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Alifax Holding SPA v. Alcor Scientific, Inc.

United States District Court, D. Rhode Island

September 28, 2015

ALIFAX HOLDING SPA; and SIRE ANALYTICAL SYSTEMS SRL, Plaintiffs,
v.
ALCOR SCIENTIFIC, INC.; and FRANCESCO A. FRAPPA, Defendants.

MEMORANDUM AND ORDER

WILLIAM E. SMITH, Chief Judge.

Plaintiff Alifax Holding SpA ("Alifax") brought this action against Defendants, Francesco A. Frappa ("Frappa"), a former employee of Sire Analytical Systems Srl ("Sire") (a subsidiary of Alifax), and Alcor Scientific, Inc. ("Alcor"), Frappa's new employer, alleging patent infringement (Count One), misappropriation of trade secrets (Count Two), and breach of a confidential relationship (Count Three). (Compl. ¶¶ 3-4, 59-74, ECF No. 1.) Defendants moved, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss Counts Two and Three; Defendants have also moved, pursuant to Rule 12(f) of the Federal Rules of Civil Procedure, to strike the component of Alifax's prayer for relief that seeks imposition of a constructive trust in one of Alcor's patents. (ECF No. 10.) After holding argument on Defendants' motion, the Court permitted Alifax to file an amended complaint to address a real-party-in-interest concern. Alifax has since filed its amended complaint, which adds Sire as a party plaintiff and asserts the same three counts as Alifax's original complaint.[1] (See Am. Compl. ¶¶ 2, 54-75, ECF No. 20.) Defendants and Plaintiffs have also filed supplemental briefs. (ECF Nos. 21-22.)

In ruling on Defendants' motion to dismiss under Rule 12(b)(6), the Court must view the complaint in the light most favorable to Plaintiffs, taking all well-pled factual allegations as true and affording Plaintiffs the benefit of all reasonable inferences to be drawn from those allegations. See Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55-56 (1st Cir. 2012). To survive a Rule 12(b)(6) motion, the complaint must plead a plausible entitlement to relief; in other words, "a plaintiff must plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Alex & Ani, LLC v. Elite Level Consult., LLC, 31 F.Supp. 3d 365, 370-71 (D.R.I. 2014) (quoting Sanchez v. Pereira-Castillo, 590 F.3d 31, 48 (1st Cir. 2009)). On the other hand, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id . (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

I. Count Three

Defendants first argue that the claim asserted in Count Three breach of a confidential relationship - is preempted by the Rhode Island Uniform Trade Secrets Act ("RIUTSA"), see R.I. Gen. Laws §§ 6-41-1 to 6-41-11, which forms the basis of the claim asserted in Count Two (see Am. Compl. ¶¶ 60-69, ECF No. 20). (See Defs.' Mot. 16-17, ECF No. 10-1; Defs.' Supplemental Mem. 2, ECF No. 21.) Defendants also assert that Count Three fails because it is premised on Frappa's conduct that occurred after he left Sire's employ. (See Defs.' Mot. 15-16, ECF No. 10-1.) Finally, Defendants argue that Plaintiffs have not pled sufficient facts to establish that either Frappa or Alcor owed a duty of confidentiality to Alifax. (See id. at 17-19; Defs.' Supplemental Mem. 2-3, ECF No. 21.)

Although these arguments might eventually prove meritorious, they cannot be accepted at this juncture. Each rests on the premise that Rhode Island law applies to Count Three.[2] (See Defs.' Mot. 15-19, ECF No. 10-1; Defs.' Supplemental Mem. 1, ECF No. 21.) Plaintiffs, by contrast, assert that Italian law applies to Count Three and that, under Italian law, the Amended Complaint states a cognizable claim for breach of a confidential relationship. (See Pls.' Opp'n 9-10, 14, ECF No. 15.) At the hearing, Defendants appeared to take issue with Plaintiffs' position that federal law applies to Count One, Rhode Island law applies to Count Two, and Italian law applies to Count Three.

