877321.8.50 3/29/04

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOHN J. KORESKO, V and 

PENNMONT BENEFIT SERVICES, INC., 

 Plaintiffs, 

 v. 

JEFF BLEIWEIS, 

RAYMOND ANKNER, 

CJA AND ASSOCIATES, INC., and 

THE TRAVELERS LIFE AND ANNUITY COMPANY, 

 Defendants. 

CIVIL ACTION NO. 04-CV-769

ORDER

 Defendant The Travelers Life and Annuity Company’s Motion to Dismiss Count 

III and Part of Count V of the Complaint is granted. Count III of the Complaint 

(“Misappropriation of Trade Secret”) is dismissed as against defendant The Travelers Life and 

Annuity Company with prejudice. Count V (“Civil Conspiracy”) is dismissed as against 

defendant The Travelers Life and Annuity Company with prejudice to the extent it alleges a 

conspiracy to misappropriate trade secrets. 

Dated: _______________________ _____________________________ 

 Stewart Dalzell, U.S.D.J. 
IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOHN J. KORESKO, V and 

PENNMONT BENEFIT SERVICES, INC., 

 Plaintiffs, 

 v. 

JEFF BLEIWEIS, 

RAYMOND ANKNER, 

CJA AND ASSOCIATES, INC., and 

THE TRAVELERS LIFE AND ANNUITY COMPANY, 

 Defendants. 

CIVIL ACTION NO. 04-CV-769

DEFENDANT THE TRAVELERS LIFE AND ANNUITY COMPANY’S

MOTION TO DISMISS COUNT III AND PART OF COUNT V OF THE COMPLAINT

 Defendant The Travelers Life and Annuity Company (“TLAC”) moves the Court 

to dismiss Count III of the Complaint (“Misappropriation of Trade Secret”) as against TLAC 

with prejudice, and to dismiss Count V of the Complaint (“Civil Conspiracy”) as against TLAC 

with prejudice to the extent it alleges a conspiracy to misappropriate trade secrets. The grounds 

for this motion are set forth in Defendant The Travelers Life and Annuity Company’s 

Memorandum of Law in Support of its Motion to Dismiss Count III and Part of Count V of the 

Complaint. 

Dated: March 29, 2004 

Respectively submitted, 

 RA604 

Diane Siegel Danoff 

Robert W. Ashbrook 

Dechert LLP 

4000 Bell Atlantic Tower 

1717 Arch Street 

Philadelphia, PA 19103-2793 

telephone 215.994.4000 

facsimile 215.994.2222 

Attorneys for Defendant 

 The Travelers Life and Annuity Company 
IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOHN J. KORESKO, V and 

PENNMONT BENEFIT SERVICES, INC., 

 Plaintiffs, 

 v. 

JEFF BLEIWEIS, 

RAYMOND ANKNER, 

CJA AND ASSOCIATES, INC., and 

THE TRAVELERS LIFE AND ANNUITY COMPANY, 

 Defendants. 

CIVIL ACTION NO. 04-CV-769

DEFENDANT THE TRAVELERS LIFE AND ANNUITY COMPANY’S

MEMORANDUM OF LAW IN SUPPORT OF ITS

MOTION TO DISMISS COUNT III AND PART OF COUNT V OF THE COMPLAINT

 The plaintiffs allege in Count III that defendant The Travelers Life and Annuity 

Company (“TLAC”) committed the tort of misappropriation of trade secrets. Because the gist of 

this claim is for a breach of contract, the claim should be dismissed as a matter of law. In 

addition, TLAC cannot be liable for a conspiracy to commit a tort that is not itself actionable. 

Thus, the corresponding portion of Count V should also be dismissed. 

FACTS

 Plaintiff PennMont Benefit Services, Inc. (“PennMont”) is in the business of 

marketing, design, sales and administration of tax-advantaged employee benefit and pension 

programs for financial professionals and their clients. (Compl. ¶ 5.) Plaintiff John J. Koresko V 

(“Koresko”) is an attorney who allegedly developed a pension program which is marketed by 

PennMont. (Compl. ¶¶ 11-12.) Defendant TLAC is an insurance company. The plaintiffs 

unsuccessfully attempted to persuade TLAC to adopt their program. (Compl. ¶ 34.) 
Page 2 

 According to the plaintiffs, attorney Koresko revealed confidential information 

about the plaintiffs’ pension program to TLAC on two occasions: at a seminar at which a TLAC 

executive was one of the attendees and at a private meeting with several TLAC personnel. 

