LUPIN ATLANTIS HOLDINGS SA, a foreign corporation v. ZENG

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 23-61621-CIV-DAMIAN/Reid

LUPIN ATLANTIS HOLDINGS SA, et al.,

Plaintiffs,

v.

XIAN-MING ZENG, et al.,

Defendants.

______________________________________/

ORDER ON DEFENDANTS’ MOTION TO DISMISS

FIRST AMENDED COMPLAINT [ECF NO. 39]

THIS CAUSE is before the Court upon Defendants, Xian-Ming Zeng, Transpire Bio,

Inc., Axel Perlwitz, and William Schachtner’s (collectively, “Defendants”), Motion to

Dismiss Plaintiffs’ First Amended Complaint [ECF No. 39] (the “Motion to Dismiss”), filed

February 9, 2024.

THE COURT has reviewed the Motion to Dismiss, the Response [ECF No. 49] and

Reply thereto [ECF No. 53], the pertinent portions of the record, and the relevant authorities

and is otherwise fully advised. The Court also heard argument from the parties who appeared

before the undersigned on September 16, 2024. For the reasons that follow, and as further

detailed on the record at the hearing, the Motion to Dismiss is granted in part and denied in

part.

I. BACKGROUND

The following facts are stated as alleged by Plaintiffs, Lupin Atlantis Holdings SA

(“LAHSA”) and Lupin Inc. (collectively, “Lupin” or “Plaintiffs”), in the First Amended

Complaint. [ECF No. 31 (“Amended Complaint”)]. For purposes of considering the Motion

to Dismiss, the allegations in the Amended Complaint are taken as true and construed in the

light most favorable to Lupin. See Devengoechea v. Bolivarian Republic of Venezuela, 889 F.3d

1213, 1220 (11th Cir. 2018).

Lupin and its affiliated entities are a group of companies that develop and market an

array of pharmaceutical products sold globally. Am. Compl. ¶¶ 2, 24. In 2013, Lupin hired

Zeng to lead a team of research and development professionals to grow Lupin’s inhaled

pharmaceutical product division. Id. ¶¶ 2, 41. In connection with his employment with Lupin,

Zeng signed an employment agreement that included non-solicitation and confidentiality

provisions. Id. ¶¶ 2, 42, 50–51, 53.

The events that gave rise to this lawsuit began in April 2021, when non-party Smoore

International Holdings Ltd. (“Smoore”), a global leader in electronic cigarette manufacturing,

contacted Zeng regarding a potential collaboration between Lupin and Smoore to adapt and

optimize Smoore’s vaping technology with Lupin’s inhalation pharmaceutical drug business.

Id. ¶ 4. According to Lupin, Zeng never disclosed this contact nor the business opportunity to

Lupin’s board of directors and, instead, usurped the opportunity with Smoore for himself. Id.

¶ 5.

In August 2021, four months after Smoore allegedly contacted Zeng, Zeng submitted

a resignation letter informing Lupin that he accepted a position at a non-pharmaceutical

company in China in order to spend more time with his family. Id. ¶¶ 6, 64, 66. Lupin claims

Zeng was actually planning to launch Transpire, a competing business to Lupin which is

wholly owned by Smoore. Id. ¶ 7. Lupin alleges that since leaving Lupin and starting

Transpire, Zeng has poached ten Lupin executives and scientists to work for Transpire. Id. ¶

8. Lupin alleges that in addition to poaching Lupin employees and usurping Lupin’s business

opportunity, Zeng copied Lupin’s confidential information and trade secrets to external

devices and to a cloud storage account. Id. ¶¶ 10–12. Zeng then allegedly covered his tracks

by using a software cleaning tool and deleting all emails from his company laptop. Id. All of

this was allegedly done while Zeng was still employed by Lupin. Id.

A year after Zeng’s resignation, on August 22, 2023, Lupin filed the instant lawsuit

against Zeng, Transpire, and two former Lupin executives, Perlwitz and Schachtner. [ECF

No. 1]. In the operative Amended Complaint, filed on January 12, 2024, Lupin asserts eight

causes of action and seeks damages and injunctive relief for: misappropriation of trade secrets

against Zeng and Transpire (Counts I and II); breach of contract and breach of fiduciary duty

against Zeng (Counts III and IV); civil conspiracy against all Defendants (Count V); breach

of fiduciary duty and aiding and abetting breach of contract against Perlwitz and Schachtner

(Counts VI and VII); and tortious interference with contractual relationship against Transpire,

Perlwitz, and Schachtner (Count VIII). [ECF No. 31].

On February 9, 2024, Defendants filed the Motion to Dismiss now before the Court.

[ECF No. 39]. Lupin filed a Response on March 7, 2024. [ECF No. 49], and Defendants filed

a Reply on March 18, 2024 [ECF No. 53]. The Motion to Dismiss is fully briefed and ripe for

adjudication, and the Court has had the benefit of oral argument from counsel.

II. LEGAL STANDARD

Dismissal under Federal Rule of Civil Procedure 12(b)(6) is appropriate where a

plaintiff fails to state a claim upon which relief could be granted. “To survive a motion to

dismiss [under Rule 12(b)(6)], 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

(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A pleading withstands

a motion to dismiss if it alleges “factual content that allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550

U.S. at 556). This pleading standard “does not require ‘detailed factual allegations,’ but it

demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal,

556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).

Federal Rule of Civil Procedure 8(a)(2) also requires that a pleading contain a “short

and plain statement of the claim” showing the pleader is entitled to relief. Fed. R. Civ. P.

8(a)(2). The complaint must “give the defendant fair notice of what the . . . claim is and the

grounds upon which it rests.” Twombly, 550 U.S. at 555 (citation and quotation marks

omitted).

When considering a motion to dismiss under Rule 12(b)(6), courts must accept the

non-moving party’s allegations as true and evaluate all plausible inferences derived from those

facts in favor of the plaintiff. See United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1066 (11th Cir.

