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Signature Style, Inc. v. Roseland

United States District Court, D. Nebraska

January 6, 2020

SIGNATURE STYLE, INC., a Nebraska Corporation, d/b/a SIGNATURE STYLE JEWELRY, Plaintiff and counterclaim defendant,
v.
SCOTT ROSELAND, d/b/a EMPIRE CHAMPIONSHIP RINGS, Defendant and counterclaimant.

          MEMORANDUM AND ORDER

          JOHN M. GERRARD CHIEF UNITED STATES DISTRICT JUDGE.

         This dispute arose after defendant Scott Roseland terminated his employment with plaintiff Signature Style, Inc. and started a competing business, Empire Championship Rings. Signature Style alleges that Roseland breached both a Confidentiality/Nondisclosure Agreement (filing 1-2 at 16) and a Noncompete Agreement (filing 1-2 at 17) by taking customer records, design and supplier information, other proprietary information, and trade secrets and using them to establish Empire.

         This matter is before the Court on Roseland's partial motion to dismiss (filing 5) pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons set forth below, the Court will grant Roseland's motion in part and deny it in part.

         I. BACKGROUND

         Signature Style is a Nebraska corporation that designs, manufactures and sells championship and class rings nationwide. Filing 1-2 at 1. Its principal place of business is in Lincoln, Nebraska. Filing 1-2 at 1. Roseland worked for Signature Style from 2013 or 2014[1] until mid-February 2019, first as a sales representative and later a sales manager. Filing 1-2 at 2-3; filing 4 at 2-3. On September 10, 2018 Roseland signed a Confidentiality/Non-Disclosure Agreement and a Non-Compete Agreement as a condition of his continued employment with Signature Style. Filing 1-2 at 2; filing 4 at 2. In mid-February 2019, Roseland notified Signature Style he would be resigning and starting his own jewelry design and sales business. Filing 1-2 at 3; filing 4 at 3.

         Roseland moved from Lincoln, Nebraska to Wichita, Kansas and started Empire. See filing 1-2 at 1-3, filing 4 at 1-3. Signature Style alleges that Roseland took confidential information including customer lists; pricing methods; and names and addresses of suppliers, vendors, and other third parties doing business with Signature Style. Filing 1-2 at 2-3, 18. Signature Style also alleges Roseland has used this confidential information to establish Empire in violation of the confidentiality agreement and noncompete agreement. Filing 1-2 at 3-4. Finally, Signature Style alleges that Roseland is soliciting former, current and prospective customers that Roseland "knew or otherwise developed a relationship with" while employed at Signature Style. Roseland admits that Empire competes with Signature Style, but denies that he took any confidential information. Filing 4 at 3.

         Signature Style sued Roseland for (1) breach of contract, (2) accounting, (3) misappropriation of proprietary material, (4) breach of the Nebraska Trade Secrets Act, (5) breach of the Nebraska Uniform Deceptive Trade Practices Act (UDTPA), (6) unjust enrichment, and (7) injunctive relief. Filing 1-2 at 1-9. Roseland now moves to dismiss Signature Style's breach of contract, and UDTPA claims.

         II. STANDARD OF REVIEW

         A complaint must set forth a short and plain statement of the claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2). This standard does not require detailed factual allegations, but it demands more than an unadorned accusation. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint need not contain detailed factual allegations, but must provide more than labels and conclusions; and a formulaic recitation of the elements of a cause of action will not suffice. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). For the purposes of a motion to dismiss a court must take all of the factual allegations in the complaint as true, but is not bound to accept as true a legal conclusion couched as a factual allegation. Id.

         And to survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a complaint must also contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Iqbal, 556 U.S. at 678. A claim has facial plausibility when the plaintiff pleads factual content that allows the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. Where the well-pleaded facts do not permit the Court to infer more than the mere possibility of misconduct, the complaint has alleged-but has not shown-that the pleader is entitled to relief. Id. at 679.

         Determining whether a complaint states a plausible claim for relief will require the reviewing court to draw on its judicial experience and common sense. Id. The facts alleged must raise a reasonable expectation that discovery will reveal evidence to substantiate the necessary elements of the plaintiff's claim. See Twombly, 550 U.S. at 545. The Court must assume the truth of the plaintiff's factual allegations, and a well-pleaded complaint may proceed, even if it strikes a savvy judge that actual proof of those facts is improbable, and that recovery is very remote and unlikely. Id. at 556.

         When deciding a motion to dismiss under Rule 12(b)(6), the Court is normally limited to considering the facts alleged in the complaint. If the Court considers matters outside the pleadings, the motion to dismiss must be converted to one for summary judgment. Fed.R.Civ.P. 12(d). However, the Court may consider exhibits attached to the complaint and materials that are necessarily embraced by the pleadings without converting the motion. Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003). Documents necessarily embraced by the pleadings include those whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading. Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012).

         III. DISCUSSION

         1. Breach of Contract

         Roseland argues (1) the noncompete agreement is unenforceable as a matter of Nebraska law, and (2) the noncompete and confidentiality agreement should be considered as a single, inseverable agreement; so the invalidity of the noncompete ...


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