Brimer v. MDElite Laser & Aesthetic, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF NORTH CAROLINA

SOUTHERN DIVISION

Civil Action No. 7:24-cv-00316-M-RJ

CRYSTAL BRIMER, OD, FAAO,

Plaintiff/Counter Defendant,

V. ORDER

MDELITE LASER & AESTHETIC, LLC,

Defendant/Counter Claimant.

This matter comes before the court on the Plaintiff/Counter Defendant Crystal Brimer’s

(“Brimer”) motion for partial dismissal of Defendant/Counter Claimant MDElite Laser &

Aesthetic, LLC’s (‘“MDElite”) Counterclaims [DE 14]. Brimer seeks dismissal of four of

MDElite’s seven counterclaims against her, including promissory estoppel, civil theft, replevin,

and misappropriation of trade secrets, arguing the claims are alleged under the incorrect state law

and/or fail to state claims for relief. MDElite counters that the choice-of-law provision in the

parties’ contract governs its contract-related tort claims and that it states plausible counterclaims

for relief against Brimer. For the reasons that follow, Brimer’s motion is denied.

I. Background

A. Counter Claimant’s Factual Allegations

The following are relevant factual allegations (as opposed to statements of bare legal

conclusions, unwarranted deductions of fact, or unreasonable inferences) made by MDElite in the

operative Counterclaims (DE 11), which the court must accept as true at this stage of the

proceedings pursuant to Kashdan v. George Mason Univ., 70 F.4th 694, 700 (4th Cir. 2023).

MDElite is a medical technology company seeking to provide affordable access to

advanced, light, laser, and radiofrequency technology to the aesthetic and vision industries. It

regularly collaborates with practitioners in dermatology, plastic surgery, ophthalmology, and

optometry to deploy such technologies. Brimer is a Doctor of Optometry and fellow of the

American Academy of Optometry who owns a specialty dry eye clinic (“Dry Eye Institute”).

On or about March 1, 2023, MDElite and Brimer entered into a Consulting Agreement (the

“Agreement”). Under the Agreement, MDElite retained Brimer as an independent contractor, who

was required to “perform the following Consulting Services for [MDElite] pursuant to the terms

and conditions of the Consulting Agreement”:

[a] Direct the development of clinical strategies and plans to further integrate

MDElite into the Vision market;

[b] Orchestrate and manage clinical aspects of regulatory strategies and interactions

with Health Authorities including the FDA;

[c] Oversee the analysis and interpretation of clinical trial data and reporting

clinical trial results;

[d] Lead interactions with academic thought leaders, investigators, and cooperative

groups;

[e] Provide clinical support and work with other members of the management team

to develop and communicate the overall corporate strategy;

[f] Represent [MDElite] and its programs to external audiences, including the

investment, medical and regulatory communities, as well as _ industry

collaborators/partners . . .;

[j] Provide lectures and webinars involving [MDElite] products to optometrists

throughout the year, as outlined in Exhibit B;

[k] Be reasonably available to address quick pre-sale, one off reach outs from

doc[tor]s . . .;

[m] 1-2 strategy calls monthly (marketing, legal, product development, doctor

messaging); [and]

[n] Pre-record social media and testimonial videos/allow use of [Crystal Brimer]

name and [Dry Eye Institute] ....

In addition to these services listed in the Counterclaims, the Agreement also required that Brimer

“lead[] and supervis[e] clinical research” and “have direct line responsibility for Clinical

Operations” for which she would “[p]rovide technical advice, development expertise[,] and advice

regarding the evaluation of [MDElite’s] products, prototypes, designs, and procedures.” DE 11-1

at 4.!

Brimer agreed that “[a]ll services will be performed to the best of her ability and in a timely,

competent, and professional manner.” The Consulting Services provision further permitted the

“{u]se of Crystal Brimer, OD and Dry Eye Institute (DEI) name[s] in MDElite marketing, with

prior review and written authorization by [Brimer] on each marketing piece.” In exchange,

MDElite agreed to compensate Brimer as set forth in Exhibit B to the Agreement, including

payments for attending certain events, for every device Brimer sold, and for a percentage of

MDElite’s annual gross revenue.

Under the Agreement, Brimer was to submit invoices to MDElite within twenty-one (21)

days of the quarter in which she incurred expenses and to include the Consulting Services she

performed that quarter. To assist Brimer in performing her Consulting Services, MDElite loaned

her two (2) iProX devices, one (1) SculptPro device, and one (1) iLightPro device (the ““Devices”’).

Under Paragraph Four of the Agreement, any Work Product arising out of or resulting from the

Consulting Services was to remain MDElite’s property and did not belong to Brimer:

1 The court may “consider a ‘written instrument’ attached as an exhibit to a pleading, see Fed. R.

Civ. P. 10(c), ‘as well as [documents] attached to the motion to dismiss, so long as they are integral

to the complaint and authentic.’” Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th Cir. 2013)

(quoting Philips v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009)). No party disputes

that the Agreement, a copy of which is attached to the Counterclaims, is integral to the pleading

and authentic.

