United States District Court, W.D. Tennessee, Eastern Division
ORDER CONDITIONALLY GRANTING PLAINTIFF'S MOTION TO DISMISS WITHOUT PREJUDICE
J. DANIEL BREEN, Chief District Judge.
Before the Court is the April 27, 2015, motion of Plaintiff, PGT Trucking, Inc. ("PGT"), for voluntary dismissal of the case without prejudice pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure. (Docket Entry "D.E." 14.) Defendant, Clay Jones, responded, arguing that dismissal is appropriate, but that it should be with prejudice, and he should be awarded his litigation costs. (D.E. 19.) Plaintiff has replied, (D.E. 23), and the motion is now ripe for disposition. For the reasons discussed below, the motion will be granted, subject to certain conditions.
The following facts are taken from the complaint. PGT, an interstate freight transportation company, has several agents in various parts of the country, including, at one time, Donald L. Mollette. Mollette and PGT executed an agency agreement that prohibited Mollette from soliciting PGT's customers for two years after the end of his contract. It also barred him from acting through another individual to enlist or solicit the services of any independent contractor or owner-operator who had a business relationship with PGT. Jones, a Tennessee6> resident, worked for Mollette during his agency relationship with PGT. In his answer, Defendant states that he was not Mollette's employee but provided services to Mollette as an independent contractor. Plaintiff also considers certain information in its possession to be propriety and a trade secret, including information related to its customers, rates, and the owner-operators and independent contractors that work with the company. When this data is on its computer system, PGT protects it with passwords.
At some point, Jones began doing business in competition with PGT. Plaintiff claims that, to facilitate this business, Jones accessed confidential information, perhaps with the assistance of Mollette. Further, PGT states that some of the accessed information was password-protected. According to the company, "Jones... used this information to entice owner-operators or independent contractors away from PGT." (D.E. 1 ¶ 17.) The company also avers that Jones used its password-protected information regarding rates and customers to "go into direct competition with PGT" and "to lure accounts away from PGT." ( Id. ¶¶ 18-19.)
On February 18, 2015, Plaintiff filed suit, claiming that these events constituted a breach of Jones's duty of loyalty to the company and an appropriation of trade secrets in violation of the Tennessee Uniform Trade Secrets Act (TUTSA), Tenn. Code Ann. §§ 47-25-1701 to -1709. PGT now moves to voluntarily dismiss this case without prejudice under Rule 41(a)(2). Jones responded in opposition, stating that the claims should be dismissed with prejudice, and he requests fees under the TUTSA or, in the alternative, as a condition to a grant of dismissal.
I. Rule 41
Rule 41(a) of the Federal Rules of Civil Procedure governs voluntary dismissal. Rule 41(a)(2) applies in cases where the opposing party has filed either an answer or a motion for summary judgment and not all of the parties consent to the dismissal. See Fed.R.Civ.P. 41(a)(1)-(2); Jones v. W. Reserve Transit Auth., 455 F.Appx. 640, 643 (6th Cir. 2012). Here, Defendant has not agreed to a dismissal, and he has filed an answer to Plaintiff's complaint, ( see D.E. 11), making Rule 41(a)(2) controlling. In relevant part, Rule 41(a)(2) provides that "[e]xcept as provided in Rule 41(a)(1), an action may be dismissed at the plaintiff's request only by court order, on terms that the court considers proper." The decision of whether to grant a Rule 41(a)(2) motion is "commit[ted] to the district court's sound discretion...." Smith v. Holston Med. Grp., P.C., 595 F.Appx. 474, 477 (6th Cir. 2014). In determining if dismissal will be allowed, the Court must "consider whether permitting voluntary dismissal will cause the nonmovant to suffer plain legal prejudice, ' as opposed to the mere prospect of a second lawsuit.'" Id. (quoting Grover v. Eli Lilly & Co., 33 F.3d 716, 718 (6th Cir. 1994)).