2007). However, this tenet does not apply to legal conclusions, as courts are not bound to

accept as true a legal conclusion couched as a factual allegation. Twombly, 550 U.S. at 555

(citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). The Court must limit its consideration to

well-pleaded factual allegations, documents central to or referenced in the complaint, and

matters judicially noticed. La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004).

III. ANALYSIS

In the Motion to Dismiss, Defendants argue that Lupin’s Amended Complaint should

be dismissed in its entirety for failure to state a claim. The Court addresses the specific grounds

for dismissal as to each of the eight counts and the parties’ arguments as to each below.

A. Misappropriation Of Trade Secret Claims Against Zeng And Transpire (Counts I

and II).

In the Amended Complaint, Plaintiffs allege two parallel claims for misappropriation

of trade secrets against Zeng and Transpire, one under the Defend Trade Secrets Act

(“DTSA”), 18 U.S.C. § 1836 (Count I), and the other under the Florida Uniform Trade

Secrets Act (“FUTSA”), §§ 688.001–688.009, Fla. Stat. (Count II). Am. Compl. at 23–27.

Defendants argue that Lupin fails to state claims for trade secret misappropriation

under the DTSA and the FUTSA because Lupin fails to: (1) allege an actual misappropriation

within the meaning of the statutes; and (2) identify the alleged trade secrets with sufficient

particularity. In their Response, Plaintiffs argue they sufficiently allege that Defendants

misappropriated trade secrets under both statutes and sufficiently identified the trade secrets

in their Amended Complaint.

1. The DTSA And The FUTSA.

To bring a viable claim under the DTSA, a plaintiff must plausibly allege that it (i)

“possessed information of independent economic value” that (a) “was lawfully owned by”

the plaintiff and (b) for which the plaintiff “took reasonable measures to keep secret,” and (ii)

the defendant “used and/or disclosed that information,” despite (iii) “a duty to maintain its

secrecy.” Sentry Data Sys., Inc. v. CVS Health, 361 F. Supp. 3d 1279, 1293 (S.D. Fla. 2018).

Similarly, “[t]o prevail on a FUTSA claim, a plaintiff must demonstrate that (1) it possessed

a ‘trade secret’ and (2) the secret was misappropriated.” Yellowfin Yachts, Inc. v. Barker

Boatworks, LLC, 898 F.3d 1279, 1297 (11th Cir. 2018).

Under the FUTSA, a “trade secret” is defined as information that:

(a) Derives independent economic value, actual or potential, from not

being generally known to, and not being readily ascertainable by proper means

by, other persons who can obtain economic value from its disclosure or use;

and

(b) Is the subject of efforts that are reasonable under the circumstances

to maintain its secrecy.

§ 668.002(4)(a)–(b), Fla. Stat. Thus, to qualify as a “trade secret” under the FUTSA, a plaintiff

must allege that the information “[d]erives independent economic value, actual or potential,

from not being generally known to, and not being readily ascertainable by proper means by,

other persons who can obtain economic value from its disclosure or use.” Id. § 688.002(4).

And, the alleged trade secret information must be “the subject of efforts that are reasonable

under the circumstances to maintain its secrecy.” Id. A “trade secret” is defined similarly

under the DTSA and in terms of the same two (2) general requirements. See 18 U.S.C. §

1839(3). The Eleventh Circuit has acknowledged that DTSA and FUTSA claims “largely

mirror[ ]” each other. Compulife Software, Inc. v. Newman, 959 F.3d 1288, 1311 n.13 (11th Cir.

2020). Therefore, this Court considers the DTSA and FUTSA claims and Defendants’

challenges thereto together.

2. Whether The Amended Complaint Sufficiently Identifies The Trade Secrets.

Courts adjudicating FUTSA and DTSA cases require a plaintiff to “identify with

reasonable particularity the trade secrets at issue before proceeding with discovery.” DynCorp

Int’l v. AAR Airlift Grp., Inc., 664 F. App’x 844, 848 (11th Cir. 2016). “However, to satisfy this

requirement at the dismissal stage in federal court, the plaintiff need only allege sufficient facts

to plausibly show a trade secret was involved and to give the defendant notice of the material

it claims constituted a trade secret.” Id. (citing Twombly, 550 U.S. at 555–56; other citations

omitted). To state a claim with “sufficient particularity,” a plaintiff must nevertheless do more

than merely “identify broad categories of information, such as financial and technical data.”

Id. at 849.

Defendants contend that Plaintiffs’ trade secret claims are inadequate because they fail

to identify “a single specific trade secret” in the Amended Complaint. Mot. at 9–11.

According to Defendants, Plaintiffs provide no specifics about which of the hundreds of

documents that Zeng allegedly accessed contain trade secrets or even what those trade secrets

are. Id.

In the Amended Complaint, Plaintiffs define the trade secrets at issue as the “product

formulations and development information, product inventions and plans, profit information,

proprietary manufacturing processes, FDA approval guidance, current and prospective

customer and vendor lists and related databases, equipment lists, pricing data, purchasing

histories, consumer data, market intelligence and strategies, and overall industry and product

expertise.” Am. Compl. ¶ 31. Plaintiffs also allege these trade secrets “derive independent

economic value” from not being generally known to the public. Id. ¶¶ 107, 116.

Defendants contend Plaintiffs’ allegations include “a sweeping and legally insufficient

category” of trade secrets. This Court disagrees. Courts consistently find that customer lists

and pricing information constitute trade secrets. See, e.g., Marlite, Inc. v. Eckenrod, No. 09-

22607-Civ, 2011 WL 39130, at *5 (S.D. Fla. Jan. 5, 2011) (Torres, J.) (concluding customer

lists and pricing information are trade secrets), aff’d sub nom. Marlite, Inc. v. Am. Canas, 453 F.