Ownership of Work Product. “Work Product” shall mean any products or

publications solely or jointly conceived, developed, or reduced to practice by

[Brimer] which arise out of or result from the Consulting Services rendered under

this Agreement. Any Work Product jointly conceived, developed, or practiced by

[MDElite] and [Brimer], specific to this agreement, shall remain the property of the

[MDElite]. Contractor agrees that Work Product is and shall be work made for hire

to the full extent permitted by law, with all intellectual property rights in the Work

Product owned by [MDElite]. To the extent that Work Product does not qualify as

work made for hire under applicable law, Contractor irrevocably transfers, assigns,

and conveys to [MDElite] all rights, title, and interest in and to the Work Product.

In addition, Paragraph Five prevents the parties from disclosing any Confidential Information,

which includes information and/or trade secrets relating to the party’s management, business,

operations, technology, products, or business plans for the term of the Agreement and for a period

of three (3) years thereafter. Paragraph Five provides:

Confidentiality. The parties agree that during the Term of this Agreement and any

subsequent extensions, and for a period of three (3) years thereafter, the parties shall

not disclose without the prior written consent of the non-disclosing party any

Confidential Information. “Confidential Information” means information and/or

trade secrets relating to the party’s management, business, operations, technology,

products, or business plans, which either party knows or has reason to believe is

regarded as confidential by the other party and includes without limitation Work

Product. Confidential Information shall not include information that (i) has become

part of the public domain other than through breach of this Agreement, (ii) either

party knew prior to its disclosure to the other party, or (iii) was learned from a third-

party source having no duty of confidentiality to the party. Nothing in this section

or Agreement shall be read to prevent [Brimer] from lecturing upon, disseminating,

or publishing scientific papers arising from the Consulting Services performed for

[MDElite]. [Brimer] shall give appropriate credit to [MDElite] in any publication

directly related to jointly conceived Work Product.

Paragraph 14 of the Agreement further provides, “This Agreement shall be governed by the laws

of the State of Minnesota without regard to conflict of laws rules.”

MDElite alleges that, between March 2023 and November 2023, Brimer failed to perform

all the Consulting Services in a timely, competent, and professional manner, as agreed. These

failures include, but are not limited to:

a. Brimer was not reasonably available to address “one off reach outs” from doctors.

b. Brimer did not make herself available for strategy and sales calls and other

promotional activities. MDElite’s sales team arranged for multiple sales calls to

take place between Brimer and MDElite’s clients and business prospects, but

Brimer was difficult to reach and often unable to attend the sales calls, causing

MDElite to lose sales. When Brimer did attend sales calls with MDElite’s clients

and business prospects, Brimer frequently suggested to MDElite’s clients and

business prospects that they needed additional devices that MDElite could not

supply. These suggestions caused confusion and concern for MDElite’s clients and

business prospects, causing MDElite to lose sales.

c. Brimer was nonresponsive or slow to respond to requests from MDElite’s

marketing partner.

d. The quality of Brimer’s presentations to the medical community relating to the

Dry Eye Institute and MDElite’s products were subpar, underwhelming, and

resulted in MDElite receiving negative feedback from those who attended.

e. During the MDElite Sale Representative Training Webinar, Brimer was woefully

unprepared and frequently left the Webinar screen during the Webinar.

f. During Brimer’s Dry Eye Institute virtual training session, Brimer was

unprepared, used outdated material, and was late or absent for significant periods

of time. After the training session, MDElite’s clients provided negative feedback.

Brimer also allegedly failed to perform her clinical guidance obligations. For example,

Brimer provided no clinical support to MDElite after she began using MDElite’s Devices and

never reported the Devices’ performance to MDElite. Rather than learning about the Devices’

performance through Brimer, MDElite had to resort to learning about its Devices’ performance

through word of mouth or social media. Additionally, MDElite believes that Brimer shared

Confidential Information relating to MDElite’s business strategies with MDElite’s business

competitors.

On December 28, 2023, MDElite expressed to Brimer via letter its belief that she had

breached the Agreement. Brimer did not respond; thus, on January 8, 2024, counsel for MDElite

sent a follow-up letter regarding Brimer’s alleged breaches, suggesting the parties (1) enter a new

agreement or (2) discontinue working together. By letter dated January 22, 2024, Brimer

terminated the agreement by rejecting MDElite’s offer to continue working together and demanded

that MDElite cease and desist using Brimer’s name, image, and likeness in MDElite’s marketing

materials. MDElite complied and removed all references in its marketing materials.

The four Devices loaned to Brimer are MDElite’s proprietary property. One of the Devices,

the SculptPro, has been cleared by the Food and Drug Administration (“FDA”) but has not been

cleared for distribution by MDElite and, therefore, can be used only as part of MDElite’s clinical

assessment protocol.

After the Agreement was terminated, on February 2, 2024, MDElite sent Brimer a formal

notice that MDElite would collect MDElite’s four Devices, and requested that it be allowed to

retrieve the Devices during the week of February 12, 2024. Brimer responded, disclaiming any

obligation to return the Devices.

On February 12, 2024, MDElite sent a second letter to Brimer demanding the immediate

return of the four Devices. The four Devices carry a combined value of $200,000.00. Despite the

termination of the parties’ relationship and MDElite’s multiple demands for possession, Brimer

continued to refuse to return the Devices. MDElite believes that Brimer continues to use and profit

from MDElite’s four Devices and is creating Work Product with the Devices.

