Recoop LLC v. Outliers Inc. d/b/a Thesis Nootropics Inc.

Background

Recoop LLC sells vitamin supplements through an online business. Outliers Inc. does business as Thesis Nootropics Inc. Recoop was founded by Daniel Freed and Anastasia Alt. Freed also co-founded Thesis, and Alt was a Thesis shareholder and advisor. Freed worked for Recoop until Alt terminated his employment on February 28, 2020.

Recoop alleged that, between an unspecified month in 2019 and January 2020 at the latest, Thesis—through Freed—accessed Recoop’s website backend without authorization. Recoop claimed that Thesis installed or used Google Tag Manager, Google Analytics, and Meta tracking tools to monitor visitors, intercept customer communications, obtain proprietary data, and improve Thesis’s marketing. Its amended complaint asserted five claims: violation of the federal Defend Trade Secrets Act, violation of the federal Wiretap Act, violation of the California Invasion of Privacy Act, unfair competition, and unjust enrichment.

Thesis moved for summary judgment under Federal Rule of Civil Procedure 56. Summary judgment is a decision without a trial when the evidence shows that no important factual dispute requires a trial and the moving party is entitled to judgment under the law. Thesis also sought sanctions under Rule 11 and attorneys’ fees under the Defend Trade Secrets Act. Recoop did not timely oppose the summary-judgment motion, but the court still examined whether Thesis had shown that it was entitled to judgment.

Evidence Reviewed

The court relied on Thesis’s statement of undisputed facts, declarations, communications between Freed and Alt, and a forensic report by Stroz Friedberg. The forensic examination found that only the identified Google Tag Manager account appeared in Recoop’s website code. The identified Google Analytics and Meta accounts did not appear in Recoop’s website code or Meta records.

The report found that the tracking tools did not, by default, collect sensitive information or customer communications. It found no evidence that Recoop’s customer information was collected, exported, forwarded, or transmitted to Thesis or Freed. It also found no evidence that Freed accessed or altered Recoop’s tracking systems after leaving Recoop. Freed’s last activity connected to the identified Google Tag Manager account occurred in June 2019, while he was still working for Recoop, and his access was later removed in 2020.

The record showed that Freed received access to Recoop’s Google Tag Manager through Recoop’s marketing agency while he was employed by Recoop and responsible for website development. The court found that Alt knew about and supervised Freed’s work involving pixels, tags, and Google Tag installation. Emails and messages also showed Alt’s awareness of, and approval of, his website work.

Court’s Analysis

The court held that all five claims shared a required element: Thesis must have unlawfully accessed or used Recoop’s information.

For the Defend Trade Secrets Act claim, Recoop had to show that it possessed a trade secret and that Thesis used it in violation of an agreement, confidence, or duty, or obtained it through improper means. The court found no evidence that Thesis or Freed improperly acquired, disclosed, or used Recoop’s customer data. It also found no evidence that the tracking tools collected or exported the information at issue, or that Freed’s access was unauthorized or improper.

For the Wiretap Act claim, the court found no evidence of an actual or attempted interception of Recoop’s wire, oral, or electronic communications. The tracking tools did not ordinarily capture communications, and the forensic report found no evidence that communications were intercepted while being transmitted or that data was exported to systems controlled by Thesis or Freed. Because the court considered the California Invasion of Privacy Act claim under the same analysis, the absence of evidence likewise defeated that claim.

The unfair-competition claim failed because the record did not show that Thesis took or used Recoop’s property, labor, expenditures, customer information, or communications to compete against Recoop. The unjust-enrichment claim failed for the same reason: there was no evidence that Thesis or Freed received or used Recoop’s data, or that Thesis engaged in the alleged wrongful conduct.

Disposition

Judge Lewis J. Liman granted Thesis’s motion for summary judgment. The court directed the clerk to close Docket No. 96. The court retained the motion for sanctions and the request for attorneys’ fees for later consideration; the opinion did not resolve those requests.