Plastronics Socket Partners Limited v. Highrel Inc.

          ORDER

          Honorable Susan M. Brnovich United States District Judge

         Pending before this court are two motions: Defendant Paul Shubring's Motion to Dismiss Plaintiffs' First Amended Complaint and Request For Injunction (Doc. 20) and Defendant Dong Weon Hwang's Motion to Dismiss Plaintiffs' First Amended Complaint and Request For Injunction (Doc. 41). The motions are fully briefed and there is no request for oral argument.

         I. Factual Background

         Plastronics Socket is a provider of technology and innovation for the semiconductor industry, including burn-in sockets and related components. (Doc. 11 ¶ 2, “FAC”). Defendants Hwang and Schubring are both former Plastronics employees. (FAC ¶¶ 3-4). Defendant Hwang worked for Plastronics as the Chief Technology Officer from October 2004 until April 2008. (FAC ¶¶ 36, 46). Defendant Schubring worked for Plastronics from October 2007 until April 2009 (FAC ¶¶ 50, 54). Defendant Schubring managed the supply chain for burn-in sockets and related components. (FAC ¶ 50).

         Plaintiffs allege that Hwang “received, agreed, and signed a letter agreement from Plastronics regarding the Proprietary Information of Plastronics (the ‘Confidential Information Acknowledgment Agreement')” upon leaving the company and that the agreement informed Hwang of his obligations to maintain the secrecy of the proprietary information. (FAC ¶ 47). Plaintiffs further allege that Schubring signed a proprietary information agreement as a condition of his employment and that it required Schubring to keep proprietary material confidential. (FAC ¶¶ 51-52).

         Defendant Hwang formed HiCon Ltd. on or about April 30, 2008, to manufacture and sell competing products. (FAC ¶ 57). On or about July 27, 2009, Hwang formed HiCon Co. to design and sell competing products. (FAC ¶ 60). In 2016, Hwang and Schubring formed HiCon USA, which signed an exclusive distribution agreement with HiCon Ltd. and/or HiCon Co. for the territory of North America. (FAC ¶ 65).

         On October 10, 2018, Plaintiffs filed their First Amended Complaint (FAC) alleging the following counts: (1) patent infringement against HiCon USA, (2) patent infringement against HighRel, (3-4) misappropriation of trade secrets in violation of the Federal Defend Trade Secrets Act (“DTSA”), 18 U.S.C. 1836(c), and the Arizona Uniform Trade Secrets Act (“AUTSA”), A.R.S. § 44-401 et seq., against Hwang, (5-6) misappropriation of trade secrets in violation of DTSA and AUTSA against Schubring, (7) breach of contract against Hwang, (8) breach of fiduciary duty against Hwang, (9) breach of contract against Schubring, and (10) tortious interference with business expectancy, prospective business relations against all Defendants.

         II. Legal Standard for a Motion to Dismiss under Rule 12(b)(6)

         To survive a Rule 12(b)(6) motion for failure to state a claim, a complaint must meet the requirements of Rule 8(a)(2). Rule 8(a)(2) requires a “short and plain statement of the claim showing that the pleader is entitled to relief, ” so that the defendant has “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Dismissal under Rule 12(b)(6) “can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). A complaint that sets forth a cognizable legal theory will survive a motion to dismiss if it contains sufficient factual matter, which, if accepted as true, states a claim to relief that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). Facial plausibility exists if the pleader sets forth “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Plausibility does not equal “probability, ” but requires “more than a sheer possibility that a defendant has acted unlawfully.” Id. “Where a complaint pleads facts that are ‘merely consistent' with a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.'” Id. (quoting Twombly, 550 U.S. at 557).

         In ruling on a Rule 12(b)(6) motion to dismiss, the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). However, legal conclusions couched as factual allegations are not given a presumption of truthfulness, and “conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). A court ordinarily may not consider evidence outside the pleadings in ruling on a Rule 12(b)(6) motion to dismiss. See United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). “A court may, however, consider materials- documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice-without converting the motion to dismiss into a motion for summary judgment.” Id. at 908.

         III. Analysis

         Defendant Hwang's Motion to Dismiss (Doc. 41) and Defendant Schubring's Motion to Dismiss (Doc. 20) are both brought under Rule 12(b)(6) and argue similar bases for dismissal so they will be discussed together.

         A. Trade Secret Violation under 18 U.S.C. § 1836 or A.R.S. § 44-401 et seq.

         Defendants' Hwang and Schubring argue that Plaintiffs have failed to identify what specific information was misappropriated and have only identified vague and broad categories of information. Hwang and Schubring also argue that Plastronics fails to explain how or why the information ...