B. Procedural History

On February 26, 2024, Brimer filed this action in New Hanover County Superior Court,

alleging breach of contract and requesting a declaratory judgment or, in the alternative, monetary

damages and attorney’s fees. DE 1-1. MDElite removed the action to this court on March 28,

2024, invoking the court’s diversity jurisdiction. DE 1. On April 4, 2024, MDElite filed the

operative Answer and Counterclaims, in which it alleges claims for breach of contract, promissory

estoppel, unjust enrichment, and conversion, and for civil theft, replevin, and misappropriation of

trade secrets under Minnesota statutory law. DE 11.

Brimer filed the present motion seeking dismissal of four counterclaims—promissory

estoppel, civil theft, replevin, and misappropriation of trade secrets—arguing that, under North

Carolina’s choice-of-law rules, the claims are pled under the incorrect law (i.e., they should be

pled under North Carolina law), and/or they fail to state plausible claims for relief.

MDElite agrees that the court must apply North Carolina’s choice-of-law rules and

counters that its “contract-related” counterclaims are properly pled under Minnesota law in

accordance with the “broad” choice-of-law provision in the Agreement. MDElite argues that

“{b]Jecause Dr. Brimer and MDElite’s relationship is established by the Consulting Agreement and

therefore does not exist outside of the Agreement, any actions or omissions by Dr. Brimer arise

under the Consulting Agreement and are governed by Minnesota law.” DE 25 at 5. Alternatively,

MDElite asserts that discovery is necessary to determine factual issues, such as whether the

counterclaims are related to the Agreement, where the Agreement was formed, and where the

injur(ies) occurred.

Brimer replies that MDElite’s contention—that its counterclaims should survive this

motion because they essentially “do not allege sufficient facts to establish that Minnesota law does

not apply”—fails to acknowledge MDElite’s burden under Rule 8 of the Federal Rules of Civil

Procedure to state plausible claims for relief, including facts sufficient to establish that the claims

are permitted by the applicable choice-of-laws analysis. DE 28 at 1; see also id. at 8-9 (“MDElite

cannot hide behind the vagueness of its pleadings on the choice-of-law issue and simultaneously

survive the /qba/l pleading standard’’). Further, Brimer contends that MDElite primarily relies on

cases that do not apply North Carolina choice-of-law rules and that, if MDElite persists in its

argument that the non-contractual counterclaims “bear a close relationship to the Agreement,” then

the economic loss rule would bar the claims. Finally, Brimer argues that the allegations support a

finding that North Carolina law applies and/or that MDElite fails to state plausible claims for relief.

II. Legal Standards

When considering a Rule 12(b)(6) motion to dismiss, the court must accept as true all of

the well-pleaded factual allegations contained within the pleading and must draw all reasonable

inferences in the claimant’s favor, Hall vy. DIRECTV, LLC, 846 F.3d 757, 765 (4th Cir. 2017), but

any legal conclusions proffered by the claimant need not be accepted as true, Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009) (“[T]he tenet that a court must accept as true all of the allegations

contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements

of a cause of action, supported by mere conclusory statements, do not suffice.”). The /gba/ Court

made clear that “Rule 8 marks a notable and generous departure from the hypertechnical, code-

pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed

with nothing more than conclusions.” Jd. at 678-79.

To survive a Rule 12(b)(6) motion, the claimant’s well-pleaded factual allegations,

accepted as true, must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007). Twombly’s plausibility standard requires that a claimant’s

well-pleaded factual allegations “be enough to raise a right to relief above the speculative level,”

i.e., allege “enough fact to raise a reasonable expectation that discovery will reveal evidence of

illegal [conduct].” Jd. at 555-56. A speculative claim resting upon conclusory allegations without

sufficient factual enhancement cannot survive a Rule 12(b)(6) challenge. Jqgbal, 556 U.S. at 678—

79 (“where the well-pleaded facts do not permit the court to infer more than the mere possibility

of misconduct, the complaint has alleged--but it has not ‘show[n]’--‘that the pleader is entitled to

relief.’” (quoting Fed. R. Civ. P. 8(a)(2)); Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009)

(‘naked assertions’ of wrongdoing necessitate some ‘factual enhancement’ within the complaint

to cross ‘the line between possibility and plausibility of entitlement to relief.’”” (quoting Twombly,

550 U.S. at 557)). Courts must draw all reasonable inferences in favor of the claimant. Alberti v.

Rector & Visitors of the Univ. of Virginia, 65 F.4th 151, 154 n.3 (4th Cir. 2023) (citing Kensington

Volunteer Fire Dep’t v. Montgomery Cnty., 684 F.3d 462, 467 (4th Cir. 2012)).

Analysis

As previously stated, subject-matter jurisdiction for this case is based on diversity of

citizenship of the parties. See 28 U.S.C. § 1332. Federal courts sitting in diversity must apply the

substantive law of the forum state, including its choice-of-law rules. Small vy. WellDyne, Inc., 927

F.3d 169, 173 n.3 (4th Cir. 2019); see also Kenney v. Indep. Order of Foresters, 744 F.3d 901, 905

(4th Cir. 2014). Typically, the proper choice-of-law analysis in North Carolina varies depending

on how a claim is characterized: “[c]hoice of law in contracts cases is governed by the rule of /ex

loci contractus [or, where the contract was formed], see Tanglewood Land Co. v. Byrd, 299 N.C.

