Krawiec v. Manly

                IN THE SUPREME COURT OF NORTH CAROLINA

                                      No. 252A16

                                  Filed 6 April 2018

 MICHAEL KRAWIEC, JENNIFER KRAWIEC, and HAPPY DANCE, INC./CMT
 DANCE, INC. (d/b/a FRED ASTAIRE FRANCHISED DANCE STUDIOS)
              v.
 JIM MANLY, MONETTE MANLY, METROPOLITAN BALLROOM, LLC, RANKO
 BOGOSAVAC, and DARINKA DIVLJAK



      Appeal pursuant to N.C.G.S. § 7A-27(a)(3)(a) from an order dated 22 January

2016 entered by Judge Louis A. Bledsoe, III, Special Superior Court Judge for

Complex Business Cases appointed by the Chief Justice pursuant to N.C.G.S.

§ 7A-45.4, in Superior Court, Mecklenburg County. Heard in the Supreme Court on

30 August 2017.


      Hatcher Legal, PLLC, by Erin B. Blackwell and Nichole M. Hatcher, for
      plaintiff-appellants.

      Brock & Scott, PLLC, by Renner St. John, for defendant-appellees.


      JACKSON, Justice.


      In this case we consider whether plaintiffs have stated claims for tortious

interference with contract, misappropriation of trade secrets, unfair and deceptive

practices, civil conspiracy, and unjust enrichment sufficient to survive defendants’

motions to dismiss pursuant to North Carolina Rule of Civil Procedure 12(b)(6). See

N.C.G.S. § 1A-1, Rule 12(b)(6) (2017). Because we conclude that plaintiffs’ amended

complaint reveals the absence of law or facts essential to these claims, or alleges facts
                                 KRAWIEC V. MANLY

                                  Opinion of the Court



that necessarily defeat these claims, we affirm the portions of the North Carolina

Business Court’s 22 January 2016 Order and Opinion on Defendants’ Motions to

Dismiss Amended Complaint dismissing the claims listed above.


      According to the factual allegations in plaintiffs’ amended complaint, which we

take as true for purposes of reviewing an order on a motion to dismiss pursuant to

Rule 12(b)(6), see State ex rel. Cooper v. Ridgeway Brands Mfg., LLC, 

362 N.C. 431, 442

, 

666 S.E.2d 107, 114

 (2008) (quoting Stein v. Asheville City Bd. of Educ., 

360 N.C. 321, 325

, 

626 S.E.2d 263, 266

 (2006)), plaintiffs Michael Krawiec and Jennifer

Krawiec are residents and citizens of North Carolina who own plaintiff Happy Dance,

Inc./CMT Dance, Inc. (Happy Dance)—a North Carolina corporation doing business

as Fred Astaire Franchised Dance Studios in Forsyth County. Defendants Jim Manly

and Monette Manly own defendant Metropolitan Ballroom, LLC (Metropolitan

Ballroom) (collectively, the Metropolitan defendants), which is a North Carolina

limited liability company doing business in Mecklenburg County. Defendants Ranko

Bogosavac, a citizen of Bosnia and Herzegovina, and Darinka Divljak, a Serbian

citizen, (the dancer defendants) were employed by plaintiffs pursuant to O1-B

nonimmigrant work visas.


      On or about 18 July 2011, plaintiffs entered into contracts with Bogosavac and

Divljak pursuant to which plaintiffs procured the visas in exchange for each dancer’s

express promise to work exclusively for plaintiffs as a dance instructor and performer.


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                                   Opinion of the Court



Bogosavac, who previously had been employed by plaintiffs, was to work exclusively

for plaintiffs from 31 January 2012 to 3 January 2013, and Divljak was to do the same

from 1 September 2011 to 31 August 2014. The dancer defendants also agreed not to

work for any other company that offered dance instruction or competed against

Happy Dance for one year after either the expiration or termination of their

employment with Happy Dance.


       On or about 7 February 2012, the dancer defendants began working as dance

instructors for the Metropolitan defendants in violation of their respective

employment agreements with plaintiffs.           In support of this allegation, plaintiffs

attached to their amended complaint copies of Bogosavac’s and Divljak’s biographies

as they appeared on a list of Metropolitan Ballroom’s staff on Metropolitan Ballroom’s

website on 7 February 2012.         In addition, according to plaintiffs, the dancer

defendants shared confidential information with the Metropolitan defendants,

specifically, plaintiffs’ “ideas and concepts for dance productions, marketing

strategies and tactics, as well as . . . customer lists [containing] contact information.”

From this information, the Metropolitan defendants produced and marketed

plaintiffs’ dance shows as their own, original productions. The dancer defendants

also lured away plaintiffs’ customers, resulting in a significant loss of revenue for

plaintiffs.




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      Based on these factual allegations, plaintiffs asserted various causes of action

against all defendants. The Metropolitan defendants and dancer defendants all filed

motions to dismiss the amended complaint in its entirety pursuant to Rule 12(b)(6).

In its order and opinion regarding the motions to dismiss, the Business Court granted

defendants’ motions as to all of plaintiffs’ claims except for plaintiffs’ claims for

breach of contract, fraudulent misrepresentation, unjust enrichment, and punitive

damages against the dancer defendants. Plaintiffs filed a notice of appeal from the

Business Court’s order and opinion to this Court pursuant to N.C.G.S.

§ 7A-27(a)(2)-(3). In their appeal, plaintiffs challenge the Business Court’s dismissal

of their claims against the Metropolitan defendants for tortious interference with

contract, misappropriation of trade secrets, unfair and deceptive practices, civil

conspiracy, and unjust enrichment.       Plaintiffs also contest the Business Court’s

dismissal of their claims against the dancer defendants for misappropriation of trade

secrets and civil conspiracy. We consider each of plaintiffs’ dismissed claims in turn.


      On appeal from an order dismissing an action pursuant to Rule 12(b)(6), we

conduct de novo review. Arnesen v. Rivers Edge Golf Club & Plantation, Inc., 

368 N.C. 440, 448

, 

781 S.E.2d 1, 8

 (2015) (citing Bridges v. Parrish, 

366 N.C. 539, 541

,

742 S.E.2d 794, 796

 (2013)). A Rule 12(b)(6) dismissal “is appropriate when the

complaint ‘fail[s] to state a claim upon which relief can be granted.’ ” Id. at 448, 

781 S.E.2d at 7

 (alteration in original) (quoting N.C.G.S. § 1A-1, Rule 12(b)(6) (2013)). We

have determined that a complaint fails in this manner when: “(1) the complaint on

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                                   Opinion of the Court



its face reveals that no law supports the plaintiff’s claim; (2) the complaint on its face

reveals the absence of facts sufficient to make a good claim; or (3) the complaint

discloses some fact that necessarily defeats the plaintiff’s claim.” Wood v. Guilford

County, 

355 N.C. 161, 166

, 

558 S.E.2d 490, 494

 (2002) (citing Oates v. JAG, Inc., 

314 N.C. 276, 278

, 

333 S.E.2d 222, 224

 (1985)). “When reviewing a complaint dismissed

under Rule 12(b)(6), we treat a plaintiff’s factual allegations as true.” Ridgeway

Brands, 

362 N.C. at 442

, 

666 S.E.2d at 114

 (quoting Stein, 

360 N.C. at 325

, 

626 S.E.2d at 266

). In conducting our analysis, we also consider any exhibits attached to the

complaint because “[a] copy of any written instrument which is an exhibit to a

pleading is a part thereof for all purposes.” N.C.G.S. § 1A-1, Rule 10(c) (2017).


