Title: Savor, Inc. v. FMR Corp. et al.
Citation: N/A
Docket Number: 192, 2002
State: Delaware
Issuer: Delaware Supreme Court
Date: December 18, 2002

IN THE SUPREME COURT OF THE STATE OF DELAWARE
SAVOR, INC.,
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No. 192, 2002
Plaintiff Below,
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Appellant,
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v.
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Court Below: Superior Court
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of the State of Delaware
FMR CORP., a Massachusetts
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in and for New Castle County
corporation and UPROMISE, INC.,
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C.A. No. 00C-10-249
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Defendants Below,
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Appellees.
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Submitted: September 10, 2002
Decided: November 25, 2002
Revised: December 18, 2002
Before VEASEY, Chief Justice, BERGER and STEELE, Justices.
Upon appeal from the Superior Court.  REVERSED in part; AFFIRMED in part.
Jeffrey K. Martin, Esquire, and William M. Aukamp, Esquire, of Harvey, Pennington,
Cabot, Griffith & Renneisen, Ltd., Wilmington, Delaware, and Howard M. Cyr, III,
Esquire, Michael E. Lignowski, Esquire (argued), and Paul M. Quinones, Esquire, of
Harvey, Pennington, Cabot, Griffith & Renneisen, Ltd., Philadelphia, Pennsylvania,
for Appellant.
Kevin G. Abrams, Esquire, and Srinivas M. Raju, Esquire, of Richards, Layton &
Finger, Wilmington, Delaware, and John D. Donovan, Jr., Esquire (argued), and L.
Jay Law, Esquire, of Ropes & Gray, Boston, Massachusetts, for Appellee FMR Corp.
Anthony W. Clark, Esquire, of Skadden, Arps, Slate Meagher & Flom, LLP,
Wilmington, Delaware, and James R. Carroll, Esquire (argued), and Michael D.
Blanchard, Esquire, of Skadden, Arps, Slate, Meagher & Flom, LLP, Boston,
Massachusetts, for Appellee Upromise, Inc.
BERGER, Justice:
1 So-called “529 Plans” are state-run college tuition savings programs that accumulate free
of federal taxation pursuant to 26 U.S.C.A. §529.
2
 
In this appeal, we consider whether a complaint seeking relief for
misappropriation of trade secrets adequately states a claim.  The Superior Court
dismissed appellant’s third amended complaint, finding that it contained only
generalities and conclusory allegations that failed to identify a trade secret.  Although
the complaint does not describe the purported trade secret in detail, we are satisfied
that it meets the minimal standards governing notice pleading.  Accordingly, we
reverse.
Factual and Procedural Background
In 1994, Savor, Inc. developed what it claims was a unique program under
which consumers, when purchasing specified goods and services, would be entitled
to cash rebates that would be paid into a State Qualified Tuition Plan (now known as
a “529 Plan”).1  In September 1998, Savor’s Chief Executive Officer, Dennis A.
Doyle, contacted Abram Claude, Vice President of FMR Corp., to solicit FMR’s
participation in the Savor program.  Doyle asked Claude to sign a confidentiality
agreement, but Claude declined, claiming that it was against company policy. Claude
promised, nonetheless, to respect the secrecy of Savor’s information.
Savor sent a package of materials to FMR, under a cover page that stated,
“Materials enclosed are protected by various copyrights, patents pending, and
2Original Complaint, ¶5.
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trademark registrations.” Over the next few weeks, Doyle discussed the details of the
Savor program with Claude and other FMR employees.  In October, Claude informed
Doyle that FMR was not interested in the Savor program.
UPromise was organized in February 2000.  Jim Fadule, an UPromise Vice
President, is a former FMR employee who worked with Claude and was the “primary
author” of FMR’s college investment business lines.  UPromise is marketing a college
investment/rebate program that uses “many of the marketing strategies, methods,
techniques and processes” that Savor presented to FMR in 1998.  In April 2001, FMR
agreed to manage UPromise’s 529 Plan assets.  According to Savor, both UPromise
and FMR are likely to reap substantial economic gain from their involvement in the
UPromise program.
