Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_19-cv-04734/USCOURTS-azd-2_19-cv-04734-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1330 Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

TLX Incorporated,

Plaintiff,

v. 

JetBlue Airways Corporation,

Defendant.

No. CV-19-04734-PHX-SMB

ORDER 

Pending before the Court are Defendant JetBlue Airways Corporation’s (“JetBlue”)

Motion to Dismiss Plaintiff’s Complaint, (Doc. 21, “Mot.”), and Plaintiff TLX 

Incorporated’s (“TLX”) Motion for Leave to File Sur-Response to Defendant’s Motion to 

Dismiss, (Doc. 30). Defendant requested oral argument on its Motion to Dismiss, but the 

Court elects to resolve that Motion without it. See LRCiv 7.2(f). The Court has considered 

the pleadings, (see Docs. 21, 25, 26, 30, 31, 32), and denies both Motions as explained 

below.

I. BACKGROUND1

This case concerns purported violations relating to an “October 22, 2010 Mutual 

Non-Disclosure Agreement” (“NDA”) executed between TLX and JetBlue. (See generally 

Doc. 1, “Compl.” ¶¶ 4-22.) The parties executed the NDA before TLX bid in response to 

JetBlue’s request for proposal (“RFP”) related to airline crew reservation needs. (Id. ¶¶ 14-

15.) Among other things, the NDA protects TLX’s software pertaining to an automated 

 

1 The Court accepts the Complaint’s well-pleaded allegations as true. See Daniels-Hall v. 

Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010).

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process of booking hotel accommodations and ground transportation for crew members

when airline carriers modify their flight schedules. (Id. ¶ 4.) 

The Complaint alleges “JetBlue breached the NDA by turning TLX’s bid response 

over to one of its direct competitors.” (Id. ¶ 25.) It further alleges JetBlue provided TLX’s 

confidential information to a direct competitor “in order to allow [that] competitor an 

(unfair) advantage during the JetBlue RFP process” and that “[t]hese actions also interfered 

with TLX’s other current and potential client relationships.” (Id. ¶ 33.) Based on these 

allegations, inter alia, TLX brings three claims: (1) breach of contract; (2) breach of the 

implied covenant of good faith and fair dealing; and (3) unfair competition. (Id. ¶¶ 23-35.)

Defendant moves to dismiss each claim under Federal Rule of Civil Procedure 12(b)(6). 

(Mot. at 1.)

II. LEGAL STANDARD

To survive a Rule 12(b)(6) motion for failure to state a claim, a complaint must meet 

the requirements of Rule 8(a)(2). Fed. R. Civ. P. 12(b)(6). Rule 8(a)(2) requires a “short 

and plain statement of the claim showing that the pleader is entitled to relief,” so that the 

defendant has “fair notice of what the . . . claim is and the grounds upon which it rests.”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 

41, 47 (1957)). Dismissal under Rule 12(b)(6) “can be based on the lack of a cognizable 

legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” 

Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). A complaint that 

sets forth a cognizable legal theory will survive a motion to dismiss if it contains sufficient 

factual matter, which, if accepted as true, states a claim to relief that is “plausible on its 

face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). 

Facial plausibility exists if the pleader sets forth “factual content that allows the court to 

draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

“Threadbare recitals of the elements of a cause of action, supported by mere conclusory 

statements, do not suffice.” Id. Plausibility does not equal “probability,” but requires “more 

than a sheer possibility that a defendant has acted unlawfully.” Id. “Where a complaint 

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pleads facts that are ‘merely consistent’ with a defendant’s liability, it ‘stops short of the 

line between possibility and plausibility of entitlement to relief.’” Id. (quoting Twombly, 

550 U.S. at 557).

III. DISCUSSION

A. The Complaint Adequately Alleges Breach of Contract and Breach 

of the Implied Covenant of Good Faith and Fair Dealing Claims.2

A breach of contract claim under Arizona law requires that a plaintiff show (1) a 

contract, (2) a breach, and (3) damages. Sonoran Res. LLC v. Oroco Res. Corp., No. CV13-01266-PHX-DGC, 2014 WL 2605363, at *2 (D. Ariz. June 11, 2014). Defendant argues 

the Complaint inadequately alleges breach of contract or breach of the implied covenant of 

good faith and fair dealing because it fails to allege the specific terms of the NDA that

Defendant violated. (Mot. at 3.) Defendant’s contention that the Complaint only “generally 

alleges that Defendant ‘violated three sections of the NDA,’” however, ignores the fact that 

Plaintiff attached the NDA to the Complaint, (see generally Compl. at 9-11), and the 

Complaint itself references three specific sections of the NDA that JetBlue violated, (see 

id. ¶¶ 16, 21, 23, 28). Consequently, Defendant’s first argument does not support dismissal

of either claim when considering the Complaint and its attachments in their entirety.

Defendant next argues both claims should be dismissed because the Complaint fails 

to identify JetBlue’s alleged representative who disclosed Plaintiff’s protected information 

to a direct competitor. (Mot. at 2.) Defendant argues this information is needed to determine 

if all necessary parties have been joined, (id. at 3-4), but cites no case law for the 

proposition that its employee or representative must be specifically named in the Complaint 

rather than identified through discovery. The Court does not find this unsupported 

argument persuasive either.

In its final challenge to each claim’s sufficiency, Defendant argues each should be 

dismissed because the Complaint alleges only when Plaintiff discovered the breach, not

when it actually occurred. (Id. at 4.) In support, Defendant cites to how the Complaint 

 

2 Defendant argues the breach of contract and breach of the implied covenant of good faith 

and fair dealing claims should be dismissed for the same reasons. (See generally Mot. at 3-

4.)

