Court Opinion

ID: 5136451
Source: CourtListenerOpinion
Date Created: 2021-12-20 17:01:10.317623+00
Date Added: 2024-06-11T08:23:55.853768
License: Public Domain

UNITED STATES DISTRICT COURT
                       FOR THE DISTRICT OF COLUMBIA

    HIRECOUNSEL D.C., LLC,

                    Plaintiff,
    v.
                                        Civ. Action No. 20-3337
    KILIAN CONNOLLY,                    (EGS)
                    Defendant.

                            MEMORANDUM OPINION

         Plaintiff HIRECounsel D.C., LLC (“HIRECounsel”) brings this

lawsuit against Defendant Kilian Connolly (“Mr. Connolly”)

alleging: (1) two counts of breach of contract; and (2)

violation of the District of Columbia Uniform Trade Secrets Act

(“DCUTSA”) arising out of his employment with his former

employer HIRECounsel. Compl., ECF No. 1-1 at 8-10. 1 HIRECounsel

filed its Complaint in the Superior Court of the District of

Columbia, and Mr. Connolly removed the action to this court,

alleging federal jurisdiction based on diversity of citizenship

and the amount in controversy. See Notice of Removal, ECF No. 1

at 2.

1
 When citing electronic filings throughout this Opinion, the
Court cites to the ECF page number, not the page number of the
filed document.

                                    1
     Pending before the Court is Mr. Connolly’s Motion to

Dismiss. See Def.’s Mot. to Dismiss (“Mot. to Dismiss”), ECF No.

7. Upon careful consideration of the motion, opposition, reply,

the applicable law, and for the reasons explained below, Mr.

Connolly’s motion is DENIED.

I.   Background

     A.   Factual

     The Court assumes the following facts alleged in the

complaint to be true for the purposes of deciding this motion

and construes them in HIRECounsel’s favor. See Baird v. Gotbaum,

792 F.3d 166, 169 n.2 (D.C. Cir. 2015). HIRECounsel is a “legal

staffing and managed document review company” which “provides

law firms and corporate legal departments permanent and

temporary legal placements of attorneys and paralegals, as well

as supplies personnel, technology, and staff to support managed

document review for transactions and litigation matters.”

Compl., ECF No. 1-1 ¶ 4. On January 26, 2015, HIRECounsel hired

Mr. Connolly as a Managing Director of Client Relations and

entered into an Employment Agreement (the “Agreement”) with him

that included, among other things, certain post-employment

restrictive covenants. Id. ¶¶ 6, 10-11. While Mr. Connolly was

“based” in HIRECounsel’s Boston office, “on several occasions in

2019, he was also directly responsible for customer engagements

                                2
pertaining to managed document review projects in Washington, DC

for which he received compensation.” Id. ¶ 8.

     HIRECounsel alleges that during Mr. Connolly’s employment,

he had “access to information that is confidential and

constitute trade secrets of [HIRECounsel]”. Id. ¶ 10. This

information included “detailed confidential information

regarding [HIRECounsel] legal placements and prospects as well

as the strengths and weaknesses of candidates for temporary and

permanent legal placements at customers . . . confidential

information concerning customers and [HIRECounsel’s]

relationship with them, pricing and other terms of contractual

agreements with these customers, and profitability concerning

services to its customers”. Id. ¶ 9.

     HIRECounsel alleges that Section 4 of the Agreement

includes a non-disclosure covenant and defines “Confidential

Information”:

          (b) During and after EMPLOYEE’S employment
          with the COMPANY, the EMPLOYEE agrees that
          EMPLOYEE will not use, disclose, copy or
          retain or remove from the COMPANY’S premises
          any confidential or proprietary information or
          trade secrets, including but not limited to,
          lists and information pertaining to clients
          and   client    contacts,   job    applicants,
          referrals, and employees, and any other ideas,
          methods,   procedures,   techniques,   written
          material, and other know- how, developed or
          used in connection with the COMPANY’S or any
          of its Affiliates’ business belonging to the
          COMPANY    or    any   of    its    Affiliates
          (collectively, “Confidential Information”),

                                3
            other than for use in connection with
            authorized work performed for the COMPANY or
            such Affiliates. Confidential Information
            shall also include, but is not limited to, ...
            financial and other information of the COMPANY
            and its Affiliates, not generally available to
            others.

