Moreland Apartments Associates v. LP Equity LLC

Background

Moreland Apartments Associates, Seaside Apartments Associates, and San Jose Apartments Associates alleged that LP Equity LLC solicited their limited partners to purchase partnership interests. The plaintiffs claimed that LP Equity improperly obtained the partners’ names, addresses, telephone numbers, and Social Security numbers; that this information was protected trade-secret material; that LP Equity engaged in unfair competition; and that it intentionally interfered with the plaintiffs’ contractual relationships with their limited partners.

Trade-secret claims

The plaintiffs asserted claims under the federal Defend Trade Secrets Act and the California Uniform Trade Secrets Act. The court applied the Rule 12(b)(6) standard, which asks whether the complaint contains enough factual allegations to state a legally plausible claim.

The court held that the names of the limited partners were not protectable trade secrets because they were available through public sources, including recorded documents and online information. It likewise held that the partners’ addresses and telephone numbers were publicly accessible through databases and the public docket. The court rejected the plaintiffs’ general allegation that LP Equity obtained the information through “improper means” as insufficient. As to Social Security numbers, the court noted that the solicitation letter instructed partners not to send them and found no credible allegation that LP Equity improperly obtained them. The motion to dismiss the trade-secret claim was granted.

Unfair-competition claim

The plaintiffs’ California Unfair Competition Law claim was based on alleged harassment and a possible future loss if LP Equity acquired partnership interests. The court held that the plaintiffs had not alleged that they actually lost money or property. Because LP Equity had not purchased an interest from the plaintiffs’ limited partners, the court granted the motion to dismiss this claim.

Intentional-interference claim

The court also granted the motion to dismiss the intentional-interference claim. The plaintiffs had not alleged that LP Equity received any partnership interests or that the plaintiffs suffered resulting damage. The court further reasoned that the partnership agreement allowed a limited partner to transfer an interest with approval from the general partners, and the plaintiffs did not allege that LP Equity urged partners to transfer interests without that approval. The claim therefore failed under the court’s analysis.

Disposition

The court granted LP Equity’s motion to dismiss. The trade-secret, unfair-competition, and intentional-interference claims were dismissed with leave to amend. The court stated that the plaintiffs could file an amended complaint by January 7, 2020, and could not add new claims or parties without court permission or the parties’ stipulation. The court also granted LP Equity’s requests for judicial notice and denied the request to file portions of the motion under seal, while directing LP Equity to refile with unredacted exhibits except for the Social Security numbers listed in Exhibits 3, 4, and 5. The order was signed by Judge Edward J. Davila.