My Mavens, LLC v. Grubhub, Inc.

Background

My Mavens, LLC alleged that Grubhub, Inc. and Wenjun Zhang, a former Grubhub employee who was proceeding without a lawyer, conspired to obtain and use My Mavens’ confidential information. My Mavens said Zhang signed a nondisclosure agreement, received an oral presentation and access to a cloud-based drive, and completed a coding challenge while considering a possible position with My Mavens. My Mavens alleged that Zhang later shared information about three proposed website features with Grubhub: discounts for first-time reviews or orders, filtering menus by dietary preferences, and time-limited “happy hour” promotions.

The amended complaint asserted claims under the federal Defend Trade Secrets Act and state-law claims for trade-secret misappropriation, unfair competition, unjust enrichment, civil conspiracy, tortious interference with contract, fraudulent inducement, breach of fiduciary duty, and breach of contract. The breach-of-contract claim was asserted against Zhang and was not included in Zhang’s motion to dismiss. Grubhub moved to dismiss all claims against it, and Zhang moved to dismiss all claims against him except the breach-of-contract claim. The defendants also sought partial summary judgment based on statutes of limitations, and Grubhub moved to strike allegations concerning its code of conduct. My Mavens moved to strike a declaration submitted in support of the summary-judgment motion.

Motion to Strike

The court granted Grubhub’s motion to strike allegations concerning Grubhub’s code of conduct and Zhang’s execution of it. My Mavens had added those allegations after receiving a letter from Grubhub’s lawyer marked for settlement purposes only. The court held that the statements about the code of conduct were statements made during settlement negotiations and would be inadmissible to prove or disprove the claims under Federal Rule of Evidence 408. The court therefore disregarded those allegations under Federal Rule of Civil Procedure 12(f).

The court denied My Mavens’ motion to strike the declaration and attached emails as moot. The court explained that it did not need to decide the summary-judgment issues because it dismissed the claims challenged by the defendants’ motions to dismiss. It also concluded that the emails could not be considered for summary judgment because they were submitted for the truth of what they asserted and had not been supported by an appropriate witness or records foundation.

Trade-Secret Claims

The court granted the motions to dismiss My Mavens’ federal and New York trade-secret claims. It held that the alleged “Proprietary Functionalities” were described only as broad concepts or capabilities—for example, offering discounts, filtering menus by dietary preference, and offering happy-hour promotions. My Mavens did not identify the specific aspect, algorithm, code, document, or other information that the defendants allegedly misappropriated. The complaint also did not allege that Zhang received or disclosed source code relating to those features.

The court further held that the alleged features, as described, were ideas visible to users once implemented rather than secret internal software processes. The complaint did not allege that My Mavens ever launched the features on its own website. The court therefore concluded that My Mavens had not adequately alleged protectable trade secrets.

The court alternatively ruled that the complaint did not plausibly allege misappropriation by Grubhub. The allegations that Grubhub knew about the nondisclosure agreement, approved Zhang’s participation, agreed with Zhang to obtain My Mavens’ information, and used that information were pleaded mainly “on information and belief” without supporting facts. The court held that the timing of Grubhub’s later development of similar features was not enough, by itself, to support an inference of trade-secret use.

The court also ruled that My Mavens’ New York trade-secret claim against Zhang was duplicative of its breach-of-contract claim. The nondisclosure agreement covered the alleged duty not to disclose or misuse My Mavens’ confidential information, so the trade-secret claim was based on the same conduct as the contract claim.

Other Claims

The court dismissed My Mavens’ tortious-interference claim against Grubhub because the complaint did not plausibly allege that Grubhub knew about the specific nondisclosure agreement. It dismissed the unfair-competition claim against Grubhub because the same speculative allegations did not adequately plead bad faith. It dismissed the unfair-competition claim against Zhang because it duplicated the contract claim.

The court granted Zhang’s motion to dismiss the fraudulent-inducement claim. My Mavens alleged that Zhang assured it he would provide coding and software-development services if he successfully completed the coding challenge. The court treated those statements as vague promises about possible future work by a job candidate, not material misrepresentations of present fact. It also found insufficient allegations of reasonable reliance and intent to deceive.

The court dismissed My Mavens’ breach-of-fiduciary-duty claim against Zhang. It stated that the opinion had found no authority establishing that a job applicant owes a fiduciary duty to a potential employer. It also held that the alleged duty and breach were covered by the nondisclosure agreement and therefore duplicated the contract claim.

The court dismissed the unjust-enrichment claims against both defendants because they relied on the same allegations as the contract and tort claims. As to Grubhub, the court additionally stated that My Mavens and Grubhub had no direct dealings. The court dismissed the civil-conspiracy claim because New York does not recognize conspiracy as an independent claim and all of the underlying tort claims had been dismissed. The court also dismissed the constructive-trust claim against Grubhub because a constructive trust is an equitable remedy, not a separate cause of action.

Leave to Amend and Disposition

The court granted My Mavens leave to seek permission to file a second amended complaint concerning its trade-secret, unfair-competition, tortious-interference, and civil-conspiracy claims against Grubhub. Any proposed amendment had to explain why the claims were not time-barred, including claims based on the dietary-preference filter. The court also allowed amendment of the federal trade-secret, fraudulent-inducement, and conspiracy claims against Zhang.

The court stated that the unjust-enrichment claim against Grubhub would be dismissed with prejudice as duplicative of the tort claims. It stated that Zhang’s New York trade-secret, unfair-competition, and breach-of-fiduciary-duty claims would be dismissed with prejudice as duplicative of the breach-of-contract claim, and that Zhang’s unjust-enrichment claim would be dismissed with prejudice as duplicative of the contract and tort claims. The opinion did not dismiss or otherwise rule on Zhang’s breach-of-contract claim.

The court’s final disposition was that the defendants’ motions to dismiss were granted; Grubhub’s motion to strike was granted; the defendants’ motions for partial summary judgment were denied as moot; and My Mavens’ motion to strike was denied as moot. The opinion stated that any motion for leave to file a second amended complaint was due by August 24, 2023.