Id. at 4.

     Section 5 of the Agreement imposed non-competition

restrictions, providing in relevant part that:

            (a) EMPLOYEE agrees that during the term of
            this Agreement and for a period of twelve (12)
            months following EMPLOYEE ceasing to be an
            employee of the COMPANY, EMPLOYEE will not,
            without the prior written consent of the
            COMPANY, either directly or indirectly, on
            EMPLOYEE'S own behalf or in the service or on
            behalf of others:
            ...
            (vii) directly or indirectly ... be employed
            by ... any Competing Business within seventy-
            five (75) miles of any office of the COMPANY
            or any of the COMPANY'S Affiliates, at which
            the EMPLOYEE is or was employed, performed
            services or engaged or assisted in the
            business or operations of the COMPNY or any of
            its Affiliates. ...

Id. Section 5(a)(i) defines “Competing Business” as a “business

which is either engaged in permanent or temporary placement or

the same or substantially the same business of HIRECounsel or

its Affiliates.” Id.

     On August 7, 2020, Mr. Connolly resigned from his position

with HIRECounsel, effective that day. Id. ¶ 13. Several weeks

after his resignation, HIRECounsel alleges that it learned that

                                  4
Mr. Connolly had joined Beacon Hill Staffing, LLC (“Beacon

Hill”) in its Boston office in its legal staffing specialty

division as a Senior Account Executive. Id. ¶ 14. HIRECounsel

alleges that Beacon Hill’s legal specialty division provides

legal placement and managed document review services similar to

HIRECounsel and is a competitor of HIRECounsel. Id.

     After Mr. Connolly’s departure, HIRECounsel learned that he

had, on July 28, 2020, “wrongfully forwarded from his work e-

mail address to his personal e-mail a confidential internal

report prepared by the Company’s Vice-President of Sales

regarding on- going placements, price mark-ups, and revenue

projections by sales person.” Id. ¶ 15. HIRECounsel alleges that

this information was not available to the public and was only

drawn from data in a password protected confidential database,

and that Mr. Connolly was only given access by his direct

superior during a virtual meeting when she shared her computer

screen with the attendees of the virtual meeting. Id.

HIRECounsel alleges that Mr. Connolly took “a screen shot with a

snipping tool and then forward[ed] that image to his personal e-

mail account.” Id.

     On September 23, 2020, HIRECounsel’s counsel sent Mr.

Connolly a cease and desist letter, alleging, in essence, that

Mr. Connolly was in violation of the non-compete provision of

the Agreement, and claiming that Mr. Connolly had sent

                                5
confidential information belonging to HIRECounsel to his

personal e-mail address, in violation of Section 4(b) of the

Agreement. Id. ¶ 16. Counsel to HIRECounsel also wrote to Beacon

Hill, on or about September 29, 2020, claiming that Mr.

Connolly’s employment with Beacon Hill–and the alleged

misappropriation of HIRECounsel’s confidential information–

violated the Agreement. Id. ¶ 17.

      B.   Procedural

      On November 24, 2020, Mr. Connolly filed his Motion to

Dismiss. See Mot. to Dismiss, ECF No. 7. HIRECounsel filed its

Opposition brief on December 8, 2020, see Opp’n, No. 8; and Mr.

Connolly filed his Reply brief on December 15, 2020, see Reply,

ECF No. 10. The Motion is ripe and ready for the Court’s

adjudication.

II.   Standard of Review

      A motion to dismiss pursuant to Federal Rule of Civil

Procedure 12(b)(6) tests the legal sufficiency of a complaint.

Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A

complaint must contain "a short and plain statement of the claim

showing that the pleader is entitled to relief, in order to give

the defendant 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) (internal quotation marks omitted).

                                 6
     Despite this liberal pleading standard, to survive a motion

to dismiss, a complaint "must contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible

on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009)

(internal quotation marks omitted). A claim is facially

plausible when the facts pled in the complaint allow the court

to "draw the reasonable inference that the defendant is liable

for the misconduct alleged." Id. The standard does not amount to

a "probability requirement," but it does require more than a

"sheer possibility that a defendant has acted unlawfully." Id.