      The Business Court dismissed plaintiffs’ claim against the Metropolitan

defendants for tortious interference with contract on the basis that plaintiffs failed to

allege that the Metropolitan defendants knew of the exclusive employment

agreement between plaintiffs and the dancer defendants. Plaintiffs contend that the

Business Court was in error because plaintiffs’ factual allegations included the

statement that the Metropolitan defendants had “knowledge of the contracts.” We

disagree.


      Whether plaintiffs sufficiently alleged that the Metropolitan defendants had

knowledge of the exclusivity agreement is essential because a claim for tortious

interference with contract requires proof of five elements:


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                                  Opinion of the Court



             (1) a valid contract between the plaintiff and a third person
             which confers upon the plaintiff a contractual right against
             a third person; (2) the defendant knows of the contract; (3)
             the defendant intentionally induces the third person not to
             perform the contract; (4) and in doing so acts without
             justification; (5) resulting in actual damage to plaintiff.

United Labs., Inc. v. Kuykendall, 

322 N.C. 643, 661

, 

370 S.E.2d 375, 387

 (1988) (citing

Childress v. Abeles, 

240 N.C. 667, 674

, 

84 S.E.2d 176, 181-82

 (1954)).


      The entirety of the relevant allegation in plaintiffs’ amended complaint is that

“Defendants Metropolitan and Manlys, as well as Defendants Bogosavac and Divljak,

all had knowledge and/or should have had knowledge of the existing contracts

pursuant to the O1-B work visas between Plaintiffs and Defendants Bogosavac and

Divljak.” That the Metropolitan defendants allegedly knew of the existing contract

“pursuant to the O1-B work visas” does not satisfy plaintiffs’ Rule 12(b)(6) burden

because the amended complaint is devoid of any allegation that the work visas

themselves constituted or contained any reference to an exclusivity agreement. In

fact, elsewhere in the amended complaint, plaintiffs only alleged that “[p]ursuant to

the second I-129 Petition . . . Defendant Bogosavac agreed to work exclusively for

Plaintiffs . . . . The agreement did not authorize Defendant Bogosavac to engage in

other part-time or concurrent work with other dance studios.” Regarding Divljak,

plaintiffs stated, in even more general terms, “Pursuant to the contract with

Plaintiffs, Defendant Divljak was to work exclusively for Plaintiffs . . . .       The

agreement did not authorize Defendant Divljak to engage in other part-time or


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                                   Opinion of the Court



concurrent work with other dance studios.” Neither of these factual allegations

demonstrates how the Metropolitan defendants could have known of the alleged

exclusive employment agreement through knowledge of the O1-B work visas.

Therefore, we conclude that “the complaint on its face reveals the absence of facts

sufficient to make a good claim” for tortious interference with contract because the

plaintiffs failed to allege that the Metropolitan defendants had knowledge of the

exclusivity provision. Wood, 

355 N.C. at 166

, 

558 S.E.2d at 494

 (citing Oates, 

314 N.C. at 278

, 

333 S.E.2d at 224

).


      We now turn to plaintiffs’ claims for misappropriation of trade secrets against

all defendants. The Business Court dismissed these claims on the basis that plaintiffs

both failed to identify the alleged trade secrets with sufficient particularity and to

allege the specific acts of misappropriation in which defendants engaged. On appeal,

plaintiffs contend that their description of their trade secrets as “original ideas and

concepts for dance productions, marketing strategies and tactics, as well as student,

client and customer lists and their contact information,” was legally sufficient.

Plaintiffs also argue that customer lists and contact information are protectable trade

secrets as a matter of law. Finally, plaintiffs maintain that they adequately described

the act of misappropriation by stating that the dancers learned of the pertinent

information in confidence while employed by plaintiffs, that the dancers shared that

information with the Metropolitan defendants without plaintiffs’ consent, and the

Metropolitan defendants used that information to benefit their own business.

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                                   Opinion of the Court



Consequently, plaintiffs contend that the Business Court erred in dismissing their

claim. We disagree with plaintiffs and reach the same conclusion as the Business

Court, albeit based upon a somewhat different rationale.


      Section 66-153 of the General Statutes provides that an “owner of a trade

secret shall have remedy by civil action for misappropriation of his trade secret.”

N.C.G.S. § 66-153 (2017).      For purposes of the Trade Secrets Protection Act,

misappropriation is the “acquisition, disclosure, or use of a trade secret of another

without express or implied authority or consent, unless such trade secret was arrived

at by independent development, reverse engineering, or was obtained from another

person with a right to disclose the trade secret.” Id. § 66-152(1) (2017). A trade secret

consists of

              business or technical information, including but not limited
              to a formula, pattern, program, device, compilation of
              information, method, technique, or process that:

                    a. Derives independent actual or potential
                       commercial value from not being generally
                       known or readily ascertainable through
                       independent development or reverse engineering
                       by persons who can obtain economic value from
                       its disclosure or use; and

                    b. Is the subject of efforts that are reasonable under
                       the circumstances to maintain its secrecy.

Id. § 66-152(3) (2017). As to the burden of proof, the General Statutes further direct:

                     Misappropriation of a trade secret is prima facie
              established by the introduction of substantial evidence that
              the person against whom relief is sought both:

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                                     KRAWIEC V. MANLY

                                      Opinion of the Court




                      (1) Knows or should have known of the trade secret;
                          and

                      (2) Has had a specific opportunity to acquire it for
                          disclosure or use or has acquired, disclosed, or
                          used it without the express or implied consent or
                          authority of the owner.

Id. § 66-155 (2017).


