Delaware Business Litigation Report

Federal Court Permits Amendment Of Answer And Addition Of Counterclaim In Suit Involving Trade Secrets Violation Under Kansas Law

CC Investors Corp. v. Raytheon Co., No. Civ. A. 03-114-JJF, 2005 WL 81591 (D.Del. Jan. 07, 2005). This opinion considered a Motion For Leave To File Its First Amended Answer and Counterclaim filed by Defendant Raytheon Travel Air Company ("Travel Air"). Travel Air filed the motion to amend its answer to include a counterclaim against CC Investors Corp. ("CCI"), the plaintiff in this action. This counterclaim intended to allege that CCI had misappropriated Travel Air's trade secrets violating the Kansas Uniform Trade Secrets Act ("Kansas UTSA"), Kan. Stat. Ann. §§ 60-3320 et seq. The Court granted Travel Air's motion. CCI filed this action representing itself and the putative class members against Defendant Travel Air, its parent company, Raytheon Company ("the Raytheon Defendants'"), Flight Options, LLC and Flight Options International, Inc. (collectively, the "Flight Option Defendants"). Plaintiff alleged: (1) breach of contract claims; (2) and common law fraud from a business combination between the Raytheon Defendants and Flight Options, International, Inc., that resulted in the formation of Flight Options, LLC. Travel Air alleged that CCI improperly acquired its trade secrets in violation of Kansas law. That acquisition was alleged to have occurred through Mr. Carr ("Carr"), Travel Air's former contract manager. Carr formed his consulting company in 2002 and negotiated contracts with Flight Options, LLC, for Travel Air's former customers, without obtaining consent from Travel Air. Travel Air further alleged that CCI obtained the information from Carr despite knowing that the information was proprietary to Travel Air. CCI nevertheless "solicited, obtained and misappropriated confidential information from Mr. Carr in violation of the "stranger provision" of the Kansas UTSA...." CCI opposed the motion claiming: (1) the amendment was futile and would not therefore survive a motion to dismiss; and (2) it was sought in bad faith to prevent CCI from obtaining class certification. Further, CCI contended that the Court could not find a trade secret violation under Kansas law and because Raytheon and Carr, who were alleged to be necessary and indispensible parties, were not made parties to the counterclaim. The Court examined case law pertaining to Fed.R.Civ.P 19 and concluded that Carr was not a necessary party because he was a joint-tortfeasor with CCI. As a result, the Court held that complete relief could be provided to CCI without necessarily joining Carr. Further, the Court held that Raytheon Company and Carr were not indispensible parties and therefore CCI's claim that they had to be joined prior to amending the Complaint to counterclaim had no basis in law under the particular facts alleged in the Complaint. CCI had also claimed that Travel Air had not adequately pled the trade secret violations under Kansas law and therefore, adding the counterclaim would be futile. This argument too was dismissed by the court because it found that Travel Air's pleading survived a Fed.R.Civ.P 12(b)(6) standard for stating a claim and was adequate under Kan. Stat. Ann. § 60-3320(4). Finally, the Court dismissed CCI's claim that Defendant Travel Air's motion for leave to amend the Complaint was brought in bad faith. CCI claimed that "the counterclaim was filed two weeks after CCI's motion for class certification in an attempt to create a non-typicality defense to class certification." The Court found that CCI had not substantiated this claim through evidence and based it entirely only on the timing of the motion. It therefore permitted Travel Air's motion and granted it leave to amend its Answer and add the counterclaim. Authored by: Raj Srivatsan 302.888.6831 rsrivatsan@morrisjames.com Share