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Dropzonems, LLC v. Cockayne

2019 WL 7630788 (D. Or. 2019)

September 12, 2019

You, Youlee Yim, United States Magistrate Judge

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Summary

The court granted summary judgment in favor of the plaintiff on the defendants' first counterclaim for breach of contract, as the written Software Use and License Agreement superseded any prior oral agreements. The court also found that the plaintiff's trade secret misappropriation and copyright infringement claims failed due to lack of expert testimony. The court also noted that ESI, specifically the Dropzone Management Software, was a key piece of evidence in the case.

Additional Decisions

DROPZONEMS, LLC, an Oregon LLC, Plaintiff,
v.
STEVEN COCKAYNE; NATALIE ROGERS; DAVID THORPE; and PACIFIC NORTHWEST SKYDIVING CENTER, LLC, an Oregon LLC, Defendants.
STEVEN COCKAYNE, Third-Party Plaintiff,
v.
KYLE WILLIAMS; ALEX TOGSTAD; TIMOTHY NOONAN; and DROPZONEMS, LLC, an Oregon LLC, Third-Party Defendants

Case No. 3:16-cv-02348-YY

United States District Court, D. Oregon

FIled September 12, 2019

Counsel

Klaus H. Hamm, Salumeh R. Loesch, Klarquist Sparkman, LLP, Johnathan E. Mansfield, MansfieldLaw, Portland, OR, for Plaintiff.
Daniel T. Keese, Erick J. Haynie, Perkins Coie, LLP, Portland, OR, for Defendants.

You, Youlee Yim, United States Magistrate Judge

FINDINGS AND RECOMMENDATIONS

*1 Plaintiff and third-party defendant DropzoneMS, LLC (plaintiff or DropzoneMS) bring claims for trade secret misappropriation under the Defend Trade Secrets Act, 18 U.S.C. § 1836 (Claim One) and the Oregon Uniform Trade Secrets Act, O.R.S. 646.461-.475 (Claim Two), and copyright infringement under 17 U.S.C. § 501 (Claim Three). First Am. Compl. ¶¶ 25-39, ECF #9. Defendants Steven Cockayne (Cockayne), Natalie Rogers (Rogers), David Thorpe (Thorpe), and Pacific Northwest Skydiving Center, LLC (PNSC) assert nine affirmative defenses.[1] PNSC alleges two counterclaims against DropzoneMS for breach of contract and unjust enrichment (First Counterclaim) and trade secret misappropriation (Second Counterclaim). Additionally, Cockayne, as third-party plaintiff, asserts a claim for intentional deprivation of property interest (Third Counterclaim) against DropzoneMS and its current members and investors, Alex Togstad (Togstad), Kyle Williams (Williams), and Timothy Noonan (Noonan). Second Am. Answer 8-15, ECF #25. This court has original jurisdiction over the DTSA and copyright claims, and supplemental jurisdiction over the state law claims. 28 U.S.C. §§ 1331, 1367(a).

Defendants move for summary judgment on all of plaintiff's claims. Defs.' Mot. Summ. J., ECF #81. Plaintiff and third-party defendants move for summary judgment on all counterclaims and the first through fifth and eighth affirmative defenses, and alternatively for judgment on the pleadings on the third counterclaim. Pl.'s Mot. Summ. J., ECF #78. For the reasons set for below, both motions should be granted and this action should be dismissed in its entirety.

STANDARDS

A party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” F.R.C.P. 56(a). The moving party has the burden of establishing the lack of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “When judging the evidence at the summary judgment stage, the district court is not to make credibility determinations or weigh conflicting evidence, and is required to draw all inferences in a light most favorable to the nonmoving party.” Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir. 1990); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (“The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.”). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge ... ruling on a motion for summary judgment,” the “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient ....” Id. at 252, 255. “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).

BACKGROUND

*2 DropzoneMS is a start-up business that was created to provide a software management solution for skydiving operators. Skydiving operators are referred to as “dropzones,” and PNSC is a dropzone in Mulino, Oregon. Rogers Decl. ¶ 3, ECF #68. In 2014, Cockayne approached Rogers, a principal of PNSC, to learn PNSC's business and operations processes so that Cockayne could create a software solution, which he could then sell to other dropzones. Id. ¶¶ 1-5. Cockayne and Rogers claim they came to an oral agreement with each other in the fall of 2014 where PNSC would serve as Cockayne's beta tester in exchange for perpetual free use and support of the software. (Plaintiff disputes that this oral agreement was made or that PNSC was promised a perpetual license. Togstad Dep. 195:24-196:3, ECF #69-1.)

Cockayne began developing the Dropzone Management Software, comprised of the DZ source code, and Cockayne and PNSC executed a Software Use and License Agreement (SULA) on May 9, 2015. Decl. Marla Beier (Beier Decl.), Ex. 1, ECF #80-1. The SULA describes the Dropzone Management Software as “a web-based application ... designed to provide skydiving-related businesses a mechanism to record and organize customer data, track and process sales made with various methods of payment, manage planes, create and manage skydiving manifest queues/loads, and track charges to customers during manifesting process.” Id. at 1, 7. Cockayne formed DropzoneMS, LLC two days later. Id., Ex. 2, ECF # 79-1 (Articles of Organization, Reg. No. 111195590).

On October 20, 2015, Cockayne entered into a limited liability company operating agreement (Operating Agreement) for DropzoneMS, LLC with Togstad, Williams, and Noonan. Id., Ex. 3, at 15, ECF #80-2. Pursuant to the Operating Agreement, Cockayne and Togstad held the most shares in the company, at 35% each. Id. at 2. Williams and Noonan made cash contributions, Togstad made a computer hardware contribution valued at $70,000, and Cockayne made an intellectual property contribution valued at $70,000—for a total initial valuation of $179,000. Id. at 16. Noonan paid Cockayne $2,000 a month to develop the DZ source code through the remainder of 2015, Cockayne Dep. 13:9-13, ECF #80-3, but by the end of the year, Togstad, Williams, and Noonan were not satisfied with Cockayne's progress.

Late one night at an International House of Pancakes (IHOP) in January 2016, Togstad, Williams, Noonan, and Cockayne all met and argued. Togstad characterized the DZ software as worth “negative money,” Cockayne Decl., Ex. 2, at 27, ECF #70-2, but told Noonan and Williams he did not want Cockayne “to be homeless.” Id. at 36. Ultimately, Noonan bought Cockayne out of his share of the company for $1,000. The conversation, which was surreptitiously record without Cockayne's consent, transpired as follows:

NOONAN: Options are, I'll give you a thousand dollars, you can pay your rent and we can figure out something with this, we can get a developer ....

TOGSTAD: It's a thousand dollars now, you take it and you walk.... Or we can sort this out with lawyers [inaudible].[2]

Id. at 34 (Transcript of January 2016 IHOP meeting). All four individuals subsequently signed a Withdrawal of Partner agreement. Id., Ex. 3, ECF #70-3. The agreement contains a provision that the “withdrawing partner is to have no communication with current customers, and potential customers where DropzoneMS, LLC has already established communications.” Id.

*3 Rogers testified that after Cockayne was ousted from DropzoneMS, he texted her and said he could no longer work with her. Rogers Dep. 74:16-18, ECF #94-1. Rogers also testified that Togstad told Cockayne he was no longer allowed to talk to Rogers or Thorpe at PNSC. Id. at 32:6-9, 33:22-23. Rogers called Togstad and insisted they speak about the situation. Id. at 74:20-25–75:1-2. Togstad met with Rogers at PNSC and told her “they had kicked [Cockayne] out because the software that he had built, that we had been working on, was an unsellable piece of ****....” Id. at 75:4-8. Rogers told Togstad that she and Cockayne had worked on the DZ source code almost every day and it was a good piece of software. Id. at 75:11.

Rogers thereafter scheduled a meeting with Togstad, Williams, Cockayne, and Thorpe to sort things out. They met at a Lucky Lab restaurant and spoke for about three hours. Rogers Decl. ¶ 7, ECF #68; Rogers Dep. 76:24, ECF #69-2. Rogers described it as a “rough meeting” with a “lot of fighting.” Rogers Dep. 76:25, ECF #69-2. At the end of the meeting, Togstad and Williams told Rogers they would get back to her after hiring another developer. Id. at 81:23-25. Rogers testified that soon thereafter, Togstad issued PNSC a license to use the DZ software through 2038. Rogers Dep. 48:5-50:7, ECF #98-1; see also DZ Software Screenshot, ECF #68-1 (showing “License Active Until: 01/18/2038 7:14 PM”).

A couple of weeks after the Lucky Lab meeting, when Rogers had heard nothing further from Togstad and Williams, she met with Cockayne to discuss how to move forward. Roger's Dep. 81:4-22, ECF #94-1. They discussed several options but decided Cockayne would “just write a whole new program from the ground up.” Id. at 83:12-13. They memorialized this agreement on February 15, 2016, and Rogers began loaning Cockayne $2,000 a month to draft a new program called “Flare.” Beier Decl., Ex. 4, ECF #94-4. Cockayne then developed the Flare source code and had a working version by May 2016. See Cockayne Decl. ¶ 9, ECF #70; Rogers Dep. 95:4-9, ECF #94-1.

