Pauwels v. Bank of New York Mellon Corporation

Background

Andre Pauwels sued Bank of New York Mellon Corporation and Bank of New York Mellon (collectively, “BNYM”), along with Deloitte LLP, Deloitte USA LLP, and Deloitte Tax LLP (collectively, “Deloitte”). He alleged that, while working as a consultant for BNYM, he developed a proprietary forecasting model and spreadsheets. According to Pauwels, BNYM gave that information to Deloitte, allowing Deloitte to perform services that Pauwels had previously provided. He also alleged that BNYM did not fully pay invoices for work performed from January through May 2018.

After the court dismissed Pauwels’s First Amended Complaint, he filed a Second Amended Complaint. The defendants moved to dismiss it under the pleading rules, which require enough factual allegations to make a claim legally plausible. Fraud claims also had to describe the alleged misconduct in particular detail.

Trade-secret misappropriation

The court dismissed Pauwels’s trade-secret claim. It held that the Second Amended Complaint still did not plausibly allege that the model and spreadsheets qualified as trade secrets. Although Pauwels alleged that he shared the information selectively and had agreements with two BNYM employees to keep it confidential, he also alleged that he shared the information with other BNYM employees without corresponding confidentiality agreements. He sent the spreadsheets through BNYM’s email system without encryption, password protection, or a confidentiality designation, and sometimes provided the full formulas and computations.

The court also held that Pauwels had not plausibly alleged the second required part of misappropriation: use of the alleged trade secret in breach of an agreement, confidential relationship, or duty, or acquisition through improper means. The court therefore dismissed the trade-secret claim.

Unfair competition

The court dismissed the unfair-competition claim as duplicative of the trade-secret claim. Both claims rested on the same alleged misuse of Pauwels’s model and spreadsheets, and Pauwels did not provide a different factual basis for the unfair-competition claim.

Fraud

The court dismissed the fraud claim because Pauwels did not plead facts creating a strong inference that Sarmasti, acting for BNYM, knew a statement about Deloitte’s use of the model was false or intended to deceive him. The court said that Deloitte’s identification of errors in the spreadsheets did not establish that Deloitte actually used the model. It also found that allegations about why Sarmasti supposedly would have lied were speculative and contradicted by allegations that BNYM invited Pauwels to participate in calls with Deloitte and asked him to review Deloitte’s calculations.

Negligent misrepresentation

The court dismissed the negligent-misrepresentation claim. Under the law applied by the court, this claim required Pauwels to plausibly allege that BNYM had a special relationship or fiduciary duty requiring it to provide accurate information. The court found that the alleged confidentiality agreement with Sarmasti and Hegedus was made after Pauwels had already disclosed the model and spreadsheets to BNYM, so Pauwels could not have relied on that agreement when making those disclosures. The court also noted that Pauwels did not allege similar agreements with other BNYM employees who received the information.

Unjust enrichment

The court dismissed the unjust-enrichment claims concerning the model and spreadsheets because they were duplicative of the dismissed trade-secret claim. The court separately considered Pauwels’s claim that BNYM was unjustly enriched by allegedly failing to pay all amounts owed for his work.

Pauwels alleged that he invoiced BNYM for £169,720, received £134,779, and was left with a £34,941 shortfall. He also identified BNYM’s stated reasons for withholding payment, including its position that some valuation work should not have been billed at the full rate, some research work was not chargeable, and some work was duplicative. The court held that these additional allegations plausibly identified a specific and direct benefit BNYM allegedly received at Pauwels’s expense. It therefore denied BNYM’s motion to dismiss this unjust-enrichment claim.

Disposition

The court granted Deloitte’s motion to dismiss in full. It granted BNYM’s motion to dismiss in part and denied it in part. The court dismissed Pauwels’s claims with prejudice, except for his seventh cause of action for unjust enrichment against BNYM. The court directed the clerk to terminate Deloitte LLP, Deloitte Tax LLP, and Deloitte USA LLP from the case, and directed Pauwels and BNYM to submit a joint letter proposing the next steps.