       This Court has not considered the requirements for pleading a claim for

misappropriation of trade secrets previously, but we conclude that the reasoning of

our Court of Appeals, which mirrors the notice-pleading standard set forth in North

Carolina Rule of Civil Procedure 8,1 is persuasive on this topic. The Court of Appeals

has stated, “To plead misappropriation of trade secrets, a plaintiff must identify a

trade secret with sufficient particularity so as to enable a defendant to delineate that

which he is accused of misappropriating and a court to determine whether

misappropriation has or is threatened to occur.” Washburn v. Yadkin Valley Bank &

Tr. Co., 

190 N.C. App. 315, 326

, 

660 S.E.2d 577, 585

 (2008) (quoting VisionAIR, Inc.

v. James, 

167 N.C. App. 504, 510-11

, 

606 S.E.2d 359, 364

 (2004)) (internal quotation

marks omitted), disc. rev. denied, 

363 N.C. 139

, 

674 S.E.2d 422

 (2009); see Savor, Inc.

v. FMR Corp., 

812 A.2d 894, 897

 (Del. 2002) (concluding that a defendant had



       1  Rule 8(a)(1) requires “[a] short and plain statement of the claim sufficiently
particular to give the court and the parties notice of the transactions, occurrences, or series
of transactions or occurrences, intended to be proved showing that the pleader is entitled to
relief.” N.C.G.S. § 1A-1, Rule 8(a)(1) (2017).

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                                   Opinion of the Court



sufficient notice of a claim for misappropriation of trade secrets to survive a motion

to dismiss when the court could identify the trade secret as “the allegedly unique

combination of marketing strategies and processes for the implementation of a

program under which consumers would be able to use rebates from their qualified

purchases to fund a 529 Plan”); see also SmithKline Beecham Pharm. Co. v. Merck &

Co., 

766 A.2d 442, 447

 (Del. 2000) (noting that a plaintiff “must disclose the allegedly

misappropriated trade secrets with reasonable particularity” in order to, inter alia,

“ensure that defendants are put on notice of the claimed trade secrets early in the

litigation, preventing defendants from being subject to unfair surprise on the eve of

trial”). This standard also has been applied by federal courts in our state. See

Prometheus Grp. Enters. v. Viziya Corp., No. 5:14-CV-32-BO, 

2014 WL 3854812

, at

*7 (E.D.N.C. Aug. 5, 2014) (“In order to adequately plead misappropriation of trade

secrets, a plaintiff ‘must identify a trade secret with sufficient particularity so as to

enable a defendant to delineate that which he is accused of misappropriating and a

court to determine whether misappropriation has or is threatened to occur.’ ” (quoting

Analog Devices, Inc. v. Michalski, 

157 N.C. App. 462, 468

, 

579 S.E.2d 449, 453

(2003))); Asheboro Paper & Packaging, Inc. v. Dickinson, 

599 F. Supp. 2d 664, 676

(M.D.N.C. 2009) (“The alleged trade secret information must be identified ‘with

sufficient particularity so as to enable a defendant to delineate that which he is

accused of misappropriating and a court to determine whether misappropriation has

or is threatened to occur.’ ” (quoting Analog Devices, 

157 N.C. App. at 468

, 579 S.E.2d


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                                    Opinion of the Court



at 453)). In contrast, “a complaint that makes general allegations in sweeping and

conclusory statements, without specifically identifying the trade secrets allegedly

misappropriated, is ‘insufficient to state a claim for misappropriation of trade

secrets.’ ” Washburn, 

190 N.C. App. at 327

, 

660 S.E.2d at 585

-86 (quoting VisionAIR,

167 N.C. App. at 511

, 

606 S.E.2d at 364

).


       Provided that the information meets the two requirements for a trade secret

as defined in subsection 66-152(3), we agree with the determination of the Court of

Appeals that “[i]nformation regarding customer lists, pricing formulas and bidding

formulas can qualify as a trade secret under G.S. § 66-152(3).” Area Landscaping,

L.L.C. v. Glaxo-Wellcome, Inc., 

160 N.C. App. 520, 525

, 

586 S.E.2d 507, 511

 (2003)

(citation omitted). We are persuaded by the fact that other jurisdictions have reached

the same conclusion. See, e.g., Home Pride Foods, Inc. v. Johnson, 

262 Neb. 701, 709

,

634 N.W.2d 774, 781

 (2001) (“We agree [with other cited jurisdictions] and hold that

a customer list can be included in the definition of a trade secret . . . .”); Ed Nowogroski

Ins., Inc. v. Rucker, 

137 Wash. 2d 427, 440

, 

971 P.2d 936, 943

 (1999) (en banc) (“A

customer list is one of the types of information which can be a protected trade secret

if it meets the criteria of the Trade Secrets Act.” (citing Am. Credit Indem. Co. v.

Sacks, 

213 Cal. App. 3d 622

, 

262 Cal. Rptr. 92

 (1989))); Fred's Stores of Miss., Inc. v.

M & H Drugs, Inc., 96-CA-00620-SCT, 96-CA-00633-SCT (¶¶ 21, 28), 

725 So. 2d 902, 910-11

 (1998) (en banc) (holding that the information on a customer list qualified as

a trade secret when evidence showed that it had independent economic value, was

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                                  Opinion of the Court



not known or readily ascertainable, and was subject to reasonable efforts to maintain

its secrecy). However, in light of the requirements of subsection 66-152(3), a customer

database did not constitute a trade secret when “the record show[ed] that defendants

could have compiled a similar database through public listings such as trade show

and seminar attendance lists.” Combs & Assocs. v. Kennedy, 

147 N.C. App. 362, 370

,

555 S.E.2d 634, 640

 (2001) (citation omitted). Similarly, a plaintiff failed to allege

sufficiently that its “customer lists and other compilations of customer data” were

protected trade secrets when it “ha[d] not come forward with any evidence to show

that the company took any special precautions to ensure the confidentiality of its

customer information” and “any information used to contact the clients would have

been easily accessible to defendant through a local telephone book.”        NovaCare

Orthotics & Prosthetics E., Inc. v. Speelman, 

137 N.C. App. 471, 478

, 

528 S.E.2d 918, 922

 (2000); see also Asheboro Paper, 

599 F. Supp. 2d at 676

 (noting that “[c]ustomer

names and addresses may not be protected as a ‘trade secret’ inasmuch as they can

be readily ascertained through independent development” (citing UBS PaineWebber,

Inc. v. Aiken, 

197 F. Supp. 2d 436

 (W.D.N.C. 2002))).


       In their amended complaint, plaintiffs described their trade secrets only as

their “original ideas and concepts for dance productions, marketing strategies and

tactics, as well as student, client and customer lists and their contact information.”

