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BladeRoom Group Ltd. v. Facebook, Inc.

United States District Court, N.D. California, San Jose Division

February 10, 2017

BLADEROOM GROUP LIMITED, et al., Plaintiffs,
v.
FACEBOOK, INC., et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS Re: Dkt. No. 114

          EDWARD J. DAVILA United States District Judge.

         This is a case about data centers, “which are the buildings that house the vast arrays of computer servers that form the backbone of the internet and the high-technology economy.” Second Am. Compl. (“SAC'), Dkt. No. 107, at ¶ 1. Plaintiffs BladeRoom Group Limited (“BRG”) and Bripco (UK) Limited (“Bripco”)[1] are two English companies who allege that Defendants Facebook, Inc. (“Facebook”), Emerson Electric Co. (“Emerson”), Emerson Network Power Solutions, Inc. and Liebert Corporation[2] enticed them to reveal their data center designs and construction methods with promises of acquisition and partnership, only to then copy those designs and methods and pass them off as their own.

         Federal jurisdiction arises pursuant to 28 U.S.C. §§ 1331 and 1332. Presently before the court is Facebook's Motion to Dismiss the SAC under Federal Rule of Civil Procedure 12(b)(6). Dkt. No. 114. Plaintiffs have filed written opposition to this motion. Having carefully considered the parties' arguments, the court concludes that most but not all of the SAC withstands a Rule 12(b)(6) review. Thus, Facebook's motion will be granted in part and denied in part for the reasons explained below.

         I. BACKGROUND

         A. Plaintiffs and the BladeRoom Technology

         Plaintiffs developed and perfected a method for manufacturing and installing a type of prefabricated data center known as a “BladeRoom.” Id. at ¶ 4. ____ Id. at ¶ 26. Plaintiffs built the first BladeRoom in 2009, and have since built over 40 BladeRooms on four continents. Id. at ¶ 27.

         Though some of the techniques used to build a BladeRoom are publicly disclosed, Plaintiffs keep others as confidential trade secrets and limit the release of this information in several ways. Id. at ¶¶ 28, 31. They ensure that private disclosure to potential clients, suppliers and others is covered by non-disclosure agreements. Id. at ¶ 31. The computer systems containing the trade secrets are password-protected and the facilities where they are stored are physically secured. Id. Additionally, employee access to trade secrets is limited to only those that need to know of them and is subject to confidentiality agreements. Id.

         Bripco is the legal owner, and BRG is the licensee, of all right, title and interest in the trade secrets and other confidential information developed by BRG, including the BladeRoom technology. Id. at ¶ 5.

         B.BRG Discusses BladeRoom Technology with Emerson and Facebook

         In August 2011, BRG entered into ___ Id. at ¶ 34. Emerson executed a non-disclosure agreement before any substantive discussions occurred, ____. Id. at ¶ 35. BRG then hosted a meeting for several Emerson executives at its factory in England in September, 2011, ___ Id. at ¶ 47. Emerson later informed BRG in October, 2011, ___. Id. at ¶ 48.

         BRG also began discussing the BladeRoom technology with Facebook in October, 2011. Id. at ¶ 37. In connection with those discussions, BRG and Facebook entered into a nondisclosure agreement ___ Id. at ¶ 40. ___, Facebook “urgently requested” a proposal to supply BladeRooms for a data center in North Carolina. Id. at ¶ 49. BRG provided the proposal in November, 2011, ____. Id. According to BRG, “[f]eedback from Facebook was positive, and Facebook quickly began asking to learn even more details about” BladeRooms. Id. at ¶ 50. BRG representatives met with Facebook in California, and two Facebook representatives met with BRG in England in March, 2012. Id. at ¶ 51. During this trip, BRG took the Facebook representatives on a tour of an operating BladeRoom and provided them with additional confidential information. Id. Subsequently, “Facebook continued to request yet more detailed confidential information from BRG, ” and “suggested that the next step should be for a team of Facebook design and engineering staff to travel to BRG in England for an in-depth workshop with BRG's technical teams to enable Facebook to learn more . . . .” Id. at ¶ 52.