Sometime later, Togstad, Noonan, and Williams learned of Cockayne's continued involvement with PNSC. DropzoneMS registered its copyright in December 2016, and filed this lawsuit.

FINDINGS

These findings and recommendations first address the parties' evidentiary objections, then defendants' and third-party plaintiff's motions, and finally plaintiff's and third-party defendants' motions.

I. Evidentiary Objections

Plaintiff objects to Amy Breen's declaration, ECF #66; paragraph nine of Rogers' declaration, ECF #68; paragraph ten of Cockayne's January 16, 2019 declaration, ECF #70; paragraph three of Cockayne's February 4, 2019 declaration, ECF #82; and Cockayne's Expert Report, ECF #70-1.[3] Pl.'s Opp. 29-33, ECF #92. Defendants object to the admissibility of Barbara Frederiksen-Cross' declaration, ECF #93. Defs.' Reply 4, ECF #111. The court need only address the admissibility of Cockayne's report and Frederiksen-Cross' declaration, as the claims and counterclaims that the other evidence supports fail as a matter of law regardless.[4]

A. Cockayne's Expert Report

*4 Plaintiff objects to Cockayne's 150-page Expert Report, ECF #70-1, on grounds that it is untimely and unauthenticated.

1. Timeliness

Federal Rule of Civil Procedure 37(c)(1) provides that “[i]f any party fails to provide information ... as required by Rule 26(a) ..., the party is not allowed to use that information ... to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Rule 26(a)(2) allows the court to set various pretrial deadlines, including deadlines to complete expert discovery. Under this court's scheduling order, expert discovery closed on September 17, 2018. Scheduling Order (May 2, 2018), ECF #38. Defendants submitted Cockayne's report on September 17, 2018.

Earlier this year, the court issued a decision in which it stated that “[t]hat all expert discovery must have been completed by September 17, 2018, necessarily required opening expert disclosures to have been served before then.” Findings and Recommendations 13, ECF #88, adopted by Opinion and Order, ECF #121. Citing this language, plaintiff argues that Cockayne's report is late because defendants submitted it on September 17, 2019, but not before that date. Pl.'s Opp. 31-32, ECF #92. However, the Cockayne report is a supplemental expert disclosure, not an “opening expert disclosure.” The original report was disclosed on January 30, 2018—eight months before the close of expert discovery—and nearly fourth months before plaintiff deposed Cockayne on May 25, 2018. See Suppl. Decl. Erick Haynie ¶ 6, ECF #112; id., Ex. 1, ECF #112-1.

Moreover, Cockayne is not an expert witness under Rule 26(a)(2) because he is a party and he does not regularly provide expert testimony. See F.R.C.P. 26(a)(2)(B); Ross Island Sand & Gravel Co. v. Lehigh Sw. Cement Co., No. 3:15-CV-01369-PK, 2016 WL 6398799, at *10 (D. Or. Oct. 27, 2016) (denying motion to strike testimony based on personal knowledge and observation). He is a lay witness with “particularized knowledge garnered from years of experience within the field.” Tampa Bay Shipbuilding & Repair Co. v. Cedar Shipping Co., 320 F.3d 1213, 1223 (11th Cir. 2003); see also Ross Island, 2016 WL 6398799, at *10. Thus, Cockayne's report is not untimely under this court's prior order or Rule 37(c)(1).

2. Authenticity

Plaintiff contends that Cockayne's report is inadmissible under Federal Rule of Civil Procedure 37(e)(1) and Federal Rules of Evidence 1002 and 1006. F.R.C.P. 37(e)(1) provides:

If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court: upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice.

F.R.E. 1002 provides: “An original writing, recording, or photograph is required in order to prove its content unless these rules or a federal statute provides otherwise.” Under F.R.E. 1006, if a proponent uses a summary to prove the content of voluminous writings, the “proponent must make the originals or duplicates available for examination or copying, or both, by other parties at a reasonable time and place.”

*5 Plaintiff argues that Cockayne's report should be excluded under these rules because defendants failed to preserve the Flare source code that Cockayne analyzed. Pl.'s Opp. 32, ECF #92. To substantiate its claim, plaintiff argues that the “Date Last Modified” metadata for 110 files that were analyzed postdate the date of Cockayne's analysis, Beier Decl., Ex. 7, ECF #94-7, the inference being, apparently, that Cockayne used one set of files to generate his report and then produced a different set of files to plaintiff.

Metadata is “data that provides information about other data.” Metadata, MERRIAM-WEBSTER, https://www.merriam-webster.com/dictionary/metadata (last visited Sept. 4, 2019). Other than this metadata, plaintiff does not point to any inconsistencies between the content of the files analyzed in Cockayne's report and the content of the files that were produced to plaintiff. Defendants submit that the last-modified date can change for any number of innocuous reasons, including “uploading/downloading from a UNIX-based server, compressing/decompressing using archival tools that strip metadata, opening a file in binary read/write mode instead of [read only] mode, [or] changing file permission in Windows.” Suppl. Cockayne Decl. ¶ 390, ECF #113. Cockayne represents he is “unaware of any substantive change or difference in any of the files ... that would impact [his] comparative analysis[,]” id. ¶ 393, and that “the modification date is purely an arbitrary metadata value, and does not in any way actually indicate that the content of any file has actually changed.” Id. ¶ 392. Because plaintiff makes no credible challenge to the underlying data, its objection should be overruled. C.f., Autotech Techs. Ltd. P'ship v. Automationdirect.com, Inc., 248 F.R.D. 556, 559-60 (N.D. Ill. 2008) (denying motion to compel production of documents in native file format to preserve metadata, in part, because movant offered no credible evidence underlying data was not authentic).[5]

B. Frederiksen-Cross Declaration

Defendants argue that plaintiff is in a catch-22 of its own making: Because plaintiff failed to submit the Frederiksen-Cross declaration in a timely fashion, it does not qualify as an expert report, but because the declaration contains findings outside the realm of lay testimony, it can only be characterized as an expert report. Defs.' Reply 4-5, ECF #111.

Plaintiff filed the Frederiksen-Cross declaration on March 11, 2019; however, expert discovery closed nearly six months earlier on September 17, 2018. See Notice of Electronic Filing, ECF #93; Scheduling Order (May 2, 2018), ECF #38; Suppl. Haynie Decl. ¶ 2, ECF #112. Thus, the Frederiksen-Cross declaration is inadmissible as an expert report.

In response to defendants' objections, plaintiff contends that the declaration is not really an expert report but merely provides a side-by-side comparison of the DropzoneMS source code and the Flare source code. Pl.'s Sur-Reply 1-2, ECF #114. To admit the declaration on that basis would violate evidentiary rules, as explained below, and endorse plaintiff's sandbagging.

“[T]he distinction between lay and expert witness testimony is that lay testimony ‘results from a process of reasoning familiar in everyday life,’ while expert testimony ‘results from a process of reasoning which can be mastered only by specialists in the field.’ ” F.R.E. 701, advisory committee's note to 2000 amendments (quoting State v. Brown, 836 S.W.2d 530, 549 (1992)). “If a witness is not testifying as an expert, testimony in the form of an opinion is limited to one that is: (a) rationally based on the witness's perception; (b) helpful to clearly understanding the witness's testimony or to determining a fact in issue; and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.” F.R.E. 701.

*6 Rule 701 was “amended to eliminate the risk that the reliability requirements set forth in Rule 702 will be evaded through the simple expedient of proffering an expert in law witness clothing.” F.R.E. 701, advisory committee's note to 2000 amendments (emphasis added).

Under the amendment, a witness' testimony must be scrutinized under the rules regulating expert opinion to the extent that the witness is providing testimony based on scientific, technical, or other specialized knowledge within the scope of Rule 702. By channeling testimony that is actually expert testimony to Rule 702, the amendment also ensures that a party will not evade the expert witness disclosure requirements set forth in Fed. R. Civ. P. 26 and Fed. R. Crim. P. 16 by simply calling an expert witness in the guise of a layperson.

...
[A]ny part of a witness' testimony that is based upon scientific, technical, or other specialized knowledge within the scope of Rule 702 is governed by the standards of Rule 702....

Id. (internal citations and quotation marks omitted) (emphasis added). “The amendment is not intended to affect the ‘prototypical examples of the type of evidence contemplated by the adoption of Rule 701 relating to the appearance of persons or things, identity, the manner of conduct, competency of a person, degrees of light or darkness, sound, size, weight, distance, and an endless number of items that cannot be described factually in words apart from inferences.” Id. (quoting Asplundh Mfg. Div. v. Benton Harbor Eng'g., 57 F.3d 1190, 1196 (3d Cir. 1995)) (original alterations omitted).

Frederiksen-Cross is undoubtedly an expert in forensic software analysis. See Curriculum Vitae, ECF #93-1 (detailing 44 years of experience designing, developing, and analyzing computer software; listing extensive publication and presentation history; and analyzing computer software as an expert witness in arbitrations and federal district courts across the country). But her extensive qualifications are not disqualifying, as the rules of evidence do not “distinguish between expert and lay witnesses, but rather between expert and lay testimony.” F.R.E. 701, advisory committee's note to 2000 amendments (emphasis in original). Thus, the court must look to the content of her declaration to determine whether it contains expert testimony.