Plaintiffs provided no further detail about these ideas, concepts, strategies, and

tactics sufficient to put defendants on notice as to the precise information allegedly

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                                  Opinion of the Court



misappropriated. In addition, plaintiffs’ failure to describe a specific idea, concept,

strategy, or tactic with respect to their marketing plan or to provide any detail about

their dance productions renders their claim too general for this Court to determine—

even taking plaintiffs’ factual allegations as true—whether there is a “formula,

pattern, program, device, compilation of information, method, technique, or process”

at issue that “[d]erives independent actual or potential commercial value from not

being generally known or readily ascertainable through independent development or

reverse engineering.”    N.C.G.S. § 66-152(3)(a).        Similarly, plaintiffs’ amended

complaint, on its face, does not show that plaintiffs’ customer lists constituted a

protected trade secret because plaintiffs failed to allege that the lists contained any

information that would not be readily accessible to defendants. Like the Ohio Court

of Common Pleas in an often cited case involving a dispute between a dance studio

and its former employee, we recognize that “[t]here is no presumption that a thing is

a secret,” and emphasize the shortcomings of “general allegations” in making a case

for misappropriation of trade secrets. Arthur Murray Dance Studios of Cleveland,

Inc. v. Witter, 

105 N.E.2d 685, 709-10

 (Ohio Ct. Com. Pl. 1952) (citing Super Maid

Cook-Ware Corp. v. Hamil, 

50 F.2d 830, 832

 (5th Cir. 1931)).


      In light of the concern inherent in any misappropriation of trade secrets claim

that, in pursuing litigation, the alleged trade secret not be revealed in a public

document such as the complaint, see Glaxo Inc. v. Novopharm Ltd., 

931 F. Supp. 1280, 1301

 (E.D.N.C. 1996), we note at this point that our analysis of plaintiffs’ claim is

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                                   Opinion of the Court



entirely dependent upon the extremely general nature of plaintiffs’ allegations.

There exists a wide gulf between plaintiffs’ description of its alleged trade secrets as

“original ideas and concepts for dance productions” and “marketing strategies and

tactics,” and exposure or compromise of the critical details of those alleged trade

secrets. If plaintiffs had provided additional descriptors to put defendants and the

courts on notice as to which “original ideas and concepts for dance productions” and

“marketing strategies and tactics,” were allegedly misappropriated, then we would

have a different claim before us with the potential for a different outcome.


      Additionally, the only allegation of secrecy in plaintiffs’ amended complaint is

that “Plaintiffs shared this information with Defendants Bogosavac and Divljak in

confidence.”   That plaintiff shared the information at issue with the dancer

defendants with nothing more than an expectation of confidentiality is insufficient to

establish that the information was the “subject of efforts that [were] reasonable under

the circumstances to maintain its secrecy.” 

Id.

 § 66-152(3)(b). Plaintiffs’ amended

complaint is devoid of any allegation of a method, plan, or other act by which they

attempted to maintain the secrecy of the alleged trade secrets. For all of these

reasons, plaintiffs failed to allege the existence of a trade secret in their amended

complaint.


      We next address the Metropolitan defendants’ motion to dismiss plaintiffs’

claim for unfair and deceptive practices (UDP). The Business Court concluded that


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                                   Opinion of the Court



plaintiffs failed to allege egregious or aggravating circumstances essential to the

claim because plaintiffs did not sufficiently plead their claim for tortious interference

with contract or misappropriation of trade secrets. On appeal from the dismissal of

their UDP claim, plaintiffs argue only that the Business Court should not have

dismissed the claim because they pleaded valid claims for tortious interference with

contract and misappropriation of trade secrets. We disagree.


      We have recognized an action for UDP based on the provision of the General

Statutes that “[u]nfair methods of competition in or affecting commerce, and unfair

or deceptive acts or practices in or affecting commerce, are declared unlawful.” Id.

§ 75-1.1(a) (2017); see Dalton v. Camp, 

353 N.C. 647, 655-56

, 

548 S.E.2d 704, 710

(2001).   To plead a valid claim for UDP, “a plaintiff must show: (1) defendant

committed an unfair or deceptive act or practice, (2) the action in question was in or

affecting commerce, and (3) the act proximately caused injury to the plaintiff.”

Dalton, 

353 N.C. at 656

, 

548 S.E.2d at 711

 (citing Spartan Leasing Inc. v. Pollard,

101 N.C. App. 450, 461

, 

400 S.E.2d 476, 482

 (1991)). “The determination of whether

an act or practice is an unfair or deceptive practice that violates N.C.G.S. § 75-1.1 is

a question of law for the court.” Gray v. N.C. Ins. Underwriting Ass'n, 

352 N.C. 61, 68

, 

529 S.E.2d 676, 681

 (2000) (citing Ellis v. N. Star Co., 

326 N.C. 219, 226

, 

388 S.E.2d 127, 131

 (1990)).




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       Here the unfair or deceptive acts alleged in the amended complaint were that

the Metropolitan defendants had “maliciously, deliberately, secretly, wantonly,

recklessly, and unlawfully solicit[ed] and subsequently hir[ed] Plaintiffs’ employees,

Bogosavac and Divljak, and misappropriat[ed] Plaintiffs’ trade secrets for their own

benefit.” Plaintiffs made no further allegations of specific unfair or deceptive acts.

Because we determined that plaintiffs failed to state a valid claim for tortious

interference with contract or misappropriation of trade secrets, we necessarily must

conclude that plaintiffs also failed to adequately allege that the Metropolitan

defendants “committed an unfair or deceptive act or practice.” Dalton, 

353 N.C. at 656

, 

548 S.E.2d at 711

. Consequently, plaintiffs have not stated a valid claim for

UDP.


       We turn next to plaintiffs’ claims for civil conspiracy against all defendants.

The Business Court dismissed the claim against the dancer defendants on the

grounds that a civil conspiracy claim must be based on an underlying claim and the

underlying claim for fraudulent misrepresentation—the only applicable, surviving

claim—was based on allegations of fraud completely unrelated to the alleged,

conspiratorial agreement between the dancer defendants and Metropolitan

defendants. The Business Court then dismissed the civil conspiracy claim against

the Metropolitan defendants on the grounds that all underlying tort claims against

the Metropolitan defendants also had been dismissed. On appeal, plaintiffs argue

that they pleaded a valid claim for civil conspiracy because that claim rested on

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                                   Opinion of the Court



plaintiffs’ legitimate claims against all defendants based on the underlying tort of

misappropriation of trade secrets. We disagree.


      “A civil action for conspiracy is an action for damages resulting from acts

committed by one or more of the conspirators pursuant to the formed conspiracy,

rather than the conspiracy itself.” Burton v. Dixon, 

259 N.C. 473, 476

, 

131 S.E.2d 27, 30

 (1963). “To create civil liability for conspiracy there must have been a wrongful

act resulting in injury to another committed by one or more of the conspirators

pursuant to the common scheme and in furtherance of the objective.” Ridgeway

Brands, 

362 N.C. at 444

, 

666 S.E.2d at 115

 (quoting Henry v. Deen, 

310 N.C. 75, 87

,

310 S.E.2d 326, 334

 (1984)). This is because a “conspiracy charged does no more than

associate the defendants together and perhaps liberalize the rules of evidence to the

extent that under the proper circumstances the acts of one may be admissible against

all.” Henry, 

310 N.C. at 87

, 

310 S.E.2d at 334

 (first citing Shope v. Boyer, 

268 N.C. 401

, 

150 S.E.2d 771

 (1966); then citing Muse v. Morrison, 

234 N.C. 195

, 

66 S.E.2d 783

(1951)). Therefore, we have determined that a complaint sufficiently states a claim

for civil conspiracy when it alleges “(1) a conspiracy, (2) wrongful acts done by certain

of the alleged conspirators in furtherance of that conspiracy, and (3) injury as a result

of that conspiracy.” Ridgeway Brands, 

362 N.C. at 444

, 

666 S.E.2d at 115

 (citing

Muse, 

234 N.C. at 198

, 

66 S.E.2d at 785

).