II. Existence of an Absolute Defense
Voluntary dismissal results in "plain legal prejudice, " and is therefore improper, "when the law clearly dictates a result for the defendant...." Id. (quoting Grover, 33 F.3d at 719). When the defendant is clearly entitled to prevail, "it is unfair to subject him to continued exposure to potential liability by dismissing the case without prejudice." Grover, 33 F.3d at 719 (citing Ikospentakis v. Thalassic S.S. Agency, 915 F.2d 176, 177 (5th Cir. 1990); Phillips v. Illinois Cent. Gulf R.R., 874 F.2d 984, 987 (5th Cir. 1989); Kern v. TXO Production Corp., 738 F.2d 968, 970 (8th Cir. 1984)). As Jones contends that the Court may consider the merits of the claim sought to be dismissed, he insists that dismissal of PGT's lawsuit should be with prejudice because its breach of the duty of loyalty and TUSTA claims are "facially invalid and fail as a matter of law." (D.E. 19 at 7.) In making that merits analysis, the standard used by the Court is whether "the law clearly dictates a result for the defendant." Grover, 33 F.3d at 719 (emphasis added).
Defendant contends that Plaintiff does not state a valid claim under the TUTSA because the information Jones was alleged to have appropriated did not constitute a trade secret. He raises two arguments to this effect. Since "easily ascertainable information" cannot constitute a trade secret under Tennessee law, Defendant first asserts that "the names of [PGT's] valued drivers [listed] on its Facebook and [T]witter accounts and [in] newsletters publicly available on [its] website" do not equate to trade secrets. (D.E. 19 at 8.) Second, Jones maintains that "PGT does not allege that [he] took any information from [the company] or that he used any information to compete with PGT while he was still working [there]." ( Id. ) He further compares "the rate information and customer relationships [he] remembered" with "an employee's remembered information' and relationships with customers" that do not qualify for trade secret protection. ( Id. at 8-9.)
Jones's assertions regarding PGT's social media activity fall short. Under the TUTSA, information qualifies as a trade secret only if it "[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy." Tenn. Code Ann. § 47-25-1702(4)(B). At this stage, the record does not contain any evidence that PGT actually shared confidential information on social media, and, moreover, Jones does not claim that Plaintiff disclosed any information related to its rates. Even accepting, arguendo, Defendant's assertions as true, he has not pointed to any authority that shows he is clearly entitled to prevail on this point. In fact, "[e]ven if [he] could have obtained individual pieces of information' by other means, the integration and aggregation of it may be deemed confidential or a trade secret." Hamilton-Ryker Grp., LLC v. Keymon, No. W200800936COAR3CV, 2010 WL 323057, at *15 (Tenn. Ct. App. Jan. 28, 2010) (Kirby, J.). Moreover, "certain substantive elements, like reasonableness..., are so fact bound that they should normally be reserved for the jury unless there is only one reasonable determination possible' based on the evidence produced by the parties." Snyder v. Kohl's Dep't Stores, Inc., 580 F.Appx. 458, 461-62 (6th Cir. 2014); see also Niemi v. NHK Spring Co., 543 F.3d 294, 301 (6th Cir. 2008) (applying Ohio's version of the Uniform Trade Secret Act, but recognizing as a general proposition that "whether efforts taken to maintain the secrecy of a trade secret are reasonable under the circumstances depends on the circumstances... and that the determination ordinarily represents a question for the jury"). Presently, therefore, it would be premature to find that Plaintiff's secrecy measures were insufficient as a matter of law.
Likewise, the Court would act hastily by accepting Jones's reasoning that he relied solely on his memories and existing relationships rather than misappropriating a trade secret. At common law, Tennessee provided protection in some cases to "confidential business information such as customer lists, knowledge of the buying habits and needs of particular clients, and pricing information...." Hamilton-Ryker, 2010 WL 323057, at *13 (quoting Douglas F. Halijan, The Past, Present, and Future of Trade Secrets Law in Tennessee: A Practitioner's Guide Following the Enactment of the Uniform Trade Secrets Act, 32 U. Mem. L. Rev. 1, 13 (2001)). The TUTSA's definition of a trade secret is more expansive than the standard version of the Uniform Trade Secret Act, and it "is sufficiently broad to include information which at common law would have been considered confidential information." Id. at *14. As Defendant correctly noted, however, "an employee's remembered information and relationships with customers'" are typically not considered trade secrets under Tennessee law. ProductiveMD, LLC v. 4UMD, LLC, 821 F.Supp.2d 955, 961 (M.D. Tenn. 2011) (quoting PartyLite Gifts, Inc. v. Swiss Colony Occasions, 246 F.Appx. 969, 973 (6th Cir. 2007)). Nevertheless, the complaint specifically alleges that Jones used PGT's confidential information relating to customers, rates, and owner-operators or independent contractors to compete with the company. ( See D.E. 1 ¶¶ 10-12, ...