Frederiksen-Cross generated side-by-side comparisons of the Flare and DZ source codes using two different techniques. Frederiksen-Cross Decl. ¶ 5, ECF #93. The first technique required opening both source-code files using the UltraEdit text editor (which displays the source code side-by-side), taking a screen shot, and copying the screen shots into a Microsoft Word document so that the files could be labelled. Id. ¶ 6. Frederiksen-Cross' declaration contains 15 such comparisons. For example, the screenshot below shows a comparison of excerpts from the Flare created.ajax.php source code and the install.sql.php source code:

Id., Ex. B, at 7, ECF #93-2.

The second technique required using Araxis Merge, “a software product used by software developers and forensic software analysists that is specifically designed to identify and highlight similarities in textual or binary files.” Id. ¶ 7.

*7 The Araxis Merge tool compares files from top to bottom, one line at a time. As it goes, it applies algorithmic rules to identify and highlight matching content. As a part of its operation, Araxis Merge draws linking lines between the two files and inserts white space to visually align sections of files that have matching content. Because it proceeds sequentially through the files it does not necessarily identify every matching line, especially when segments of the file have been rearranged. That said, in my experience it is a reliable and conservative tool that provides useful insight into similarities and differences that can be identified algorithmically.

Id. An excerpt of the comparison that Frederiksen-Cross generated using the Araxis Merge tool appears as follows:

Id., Ex. C, at 3, ECF #93-3 (excerpt from Araxis Merge file comparison between Left: Q:\DZ-Linematch\Flare-C000056\install\createdb.ajax.php and Right: Q:\DZ-Linematch\DZMSv2\ install\install.sql.php).

The side-by-side comparisons that Frederiksen-Cross generated through these techniques span nearly 280 pages. Frederiksen-Cross concludes that “[t]he side-by-side comparisons plainly show that there are substantial blocks of identical source code present in the Flare and DropzoneMS software.” Id. ¶ 9.

This is all clearly technical analysis, and the report is inadmissible under all three prongs of F.R.E. 701. First, computer-generated comparisons of source code are not “rationally based on the witness's perception.” F.R.E. 701(a). Ordinary people do not compare blocks or lines of source code in their everyday lives. In fact, a vast majority of people do not even know how to read and write source code. Second, without expert testimony explaining their meaning, these computer-generated comparisons are not “helpful to clearly understanding the witness's testimony or to determining a fact in issue.” F.R.E. 701(b). And, finally, these computer-generated comparisons are undeniably “based on scientific, technical, or other specialized knowledge within the scope of Rule 702.” F.R.E. 701(c). Without expert testimony explaining the nature of these comparisons or the soundness of the inferences to be made from them, this information is meaningless to a jury of lay persons.

Moreover, without expert testimony establishing the validity and reliability of the UltraEdit and Araxis Merge programs, or of Frederiksen-Cross' results obtained from employing them, the side-by-side comparisons are not verifiable. See United States v. Dioguardi, 428 F.2d 1033, 1038 (2d Cir. 1970) (holding that the lower court erred in admitting a computer-generated report without requiring evidence establishing how the computer program worked). Frederiksen-Cross does not even attempt to explain how either the UltraEdit text editor or Araxis Merge programs work—likely because any attempt to do so would signal she is proffering expert testimony six months after the expert discovery deadline. Regardless, Frederiksen-Cross has not met her burden to show she employed a reliable methodology to generate the comparisons. See Engenium Sols., Inc. v. Symphonic Techs., Inc., 924 F. Supp. 2d 757, 769 (S.D. Tex. 2013) (“The report does not indicate how Wright decided which components to compare, or how much time he spent comparing them. Indeed, the report does not explain how, exactly, Wright compared the features of the programs at all.”).

Defendants also object to the methodology employed to generate the comparisons under F.R.E. 702, which requires that expert “testimony is the product of reliable principles and methods.” By way of example, Cockayne used the methodology employed by the Araxis Merge program to compare excerpts from Green Eggs & Ham by Dr. Seuss and the transcript of the very first episode of I Love Lucy: The Girls Want to Go to a Nightclub:

Suppl. Cockayne Decl., Ex. 11, at 1, ECF # 113-11. The Araxis Merge program appears to have produced a false positive in this instance. Could this method produce true positives? Probably, but the court would need expert testimony to find out.

Finally, Frederiksen-Cross also took screenshots of the “modules” sub-directory in the DropzoneMS software and “sections” sub-directory in the Flare software:

Frederiksen-Cross Decl., Ex. C, at 3, ECF #93-3. This comparison likewise violates Rule 701. While less expertise is required to “take a screenshot,” expert testimony is necessary to describe the nature and meaning of these images. Simply because folder names are the same, does not mean that their contents are identical.

For all these reasons, the Frederiksen-Cross declaration is inadmissible.

II. Defendants' and Third-Party Plaintiff's Motions

A. Claims One and Two: Trade Secret Misappropriation

Claim One alleges trade secret misappropriation under the Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836. Claim Two asserts the same allegations under the Oregon Uniform Trade Secrets Act (OUTSA), O.R.S. 646.461-.475. As Oregon has adopted the Uniform Trade Secrets Act, the Ninth Circuit has approved of looking to “other courts' interpretations of the Act for guidance” where “there is no Oregon law on point.”[6] Lamb-Weston, Inc. v. McCain Foods, Ltd., 941 F.2d 970, 972 n.1 (9th Cir. 1991).

*9 Both the DTSA and the OUTSA define the terms “improper means,” “misappropriation,” and “trade secret,” and while they define the terms differently, the differences do not appear to be substantive, and they are not material here. Compare 18 U.S.C. § 1839(6) with O.R.S. 646.461(1) (defining “improper means”); compare 18 U.S.C. § 1839(5) with O.R.S. 646.461(2) (defining “misappropriation”); compare 18 U.S.C. § 1839(3) with O.R.S. 646.461(4) (defining “trade secret”). Likewise, the parties discuss both the DTSA and OUTSA claims together. Defs.' Mot. Summ. J. 18, ECF #81; Pl.'s Opp. 8, ECF #92.

1. Elements of Trade Secret Misappropriation

To establish a UTSA violation, the plaintiff must show that a defendant has been unjustly enriched by the improper appropriation, use, or disclosure of a trade secret. MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 520 (9th Cir. 1993). A trade secret is information that

(A) the owner thereof has taken reasonable measures to keep such information secret; and
(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information;

18 U.S.C. § 1839(3).

Misappropriation means:

(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(B) disclosure or use of a trade secret of another without express or implied consent by a person who—

(i) used improper means to acquire knowledge of the trade secret;
(ii) at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was—

(I) derived from or through a person who had used improper means to acquire the trade secret;
(II) acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or
(III) derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret; or

Id. § 1839(5). “[I]mproper means (A) includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means; and (B) does not include reverse engineering, independent derivation, or any other lawful means of acquisition.” Id. § 1839(6). Typically, “whether information is or is not a trade secret is a question of fact.” Kaib's Roving R.PH. Agency, Inc. v. Smith, 237 Or. App. 96, 103 (2010).

2. Sufficient Particularity

Source code may qualify for trade secret protection under the UTSA. MAI, 991 F.2d at 522. However, “[a] plaintiff seeking relief for misappropriation of trade secrets ‘must identify the trade secrets and carry the burden of showing that they exist.’ ” Imax Corp. v. Cinema Techs., Inc., 152 F.3d 1161, 1164-65 (9th Cir. 1998) (citing MAI, 991 F.2d at 522). This obligation of providing “a particularized description of an alleged trade secret is a duty owed to the court.” Agency Solutions.Com, LLC v. TriZetto Grp., Inc., 819 F. Supp. 2d 1001, 1017 (E.D. Cal. 2011) (citing MAI, 991 F.2d at 520-22).

A plaintiff “should describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons skilled in the trade.” Id. at 1164-65 (citation omitted); MAI, 991 F.2d at 522 (“Since the trade secrets are not specifically identified, we cannot determine whether Peak has misappropriated any trade secrets by running the MAI operating software and/or diagnostic software in maintaining MAI systems for its customers.”); see also RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 39, comment (d) (1995) (“A person claiming rights in a trade secret bears the burden of defining the information for which protection is sought with sufficient definiteness....”). The court then must “make an item-by-item determination of what is and is not a trade secret.” Agency Solutions.Com, 819 F. Supp. 2d at 1017.

*10 Courts apply this sufficient particularity requirement at both early and later stages of litigation with some frequency. E.g., Lilith Games (Shanghai) Co. v. uCool, Inc., No. 15-CV-01267-SC, 2015 WL 4149066, at *5 (N.D. Cal. July 9, 2015) (denying defendants' motion to compel: “In technical cases such as this, a plaintiff must describe the trade secret, not merely the technology.... [Plaintiff] specifically identified the trade secret contained in the software and differentiated the trade secret from other components.”); Ajuba Int'l, LLC v. Saharia, No. 2:11-cv-12936, 2014 WL 3420524, at *9 (E.D. Mich. July 14, 2014) (dismissing trade-secret-misappropriation claim on summary judgment because plaintiffs “provide no explanation as to what functions the software performs and how it operates in a way unique to competing companies”); Keywords, LLC v. Internet Shopping Enterprises, Inc., No. CV 05-2488 MMM (EX), 2005 WL 8156440, at *17 (C.D. Cal. June 29, 2005) (denying motion for preliminary injunction because the plaintiff had “failed to identify what portions of the source codes constitute[d] trade secrets, and the court thus [could not] determine whether they meet the UTSA's definition of a trade secret”).

