Defendant cites to no case law, and makes
no further attempt to develop this argument or demonstrate how
it proves Plaintiff’s claim are futile. And, importantly,
Plaintiff has pointed out that its amended complaint alleges
that the enterprise conspired to have multiple Borgata employees
steal trade secrets — an allegation that, on its face, would
appear to include multiple predicate acts of misappropriation of
trade secrets. Given the failure to develop this argument any
further, the Court finds that Defendant has not met the “heavy
burden” placed on it as a party challenging a motion for leave
to amend, and that Plaintiff’s claims are not so clearly futile
as to warrant denial of their motion.
The Court notes here that Defendant’s motion to dismiss
targeted Plaintiff’s initial RICO claim in the original
complaint only by arguing that it had failed to allege a
qualifying predicate act, because the original complaint
referenced 18 U.S. Code § 1831, which covers economic espionage
that will benefit any foreign government, foreign
instrumentality, or foreign agent . . .” As Plaintiff’s amended
RICO claim instead relies upon § 1832, the provision covering
“theft of trade secrets,” Defendant’s motion to dismiss the RICO
claim under Rule 12(b)(6) will be denied as moot.
C. Plaintiff’s Proposed Unfair Competition and Tortious
Interference Claims
Defendant’s opposition to Plaintiff’s amended complaint is
not confined to the claims it initially moved to dismiss.
Instead, Defendant also asserts that Plaintiff’s tortious
interference and unfair competition claims, which were not
attacked by the initial 12(b)(6) motion, are both futile.
Defendant attacks the first claim by arguing that New
Jersey law does not recognize tortious interference claims for a
company hiring another company’s at-will employee without the
use of improper means, and that Plaintiff has not sufficiently
alleged that improper means were utilized here. Defendant’s
statement of the law in New Jersey is accurate. “The mere
inducement of an employee to move to a competitor is not, in and
of itself, actionable when the employee is terminable at will.”
National Auto Division, LLC v. Collector's Alliance, Inc., No.
A–3178–14T3, 2017 WL 410241, at *3 (N.J. Super. Ct. App. Div.
Jan. 31, 2017) (citing Avtec Indus., Inc. v. Sony Corp. of Am.,
205 N.J. Super. 189, 194 (N.J. Super. Ct. App. Div. 1985)).
However, the New Jersey Supreme Court has made clear “that
the one who acts to induce another is not free to do so by any
means whatsoever. Regardless of whether the focus is on an
existing contract, a contract terminable at will, or a purely
prospective contractual relationship, the means utilized may be
neither improper, nor wrongful.” Nostrame v. Santiago, 61 A.3d
893, 902 (N.J. 2013) (internal citations omitted). And as
Defendant acknowledges, wrongful means has been explained to
include fraud, defamation, deceit and misrepresentation,
violence, intimidation, criminal, or civil threats and/or
violations of law. Id.
Here, Defendant contends that not only has Plaintiff
alleged none of these things, but also that “nor is any such
allegation possible.” (ECF No. 139 at 13). Neither of these
statements appear to be true. Defendant has straightforwardly
alleged here that, as part of Ocean’s process of hiring away
Borgata employees, Ocean violated multiple trade secrets laws
and induced Borgata employees to violate noncompete clauses and
restrictive covenants that extended and applied beyond the
conclusion of any at-will employment. The District Court for
the District of Nevada went so far as to enter a preliminary
injunction against both Burke and Callahan based on a finding
that Plaintiff would likely succeed on its claim that Burke
violated her noncompete clause and that Callahan misappropriated
trade secrets in the process of moving from Borgata to Ocean.
(ECF No. 96 at 114:20-115:25; 121:7-20). Plaintiff has clearly
alleged that Ocean committed a violation of law in inducing
Borgata’s employees to leave for employment elsewhere and bring
with them Borgata’s trade secrets, and that these actions
constituted improper or wrongful means. See Platinum Mgmt.,
Inc. v. Dahms, 666 A.2d 1028, 1044 (N.J. Super. Ct. Law Div.
1995) (“The acts of GAF to increase its business by
intentionally seeking out and employing PMI’s key sales
employees, so that it could sell to PMI’s existing customers by
reason of the customer information they had, constituted
intentional wrongful acts committed without justification or
excuse.”). The Court therefore finds that Plaintiff’s tortious
interference claim is not so clearly futile as to warrant denial
of the motion for leave to amend.
Next, Defendant attacks Plaintiff’s unfair competition
claim as futile on only one ground: that “unfair competition is
not a distinct cause of action under New Jersey law.” (ECF No.
139 at 13 (quoting Heartland Payment Sys., LLC v. Carr, No.
3:18-cv-09764-BRM-DEA, 2021 WL 302918, at *8-9 (D.N.J. Jan. 29,
2021)). Again, Defendant’s statement regarding New Jersey law
is, on the surface, accurate. As a general rule, New Jersey
“courts have dismissed unfair competition claims where they are
duplicative of claims for tortious interference.” Diversified
Indus., Inc. v. Vinyl Trends, Inc., No. 13-6194, 2014 WL 1767471
at *6 (D.N.J. May 1, 2014).
However, the exact same paragraph from Heartland that
Defendant quotes further explains that, while unfair competition
is not generally a distinct cause of action, “[i]n New Jersey,
unfair competition is commonly invoked for claims similar to
misappropriation of trade secrets or commercial identity,” and
it “protects more information than a traditional trade secret
claim.” Id. (quoting Avaya Inc., RP v. Telecom Labs, Inc., 838
F.3d 354, 386–87 (3d Cir. 2016)). New Jersey courts, in
explaining the general rule against distinct unfair competition
claims, have specifically clarified that “[o]utside of the
intellectual property context, unfair competition is not an
independent cause of action.” Nat'l Auto Div., 2017 WL 410241,
at *5. See also Sussex Commons Outlets, L.L.C. v. Chelsea Prop.
Group, Inc., 2010 WL 3772543, at *9 (N.J. Super. Ct. App. Div.
2010) (“New Jersey courts have noted that, in essence, unfair
competition is a business tort, generally consisting of the
misappropriation of a business's property by another business.”)
(citations and internal quotations omitted).
And as the Heartland case cited by Plaintiff further noted,
courts in this district have previously declined to dismiss
unfair competition claims involving misappropriation of trade
secrets simply because they duplicate a tortious interference
claim. See LoanDepot.com v. CrossCountry Mortg., Inc., 399 F.
Supp. 3d 226, 238 (D.N.J. 2019). Given this larger context, and
the allegations involved in the amended complaint here, the
Court finds that Plaintiff’s unfair competition claims are not
clearly futile at this stage. While the Court makes no finding
here regarding whether Plaintiff may ultimately recover on both
this claim and its tortious interference claim in this action,
as the parties have not fully briefed that question, Plaintiff
will be allowed to proceed with its unfair competition claim at
this stage. Accordingly, Plaintiff’s motion for leave to file
its amended complaint will be granted.
CONCLUSION
For the reasons expressed above, Plaintiff’s motion for
leave to file its amended complaint (ECF No. 136) will be
granted, and Defendant’s motion to dismiss (ECF No. 18) will be
denied as moot.
An appropriate Order will be entered.
Date: April 19, 2021 /s Noel L. Hillman
At Camden, New Jersey NOEL L. HILLMAN, U.S.D.J.