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                                    Opinion of the Court



      Two examples from our case law are instructive. We have held that a plaintiff

“fail[ed] to allege any overt, tortious, or unlawful act which any defendant committed

in furtherance of the conspiracy” when the defendants’ attempt to bankrupt the

plaintiff by “subscribing to stock” from a third-party supplier did not breach their

agreement to “from time to time [ ] purchase some of [their] requirements of such

parts and other articles as are warehoused and sold by [plaintiff].” Shope, 

268 N.C. at 404-05

, 

150 S.E.2d at 773

.        In contrast, we also have held that a plaintiff

sufficiently pleaded a cause of action for civil conspiracy when the plaintiff specifically

alleged that the parties to the conspiracy concealed and falsified medical records—

acts that “would amount to the common law offense of obstructing public justice.”

Henry, 

310 N.C. at 87

, 

310 S.E.2d at 334

 (citation omitted).


      Plaintiffs here alleged in their amended complaint that the Metropolitan

defendants reached an agreement with the dancer defendants according to which the

latter “would unlawfully leave Plaintiffs’ dance studio to come work for Defendants

Metropolitan and Manlys, unlawfully solicit Plaintiffs’ customers, and unlawfully

disclose Plaintiffs’ trade secrets to Metropolitan and Manlys in order to cripple or

eliminate Plaintiffs as a competitor in the dance industry.” Plaintiffs asserted that,

as a result of the conspiracy, “Plaintiffs’ business and reputation were significantly

damaged.”




                                           -18-
                                  KRAWIEC V. MANLY

                                   Opinion of the Court



      Regarding the allegations that the dancer defendants unlawfully left plaintiffs

to work for the Metropolitan defendants and that all defendants unlawfully solicited

plaintiffs’ customers, plaintiffs’ amended complaint must fail because it lacks

sufficient detail. It is unclear from the face of the amended complaint which laws

were allegedly violated and how defendants violated them. To the extent these

allegations of unlawfulness may be read to invoke plaintiffs’ claim for tortious

interference with contract as to the dancer defendants’ alleged exclusive employment

agreement and plaintiffs’ claim for misappropriation of trade secrets as to the

customer lists, we already have determined that plaintiffs failed to plead either of

those claims sufficiently.   The only remaining allegation of a wrongful act in

furtherance of the conspiracy is that the dancer defendants unlawfully disclosed

plaintiffs’ trade secrets to the Metropolitan defendants.            As we have already

determined that plaintiffs failed to allege a viable claim for misappropriation of trade

secrets, we now conclude that plaintiffs did not plead any wrongful acts that were

done in furtherance of the alleged conspiracy.            Accordingly, the claims for civil

conspiracy against all defendants necessarily fail.


      Next, we consider plaintiffs’ claim for unjust enrichment against the

Metropolitan defendants.       The Business Court dismissed plaintiffs’ unjust

enrichment claim against the Metropolitan defendants on two grounds. First, the

Business Court determined that plaintiffs could not seek a remedy in equity through

their unjust enrichment claim while seeking the exact same damages at law through

                                          -19-
                                 KRAWIEC V. MANLY

                                  Opinion of the Court



their breach of contract claim against the dancer defendants—a claim that survived

defendants’ motions to dismiss.      Second, the Business Court determined that

plaintiffs failed to plead that the Metropolitan defendants took any action to solicit

or induce plaintiffs to incur the expenses alleged, which the Business Court found to

be a necessary element of an unjust enrichment claim. On appeal, plaintiffs argue

that they adequately stated a claim for unjust enrichment by alleging that the

Metropolitan defendants accepted the benefit of employing the dancers without

obtaining new visas and that plaintiffs did not procure the visas gratuitously. We

disagree with plaintiffs’ argument, and although we agree with the conclusion the

Business Court reached, we base our decision on different grounds.


      “The general rule of unjust enrichment is that where services are rendered and

expenditures made by one party to or for the benefit of another, without an express

contract to pay, the law will imply a promise to pay a fair compensation therefor.”

Atl. Coast Line R.R. Co. v. State Highway Comm’n, 

268 N.C. 92, 95-96

, 

150 S.E.2d 70, 73

, (1966) (first citing Beacon Homes, Inc. v. Holt, 

266 N.C. 467

, 

146 S.E.2d 434

(1966); then citing Dean v. Mattox, 

250 N.C. 246

, 

108 S.E.2d 541

 (1959)). A claim for

unjust enrichment “is neither in tort nor contract but is described as a claim in quasi

contract or a contract implied in law.” Booe v. Shadrick, 

322 N.C. 567, 570

, 

369 S.E.2d 554, 556

 (1988). “The claim is not based on a promise but is imposed by law to prevent

an unjust enrichment.” 

Id. at 570

, 

369 S.E.2d at 556

. “In order to establish a claim

for unjust enrichment, a party must have conferred a benefit on the other party,” and

                                         -20-
                                  KRAWIEC V. MANLY

                                   Opinion of the Court



“[t]he benefit must not be gratuitous and it must be measurable.” 

Id. at 570

, 

369 S.E.2d at 556

 (citing Britt v. Britt, 

320 N.C. 573

, 

359 S.E.2d 467

 (1987)).


      Plaintiffs stated in their amended complaint that “Defendants Metropolitan

and Manlys have [ ] received the benefit of Plaintiffs’ procurement of the O1-B work

visas for Defendants Bogosavac and Divljak, because they were able to employ

Defendants Bogosavac and Divljak, though unlawfully, without paying for their O1-B

work visas.” This allegation is contradicted by the Form I-797A and Form I-797B

from the United States Citizenship and Immigration Services, which plaintiffs

attached to their amended complaint. Both forms indicate that petition approval for

a nonimmigrant worker visa applies only to the employment outlined in the petition

and that any change in a nonimmigrant worker’s employment requires the filing of a

new I-129 visa petition. Accordingly, if the Metropolitan defendants employed the

dancer defendants without filing new petitions, no benefit was conferred on the

Metropolitan defendants by plaintiffs because their petitions did not authorize the

dancers’ employment with the Metropolitan defendants. As a conferred benefit is a

necessary element of a claim for unjust enrichment, plaintiffs’ “complaint discloses

some fact that necessarily defeats the plaintiff[s’] claim.” Wood, 

355 N.C. at 166

, 

558 S.E.2d at 494

 (citing Oates, 

314 N.C. at 278

, 

333 S.E.2d at 224

).