One case in this district holds that trade secret plaintiffs must identify the trade secret with “reasonable particularity.” Vesta Corp. v. Amdocs Mgmt. Ltd., 147 F. Supp. 3d 1147, 1153 (D. Or. 2015). In Vesta, the court examined California's trade secret statute, California Code of Civil Procedure § 2019.20, which explicitly requires trade secret plaintiffs to “identify the trade secret with reasonable particularity” before commencing discovery related to the trade secret. The court held, “[i]t is clear ... that such a requirement is not limited to cases applying California's unique statutory requirement,” and made the defendant's obligation to respond to the plaintiff's trade-secret discovery requests contingent on the plaintiff identifying its trade secrets with reasonable particularity. Id. at 1158.

Here, at the summary judgment stage, the “strong practical and policy reasons” for requiring sufficient or reasonable particularity are even more pronounced than during discovery. Id.; see also Imax, 152 F.3d at 1168 (dismissing UTSA trade secret claim on summary judgment for failure to identify trade secrets with sufficient particularity); MAI, 991 F.2d at 522-23 (same). Yet, plaintiff fails to even describe the technology—let alone the purported trade secrets—with such particularity. Plaintiff alleges its trade secrets are in the source code: “The DZ software contains highly confidential trade secrets.” First Am. Compl ¶ 15, ECF #9; id. ¶¶ 27, 34 (“Dropzone's trade secrets embodied in the DZ Software have independent economic value....”). But plaintiff does not take the crucial next step of describing the trade secrets to separate them from matters of general knowledge.

During his Rule 30(b)(6) deposition as DropzoneMS's corporate designee, Togstad deferred to his expert to describe the trade secrets:

COUNSEL: Okay. What did they steal?
TOGSTAD: I would say the source code.... And/or parts of it.
Q: Would you agree with me that the trade secret of DropzoneMS, whatever it is, is inside the four walls of the source code?
A: Correct.
Q. Okay. Now, within that what portions of the code does the plaintiff believe has been misappropriated?
A. I don't know. You'll have to talk to my expert witness about that ....
Q. [W]hat information do you have that any of the defendants have improperly used any portion of the source code?
A. I wouldn't know the specifics of that. I would refer to my expert witness again.... I'll refer to my expert witness.

Togstad Dep. 95:19-99:2, ECF #119-1.

However, plaintiff has failed to come forth with any expert testimony describing its trade secrets.[7] In fact, plaintiff concedes “that there is no ‘filtration analysis’ in the Frederiksen-Cross Declaration—or any other specialized analysis—because it is not an expert report.” Pl.'s Sur-Reply 3, ECF #114. Plaintiff's failure to describe its trade secrets with sufficient particularity is fatal to its trade secret misappropriation claims.

*11 Cockayne declares that he wrote the DZ source code with many third-party packages, including the DOMPDF HTML to PDF Convertor, the Stripe PHP API SDK, CrontabManager PHP Library, the jQuery Javascript Library, and the Signature Pad jQuery Plugin released under various licenses, including the MIT License and the LGPL License. Cockayne Report 12, ECF #70-1.[8] He also declares that the source code contains many open source software packages, including the getIPAddress( ) PHP function, the guidv4( ) PHP function, the parseHeaders( ) PHP function, and the parseHeaders( ) PHP function. Id. at 12-13 (listing over 10 more open-source and third-party packages). Cockayne has provided URL links for each of these software packages and functions, showing they are posted openly online on platforms such as github.com, php.net, and stackoverflow.com. Id. Plaintiff cannot have trade secrets in source code that, by definition, is not secret. Open-source code may be valuable, but it does not “derive[ ] independent economic value, actual or potential, from not being generally known.” 18 U.S.C. § 1839(3)(B). Plaintiff does not even attempt to isolate its trade secrets in the DZ source code from these types of openly available and unprotectable source code. Without expert testimony separating source code that derives value from being secret from open-source and third-party source code, which does not, plaintiff cannot establish the existence of a trade secret.

Despite these shortcomings, plaintiff counters that defendants did not serve discovery requests asking plaintiff to identify or describe the contours of the trade secret. Pl.'s Opp. 10, ECF #92. This is inapposite because plaintiff maintains the burden to describe its trade secret with particularity. Plaintiff cannot shift this burden.

The Ninth Circuit's decision in Imax illustrates that it is the plaintiff's burden to describe the trade secret with precision. There, the plaintiff alleged the existence of trade secrets in its highly complex projector system. 152 F.3d at 1166. The plaintiff conceded that its “patents revealed the existence and manner of operation of the projector's various components,” but alleged the information revealing the “components' precise dimensions and tolerances” were trade secrets. Id. The parties conducted extensive discovery, and the district court ordered the plaintiff to supplement several interrogatory responses and describe its trade secrets with particularity. Id. at 1165. When the plaintiff did not do so, the district court dismissed the claim at summary judgment, holding the plaintiff “failed to carry its burden of identifying for the court exactly what dimensions and tolerances it claimed as trade secrets.” Id. The Ninth Circuit affirmed, holding “reasonable specificity could only be achieved by identifying the precise numerical dimensions and tolerances as trade secrets.” Id. at 1167.

Plaintiff would distinguish Imax on the basis that defendants already had the DZ source code and did not serve interrogatories to learn the specifics of the trade secrets. Pl.'s Opp. 10, ECF #92. However, plaintiff maintains the burden of describing its trade secrets with sufficient particularity, regardless of whether defendants failed to learn the contours of plaintiff's trade secrets through discovery. And plaintiff's contention that its trade secret is “in the source code” would be like the plaintiff in Imax claiming its trade secret was “in the projector,” which is even less particular than claiming its trade secret was in “the dimensions”—which was a level of particularity that the Ninth Circuit found was insufficient.

In a more recent, unpublished Ninth Circuit opinion, which is not precedent under Ninth Circuit Rule 36-3, the court held that a plaintiff had “raised a genuine issue of material fact as to whether [the defendant] copied all of its source code.” Integral Dev. Corp. v. Tolat, 675 F. App'x 700, 703 (9th Cir. 2017). However, even there, the plaintiff had “identified specific key aspects of its source code that it claims [the defendant] misappropriated.” Id. Here, plaintiff has failed to identify such “specific key aspects” of its source code.

Plaintiff's reliance on JustMed, Inc. v. Byce, 600 F.3d 1118, 1129 (9th Cir. 2010), aff'd in part, rev'd in part and remanded, 600 F.3d 1118 (9th Cir. 2010), and Asset Mktg. Sys., Inc. v. Gagnon, 542 F.3d 748, 758 (9th Cir. 2008), is misplaced because the descriptions of the purported trade secrets in those cases were not at issue. In JustMed, the issue was whether the defendant had acquired trade secrets through improper means. 600 F.3d at 1129. The defendant conceded that the trade secret was described with sufficient particularity. Id. (“It is undisputed that the source code, as a whole, is a trade secret.”). In Asset Marketing, the court held that even assuming a trade secret existed, the defendant had impliedly granted an unlimited license to use the software. 542 F.3d at 754-58. That the identity and existence of trade secrets were not contested in other trade secret misappropriation cases does not negate the requirement here, where defendants most definitely do not concede this point. Plaintiff's failure to identify its trade secret with sufficient particularity is dispositive of the DTSA and OUTSA claims. See Imax, 152 F.3d at 1168 (“the district court properly excluded [evidence relevant to other elements of a trade secret misappropriation claim] due to Imax's failure to allege trade secrets in the precise numerical dimensions and tolerances with sufficient particularity”).

3. Misappropriation

*12 Even assuming arguendo that plaintiff has met the sufficient particularity requirement, plaintiff has not offered sufficient evidence to create a genuine issue of material fact on the issue of misappropriation. See First Am. Compl. ¶¶ 29-31, 36-38, ECF #9 (alleging misappropriation by disclosure or use); 18 U.S.C. § 1839(5) (defining the same). Plaintiff cannot prove disclosure or use without expert testimony showing that proprietary DZ source code was copied, re-used, or somehow informed the creation of Flare, when defendants have proffered expert testimony demonstrating independent derivation. Independent derivation is specifically excluded in the definition of improper means. 18 U.S.C. § 1839(6). While plaintiff has offered some circumstantial evidence in this case, the only expert testimony is Cockayne's testimony that

Taking into consideration only the portions of the software source code that does not contain third-party packages, functions, libraries, or references, and further, does not contain language-specific syntax, keywords, functions, and structure, it is clear to me that, while ultimately providing the same functionality, both the DropzoneMS software and the Flare software each do so uniquely and without deriving or duplicating source code from one another.

....
[I]t is my professional and expert opinion that both the DropzoneMS software and the Flare software are unique and independent of each other, and that neither piece of software is a derivative or duplication of the other.

Cockayne Report 15-16, ECF #70-1.

As such, defendants are entitled to summary judgment on claims one and two.