260, 261 S.E.2d 655, 656 (1980), and choice of law in torts cases is governed by the rule of /ex

loci delicti [or, where the injury occurred] see Boudreau v. Baughman, 322 N.C. 331, 368 S.E.2d

849, 854 (1988).” Caper Corp. v. Wells Fargo Bank, N.A., 578 F. App’x 276, 280 (4th Cir. 2014).

Relevant here, when the contracting parties have agreed “that a given jurisdiction’s substantive

law shall govern the interpretation of the contract, such a contractual provision will be given

effect.” Byrd, 299 N.C. at 262, 261 S.E.2d at 656.

A. Choice of Law

In this case, no party disputes that, under the governing choice-of-law provision, the claims

for breach of contract are governed by Minnesota law. The parties also agree that North Carolina’s

choice-of-law rules apply. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)

(“The conflict of laws rules to be applied by the federal court in [North Carolina] must conform to

those prevailing in [North Carolina’s] state courts.”); see also Synovus Bank v. Coleman, 887 F.

Supp. 2d 659, 669 (W.D.N.C. 2012) (“A choice-of-law provision in a contract generally requires

use of a certain state’s substantive law, not the state’s conflict of laws principles.”) (citing Johnston

County v. R.N. Rouse & Co., 331 N.C. 88, 92, 414 S.E.2d 30, 33 (1992)).

The parties differ, however, as to which law applies to four of MDElite’s seven

counterclaims: Brimer contends that North Carolina law applies to the four challenged claims, but

MDElite asserts that the claims arise from the Agreement and, thus, are governed by the

Agreement’s choice-of-law provision, which requires application of Minnesota law. Before

analyzing which law applies, the court must first characterize the nature of the challenged claims.

See Synovus Bank, 887 F. Supp. 2d at 668 (citing Simms Inv. Co. v. E.F. Hutton & Co., 688 F.

Supp. 193, 197 (M.D.N.C. 1988) for the proposition that “[i]n a conflict of laws situation, a court

must determine at the outset whether the problem presented to it for resolution relates to torts,

contracts, property, or some other field, or to a matter of substance or procedure, in order to refer

to the appropriate law.”).

1. Nature of the Claims

lite relies, in substantial part, on the decision in Hitachi Credit America Corporation

y. Signet Bank, 166 F.3d 614 (4th Cir. 1999), to argue that the choice-of-law provision in the

subject Agreement should extend to the four challenged counterclaims. In Hitachi, like here, the

pleading alleged both contract and tort claims; however, the tort in Hitachi alleged fraudulent

inducement to enter the contract. /d. at 620, 623. Also, the choice-of-law provision in the subject

contract “explicitly callfed] for the application of Virginia law in the interpretation of ‘[the]

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Agreement and the rights and obligations of the parties [t]hereunder . . . including all matters of

construction, validity and performance.” /d. at 624. The Fourth Circuit “recogniz[ed] the close

relationship of the tort claims to the contract” (id. at 628) and “concluded that Virginia law applied

to the fraud claims, reasoning that the choice-of-law language in the contract ‘indicate[d] that the

parties intended to cover more than merely contract claims.’” Pasternak & Fidis, P.C. v. Recall

Total Info. Mgmt., Inc., 95 F. Supp. 3d 886, 895 (D. Md. 2015) (quoting Hitachi, 166 F.3d at 628).

MDElite contends that the challenged counterclaims bear a close relationship to the

Agreement. Brimer counters that Hitachi and MDElite’s other cited cases do not apply North

Carolina choice-of-law rules and, thus, are not applicable. While true that Hitachi and some of its

progeny do not apply North Carolina rules, the court finds these courts’ analyses instructive,

particularly here where the North Carolina Supreme Court has not spoken on the issue.

In evaluating the nature of the challenged tort claims, Hitachi and its progeny focus on

whether the claims are “closely related” to the contract at issue. See, e.g., Pasternak & Fidis, P.C.,

95 F. Supp. 3d at 895 (noting that the fraudulent inducement claim found to be covered by the

choice-of-law provision in Hitachi “called into question the validity of the entire contract’’); Volvo

Grp. N. Am., LLC v. Forja de Monterrey S.A. de C.V., No. 1:16-CV-114, 2019 WL 4919632, at

*5 (M.D.N.C. Oct. 4, 2019) (same). Here, MDElite argues, and the court agrees, that discovery is

necessary to determine whether the claims are “closely related.”

Before examining the tort claims, the court notes first that one of the challenged

counterclaims is, by nature, “contract related”: promissory estoppel. JTH Tax, Inc. v. Aime, 744

F. App’x 787, 792 (4th Cir. 2018) (characterizing the doctrine of promissory estoppel as a

“contract-related theory.”’”). Such claim is typically alleged in the alternative to a breach of contract

claim, in the event the contract may be deemed void or otherwise unenforceable. Here, MDElite

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alleges its promissory estoppel claim in the alternative to its breach of contract claim and seeks

recovery for two promises allegedly made by Brimer: (1) to perform Consulting Services for

MDElite in a timely, competent, and professional manner (“services promise’’); and (2) to return

the four Devices loaned to her by MDElite at the end of the parties’ relationship (“devices

promise”). Countercl. J 51.