However, Defendants' assumption that, because Count Two asserts a Rhode Island statutory claim, Rhode Island law must also apply to the common law claim asserted in Count Three overlooks "the principle of depecage." Putnam Res. v. Pateman, 958 F.2d 448, 464-65 (1st Cir. 1991). As the First Circuit has explained:

In legal parlance, depecage erects the framework under which different issues in a single case, arising out of a common nucleus of operative facts, may be decided according to the substantive law of different states. Although the Rhode Island Supreme Court has yet to pledge express allegiance to the principle of depecage, the court's decisions make it clear that Rhode Island, like most other jurisdictions, adheres to the principle in the tort context. Id . (citations omitted); see also La Plante v. Am. Honda Motor Co., 27 F.3d 731, 741 (1st Cir. 1994); Oyola v. Burgos, 864 A.2d 624, 628 (R.I. 2005) (explaining that conflict-of-laws "questions are issue-specific"); Restatement (Second) of Conflict of Laws § 145 cmt. d (1971) ("Each issue is to receive separate consideration if it is one which would be resolved differently under the local law rule of two or more of the potentially interested states.").

Therefore, the substantive law applicable to Count Three cannot be automatically inferred from the substantive law applicable to Count Two; instead, to determine the law governing Count Three, the Court must conduct an analysis under Rhode Island's choice-of-law framework. However, the parties have not adequately briefed or argued the choice-of-law issues with respect to Count Three. A brief examination of the governing framework and the facts alleged in the Amended Complaint demonstrates that the requisite analysis cannot be conducted at this time.

Rhode Island's interest-weighing analysis, see Magnum Defense, Inc. v. Harbour Grp. Ltd., 248 F.Supp.2d 64, 69 (D.R.I. 2003), entails close examination of "the particular... facts" to "determine therefrom the rights and liabilities of the parties in accordance with the law of the state that bears the most significant relationship to the events and parties." Harodite Indus., Inc. v. Warren Elec. Corp., 24 A.3d 514, 534 (R.I. 2011) (quoting Cribb v. Augustyn, 696 A.2d 285, 288 (R.I. 1997)). In order to identify the appropriate jurisdiction, a court must examine several "policy considerations, "[3] as well as additional, tort-specific factors: (1) the place where the injury occurred; (2) the place where the conduct causing the injury occurred; (3) the domicile, "residence, nationality, place of incorporation and place of business of the parties"; and (4) the place where the relationship, if any, between the parties is centered. Id . (quoting Brown v. Church of Holy Name of Jesus, 252 A.2d 176, 179 (R.I. 1969)).

The facts alleged in the Amended Complaint (and the reasonable inferences to be drawn therefrom) do not point strongly towards either Rhode Island or Italian law. On the one hand, Plaintiffs are Italian companies, Frappa worked for Sire in Italy, and he now works for Alcor in Italy. (See Am. Compl. ¶¶ 1-3, ECF No. 20.) A permissible inference to be drawn from these allegations is that Frappa obtained Plaintiffs' confidential information in Italy. On the other hand, however, Alcor is a Rhode Island corporation (id. at ¶ 4), and the Amended Complaint does not allege the location where Frappa breached his fiduciary duty to Plaintiffs by disclosing the confidential information to Alcor. Cf. Magnum Defense, 248 F.Supp.2d at 69 ("In a misappropriation of trade secrets case such as the present one, the defendants' wrongful conduct is said to take place where the defendants misused the plaintiff's confidential information for their benefit." (quoting Scully Signal Co. v. Joyal, 881 F.Supp. 727, 742 (D.R.I. 1995))).

Thus, at this early juncture and with the absence of adequate choice-of-law briefing from the parties, the Court is unwilling to determine what law applies to Count Three. Because Defendants' arguments for dismissal of that count all rely on the assumption that Rhode Island law governs, Defendants' motion is denied with respect to that count. See In re Volkswagen & Audi Warranty Extension Litig., 692 F.3d 4, 8 n.2 (1st Cir. 2012) (district court denied a motion to dismiss that was premised on a choice-of-law issue because that issue was premature until some discovery occurred); Walker v. Unum Life Ins. Co. of Am., 530 F.Supp.2d 351, 354 (D. Me. 2008) (similar). Rather, the issue of what law applies to Count Three would be more suitably addressed at the summary judgment stage, once the parties have had a full opportunity to develop the record.

II. Count Two

With respect to Count Two, Defendants argue that Plaintiffs have failed to identify any protectable trade secrets or to sufficiently allege misappropriation. (Defs.' Mot. 12-15, ECF No. 10-1.) Neither ...


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