B. Claim Three: Copyright Infringement

To prove copyright infringement under 17 U.S.C. § 501, a plaintiff must demonstrate (1) ownership of the allegedly infringed work, and (2) copying of the protected elements of the work by the defendant. Unicolors, Inc. v. Urban Outfitters, Inc., 853 F.3d 980, 984 (9th Cir. 2017) (quoting Pasillas v. McDonald's Corp., 927 F.2d 440, 442 (9th Cir. 1991)). Here, plaintiff's infringement claim fails as a matter of law at the second step of this analysis.

1. Transfer of Ownership

Ownership of a copyright vests initially in the author of the work. 17 U.S.C. § 201(a). Ownership “may be transferred in whole or in part by any means of conveyance or by operation of law....” Id. § 201(d)(1). A transfer by conveyance is not valid unless the instrument of conveyance is in a signed writing. Id. § 204(a). This signed-writing requirement ensures authors will not transfer their rights inadvertently, and “forces a party who wants to use the copyrighted work to negotiate with the creator to determine precisely what rights are being transferred and at what price.” Konigsberg Int'l Inc. v. Rice, 16 F.3d 355, 357 (9th Cir. 1994) (citing Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 557 (9th Cir. 1990)).

The writing requirement is not burdensome; “a one-line pro forma statement will do.” Effects, 908 F.2d at 557. The writing does not require any ‘magic words .... Rather, the parties' intent as evidenced by the writing must demonstrate a transfer of the copyright.’ ” Johnson v. Storix, Inc., 716 F. App'x 628, 630 (9th Cir. 2017), cert. denied, 139 S. Ct. 76 (2018) (quoting Radio Television Espanola S.A. v. New World Entm't, Ltd., 183 F.3d 922, 927 (9th Cir. 1999)).

“While the court's interpretation of an agreement is a question of law in the absence of ambiguous language, ambiguous language can raise factual issues as to the intentions of the parties.” Employers Ins. of Wausau v. R.A. Hanson, Inc., 861 F.2d 268 (9th Cir. 1988). “A ‘contractual provision is ambiguous if its wording can, in context, reasonably be given more than one plausible interpretation.’ ” Ness & Campbell Crane, Inc. v. Kleppe, No. 3:17-CV-01865-HZ, 2018 WL 1702049, at *3 (D. Or. Apr. 5, 2018) (citation omitted).

*13 Here, the Operating Agreement satisfies the signed-writing requirement by unambiguously transferring ownership of the copyright in the DZ source code to plaintiff. The Operating Agreement states that it pertains to “Intellectual Property: Software valued at $70,000.” Beier Decl., Ex. 3, at 16, ECF #80-2. “Intellectual Property” unambiguously includes patents and copyrights. E.g., Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 33 (2003) (referring to “an intellectual property right ... as a patent or copyright”); Sisyphus Touring, Inc. v. TMZ Prods., Inc., 208 F. Supp. 3d 1105, 1113 (C.D. Cal. 2016) (“an agreement, which did not include the word ‘copyright,’ but whose wording leaves little doubt that the alleged transferor sold all the assets ..., tangible and intangible alike was sufficient to constitute a transfer under Section 204(a)”) (internal citation, quotation marks, and alterations omitted). Moreover, the agreement specifically refers to “intellectual property” and not merely “property” or “assets,” Johnson, 716 F. App'x at 631 (finding that the term “all assets” was ambiguous and could include copyright ownership), and gives the intellectual property in the source code substantial value of $70,000. The only plausible interpretation of this language is that whatever intellectual property Cockayne created in the DZ source code—including a copyright—he transferred it to plaintiff. As such, the court may not consider contradictory extrinsic evidence. See Ness, 2018 WL 1702049, at *3 (noting that under Oregon's three-step inquiry for interpreting the provision of a contract, “[i]f the disputed provision is clear, the inquiry ends”). Thus, plaintiff owns the copyright at issue.[9]

2. Copying of Protected Elements

The court next asks if plaintiff has offered enough evidence to create a disputed issue of material fact regarding whether defendants copied the protected elements of the work. Unicolors, 853 F.3d at 984. Copying may be established by direct or circumstantial evidence. See id. “If there is no direct evidence of copying, a plaintiff may prove this element through circumstantial evidence that (1) the defendant had access to the copyrighted work prior to the creation of defendant's work and (2) there is substantial similarity of the general ideas and expression between the copyrighted work and the defendant's work.” Id. at 984-85 (citation omitted). “Access alone cannot establish copyright infringement.” Antonick v. Elec. Arts, Inc., 841 F.3d 1062, 1066 (9th Cir. 2016) (citing Shaw v. Lindheim, 919 F.2d 1353, 1361 (9th Cir. 1990)).

The Ninth Circuit applies a two-part analysis to assess whether particular works are substantially similar: the extrinsic test and the intrinsic test. Unicolors, 853 F.3d at 985; Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1475, (9th Cir. 1992). “[E]xpert opinion is relevant not only to the analysis of ideas behind two works but also to the objective analysis of expression.” Brown Bag Software, 960 F.2d at 1474.

“The ‘extrinsic test’ is an objective comparison of specific expressive elements.” Benay v. Warner Bros. Entm't, 607 F.3d 620, 624 (9th Cir. 2010) (citing Cavalier v. Random House, Inc., 297 F.3d 815, 822 (9th Cir. 2002)). “[T]he extrinsic test looks at “more than just the similarity of ideas.” Brown Bag Software, 960 F.2d at 1475. It is an objective analysis of expression that “rests upon specific criteria that can be listed and analyzed.” Id. “Because substantial similarity is usually an extremely close issue of fact[,] summary judgment has been disfavored in cases involving intellectual property.” Unicolors, 853 F.3d at 985 (citation and quotation marks omitted). However, “[s]ummary judgment for a defendant accused of copyright infringement is appropriate when the plaintiff fails to show a genuine issue regarding whether the ideas and expressive elements of the works are substantially similar.” Brown Bag Software, 960 F.2d at 1472 (citing Frybarger v. International Business Machs. Corp., 812 F.2d 525, 528 (9th Cir. 1987)).

“The ‘intrinsic test’ is a subjective comparison that focuses on ‘whether the ordinary, reasonable audience’ would find the works substantially similar in the ‘total concept and feel of the works.’ ” Id. (quoting Kouf v. Walt Disney Pictures & Television, 16 F.3d 1042, 1045 (9th Cir. 1994)). The intrinsic test measures “substantial similarity in expressions ... depending on the response of the ordinary reasonable person” and “does not depend on the type of external criteria and analysis which marks the extrinsic test.” Brown Bag Software, 960 F.2d at 1475 (holding analytic dissection and expert testimony are not appropriate under the intrinsic test).

*14 Not every expression is subject to copyright protection. The court must “take care to inquire only whether the protectable elements, standing alone, are substantially similar, for protectable expression includes only the specific details of an author's rendering of ideas.” Identity Arts v. Best Buy Enter. Servs. Inc., No. C 05-4656 PJH, 2007 WL 1149155, at *8 (N.D. Cal. Apr. 18, 2007), aff'd sub nom., 320 F. App'x 772 (9th Cir. 2009) (citing Funky Films, Inc. v. Time Warner Entm't Co., L.P., 462 F.3d 1072, 1077 (9th Cir. 2006)); Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435, 1446 (9th Cir. 1994) (“the party claiming infringement may place ‘no reliance upon any similarity in expression resulting from’ unprotectable elements”) (quoting Aliotti v. R. Dakin & Co., 831 F.2d 898, 901 (9th Cir. 1987)) (emphasis in original). “Unprotected elements of a copyrighted work can include (1) ideas, as opposed to expression; (2) expressions that are indistinguishable from the underlying ideas; (3) standard or stock elements (scènes à faire); and (4) facts and other public information.” Erickson v. Blake, 839 F. Supp. 2d 1132, 1136 (D. Or. 2012); see also Apple Computer, 35 F.3d at 1441, 1444 (“the unprotectable elements have to be identified, or filtered, before the works can be considered as a whole”); Pasillas, 927 F.2d at 443 (copyright holder could not rely on unprotectable elements to show copying); Data East USA, Inc. v. Epyx, Inc., 862 F.2d 204, 208 (9th Cir. 1988) (holding substantial similarity of unprotected expression does not support finding of infringement).

If the plaintiff cannot satisfy the extrinsic test, it is unnecessary to consider the intrinsic test: “A plaintiff who cannot satisfy the extrinsic test necessarily loses on summary judgment, because a jury may not find substantial similarity without evidence on both the extrinsic and intrinsic tests.” Rice v. Fox Broad. Co., 330 F.3d 1170, 1174 (9th Cir. 2003) (quoting Kouf, 16 F.3d at 1045) (alteration omitted); see also Seals-McClellan v. Dreamworks, Inc., 120 F. App'x 3, 4 (9th Cir. 2004) (applying the holding from Rice and affirming the district court's summary-judgment dismissal, which did not proceed to the intrinsic test).

Here, plaintiff does not even attempt to distinguish unprotectable source code from protectable source code. Even assuming it were admissible, the Frederiksen-Cross declaration does not separate unprotectable content from protectable content. The report contains nearly 280 pages of side-by-side computer-generated comparisons of the DZ source code and the Flare source code, some of which show identical or similar lines of code. Frederiksen-Cross concludes that “[t]he side-by-side comparisons plainly show that there are substantial blocks of identical source code present in the Flare and DropzoneMS software.” Id. ¶ 9. However, as explained above, Cockayne developed the DZ source code using many third-party and open-source packages. That type of source code is not copyrightable. And, again, plaintiff concedes “that there is no ‘filtration analysis’ in the Frederiksen-Cross Declaration—or any other specialized analysis—because it is not an expert report.” Pl.'s Sur-Reply 3, ECF #114.

