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Adams Arms, LLC v. Unified Weapon Systems, Inc.

United States District Court, M.D. Florida, Tampa Division

February 8, 2017

ADAMS ARMS, LLC, Plaintiff,
v.
UNIFIED WEAPON SYSTEMS, INC. et al., Defendants.

          ORDER

          VIRGINIA M. HERNANDEZ COVINGON UNITED STATES DISTRICT JUDGE.

         This cause is before the Court pursuant to Adams Arms, LLC's Motion to Dismiss or Strike Unified Weapon Systems, Inc.'s First Amended Counterclaim (Doc. # 119), which was filed on October 28, 2016. On November 18, 2016, Unified Weapon Systems, Inc. (“UWSI”) filed a Response in Opposition to the Motion. (Doc. # 128). Also before the Court is Adams' Motion to Dismiss Aguieus, LLC's Counterclaim (Doc. # 123), which was filed on November 2, 2016. Aguieus filed a Response to the Motion on November 28, 2016. (Doc. # 131).

         As explained below, the Court denies Adams' Motion to Dismiss UWSI's Counterclaims. The Court grants in part Adams' Motion to Dismiss Aguieus' Counterclaims to the extent that Aguieus' Counterclaim for breach of the Letter of Intent is dismissed without prejudice and with leave to amend by February 21, 2017.

         I. Facts

         A. The Parties

         Adams is a Tampa, Florida, weapons manufacturer specializing in “small arms, including high-powered military rifles.” (Doc. # 106 at ¶ 1). UWSI is a Delaware corporation with its principal place of business in Florida. (Id. at ¶ 11). UWSI is alleged to be a subsidiary of Aguieus. (Doc. # 106 at ¶ 11). Aguieus is a Delaware limited liability corporation. (Id. at ¶ 12). Michael Bingham claims to be the managing member of Aguieus and the Vice President and Chief Operating Officer of UWSI. (Id. at ¶ 13).[1] Christian Quintanilla Aurich, an individual who resides in Peru, is the President and Chief Executive Officer of UWSI. (Doc. # 106 at ¶ 14). General James W. Parker, a resident of Hillsborough County, is a retired Major General from the United States Army and serves as a Director and advisor for UWSI. (Id. at ¶ 15).

         B. The Letter of Intent and Nondisclosure Agreements

         In early 2014, Aguieus approached Adams with a proposal for the two companies to work together on a bid to supply high-powered military rifles designed and built by Adams to the Peruvian military. (Id. at ¶ 18). According to Bingham, the Ministry of Defense of the Republic of Peru (the “Peruvian MOD”) contacted UWSI concerning the opportunity to secure a multi-year contract for the supply of rifles. (Id. ¶ 19). “The Peruvian MOD was purportedly funding the purchase through the Peruvian Factory of Weapons and Ammunition from the Army S.A.C. (‘FAME').” (Id.). The rifles would be constructed based on the Peruvian MOD's specifications “with input by UWSI and its business partners.” (Id. ¶ 20). Adams alleges that “Aguieus and UWSI, through Mr. Bingham and Mr. Aurich, solicited [Adams] to be a business partner in the project.” (Id.). The project would require Adams to provide UWSI with products, such as demonstration rifles, to disclose trade secrets and confidential information, and allow a tour of Adams' manufacturing facility. (Id. at ¶ 21).

         On February 24, 2014, as an “inducement” for Adams to join the project, Aurich and Bingham, on behalf of Aguieus, executed a “Mutual Confidentiality and Nondisclosure Agreement” with Adams “in which Aguieus agreed not to use [Adams'] confidential information, including [Adams'] technical data, trade secrets, and know-how, for its own use or for any purpose other than the commercial relationship between [Adams] and Aguieus.” (Id. at ¶ 22).[2] The Mutual Confidentiality and Nondisclosure Agreement allowed Aguieus to share Adams' confidential information with others, such as UWSI, so long as they “acknowledged and agreed to be bound by the [Mutual Confidentiality and Nondisclosure Agreement].” (Id.).

         Thereafter, on April 29, 2014, Bingham sent Adams a six-page Letter of Intent, which UWSI and Adams executed. (Id. at ¶ 23). The Letter of Intent describes the “mutual intentions” between “Unified Weapon Systems (‘Buyer') and Adams Arms (‘Seller').” (Doc. # 117-3 at 1)(emphasis in original). “After signing the [Letter of Intent], on or about June 25, 2014, Mr. Bingham represented to [Adams] that there would be an immediate order for 3, 000 units for use by the Peruvian MOD.” (Doc. # 106 at ¶ 32).

         During that time, General Parker met with Adams' President and CEO, Michael Froning, “and represented to Mr. Froning that General Parker possessed significant expertise and knowledge regarding foreign and domestic military matters, which would be helpful to [Adams] in negotiating the rifle contract with UWS[I].” (Id. at ¶ 33). According to Adams, General Parker failed to disclose that he was a Director and advisor for UWSI and “when Mr. Froning asked General Parker whether he had any conflicts of interest or ties with UWS[I] that would prevent him from being loyal to [Adams], General Parker misrepresented to Mr. Froning that he had no ties to UWS[I].” (Id. at ¶ 34).