     "[W]hen ruling on a defendant's motion to dismiss [pursuant

to Rule 12(b)(6)], a judge must accept as true all of the

factual allegations contained in the complaint." Atherton v.

D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009)

(internal quotation marks omitted). “In determining whether a

complaint fails to state a claim, [the Court] may consider only

the facts alleged in the complaint, any documents either

attached to or incorporated in the complaint and matters of

which [the Court] may take judicial notice.” EEOC v. St. Francis

Xavier Parochial Schl., 117 F.3d 621, 624 (D.C. Cir. 1997). In

addition, the court must give the plaintiff the "benefit of all

inferences that can be derived from the facts alleged." Kowal v.

MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).

                                7
III. Analysis

     A.   Counts I and II State a Claim for Breach of Contract
          with Regard to Certain Provisions of the Agreement

     In Count I, HIRECounsel alleges that Mr. Connolly violated

the non-Competition provision in Section 5 of the Agreement as a

result of his employment with Beacon Hill’s legal staffing

specialty division. Compl., ECF No. 1-1 at 8. In Count II,

HIRECounsel alleges that Mr. Connolly violated Section 4(b) of

the Agreement by taking a screen shot with a snipping tool of a

confidential internal report and then forwarding that image to

his personal e-mail account. Id. at 9.

     Under District of Columbia law, to state a claim for breach

of contract, HIRECounsel must allege: (1) a valid contract

between the parties; (2) an obligation or duty arising out of

the contract; (3) a breach of that duty; and (4) damages caused

by the breach. Tsintolas Realty Co., v. Mendez, 984 A.2d 181,

187 (D.C. 2009).

          1.    Count I States a Claim for Breach of Contract
                With Regard to the Non-Compete Provisions in
                Section 5 of the Employment Agreement

     Mr. Connolly argues that HIRECounsel fails to state a claim

for breach of contract on the ground that the non-compete

provision in the Agreement is unenforceable because: (1) it is

not reasonable; and (2) “it is far broader than necessary for

the protection of any possible business interest at stake for

                                 8
HIRECounsel.” Mot. to Dismiss, ECF No. 7 at 8. “Under District

of Columbia law, a non-compete agreement’s terms are enforceable

if the restrictions further a legitimate business interest and

are reasonable in duration and geographic scope.” Robert Half

Int’l v. Billingham, 315 F. Supp. 3d 419, 430 (D.D.C. 2018)

(citations omitted). Here, HIRECounsel has alleged that Section

5(a)(vii) of the Agreement obligates Mr. Connolly to not be

employed by a competing business within 75 miles of the

HIRECounsel Boston office for one year. 2 Compl., ECF No. 1-1 ¶

11. The Agreement defines a “competing business” as a “business

which is either engaged permanent or temporary placement or the

same or substantially business.” Id. Mr. Connolly argues that

the provision is overbroad because it would prohibit him “from

being employed in any business engaged in staffing, without

limitation to industry, and even in a role unrelated to the kind

of work [he] performed for HIRECounsel.” Mot. to Dismiss, ECF

No. 7 at 18. HIRECounsel responds—and the Court agrees—that a

“competing business” is a “competing legal staffing business.”

Opp’n, ECF No. 8 at 13. And to the extent Mr. Connolly argues

that the provision would prevent him from doing any kind of work

for a competing legal staffing business, that is not the case

before the Court. Here, HIRECounsel has alleged that it hired

2
 Mr. Connolly does not contest the one-year time restriction.
See generally Mot. to Dismiss, ECF No. 7.

                                9
Mr. Connolly as a Managing Director of Client Relations and that

after resigning from his position with HIRECounsel, he joined a

competitor of HIRECounsel as a Senior Account Executive in its

legal staffing specialty division. Compl., ECF No. 1-1 ¶¶ 6, 13,

14. Accordingly, “[t]he [C]ourt need not indulge in this thought

experiment.” Robert Half, 315 F. Supp. 3d at 431.

     Mr. Connolly also argues that because staffing businesses

do not rely on customer goodwill and confidential information,

HIRECounsel has no legitimate business interest in the

restrictive covenant. Mot. to Dismiss, ECF No. 7 at 17.