In sum, plaintiff has not marshalled any expert testimony in support of its copyright infringement claim, rending it impossible to conduct the necessary filtration analysis. Without expert testimony distinguishing unprotectable source code from purportedly protectable source code, this claim fails as a matter of law.

III. Plaintiff's and Third-Party Defendants' Motions

Plaintiff and third-party defendants move for summary judgment on defendants' and third-party plaintiff's three counterclaims and six of defendants' nine affirmative defenses. The counterclaims all fail as a matter of law. Further, because, as discussed above, plaintiff's trade secret misappropriation and copyright infringement claims fail, the motion for summary judgment as to defendants' affirmative defenses is moot.

A. Counterclaims

1. First Counterclaim: Breach of Contract[10]

*15 Under Oregon law, the elements of breach of contract are (1) the existence of a contract; (2) the relevant terms of the contract; (3) the plaintiff's full performance and lack of breach; and (4) the defendant's breach resulting in damage to the plaintiff. Olmstead v. ReconTrust Co., N.A., No. 3:11-cv-964-HA, 2012 WL 442225, at *3 (D. Or. Feb. 9, 2012) (citing Slover v. Or. State Bd. Of Clinical Social Workers, 144 Or. App. 565, 570 (1996)).

Defendants assert that plaintiff and PNSC reached an oral agreement in Fall 2014 for PNSC to serve as a beta tester for the Dropzone Management Software, where PNSC would provide DropzoneMS with business documentation and intelligence and related support in exchange for a perpetual license to use the DropzoneMS software solution. Second Am. Answer, Counterclaims ¶ 3, ECF #25. Defendants assert that they performed all of their material obligations required by this oral agreement, yet plaintiff and third-party defendants breached the agreement by failing to support PNSC's continued use of the solution in January 2016 after Cockayne was fired. Id. ¶¶ 4-6.

As proof of this agreement, defendants have offered the testimony of Rogers, who attests that Cockayne “teamed up with PNSC” to learn how a dropzone operates. Rogers Decl. ¶¶ 2-3, ECF #68. She further attests that there was an agreement between PNSC, Cockayne, and plaintiff that PNSC would serve as a beta tester in exchange for a license to use the software solution without charge:

We agreed with [Cockayne] (and ultimately DropzoneMS, LLC) that PNSC would serve as a Beta tester for the DropzoneMS software solution, and would provide DropzoneMS with business documentation, intelligence and information relative to the skydiving business. We agreed to this in exchange for a license to use the DropzoneMS solution, and to receive related support assistance, without charge.

Id. ¶ 3. “The deal was that they would build it, and they would sell it. And we would be their test bed forever, that we would never pay for it, that we would work through the bugs with them, and that we would have access to it forever.” Rogers Dep. 19:20-24, ECF #98-1. When asked who she had made this deal with, Rogers answered, “we had a deal with all of them.” Id. at 19:14. She clarified this meant Cockayne and Togstad, and later “the Dropzone people.” Id. at 19:15-18.

Excerpts from Togstad's deposition appear to confirm that an agreement between PNSC and DropzoneMS was reached:

COUNSEL: [T]he arrangement with Pacific Northwest Skydiving was such that Pacific Northwest Skydiving was allowed to use the DropzoneMS program in exchange for being a beta tester; is that right?
TOGSTAD: Correct.
Q: And that was a deal struck by Mr. Cockayne?
A: All of us, actually.
Q: Okay. And as part of that arrangement, there was never an expectation that Pacific Northwest Skydiving would pay a license fee or pay money, but rather, provide information for the betterment of DropzoneMS, right?
A: I think there was actually discussions about some sort of a form of payment, but I don't think we agreed on anything of those terms.
Q: So economic terms -- an agreement as to economic terms were never reached between Pacific Northwest Skydiving and DropzoneMS, correct?
A: Correct.
Q: What was agreed to, though, was this quid pro quo of beta tester and use; is that right?

*16 A: Correct.

Togstad Dep. 154:7-155:3, ECF #69-1. Rogers claims that Togstad issued PNSC a license to use the DZ software through 2038. Rogers Dep. 48:5-50:7, ECF #98-1 (“[Togstad] actually gave it to us until 2038 after they kicked [Cockayne] out”); Rogers Decl. ¶ 5, ECF #68; DZ Software Screenshot, ECF #68-1 (showing “License Active Until: 01/18/2038 7:14 PM”). But Togstad testified that the agreement was only for one year. Togstad Dep. 195:24-196:3 (“The original licensing agreement, I believe, was till 5/2 of 2016, and it was only a year.”).

Rogers and Cockayne declare that PNSC fully performed its side of the agreement by sharing business information and intelligence with DropzoneMS. Rogers Decl. ¶ 4, ECF #68; Cockayne Decl. ¶ 5, ECF #70. However, Rogers claims, “[DropzoneMS] breached. They stopped supporting our software completely. They stopped communication with us 100 percent.” Rogers Dep. 113:11-13, ECF #98-1. Finally, Rogers testified that PNSC suffered damages as a result of DropzoneMS's failure to provide and support a functional software solution:

It slows down our business significantly to have to change the way that we order the manifest situation. So having to relearn this software took, approximately, 50 hours a week for eight weeks.... I've guesstimated our expenses at right around $180,000 is what it cost us in time, in time lost and productivity loss.

Id. at 112:7-114:8.

Construed in the light most favorable to the non-moving party, this evidence shows there was an oral agreement, at least some material terms were agreed upon, defendants substantially performed, and plaintiff and third-party defendants breached, causing damages. Nonetheless, this counterclaim fails as a matter of law. Plaintiff offers four separate reasons why this should be the case, but the first argument regarding a subsequent written agreement is dispositive. Pl.'s Mot. Summ. J. 5-11, ECF #78.

On May 9, 2015, about six months after PNSC and Cockayne entered into the Fall 2014 oral agreement, they signed a Software Use and License Agreement (SULA) granting PNSC a one-year renewable license to use the Dropzone Management Software. Beier Decl., Ex. 1, at 8, ECF #80-1. Cockayne founded DropzoneMS two days later. Id., Ex. 3, ECF #80-2.

Three of the SULA's provisions are relevant here. First, the SULA contains a “successors and assigns” clause, which provides that “[t]his Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their heirs, administrators, successors and assigns.” Id., Ex. 1, at 4, ECF #80-1. DropzoneMS is Cockayne's successor under the Operating Agreement and the Withdrawal of Partner agreement. See id., Ex. 3, at 1-5, 15, ECF #80-2; Cockayne Decl., Ex. 3, ECF #70-3.

Second, the SULA includes an integration clause, which provides:

This Agreement constitutes the entire understanding of the parties, and revokes and supersedes all prior agreements between the parties and is intended as a final expression of their Agreement. It shall not be modified or amended except in writing signed by the parties hereto and specifically referring to this Agreement. This Agreement shall take precedence over any other documents that may be in conflict therewith.

*17 Id., Ex. 1, at 5, ECF #80-1 (emphasis added). Under this clause, the SULA nullifies the Fall 2014 Oral Agreement. Finally, the SULA contains a “term of years” clause, which limits the agreement to a one-year period, renewable for additional years subject to an annual fee:

This Agreement shall be effective as of the date of execution by both parties and shall extend for the period of 1 year(s) thereafter (Initial Term). This Agreement shall be renewed only upon receipt of payment of the annual fee, as defined by the Licensor at the time of renewal, upon which the Extended Term will begin from date of payment and continue for a period of 1 year(s).

Id. at 1.

Defendants argue that the SULA does not supersede the Fall 2014 agreement because they are entirely separate agreements. Defs.' Opp. 11-12, ECF #95. Defendants contend that the agreements have different and additional terms, namely, the SULA does not mention that PNSC was to provide business intelligence because PNSC had already performed that duty. Id. at 12-13.

Under Oregon law, “[a]n oral agreement is not superseded or invalidated by a subsequent or contemporaneous integration ... if the agreement is not inconsistent with the integrated contract, and is such an agreement as might naturally be made as a separate agreement by parties situated as were the parties to the written contract.’ ” Brazil v. Dupree, 197 Or. 581, 597, (1953) (quoting RESTATEMENT (FIRST) OF CONTRACTS § 240(1)(b) (1932)) (emphasis added) (internal quotation marks and alterations omitted). Here, the Fall 2014 oral agreement is inconsistent with the SULA. Under the Fall 2014 oral agreement, PNSC was entitled to use the DropzoneMS software forever, for free. But, under the SULA, PNSC was entitled to use the DropzoneMS software for a one-year period, that was renewable for additional one-year periods subject to payment of an annual fee.

Cockayne testified that the SULA was “intended to serve as a template that we would request all of our customers to sign” and that the one-year term “was created by me not with an eye toward PNSC (because PNSC was always to be able to use the software as our Beta tester), but rather with an eye toward future customers.... It was never intended for PNSC to be subject to only a 1-year license.” Cockayne Decl. ¶ 4, ECF #96. Cockayne also testified that after he and PNSC executed the SULA, he confirmed with Rogers that “PNSC would not be charged a license fee by DropzoneMS. It was always intended that PNSC could use [the DropzoneMS software], in perpetuity, in exchange for all the help it provided in building the program.” Id. ¶ 6. However, the SULA's integration clause specifically prohibits modifications and amendments to the agreement except by a signed writing.

