Krypt, Inc. v. RoPaar LLC

Background

Krypt, Inc. sued former employee Clay Robinson and Ropaar LLC. Krypt alleged that Robinson transferred confidential business information from Krypt to personal accounts and storage devices before and shortly after leaving Krypt, and that he used or retained that information while working for Ropaar. Krypt asserted claims against Robinson and Ropaar under the federal Defend Trade Secrets Act and the California Uniform Trade Secrets Act. Krypt also asserted a breach-of-contract claim against Robinson, but that claim was not at issue in Ropaar’s motion.

Ropaar moved to dismiss the two trade-secret claims against it under Federal Rule of Civil Procedure 12(b)(2), arguing that the court lacked personal jurisdiction over Ropaar, and under Rule 12(b)(6), arguing that Krypt had not stated a legally sufficient claim. The court had previously granted Ropaar’s first motion challenging personal jurisdiction and allowed Krypt to amend its complaint.

Personal Jurisdiction

The court considered only specific personal jurisdiction, which applies when a defendant’s contacts with the forum state are connected to the claims. Krypt argued that jurisdiction existed through conspiracy, vicarious liability, and Ropaar’s alleged direction of conduct toward California. The court rejected conspiracy as a basis because the Ninth Circuit had not adopted that theory of jurisdiction.

The court nevertheless found that Krypt plausibly alleged an agency relationship between Robinson and Ropaar. The allegations included communications about Robinson’s hiring before he left Krypt, Ropaar’s provision of an email account and related credentials, Robinson’s use of Ropaar’s email while still working for Krypt, and Robinson’s alleged transfer of Krypt’s confidential files while preparing to work for Ropaar. Under vicarious liability principles, an employee’s relevant contacts may be attributed to the employer.

The court then applied the three-part test for specific jurisdiction. It found that Robinson allegedly committed intentional acts, aimed those acts at California by accessing Krypt’s California-based computer network and downloading confidential information, and knew that the resulting economic harm would likely be felt by Krypt in California. The court also found that the claims arose directly from those alleged contacts. Finally, although some factors slightly favored Ropaar because of the burden of litigating in California and the location of witnesses and evidence, the court concluded that Ropaar had not shown that exercising jurisdiction was unreasonable.

Failure to State a Claim

Ropaar’s Rule 12(b)(6) argument was that Krypt had not alleged that Ropaar ever acquired any trade secrets. The court disagreed. It held that Krypt’s allegations, including allegations based on forensic analysis of Robinson’s laptop and discovery responses, plausibly stated that Robinson worked for Ropaar and saved Krypt’s confidential documents to personal cloud accounts and USB drives for Ropaar’s benefit.

The court declined to consider declarations from Ropaar employees to contradict the complaint at this stage. On a Rule 12(b)(6) motion, the court generally accepts well-pleaded factual allegations as true and considers whether they plausibly support a claim; the court explained that Ropaar’s declarations were not materials of which it could take judicial notice for this purpose.

Disposition

The court denied Ropaar’s motion under Rule 12(b)(2) for lack of personal jurisdiction and denied its motion under Rule 12(b)(6) for failure to state a claim. The court therefore denied Ropaar’s Motion to Dismiss and ordered Ropaar to file its answer within 21 days. This order did not decide whether Krypt would ultimately prove its trade-secret claims.