United States District Court, D. Montana, Missoula Division
L. CHRISTENSEN, CHIEF JUDGE UNITED STATES DISTRICT COURT.
the Court is Defendant Halliburton Energy Services,
Inc.'s ("Halliburton") Partial Motion to
Dismiss Adelos, Inc.'s ("Adelos") conversion
claim in its First Amended Complaint. The Court held a
hearing on the motion on December 5, 2017. For the reasons
explained below, the Court denies the motion.
the parties are familiar with the general facts of this case,
the Court will not restate them here. (See Doc. 60
filed its First Amended Complaint (Doc. 68) on July 28, 2017.
Halliburton now brings this Motion for Partial Dismissal of
Adelos's Amended Complaint under Fed.R.Civ.P. 12(b)(6),
seeking to dismiss Adelos's amended conversion claim for
failure to state a claim upon which relief can be granted.
Rule 12(b)(6), the Court is generally limited to the
allegations of the complaint, "which are accepted as
true and construed in the light most favorable to the
plaintiff." Lazy YRanch LTD v. Behrens, 546
F.3d 580, 588 (9th Cir. 2008). Nonetheless, the plaintiff
must allege sufficient facts "to state a claim to relief
that is plausible on its face." Ashcroft v.
Iqbal, 556 U.S. 662, 697 (2009) (citation omitted).
These facts need not be overly specific, but they must
"give the defendant fair notice of what the ... claim is
and the grounds upon which it rests." Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (per curium) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). The Twombly/Iqbal plausibility standard is
not "akin to a probability requirement, " but it
"asks for more than a sheer possibility that a defendant
has acted unlawfully ...." Iqbal, 556 U.S. at
678 (internal quotation marks and citation omitted).
initial matter, Adelos claims that Halliburton waived all
arguments presented in its motion to dismiss because they
were omitted from its first motion to dismiss. (Doc. 71 at
10.) Under Federal Rule of Civil Procedure 12(g)(2), Adelos
argues that a when a party makes a motion under Rule 12, it
must not make another motion under this rule raising a
defense or objection that was available to the party but
omitted from its earlier motion. (Id.) Halliburton
counters that Adelos's new conversion claim relates to
alleged information that falls outside of Adelos's
patents and patent applications. Thus, it is a new theory of
liability and Halliburton could not have raised these
defenses under the original conversion claims and first
motion to dismiss. The Court agrees. In the Court's July
7, 2017 Order, it invited Adelos to file an Amended Complaint
in order to cure the deficiencies related to the conversion
claim. The Court found that federal law preempts state law
claims related to patents and patent infringement. (Doc. 67
at 6 ("If Adelos chooses to amend its Complaint, its
claim may survive the pleadings phase to the degree that it
plausibly alleges [Halliburton's] misappropriation of
technical information other than that disclosed in the
patents and patent applications.").) Therefore, the
Court anticipated a new conversion claim related to
Adelos's business proprietary information. This is an
entirely new claim. Therefore, Halliburton did not waive any
defenses under Rule 12(g)(2).
the merits of the amended conversion claim, Halliburton
presents four arguments in favor of dismissal. First, it
contends that the claim fails as a matter of law because
Adelos has not and cannot allege a recognized property
interest in the information allegedly converted. Second, it
claims that Adelos did not sufficiently plead "specific
technical information." Third, it argues that the
Montana Uniform Trade Secrets Act ("MUTSA")
preempts common law causes of action that are premised on the
alleged misappropriation of "technical
information." Finally, it claims that Adelos did not
plead a contractual relationship and that Adelos volunteered
the alleged "technical information" to Halliburton.
preliminary matter, the Court notes that the amended
conversion claim may be subject to MUTSA preemption.
NetApp, Inc. v. Nimble Storage, Inc., No.
5:13-CV-05058-LHKHRL, 2015 WL 400251, at *16 (N.D. Cal. Jan.
29, 2015) (finding that "although [plaintiffs]
allegations are decidedly vague, they may still be subject to
[California Uniform Trade Secret Act] preemption").
However, at this stage of the proceeding it is unclear what
information is contained in the documents listed in paragraph
81 of the Amended Complaint. It may very well be trade
secrets. But without the benefit of discovery in
this case, the Court is unable to conclude that the
conversion claim is preempted in whole or in part by MUTSA.
Thus, the Court is left to determine whether Adelos has
sufficiently pled a common law claim for conversion under
claims that Adelos failed to plead any property right that is
subject to conversion under Montana law. Halliburton contends
that Adelos must allege a legal basis for the property right,
and cannot state a mere conclusory recitation of the elements
of conversion to satisfy the pleading standard at the motion
to dismiss stage. (Doc. 70 at 6-8.) Adelos claims that it
accurately set forth the elements of a conversion claim under
Montana law in its Amended Complaint, and named specific
documents in which the information Halliburton allegedly
converted is merged.
plaintiff alleging a claim of conversion must establish the
following four elements: (1) property ownership by the
plaintiff; (2) plaintiffs right of possession of the
property; (3) defendant's unauthorized control over the
property; and (4) damages." Feller v. First
Interstate Bancsystem, Inc.,299 P.3d 338, 343 (Mont.
2013). "Conversion is 'a distinct act of dominion
wrongfully exerted over one's property in ...