Palantir Technologies Inc. v. Abramowitz

Background

Palantir alleged that Marc L. Abramowitz obtained access to its confidential and proprietary information while acting as an advisor, agent, or fiduciary, and later used that information in patent applications and competing businesses. The operative fifth amended complaint asserted claims under the federal Racketeer Influenced and Corrupt Organizations Act, breach of contract, and California’s trade-secret statute against Abramowitz, KT4 Partners LLC, and Marc Abramowitz Charitable Trust No. 2.

Racketeering claim

The court held that Palantir did not adequately plead the continuity required to show a pattern of racketeering activity. For closed-ended continuity, the alleged conduct involved one victim—Palantir—and one episode with the single purpose of establishing competing businesses based on Palantir’s technology. The court found that the alleged patent applications could not serve as wire-fraud predicate acts because a patent application that has not matured into a patent is not property for that purpose. The court also found that Palantir’s allegations did not establish open-ended continuity because they relied on those patent applications and the alleged predicate acts had ceased by the time the lawsuit was filed.

Because Palantir had repeatedly failed to cure these deficiencies through amendment, the court dismissed the federal racketeering claim with prejudice. The court did not reach the defendants’ other arguments concerning that claim.

Breach-of-contract claims

The court concluded that the Trust could potentially be liable only under the 2012 Transfer Agreement, KT4 only under the 2015 Transfer Agreement, and Abramowitz only under the nondisclosure agreement. Abramowitz was not a party to the two transfer agreements, and the agreements made the purchaser or seller responsible for breaches by covered persons rather than imposing that liability directly on a covered person.

The court dismissed the breach-of-contract claims against the Trust and KT4 with prejudice. Palantir had not alleged that confidential information was provided to the Trust during the period covered by the 2012 Transfer Agreement, and the earliest alleged disclosure occurred after the Trust ceased being a Palantir shareholder. Palantir also had not alleged that confidential information was provided to KT4 during the negotiations or closing of the 2015 Transfer Agreement, or after that agreement was signed.

The court denied the motion to dismiss the breach-of-contract claim against Abramowitz. Accepting Palantir’s allegations and drawing reasonable inferences in its favor at this stage, the court found that Palantir plausibly alleged that it provided Abramowitz confidential information after he signed the nondisclosure agreement, that he used the information in a patent application, and that he breached the agreement.

Trade-secret claim

The court dismissed the trade-secret claim against the Trust and KT4 with prejudice because Palantir had not specifically alleged that either entity received, used, or disclosed any trade secrets. The court denied the motion as to Abramowitz, finding that Palantir plausibly alleged that trade secrets were disclosed to him under circumstances creating an obligation not to use or disclose them and that he misappropriated them. The court also stated that the level of detail demanded by the defendants went beyond what was required at the pleading stage and that whether Palantir took reasonable steps to protect secrecy was a factual question.

Order

The court granted the motion to dismiss as to the federal racketeering claim, which was dismissed with prejudice; granted it as to the breach-of-contract claims against the Trust and KT4, which were dismissed with prejudice; and denied it as to the breach-of-contract claim against Abramowitz. The court also granted it as to the trade-secret claims against the Trust and KT4, which were dismissed with prejudice, and denied it as to the trade-secret claim against Abramowitz. KT4 and the Trust were dismissed from the case.