Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-02101/USCOURTS-azd-2_12-cv-02101-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1331 Fed. Question: Breach of Contract

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Castle Megastore Group, Inc.,

Plaintiff, 

v. 

Kylee Wilson et al, 

Defendants.

No. CV-12-02101-PHX-DGC

ORDER 

 On October 3, 2012, Plaintiff Castle Megastore Group, Inc. (“CMG”) filed a 

complaint against Kylee Wilson, Michael Keith Flynn, and Alma Pilar Quintana and their 

spouses alleging breaches of contract, misappropriation of trade secrets, breaches of 

fiduciary duties, breaches of the implied covenant of good faith and fair dealing, violation 

of the Stored Communications Act, and conversion. Doc. 1. Wilson filed a motion to 

dismiss on November 6, 2012 (Doc. 17), and Quintana filed a motion raising virtually 

identical arguments on November 19, 2012 (Doc. 22). Plaintiff filed a consolidated 

response to the motions (Doc. 29) and both Defendants filed replies (Docs. 36-37). 

Defendant Flynn filed a notice of joinder in the motions to dismiss. Doc. 26. Plaintiff 

opposed joinder (Doc. 30) and Flynn filed a reply (Doc. 40).1

 All motions have been 

fully briefed and no party has requested oral argument. For the reasons that follow, the 

Court will grant Defendants’ motions to dismiss. 

 

 

1

 Plaintiff’s response opposes joinder on the substance of the arguments in favor of the motions to dismiss. The Court will consider the briefing on the joinder issue as additional briefing on the motions to dismiss. 

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I. Background. 

CMG is a retailer of novelty and adult-themed merchandise incorporated in 

Arizona and with its principal place of business in Tempe, Arizona. Doc. 1 at 2. 

Defendants are all Arizona residents and former employees of CMG and their spouses. 

Doc. 1 at 2-3. As a condition of their employment, each Defendant signed confidentiality 

agreements that included non-compete clauses. Doc. 1 at 4. 

 CMG alleges that Wilson posted an image of a computer screen displaying the 

company’s computer system on Twitter on August 9, 2012. Doc. 1 ¶ 29. Over the next 

week, CMG claims that Wilson prepared application materials to other companies that 

contained “confidential information regarding CMG, including CMG’s facilities data, the 

Company’s employees, its annual revenue, information regarding its systems and 

business strategies, sales strategies, sales numbers and programs.” Doc. 1 ¶ 25. Wilson 

was terminated on August 20, 2012. 

 CMG alleges that while still employed as the “Social Media Specialist,” Lynn 

posted a video of a “confidential CMG Managers’ meeting” to a third party website 

called Vimeo. Doc. 1 ¶ 35; Doc. 1-1 at 22. CMG claims that Flynn shared the link and 

password to his account with Quintana on September 21, 2012, and with Wilson on 

September 24, 2012. Doc. 1 ¶ 36. It also alleges that further email communications 

between the three former employees disclosed other confidential information regarding 

the company. Doc. 1 ¶ 37. Flynn was terminated on September 24, 2012 (Doc. 1 ¶ 38) 

and Quintana resigned on July 3, 2012 (Doc. 1 ¶ 50). 

II. Legal Standard. 

 When analyzing a complaint for failure to state a claim to relief under 

Rule 12(b)(6), the well-pled factual allegations are taken as true and construed in the light 

most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th 

Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the 

assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and they are insufficient 

to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d 

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1103, 1108 (9th Cir. 2010). To avoid a Rule 12(b)(6) dismissal, the complaint must 

plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. 

v. Twombly, 550 U.S. 544, 570 (2007). 

III. Analysis. 

A. Stored Communications Act. 

The Stored Communications Act (“SCA”), 18 U.S.C. § 2701, provides a cause of 

action against anyone who: 

(1) intentionally accesses without authorization a facility 

through which an electronic communication service is 

provided; or 

(2) intentionally exceeds an authorization to access that 

facility; and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in 

electronic storage in such system. 

An electronic communication service is defined as “any service which provides to users 

thereof the ability to send or receive wire or electronic communications.” 18 U.S.C. 

§ 2510(15). 

 CMG alleges that Flynn violated the SCA when he posted the video of the 

manager’s meeting on an account he created on a third party website and when he gave 

Wilson and Quintana access to the site. It alleges that Wilson and Quintana violated the 

SCA when they accessed the link. 