App’x 938 (11th Cir. 2012); Johnson Controls, Inc. v. Rumore, No. 8:07-cv-1808, 2008 WL

203575, at *5 (M.D. Fla. Jan. 23, 2008) (finding a legitimate interest in “customer lists,

business, service and maintenance plans, sales, revenue and financial information, including

pricing information”). In any event, “whether something is a trade secret is a question

typically ‘resolved by a fact finder after full presentation of evidence from each side.’”

Compulife Software, Inc., 959 F.3d at 1311 (quoting Lear Siegler, Inc. v. Ark-Ell Springs, Inc., 569

F.2d 286, 288–89 (5th Cir. 1978)).

Defendants rely on Taxinet, Corp. v. Leon, a decision in which another court in this

District found that allegations of “confidential business information, processes and

techniques, software applications, and business characteristics, including present, future and

proposed services and business model” were inadequate because they “only indicate broad

categories of information.’” Taxinet, Corp. v. Leon, No. 16-24266-CIV, 2018 WL 3405243 at

*3 (S.D. Fla. July 12, 2018) (Moreno, J.). Plaintiffs’ allegations here are not as generalized as

those in Taxinet. Review of the allegations in the Amended Complaint reveals they are more

akin to allegations in cases in which courts have found the reasonable particularity

requirement satisfied. See e.g., DynCorp Int’l., 664 F. App’x at 849 (“The amended complaint

did not just identify broad categories of information, such as financial and technical data, but

specifically identified financial and technical data related to DynCorp’s pre-existing WASS

contract . . . and pricing data related to staffing and business operations.”); NPA Assocs., LLC

v. Lakeside Portfolio Mgmt, LLC, No. 12-23930-CIV, 2014 WL 714812 at *3 (Moreno, J.)

(allegations regarding “proprietary calculations, assessments, and/or formulas related to

investment viability” identified trade secrets with reasonable particularity).

Likewise, Plaintiffs also adequately allege what trade secrets Zeng allegedly

misappropriated. The Amended Complaint alleges Zeng copied onto an external storage

device several documents containing the trade secrets at issue. Am. Compl. ¶ 97. The pleading

identifies specific documents and dates Zeng allegedly misappropriated them. Id. At this stage

of the proceedings, further specificity is not required. See NPA Assoc., 2014 WL 714812 at *3

(rejecting defendant’s theory that plaintiffs “must specifically identify the calculations,

assessments, or formulas misappropriated in order to comply with its burden”).

Therefore, this Court concludes that Plaintiffs have sufficiently alleged the trade secrets

at issue.

3. Whether The Amended Complaint Sufficiently Alleges That Plaintiffs Took

Reasonable Steps to Maintain Secrecy Of Its Information.

Plaintiffs allege that Lupin requires all employees to enter into written confidentiality

agreements before granting access to Lupin’s trade secret information. Am. Compl. ¶ 40. As

further alleged in the Amended Complaint, Lupin takes reasonable and necessary steps to

maintain the confidentiality of its trade secrets, including implementing policies with respect

to the confidential information, prohibiting employees from copying, removing, using, or

disclosing Lupin’s confidential information, locking its physical facilities and requiring the

use of a trackable keycard for access, and limiting access to Lupin’s network to ensure its

confidential information and trade secrets are accessible on a need-to-know basis only. Id. ¶¶

33–39. These allegations are sufficient to establish that Lupin “took reasonable measures” to

keep its trade secrets from being publicly known.

4. Whether The Amended Complaint Sufficiently Alleges Defendants

Misappropriated Lupin’s Trade Secrets.

Defendants contend that Plaintiffs have not satisfied their obligation to plead facts

demonstrating that Zeng acquired any of Lupin’s trade secrets by improper means or that he

even used Lupin’s trade secrets. In Response, Plaintiffs assert Zeng misappropriated Lupin’s

trade secrets under the DTSA and the FUTSA by breaching a duty to uphold Lupin’s

confidential information and by downloading Lupin’s trade secrets onto an external storage

device during the final weeks of his employment in order to give Transpire an “unfair

competitive edge” against Lupin.

As noted above, both the DTSA and the FUTSA define “misappropriation” of a trade

secret as: (1) acquisition of another’s trade secret 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 without consent by a person who used improper means to acquire the trade secret or

knew that the trade secret was improperly acquired. 18 U.S.C. § 1839(5)(A); § 688.002, Fla.

Stat. These statutes further define “improper means” to include “theft, bribery,

misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or

espionage through electronic or other means.” 18 U.S.C. § 1839(6)(A); § 688.002(1), Fla. Stat.

Plaintiffs have adequately alleged that Zeng misappropriated Lupin’s trade secrets

through a breach of a duty to maintain secrecy. The Amended Complaint alleges that Zeng

had a duty to uphold Lupin’s confidential information and that he breached that duty by

downloading Lupin’s trade secrets onto an external storage device during the final weeks, and

even on the final days, of his employment. Am. Compl. ¶¶ 97–98. Plaintiffs also allege that

Zeng attempted to “hide evidence of his misappropriation” by utilizing a computer software

cleanup tool and “delet[ing] all items from his Outlook account on his company issued

laptop.” Id. ¶ 99. These allegations are sufficient to meet the definition of misappropriation

under both statutes at this stage of the proceedings. See, e.g., Hayes Med. Staffing, LLC v.

Eichelberg, No. 0:23-cv-60748, 2024 WL 670440, at *7 (S.D. Fla. Jan. 23, 2024) (Gayles, J.)

(“The timing of Eichelberg’s emails (two days before her resignation), how she sent them to

herself (via blind copy and without permission), and her attempt to delete evidence of what

she had done (by deleting emails from the sent and permanent deletion folders) constitutes

strong evidence of her intentional misappropriation of Jobot’s trade secrets.”). Moreover,

while not defined in the statute, the bar for what counts as “use” of a trade secret is generally

low. See Penalty Kick Mgmt. v. Coca Cola Co., 318 F.3d 1284, 1292 (11th Cir. 2003) (“[A]ny

exploitation of the trade secret that is likely to result in injury to the trade secret owner or

enrichment to the defendant is a ‘use.’” (quoting Restatement (Third) of Unfair Competition

§ 40 cmt. c (1995))).