Defendants' reliance on Bennett v. Farmers Ins. Co. of Oregon, 332 Or. 138 (2001), is misplaced. Simply put, that case concerned the oral modification of a written agreement, not a written modification of an oral agreement. The written agreement at issue contained an integration clause that prohibited the modification of an employment contract without a signed writing. Id. at 142-44. The Oregon Supreme Court found the trial court erred by entering judgment notwithstanding the verdict in reliance on the integration clause after allowing the jury to hear evidence about “repeated, direct and indirect” oral assurances that were inconsistent with the agreement. Here, by contrast, the Fall 2014 oral agreement preceded the SULA. Id. at 149.

*18 Defendants also argue PNSC should be entitled to pursue a claim directly under the SULA. Defs.' Opp. 15, ECF #95. But that is not what the counterclaim alleges. Defendants counterclaim concerns a Fall 2014 oral agreement, not some later agreement, oral or written. The deadline to amend the pleadings has already lapsed. Thus, for all of these reasons, this claim fails as a matter of law.

2. Second Counterclaim: Trade Secret Misappropriation

Defendants allege a counterclaim for trade secret misappropriation under the DTSA and OUTSA. Second Am. Answer, Counterclaims ¶¶ 9-18, ECF #25. Defendants assert that their trade secrets are contained in the business intelligence it provided to plaintiff. Id. ¶ 10. Plaintiff argues this counterclaim fails as a matter of law because PNSC did not take reasonable measures to keep its business intelligence secret and plaintiff did not misappropriate any trade secrets.

The relevant law regarding trade secret misappropriation is set forth above. See 18 U.S.C. § 1839(3). Even if PNSC took reasonable measures to keep its trade secrets confidential, plaintiff is correct that it did not misappropriate PNSC's trade secrets because it did not acquire them improperly.

Defendants argue plaintiff misappropriated PNSC's trade secrets through “disclosure or use” under 18 U.S.C. § 1839(5)(B). Under this section, misappropriation means “disclosure or use of a trade secret of another without express or implied consent by a person who used improper means to acquire knowledge of the trade secret.” Id. § 1839(5)(B)(i) (emphasis added). The term “improper means” specifically excludes “lawful means of acquisition.” Id. § 1839(6)(B).

Here, the evidence shows PNSC disclosed its trade secrets to plaintiff under the Fall 2014 oral agreement and the SULA. That Dropzone may have later breached those agreements may give rise to a claim for breach of contract, but it does not retroactively make the acquisition unlawful.

Defendants insist there are disputed issues of material fact regarding whether plaintiff used their trade secrets to develop and market a product for sale after acquiring them in breach of its agreement with PNSC. They argue plaintiff used improper means to acquire their trade secrets by receiving them “after extending repeated promises to allow PNSC to use the program in perpetuity and provide system support, but then reneging on that promise.” Defs.' Opp. 19, ECF #95. Clever wordsmithing aside, this framing of the issue does not negate the evidence showing there was a bargained-for exchange resulting in an agreement, PNSC disclosed its business intelligence in performance of that agreement, and plaintiff performed its promise until Cockayne's ouster in January 2016. Defendants do not argue they were fraudulently induced to disclose their business intelligence in the first instance, but instead claim that after a year of mutual performance, plaintiff failed to keep up its end of the bargain. For the acquisition of the trade secrets to be improper, it must have been improper at the time of acquisition. Because plaintiff's acquisition of PNSC's business intelligence was not improper, defendants' argument fails as a matter of law.

3. Third Counterclaim: “Intentional Deprivation of Property Interest”

Plaintiff and third-party defendants ask the court to grant summary judgment or judgment on the pleadings against the counterclaim of “Intentional Deprivation of Property Interest,” arguing that no such tort claim exists under Oregon law and, even if it does, the claim is procedurally improper under Rule 14.

a. Intentional Deprivation of Property Interest

*19 Defendants have derived their claim from Section 871 of the Restatement (Second) of Torts (1979), which provides

One who intentionally deprives another of his legally protected property interest or causes injury to the interest is subject to liability to the other if his conduct is generally culpable and not justifiable under the circumstances.

This tort appears to be one manifestation of a broad, catch-all cause of action termed the “prima facie tort.” See Committee Commentary to NMRA RULE 13-1631 (“See Restatement (Second) of Torts Sections 871 and 871A for examples of particular types of harm which may result in liability under the prima facie tort.”); Ostroff v. F.D.I.C., 847 F. Supp. 270, 279 (D.R.I. 1994) (“The elements of prima facie tort are outlined in the Restatement (Second) of Torts §§ 870 and 871 (1979).”); Meadow Ltd. P'ship v. Heritage Sav. & Loan Ass'n, 639 F. Supp. 643, 654 (E.D. Va. 1986) (“As for the intentional tort stated in Restatement (Second) of Torts § 871, it generally appears to be the same animal as a prima facie tort, and courts have used the two interchangeably.”).

It does not appear that Oregon courts have specifically recognized a claim for “intentional deprivation of property interest.” “In the absence of controlling forum state law, a federal court ... must use its own best judgment in predicting how the state's highest court would decide the case.” Takahashi v. Loomis Armored Car Serv., 625 F.2d 314, 316 (9th Cir. 1980).

The Oregon Supreme Court explicitly rejected use of the term “prima facie tort” in Nees v. Hocks, 272 Or. 210 (1975).[11]

The New York experience indicates the difficulties of transposing a very broad principle of liability into a specific tort. In Oregon we do not need to adopt a broad principle of liability as a specific tort category in order to evade the rigidities of existing causes of action. This court has not felt unduly restricted by the boundaries of pre-existing common-law remedies. We have not hesitated to create or recognize new torts when confronted with conduct causing injuries which we feel should be compensable.

Id. at 213, 215; see also Lowe v. Philip Morris USA, Inc., 207 Or. App. 532, 543-44 (2006), aff'd, 344 Or. 403 (2008) (explaining Oregon's long history of “judicially created tort law”). After opining that the “term serves no purpose in Oregon and [it would] advance the jurisprudence of this state by eliminating it,” the Nees court held the defendant employer was liable for discharging the plaintiff for missing work after she responded to a jury summons, appeared for jury duty, and served on the jury—when no such claim had existed before. 272 Or. at 218-19. The court went on to develop a claim for “tortious interference with economic relations” over the next two decades. See Mantia v. Hanson, 190 Or. App. 412, 421-22 (2003) (discussing this history); see also Top Serv. Body Shop, Inc. v. Allstate Ins. Co., 283 Or. 201, 210 (1978) (discussing Nees).

*20 Here, Cockayne contends plaintiff and third-party defendants intentionally deprived him of his membership interest in DropzoneMS by threatening to sue him when he had little economic means. Defs.' Opp. 20, ECF #95. He asserts his ouster was not justifiable under the circumstances, and now, after having made no improvements to the DropzoneMS software, plaintiff is suing him for exponentially more[12] than what third-party defendants valued DropzoneMS at when they ousted him. Id.

This court need not recount the expletive-laden transcript of the January 2016 IHOP meeting (ECF #70-2)—which one of the third-party defendants surreptitiously recorded without Cockayne's consent in violation of Oregon's all-party consent law, see O.R.S. 165.540, 133.739—to find that disputed issues of material fact preclude granting summary judgment on this claim. Given the Oregon Supreme Court's hostility toward unhelpful nomenclature but its amiability toward allowing novel tort claims to counter the effects of economic injury sustained by an act undertaken with a “socially undesirable motive,” Nees, 272 Or. at 218, Oregon courts may be receptive to such a claim.

b. Impleader

However, even if Oregon recognized a new tort for intentional deprivation of property interest, it would be procedurally improper under these circumstances.

Rule 14 provides that “[a] defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it.” F.R.C.P. 14 (emphasis added). Under Ninth Circuit precedent, “a third-party claim may be asserted only when the third party's liability is in some way dependent on the outcome of the main claim and is secondary or derivative thereto.” Stewart v. Am. Int'l Oil & Gas Co., 845 F.2d 196, 199-200 (9th Cir. 1988) (citing United States v. One 1977 Mercedes Benz, 708 F.2d 444, 452 (9th Cir. 1983)) (emphasis added). “The crucial characteristic of a Rule 14 claim is that defendant is attempting to transfer to the third-party defendant the liability asserted against him by the original plaintiff. The mere fact that the alleged third-party claim arises from the same transaction or set of facts as the original claim is not enough.” Id. at 200 (quoting WRIGHT & MILLER, FED. PRAC. & PROC. § 1446 (1971 ed.)) (emphasis added).

Here, Cockayne's counterclaim does not allege that plaintiff and third-party defendants are liable to him for the copyright infringement and trade secret misappropriation claims that plaintiff has made against defendants, but contends instead that the value of those claims are contingent and directly proportional to the value of his counterclaim. This does not satisfy Rule 14's requirement that liability be transferred, not merely the loss.

