Turret Labs USA, Inc. v. CargoSprint, LLC

Turret Labs USA, Inc. v. CargoSprint, LLC

Opinion

MEMORANDUM & ORDER

ERIC KOMITEE, United States District Judge:

Turret Labs USA, Inc. ("Turret") brings this action against CargoSprint, LLC ("CargoSprint") and its CEO, Joshua Wolf. Turret alleges that the Defendants accessed its proprietary software under false pretenses, then misappropriated its trade secrets.

In its first amended complaint, Plaintiff alleged that Defendants' conduct violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the Defend Trade Secrets Act ("DTSA"), and the Computer Fraud and Abuse Act ("CFAA"). That complaint also alleged state-law violations: misappropriation of trade secrets, unfair competition, conversion and defamation.

Defendants moved [*2]  to dismiss the first amended complaint. Following this, Plaintiff moved to amend; they attached a proposed second amended complaint (the "SAC") to their motion. The proposed SAC would drop the RICO count; it would also include additional factual allegations as to the remaining claims. Defendants opposed the motion to amend as futile. For the sake of efficiency, Plaintiff's motion to amend is granted and the Court construes Defendants' motion to dismiss as being made against the SAC. For the reasons that follow, the Court grants that motion to dismiss in part and denies it in part.

Background

The gravamen of Turret's complaint is that Defendants should never have had access to Turret's proprietary software, because CargoSprint is not the type of business for which the software was intended — namely, a "freight forwarder." Nevertheless, Defendants allegedly schemed to obtain such access, and ultimately stole Turret's trade secrets to develop a competing product.

The following facts are alleged in the SAC. Turret developed and owns all rights to a logistics-management software program it calls Dock EnRoll. SAC ¶¶ 17-18, 52. The program is designed to facilitate the hand-off of air cargo [*3]  arriving in the United States to ground transporters, and the payment of associated storage and handling fees. Id. ¶¶ 16-17. Dock EnRoll was created for exclusive use by freight forwarders, which are entities that arrange for merchandise to be shipped by air and stored upon arrival. Id. ¶ 16. The program allows freight forwarders to pay "ground handling warehouse operators" and to schedule shipments efficiently "based on synchronized real-time United States Customs release notifications." Id. ¶¶ 16-17. It took two years to create Dock EnRoll, the "first software of its kind," with twenty-five employees working approximately 132,000 total hours. Id. ¶¶ 17-18.

In 2008, Turret entered into an exclusive licensing agreement with Lufthansa Cargo Americas ("Lufthansa"). Id. ¶ 19. This agreement allowed Lufthansa, a cargo airline, to provide Lufthansa's customers with access to Dock EnRoll. See id. ¶¶ 19-20. Turret gave Lufthansa complete control over "who could access and use Dock EnRoll." Id. ¶ 20; see also id. ¶ 21(f) ("User Access for Dock EnRoll is managed by Lufthansa only, and no other party has access without Lufthansa's authority."). However, Turret alleges that pursuant to the licensing [*4]  agreement, "Lufthansa would only permit registration to freight forwarders" and that Lufthansa would "restrict[] the authorized access of the registered freight forwarders to . . . specified use[s]." Id. ¶¶ 17, 20, 21(i), 21(j). Lufthansa was also "required . . . to adopt strict procedures such as user name and password protections" for freight-forwarding customers. Id. ¶ 21(j). These obligations allegedly emanated from two documents — the Lufthansa Information Security Policy and Lufthansa List of Procedures for Dock EnRoll — which Plaintiff calls the "Security Documents." Id. ¶ 21(d), (e).

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