Insofar as Plaintiffs’ misappropriation claims are directed against Transpire in Counts

I and II, Plaintiffs allege that Zeng utilized Lupin’s trade secrets “for personal gain and/or for

the benefit of Transpire.” Am. Compl. ¶¶ 111, 120; see also id. ¶ 10 (“In the final months of

Zeng’s employment, Zeng copied Lupin’s confidential information and trade secrets to

external devices and to a cloud storage account, presumably to give Transpire a competitive

advantage over Lupin.”). Thus, reading the Amended Complaint as a whole, Plaintiffs allege

that Transpire acquired Lupin’s trade secrets through Zeng.

Therefore, Plaintiffs have adequately alleged a claim for misappropriation of Lupin’s

trade secrets against Defendants Zeng and Transpire under the DTSA and the FUTSA, and

Defendants’ Motion to Dismiss is due to be denied as to these claims.

B. Breach of Contract Against Zeng (Count III).

In Count III, Plaintiffs allege Zeng breached the restrictive covenants in his

employment agreement, that is, the non-solicitation and confidentiality provisions. The

Amended Complaint alleges that, in April 2013, Zeng entered into an employment agreement

with Lupin Pharmaceuticals, Inc. (“LPI”), a non-party to this action. Am. Compl. ¶ 42. LPI

then assigned its rights and obligations under the employment agreement to Lupin GmbH

(“GmbH”). Id. ¶ 43. Thereafter, GmbH merged with Plaintiff LAHSA, transferring all of

GmbH’s assets and liabilities, including the employment agreement with Zeng, to LAHSA

by way of merger. Id. ¶ 44.

Defendants argue the restrictive covenants are not enforceable by Plaintiff LAHSA

because Zeng executed his employment agreement with LPI and then executed a separate

agreement to assign the employment agreement to GmbH, not to LAHSA. Defendants aver

that Section 542.335(1)(f)(2), Florida Statutes, prohibits the enforcement of the restrictive

covenants by LAHSA. According to Defendants, LAHSA is not the original signatory to the

employment agreement and the agreement does not expressly authorize enforcement by a

party’s assignee or successor under Section 542.335(1)(f)(2), which governs the enforceability

of restrict covenants by a party’s assignee or successor in Florida. Mot. at 10–11.

Plaintiff LAHSA responds it has standing to enforce the restrictive covenants

contained in Zeng’s employment agreement. LAHSA asserts that Zeng, as a signatory to the

assignment between non-parties LPI and GmbH, expressly agreed to assign “all of the right[s]

and obligation[s] pursuant to the Employment Agreement” to GmbH. Once GmbH merged

with LAHSA, all of GmbH’s assets, including the employment agreement at issue, were

transferred to LAHSA, and no additional assignment or contractual consent from Zeng was

required in order for LAHSA to enforce the employment agreement. LAHSA further

contends that even if the merger negates the enforceability of the restrictive covenant, the

breach of contract claim should survive dismissal to the extent it pertains to Zeng’s failure to

return company property because that provision is not a restrictive covenant governed by

Section 542.335. Resp. at 11.

1. Whether LAHSA Has Standing to Enforce the Restrictive Covenants.

Florida law provides that a court “shall not refuse enforcement of a restrictive covenant

on the ground that the person seeking enforcement is . . . an assignee or successor to a party

to such contract, provided . . . the restrictive covenant expressly authorized enforcement by a

party’s assignee or successor.” § 542.335(1)(f)(1), Fla. Stat. Plaintiff LAHSA asserts this

provision of Florida law permits a court to enforce a restrictive covenant if the parties have

agreed to and contracted to allow enforcement of the contract by a successor party. In support

of this argument, LAHSA primarily relies on Johnson Controls, Inc. v. Rumore, No. 8:07–cv–

1808–T–17TBM, 2008 WL 203575 (M.D. Fla. Jan. 23, 2008).

In Johnson Controls, the Magistrate Judge opined that “[a] plain reading of [Section

542.335, Florida Statutes,] is that if a noncompetition agreement contains an express

authorization for enforcement by a successor, the court ‘shall not refuse enforcement’ of the

contract.” Id. at *7. The Magistrate Judge further found that under Florida statutes governing

commercial transactions, the surviving corporation of a merger “shall have all the rights,

privileges, immunities and powers, and shall be subject to all the duties and liabilities” of the

merged corporation. § 607.1106, Fla. Stat. Thus, the Magistrate Judge found that in an

acquisition by way of a 100% stock purchase, the non-compete agreement was enforceable by

the surviving corporation of a merger, notwithstanding the absence of an express provision

providing for non-party enforcement. Id.; see also Thyssenkrupp Elevator Corp. v. Hubbard, No.

2:13-cv-202-FtM-29UAM, 2013 WL 3242380, at *2 (M.D. Fla. June 25, 2013) (finding

Johnson Controls persuasive in its finding that a restrictive covenant is enforceable by a

surviving corporation of a merger by 100% stock purchase).

Furthermore, in Corporate Express Office Prods. v. Phillips, 847 So. 2d 406, 414 (Fla.

2003), the Florida Supreme Court held that a non-compete provision may be enforced by a

successor corporation, without the need for an assignment, in three scenarios:

(1) a 100 percent stock purchase in which the corporate entity is unchanged

except for a change in management; (2) a corporate merger in which two

corporations unite into a single corporation and the surviving corporation

assumes the rights and liabilities of the merging corporation; or (3) where a

corporation merely undergoes a name change[.]

Id. at 411–14.