(Compl. ¶¶ 22, 102; see also Compl. ¶ 29.) On both occasions, attorney Koresko allegedly 

displayed a PowerPoint slide with a confidentiality requirement and no one in the audience, 

including the TLAC personnel, voiced any objection. (Compl. ¶¶ 20-21, 29-30). The plaintiffs 

contend that “Travelers’ personnel never objected to the condition of the disclosure, and thus 

induced [the plaintiffs] into making disclosures and promised not to use the information in 

business with anyone else.” (Compl. ¶ 27; see also Compl. ¶¶ 43, 102). 

 The plaintiffs also allege that attorney Koresko sent confidentiality agreements to 

TLAC in advance of the private meeting which TLAC supposedly promised it would execute 

“after they got out of Legal.” (Compl. ¶¶ 24-26.) Although the plaintiffs do not allege that 

TLAC ever executed any confidentiality agreement, attorney Koresko nonetheless proceeded 

with the alleged disclosures at the seminar and meeting. 

ARGUMENT

1. Count III of the Complaint Should Be Dismissed As Against TLAC

 In Count III of their Complaint, the plaintiffs allege that their “revolutionary” 

pension program, which defendants allegedly called an abusive defined benefit program subject 

to IRS scrutiny (Compl. ¶ 91), contains trade secrets which TLAC used in violation of an alleged 

confidentiality agreement with the plaintiffs. (Compl. ¶¶ 10-13, 19, 22-23, 39, 41, 46, 100-01, 

103, 105.) However, this claim against TLAC is barred by the “gist of the action” doctrine under 

Pennsylvania law. 
Page 3 

 Plaintiffs hang their trade secret claim against TLAC from a single hook: an 

alleged agreement by TLAC that TLAC would not misappropriate certain information. (See,

e.g., Compl. ¶¶ 103 (“Travelers used that trade secret in breach of an agreement.”), 43 

(“Travelers has violated the confidentiality agreement and notice that it consented to in various 

meetings.”).) This alleged agreement is the only alleged source of wrongfulness or illegality of 

TLAC’s supposed misappropriation. 

 PennMont and Koresko seek tort damages, both compensatory and punitive, for 

the alleged misappropriation. (Compl. ¶ 106, wherefore clause following ¶ 106.) They allege a 

tortious mens rea. (Compl. ¶ 39.) Thus, although Count III hinges upon an allegation of breach 

of contract to establish TLAC’s supposed duty and liability, what it in fact alleges is a tort. 

 Under Pennsylvania law,1

 the “gist of the action” doctrine governs whether a 

cause of action (other than products liability) lies in tort or in contract, when it might have been 

brought as either. See, e.g., Phico Ins. Co. v. Presbyterian Med. Servs. Corp., 663 A.2d 753, 757 

(Pa. Super. Ct. 1995) (“[T]o be construed as a tort action, the wrong ascribed to the defendant 

must be the gist of the action with the contract being collateral.” Where the gist of an action for 

the tort of misappropriation of trade secrets is in fact the breach of an agreement between the 

parties, then the tort action cannot lie. The plaintiffs must bring a contract action, or none at all. 

 To determine whether the gist of the action lies in contract or in tort at the motion 

to dismiss stage, courts look to the complaint to find the source of the duty allegedly breached. 

Owen J. Roberts Sch. Dist. v. HTE, Inc., Civil Action No. 02-7820, 2003 U.S. Dist. LEXIS 

 1

 Taking the facts pled as true, for purposes of this motion, Pennsylvania law applies to 

this tort claim because the plaintiffs are Pennsylvania citizens (Compl. at caption, ¶¶ 4-5) who 

chose to bring the suit in a Pennsylvania court, and because “the cause of action arose in 

[Pennsylvania], the damage took place in [Pennsylvania], a substantial amount [sic] of the events 

giving rise to this action occurred in [Pennsylvania], and Defendants regularly transact business 

in [Pennsylvania].” (Compl. ¶ 2.) 
Page 4 

2997, at *5-8 (E.D. Pa. Feb. 28, 2003) (Dalzell, J.). If the gist of the action lies in contract, the 

non-contract claims must be dismissed. See, e.g., Bohler-Uddeholm Am., Inc. v. Ellwood 