      Finally, plaintiffs argue on appeal that the Manlys can be held liable in their

individual capacities for the tort claims brought against Metropolitan Ballroom as a


                                          -21-
                                   KRAWIEC V. MANLY

                                    Opinion of the Court



corporate entity. In the order and opinion below, the Business Court dismissed all

claims against the Manlys that were based on the theory of piercing the corporate

veil.   Citing to our decision in Green v. Freeman, the Business Court correctly

observed that “[t]he doctrine of piercing the corporate veil is not a theory of liability,”

367 N.C. 136, 146

, 

749 S.E.2d 262, 271

 (2013), and consequently that the theory is

rendered inapposite when, as here, all underlying claims have been or should be

dismissed. Indeed, in the absence of an underlying claim, “evidence of domination

and control is insufficient to establish liability.”       

Id. at 146

, 

749 S.E.2d at 271

.

Because plaintiffs have failed to state a valid, underlying claim for relief against the

Metropolitan defendants, we agree with the Business Court that it is immaterial

whether Metropolitan Ballroom or the Manlys, in their individual capacities, would

be liable for those claims.


        Pursuant to Rule 12(b)(6), we dismiss a complaint or any claim therein when

the plaintiff “fail[s] to state a claim upon which relief can be granted.” Arnesen, 

368 N.C. at 448

, 

781 S.E.2d at 7

 (alteration in original) (quoting N.C.G.S. § 1A-1, Rule

12(b)(6)). For the reasons stated above, we hold that plaintiffs failed to state valid

claims for tortious interference with contract, unfair and deceptive practices, and

unjust enrichment against the Metropolitan defendants. We also hold that plaintiffs

failed to state valid claims for misappropriation of trade secrets and civil conspiracy

against all defendants. Accordingly, we affirm, as modified herein, the portions of



                                           -22-
                                 KRAWIEC V. MANLY

                                  Opinion of the Court



the Business Court’s order and opinion dismissing those claims and remand this case

to that court for further proceedings consistent with this Court’s opinion.


      MODIFIED AND AFFIRMED; REMANDED.




      Justice BEASLEY dissenting.

      I dissent from the majority opinion to specifically highlight the problematic

and muddled standards for North Carolina plaintiffs seeking to properly plead a

claim for misappropriation of trade secrets.       In this case this Court considered

whether plaintiffs’ description of their trade secrets as “original ideas and concepts

for dance productions, marketing strategies and tactics, as well as student, client and

customer lists and their contact information” was sufficient to put defendants on

notice of trade secrets allegedly misappropriated. I believe that a complaint alleging

the above is sufficient under our liberal pleading standards to put defendants on

notice of the transactions and occurrences at issue.

      The majority’s reasoning and reliance on various authority conflate the North

Carolina standards for Rule 12(b)(6) motions to dismiss, motions for preliminary

injunction, and motions for summary judgment as well as other jurisdictions’

standards regarding discovery. Notably, the majority relies on cases that are in

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                                    KRAWIEC V. MANLY

                                    Beasley, J., dissenting



various procedural postures, and in doing so, the majority validates a heightened

pleading standard for a claim in which public disclosure of confidential information

is a real concern for plaintiffs. Further, the majority’s erroneous affirmation of the

trial court’s dismissal of this single claim is also the basis for the majority’s

affirmation of the trial court’s dismissal of plaintiffs’ unfair and deceptive trade

practices and civil conspiracy claims against Metropolitan Ballroom and the Manlys

in their individual capacities.1 Therefore, I respectfully dissent.

       The sufficiency of a claim for misappropriation of trade secrets is a matter of

first impression for this Court. Generally, the North Carolina pleading standards

require a “short and plain statement of the claim sufficiently particular to give the

court and the parties notice of the transactions, occurrences, or series of transactions

or occurrences, intended to be proved showing that the pleader is entitled to relief.”

N.C.G.S. § 1A-1, Rule 8(a)(1) (2017) (emphases added). This is not a difficult standard

for plaintiffs to meet: “The complaint is construed liberally,” U.S. Bank Nat’l Ass’n

v. Pinkney, 

369 N.C. 723, 726

, 

800 S.E.2d 412

, 415 (2017), “view[ing] the allegations

as true and . . . in the light most favorable to the non-moving party,” id. at 726, 800

S.E.2d at 415 (alterations in original) (quoting Kirby v. NC DOT, 

368 N.C. 847, 852

,

786 S.E.2d 919, 923

 (2016)), and the claim is not dismissed “unless it appears beyond

doubt that [the] plaintiff could prove no set of facts in support of his claim which



       1Even if the misappropriation of trade secrets claim was sufficiently pleaded, I
express no opinion regarding the sufficiency of the pleadings for these additional claims.

                                             -24-
                                  KRAWIEC V. MANLY

                                  Beasley, J., dissenting



would entitle him to relief,” Holloman v. Harrelson, 

149 N.C. App. 861, 864

, 

561 S.E.2d 351, 353

 (2002) (alteration in original) (quoting Dixon v. Stuart, 

85 N.C. App. 338, 340

, 

354 S.E.2d 757, 758

 (1987)), disc. rev. denied, 

355 N.C. 748

, 

565 S.E.2d 665

(2002). Rule 12(b)(6) “generally precludes dismissal except in those instances where

the face of the complaint discloses some insurmountable bar to recovery,” Sutton v.

Duke, 

277 N.C. 94, 102

, 

176 S.E.2d 161, 166

 (1970) (quoting Am. Dairy Queen Corp.

v. Augustyn, 

278 F. Supp. 717, 721

 (N.D. Ill. 1967)), such as “(1) the complaint on its

face reveals that no law supports the plaintiff's claim; (2) the complaint on its face

reveals the absence of facts sufficient to make a good claim; or (3) the complaint

discloses some fact that necessarily defeats the plaintiff’s claim,” Wood v. Guilford

County, 

355 N.C. 161, 166

, 

558 S.E.2d 490, 494

 (2002) (citation omitted).