Here, the Amended Complaint alleges that GmbH merged with Plaintiff LAHSA in

April 2020. FAC ¶ 44. This Court agrees with the reasoning in Johnson Controls and finds that

the restrictive covenants at issue are enforceable by LAHSA, as the surviving corporation, by

way of merger.

2. Whether LAHSA Sufficiently Alleges a Breach of Contract Claim

Against Zeng.

To state a claim for breach of contract, Florida law requires a plaintiff to plead “(1) the

existence of a contract; (2) a material breach of that contract; and (3) damages resulting from

the breach.” Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1272 (11th Cir. 2009) (citing Friedman

v. N.Y. Life Ins. Co., 985 So. 2d 56, 58 (Fla. 4th DCA 2008)).

In the Amended Complaint, LAHSA alleges the employment agreement (1)

“prohibited Zeng from soliciting, inducing, or influencing” Lupin employees “to leave or alter

their employment” with Lupin; (2) “required Zeng to keep Lupin’s information confidential

and to refrain from disclosing, copying, or otherwise misappropriating Lupin’s information”;

and (3) required Zeng to “return all Lupin property in his possession in the event of a

termination of employment.” Am. Compl. ¶¶ 126–28. The pleading further alleges Zeng has

breached all these obligations under the employment agreement by soliciting Lupin’s

employees within the restrictive period, retaining Lupin’s confidential and proprietary

information after his employment with Lupin ended and failing to return same to Lupin, and

disclosing Lupin’s confidential and proprietary information to Transpire. Id. ¶¶ 129–131.

This Court is satisfied that LAHSA has sufficiently pled the requirements for a breach

of contract claim against Zeng in Count III.

C. Breach of Fiduciary Duty Against Zeng (Count IV) And Against Perlwitz And

Schachtner (Count VI).

In Counts IV and VI, Plaintiffs assert breach of fiduciary duty claims against Zeng,

Perlwitz, and Schachtner. Fiduciary relationships are either expressly or impliedly created.

Capital Bank v. MVB, Inc., 644 So. 2d 515, 518 (Fla. 3d DCA 1994). When a fiduciary

relationship has not been created by an express agreement, the question of whether the

relationship exists generally depends “upon the specific facts and circumstances surrounding

the relationship of the parties in a transaction in which they are involved.” Collins v.

Countrywide Home Loans, 680 F. Supp. 2d 1287, 1297 (M.D. Fla. 2010) (quoting Taylor

Woodrow Homes Fla., Inc. v. 4/46–A Corp., 850 So. 2d 536, 540 (Fla. 5th DCA 2003)). In the

employment context, Florida courts hold that:

an employee does not violate his duty of loyalty when he merely organizes a

corporation during his employment to carry on a rival business after the

expiration of his employment. However, that employee may not engage in

disloyal acts in anticipation of his future competition, such as using confidential

information acquired during the course of his employment or soliciting

customers and other employees prior to the end of his employment.

Fish v. Adams, 401 So. 2d 843, 845 (Fla. 5th DCA 1981); accord New World Fashions, Inc. v.

Lieberman, 429 So. 2d 1276, 1277 (Fla. 1st DCA 1983); Connelly v. Special Rd. & Bridge Dist.

No. 5, 126 So. 794, 798 (1930). Importantly, Florida law recognizes that “[c]orporate directors

and officers owe a fiduciary obligation to the corporation and its shareholders and must act

in good faith and in the best interest of the corporation.” Cohen v. Hattaway, 595 So. 2d 105,

107 (Fla. 5th DCA 1992).

1. Breach of Fiduciary Duty Claim Against Zeng.

In Count IV, Lupin alleges Zeng breached his fiduciary duty to Lupin by (1) “failing

to disclose the corporate opportunity with Smoore to create a collaboration between the two

companies, and eventually usurping that opportunity for himself”; and (2) “soliciting Lupin

(and its affiliates) employees during and after his employment.” Am. Compl. ¶¶ 137–38.

Defendants argue that Plaintiffs fail to allege the existence of a fiduciary duty owed by

Zeng to Lupin. As to the allegations regarding Zeng’s solicitation efforts during his

employment with Lupin, Defendants argue that the only non-conclusory factual allegation in

the Amended Complaint concerning Zeng’s “access[ing] the resumes of Lupin employees in

his Lupin issued laptop” (Paragraph 82) is not sufficient to support a breach of any fiduciary

duty. Mot. at 13. According to Defendants, there are “obvious alternative explanations” for

why Zeng was reviewing the resumes of current Lupin employees. Id. Defendants also argue

that Plaintiffs’ breach of fiduciary duty claim against Zeng should be dismissed because Zeng

did not owe a fiduciary duty of loyalty as he was not a Lupin employee when the alleged

solicitations occurred–after his resignation. Mot. at 12. Defendants further argue the breach

of fiduciary duty claim is barred by the independent tort doctrine because Plaintiffs’ fiduciary

duty claim overlaps with their breach of contract claim against Zeng. Id. at 15.

Plaintiffs respond that they have alleged a breach of fiduciary duty with respect to

Zeng’s usurpation of Lupin’s corporate opportunity with Smoore. Specifically, Plaintiffs

assert they have adequately pled the existence of a duty by alleging that Zeng, as Executive

Vice President of Lupin, owed a fiduciary duty “to act in the best interests of Plaintiffs and

devote his full time and energy to Plaintiffs’ business.” Am. Compl. ¶ 136. Plaintiffs contend

a fiduciary duty encompasses a duty of loyalty which seeks to prevent employees from acting

against the best interests of his or her employer or acting in a way that would reap a personal

benefit and make it unavailable to the employer.

In the Amended Complaint, Plaintiffs allege Zeng held the title of Executive Vice

President from June 2016 through his resignation on October 1, 2021. Am. Compl. ¶ 46.

Between April 2021 and June 2021, Zeng (on behalf of Lupin) began negotiations and

discussions with a Smoore representative about a potential business collaboration. Id. ¶¶ 55–

60. Plaintiffs allege Zeng never disclosed the potential business opportunity with Smoore to

Lupin’s board of directors and, instead, usurped that business opportunity for himself. Id. ¶¶

62–63.

