United States District Court, S.D. Florida
CECILIA M. ALTONAGA UNITED STATES DISTRICT JUDGE
CAUSE came before the Court on
Plaintiff/Counter-Defendant VVIG, Inc. (“VVIG”);
and Third-Party Defendants Brandtastic Parties,
Virtue Vape LLC (“Virtue Vape”), Flavor Suite,
LLC (“Flavor Suite”), David O'Brien
(“O'Brien”), John Abbey
(“Abbey”), Catalina Jimenez
(“Jimenez”), and Alan Smurfit's
(“Smurfit['s]”) (collectively with VVIG, the
“Counter-Defendants[']”) Motion to Dismiss
Second Final Amended Counterclaim [ECF No. 79].
Defendants/Counter-Plaintiffs, Henry Alvarez and Mariano
Cuesta (“Counter-Plaintiffs”), filed a Response
[ECF No. 80], to which Counter-Defendants filed a Reply [ECF
No. 81]. Counter-Defendants seek to dismiss each of
Counter-Plaintiffs' 14 counterclaims. (See
generally Mot.). The Court has reviewed the Second Final
Amended Counterclaim (“FAC”) [ECF No. 78],
parties' written submissions, and applicable law.
and Counter-Defendants work in the e-cigarette industry.
(See generally FAC). On August 18, 2018, VVIG filed
a trademark infringement action against Counter-Plaintiffs,
alleging federal question jurisdiction under 28 U.S.C.
section 1331 and 28 U.S.C. sections 1338(a) and (b),
and supplemental jurisdiction over state-law claims under 28
U.S.C. section 1367(a). (See generally Am. Compl.
¶ 2). VVIG alleges it developed several types of
e-cigarette products which Counter-Plaintiffs marketed.
(See Id. ¶¶ 7-10). According to VVIG,
after its business relationship with Counter-Plaintiffs
soured, Counter-Plaintiffs began to manufacture VVIG's
products themselves, passing the products off as their own.
(See Id. ¶¶ 15- 18). VVIG states three
claims for relief: a claim of violation of Section 43(a) of
the Lanham Act, 15 U.S.C. § 1125(a) (see Id.
8-9); infringement of registered trademark and counterfeiting
(see Id. 9-10); and cancellation of state
registrations (see Id. 10).
now bring 14 counterclaims against VVIG and the remaining
Counter-Defendants, alleging Counter-Defendants
misappropriated Counter-Plaintiffs' products. (See
generally FAC). The counterclaims allege
misappropriation of trade secrets (Count I); breach of
manufacturing agreement (Count II); trademark and tradename
infringement (Count III); Florida trademark and tradename
infringement (Count IV); breach of an oral agreement (Count
V); declaratory judgment for shares and shareholder rights
(Count VI); interference with contractual relationship (Count
VII); battery (Count VIII); fraud (Counts IX and X);
violation of the Lanham Act (Count XI); cancellation of
registration (Count XII); violation of the Florida Deceptive
and Unfair Trade Practices Act (“FDUTPA”) (Count
XIII); and indemnity (Count XIV). (See id.).
does not contain general factual allegations but includes the
a. “Florida Misappropriated Products” is defined
as the e-liquid products used for vaping with e-cigarette
devices under the names Crack Pie, Dunks, Gush, Pound It,
Raging Donut and Rolly.
b. “Misappropriated Products” is [sic] defined as
e-liquid products used for vaping with e-cigarette devices
including Dunks, Gush, Rolly, Crack Pie, Dirty Danish, Food
Fighter Juice, Krispee, Monster Krisp, Pound It, Raging
Donut, Puft (including Too Puft and 2 Puft); and Vape
c. “Florida Misappropriated Product Trademark
Items” is [sic] defined as the graphics, name and
designs used, developed and created for the Florida
d. “Misappropriated Product Trademark Items” is
[sic] defined as the graphics, name and designs used,
developed and created for the Misappropriated Products.
