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Seven Seas Technologies, Inc. v. Infinite Computer Solutions, Inc.

United States District Court, S.D. Mississippi, Northern Division

October 30, 2018




         Defendant Infinite Computer Solutions, Inc. (“Infinite”), asks the Court to dismiss Plaintiff Seven Seas Technologies, Inc.'s (“Seven Seas”) Complaint against it. Mot. to Dismiss [9]. For the reasons that follow, Infinite's motion is granted in part but otherwise denied.

         I. Facts and Procedural History

         This case centers on the contractual relationship between Plaintiff Seven Seas and Conduent Incorporated (“Conduent”), a non-party to this suit. Conduent provides “broad and comprehensive services in support of the administration of Mississippi Medicaid funds paid to Mississippi healthcare providers and entities who serve the residents and citizens covered by the Mississippi Medicaid Program.” Compl. [1] ¶ 10. Under their contract, Seven Seas “performed contract IT services . . . to support . . . Conduent's services to Mississippi residents and providers pursuant to . . . Conduent's contract with the Mississippi [Division of Medicaid.]” Id. ¶¶ 10-11.

         Defendant Infinite also “maintained a contract relationship with Conduent to support Conduent's contract services in various locations . . ., and Infinite at some time became interested in the work [Seven Seas] was performing on behalf of the Mississippi Medicaid program through the Conduent contract.” Id. ¶ 13. Seven Seas alleges that, beginning in the spring of 2017, “Infinite began to implement a strategy and execute plans aimed at disruption and destruction of the [Seven Seas/]Conduent business and contractual relationship.” Id. ¶ 15. In particular, Infinite “undertook repeated, consistent, orchestrated attempts to hire away . . . employees from [Seven Seas], ” even though the Seven Seas employees had signed non-compete and non-disclosure agreements. Id. ¶ 16. Seven Seas claims Infinite “targeted [its] employees . . . who had proprietary knowledge as to[] the Mississippi Medicaid Management Information System.” Id. ¶¶ 17-18.

         According to Seven Seas, Infinite informed the employees it targeted that the Seven Seas contract with Conduent “was terminating at a time when, in fact, it was not.” Id. ¶ 29. As a result of Infinite's efforts, some Seven Seas “employees working on Mississippi Medicaid projects have departed, ” and whereas Conduent previously renewed its contract with Seven Seas on an annual basis, “toward the end of 2017, ” those “contract renewals began to occur only on a month-to-month basis.” Id. ¶¶ 29, 25. Conduent ultimately terminated its contract with Seven Seas effective March 19, 2018.

         Seven Seas filed this lawsuit against Infinite on March 2, 2018. It asserts state-law claims for intentional interference with a business relationship, intentional interference with a contractual relationship, misappropriation of trade secrets, unfair competition, unjust enrichment, negligence, and willful misconduct. Infinite moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). The Court has both personal and subject-matter jurisdiction.

         II. Standard

         When considering a motion under Rule 12(b)(6), the “court accepts ‘all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'” Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004) (quoting Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999) (per curiam)). But “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To overcome a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570.

         Throughout its memoranda, Infinite attempts to hold Seven Seas to a higher standard than Rule 12(b)(6) requires. “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 555 (citations and footnote omitted). Yet Infinite frequently faults Seven Seas for failing to connect every dot or aver direct evidence of every essential element. For example, Infinite argues that Seven Seas has not stated a case for interference with a contract because it did not allege that Infinite discussed Seven Seas' contract with Conduent. See Def.'s Reply [16] at 6. Similarly, Infinite says Seven Seas-which lost a decade-old contract-failed to show Infinite caused any damages. Id. at 4.

         Despite such arguments, Seven Seas is not required to plead a complete case on the first day of litigation and will never be required to establish each element with direct evidence- circumstantial evidence will suffice. At this stage, Seven Seas is required merely to plead a claim that is facially plausible. Iqbal, 556 U.S. at 678. And that “standard ‘simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of' the necessary claims or elements.” In re S. Scrap Material Co., LLC, 541 F.3d 584, 587 (5th Cir. 2008) (citing Twombly, 550 U.S. at 556).

         Finally, in considering a motion under Rule 12(b)(6), the Court “must [generally] limit itself to the contents of the pleadings, including attachments thereto.” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). “If . . . matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56” and “[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d). In this case, Seven Seas submitted a declaration that expands upon its factual allegations in response to Infinite's motion. The Court cannot consider the declaration without converting Infinite's motion into a motion for summary judgment, and the Court declines to do so. See Isquith ex rel. Isquith v. Middle S. Utils., Inc., 847 F.2d 186, 193 n.3 (5th Cir. 1988) (explaining that Rule 12(d) “gives a district court complete discretion to determine whether . . . to accept any material beyond the pleadings that is offered in conjunction with a Rule 12(b)(6) motion”) (quoting 5C Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1366 (1969)).

         III. Analysis

         A. Count I: Intentional Interference with a Business Relationship

         “[T]ortious interference with business relations occurs when a person unlawfully diverts prospective customers away from one's business . . . .” Par Indus., Inc. v. Target Container Co., 708 So.2d 44, 48 (Miss. 1998). To establish a claim for tortious interference with a business relationship, the plaintiff must show:

(1) The acts were intentional and willful;
(2) The acts were calculated to cause damage to the plaintiff[] in [its] lawful business;
(3) The acts were done with the unlawful purpose of causing damage and loss, without right or justifiable cause on the part of the defendant (which constitutes malice); [and]
(4) Actual damage and loss resulted.

MBF Corp. v. Century Commc'ns, Inc., 663 So.2d 595, 598 (Miss. 1995) (quoting Nichols v. Tri-State Brick & Tile, 608 So.2d 324, 328 (Miss. 1992)). To make a “prima facie case of damages, ‘the plaintiff must show (1) a loss, and (2) that [the] defendant's conduct caused the loss.'” MBF Corp., 663 So.2d at 598 (quoting Cenac v. Murry, 609 So.2d 1257, 1271 (Miss. 1992)).

         Infinite says Seven Seas fails to state an intentional-interference-with-a-business-relationship claim for three reasons: (1) “the Complaint does not plausibly allege that Infinite's supposed recruiting efforts were calculated to damage [Seven Seas'] business, ” (2) “the Complaint does not allege that Infinite's conduct was unjustified, ” and (3) “the Complaint does not make it plausible that [Seven Seas] experienced actual damage or loss based on any action of Infinite.” Def.'s Mem. [10] at 5-6.

         Starting with intent, Seven Seas notes that under Rule 9(b), “[m]alice, intent, knowledge, and other conditions of a [party's] mind may be alleged generally.” Fed.R.Civ.P. 9(b). And as noted in the standards section of this Order, Seven Seas need not plead direct evidence supporting every essential element. Indeed the intent component of a ...

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