Thus, Plaintiffs allege that Zeng was an executive officer prior to April 2021, when

Zeng began communicating with Smoore about the business collaboration, and Plaintiffs’

allegations suggest that a duty was impliedly created based on Zeng’s executive position at

Lupin. This Court finds that the allegations are sufficient to plausibly suggest that Zeng owed

a fiduciary duty to Plaintiffs and that such duty was breached. See, e.g., Sotelo v. Interior Glass

Design, No. 16-24224-Civ, 2017 WL 7796316, at *8–10 (S.D. Fla. July 17, 2017) (Torres, J.)

(denying motion to dismiss breach of fiduciary duty claim where plaintiff plead that employee

was “[s]ecretly usurping business opportunities which belonged to [employer] (without

authorization or permission from [employer]) for his own unauthorized personal gain at

[employer’s] expense”). Therefore, Plaintiffs’ breach of fiduciary duty claim against Zeng is

sufficiently pled.

2. Breach of Fiduciary Duty Against Perlwitz and Schachtner.

In Count VI, Lupin alleges Perlwitz and Schachtner breached their fiduciary duties to

Lupin by (1) “co-funding a competing business while employed by Lupin”; and (2)

“facilitating Zeng’s misappropriation of Lupin’s confidential information and trade secrets

and Transpire’s use of same.” Id. ¶¶ 151–52.

Defendants argue the Amended Complaint fails to allege a breach of fiduciary duty on

the part of either Perlwitz or Schachtner. Plaintiffs respond that their claim for breach of

fiduciary duty against both Perlwitz and Schachtner is sufficient. Like the allegations against

Zeng, Lupin asserts Perlwitz and Schachtner had a fiduciary duty to act in the best interest of

Lupin, including protecting Lupin’s confidential and proprietary business information and

devoting their full-time and energy to Lupin’s business. Resp. at 16. Lupin alleges Perlwitz

and Schachtner both breached these duties when they co-founded Transpire while they were

on Lupin’s payroll.

In National Railroad Passenger Corporation v. Veolia Transportation Services, Inc., the D.C.

District Court explained, “[A]cts that . . . constitute actual competition include solicitation of

business for an employee’s personal endeavor, which otherwise the employee had an

obligation to obtain for an employer, competing with the employer for customers or

employees, and employee behavior leading to the mass resignation of the employer’s

workforce.” 791 F. Supp. 2d 33, 49 (D.D.C. 2011) (emphasis in original). This Court agrees

that such conduct constitutes competition sufficient to cause a breach of fiduciary duty. See

also ABC Trans Nat’l Transp., Inc. v. Aeronautics Forwarders, Inc., 62 Ill. App. 3d 671, 20 Ill. Dec.

160, 379 N.E.2d 1228, 1237 (1978) (holding that it was a breach of the duty of loyalty for

employee to continue working for original employer after establishing a personal venture that

competed with employer).

As such, the Court finds that the allegations in the Amended Complaint are sufficient

to state a claim for breach of fiduciary duty against both Perlwitz and Schachtner.

D. Civil Conspiracy Claim Against All Defendants (Count V).

In Count V, Plaintiffs allege Defendants are parties to an “agreement to unfairly

compete with Lupin” and that Defendants “conspired and agreed to use confidential

information and trade secrets wrongfully obtained by Zeng from Lupin and to solicit Lupin’s

employees in order to give Transpire a competitive edge over Lupin.” Am. Compl. ¶¶ 142–

43.

Under Florida law, the elements of civil conspiracy include: “(1) an agreement

between two or more parties (2) to do an unlawful act by unlawful means; (3) the doing of

some overt act to further the conspiracy; and (4) damage to the plaintiff as a result of the acts

done under the conspiracy.” W.P. Prods., Inc. v. Tramontina USA, Inc., No. 18-63162-CIV, 2019

WL 10092981, at *8 (S.D. Fla. July 30, 2019) (Cohn, J.) (citing GolTV, 277 F. Supp. 3d at

1312; Raimi v. Furlong, 702 So. 2d 1273, 1284 (Fla. 3d DCA 1997)). Moreover, civil

conspiracy is not a stand-alone-claim but rather “the plaintiff must allege an underlying illegal

act or tort on which the conspiracy is based.” Id. (citing Raimi, 702 So. 2d at 1284).

Additionally, “the Eleventh Circuit requires a heightened pleading standard in conspiracy

cases because a defendant must be informed of the nature of the conspiracy alleged.” Prestige

Rests. & Entm't, Inc. v. Bayside Seafood Rest., Inc., No. 09-23128-CIV, 2010 WL 680905, at *8

(S.D. Fla. Feb. 23, 2010), aff'd, 417 F. App’x 892 (11th Cir. 2011) (citation and quotations

omitted). Put differently, “[t]he basis for the conspiracy must be an independent wrong or tort

which would constitute a cause of action if the wrong were done by one person.” Kee v. Nat’l

Reserve Life Ins. Co., 918 F.2d 1538, 1541 (11th Cir. 1990) (internal quotation marks and

citation omitted); see also Chepstow Ltd. v. Hunt, 381 F.3d 1077, 1089 (11th Cir. 2004) (“The

cause of action for civil conspiracy lies not in the conspiracy itself, but in the underlying tort

committed against the plaintiff and the resulting damage.”). Relevant here, “[a] business can

be liable for civil conspiracy when it induces another business’s employees to breach the duty

they owe to their employer.” Werner Enters., Inc. v. Mendez, 362 So. 3d 278, 282 (Fla. 5th DCA

2023).