 
Savor filed this action in October 2000 against Fidelity Investment Corporation
and UPromise, Inc.  The first complaint alleged that appellees misappropriated the
“Savor Program,” a “unique program whereunder individuals who purchase products
and services, with or without the use of credit cards, would receive rebates and
rewards that would be paid in cash for the account of a designated beneficiary under
a State Qualified Tuition Plan.”2  Based on their alleged involvement in creating a
similar UPromise program, the complaint charged appellees with misappropriation of
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trade secrets, unfair competition, and conspiracy.  
After Savor amended its complaint
twice to correctly identify Fidelity Investment Corporation as  FMR Corp., a
Massachusetts corporation,  FMR and UPromise moved to dismiss the Second
Amended Complaint for failure to state a claim.  At oral argument, Savor
acknowledged that its complaint did not detail the “methods, techniques and
processes” that comprise the alleged trade secret, and it offered to provide that
additional information in a Third Amended Complaint, if the complaint could be filed
under seal.  
The Superior Court granted the motion to dismiss.  The trial court held that the
unfair competition and conspiracy claims failed as a matter of law under 6 Del.C.
§2007(a), and that the misappropriation claim failed because the complaint did not
adequately allege: (i) the processes that are claimed to be trade secrets; (ii) the basis
for Savor’s conclusory allegation that FMR agreed to maintain the confidentiality of
the trade secrets; and (iii) the basis for Savor’s conclusory allegation that FMR used
or disclosed those trade secrets.  The Superior Court granted Savor’s motion to amend
and allowed Savor to file its Third Amended Complaint under seal.
Savor’s Third Amended Complaint (the “Complaint”) deleted the claims for
unfair competition and conspiracy, and expanded its allegations in the three areas the
trial court found deficient.  In Paragraph 6, Savor explained that its “unique program”
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included “marketing strategies and methods, techniques and processes for extracting
payments from program participants, aggregating the funds until they met any
minimum payment requirements under a State Qualified Tuition Plan, and then paying
them over to the Plan.”  The “details” allegedly were contained in 120 pages of
material that was attached as Exhibit A and filed under seal.  The Complaint also
added allegations that Savor presented its program to FMR only after Claude agreed
that he would respect the confidentiality of the information he was given .  Finally, the
Complaint attempted to support its claim that FMR disclosed trade secrets to
UPromise by alleging that: (i) Fadule worked with Claude at FMR in the college
investing business line; (ii) UPromise has a magazine article bearing a “Confidential”
stamp that matches one of the documents Savor provided to FMR; and (iii) many of
the marketing strategies and processes in the UPromise program are the same as those
that Savor presented to FMR.
Appellees again moved to dismiss, arguing that Exhibit A was nothing more
than a collection of publicly available articles, website pages, and “business school
basics” about marketing a rebate program.  The Superior Court agreed, holding that
Savor failed to identify its purported trade secret with sufficient particularity to enable
appellees to prepare their defense.  The Superior Court did not address whether the
3 Precision Air  v. Standard Chlorine of Del., 654 A.2d 403, 406 (Del. 1995).
4 Ibid.
5 Ibid.
6 Ramunno v. Cawley, 705 A.2d 1029, 1034 (Del. 1998).
7 Kofron v. Amoco Chems. Corp., 441 A.2d 226,  227 (Del. 1982).
8 6 Del.C. Ch. 20.
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Complaint remedied the other pleading deficiencies identified in its earlier decision.
This appeal followed.