         In furtherance of General Parker's efforts to gain access to Adams' trade secrets, on June 24, 2014, General Parker executed a separate confidentiality agreement vowing to hold Adams' confidential information and trade secrets “in strict confidence” and agreeing “not to use any Confidential Information for any purpose other than the Business Purpose.” (Doc. # 106-4 at 3). General Parker also executed a Consulting Services Agreement on July 7, 2014, further agreeing to keep Adams' proprietary information confidential and to only use such information in connection with providing services on behalf of Adams. (Doc. # 106-5).

         C. Adams Divulges Trade Secrets

         Adams “has spent a number of years and endless resources” developing “numerous trade secrets that are crucial and extremely valuable to its business.” (Doc. # 106 at ¶¶ 29-30). Adams explains that it “exerts great efforts to ensure that its trade secrets remain confidential, ” such as requiring employees and third parties to sign nondisclosure agreements, maintaining security cameras at its facilities, and requiring badges for entry into its facilities. (Id. at ¶ 30).

         Nonetheless, and in reliance on the Mutual Confidentiality and Nondisclosure Agreements, General Parker's confidentiality agreement, the Letter of Intent, and other assurances, Adams disclosed its trade secrets to UWSI, Aguieus, Bingham, Aurich, and General Parker. (Id. at ¶ 28).

         After the parties formalized their agreements and Adams disclosed its trade secrets, the rifle project began in earnest. Between August of 2014, and February of 2015, Adams manufactured demonstration rifles for examination and testing by UWSI and the Peruvian MOD. (Id. at ¶¶ 38-44). On October 13, 2014, UWSI sent Adams a 2.1 million dollar purchase order for rifles. (Id. at ¶ 39).

On February 8 and 9, 2015, representatives of [Adams] attended the demonstration of [Adams'] rifles to the Peruvian MOD. During the demonstration, UWSI leveraged [Adams'] brand name and weapons-making experience, identifying [Adams] as one of its lead partners, and UWSI used [Adams'] trademarks to market the rifles to the Peruvian MOD. To [Adams'] knowledge, UWSI has no ability to design or manufacture any rifles. Instead, it was marketing [Adams'] rifles to the customer.

(Id. at ¶ 44). According to Adams, the demonstration was a success, and “all parties approved moving forward with the joint venture with [Adams] as the manufacturer.” (Id. at ¶ 45).

         Between April of 2015, and September of 2015, Bingham requested supplier pricing information for the separate components of Adams' rifles, which Adams provided. (Id. at ¶ 46). Bingham also requested information about Adams' manufacturing facility and equipment, and Adams allowed tours of its facility in Florida during which Adams revealed step-by-step details of its manufacturing processes, machinery, and tooling. (Id. at ¶¶ 46-48).

         Following the meetings in Florida, Bingham requested additional confidential and proprietary information, which he represented was necessary to secure the contract with FAME. (Id. at ¶ 50). This information included photographs of Adams' facility, assembly work stations, and tool boxes; a complete list of parts, parts configurations, parts suppliers, and prices; a list of all tooling needed for assembly of Adams' rifles; a breakdown of the rifle configuration; and proprietary details of Adams' technician training program. (Id.).

         On September 25, 2015, Bingham represented to Adams that all submissions to FAME were completed on time “thanks to [Adams].” (Id. at ¶ 52). On November 19, 2015, FAME issued its bid solicitation for the rifles. (Id. at ¶ 53). On December 10, 2015, UWSI submitted a qualified offer in response to the bid solicitation using Adams' designs, procedures, and specifications. (Id. at ¶ 55). On December 18, 2015, FAME announced UWSI as the winning bidder. (Id. at ¶ 58).

         D. Squeeze-Out of Adams

         After UWSI obtained the winning bid, UWSI “began taking steps to squeeze [Adams] out of the final purchase contract[.]” (Id. at ¶ 61). UWSI and Bingham refused Adams' requests for documents and meetings, although UWSI and Bingham “continued to seek guidance and input” from Adams about the design of the rifles. (Id. at ¶¶ 62-64). On December 30, 2015, Aurich advised Adams that UWSI would take the entire project over now that UWSI had all of Adams' technical and pricing data. (Id. at ¶ 65). In the months that followed, Adams was excluded from multiple meetings with FAME, including another meeting in Peru to test Adams' rifles before final contract execution. (Id. at ¶ 66).

         II. Procedural History and Amended Counterclaims

         A. Adams Sets the Stage

         Adams initiated this action on June 10, 2016, by filing the Complaint. (Doc. # 1). At this juncture, the Complaint has been amended and contains the following counts: breach of Letter of Intent against UWSI (Count One); breach of Mutual Confidentiality and Nondisclosure Agreement against all Defendants (Count Two); breach of Confidentiality Agreement against General Parker (Count Three); breach of the Consulting Services Agreement as to General Parker (Count Four); misappropriation under the Defend Trade Secrets Act as to all Defendants (Count Five); misappropriation under the Florida Trade Secrets Act against all Defendants (Count Six); unfair competition under the Lanham Act against UWSI (Count Seven); unjust enrichment ...


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