Full title: SHARETOWN, INC., Plaintiff/Counterclaim Defendant, v. PHILIP HALL…
Court: United States District Court, District of Utah
Date published: Apr 5, 2022
Facts
Mr. Hall, Cody Hunter, and a third individual founded Sharetown in 2012. Mr. Hall, a vice president, signed a Proprietary Information and Inventions Agreement that prevented him from, among other things, disclosing or using proprietary or confidential information like trade secrets. In 2016, Sharetown adopted its current business model: providing reverse logistics services to brand retailers and selling and reselling mattresses and furniture to end users. Part of this new business model, which Sharetown claims was “innovative and novel to the market, ” was Sharetown’s “proprietary approach” to its services. (Compl. ¶ 11, ECF No. 2.) Unfortunately, when Sharetown changed its business model, it lost revenue. Because the company could not afford to pay Mr. Hall and Mr. Hunter, they had to get second jobs at another company.
Sharetown’s financial setback was only temporary. In mid-2018, it was able to bring Mr. Hall and Mr. Hunter back on as full-time employees. Mr. Hall retained his title of vice president, and he became responsible for finding, training, and overseeing the independent contractor sales representatives who provided reverse logistics services and sold mattresses for Sharetown. In this role, Mr. Hall had access to a list of hundreds of sales representatives’ names and contact information. He was later tasked with developing new sales channels through which Sharetown could sell mattresses and other furniture.
In mid-2021, a former Sharetown representative named David Nish started Twinkle Beds, another company that sells mattresses. Twinkle Beds is a Sharetown competitor. Sharetown learned that Mr. Hall was working with Mr. Nish and Twinkle Beds, and Mr. Hall later told Mr. Hunter that he was a Twinkle Beds investor and principal. Twinkle Beds was using business strategies that resembled the Sharetown strategies that Mr. Hall helped develop, and it was also soliciting Sharetown sales representatives for employment. Sharetown later learned that Mr. Hall had conducted business for Twinkle Beds at a Las Vegas trade show where he purported to be representing Sharetown.
In late 2021, Sharetown filed suit against Mr. Hall, alleging breach of fiduciary duty, breach of contract, and misappropriation of trade secrets. Now Mr. Hall asks the court to dismiss the trade secrets claim under Rule 12(b)(6).
Issue
Decision
Sharetown is suing Mr. Hall for misappropriating trade secrets in violation of the Utah Uniform Trade Secrets Act (UUTSA). Sharetown claims that Hall misappropriated Sharetown’s “new business model” and a list of names, contact information, and other information related to its independent contractor sales force. The court must decide if the two alleged trade secrets fall within UUTSA’s scope. Sharetown claims that its business model and contact list are trade secrets. Hall argues that the trade secrets are not precisely defined, but the court agrees that UUTSA has no particularity requirement. Sharetown must provide sufficient detail to put Hall on notice, and further specificity will come during discovery.
Sharetown has plausibly alleged that Mr. Hall misappropriated its trade secrets. Accordingly, Mr. Hall’s motion to dismiss (ECF No. 6) is DENIED.