Discussion
We review the trial court’s decision de novo.3  The standards governing a
motion to dismiss for failure to state a claim are well settled: (i) all well-pleaded
factual allegations are accepted as true;4 (ii) even vague allegations are “well-pleaded”
if they give the opposing party notice of the claim;5 (iii) the Court must draw all
reasonable inferences in favor of the non-moving party;6 and (iii) dismissal is
inappropriate unless the “plaintiff would not be entitled to recover under any
reasonably conceivable set of circumstances susceptible of proof.”7   The elements of
a misappropriation of trade secrets claim also are well defined.  A party may obtain
injunctive relief and damages against one who acquires, uses or discloses a trade
secret obtained through improper means.8  A trade secret is information that: 
9 6 Del.C. §2001(4).
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a.  Derives independent economic value, actual or potential, from
not being generally 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.  Is the subject of efforts that are reasonable under the
circumstances  to maintain its secrecy.9
Under the liberal notice pleading standards governing this motion, we find that
the Complaint adequately states a misappropriation of trade secrets claim.  The trade
secret is the allegedly unique combination of marketing strategies and processes for
the implementation of a program under which consumers would be able to use rebates
from their qualified purchases to fund a 529 Plan.  Savor alleges that its program was
not generally known to, or readily ascertainable by, others and that it  described the
program to FMR after receiving an assurance that Claude would respect the
confidentiality of the information.  Finally, Savor alleges that its program has potential
economic value to FMR and UPromise.
Appellees say that the Savor Program cannot be a trade secret because it is
nothing but a combination of widely known business and marketing techniques
associated with rebate programs.   If there is something more to Savor’s claim, they
say that the complaint gives them insufficient information from which to prepare a
response.  Appellees also contend that Savor’s claim must be dismissed because the
10Merck & Co. v. SmithKline Beecham Pharmaceuticals Co., 1999 WL 669354 at *15 (Del.
Ch. 1999), aff’d. 766 A.2d 442 (Del. 2000).
11SmithKline Beecham Pharmaceuticals Co. v. Merck & Co., 766 A.2d 442, 448 (Del. 2000).
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Complaint itself reveals that Savor failed to take reasonable steps to maintain the
confidentiality of its purported trade secret.  Finally, they say that the Complaint fails
to adequately allege that FMR or UPromise misappropriated the trade secret.
The short answer to these arguments is that, at this stage of the proceedings,
Savor gets the benefit of all favorable inferences.  Savor alleges that its program was
a unique set of marketing strategies and processes that combined consumer rebates
with college investment plans.  Even if the basic components of the program were
well known, as appellees argue, the program still may be a protectable trade secret if
it is a unique combination of those components.10  That determination, along with
factual findings about whether Savor adequately protected the confidentiality of its
program or whether appellees misappropriated it, cannot be resolved on a motion to
dismiss.11 
Although the Complaint is being reinstated, there remains a question as to the
viability of Savor’s unfair competition and conspiracy claims.  Savor argues that the
dismissal of those common law claims was premature because the trial court has not
yet determined that a trade secret exists.  If Savor fails in its statutory trade secret
claims, Savor says that is should be allowed to proceed with its alternative common
12 6 Del.C. §2001 et seq.
13 6 Del.C. § 2007(b).
14 Savor v. FMR Corp. et al, Del. Super., C.A. No. 00C-10-249-JRS, Slights, J.(April 24,
2001).
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law claims.  The Superior Court held that, because the common law claims are based
on the same alleged wrongful conduct as the trade secrets claims, they are precluded
under 6 Del.C. §2007, which provides that the Uniform Trade Secrets Act12 “displaces
conflicting tort, restitutionary and other law of this State providing civil remedies for
misappropriation of a trade secret.”  The only exceptions to this provision are claims
for criminal remedies, contract remedies, and “other civil remedies that are not based
on misappropriation of a trade secret....”13  Savor’s common law claims seek civil
remedies based solely on the alleged misappropriation of a trade secret.  Thus, the
Superior Court correctly ruled that Savor’s common law claims are precluded.14
Conclusion
Based on the foregoing, the decision of the Superior Court dismissing Savor’s
Third Amended Complaint is reversed and the decision of the Superior Court
dismissing Counts II and III of the Second Amended Complaint is affirmed.  
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