e. “Secret e-juice information” is all necessary
know-how, standards and specifications (as well as any
knowhow thereafter acquired) for the e-juice products which
included [sic] “all information concerning the business
affairs, products, marketing systems, technology, customers,
end users, financial affairs, accounting statistical
data” of Alvarez and Cuesta. The foregoing term
i. any data documents, processes and methods and other
information developed by Virtue Vape LLC for Alvarez and
Cuesta and any other proprietary and trade secret information
of Alvarez and Cuesta whether in oral, graphic written
electronic or machine-readable form;
ii. the formula [sic] for each of the Misappropriated
Products; iii. the taste [sic] of each of the Misappropriated
iv. the customers of the Misappropriated Products (to whom
Virtue Vape LLC had shipped products for Alvarez and Cuesta);
v. software and social media advertising and ordering systems
for each of the Misappropriated Products;
vi. details and directions for the creation and reproduction
of the graphic designs for the Misappropriated Products; and
vii. marketing research for the clients and names of the
(Id. ¶ 3). Because each count includes specific
factual allegations, the Court addresses the necessary
background facts in its analysis of each count.
STANDARD OF REVIEW
motion to dismiss tests the sufficiency of the complaint, not
the merits of a suit.” Levy v. City of
Hollywood, 90 F.Supp.2d 1344, 1345 (S.D. Fla. 2000)
(internal quotation marks and citation omitted). “To
survive a motion to dismiss [under Federal Rule of Civil
Procedure 12(b)(6)], a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(alteration added; quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). The pleading
standard “does not require ‘detailed factual
allegations,' but it demands more than an unadorned,
Id. (quoting Twombly, 550 U.S. at 555).
Pleadings must contain more than “labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Twombly, 550
U.S. at 555 (citation omitted). Therefore a plaintiff must
“plead factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678
(alteration added; citing Twombly, 550 U.S. at 556).
When reviewing a motion to dismiss, the Court must construe
the complaint in the light most favorable to the plaintiff
and take the factual allegations therein as true. See
Brooks v. Blue Cross & Blue Shield of Fla., Inc.,
116 F.3d 1364, 1369 (11th Cir. 1997) (citation omitted).
argue Counter-Plaintiffs fail to state claims for relief in
11 of the 14 counterclaims. (See generally Mot.).
Regarding the other three claims, Counter-Plaintiffs argue
(1) Counts V and VI are duplicative of claims in a related
state court action and are soon to be barred by collateral
estoppel (see id. 12-13); and (2) Count VIII - for
battery - should be severed because it is not sufficiently
related to the claims in this lawsuit (see id.
11-12). The Court addresses each suggested basis for
dismissal of the counterclaims in turn.
Misappropriation of Trade Secrets (Count I)
state a cause of action for misappropriation of trade secrets
under the Florida Uniform Trade Secrets Act
(“FUTSA”), section 688.001, Florida Statutes,
Counter-Plaintiffs must allege they (1) possessed secret
information and took reasonable steps to protect its secrecy,
and (2) the secret they possessed was misappropriated.
See Medimport S.R.L. v. Cabreja, 929 F.Supp.2d 1302,
1322 (S.D. Fla. 2013) (citation omitted). Regarding the first
element, “Florida courts . . . have said that the
plaintiff is required to identify with reasonable
particularity the trade secrets at issue before proceeding
with discovery.” DynCorp Int'l v. AAR Airlift
Grp., Inc., 664 Fed.Appx. 844, 848 (11th Cir. 2016)
(internal quotation marks and citations omitted).
“However, to satisfy this requirement at the dismissal
stage in federal court, the plaintiff need only allege
sufficient facts to plausibly show a trade secret was
involved and to give the defendant notice of the material it
claims constituted a trade secret.” Id.
(citing Twombly 550 U.S. at 555-56; other citation
omitted). Still, to state a claim with “sufficient
particularity, ” the claimant must do more than simply
“identify broad categories of information, such as
financial and technical data.” Id. at 849.
assert Counter-Plaintiffs fail to state a trade secret claim
because they do not identify their trade secret with
“reasonable particularity.” (Mot
3-5). Under DynCorp, Counter-Plaintiffs
need not do so. See DynCorp, 644 Fed.Appx. at 848.
Whether Counter-Plaintiffs state a cause of action for
misappropriation of trade secrets depends on whether their
alleged trade secret - the “secret e-juice
information” - meets the relatively low
“sufficient particularity” standard.
Court concludes it does not. As noted by Counter-Defendants,
the FAC's definition of “secret e-juice
information” is a “grab-bag” of information
(Mot. 4), so broad and conclusory as to be nonsensical.
