Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-00175/USCOURTS-azd-2_12-cv-00175-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:2201 Declaratory Judgment

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Food Services of America Incorporated, a 

Delaware corporation, 

Plaintiff, 

vs. 

Paul Carrington; Elba Rubio, et al., 

Defendants. 

No. CV-12-175-PHX-GMS

ORDER 

 Pending before the Court is Defendants’ Motion for Partial Judgment on the 

Pleadings on Counts Three through Six. (Doc. 72.) For the reasons stated below, 

Defendants’ motion is granted.

BACKGROUND 

 This case involves the alleged misappropriation of trade secrets and confidential 

information by former employees. Plaintiff Food Services of America (“FSA”) is a 

national foodservice distributor and maintains confidential information related to client 

pricing and preferences, and effective route lists for sales employees. (Doc. 1 at 4–5.) In 

2008, Defendants Carrington and Rubio began their employment with FSA and were 

granted access to FSA confidential information. (Id. at 5-8.) Upon commencement of 

their employment, FSA advised Defendants of the confidential nature of the information 

provided to them, and Defendants both signed confidentiality agreements. (Id. at 6–8.) 

 On March 4, 2011, FSA discharged Defendant Rubio for gross misconduct. (Id.) 

On March 5, 2011, Defendant Carrington used an FSA computer to transfer hundreds of 

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emails containing FSA confidential information to his personal email address and to 

Defendant Rubio. (Id.) Two days later FSA discharged Defendant Carrington for gross 

misconduct. (Id. at 10.) 

 On March 8, 2011, FSA sent Defendants letters demanding the return of all FSA 

confidential information in their possession. (Id.) FSA’s subsequent investigation 

revealed that in February 2011, Defendant Carrington had also transferred FSA 

confidential information to his personal address. (Id.) Thereafter, both Defendants began 

working in positions in which they could use FSA information to their new employers’ 

competitive advantage. (Id. at 11.) 

 FSA filed this action on January 25, 2012, alleging the following six claims: (1) 

violation of the Computer Fraud and Abuse Act (“CFAA”); (2) violation of the Arizona 

Trade Secrets Act (“AUTSA”); (3) violation of the Arizona Anti–Racketeering Statute; 

(4) breach of fiduciary duty; (5) conversion; and (6) unjust enrichment. On August 7, 

2012, Defendants filed a motion for judgment on the pleadings. The Court granted the 

motion as to the CFAA claim but denied it as to the remaining claims. In its Order, the 

Court stated that “[a]s a consequence of asserting an AUTSA claim, FSA is not entitled 

to bring any non-AUTSA claims based on a theory of misappropriation of confidential 

information.” (Doc. 57 at 7-8.) The Court noted, without holding, that FSA appears to 

base its state law claims on that theory. (Id.)

DISCUSSION 

I. LEGAL STANDARD 

 The standard governing a Rule 12(c) motion for judgment on the pleadings is 

“functionally identical” to that governing a Rule 12(b)(6) motion. Caffaso, U.S. ex rel. v. 

Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054-55 n. 4 (9th Cir. 2011). When 

analyzing a Rule 12(c) motion, the court must accept the nonmovant’s allegations as true 

and construe factual allegations in the complaint in the light most favorable to the 

nonmovant. Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009); see Elvig v. Calvin 

Presbyterian Church, 375 F.3d 951, 955 (9th Cir. 2004) (stating that in ruling on a Rule 

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12(c) motion the court must treat as false the allegations in the defendant’s answer that 

contradict the plaintiff’s allegations). “Judgment on the pleadings under Rule 12(c) is 

proper when the moving party establishes on the face of the pleadings that there is no 

material issue of fact and that the moving party is entitled to judgment as a matter of 

law.” Jensen Family Farms, Inc. v. Monterey Bay Unified Air Pollution Control Dist., 

644 F.3d 934, 937 n.1 (9th Cir. 2011). Dismissal pursuant to Rule 12(c) is inappropriate 

if the facts as pled would entitle the plaintiff to a remedy. Merchants Home Delivery 

Serv., Inc. v. Hall & Co., 50 F.3d 1486, 1488 (9th Cir. 1995). 

