Release Marine, Inc. et al. v. Freeman et al., Civil Action No. 4:21-cv-00203-RSB-CLR (S.D. Ga. May 27, 2022)

Plaintiffs Release Marine, Inc. and Marine Tables, Inc. filed suit against Defendants Jason Freeman and Cat 5 Marine Industries, Inc. on July 12, 2021 in the Southern District of Georgia (Savannah Division) seeking injunctive relief and damages for violations of the Georgia Trade Secrets Act. In the Complaint, Plaintiff–a manufacturer of custom-made marine furniture for yachts and other vessels in Savannah–alleged that Defendant Freeman, by and through Defendant Cat 5 Marine Industries, misappropriated Plaintiffs’ computer-aided drawings and used the drawings to manufacture and sell custom-made marine furniture to Plaintiffs’ customers. The Complaint alleges that Defendant Freeman, who was employed by Plaintiffs for approximately 16 years, decided to leave Plaintiffs’ employ and start a competing company (Defendant Cat 5 Marine) while he was still working for Plaintiffs. The Complaint further alleged that, shortly after leaving Plaintiffs and starting Defendant Cat 5 Marine, Defendants began manufacturing custom-made marine furniture using CAD files misappropriated and disseminated by Defendant Freeman for several of Plaintiffs’ customers and prospective customers. The case was originally assigned to Judge William More, Jr. but was later reassigned to Judge R. Stan Baker.

Defendants filed a motion to dismiss the Complaint on August 19, 2021 for failure to state a claim or, alternatively, for more definite statement arguing that Plaintiffs’ complaint contains only conclusory allegations that its CAD files have economic value such that they constitute trade secrets or, even if they do constitute trade secrets, that Defendants misappropriated the CAD files. In an Order dated March 8, 2022, the Court granted Defendants’ motion to dismiss without prejudice with leave to amend. In so ordering, the Court agreed with Plaintiffs that they had adequately alleged the CAD files qualified as trade secrets, finding it “reasonable to infer that the CAD drawings, which are essentially design blueprints, would be valuable to a competing company that produces identical, or virtually identical, products.” In doing so, the Court explicitly rejected Defendants’ argument that the CAD files were effectively “worthless” because their products are all custom-made. The Court, however, agreed with Defendants that Plaintiffs had failed to adequately allege misappropriation, finding Plaintiffs’ allegations “wholly deficient.” Specifically, the Court found that “Plaintiffs do not allege specific facts that would support an inference that Defendants engaged in any activity” that would qualify as misappropriation as defined in the Georgia Trade Secrets Act, including that the CAD files were acquired through “improper means.” To find Plaintiffs’ allegations legally sufficient to state a claim for misappropriation “would undermine the purpose of heightened pleading standards by imposing significant litigation costs on any employee that leaves their employer for a competing business simply because the employee previously had access to trade secret information.” Because Plaintiffs’ Complaint simply recited the basic elements of a misappropriation claim, the Court dismissed the claim with leave to amend.

Plaintiffs filed an Amended Complaint on March 23, 2022. Defendants moved to dismiss the Amended Complaint on April 12, 2022 arguing that, instead if filing a “stand-alone” complaint “that independently contains all factual allegations necessary to state a claim for relief” as instructed by the Court in its Order, Plaintiffs merely took the old complaint and added seven new paragraphs in the factual allegations section that were then repeated essentially verbatim in the cause of action section. Plaintiffs opposed Defendants’ Motion on May 3, 2022. On May 20, 2022, the parties filed a Joint Stipulation of Dismissal With Prejudice, which the Court granted in an Order dated May 27, 2022. Pursuant to the Stipulated Dismissal, each side bore its own costs and fees.