TRB Acquisitions LLC v. Yedid

Background

TRB Acquisitions LLC and E.D.Y. Equities LLC sued Jack Yedid. The opinion states that Jack and Eli Yedid co-founded TRB in 2011 and that Eli later acquired Jack’s ownership interest through E.D.Y. The dispute also involved a separate family-business arbitration and trademark litigation brought against TRB by adidas/Reebok.

According to the amended complaint, Jack threatened to provide damaging testimony against TRB in the adidas/Reebok litigation unless Eli accepted Jack’s settlement demand in the separate arbitration. Jack’s counsel later informed adidas/Reebok that Jack was willing to testify, and adidas/Reebok identified anticipated testimony about TRB’s alleged plans, brand identity, product lines, markets, channels of trade, consumers, pricing, and licensees.

TRB and E.D.Y. alleged that Jack disclosed TRB’s brand and marketing plans to adidas/Reebok. TRB asserted a claim under the federal Defend Trade Secrets Act and both plaintiffs asserted state-law claims. Jack moved to dismiss under Rule 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim.

Federal trade-secret claim

To state a claim under the Defend Trade Secrets Act, a plaintiff must plausibly allege that it possessed a trade secret and that the defendant misappropriated it. The statute covers business information when the owner takes reasonable steps to keep it secret and the information has actual or potential economic value because it is not generally known or readily ascertainable through proper means.

The court explained that a plaintiff need not reveal the secret itself in the complaint, but must provide enough detail to identify the alleged trade secret. TRB described its trade secret as its “core brand and marketing plan strategy,” including plans for licensed product lines and strategies concerning channels, product categories, markets, target consumers, retail entry, price points, and licensees.

The court held that this description consisted only of general categories of information. TRB did not provide particulars showing how the strategies operated or allowing the court to determine exactly what information Jack allegedly misappropriated or whether that information was protectable. The court therefore dismissed TRB’s Defend Trade Secrets Act claim. Because the complaint did not plausibly allege the existence of a trade secret, the court did not address Jack’s alternative argument that the complaint failed to adequately allege misappropriation.

State-law claims and disposition

After dismissing the only federal claim, the court declined to exercise supplemental jurisdiction, meaning jurisdiction over related state-law claims in the same case. The court concluded that the case was still at an early stage and that considerations such as efficiency, convenience, fairness, and respect for state courts did not justify retaining the state-law claims.

Judge Jesse M. Furman granted the motion to dismiss. The court dismissed TRB’s federal trade-secret claim with prejudice and dismissed the plaintiffs’ state-law claims without prejudice to refiling in state court. The court also declined to grant leave to file another amended complaint, noting that plaintiffs had not requested it or identified facts that would cure the defect, and that they had previously received an opportunity to amend with a warning that no further amendment would be allowed. The clerk was directed to terminate the motion and close the case.