HIRECounsel has alleged that it provided Mr. Connolly with

access to its confidential and trade secret information

including “detailed confidential information regarding [its]

legal placements and prospects as well as the strengths and

weaknesses of candidates for temporary and permanent legal

placements at customers.” Compl., ECF No 1-1 ¶ 9. HIRECounsel

has further alleged that the information “also included

confidential information concerning customers and [its]

relationships with them, pricing and other terms of contractual

agreements with these customers; and profitability concerning

services to its customers.” Id. With these allegations,

HIRECounsel has sufficiently alleged its legitimate business

interest in maintaining customer goodwill and protecting

confidential information. Cf. Mercer Mgmt. Consulting v. Wlide,

                               10
920 F. Supp. 219, 237 (D.D.C. 1996) (finding a non-compete

agreement to be reasonable and enforceable in view of the

substantial investment Mercer made in its employees, the vital

importance of its client base to its business, and the close

contacts established between its consultants and its client

base).

     Mr. Connolly also argues that the 75-mile restriction is

geographically overbroad and unreasonable. 3 Mot. to Dismiss, ECF

No. 7 at 20. The Court disagrees. Courts applying District of

Columbia law have repeatedly upheld the enforceability of

similar geographic scope restrictions. E.g., Robert Half, 315 F.

Supp. 3d at 430 (50-mile restriction); Morgan Stanley DW Inc.,

150 F. Supp. 2d 67, 74 (D.D.C. 2001) (100-mile restriction).

     Finally, Mr. Connolly argues that even if the provision is

enforceable, HIRECounsel has “fail[ed] to allege the essential

element of damages” because it “does not allege that it has lost

any customer, job placement, or any other business . . . .” Mot.

to Dismiss, ECF No. 7 at 21. Under District of Columbia law,

however, a plaintiff is not required to allege the damages

caused by a breach of contract to survive a Rule 12(b)(6) motion

3 To the extent Mr. Connolly argues that the provision could also
restrict his employment within a 75-mile radius of Washington,
D.C., again, that is not the case before the Court. Here, the
complaint alleges that Mr. Connolly went to work for its
competitor Beacon Hill in its Boston Office. Compl., ECF No. 1-1
¶ 14.

                                11
to dismiss. At this stage, “‘it is enough for the plaintiff to

describe the terms of the alleged contract and the nature of the

defendant’s breach.’” Jacobson v. Hofgard, 168 F. Supp. 3d 187,

207 (D.D.C. 2016) (quoting Francis v. Rehman, 110 A.3d 615, 620

(D.C. 2015).

     For these reasons, HIRECounsel has sufficiently stated a

claim for breach of contract and Mr. Connolly’s Motion to

Dismiss is DENIED as to Count I of the Complaint.

          2.   Count II States a Claim for Breach of Contract
               With Regard to Section 4(b) of the Employment
               Agreement

     Mr. Connolly contends that HIRECounsel has failed to

plausibly allege a violation of Section 4(b) of the Agreement

because HIRECounsel failed to allege that: (1) he removed the

screen shot for any unauthorized reason; (2) he disclosed the

information to anyone outside of HIRECounsel; (3) he has used it

since leaving HIRECounsel; (4) the information would be valuable

to HIRECounsel’s competitors; (5) facts describing what the

image contained; and (6) why the information was subject to the

Agreement’s definition of Confidential Information. Mot. to

Dismiss, ECF No. 7 at 22.

     Mr. Connolly’s arguments are unpersuasive. First,

HIRECounsel has adequately described what the image contained

and has adequately alleged that the information in the screen

shot falls within Section 4(b) of the Agreement. Section 4(b) of

                               12
the Agreement defines “Confidential Information” as “including

but not limited to, lists and information pertaining to clients

and client contacts, job applicants, referrals, and employees,

and any other ideas, methods, procedures, techniques, written

material, and other know-how, developed or used in connection

with the COMPANY'S or any of its Affiliates' business belonging

to the COMPANY or any of its Affiliates,” Compl., ECF No. 1-1 ¶

10; and as “include[ing], but not [] limited to, ... financial

and other information of the COMPANY and its Affiliates, not

generally available to others,” id. HIRECounsel alleges that the

screen shot contained “a confidential internal report . ..

regarding on-going placements, price mark-ups, and revenue

projections.” Id. ¶ 15. HIRECounsel further alleges that “[t]his

information was not available to the public,” was “drawn from

data in a password protected confidential database,” and was

“marked ‘confidential and proprietary.’” Id.