 Defendants argue that CMG has failed adequately to allege that they accessed an 

“electronic communication service” within the meaning of the statute. Doc. 22 at 4-5. 

CMG emphasizes that the statute covers “any service which provides to users the ability 

to send or receive wire or electronic communications,” and points to case law holding 

that third party websites can be electronic communication services under the SCA. See 

Konop v. Hawaiian Airlines, Inc., 302 F.3d 868, 880 (9th Cir. 2002) (finding employee’s 

personal website was an electronic communication service); Pure Power Boot Camp, v. 

Warrior Fitness Boot, 587 F. Supp. 2d 548, 556 (S.D.N.Y. 2008) (holding that private 

employer email accounts are electronic communication services). CMG argues that the 

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third party website in this case, Vimeo, was an electronic communication service and that 

Defendants “were aware of the confidential content of the video before accessing it and 

that Flynn did not have the authority to authorize them to access the website to view the 

video.” Doc. 29 at 8. 

 While Vimeo might be an electronic communication service, CMG provides no 

support for its assertion that Flynn did not have authority to authorize others to view his 

Vimeo account. Flynn created the account and provided his password to Wilson and 

Quintana. CMG alleges that he was not authorized to have or to share the video, but they 

do not allege that he obtained the video by accessing an electronic communication 

service that was controlled by CMG.2

 Without additional facts, CMG has not alleged that 

Defendants gained unauthorized access to an electronic communication service. Sending 

or using a link and password to access a personal account created on a third party website 

does not appear to violate the SCA. 

 CMG also alleges that Flynn changed the password of the Facebook account he 

created for CMG after the date he was terminated (Doc. 1 ¶ 42), and that changing the 

password is a separate ground for finding that Flynn violated the SCA (Doc. 30 at 7-8). 

But CMG has not alleged any facts about the company’s use of the Facebook page from 

which the Court could conclude that the page was an electronic communication service 

under the SCA. The Court may not “assume any facts necessary to the [plaintiffs=] claim 

that they have not alleged.” Jack Russell Terrier Network of N. Cal. v. Am. Kennel Club, 

Inc., 407 F.3d 1027, 1035 (9th Cir. 2005). The threadbare statement that Flynn changed 

the Facebook password (a statement that is not even repeated under the SCA claim 

heading later in the complaint) does not state a claim under the SCA. 

B. State Law Claims. 

 Jurisdiction in this case is based on the federal question presented by the SCA 

claim, with supplemental jurisdiction over the state law claims. Doc. 1 ¶ 11; 28 U.S.C 

 

2

 In CMG’s response in opposition to Flynn’s notice of joinder, CMG claims that Flynn gained access to the video through CMG’s IT systems. Doc. 30 at 6-7. This 

allegation, however, is not set out in the complaint. See Doc. 1 ¶¶ 35-49. 

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§§ 1331 & 1367. A district court may decline to exercise supplemental jurisdiction if 

“the district court has dismissed all claims over which it has original jurisdiction.” 28 

U.S.C. § 1367(c)(3). The Supreme Court has instructed that “‘if the federal claims are 

dismissed before trial . . . the state claims should be dismissed as well.’” CarnegieMellon Univ. v. Cohill, 484 U.S. 343, 350 n. 7 (1988) (quoting United Mine Workers of 

America v. Gibbs, 383 U.S. 715, 726 (1966)). While not a hard-and-fast rule, that 

statement has come to mean that “in the usual case in which all federal-law claims are 

eliminated before trial, the balance of factors . . . will point toward declining to exercise 

jurisdiction over the remaining state-law claims.” Id. 

 All of the remaining claims against Defendants are based on Arizona law. Having 

dismissed the SCA claim, the basis for this Court’s federal question jurisdiction no longer 

exists. The Court declines to exercise supplemental jurisdiction over the state law claims 

that would more appropriately be litigated in state court. 

IT IS ORDERED: 

 1. Defendants’ motions to dismiss (Docs. 17, 22) are granted. The complaint 

(Doc. 1) is dismissed without prejudice. 

 2. Consistent with the Court’s discussion with the parties at the recent Rule 16 

conference, Plaintiff is granted leave to file an amended complaint on or before 

March 15, 2013, following which the parties shall have 30 days to attempt to resolve this 

case. 

 3. A further scheduling conference will be held on April 17, 2013, at 

4:00 p.m. If the case has not been resolved by that date, the Court will set a litigation 

schedule for completion of the case. 

 Dated this 25th day of February, 2013. 

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