Defendants argue the conspiracy claim must be dismissed on grounds Plaintiffs fail to

state a claim for any underlying wrong; the civil conspiracy claim is barred by the intra-

corporate conspiracy doctrine; and the claim is preempted by the FUTSA because the claim

relies on the same misappropriation and solicitation claims. Mot. at 16. Plaintiffs respond that

Defendants conspired to breach Zeng’s obligations to Lupin under the employment

agreement, and, thus, Plaintiffs have alleged an underlying tort sufficient to support their

claims for conspiracy; the intra-corporate conspiracy doctrine does not apply in this case

because Transpire was founded in April 2022, months after Plaintiffs allege that Zeng

misappropriated Lupin’s trade secrets; and the conspiracy claim is not preempted by the

FUTSA because the wrong underlying each claim is distinct, that is, Plaintiffs’ conspiracy

claim relies on other wrongful acts separate and apart from the theft of information, including

Zeng’s solicitation of employees and breaching of his fiduciary duty. Resp. at 19–21.

Review of the allegations in Count V reveals the Amended Complaint does not allege

that Defendants entered into an agreement to engage in the allegedly unlawful acts. “An

agreement between two or more parties occurs when there is an express or implied agreement

of two or more persons to engage in a criminal or unlawful act.” Gilison v. Flagler Bank, 303

So. 3d 999, 1004 (Fla. 4th DCA 2020) (citation omitted). The pleading alleges that, in

furtherance of the alleged conspiracy to unfairly compete with Lupin, Zeng “removed and

disclosed confidential information and trade secrets from Lupin regarding Lupin’s ongoing

products” and “misrepresented the true reasons for his departure from Lupin, in order to give

Zeng an opportunity to continue to misappropriate Lupin’s confidential information and

trade secrets.” Am. Compl. at ¶ 145. However, apart from generally alleging that Defendants

founded Transpire in order to unfairly compete with Lupin and allegedly solicited Lupin

employees to resign their employment with Lupin in order to work for Transpire, the pleading

fails to specifically identify what each of the co-conspirators, i.e., Perlwitz, Schactner, and

Transpire, actually did to further or assist in the alleged conspiracy. “Each coconspirator need

not act to further a conspiracy; each ‘need only know of the scheme and assist in it in some

way to be held responsible for all of the acts of his coconspirators.’” Charles v. Fla. Foreclosure

Placement Ctr., LLC, 988 So. 2d 1157, 1160 (Fla. 3d DCA 2008) (quoting Donofrio v. Matassini,

503 So. 2d 1278, 1281 (Fla. 2d DCA 1987)).

Although the Amended Complaint alleges, both in the general allegations and in

Count V, that Defendants engaged in, or aided and abetted, some wrongful conduct or should

have known that they were engaged in the wrongful conduct, allegations that the co-

conspirators were “engaged in the same ‘scheme,’” alone, are insufficient to state a claim for

civil conspiracy. Alhassid v. Bank of Am., N.A., 60 F. Supp. 3d 1302, 1319 (S.D. Fla. 2014)

(Bloom, J.); see also Shores Global, LLC v. Njord’s Ark A/S, No. 21-cv-20623, 2023 WL 2838078,

at *28 (S.D. Fla. Feb. 3, 2023), report and recommendation adopted, 2023 WL 4972787 (S.D.

Fla. Mar. 28, 2023).

In short, the civil conspiracy claim is impermissibly vague and inadequate and is due

to be dismissed without prejudice for failure to state a claim.

E. Aiding and Abetting Breach of Contract Against Perlwitz And Schachtner

(Count VII).

In Count VII, Lupin alleges Perlwitz and Schachtner aided or abetted the breach of

Zeng’s employment agreement with Lupin by accepting employment with Transpire and

encouraging and substantially assisting Zeng’s hire of seven former Lupin employees to join

Transpire. Am. Compl. ¶¶ 156–59. Defendants argue the Amended Complaint contains no

factual allegations that establish Perlwitz and Schachtner aided or abetted the breach of any

contract. Specifically, Defendants contend Plaintiffs fail to allege that the former Lupin

employees were solicited or hired within the period during which Zeng was allegedly

restricted from solicitation under the employment agreement with Lupin. Additionally,

Defendants assert there is no authority for a claim of “aiding and abetting the breach of

contract” under Florida law. Mot. at 18 n.5.

Plaintiffs respond that Florida courts recognize claims for aiding and abetting a breach

of a restrictive covenant by a third party. See, e.g., Bauer v. DILIB, Inc., 16 So. 3d 318, 320 (Fla.

4th DCA 2009) (“[A] plaintiff still may enjoin a third party who aids and abets the violation

of a restrictive covenant.”).

A claim of aiding and abetting under Florida law requires “(1) an underlying violation

on the part of the primary wrongdoer; (2) knowledge of the underlying violation by [the]

alleged aider and abettor; and (3) the rendering of substantial assistance in committing the

wrongdoing by the alleged aider and abettor.” Meridian Tr. Co. v. Batista, No. 17-23051, 2018

WL 4760277, at *8 (S.D. Fla. Sept. 30, 2018) (Williams, J.) (citation omitted). “In order for

a claim of aiding and abetting to survive a motion to dismiss, the plaintiff must allege that the

defendant had actual knowledge of the underlying wrongdoing.” Id. (citing Lamm v. State St.

Bank & Tr. Co., 889 F. Supp. 2d 1321, 1332 (S.D. Fla. 2012)); Freeman v. JPMorgan Chase Bank

N.A., 675 F. App’x 926, 934 (11th Cir. 2017).

In Count VII of the Amended Complaint, Plaintiffs allege Perlwitz and Schachtner

substantially assisted Zeng’s breach of his employment contract with Lupin by accepting

employment with Transpire and by encouraging and assisting Zeng’s hire of seven Lupin

employees. Am. Compl. ¶¶ 158–59. For the knowledge requirement, Plaintiffs allege Perlwitz

and Schachtner “knew that at the time Zeng solicited them for employment or to leave Lupin

and when they accepted employment with Transpire, that Zeng was prohibited by contract

from soliciting any Lupin Employee.” Am. Compl. ¶ 157.