For purposes of this analysis, the court must determine not whether the challenged claims

are merely “contract related,” but whether they are related to the contract at issue. See Volvo Grp.

N. Am., 2019 WL 4919632, at *5. In this case, the court finds that the ‘services promise” portion

of MDElite’s promissory estoppel claim clearly relates to the subject Agreement, which delineates

the services Brimer agreed to perform in exchange for compensation as consideration. See DE 11-

1. The “devices promise” portion of the claim, however, is not as clear; nothing in the Agreement

specifically references any loan or other transaction between Brimer and MDElite involving

MDElite’s “devices.” See id.

However, the Consulting Services section of the Agreement required that Brimer “lead[]

and supervis[e] clinical research” and “have direct line responsibility for Clinical Operations” for

which she would “[p]rovide technical advice, development expertise[,] and advice regarding the

evaluation of [MDElite’s] products, prototypes, designs, and procedures.” DE 11-1 at 4 (emphasis

added). In addition, Brimer was directed to “[p]rovide lectures and webinars involving

[MDElite’s] products to optometrists throughout the year.” Jd. (emphasis added). These required

services imply not only that Brimer would need to obtain, employ, and share knowledge of

MDElite’s “products, prototypes, designs, and procedures,” but also that the loaned “devices”

either included such products or prototypes, or, at least, assisted Brimer with research, clinical

operations, and/or education. The court finds that MDElite’s allegations raise factual questions

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requiring further development about whether its promissory estoppel claim involving the devices

promise is closely related to the Agreement.

The same is true for the tort counterclaims of civil theft and replevin, which also seek

recovery for MDElite’s alleged injuries from Brimer’s failure or refusal to return the loaned

devices. Questions exist as to whether the devices constitute the same “products” or “prototypes”

described in the Agreement, whether MDElite loaned Brimer the devices to assist her with

performing with the Consulting Services, and whether Brimer, in fact, used the loaned devices to

perform such services. These questions require further factual development before the court can

determine whether the counterclaims are closely related to the Agreement.

Finally, like the civil theft and replevin claims, misappropriation of trade secrets is a tort

claim and, in this case, involves Brimer’s alleged continued use of MDElite’s devices after

termination of the Agreement. The claim seeks recovery for injuries stemming from “work

product” generated by Brimer through such use, which purportedly belongs to MDElite, and from

Brimer’s failure to return such work product to MDElite and/or her improper dissemination of it

to competitors. Countercl. f 79-86. MDElite alleges that ‘““Brimer was permitted to use the

SculptPro as part of MDElite’s clinical assessment protocol and [she] reported results to MDElite

as part of MDElite’s clinical testing” and that “[a]ll data and information related to patient

experience with the Devices, including the SculptPro, is Work Product which shall remain the

property of MDElite pursuant to the Agreement.” Jd. 80-81. In addition to the Consulting

Services described above, the Agreement provides that Brimer agreed to “[o]versee the analysis

and interpretation of clinical trial data and the reporting [of] clinical trial results.” DE 11-1 at 3.

Taking the allegations as true, the court may reasonably infer that Brimer used the SculptPro, leant

to her by MDElite, to perform the clinical trial service, as well as possibly the evaluation and

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education services involving this and other of MDElite’s products. However, these are questions

requiring further factual development to determine whether the misappropriation claim is “closely

related” to the Agreement. See Movement Mortg., LLC v. McDonald, No. 317CV00716RJCDSC,

2018 WL 6733953, at *3 (W.D.N.C. Nov. 6, 2018), report and recommendation adopted, No.

317CV00716RJCDSC, 2019 WL 452773 (W.D.N.C. Feb. 5, 2019) (“A choice of law inquiry may

be very fact intensive and more appropriately undertaken after the record is sufficiently

developed.”’) (citing Terry v. Swift Transp., No. 1:16cv256, 2017 WL 1013074, at *7 (M.D.N.C.

March 14, 2017)).

2. Scope of Choice-of-Law Provision

In determining which law to apply in a conflicts of law scenario, courts examine not only

the nature of the claims, but also the language of the choice-of-law provision to determine whether

it is broad enough to encompass non-contractual claims. Here, the choice-of-law provision states,

“This Agreement shall be governed by the laws of the State of Minnesota without regard to conflict

of laws rules.” Agreement, § 14, DE 11-1. This provision is nearly identical to at least two

provisions analyzed by courts in North Carolina. In NC & VA Warranty Co., Inc., the court

distinguished a very similar choice-of-law provision from that in Hitachi, finding it was “not as

broad” and did not cover the related tort claims. No. 15-80016, 2016 WL 6658968, at *6 (Bankr.