II. AUTSA PREEMPTION 

 The AUTSA expressly “displaces conflicting tort, restitutionary and other laws of 

this state that provide civil remedies for misappropriation of trade secrets.” A.R.S. § 44–

407(A). However, contractual and criminal remedies are excepted from preemption. Id. § 

44–407(B). AUTSA further “preempts all common law tort claims based on 

misappropriation of information, whether or not it meets the statutory definition of a trade 

secret.” Universal Engraving, Inc. v. Metal Magic, Inc., CV-08-1944-PHX-GMS, 2012 

WL 4358942, *2 (D. Ariz. Sept. 21, 2012) (citing Firetrace USA, LLC v. Jesclard, 800 F. 

Supp. 2d 1042, 1049-50 (D. Ariz. 2010)). That is also the majority interpretation of an 

identical preemption provision in the Uniform Trade Secrets Act (“UTSA”), after which 

the AUTSA is modeled. See Firetrace, 800 F. Supp. 2d 1047-48 (compiling cases with 

such holdings); Hauck Mfg. v. Astec Industries, Inc., 375 F. Supp. 2d 649, 654 (E.D. 

Tenn. 2004). Furthermore, the purpose of the AUTSA is to create uniform standards for 

liability for misappropriation of confidential information under a single tort action and to 

eliminate other causes of action founded on similar allegations. Universal Engraving, 

Inc., 2012 WL 4358942, at *2 (citing id. at 1048). That purpose would be undermined if 

Plaintiff “could circumvent the AUTSA by ‘dressing up’ misappropriation claims as 

common-law torts.” Id. 

 Because Plaintiff’s anti-racketeering claim is a private cause of action for criminal 

acts, Plaintiff contends that it is saved by the preemption carve-out for “criminal 

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remedies.” A.R.S. § 44-407(B)(3). However, Plaintiff’s claim is a civil claim for civil 

remedies and thus does not fall under that exception. Plaintiff also contends that the antiracketeering claim is based on the “continuing pattern of racketeering activity” and not 

on the misappropriation of confidential information. (Id.) Notwithstanding that 

characterization, Plaintiff’s allegation that Defendants perpetrated a scheme to defraud is 

based upon alleged misappropriation of confidential information. Doc. 1 ¶¶ 73–74; see

Hauck Mfg., 375 F. Supp. 2d at 661 (holding that a civil conspiracy claim requiring an 

additional element of a “common design” is still based upon misappropriation and is 

therefore preempted by the UTSA). The anti-racketeering claim is therefore preempted 

by the AUTSA. 

 Plaintiff argues that it should be allowed to plead the common law tort claims as 

alternative theories for recovery because there is a disputed factual issue which affects 

the viability of its claims. (Doc. 86 at 3-4.) Plaintiff asserts in its Response, for the first 

time, that its claims are based on contractual nondisclosure covenants in the 

confidentiality agreements that the Defendants signed. (Id. at 2-3.) Defendants dispute 

that they assumed, by contract, obligations not to disclose confidential information. (Doc. 

17 ¶ 24.) Plaintiff contends that if Defendants did assume those obligations, then 

Plaintiff’s claims would fall under the “contract remedies” exception to the preemption 

clause. A.R.S. § 44–407(B). Hence, any ruling on these common law claims is allegedly 

premature until that disputed factual issue is resolved. (Doc. 86 at 5.) 

 Plaintiff, however, has not pled breach of contract claims and does not seek 

contractual remedies. Therefore, the existence of contractual obligations does not affect 

the preemption of Plaintiff’s claims. Preemption and dismissal of the racketeering, breach 

of fiduciary duty, conversion, and unjust enrichment claims is proper at this stage of the 

proceedings. 

/ / / 

/ / / 

/ / / 

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 All of Plaintiff’s state law claims are based on the misappropriation of confidential 

information and are thus preempted.1

 (Doc. 1 ¶¶ 88, 91, 96) 

III. ARIZONA CONSTITUTION ANTI-ABROGATION CLAUSE

 Plaintiff argues that if the AUTSA is interpreted as preempting claims based on 

the misappropriation of non-trade secret information, then the Act violates the antiabrogation clause of the Arizona Constitution, Ariz. Const. art. XVIII, § 6. Plaintiff will 

be left without remedy if its claims are preempted because the AUTSA only provides 

relief for misappropriation of information rising to the level of trade secrets. (Doc. 86 at 

9, 13.) The anti-abrogation clause provides that “[t]he right of action to recover damages 

for injuries shall never be abrogated, and the amount recovered shall not be subject to any 

statutory limitation.” Ariz. Const. art. XVIII, § 6. To be protected by the anti-abrogation 

clause, the cause of action must have either been recognized at common law when the 

Arizona Constitution was established in 1912, or have evolved from common law 

antecedents. Firetrace, 800 F. Supp. 2d at 1049 (citing Cronin v. Sheldon, 195 Ariz. 531, 

539, 991 P.2d 231, 239 (1999)); Hazine v. Montgomery Elevator Co., 176 Ariz. 340, 348, 

861 P.2d 625, 633 (1993) (holding that the anti-abrogation clause “prevents the 

legislature from abrogating a cause of action to recover damages for injuries that existed 

at common law.”). 