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alleges that “[o]n December 1, 2017, TLX discovered that JetBlue violated three sections 

of the NDA.” (Id. (citing Compl. ¶ 21).) However, Defendant again cites no case law

requiring that Plaintiff identify the alleged breach’s specific date, especially in a situation 

like here, where a party discovers the breach long after it occurred. The Court is satisfied

that Defendant has adequate notice of the claims against it, even without the specific date 

of breach, because the day it occurred is limited to a sometime between when the parties 

executed the NDA and when Plaintiff discovered it. See Twombly, 550 U.S. at 555.

In conclusion, the Court disagrees with Defendant’s narrow reading of the 

Complaint and likewise rejects its unsupported requests for additional, unnecessary factual 

allegations at this stage. To the contrary, the Court finds both claims adequately alleged 

when considering the Complaint and its attachments in their entirety. See Twombly, 550 

U.S. at 555. Accordingly, Defendant’s Motion as it relates to the first two claims is denied.

B. The Unfair Competition Claim is Not Preempted by Arizona’s 

Uniform Trade Secrets Act.

Defendant next argues the unfair competition claim is preempted by Arizona’s

Uniform Trade Secrets Acts (AUTSA) because it is based on an alleged misappropriation 

of trade secrets. (Mot. at 5 (citing Orca Commc'ns Unlimited, LLC v. Noder, 236 Ariz. 180, 

181, 337 P.3d 545 (2014).) As a preliminary matter, Defendant correctly highlights that 

the Arizona Supreme Court held that “Arizona's Uniform Trade Secrets Act (“AUTSA”), 

A.R.S. §§ 44–401 to –407, creates an exclusive cause of action—and displaces conflicting 

causes of action—for claims based on the misappropriation of trade secrets.” Orca, 236

Ariz. at 181 (emphasis added). However, the Arizona Supreme Court further held, in the 

following sentence, that “AUTSA does not displace common-law claims based on alleged 

misappropriation of confidential information that is not a trade secret.” Id. The Court finds 

this second sentence particularly relevant here.

In other words, although the Complaint refers to Plaintiff’s trade secrets that 

Defendant allegedly disclosed in violation of the NDA, it also mentions confidential 

information. (See, e.g., Compl. ¶¶ 7, 8, 11, 12, 13, 18, 20.) Even further, the NDA provides 

a nonexclusive list of protected materials that “includes, but is not limited to, trade secrets, 

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systems, software and hardware . . . .” (Id. ¶ 16) (emphasis added). Based on these 

allegations and the NDA’s expansive scope of protection, it is unlikely that Plaintiff’s

unfair competition claim encompasses only trade secret misappropriations. Indeed, 

Plaintiff even argues its unfair competition claim is not based on trade secrets, but on 

JetBlue’s decision to give TLX’s direct competitor an unfair advantage by releasing TLX’s 

confidential and proprietary bid to the direct competitor. (Doc. 25 at 2.) While AUTSA 

would preempt Plaintiff’s unfair competition claim insofar as it is based solely on trade 

secret misappropriation, the Plaintiff’s disclosed “bid” or other information at issue does 

not appear to fall within AUTSA’s very specific definition of a “trade secret.” See Orca,

236 Ariz. at 182.

3 Since this is the case, the unfair competition claim is not preempted. See

id. at 183; see also Joshua David Mellberg LLC v. Will, 96 F.Supp.3d 953, 963 (D. Ariz. 

2015) (permitting plaintiffs to amend unfair competition claim to include misappropriation 

of confidential information that is not a trade secret to avoid preemption by AUTSA).

Accordingly, the Court finds that the Complaint adequately alleges an unfair 

competition claim that is not preempted by AUTSA because the claim, as currently alleged, 

is not based on misappropriation of trade secrets. Orca, 236 Ariz. at 181.

C. Motion for Leave to File Sur-Response

Plaintiff requests leave to file a sur-response to Defendant’s Motion to Dismiss to 

provide testimony by JetBlue’s in-house counsel that allegedly contradicts the Motion.

(Doc. 30 at 1.) However, even if Plaintiff’s claim were true, such information would not 

help the Court decide Defendant’s Motion because it may not ordinarily consider evidence 

outside the pleadings when ruling on a motion to dismiss. See United States v. Ritchie, 342 

F.3d 903, 907 (9th Cir. 2003) (“When ruling on a Rule 12(b)(6) motion to dismiss, if a 

district court considers evidence outside the pleadings, it must normally convert the 

12(b)(6) motion into a Rule 56 motion for summary judgment and it must give the 

 

3 Section 44-401 defines “trade secret” as “information, including a formula, pattern, 

compilation, program, device, method, technique or process that both: (a) [d]erives

independent economic value, actual or potential, from not being known to, and not being 

readily ascertainable by proper means by, other persons who can obtain economic value 

from its disclosure or use[] [and] (b) [i]s the subject of efforts that are reasonable under the 

circumstances to maintain its secrecy.” A.R.S. § 44-401(4).

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nonmoving party an opportunity to respond.”). Because the Court is unwilling to convert 

the Motion at issue here into one for summary judgment, Plaintiff’s request is denied.

IV. CONCLUSION

The Complaint alleges sufficient factual details to state a claim for breach of 

contract and breach of the implied covenant of good faith and fair dealing. Moreover, the 

Court finds that the unfair competition claim, as alleged, is not preempted by AUTSA.

Accordingly,

IT IS ORDERED denying Defendant’s Motion to Dismiss Plaintiff’s Complaint,

(Doc. 21), and Plaintiff’s Motion for Leave to File Sur-Response to Defendant’s Motion to 

Dismiss, (Doc. 30). 

Dated this 22nd day of January 2020.

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