Group, Inc., 247 F.3d 79, 106-07 (3d Cir. 2001) (rejecting tort liability for misappropriation of 

trade secrets covered by a contract); Penn City Invs., Inc. v. Soltech, Inc., Civil Action No. 01-

5542, 2003 U.S. Dist. LEXIS 22321, at *10-17 (E.D. Pa. Nov. 23, 2003) (granting summary 

judgment on a fraud claim when the defendant’s promises were later incorporated into a contract 

and barring a common law negligence claim because “the contract directly addressed this 

issue”); Blue Mt. Mushroom Co. v. Monterey Mushroom, 246 F. Supp. 2d 394 (E.D. Pa. 2002) 

(granting summary judgment on claims for intentional and negligent misrepresentation that were 

actually contract claims); Galdieri v. Monsanto Co., 245 F. Supp. 2d 636, 650 (E.D. Pa. 2002) 

(dismissing a fraud claim when the defendant’s promises were later incorporated into a contract); 

Mid-Continent Ins. Co. v. Packel, Civil Action No. 00-CV-3239, 2001 U.S. Dist. LEXIS 24204, 

at *12-13 (E.D. Pa. Oct. 25, 2001) (granting summary judgment on a conversion claim that 

should have been a breach of contract claim); see also Werwinski v. Ford Motor Co., Civil 

Action No. 00-943, 2000 U.S. Dist. LEXIS 11977, at *17-18 (E.D. Pa. Aug. 14, 2000) 

(analogizing to the gist of the action doctrine to hold that a cause of action based upon a statute 

was precluded by a contract claim). 

 The Bohler-Uddeholm case, like this one, involved a claim for misappropriation 

of trade secrets. In that case, the contract protected “Know How” from use and disclosure, 

which was defined to mean technical information about how to manufacture steel ingots. “Know 

How” did not cover non-technical information like client lists and pricing information. Thus, the 

gist of the action doctrine applied to forbid a cause of action for the tort of misappropriation of 

the technical information covered by the contract, but the doctrine did not keep the plaintiff from 
Page 5 

bringing a tort cause of action for misappropriation of the non-technical information. 247 F.3d at 

106-07. Here, the plaintiffs allege that there was an agreement that covered every one of the 

trade secret(s) supposedly misappropriated by TLAC. (E.g., Compl. ¶¶ 27, 43, 102-03.) 

Therefore, the Third Circuit’s holding in Bohler-Uddeholm is directly on point.2

 Count III for 

the tort of misappropriation of trade secrets must be dismissed. 

 Taking the plaintiffs’ allegations as true, TLAC’s alleged duty not to 

misappropriate the plaintiffs’ scheme hinges upon an agreement(s) between the plaintiffs and 

TLAC. There was no other relationship between the parties having anything to do with the 

plaintiffs’ scheme except through the agreement(s) that the plaintiffs allege TLAC to have made. 

The Complaint gives no other reason. Thus, the gist of the plaintiffs’ action lies in contract, not 

in tort, and the plaintiffs cannot sue for the tort of misappropriation. Count III of the Complaint 

should be dismissed as against TLAC with prejudice. 

 2

 Another recent case involving misappropriation of trade secrets supports the same 

conclusion. Flynn v. Health Advocate, Inc., Civil Action No. 03-3764, 2004 U.S. Dist. LEXIS 

293 (E.D. Pa. Jan. 13, 2004) (deciding a motion to dismiss). There, the plaintiffs alleged (1) an 

oral non-disclosure agreement with GCA, followed by (2) the plaintiffs’ disclosure of trade 

secrets to GCA and their tortious misappropriation by a defendant (“HA”) which was related to 

GCA, followed by (3) a written non-disclosure agreement with HA, followed by (4) the 

plaintiffs’ disclosure of trade secrets to HA and HA’s tortious misappropriation of these trade 

secrets. The court said that, had events (3) and (4) been the only facts, the gist of the action 

doctrine would apply. Id. at *33 (“While the ‘gist of the action’ doctrine might block any 

purported misappropriation of Plaintiffs’ trade secrets claim arising from the written nondisclosure agreement between HA and the plaintiffs, [events (1) and (2) change the analysis 

because HA did not have an agreement with the plaintiffs at the time of the misappropriation].” 

