ANDREW P. GORDON, District Judge.
Plaintiff Octaform Systems Inc. ("Octaform")
The defendant employees move to dismiss on two grounds. First, they argue that the whole case should be thrown out because Octaform did not join the manufacturer with whom they allegedly conspired. The defendants argue that this manufacturer is a necessary party under Federal Rule of Civil Procedure 19, without whom the case cannot proceed. But Rule 19 requires the defendants to establish either (1) that I will be unable to afford relief without the absent party, or (2) that the absent party's interests might be legally impacted by this case if I fail to join them. They have shown neither. Whether this manufacturer is joined has no impact on whether Octaform will succeed on its claim or what relief it will be given, and there is no evidence that the manufacturer will be bound by any determinations in this case.
Second, the defendants argue that if I don't dismiss the entire case under Rule 19, I should dismiss Octaform's various tort claims because they are precluded by Nevada's trade secret statute. On this point, I agree. Octaform has alleged several tort claims that are dependent on its trade secret claim, and Nevada law makes clear that as a result these tort claims are barred. I therefore dismiss Octaform's claims for conversion, interference with business relations, conspiracy, and unjust enrichment, but I otherwise deny the defendants' motion.
Octaform designs and makes PVC forms for pouring concrete.
A properly pleaded complaint must provide "a short and plain statement of the claim showing that the pleader is entitled to relief."
The defendants' primary argument is that Octaform has failed to sue Huajun, and this manufacturer is a necessary party under Federal Rule of Civil Procedure 19. Rule 19 works in two steps. First, I decide if there are missing parties who are necessary to resolving this case. If so, I then try to join them; if I can't, I must decide whether they are so crucial that they are indispensable and their absence warrants outright dismissal of the action. Here, the defendants' argument fails at the first step because they have not established that Huajun's joinder is necessary, much less indispensable.
A party is necessary under Rule 19 in two scenarios. First, an absent party is necessary if I am unable to "accord" "complete relief" to the current parties without it.
The defendants argue that they will be liable for selling Huajun's products only if Octaform can first prove that Huajun illicitly made the products using Octaform's trade secrets. Thus, the defendants conclude that it will be impossible for Octaform to succeed on its claims without Huajun in this case.
But entities are not necessary parties merely because they were involved in the tort being sued over, and the defendants have not established that joining Huajun is otherwise needed for this case to proceed. This step of Rule 19 "asks whether the absence of the party would preclude [me] from fashioning meaningful relief as between the parties."
The defendants also argue that Huajun should be joined because it was an "active participant" in the alleged trade secret misappropriation. While some district courts have held that being an active participant with a defendant is enough to make that party necessary, the Ninth Circuit has never adopted that test.
Finally, the defendants contend that Rule 19's second situation is present: that the manufacturer's interests will be impaired if it is not joined. The thrust of the defendants' argument on this point is that "it is possible that any findings in this action could impair or impede [the manufacturer's] interests in any current or future litigation." But the defendants have not established that any rulings in this case will bind the manufacturers so that their interests might be in peril. If Octaform establishes that the defendants knowingly participated in trade secret misappropriation that, would not mean that the manufacturers would be liable.
The defendants have not shown either that I will be unable to afford relief to the parties or that the manufacturer has an interest in this case that might be impeded. I thus find that they have not met their burden to establish that this case should be dismissed under Rule 19.
Octaform's other tort claims are not plausible because each of them is contingent on Octaform's claim that the defendants misappropriated trade secrets—and Nevada's trade secrete statute thus bars these claims. The Nevada Uniform Trade Secrets Act ("NUTSA") "displaces conflicting tort, restitutionary, and other . . . civil remedies for misappropriation of a trade secret."
First, Octaform's conversion claim alleges that the defendants stole "Octaform's confidential, proprietary and trade secret information."
Second, Octaform's tortious interference claim similarly relies on allegations that the defendants misappropriated trade secrets. This claim requires Octaform to prove that the defendants interfered with Octaform's business relationships in an improper manner—and the only plausible allegation that the defendants acted improperly is that they stole Octaform's trade secrets. The only difference between this claim and the conversion claim is that instead of arguing that the defendants stole the trade secrets, Octaform is claiming that the defendants used the stolen trade secrets to interfere with business relationships. As pleaded, this claim is therefore barred by NUTSA.
Third, Octaform's claim for unjust enrichment relies on its trade secret claim. Octaform alleges that the defendants have been unjustly enriched by using "Octaform[`s] intellectual property." The only intellectual property that Octaform alleges with sufficient specificity is its trade secrets. As with the other claims, to the extent that Octaform means to allege that the defendants have taken or improperly used other legally-protected property (such as a copyrighted work or physical property), it did not plausibly allege that claim.
Finally, as pleaded, Octaform's civil conspiracy claim is not plausible. To succeed here, Octaform must prove that the defendants agreed to carry out a tort together.
I will allow Octaform to amend its complaint, but it is cautioned that if the amended complaint does not contain specific facts stating claims wholly independent from its allegations of trade secret misappropriation, I will dismiss those claims with prejudice. To the extent that Octaform intends to claim that the defendants stole or misused physical or copyrighted property that is legally-protected—without resort to Nevada's trade secret protection—it must allege those claims with specific supporting facts.
IT IS THEREFORE ORDERED that the defendants' motion to dismiss