 Plaintiff contends the claims for breach of fiduciary duty, conversion and unjust 

enrichment should not be abrogated by preemption because they were recognized at 

 

1

 FSA’s racketeering claim alleges “Defendants’ misappropriation, retention, and 

use of FSA’s Trade Secret and Confidential Proprietary Information constitutes theft” 

and that “Defendants’ unauthorized and unlawful use of FSA’s Trade Secret and 

Confidential Proprietary Information without disclosing such use to, and concealing it 

from, FSA constitutes a scheme or artifice to defraud . . . .” (Doc. 1 ¶¶ 73–74). FSA’s 

breach of fiduciary duty claim alleges “Defendants violated their common law fiduciary 

duty and duty of loyalty . . . in that, they knowingly, willfully, and maliciously 

misappropriated FSA’s Trade Secret and Confidential Proprietary Information.” (Id. ¶ 

88). FSA’s conversion claim alleges “Defendants have conspired to convert, and have 

actually converted, FSA’s property to their own use by misappropriating . . . FSA’s Trade 

Secret and Confidential Proprietary Information.” (Id. ¶ 91). FSA’s unjust enrichment 

claim alleges “Defendants have been enriched by their illegal misappropriation of FSA’s 

Trade Secret and Confidential Proprietary Information.” (Id. ¶ 96). 

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common law in 1912. (Doc. 86 at 16-17.) However, the AUTSA only preempts those 

claims in so far as they are based on the misappropriation of confidential information. 

See Romero v. Sw. Ambulance, 211 Ariz. 200, 205, 119 P.3d 467, 472 (Ct. App. 2005) 

(“The legislature may permissibly regulate a cause of action without abrogating it, as 

long as reasonable alternatives permit a claimant to bring the action.”). Preemption does 

not prevent Plaintiff from bringing those claims on other bases. 

 To establish that a cause of action for the misappropriation of information evolved 

from common law, Plaintiff cites to several early trade secrets cases in Massachusetts and 

Pennsylvania. (Doc. 86 at 9-11); see Peabody v. Norfolk, 98 Mass. 452, 458 (1868) 

(holding that a person “who invents or discovers, and keeps secret, a process of 

manufacture” will be protected against its misappropriation); Am. Stay Co. v. Delaney, 

211 Mass. 229, 231 (1912) (holding that “if the proprietor . . . invents . . . and keeps 

secret, processes of manufacture,” the court will give relief for an employee’s authorized 

disclosure); Fralich v. Despar, 165 Pa. 24 (1894) (case involving an employee divulging 

a trade secret used in the manufacture of greases). But citing early trade secrets 

jurisprudence from those states does not establish that a cause of action for 

misappropriation of information evolved from that jurisprudence in Arizona. Moreover, 

“this Court has held that misappropriation of information is not a claim that was 

recognized at common law, and thus is not protected by [the anti-abrogation clause].” 

Universal Engraving, Inc., 2012 WL 4358942, at *2 (citing Firetrace, 800 F.Supp.2d at 

1049). Thus, Plaintiff fails to establish that the AUTSA’s preemption clause violates the 

anti-abrogation clause of the Arizona Constitution. 

CONCLUSION 

Plaintiff’s common law tort claims are preempted by the AUTSA because they are 

based on the misappropriation of confidential information. The anti-abrogation clause of 

the Arizona Constitution does not preserve these claims. Plaintiff has not established that 

a claim for misappropriation of information was recognized at common law when the 

Arizona Constitution was established or that it evolved from common law antecedents. 

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 IT IS THEREFORE ORDERED that Defendants’ Motion for Partial Judgment 

on the Pleadings on Counts Three through Six (Doc. 72) is granted. 

 Dated this 4th day of February, 2013. 

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