United States District Court, S.D. Florida
P. GAYLES UNITED STATES DISTRICT JUDGE
CAUSE comes before the Court on Defendants'
Motion to Dismiss Plaintiff's Third Amended Complaint
[ECF No. 83] (“Motion”) and on Defendant Brian
Rice's Motion to Dismiss Plaintiff's Third Amended
Verified Complaint [ECF No. 82] (“Rice Motion”).
For the reasons that follow, Defendants' Motion is
granted in part and the Rice Motion is denied as moot.
Peter and Steven Weitz (“Weitz Defendants”) began
working for Plaintiff Fusion Analytics Investment Partners,
LLC (“Fusion”) in May 2009. As investment
advisors, the Weitz Defendants handled at least 200 Fusion
clients, and had access to confidential client information,
including transaction histories, account types, account
balances, asset allocations, income, liquid and total net
worth, and tax information, among other information. The
Weitz Defendants resigned their positions with Fusion on
September 25, 2017, to take up employment with Defend- ant
Wealth Bridge Solutions, LLC (“Wealth Bridge”).
Over the preceding months, and in anticipation of this move,
the Weitz Defendants solicited Fusion clients and secreted
confidential client information to their personal possession.
Wealth Bridge and Defendant Brian Rice (“Rice”),
Wealth Bridge's Chief Executive Officer, aided and
encouraged the scheme of the Weitz Defendants and provided
them financial incentives for diverting Fusion clients to
Wealth Bridge. Finally, on his last day of employment with
Fusion, Peter Weitz used computer “wiping”
software, DP Wiper, to delete Fusion business files and to
conceal his actions leading up to his departure.
October 3, 2017, Fusion brought this action against the Weitz
Defendants, Wealth Bridge, and Rice, alleging
misappropriation of trade secrets, breach of duty of loyalty,
conversion, unfair competition, and tortious interference
with contract. [See ECF No. 1, at 8-11]. Fusion
alleges that when the Weitz Defendants resigned from Fusion,
they took with them Fusion's confidential client
information-information that, according to Fusion,
constitutes protectable trade secrets-and unlawfully
solicited Fusion clients to move their business to Wealth
time of filing, Fusion moved for a temporary restraining
order and for a preliminary injunction. [ECF Nos. 1 & 4].
Based on the initial allegations, the Court entered a
Temporary Restraining Order [ECF No. 7] on the same day. On
October 4, Defendants filed an Emergency Motion to Modify
Temporary Restraining Order [ECF No. 12], on which the Court
held a telephonic hearing on October 6, 2017. The Court
granted Defendants' Motion to Modify in part and entered
an Amended Temporary Restraining Order [ECF No. 20] on
October 11, 2017. The Court set the evidentiary preliminary
injunction hearing for October 19, 2017.
the preliminary injunction hearing, Defendants challenged the
sufficiency of Fusion's jurisdictional allegations. The
Court ordered Fusion to come prepared to identify each member
of the LLC for the purposes of ascertaining whether diversity
jurisdiction existed. [ECF No. 23]. At the hearing, Fusion
asserted that there were only two LLC members: Michael Conte,
a citizen of New York, and Kevin Lane, a citizen of
Massachusetts. Defendants noted their belief that these
assertions were inconsistent with internet business records
for the company. At the close of the October 19 hearing, the
Court declined to extend the Amended TRO and denied
Fusion's Motion for a Preliminary Injunction, noting that
Fusion had not shown a likelihood of success on the merits or
irreparable harm. [See ECF No. 45, at 249]. The
Court indicated that a detailed written order was to follow.
[ECF No. 40].
the preliminary injunction hearing, Defendants filed a motion
to dismiss, raising a facial challenge to diversity
jurisdiction. [ECF No. 43]. After Fusion failed to adequately
respond, and because the pleadings were deficient, the Court
granted the motion to dismiss. [ECF No. 52]. Plaintiff then
moved for leave to file an amended complaint. [ECF No. 53].
Because its proposed amendment would cure the pleading
deficiencies set forth in Defendants' motion, the Court
granted Fusion leave to amend and noted that Defendants could
then properly raise any factual jurisdictional challenges to
the amended pleading. [ECF No. 57]. Defendants then moved to
dismiss, asserting a factual challenge. [ECF No. 62].
Defendants' factual attack on diversity jurisdiction
argues that Fusion Analytic Holdings, LLC
(“Holdings”)-an entity that undisputedly includes
a non-diverse party-is a member of Fusion. On the day its
response to the motion to dismiss was due, Fusion improperly
filed a Second Amended Complaint [ECF No. 63] without leave
of court (leave it had previously sought). In the Second
Amended Complaint, Fusion maintained that diversity
jurisdiction existed, but added a federal claim under the
Computer Fraud and Abuse Act (“CFAA”). The Court
set a status conference. At that status conference, the Court
granted Fusion's oretenus motion for leave to
file a Third Amended Complaint to cure certain deficiencies
in its federal claim that Defendants identified. [ECF No.
February 16, 2018, Fusion filed the operative Third Amended
Verified Complaint [ECF No. 73], still maintaining that the
Court has diversity jurisdiction over the entire case, and
revising its federal claim under the CFAA. Defendants moved
to dismiss the Third Amended Complaint, arguing that the
Court lacks diversity jurisdiction, that Fusion fails to
state a claim against Brian Rice, that Fusion fails to state
a claim under the CFAA against Peter Weitz, and that even if
the Court finds that Fusion has adequately stated a CFAA
claim, supplemental jurisdiction over the remaining state law
claims would be inappropriate. [See ECF Nos. 82
courts are courts of limited jurisdiction. They possess only
that power authorized by Constitution and statute, which is
not to be expanded by judicial decree.” Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)
(citations omitted). “A district court must have
jurisdiction under at least one of the three types of
subject-matter jurisdiction: (1) jurisdiction pursuant to a
specific statutory grant; (2) federal question jurisdiction
pursuant to 28 U.S.C. § 1331; or (3) diversity
jurisdiction pursuant to 28 U.S.C. § 1332(a).”
Butler v. Morgan, 562 Fed.Appx. 832, 834 (11th Cir.
2014). “It is to be presumed that a cause lies outside
this limited jurisdiction, and the burden of establishing the
contrary rests upon the party asserting jurisdiction.”
Kokkonen, 511 U.S. at 377 (citations omitted).
motion to dismiss for lack of subject matter jurisdiction
brought pursuant to Rule 12(b)(1) of the Federal Rules of
Civil Procedure may present either a facial or a factual
challenge to the complaint. See McElmurray v. Consol.
Gov't, 501 F.3d 1244, 1251 (11th Cir. 2007). A
facial challenge provides Plaintiff with similar safeguards
to those of a Rule 12(b)(6) motion, and “the court must
consider the allegations in the plaintiff's complaint as
true.” Id. (quoting Williamson v.
Tucker, 645 F.2d 404, 412 (5th Cir. 1981)). In a facial
challenge, a court is re- quired to determine only that the
plaintiff has “sufficiently alleged a basis for subject
matter jurisdiction, and the allegations in [the] complaint
are taken as true for purposes of the motion.”
Id. (quoting Lawrence v. Dunbar, 919 F.2d
1525, 1529 (11th Cir. 1990)). By contrast, a factual attack
“challenge[s] ‘the existence of subject matter
jurisdiction in fact, irrespective of the pleadings, and
matters outside the pleadings . . . are
considered.'” McElmurray, 501 F.3d at 1251
(quoting Lawrence, 919 F.2d at 1529). In a factual
attack, “no presumptive ...