A third-party claim may be asserted under Rule 14(a)(1) only when the third party's liability is in some way dependent on the outcome of the main claim or when the third party is secondarily liable to the defending party. The secondary or derivative liability notion is central and thus impleader has been successfully utilized when the basis of the third-party claim is indemnity, subrogation, contribution, express or implied warranty, or some other theory. If the claim is separate or independent from the main action, impleader will be denied.

*21 6 FED. PRAC. & PROC. CIV. § 1446 (3d ed.)

Cockayne argues to the contrary, relying on a District of Nevada case, China Energy Corp. v. Hill, No. 3:13-CV-562-MMD-VPC, 2014 WL 12647734 (D. Nev. June 13, 2014). There, the court counseled against a strict interpretation of Stewart and One 1977 Mercedes Benz and a narrow construction of Rule 14, and allowed a third-party complaint to move forward even though it “depart[ed] from the ‘classic indemnity model’ of Rule 14 claims.” Id. at *2 (quoting State Coll. Area Sch. Dist. v. Royal Bank of Canada, 825 F. Supp. 2d 573, 579 (M.D. Pa. 2011)).

This case is inapposite. The Ninth Circuit has held that the “trial court must act within its sound discretion when determining whether a third-party defendant may be impleaded under Rule 14,” Stewart, 845 F.2d at 199, which is what the China Energy court did. 2014 WL 12647734, at *2-*3 (weighing need for judicial efficiency and risk of inconsistent judgments with specific facts of the case). However, China Energy was a declaratory action concerning a shareholder's botched dissent to a stock split, where the third-party plaintiff asked the court for a declaration “specifying that, but for the Third-Party Defendants' errors, the [third-party plaintiffs] would have properly dissented to [the] stock split.” Id. at *1 (emphasis added). Here, it is not the case that but for third-party defendants' tortuous deprivation of Cockayne's interest in DropzoneMS, he would not have misappropriated DropzoneMS' trade secrets or infringed its copyright. These claims are not causally related, and they are separate in time. Again, “[t]he mere fact that the alleged third-party claim arises from the same transaction or set of facts as the original claim is not enough.” Stewart, 845 F.2d at 199; see also, e.g., Victorino v. FCA US LLC, No. 16CV1617-GPC(JLB), 2017 WL 4541652, at *4 (S.D. Cal. Oct. 11, 2017) (denying motion to implead when counterclaim did not seek to transfer liability despite presence of similar underlying facts). As such, this counterclaim is improper under Rule 14.

RECOMMENDATIONS

For the reasons set forth above, defendants' motion for summary judgment (ECF #81) should be GRANTED, plaintiff's and third-party defendants' motion for summary judgment (ECF #78) should be GRANTED, and this entire action should be dismissed.

SCHEDULING ORDER

These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Thursday, September 26, 2019. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.

If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.

NOTICE

These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.

Footnotes

[1]

The affirmative defenses are: (1) failure to state a claim, (2) no use, (3) permissive use–license, (4) permissive use–ownership, (5) duress, (6) unconscionability, (7) unclean hands, (8) set-off, and (9) late registration.

[2]

Plaintiff objects to another statement that Noonan made during the same meeting—i.e., “the software's completely unsellable”—on the basis it is hearsay. Pl's Opp. 33, ECF #92. Defendants concede the statement is hearsay, but argue it is an admission of a party opponent under F.R.E. 801(d)(2). Defs' Reply 25, ECF #111. Plaintiff counters that Noonan is merely an investor in DropzoneMS, a limited liability company, and although he owns equity in the business, he is not a member or a manager, and therefore could not have made the statement on DropzoneMS's behalf. Plaintiff cites no authority to support this line of reasoning, and this court is unaware of any authority providing that an individual can own equity in a limited liability company without being a member. In any event, defendants' counterclaims allege Noonan is a member of DropzoneMS, Second Am. Answer 13, ECF #25, and plaintiff admitted this allegation. Answer to Defs.' Second Am. Counterclaims and Third-Party Complaint ¶ 20, ECF #26. Therefore, Noonan's statements made during the 2016 IHOP meeting are admissible as admissions of a party opponent.

[3]

Plaintiff also objects to the admissibility of a statement that Noonan made at the January 2016 IHOP meeting. That objection is addressed in footnote 2, supra.

[4]

For example, Breen, Rogers, and Cockayne all offer testimony concerning a dinner in January 2016 where Rogers and Cockayne allegedly agreed the Flare software would have to be written from scratch. Defendants rely on this evidence to show they created Flare independently and to counter plaintiff's claims of copyright infringement and trade secret misappropriation. But those claims fail for independent reasons as fully explained below. As such, the remaining evidentiary objections are moot.

[5]

Even if Cockayne's report were inadmissible, plaintiff bears the burden to come forth with evidence supporting its claims, which as explained below, it has not done.

[6]

There are two material differences between the DTSA and OUTSA, but neither is at issue here. First, the DTSA provides a federal cause of action to owners of trade secrets that are misappropriated “if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” 18 U.S.C. § 1836(b)(1). Defendants originally argued the DTSA claim fails because the purported trade secret does not satisfy this interstate-commerce requirement. Defs.' Mot. Summ. J. 17-18, ECF #81. However, defendants conceded at oral argument that the activities at issue would trigger the “intended for use” prong of the statute. Indeed, even if plaintiff never sold its product, see Rogers Decl. ¶ 5, ECF #68, and the arrangement and activities between plaintiff and defendants occurred exclusively in Oregon, see Haynie Decl., Exs. 5-6, ECF #83, it cannot be said as a matter of law that plaintiff did not intend for its product to be used in interstate commerce. Interstate commerce includes purely intrastate activity that is not itself commercial. Gonzales v. Raich, 545 U.S. 1, 2, 17 (2005).

Second, enacted on May 11, 2016, the DTSA does not apply retroactively. However, “courts have all held that the DTSA applies to misappropriations that began prior to the DTSA's enactment if the misappropriation continues to occur after the enactment date.” Brand Energy & Infrastructure Servs., Inc. v. Irex Contracting Grp., No. CV 16-2499, 2017 WL 1105648, at *4 (E.D. Pa. Mar. 24, 2017). Defendants continued to develop the Flare source code after May 11, 2016. E.g., Email from Cockayne to Rogers, Beier Decl., Ex. 6 (“As of November 1st, all of the functionality of the original software with the exception of the installation stuff has been implemented into Flare.”).

[7]

As fully explained in the previous findings and recommendations, plaintiff missed the September 17, 2018 expert discovery deadline. Findings and Recommendations, ECF #88, adopted by Opinion and Order, ECF #121. This court found plaintiff lacked good cause to re-open expert discovery and denied plaintiff's motion for leave to file a second amended complaint and to amend the schedule. “If Plaintiff wanted more time to serve its own expert disclosures or depose the expert disclosed by Defendant, Plaintiff could have asked for an extension before the deadline expired. Plaintiff did not do so, and therefore missed its opportunity to depose Defendants' experts. Opinion and Order 3, ECF #121.

[8]

Cockayne signed his report under penalty of perjury. Cockayne Report 17, ECF #70-1.

[9]

The parties have not addressed whether the copyright is valid. Thus, for the purposes of this motion, the court assumes without deciding that plaintiff's copyright is valid. Cf., Three Boys Music Corp. v. Bolton, 212 F.3d 477, 488-89 (9th Cir. 2000) (“Registration is prima facie evidence of the validity of a copyright.”).

[10]

Defendants originally paired this claim with a theory of unjust enrichment, but after considering Nike Inc. v. Dixon, No. CV 01–1459–BR, 2004 WL 1845505 (D. Or. Apr. 6, 2004), they later conceded that Oregon's trade secret statute preempts unjust enrichment claims based on trade secret misappropriation and withdrew this theory. Defs.' Opp. 16, ECF #95.

[11]

It appears only a handful of states have recognized even a limited version of the prima facie tort, including the Virgin Islands, Hawaii, New York, New Mexico, and Missouri. See, e.g., Bank of Nova Scotia v. Boynes, No. ST-16-CV-29, 2016 WL 6268827, at *3 nn.16-19 (V.I. Super. Oct. 18, 2016); Yoneji v. Yoneji, 136 Haw. 11, 20, 354 P.3d 1160, 1169 (Ct. App. 2015) (“[T]his court recognized a cause of action for intentional harm to a property interest, under § 871, that narrowly applies to cases that are factually similar to Giuliani and where no other well-recognized causes of action are pled to address the alleged harm.”); Diorio v. Ossining Union Free Sch. Dist., 96 A.D.3d 710, 712, 946 N.Y.S.2d 195, 198 (2012); Schmitz v. Smentowski, 109 N.M. 386, 785 P.2d 726 (1990); Tufts v. Madesco Inv. Corp., 524 F. Supp. 484, 486 (E.D. Mo. 1981) (indicating Missouri courts have recognized the prima-facie-tort doctrine but holding “the doctrine is applicable only when the factual basis of the complaint does not fall within the parameters of an established tort”).

[12]

By buying Cockayne out of his 35% share for $1,000, third-party defendants implicitly valued DropzoneMS for $2,847.14. While plaintiff does not allege an amount of money damages in the complaint, it presumably seeks more than a few thousand dollars in this action. See Prayer for Relief ¶ 9, First Am. Compl., ECF #9.