Vogel v. Takeone Network Corp. d/b/a Wrapbook

Background

Michael Scott Vogel alleged that he and Naysawn Naji developed ideas and a software prototype called Tradekraft in 2017, with help from Hesham El-Nahhas. The prototype focused on digital production books and did not have payment or payroll functionality. After Vogel and Naji’s relationship ended, Naji and Patrick Ali Javid pursued an entertainment-payroll business. TakeOne Network Corp., later doing business as Wrapbook, was incorporated in 2018, and Wrapbook later developed payroll, onboarding, insurance, compliance, and related features.

Vogel sued TakeOne Network Corp. d/b/a Wrapbook, Naysawn Naji, Hesham El-Nahhas, Cameron Woodward, and Patrick Ali Javid. His remaining claims included contract and fiduciary-duty claims, business-idea misappropriation, federal and state trade-secret misappropriation, unjust enrichment, unfair competition, and aiding and abetting a breach of fiduciary duty. The defendants moved for summary judgment, which asks whether the evidence requires a trial or instead requires judgment as a matter of law. The defendants also moved to exclude Vogel’s damages expert, Javed. Vogel moved to exclude the defendants’ rebuttal damages expert and sought an adverse inference based on deleted Slack channels.

Trade-secret claims

Vogel identified two alleged trade secrets: a portable profile for entertainment-industry workers and a platform or dashboard combining human-resources features such as payroll, onboarding, insurance, workers’ compensation, tax and compliance functions, union calculations, and budgeting.

The court rejected the defendants’ argument that Vogel’s ideas were too generally described to proceed. It held that the federal Defend Trade Secrets Act can protect ideas even if the plaintiff does not explain exactly how the ideas would work. The court found that Vogel’s current description was sufficiently connected to his earlier allegations and that whether the ideas qualified as trade secrets was generally a question for the jury.

The court granted summary judgment for the defendants on the alleged dashboard trade secret. Vogel did not explain, or identify evidence showing, how that feature was secret or not readily ascertainable in 2017. The court denied summary judgment on the portable-profile theory. The defendants presented evidence that other entertainment-payroll products used reusable or portable profiles, but Vogel presented evidence that his idea differed from those products. That factual dispute must be resolved at trial.

Business-idea, contract, and fiduciary-duty claims

Under New York law, a business-idea misappropriation claim requires a qualifying legal relationship and an idea that is novel and concrete. The court found disputed facts about how unique the portable-profile idea was compared with products already on the market. It therefore denied summary judgment on that part of the claim, while holding that Vogel could not proceed on the dashboard theory.

The court also allowed Vogel’s contract and fiduciary-duty claims to proceed insofar as he claimed that Naji and El-Nahhas, while the partnership continued, worked behind his back to create a separate company based on the portable-profile idea despite an agreement concerning the partnership and confidentiality. Whether an enforceable agreement existed and what it covered were questions for the jury.

The court rejected Vogel’s broader theory that he, Naji, and El-Nahhas had agreed to pursue every entertainment-payroll venture only with one another. The alleged oral partnership ended no later than January 16, 2018. The record did not support a theory that the partnership was formed to complete a particular project, and the court held that dissolving the partnership was not itself a breach. After that date, no juror could find that the defendants had a duty to continue working with Vogel on the project.

The court also allowed Vogel’s unjust-enrichment and unfair-competition claims to proceed in connection with the portable-profile theory. It gave as an example that a jury could find that Naji and El-Nahhas misappropriated the idea and were unjustly enriched by using it to develop Wrapbook, even if no enforceable agreement governed its use.

Claims against Cameron Woodward

The court granted summary judgment on Vogel’s claims against Cameron Woodward. Vogel did not dispute the defendants’ assertion that he had offered no evidence linking Woodward, who joined Wrapbook after its founding, to the allegations in the case.

Damages expert

The court granted the defendants’ motion to exclude Javed’s damages opinions under Federal Rule of Evidence 702. Javed calculated that Vogel was owed $46,653,263 by valuing Wrapbook’s equity as though Vogel were entitled to an equal cofounder’s share. The court found that the report did not reliably connect a particular damages amount to a particular claim or alleged trade secret. It also did not separate the value of the portable-profile idea from the dashboard theory, other non-trade-secret aspects of Wrapbook, or the work and restrictions associated with Wrapbook’s actual founders. The court therefore found that the opinions did not reliably fit the facts of the case.

The court did not dismiss Vogel’s claims merely because Javed’s testimony was excluded. It noted that some claims may not require proof of damages, or may permit nominal damages, and scheduled a conference to address whether other evidence or a revised damages report might be presented.

Because Javed’s testimony was excluded, the court denied as moot Vogel’s motion to exclude the testimony of the defendants’ rebuttal damages expert. A ruling that is denied as moot is not decided on its merits because the underlying issue no longer requires a ruling.

Deleted Slack channels

The court denied Vogel’s request for an adverse inference based on Naji’s deletion of private Tradekraft Slack channels. An adverse inference would allow a jury to treat missing evidence as unfavorable to the party responsible for its loss. The court found insufficient evidence that Naji deleted the channels to hide information or that he knew Vogel was considering a lawsuit. Vogel may still cross-examine Naji and El-Nahhas about the deletion and the discussions that took place during the Tradekraft project.

Disposition

Judge Arun Subramanian held that the defendants’ motion for summary judgment was granted in part and denied in part. The court granted the defendants’ motion to exclude Javed’s testimony, denied as moot Vogel’s motion to exclude the defendants’ rebuttal damages experts, and denied Vogel’s motion for an adverse inference. The remaining claims could proceed subject to the limits described in the opinion.