(emphasis added)) Here, because Koresko and PennMont allege they did have an agreement 

with TLAC at the time of TLAC’s alleged misappropriation, the facts as plead are analogous to 

events (3) and (4) only. Thus, Flynn supports dismissal of the plaintiffs’ tort claim against 

TLAC under the gist of the action doctrine. 
Page 6 

2. Count V of the Complaint Should Also Be Dismissed as Against TLAC 

to the Extent It Alleges a Civil Conspiracy to Misappropriate Trade Secret(s) 

 Similarly, the conspiracy count as against TLAC should be dismissed to the 

extent it alleges a civil conspiracy to misappropriate trade secret(s). Pennsylvania law forbids an 

allegation of civil conspiracy where the underlying tort count does not also lie. Boyanowski v. 

Capital Area Intermediate Unit, 215 F.3d 396, 405 (3d Cir. 2000) ("[A] claim of civil conspiracy 

cannot be pled without also alleging an underlying tort."). As a matter of law, TLAC cannot be 

liable for conspiracy to commit a tort if TLAC cannot be liable for the underlying tort itself. 

 The mere fact that a tort claim may be available against the other defendants 

makes no difference. In Pelagatti v. Cohen, 536 A.2d 1337 (Pa. Super. Ct. 1987), counts IX and 

X alleged a conspiracy among the defendants to libel and slander the plaintiffs. Id. at 1344. The 

court held that because two defendants made absolutely privileged statements and two did not, 

id. at 1344-45, 1346, civil conspiracy would only lie against the two defendants who might be 

liable for the underlying tort. Id. at 1347. Similarly, in this case, Count V (civil conspiracy "to 

commit all of the aforementioned violations of law," (Compl. ¶ 118), should be dismissed against 

defendant TLAC to the extent it alleges that TLAC conspired to misappropriate trade secret(s) 

because TLAC cannot, as a matter of law, be liable for the tort of misappropriation of trade 

secret(s). 
Page 7 

CONCLUSION

 Count III of the Complaint alleges that TLAC made an agreement not to 

misappropriate the plaintiffs’ alleged trade secret(s) and that TLAC breached that agreement. 

But Count III accuses TLAC of the tort of misappropriation of trade secret(s), not breach of 

contract. As a matter of law, the “gist of the action” doctrine bars plaintiffs from bringing a tort 

claim, seeking tort damages, for what they allege is a mere breach of contract. Thus, Count III 

should be dismissed as against TLAC with prejudice. 

 Count V alleges, among other things, that TLAC conspired to commit the tort of 

misappropriation of trade secret(s). Because TLAC cannot be liable for the underlying tort, it 

cannot be liable for a conspiracy to commit that tort. Thus, Count V should be dismissed as 

against TLAC with prejudice to the extent it alleges a civil conspiracy to misappropriate trade 

secret(s). 

Dated: March 29, 2004 

Respectively submitted, 

 RA604 

Diane Siegel Danoff 

Robert W. Ashbrook 

Dechert LLP 

4000 Bell Atlantic Tower 

1717 Arch Street 

Philadelphia, PA 19103-2793 

telephone 215.994.4000 

facsimile 215.994.2222 

Attorneys for Defendant 

 The Travelers Life and Annuity Company 
CERTIFICATE OF SERVICE

 I certify that today I caused to be served by first class mail a true and correct copy 

of the following: 

Order 

Defendant The Travelers Life and Annuity Company’s 

 Motion to Dismiss Count III and Part of Count V of the Complaint 

Defendant The Travelers Life and Annuity Company’s Memorandum of Law in Support 

 of Its Motion to Dismiss Count III and Part of Count V of the Complaint 

upon the following people: 

Virginia I. Miller, Esq. 

Anderson Kill & Olick, P.C. 

1600 Market Street, Suite 2500 

Philadelphia, PA 19103 

Craig R. Tractenberg, Esq. 

Nixon Peabody, LLP 

1818 Market Street, 11th Floor 

Philadelphia, PA 19103-3647 

Dated: March 29, 2004 RA604 

 Robert W. Ashbrook