Golub Capital LLC v. NB Alternatives Advisers LLC

Background

Golub Capital LLC alleged that it shared extensive confidential business information with NB Alternatives Advisers LLC (NBAA) during due diligence for a possible minority investment. The information allegedly included lending strategies, business-performance analyses, financial projections, fundraising information, technology strategies, investment products, governance, legal and regulatory information, and employee information.

On May 1, 2018, Golub and NBAA signed a nondisclosure agreement. NBAA signed the agreement “on behalf of Dyal Capital Partners.” The agreement required the recipient to keep the information confidential and use it only to evaluate, negotiate, and implement a possible transaction. It also allowed the recipient to retain copies as required for legal, compliance, or regulatory purposes. Trade-secret protections and certain other obligations could continue after the agreement’s general three-year term.

After the parties proceeded with an investment, Neuberger Berman Group LLC announced a transaction that would spin off Dyal Capital Partners and combine it with Owl Rock Capital Partners, which Golub alleged was a direct and substantial competitor. Golub demanded that NBAA return or destroy information supplied under the nondisclosure agreement. NBAA responded that it intended to retain copies as permitted for legal, compliance, or regulatory purposes, but did not provide all of the assurances Golub requested.

Claims and Motion

Golub asserted three causes of action: breach of the nondisclosure agreement, misappropriation of trade secrets under the federal Defend Trade Secrets Act, and trade-secret misappropriation under New York law. Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that the complaint did not state a legally sufficient claim for relief. They also argued that the trade-secret claims duplicated the contract claim and that the complaint did not adequately allege misappropriation.

Court’s Analysis

The court concluded that the nondisclosure agreement’s “Recipient” was Dyal Capital Partners, not NBAA alone. The agreement stated that NBAA signed on Dyal’s behalf, and its provisions described the recipient as the party evaluating, negotiating, and implementing the investment. The court reasoned that these functions fit Dyal’s role as the fund manager and investor, rather than NBAA’s alleged role as an investment adviser.

Although Dyal Capital Partners was not a separate legal entity, the court held that this did not eliminate the agreement or require the court to rewrite it so that NBAA became the recipient. The court explained that the agreement reflected an intent to bind the legal entities within the Dyal Capital Partners group. It also stated that NBAA might be liable if it acted as an undisclosed principal and a breach occurred, but that the complaint did not adequately allege such a breach.

The court further held that Dyal’s right to possess the information did not end merely because Dyal was transferred to new ownership. The nondisclosure agreement did not contain a change-of-control provision requiring the information to be returned upon a sale of Dyal. The Blue Owl transaction, standing alone, therefore did not constitute an anticipatory breach. The complaint did not allege that defendants disclosed or used the information in a way prohibited by the agreement beyond the transaction itself.

The trade-secret claims also failed. Golub’s federal and New York claims were based on the theory that Dyal’s continued use or transfer of the information violated the nondisclosure agreement. Because the court found no adequately alleged breach of that agreement, it concluded that the related misappropriation claims did not state a claim for relief.

Disposition

The court granted defendants’ motion to dismiss with prejudice. It denied Golub leave to replead because the lack of specificity was not the reason for dismissal and Golub had not identified additional facts that would cure the defects. The Clerk of Court was directed to close the motion and the case.