DM Manager LLC v. Fidelity National Information Services, Inc.

Background

DM Manager LLC, McAllister Acceptance Corporation, Motor Acceptance Company, LLC, Motor Funding Services, LLC, Random Holdings, Inc., and Doug McAllister sued Fidelity National Information Services, Inc., Fidelity Information Services, LLC, and FIS eProcess Intelligence LLC. The plaintiffs alleged that the defendants breached a September 30, 2013 technology-services agreement involving development of a customized auto-finance platform. They also alleged that the defendants used the plaintiffs’ confidential information and business model to develop and market a competing product called FIS Ambit Asset Finance.

The Second Amended Complaint asserted nine claims: tortious interference with business, intentional fraud, fraudulent concealment, misappropriation of trade secrets, unfair competition and deceptive business practices, misappropriation of confidential information, misappropriation of ideas, misappropriation of skills, and breach of contract. The defendants moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), which address subject-matter jurisdiction and failure to state a legally sufficient claim. They alternatively sought transfer to the U.S. District Court for the Middle District of Florida. The court assumed New York law applied because the parties’ briefing relied on it, although the agreement contained a Florida choice-of-law provision.

Rulings on the claims

The court held that the tortious-interference claim was duplicative of the contract claim because the plaintiffs did not identify an independent duty outside the agreement. It also held that the claim was time-barred: the alleged interference occurred when the plaintiffs stopped pursuing their prospective relationship with FISERV and entered the FIS agreement on September 30, 2013. The claim also failed because the plaintiffs did not plausibly allege that the defendants induced FISERV, the third party, to abandon a contract or otherwise directed wrongful conduct at FISERV.

The court concluded that the intentional-fraud and fraudulent-concealment claims were not necessarily duplicative of the contract claim because the alleged post-contract misrepresentations could be collateral to the contract. However, the court dismissed both claims for failure to satisfy Federal Rule of Civil Procedure 9(b), which requires fraud to be pleaded with particular detail. The complaint did not identify the specific statements, speakers, times, places, and reasons the statements were fraudulent with sufficient precision. The fraudulent-concealment claim also failed to allege a duty to disclose based on a partial statement, fiduciary or confidential relationship, or superior knowledge. The court did not dismiss these claims as time-barred because expiration of the limitations period was not clear from the face of the complaint.

The court held that Counts 4 through 8—misappropriation of trade secrets, unfair competition and deceptive business practices, misappropriation of confidential information, misappropriation of ideas, and misappropriation of skills—were duplicative of the contract claim because they rested on the contractual relationship and alleged contractual confidentiality obligations. The court independently held that these claims were time-barred because the plaintiffs learned of Ambit Asset Finance during an unsuccessful mediation on November 22, 2017, and were therefore on notice of the alleged misappropriation. The claims also failed because the complaint described the MAC SYSTEMS model and related information only in vague and conclusory terms and did not adequately allege a trade secret.

The court dismissed the breach-of-contract claim as time-barred and inadequately pleaded. It rejected the plaintiffs’ argument that the alleged failure to deliver the platform was a continuing breach that extended the limitations period. The court also held that the plaintiffs other than Motor Funding Services, LLC lacked standing because the agreement was between MFS and FIS, and the complaint did not plausibly allege that the other plaintiffs were intended third-party beneficiaries. Finally, the complaint did not identify the specific contractual provisions allegedly breached or adequately allege conduct by Fidelity National Information Services, Inc.

Disposition

Judge Edgardo Ramos granted the defendants’ motion to dismiss. The court dismissed with prejudice the tortious-interference claim, the fraudulent-concealment claim, Counts 4 through 8, and the breach-of-contract claim. It allowed the plaintiffs to amend the intentional-fraud claim because the complaint did not make clear that the claim was time-barred. The amended complaint was due April 19, 2024; otherwise, that claim would also be dismissed with prejudice. Because the motion to dismiss was granted, the court did not address the alternative request to transfer the case to Florida.