This Court finds Plaintiffs’ allegations regarding Perlwitz’s and Schachtner’s actual

knowledge of Zeng’s contractual obligations to Lupin are too vague to state a claim for aiding

and abetting breach of contract. Although Plaintiffs generally allege that Perlwitz and

Schachtner knew Zeng was prohibited from soliciting Lupin employees, the allegations in the

Amended Complaint reveal that their knowledge was not based on knowledge of the terms

of Zeng’s contract. Rather, they are alleged to have had general knowledge of employment

contracts1, at most establishing that Perlwitz and Schachtner should have known of the

underlying breaches by Zeng. This is not sufficient to support a claim against them. See

generally Lamm, 889 F. Supp. at 1332–1333; Isaiah v. JPMorgan Chase Bank, N.A., No. 16-CIV-

21771, 2017 WL 5514370, *3–4 (S.D. Fla. Nov. 15, 2017). Cf. Shores Global, LLC, 2023 WL

2838078, at *24 n.6 (noting plaintiff had plausibly alleged the elements of aiding and abetting

1 See Am. Compl. at ¶ 78 (“Upon information and belief, Perlwitz and Schachtner were aware

of Zeng’s non-solicitation obligations as they owed similar non-solicitation obligations to

Lupin by virtue of common law.”).

where plaintiff alleged defendant corporation founded by former employee was “aware of the

terms of the Agreements between [p]laintiff and [the former employee]” and the defendant

corporation “aided and abetted [the former employee’s] breaches of those Agreements by

facilitating his illegal competition; misappropriation, disclosure, and use of trade secrets; and

solicitation of employees, customers, and vendors by providing material assistance and

resources to engage in such wrongful conduct”).

Thus, the aiding and abetting claim against Perlwitz and Schachtner is impermissibly

vague, and Count VII is due to be dismissed without prejudice for failure to state a claim.

F. Tortious Interference With Contractual Relationship Against Transpire, Perlwitz,

And Schachtner (Count VIII).

In Count VIII, Plaintiffs allege (1) Defendants, Perlwitz, Schachtner, and Transpire,

had knowledge of Zeng’s employment agreement with Plaintiff LAHSA; (2) Transpire

intentionally interfered with that agreement by hiring Perlwitz and Schachtner, and the

former Lupin employees; and (3) Perlwitz and Schachtner intentionally interfered with the

same agreement by accepting employment with Transpire. Am. Compl. ¶¶ 162–65.

The elements of a cause of action for tortious interference with a contractual

relationship are: (1) the existence of a contract, (2) the defendant’s knowledge of the contract,

(3) the defendant’s intentional procurement of the contract’s breach, (4) absence of any

justification or privilege, [and] (5) damages resulting from the breach.” Johnson Enters. of

Jacksonville, Inc. v. FPL Grp., Inc., 162 F.3d 1290, 1321 (11th Cir. 1998) (citing Fla. Tel. Corp. v.

Essig, 468 So. 2d 543, 544 (Fla. 5th DCA 1985)).

Defendants argue that Plaintiffs fail to satisfy the third and fourth elements of this

claim because the Amended Complaint does not include any factual allegation establishing

that Transpire, Perlwitz, or Schachtner procured any breach of contract by Zeng.

Like the allegations in the aiding and abetting claim, the Amended Complaint fails to

plausibly allege Defendants’ actual knowledge of Plaintiff LAHSA’s agreement with Zeng.

Moreover, the Court finds that Plaintiffs’ tortious interference claim is impermissibly pled as

a shotgun pleading. Specifically, Plaintiffs have incorporated claims based on the alleged

interference by Defendant Transpire with Zeng’s employment agreement, in addition to

claims based on both Defendants Perlwitz’s and Schachtner’s alleged interference with Zeng’s

agreement. “This type of [shotgun] pleading completely disregards Rule 10(b)’s requirement

that discrete claims should be plead in separate counts[.]” Magluta v. Samples, 256 F.3d 1282,

1284 (11th Cir. 2001) (internal citation omitted); see Shores Global, LLC, 2023 WL 2838078, at

*25 (dismissing tortious interference claim with business relationships as shotgun pleading).

Therefore, Count VIII, as pled, is due to be dismissed.

G. Lupin’s Request For Leave To Amend.

Plaintiffs have requested an opportunity to amend their pleading should the Court find

deficiencies therein. Resp. at 21. As it is well established that courts “should freely give leave

[to amend] when justice so requires,” Fed. R. Civ. P. 15(a)(2), this Court finds that Plaintiffs

are entitled to an opportunity to correct the pleading deficiencies cited above by the filing of

a Second Amended Complaint. Bryant v. Dupree, 252 F.3d 1161, 1163 (11th Cir. 2001)

(cleaned up) (“Generally, where a more carefully drafted complaint might state a claim, a

plaintiff must be given at least one chance to amend the complaint before the district court

dismisses the action with prejudice.”). However, as set forth at the September 16, 2024

hearing and in this Court’s written Order of the same date [ECF No. 117], the opportunity to

amend does not warrant a further delay of discovery, and, as such, discovery shall proceed

notwithstanding the pending amended pleading.

IV. CONCLUSION

Accordingly, based on the foregoing, it is hereby

ORDERED AND ADJUDGED that Defendants’ Motion to Dismiss [ECF No. 39]

is GRANTED IN PART AND DENIED IN PART, and Counts V, VU, and VIII of the

First Amended Complaint are DISMISSED WITHOUT PREJUDICE. In the event

Plaintiffs intend to file a Second Amended Complaint curing the foregoing deficiencies, they

shall do so within fourteen (14) days of the date of this Order.

DONE AND ORDERED in Chambers at Fort Lauderdale, Florida, this 15th day of

October, 2024.

UNITED STATES DISTRICT JUDGE

cc: Counsel of record

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