        To sufficiently plead a prima facie claim for misappropriation of trade secrets,

a plaintiff must allege defendant (1) “[k]nows or should have known of the trade

secret,” and (2) “[h]as had a specific opportunity to acquire it for disclosure or use or

has acquired, disclosed, or used it without the express or implied consent or authority

of the owner.” N.C.G.S. § 66-155 (2017). There is no statutory heightened pleading

standard for misappropriation of trade secrets, see id. § 1A-1, Rule 9 (2017), and

additional guidance from the Court of Appeals on pleading this particular claim rests

on cases evaluating the issue from an entirely different procedural posture than a

motion to dismiss. In Washburn v. Yadkin Valley Bank & Trust, our Court of Appeals

quoted language from VisionAIR, Inc. v. James to establish a pleading standard now


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                                  KRAWIEC V. MANLY

                                  Beasley, J., dissenting



propounded by the majority of this Court: “a plaintiff must identify a trade secret

with sufficient particularity so as to enable a defendant to delineate that which he is

accused of misappropriating,” ” Washburn, 

190 N.C. App. 315, 326

, 

660 S.E.2d 577, 585

 (2008) (quoting VisionAIR, 

167 N.C. App. 504, 510

, 

606 S.E.2d 359, 364

 (2004)),

disc. rev. denied, 

363 N.C. 139

, 

674 S.E.2d 422

 (2009), and “a complaint that makes

general allegations in sweeping and conclusory statements, without specifically

identifying the trade secrets allegedly misappropriated, is ‘insufficient to state a

claim for misappropriation of trade secrets,’ ” id. at 327, 

660 S.E.2d at 585

-86 (quoting

VisionAIR, 

167 N.C. App. at 511

, 

606 S.E.2d at 364

). There are two problems with

relying on this language from Washburn to establish a pleading standard: (1) this

language from VisionAIR is dicta because VisionAIR evaluated the merits of the

misappropriation of trade secrets claim for the purposes of issuing a preliminary

injunction, see VisionAIR, 

167 N.C. App. at 510-11

, 

606 S.E.2d at 364

, and (2) this

language from VisionAIR quotes another preliminary injunction case for this

proposition, see 

id. at 511

, 

606 S.E.2d at 364

 (citing Analog Devices, Inc. v. Michalksi,

157 N.C. App. 462, 468-70

, 

579 S.E.2d 449, 453-54

 (2003)).

      It is important to note that

             [t]he standards under Rule 12(b)(6) are dramatically
             different than those for issuance of a preliminary
             injunction. While a motion for a preliminary injunction
             requires a showing of a likelihood of success on the merits,
             requiring more than conclusory allegations, it is well
             established that “[w]ith the adoption of ‘notice pleading,’
             mere vagueness or lack of detail is no longer ground for


                                           -26-
                                 KRAWIEC V. MANLY

                                  Beasley, J., dissenting



             allowing a motion to dismiss.”

Barbarino v. Cappuccine, Inc., 

219 N.C. App. 400

, 

722 S.E.2d 211

, 

2012 WL 698373

,

at *4 (unpublished) (second alteration in original) (quoting Gatlin v. Bray, 

81 N.C. App. 639, 644

, 

344 S.E.2d 814, 817

 (1986)), aff’d per curiam, 

366 N.C. 330

, 

734 S.E.2d 570

 (2012). Yet much of the majority’s reasoning on this issue conflates not only these

two standards, but its reasoning also conflates cases evaluating motions for summary

judgment with the issue at hand. See VisionAIR, 

167 N.C. App. at 510-11

, 

606 S.E.2d at 364

 (evaluating whether a plaintiff was likely to succeed on the merits of its

misappropriation of trade secrets claim in an appeal from an order denying a

preliminary injunction); see also Asheboro Paper & Packaging, Inc. v. Dickinson, 

599 F. Supp. 2d 664, 676-78

 (M.D.N.C. 2009) (preliminary injunction); UBS PaineWebber,

Inc. v. Aiken, 

197 F. Supp. 2d 436, 446-48

 (W.D.N.C. 2002) (preliminary injunction);

Washburn, 

190 N.C. App. at 325-27

, 

660 S.E.2d at 585-86

 (applying standard from

VisionAIR to a Rule 12(b)(6) motion to dismiss); Analog Devices, 

157 N.C. App. at 468-70, 472

, 

579 S.E.2d at 453-54, 455

 (preliminary injunction); Combs & Assocs., v.

Kennedy, 

147 N.C. App. 362, 370-71

, 

555 S.E.2d 634, 640

 (2001) (summary judgment);

NovaCare Orthotics & Prosthetics E., Inc. v. Speelman, 

137 N.C. App. 471, 477-78

,

528 S.E.2d 918, 922

 (2000) (preliminary injunction)..         Beyond announcing a

heightened pleading requirement, the majority now requires evidence at the pleading

stage showing the plaintiff took steps to keeps its trade secrets confidential. That

has never been the law in North Carolina; the only cases requiring a plaintiff to


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                                  KRAWIEC V. MANLY

                                  Beasley, J., dissenting



affirmatively prove efforts to maintain the secrecy of a trade secret were decided at

the preliminary injunction or summary judgment stage.

      Succeeding on motions for both summary judgment and preliminary injunction

require proof on the merits of the claim, while our pleading standards merely require

a plaintiff to allege a “short and plain statement of the claim” giving the trial court

and the defendant notice of the transactions or occurrences the plaintiff intends to

prove. Compare N.C.G.S. § 1A-1, Rule 8(a)(1) with id. § 1A-1, Rule 56(c) (2017)

(stating summary judgment “shall be rendered if the pleadings, depositions, answers

to interrogatories, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that any party is entitled

to judgment as a matter of law”), and Ridge Cmty. Inv’rs, Inc. v. Berry, 

293 N.C. 688, 701

, 

239 S.E.2d 566, 574

 (1977) (explaining a preliminary injunction will issue only

upon the movant’s showing a “likelihood of success on the merits of his case”).

      By definition, trade secrets are

             business or technical information, including but not limited
             to a formula, pattern, program, device, compilation of
             information, method, technique, or process that . . .
             [d]erives independent actual or potential commercial value
             from not being generally known or readily ascertainable
             through independent development or reverse engineering
             by persons who can obtain economic value from its
             disclosure or use[,] and . . . [i]s the subject of efforts that
             are reasonable under the circumstances to maintain its
             secrecy.




                                           -28-
                                  KRAWIEC V. MANLY

                                  Beasley, J., dissenting



N.C.G.S. § 66-152(3) (2017). Our Court of Appeals has held that “customer lists and

their contact information” constitute trade secrets under the definition established in

subsection 66-152(3). Sunbelt Rentals, Inc. v. Head & Engquist Equip., L.L.C., 

174 N.C. App. 49, 55

, 

620 S.E.2d 222, 227

 (2005) (stating that “customer information,

preferred customer pricing, employees’ salaries, equipment rates, fleet mix

information, budget information and structure of the business” constitute trade

secrets under the Trade Secrets Protection Act), petition for disc. rev. dismissed, 