     Second, HIRECounsel has adequately alleged that Mr.

Connolly violated Section 4(b) of the Agreement when he emailed

a screen shot of the report to his personal email address.

Section 4(b) of the Agreement provides that, among other things,

Mr. Connolly was prohibited, during his employment with

HIRECounsel from copying, retaining, or removing from

HIRECounsel’s premises any confidential information. Compl., ECF

No. 1-1 ¶ 10. HIRECounsel alleges that Mr. Connolly took “a

                               13
screen shot [of the report] with a snipping tool and then

forward[ed] that image to his personal email account.” Id. ¶ 15.

Based on the relevant provision in the Agreement, Mr. Connolly’s

contentions that HIRECounsel needs to allege that: (1) he

removed the screen shot for any unauthorized reason; (2) he

disclosed the information to anyone outside of HIRECounsel; (3)

he has used it since leaving HIRECounsel; and (4) the

information would be valuable to HIRECounsel’s competitors are

entirely without merit.

     Finally, Mr. Connolly again argues that HIRECounsel has

failed to allege facts demonstrating that it suffered any

damages as a result of the alleged breach. Mot. to Dismiss, ECF

No. 7 at 23-24. However, and an explained supra, under District

of Columbia law, a plaintiff is not required to allege the

damages caused by a breach of contract to survive a Rule

12(b)(6) motion to dismiss. At this stage, “‘it is enough for

the plaintiff to describe the terms of the alleged contract and

the nature of the defendant’s breach.’” Jacobson, 168 F. Supp.

3d at 207 (quoting Francis, 110 A.3d at 620).

     For these reasons, HIRECounsel has sufficiently stated a

claim for breach of contract as to Section 4(b) of the Agreement

and Mr. Connolly’s Motion to Dismiss is DENIED as to Count II of

the Complaint.

                               14
     B.   Count III States a Claim for Violation of the DCUTSA

     In Count III, HIRECounsel alleges that Mr. Connolly

violated the DCUTSA when he allegedly sent to his personal e-

mail of a “screen shot” “image” from the July 2020 virtual

meeting. Compl., ECF No. 1-1 at 9.

     To establish a trade secret misappropriation claim under

the DCUTSA, HIRECounsel must allege: (1) the existence of a

trade secret; and (2) acquisition of the trade secret by

improper means, or improper use or disclosure by one under a

duty not to disclose. DSMC, Inc. v. Convera Corp., 479 F. Supp.

2d 68, 77 (D.D.C. 2007) (citing D.C. Code § 36–401). The

“threshold inquiry” in every trade secret case is “whether or

not there [is] a trade secret to be misappropriated.” Catalyst &

Chemical & Chemistry Services, Inc. v.   Global Ground Support,

350 F. Supp. 2d 1, 8 (D.D.C. 2004). “For information to

constitute a trade secret under the DCUTSA, (1) the information

must be secret; (2) its value must derive from its secrecy; and

(3) its owner must use reasonable efforts to safeguard its

secrecy.” DSMC, Inc., 479 F. Supp. 2d at 77-78 (internal

quotation marks and citation omitted). “Whether a particular

piece of information is a trade secret is generally a question

of fact.” Id.

     The DCUTSA defines a “trade secret” as “information,

including a formula, pattern, compilation, program, device,

                               15
method, technique, or process, that: (A) [d]erives actual or

potential independent economic value, from not being generally

known to, and not being readily ascertainable by, proper means

by another who can obtain economic value from its disclosure or

use; and (B) [i]s the subject of reasonable efforts to maintain

its secrecy.” D.C. Code § 36-401(4). Information, which is

generally known within industry, even if it is not generally

known to public, cannot constitute “trade secret” under District

of Columbia law. Catalyst & Chemical Services, Inc., 350 F.

