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Fusion Analytics Investment Partners LLC v. Wealth Bridge Solutions, LLC

United States District Court, S.D. Florida

June 12, 2018

FUSION ANALYTICS INVESTMENT PARTNERS LLC, Plaintiff,
v.
WEALTH BRIDGE SOLUTIONS, LLC, PETER WEITZ, STEVEN WEITZ, and BRIAN RICE, Defendants.

          ORDER

          DARRIN P. GAYLES UNITED STATES DISTRICT JUDGE

         THIS 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.

         I. FACTUAL BACKGROUND[1]

         Defendants 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.

         II. PROCEDURAL BACKGROUND

         On 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 Bridge.

         At the 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.

         Before 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].

         After 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. 71].

         On 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 & 83].

         III. ANALYSIS

         A. Diversity Jurisdiction

         “Federal 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).

         A 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 ...


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