         BRG alleges that soon after the March, 2012, meeting in England, one of the attending Facebook representatives met with an Emerson Network Power executive ___. Id. at ¶ 53. ___, Emerson contacted BRG and sought to reopen discussions, to which BRG agreed. Id. Emerson told BRG, however, that a group of individuals other than the ones who had visited BRG in 2011 ___. Id. Emerson proposed that several of its representatives visit BRG's facilities in June, 2012. Id. at ¶ 54.

         On May 29th and May 30, 2012, BRG attended a meeting with Facebook at its data center campus in Prineville, Oregon, and was told the purpose of the meeting was to “survey and physically see the functionality of a Facebook data center and meet Facebook's lead architect and engineers.” Id. at ¶ 56. Third party architects and contractors also attended. Id. Facebook told BRG it would request a proposal for an expansion of the Prineville data center campus and asked BRG to present and discuss BladeRoom technology, which it did. ___ Id. at ¶ 57. BRG alleges that unbeknownst to it at the time, Facebook had already agreed that its construction contractor Id. at ¶ 58.

         BRG's previously discussed in-depth workshop with Facebook occurred in England between June 19th and June 21, 2012, during which BRG revealed additional confidential information. Id. at ¶¶ 60, 61. A meeting between BRG and Emerson, during which BRG also revealed confidential information, occurred at the same time. Id. at ¶ 64. To maintain the confidentiality of the respective discussions, BRG ensured the two companies' representatives were separated during their visits. Id.

         But despite BRG's efforts, representatives from Facebook and Emerson did engage in a “pre-arranged, clandestine meeting” in London on June 21, 2012, and “compared notes” on what each had learned from their meetings with BRG. Id. at ¶ 68. Facebook also continued to indicate an interest in partnering with BRG and requested more information and proposals. Id. at ¶ 69.

         C. Facebook and Emerson Allegedly Misappropriate the BladeRoom Technology

         Facebook never placed an order for BladeRooms. Id. at ¶ 71. Instead, BRG alleges that Facebook and Emerson ___ Id. at ¶ 74. ___ Id. at ¶¶ 75, 80. On January 16, 2013, Emerson publicly announced that it was launching a new business focusing on “serving the needs of massive data centers” using “customized, highly scalable, and often modular infrastructures.” Id. at ¶ 78. And in May, 2014, Facebook announced it had chosen Emerson to construct a pre-fabricated, modular data center in Sweden, which it alleges will be constructed using appropriated BladeRoom technology. Id. at ¶ 113.

         D. Facebook's Disclosure of BRG Confidential Information

         BRG alleges that after Emerson's announcement, Facebook began revealing BRG's confidential information through its initiative called the “OpenCompute Project, ” the goal of which “is to give the public ‘full access to the[] specifications' used by Facebook in its data centers in order to ‘spark a collaborative dialogue” about how to improve its approach to data centers.” Id. at ¶¶ 83, 84. BRG alleges that on January 28, 2014, a Facebook representative made a public presentation at an OpenCompute forum and referred to the BladeRoom technology as one the “rapid deployment data center” (“RDDC”) method created by Facebook. Id. at ¶ 89. The same Facebook representative also authored and published an OpenCompute blog post that allegedly included details of the BladeRoom technology. Id. at ¶ 100.

         E. The Instant Action

         Plaintiffs initiated this action on March 23, 2015, and the court granted in part and denied in part Facebook's motion to dismiss the original complaint. Dkt. No. 59. Plaintiffs then filed an amended complaint and, later, the SAC. Dkt. Nos. 62, 107. This motion followed.

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient specificity to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). The factual allegations in the complaint “must be enough to raise a right to relief above the speculative level” such that the claim “is plausible on its face.” Id. at 556-57. A complaint that falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).

         When deciding whether to grant a motion to dismiss, the court must generally accept as true all “well-pleaded factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). The court must also construe the alleged facts in the light most favorable to the plaintiff. See Retail Prop. Trust v. United Bhd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014) (providing the court must “draw all reasonable inferences in favor of the nonmoving party” for a Rule 12(b)(6) motion). However, “courts are not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678.

         Also, the court usually does not consider any material beyond the pleadings for a Rule 12(b)(6) analysis. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n. 19 (9th Cir. 1990). Exceptions to this rule include material submitted as part of the complaint or relied upon in the complaint, and material subject to ...


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