360 N.C. 296

, 

629 S.E.2d 289

 (2006); Area Landscaping, L.L.C. v. Glaxo-Wellcome, Inc.,

160 N.C. App. 520, 525

, 

586 S.E.2d 507, 511

 (2003) (noting that “information

regarding customer lists, pricing formulas and bidding formulas can qualify as” a

trade secret); State ex rel. Utils. Comm’n v. MCI Telecomms. Corp., 

132 N.C. App. 625, 634

, 

514 S.E.2d 276, 282

 (1999) (concluding that a “compilation of information”

involving customer data and business operations which has “actual or potential

commercial value from not being generally known” is sufficient to constitute a trade

secret); Drouillard v. Keister Williams Newspaper Servs., 

108 N.C. App. 169, 174

, 

423 S.E.2d 324, 327

 (1992) (concluding customer lists and pricing and bidding formulas

can constitute trade secrets), disc. rev. denied and cert. dismissed, 

333 N.C. 344

, 

427 S.E.2d 617

 (1993). Because these decisions have recognized that customer lists can

constitute trade secrets, it is unreasonable to conclude that a plaintiff cannot rely on

these holdings to plead its claims. Nonetheless, the majority again conflates the

summary judgment standard, see Combs & Assocs., Inc., 

147 N.C. App. at 368-71

, 555


                                           -29-
                                  KRAWIEC V. MANLY

                                  Beasley, J., dissenting



S.E.2d at 639-40, and the preliminary injunction standard, see NovaCare Orthotics,

137 N.C. App. at 477-78

, 

528 S.E.2d at 922

, with the Rule 12(b)(6) motion to dismiss

standard by requiring plaintiffs to “come forward with . . . evidence to show that [they]

took . . . special precautions to ensure the confidentiality of [their] customer

information.”

      Further, the Court of Appeals, North Carolina business bourts, and federal

courts exercising diversity jurisdiction applying North Carolina law have also treated

“marketing” strategies as trade secrets. See Med. Staffing Network, Inc. v. Ridgway,

194 N.C. App. 649, 658-59

, 

670 S.E.2d 321, 328-29

 (2009); Bldg. Ctr., Inc. v. Carter

Lumber, Inc., No. 16 CVS 4186, 

2016 WL 6142993

, at *4 (N.C. Super. Ct.

Mecklenburg County (Bus. Ct.) Oct. 21, 2016) (unpublished); see also Olympus

Managed Health Care, Inc. v. Am. Housecall Physicians, Inc., 

853 F. Supp. 2d 559, 572

 (W.D.N.C. 2012); Merck & Co. v. Lyon, 

941 F. Supp. 1443, 1456-57

 (M.D.N.C.

1996). The majority’s dismissal of this part of the allegation without additional

consideration of these cases is error.

      Though there is no support in North Carolina for the premise that “original

ideas and concepts for dance productions” constitute trade secrets, there is no

authority that they are decidedly not, and similar information has been valued and

protected when former employees accept similar employment from competitors. See

Amdar, Inc. v. Satterwhite, 

37 N.C. App. 410, 413, 416

, 

246 S.E.2d 165, 166, 168

, disc.

rev. denied, 

295 N.C. 645

, 

248 S.E.2d 249

 (1978) (affirming trial court’s award of


                                           -30-
                                  KRAWIEC V. MANLY

                                  Beasley, J., dissenting



preliminary injunctive relief prohibiting defendant-dance instructor from accepting

employment in any capacity in any dance studio or school, giving instruction on

dancing in any form whatsoever, and from competing with the business of the

plaintiff in any other way, which included prohibiting the defendant from using or

disclosing the plaintiff’s trade secrets which included teaching techniques and sales

methods). A forecast of the merits of a case like this reveals that performers and

businessmen in the variety arts are not likely to receive protection under the Trade

Secrets Protection Act because once performed, the productions can be re-created

through reverse engineering and are observable by the public. See N.C.G.S. § 66-155;

see also Sara J. Crasson, The Limited Protections of Intellectual Property Law for the

Variety Arts: Protecting Zacchini, Houdini, and Cirque du Soleil, 

19 Vill. Sports & Ent. L.J. 73

, 77, 111-12 (2012). But in liberally construing the complaint in this case,

there is no indication that these productions had actually been performed. The

majority is correct that “[t]here is no presumption that a thing is a secret,” Arthur

Murray Dance Studios of Cleveland, Inc. v. Witter, 

105 N.E.2d 685, 709

 (Ohio Ct.

Com. Pl. 1952); however, there is also no presumption that any particular idea has

been disclosed.

      In Washburn, a case cited by the majority that actually evaluated a complaint

under a Rule 12(b)(6) standard (though a heightened standard as per its reliance on

VisionAIR), the complaint’s description of trade secrets that led the court to conclude

that the claim was not pleaded with sufficient particularity consisted of “confidential


                                           -31-
                                  KRAWIEC V. MANLY

                                  Beasley, J., dissenting



client information” and “confidential business information.” Washburn, 

190 N.C. App. at 327

, 

660 S.E.2d at 586

. These are examples of “sweeping and conclusory”

statements that the court intended to fail under Rule 12(b)(6). In contrast, the

allegations here provided more specific details regarding both client and business

information to more particularly describe the trade secrets as “original ideas and

concepts for dance productions, marketing strategies and tactics, as well as student,

client and customer lists and their contact information.” Because this description is

sufficient to put defendants on notice of the transactions and occurrences at issue, I

cannot join the majority.

      With this case this Court had an opportunity to correct the faulty logic that for

over a decade has resulted in the substitution of a preliminary injunction standard

for our general pleading standard governing this particular claim.         Instead, the

majority has validated a heightened pleading standard for a misappropriation of

trade secrets claim with no discussion as to why it believes it is necessary to do so. “

‘[T]he term trade secret is one of the most elusive and difficult concepts in the law to

define’ and the “question of whether an item taken . . . constitutes a trade secret is of

the type normally resolved by a fact finder after a full presentation of evidence from

each side.’ ” Eric D. Welsh, Betwixt and Between: Finding Specificity in Trade Secret

Misappropriation       Cases      (Am.       Bar       Ass’n,   Aug.      20,     2015),

http://apps.americanbar.org/litigation/committees/businesstorts/articles/

summer2015-0815-specificity-trade-secret-misappropriation-cases.html [hereinafter


                                           -32-
                                      KRAWIEC V. MANLY

                                      Beasley, J., dissenting



Betwixt and Between] (ellipses in original) (quoting Furmanite Am., Inc. v. T.D.

Williamson, Inc., 

506 F. Supp. 2d 1134, 1141

 (M.D. Fla. 2007) (internal quotation

marks omitted). Because I believe we should not reject plaintiffs’ misappropriation of

trade secrets claim at this early stage in the proceeding given our notice pleading

standard,2 I respectfully dissent.




       2 An alternative to requiring a heightened pleading standard to protect defendants
from unwarranted discovery, while also allowing plaintiffs to proceed with their claim at this
early stage, may be to require plaintiffs to identify the trade secret with more specificity prior
to discovery. Instead of using Rule 12(b)(6), defendants could challenge the claim “either
through a re-sequencing of discovery or a motion for a more definite statement coupled with
a stay of discovery.” Betwixt and Between.

                                               -33-