Supp. 2d at 8.

     Mr. Connolly first argues that the Complaint fails to

allege facts which describe the actual information in the screen

shot. Mot. to Dismiss, ECF No. 7 at 25. However, and as

discussed supra, HIRECounsel has sufficiently described the

information Mr. Connolly allegedly retained in the form of a

screen shot of the report.

     Second, Mr. Connolly argues that HIRECounsel has failed to

explain “how it derives economic value from the secrecy of such

information, or how such information is not readily

ascertainable ‘by another who can obtain economic value from its

disclosure or use.’” Id. (quoting D.C. Code § 36-401(4)).

However, “[w]hether a particular piece of information is a trade

secret is generally a question of fact . . . after full

presentation of the evidence from each side.” Id. DSMC, Inc.,

                               16
479 F. Supp. 2d at 77-79 (internal quotation marks and citation

omitted). As this juncture, HIRECounsel has sufficiently alleged

that the confidential information is a trade secret by alleging

that: (1) the report contained information regarding “on-going

placements, price mark-ups, and revenue projections by sales

persons”; (2) it was not publicly available; (3) was “drawn from

data in a password protected confidential database; and (4) was

marked “confidential and proprietary.” Compl., ECF No. 1-1 ¶ 15.

     Third, Mr. Connolly argues that HIRECounsel fails to allege

that he misappropriated the alleged trade secret because: (1) he

did not access the information without permission; and (2)

HIRECounsel does not allege that he has disclosed the

information to anyone outside of HIRECounsel nor used it for any

purpose other than for his work at HIRECounsel. Mot. to Dismiss,

ECF No. 7 at 26. Relevant to the allegations here, DCUTSA

defines “misappropriation” as “disclosure or use of a trade

secret without express or implied consent by a person who: (i)

used improper means to acquire knowledge of the trade secret.”

DC Code 36-401(2)(A). “‘Improper means’ means theft, bribery,

misrepresentation, breach or inducement of a breach of a duty to

maintain secrecy or espionage through electronic or other

means.” DC Code 36-401(1). HIRECounsel argues that the “improper

means” was “taking a screen shot of the confidential report with

a snipping tool and then forwarding that image to his personal

                               17
email account for his use unrelated to his employment with

[HIRECounsel].” Opp’n, ECF No. 8 at 22 (citing Compl., ECF No.

1-1 ¶ 34. HIRECounsel further argues that Mr. Connolly

misappropriated the information because his action amounted to

theft and was in violation of his Employment Agreement. Id. The

Court is persuaded that, at this juncture, HIRECounsel has

sufficiently alleged that Mr. Connolly misappropriated the

alleged trade secret. He acquired it for use unrelated to his

employment with HIRECounsel and by improper means when he

emailed the information to his personal email address 10 days

before he resigned from his position with HIRECounsel and soon

thereafter began working with one of HIRECounse’s direct

competitors. See E.I. DuPont deNemours & Co. v. Christopher, 431

F.2d 1012, 1016 (5th Cir. 1970) ("improper means" has been

defined as those means that "fall below the generally accepted

standards of commercial morality and reasonable conduct"). Mr.

Connolly’s argument that HIRECounsel’s claim fails because it

does not allege that he used the trade secret is without merit

based on the pain language of the statute. D.C. Code § 46-401

(“acquisition of the trade secret by improper means, or improper

use or disclosure by one under a duty not to disclose”)

(emphasis added).

     Finally, Mr. Connolly argues that HIRECounsel’s demand for

exemplary damages are baseless. Mot. to Dismiss, ECF No. 7 at

                               18
27. However, none of the persuasive authority cited by Mr.

Connolly supports dismissal of such a demand at this juncture in

the proceedings.

      For these reasons, HIRECounsel has sufficiently stated a

claim for a violation of the DCUTSA and Mr. Connolly’s Motion to

Dismiss is DENIED as to Count III of the Complaint.

IV.   Conclusion

      For the reasons explained above, Mr. Connolly’s Motion to

Dismiss is DENIED. An appropriate Order accompanies this

Memorandum Opinion.

      SO ORDERED.

Signed:    Emmet G. Sullivan
           United States District Judge
           December 20, 2021

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