M.D.N.C. Sept. 28, 2016) (examining a provision stating, “[t]his Agreement shall be subject to

and governed by the laws of the State of Ohio”); see also Pasternak & Fidis, P.C.,95 F. Supp. 3d

at 895 (finding no indication in the provision’s language—‘[t]his Agreement shall be governed by

the laws of the State of Georgia, without regard to its principles or conflicts of law’—that the

parties intended it to cover more than contract claims). Conversely, the court in Dash BPO, LLC

v. Lindberg, noting that the issue is “unsettled,” determined that a similar provision was

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“sufficiently broad to encompass contract-related tort claims,” and applied Illinois law to a

fraudulent concealment claim. No. 5:20-CV-625-FL, 2022 WL 107106, at *5 n.6 (E.D.N.C. Jan.

11, 2022), affd, No. 22-1146, 2024 WL 2874282 (4th Cir. June 7, 2024) (examining provision

stating the agreement “shall be governed and construed in accordance with the internal laws of the

State of Illinois”).

Mindful that courts differ as to the scope of nearly identical provisions, this court finds

persuasive the decision in Volvo Group, supra. In that case, the court was asked to determine at

the pleadings stage, inter alia, whether a choice-of-law provision in a purchase agreement, stating

that the agreement “shall be governed by and construed in accordance with the laws of the state of

New York,” was sufficiently broad to cover a claim of fraudulent inducement. 2019 WL 4919632,

at *3-4.? At the outset, the Volvo Group court noted that “North Carolina has not addressed this

precise question” and, thus, it “must predict how it believes the North Carolina Supreme Court

would rule in an appropriate case.” Jd. at *4. After a lengthy analysis of the different approaches

taken by courts both in and outside North Carolina to the issue, the Volvo Group court concluded

that its “discussion reveal[ed] a consistent theme: fidelity to the contracting parties’ intent,” and

found that the best way to give effect to the parties’ intent in that case was to construe the choice-

of-law provision as encompassing the tort claim. /d. at *5 (citing Duke Power Co. v. Blue Ridge

Elec. Membership Corp., 117 S.E.2d 812, 816 (N.C. 1961)). This court agrees with the approach,’

and will attempt to determine the parties’ intent in this case by examining both the choice-of-law

provision and the counterclaims themselves. See Hitachi, 166 F.3d at 628 (“[w]here a choice of

2 Importantly, the Volvo Group court did not simply accept the parties’ stipulation as to the

applicable law, but engaged in a comprehensive evaluation of whether the subject choice-of-law

provision governed the challenged tort claim. See id.

3 The parties have cited no recent opinions in North Carolina, and the court has performed its own

research to find that North Carolina has not yet ruled on the precise question at issue here.

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law clause . . . is sufficiently broad to encompass contract-related tort claims such as fraudulent

inducement,” courts may “honor[ ] the intent of the parties to choose the applicable law.’’).

The choice-of-law provision in this case specifies that “[¢]his Agreement shall be governed

by the laws of the State of Minnesota.” Agreement, § 14 (emphasis added). Thus, to the extent

that the challenged counterclaims arise from and are related to the terms of the Agreement, the

court may reasonably conclude the parties intended that conduct performed under the Agreement

would be governed by the choice-of-law provision. Volvo Grp., 2019 WL 4919632 at *5. As set

forth above, the court finds based on the counterclaims’ allegations and the language of the

Agreement that factual development is needed on issues such as whether the loaned devices

constitute (some of) the “products” or “prototypes” listed in the Agreement; whether the devices

were meant to assist Brimer in performing the Consulting Services listed in the Agreement;

whether Brimer, in fact, used the devices to perform some listed services, such as clinical research,

operations, and education. These “unknowns” lead the court to conclude that discovery is

necessary to determine whether the counterclaims arise and are related to the Agreement’s terms

and, thus, whether the choice-of-law provision governs the challenged counterclaims. Cf Synovus

Bank, 887 F. Supp. 2d at 669 ({T]he scope of the choice-of-law provision contained in the Note

is limited to disputes arising under the terms of that specific document. It does not dictate the

choice of law applicable to all disputes between the parties.’’).

Notably, the Fourth Circuit, in determining whether a party waived a choice-of-law

defense, recently stated:

[D]etermining what law applies to a particular claim is often a fact-intensive

undertaking. See, e.g., Kenney v. Indep. Order of Foresters, 744 F.3d 901, 907-08

(4th Cir. 2014) (stating that “the proper choice-of-law approach” is a “‘fact-intensive

area”). Parties therefore may not be able to make appropriate and persuasive

choice-of-law arguments without the benefit of discovery. District courts in this

Circuit thus regularly defer choice-of-law issues until after the parties have

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completed discovery. See, e.g., Morris v. Bank of Am., 3:18-cv-00157-RJC-DSC,

2019 WL 1421166, at *3 (W.D.N.C. Mar. 29, 2019) (declining to decide choice-

of-law issue until record was developed); Anderson Gustafsson Advokatbyra, KB

v. eScrub Sys., Inc., Civil Action No. 1:10-cv-632, 2011 WL 677053, at *2 (E.D.

Va. Feb. 15, 2011) (“The Court finds that the choice of law for tort and contract

based claims should be determined with the benefit of a more complete record

pending discovery.”); Malinowski v. Lichter Grp., LLC, Civil No. WDQ-14-917,

2015 WL 1129522, at *4 (D. Md. Mar. 11, 2015) (declining to resolve choice-of-

law issue at motion-to-dismiss stage because its “‘fact-intensive” and “context

specific” inquiry made it appropriate to defer “until after the parties have engaged

in discovery” (citation omitted)). We agree that this approach will often be the best

course....

