Logicease Solutions Inc. v. Softworks AI, LLC

Background

Logicease Solutions Inc. and SitusAMC Holdings Corp. were the plaintiffs seeking a declaratory judgment. They moved to dismiss counterclaims brought by Softworks AI, LLC. The order addresses claims for interference with contract and misappropriation of trade secrets.

Contract-Interference Claim

Situs argued that it could not be treated as a stranger to the agreement because Logicease had the ability to assign its rights and obligations under the contract to Situs. The court rejected that argument at the pleading stage because Situs identified no allegations showing that Logicease actually made such an assignment. The court also stated that having an economic interest in a contract does not necessarily defeat a claim for tortious interference.

The court therefore denied dismissal of the tortious-interference claim against Situs and stated that the claim would go forward.

Trade-Secret Claims

The court denied dismissal of Softworks AI’s fourth, fifth, sixth, and seventh claims against both Logicease and Situs. The order discusses misappropriation under federal and California law as including acquiring a trade secret through improper means, or disclosing or using another person’s trade secret without express or implied consent.

Softworks AI’s counterclaims plausibly alleged that Logicease disclosed trade secrets to Situs. Softworks AI also alleged that Logicease requested confidential information after knowing it intended to breach its contract, and that Logicease and Situs used the trade secrets to gain a competitive advantage, develop Situs’s own product, and replace the custom product Softworks AI was making for Logicease. On that basis, the court found that Softworks AI adequately pleaded misappropriation claims against both plaintiffs.

Ruling

The court denied Logicease Solutions Inc. and SitusAMC Holdings Corp.’s motion to dismiss Softworks AI, LLC’s counterclaims. Judge James Donato’s order allowed the contract-interference claim against Situs and the identified trade-secret claims against both Logicease and Situs to proceed.