“Secret e-juice information” is defined, in part,
as “all necessary know-how, standards and
specifications . . . for the e-juice products;”
including “all information concerning the
business affairs, products, marketing systems, technology,
customers, end users, financial affairs, accounting
statistical data” of Counter-Plaintiffs. (FAC ¶ 3
(alteration and emphasis added)). “Secret e-juice
information” is also defined in a conclusory fashion to
include “any other propriety and trade secrets”
of Counter-Plaintiffs. (Id.).
respect, DynCorp is instructive. In
DynCorp, the complaint described the trade secrets
confidential and proprietary [company] financial and
technical data . . . such as lists of the personnel
employed by [the company] to provide services under [an]
Incumbent Contract, the salaries and pay differentials for
those personnel on the Incumbent Contract, other pricing and
financial data about [the company's] performance on the
Incumbent Contract, and technical data about [the
company's] staffing approach and business operations
pertaining to the Incumbent Contract[;]
as well as a binder with “lists of [the company's]
employees staffed on [the] Incumbent Contract and their
salary information, as well as numerous emails and other
documents with [the company] logos.” 664 Fed.Appx. at
849 (emphasis and alterations added). The court found
“[t]hese allegations identified the trade secrets for
which [the company] was claiming protection with sufficient
particularity to survive a motion to dismiss.”
Id. (alterations added). The court specifically
distinguished the foregoing allegations from “broad
categories of information, such as financial and technical
Counter-Plaintiffs' trade secrets claim relies on the
sort of “broad categories of information”
DynCorp takes pains to distinguish.
DynCorp, 644 Fed.Appx. at 849. General allegations
of “business affairs, products, marketing systems
technology, customers, end users, financial affairs,
accounting statistical data, ” and certainly the
catch-all “all necessary know how” are
insufficient. (FAC ¶ 3). Simply put, “all
information” (id.) concerning a product is not
a trade secret.
not matter that the definition of “secret e-juice
information” includes some descriptors - the
“formula” or “customers” of the
Misappropriated Products - that are more specific. Couching
specific terms within a sweeping definition is insufficient
to state a trade secret claim because doing so fails to
notify Counter-Defendants which trade secret or
secrets they allegedly misappropriated. See Taxinet,
Corp. v. Leon, No. 16-24266-CIV, 2018 WL 3405243, at *3
(S.D. Fla. July 12, 2018).
Corp. is also helpful in explaining why the trade
secrets claim here is insufficient. In Taxinet,
Corp., the complaint defined the trade secrets as
“confidential business information, processes,
techniques, software applications, and business
characteristics, including present, future, and proposed
services, and business model.” Id. The
complaint also described specific characteristics of the
business model, including its “Taximeter, GPS
Navigation System, a Tracking System with panic button, a
Payment Gateway for credit cards, and a future booking
system.” Id. The court found the trade secret
claim lacking, notwithstanding the finer description of the
business model, because the complaint did “not lay out
. . . which of these ‘trade secrets' were
impermissibly used[.]” Id. (alterations
here. Counter-Plaintiffs fail to set forth which aspects of
the “secret e-juice information” - defined as
all information concerning the products -
Counter-Defendants misappropriated. Instead,
Counter-Plaintiffs allege “VVIG and Virtue shared and
used the secret e-juice information” and “thus
wrongfully and improperly misappropriated the secret e-juice
information in order to use and continue the manufacture and
distribution of the Misappropriated Products for their
benefit.” (FAC ¶¶ 11, 13). This allegation is
insufficient because it fails to notify Counter-Defendants
what aspects of the “secret e-juice information”
Counter-Defendants misappropriated. Counter-Plaintiffs have
failed to describe their trade secrets with sufficient
particularity to state a claim.
Contract-based Claims: Breach (Count II); Tortious
Interference (Count VII); and Indemnity (Count XIV)
bring three claims based on a Manufacturing Agreement dated
December 6, 2014, between “Virtue Vape John
Abbey” (the “Manufacturer”) and
“Henry Alvarez & Mariano Cuesta of Lee & Quids
Vapor, LLC” (the “Client”). (See
FAC, Ex. 1, Manufacturing Agreement [ECF No. 78-1]).
Counter-Plaintiffs allege (1) Virtue Vape breached the
Manufacturing Agreement by divulging confidential information
without authorization (see FAC ¶¶ 17-28);
(2) VVIG tortiously interfered with the Manufacturing
Agreement by inducing Virtue Vape to disclose the