M.D. Russell Constr., Inc. v. Consol. Staffing, Inc., No. 22-1420, 2023 WL 8798086, at *3 (4th

Cir. Dec. 20, 2023); see also Design Res., Inc. v. Leather Indus. of Am., 900 F. Supp. 2d 612, 621

(M.D.N.C. 2012) (“In light of the fact that a substantive dispute remains as to the application of

North Carolina or Washington law, this court finds that resolution of the motion to dismiss the

remaining claims should be deferred to trial.””). The court concludes that discovery is necessary to

determine which law applies to the challenged counterclaims before it can determine whether the

allegations state plausible claims for relief.

B. Failure to State Plausible Claims for Relief

Brimer argues that, notwithstanding which law applies, MDElite fails to allege facts

necessary to support a plausible misappropriation claim, in that it fails to allege the existence of a

trade secret and that Brimer used and disclosed the trade secret. The counterclaim is pled under

the Minnesota Uniform Trade Secrets Act, Minn. Stat. § 325C.01M, et seg. (“MUTSA”), which

requires that MDElite sufficiently allege “(1) trade secrets and (2) that its trade secrets were

misappropriated.” Am. Achievement Corp. v. Jostens, Inc., 622 F. Supp. 3d 749, 764 (D. Minn.

2022).

1. Existence of a Trade Secret

The MUTSA defines a trade secret as information that:

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(i) 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

(ii) is the subject of efforts that are reasonable under the circumstances to maintain

its secrecy.

Minn. Stat. § 325C.01, subd. 5. “Information which is generally known to the public or within an

industry, or is readily ascertainable, is not a trade secret.” Katch, LLC v. Sweetser, 143 F. Supp.

3d 854, 868 (D. Minn. 2015). Notably, a claimant “need not allege the nature of the trade secrets

with specificity at the pleading stage, but must describe them with more than conclusory statements

and with ‘sufficient information to infer more than a mere possibility of misconduct.’” Am.

Achievement Corp., 622 F. Supp. 3d at 764 (citation omitted).

MDElite alleges that “Brimer was permitted to use the SculptPro as part of MDElite’s

clinical assessment protocol and reported results to MDElite as part of MDElite’s clinical testing”;

“faJll data and information related to patient experience with the Devices, including the SculptPro,

is Work Product which shall remain the property of MDElite pursuant to the Agreement”; “[t]he

Agreement also includes a Confidentiality provision, which requires that such Work Product must

remain confidential”; and “[t]he Work Product generated through use of the Devices is a trade

secret because it is not generally known or readily ascertainable, it provides a competitive

advantage, has been developed at MDElite’s expense, and MDElite intended to keep it

confidential.” Countercl. ff 80-83. Taking them as true, the court finds these allegations,

supported by the attached Agreement, sufficient to state a trade secret under the MUT'SA.

Brimer cites three cases, arguing that MDElite’s allegations are insufficient to state a trade

secret. DE 15 at 18; DE 28 at 10. The court finds these cases distinguishable. First, in Hot Stuff

Foods, LLC v. Dornbach, the court determined that the plaintiff's allegations merely concluded

and failed to “‘set forth facts showing that the information [e.g., business plans, pricing, margins,

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and sales strategies] had independent economic value due to its secrecy, was not readily

ascertainable by others[,] and that Hot Stuff took efforts to maintain its secrecy.” 726 F. Supp. 2d

1038, 1044 (D. Minn. 2010). Likewise, in CHS Inc. v. PetroNet, LLC, the court found on summary

judgment that the plaintiff failed “to explain what the allegedly secret processes reflected in these

documents [e.g., “those memorializing the ‘as is’ operations and business rules of the company,

flowcharts depicting business processes, and ‘critical’ process documents providing a ‘road map’

to the software’’] are, instead giving only general categories and a few specific examples of the

documents it claims are trade secrets.” No. CIV. 10-94 RHK/FLN, 2011 WL 1885465, at *8 (D.

Minn. May 18, 2011). Finally, in Medafor, Inc. v. Starch Medical Inc., the court found allegations

describing trade secrets as, “business methodologies, formulas, devices, and compilations of

information, including suppliers and customers...” to be “so broad as to be meaningless.” No. 09-

CV-0441 PJS/FLN, 2009 WL 2163580, at *1 (D. Minn. July 16, 2009).

Conversely, in this case, MDElite alleges that it paid Brimer to generate the trade secrets

in the form of Work Product—i.e., data and information gathered from patient experiences with

the SculptPro—which, under the valid and enforceable Agreement, the parties agreed would

remain confidential and solely the property of MDElite. The court finds these allegations sufficient

to allege the existence of a trade secret under Minnesota law. See Protege Biomedical, LLC v. Z-

Medica, LLC, 394 F. Supp. 3d 924, 939 (D. Minn. 2019) (‘Protégé alleges that it developed various

trade secrets while researching and creating its inventions,” which, if made public, “would

undermine Protégé’s competitive advantage in the industry.”).

2. Misappropriation

“Misappropriation,” is the “acquisition,” “disclosure,” or “use[ ]” of another’s trade secrets

by improper means. Am. Achievement Corp., 622 F. Supp. 3d at 765 (quoting Minn. Stat. §

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325C.01, subdiv. 3). Improper means are “theft, bribery, misrepresentation, breach or inducement

of a breach of a duty to maintain secrecy, or espionage through electronic or other means.” Jd.

(quoting Minn. Stat. § 325C.01, subdiv. 2). “[A]lthough exacting specificity is not required at the

pleading stage, a plaintiff [ ] must allege that the defendant disclosed, acquired, or used some

particular trade secret in an improper manner.” CH Bus Sales, Inc. v. Geiger, No. 18-CV-2444

(SRN/KMM), 2019 WL 1282110, at *9 (D. Minn. Mar. 20, 2019) (citations omitted).

Here, MDElite alleges that Brimer caused harm when, “[u]pon information and belief, Dr.

Brimer shared MDElite’s business strategy and business plans with MDElite’s competitors.”

Countercl. J 86; see also id. § 29 (“upon information and belief, Dr. Brimer shared Confidential

Information relating to MDElite’s business strategies with MDElite’s business competitors.”).

MDElite also alleges that “[d]espite the termination of the parties’ relationship,” Brimer retained

the devices “disclaiming any obligation to return the devices,” and ‘“‘continues to use and profit

from MDElite’s four Devices and is creating Work Product with the Devices. Such Work Product,

and any profit derived therefrom, belongs solely to MDElite.” Jd. ff 38, 42-43.

Brimer contends that MDElite’s allegations are insufficient, because “mere fears” a person

“might have taken (completely undefined) trade secrets” and ‘“‘might use these trade secrets to their

advantage” do not give rise to a plausible claim under Minnesota law. DE 15 at 19 (citing CH Bus

Sales, 2019 WL 1282110, at *10) (emphasis in original). Brimer asserts that MDElite “fails to

specify how or to whom Plaintiff used or disclosed alleged trade secrets.” DE 28 at 11 (citing

Coyne’s & Co. v. Enesco, LLC, 565 F. Supp. 2d 1027, 1045 (D. Minn. 2008) (emphasis in original).

Although a close call, the court finds MDElite’s allegations sufficient to state a plausisle:

MUTSA claim at this pre-discovery stage of the litigation. According to MDElite, Brimer refused

to return the devices after two notices to collect and profited from them by continuing to use them

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to create confidential Work Product; this raises a question as to whether Brimer perceived value

in keeping and using the devices, although allegedly she had no right to do so, as set forth in the

Agreement.

The court finds these allegations, taken as true, state a plausible claim for misappropriation,

and they should proceed to discovery to flesh out whether Brimer acquired and used the

confidential Work Product by improper means. See, e.g., CH Bus Sales, 2019 WL 1282110, at

*10 (citing “recent decisions allowing a misappropriation claim past the motion to dismiss stage”

including Stratasys, Inc. v. Krampitz, No. 17-cv-5524 (DSD/HB), 2018 WL 2247265, at *3-4 (D.

Minn. May 16, 2018) (plaintiff alleged that defendant (a former employee) “sent [large amounts

of] confidential information to his [own] email account and downloaded files to a portable USB,”

while still employed with plaintiff, and then “used [plaintiff's] confidential information and trade

secrets to build his own competing [3D printing] business”) and Deluxe Fin. Servs., LLC v. Shaw,

No. 16-cv-3065 (JRT/HB), 2017 WL 3327570, at *2 (D. Minn. Aug. 3, 2017) (plaintiff alleged

that defendant (a former employee) “retained over 740 [trade secret] files on his USB devices

relating to [plaintiff's] longstanding customer,” and then used this proprietary information to steal

that customer from plaintiff during a head-to-head “RFP process”)); see also Am. Achievement

Corp., 622 F. Supp. 3d at 765 (citing Stratasys and Deluxe Fin. Servs. and finding sufficient

plaintiff's allegations that defendant asked plaintiff's former salespersons to share trade secrets

with defendant in violation of restrictive covenants and that a former executive sent trade secret

information to his personal email address and later shared the information with defendant).

IV. Conclusion

When parties expressly agree to the application of substantive law to disputes arising under

their agreement, it remains unclear in North Carolina whether such law applies to “closely related”

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tort claims. In this case, the court finds that discovery is necessary to develop factual issues before

determining which law applies to the challenged counterclaims, such as whether the devices

MDElite loaned to Brimer constitute (some of) the ‘“‘products” or “prototypes” listed in the

Agreement; whether the devices were meant to assist Brimer in performing the Consulting

Services listed in the Agreement; whether Brimer, in fact, used the devices to perform some listed

services, such as clinical research, operations, and education. Moreover, the court concludes that

MDElite alleges a plausible claim for misappropriation of trade secrets under Minnesota law,

sufficient to proceed to discovery.

Accordingly, Brimer’s motion for partial dismissal is DENIED.

SO ORDERED this the of March, 2025.

Aacl 2 (Ve trys Ab

RICHARD E. MYERS II

CHIEF UNITED STATES DISTRICT JUDGE

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