The U.S. Court of Appeals for the Second Circuit held that the district court’s dismissal of the unjust enrichment claim did not arise or fall apart from the trade secret misappropriation claim and that they could be amended in the context of a non-contractual dispute. Scope covers the dispute between the parties. Paulells v. Deloitte LLPCase No. 22-21 (2nd Circuit October 6, 2023)BagsRobinson, JJ.) (Jacobs, J., dissenting in part).
Andre Pauwels is a contractor without written agreement to estimate the value of investments by Bank of New York Mellon and its parent company (collectively, BNYM). In the year In 2014, while working for BNYM, Pauwels developed the “Pauwels Model” implemented in Excel spreadsheets for evaluation. Pauwels typically sends BNYM only the results from the Pauwels model. According to Pauwels, the Pauwels model and spreadsheets are confidential and proprietary, although the spreadsheets are not password-protected, encrypted, or designated confidential, Pauwels sometimes shares spreadsheets with BNYM.
In the year In 2016, BNYM engaged Deloitte and related entities (collectively Deloitte) to take over Pauwels’ operations. Pauwels never authorized BNYM to share Pauwels’ model spreadsheets with Deloitte, and BNYM assured Pauwels that Deloitte would not use these spreadsheets. In April 2018, Powells said BNYM gave Deloitte spreadsheets and Deloitte copied Powells’ model. BNYM severed ties with Pauwels in May 2018.
In the year In March 2019, the Powells sued BNYM and Deloitte for trade secret misappropriation, unfair competition and unjust enrichment, alleging that BNYM committed fraud and negligent representation. After BNYM and Deloitte moved to dismiss, the district court granted the motion in part. The district court dismissed his unjust enrichment claim as duplicative, citing the 2009 second criminal case for trade secret misappropriation. Fevley Transp Malmo v. Wabtech For the idea “where one Unfair competition The claim, and the question of misappropriation arise from the same factual predicate. . . The two claims generally rise or fall. The district court dismissed the remaining claims for failure to make a convincing case that the existence of trade secrets, BNYM and Deloitte “misappropriated” anything, or that the Powells suffered damages. Paul appealed.
The Second Circuit denied Paul’s unjust enrichment claim for BNYM. Initially, the court held that Powell’s unjust enrichment claim was not duplicative of his trade secret misappropriation claim. Fevley Transp and clarifying that misappropriation is not part of an unjust enrichment claim. The court rejected BNYM’s argument that the Pauwels’ unjust enrichment claim was barred by the contract between the parties. The court ruled that the Powells could pursue the claim because “a bona fide Argument. . . According to Pauwels, he was engaged and paid only for his advice and expertise, meaning BNYM had no right to use Pauwels’ model spreadsheets by sharing them with Deloitte. According to BNYM, Powells was hired and paid to prepare and deliver the Powells Model spreadsheet.
The Second Circuit also affirmed the district court’s dismissal of Deloitte’s unjust enrichment claim, holding that “unless a plaintiff has a sufficiently close relationship with the other party, an unjust enrichment claim cannot succeed.” Powell failed to allege that it had established a sufficient relationship with Deloitte and that it was insufficient to know that Powell created the spreadsheets.
In dissent, Justice Jacobs disagreed with the majority’s unjust enrichment analysis, arguing that any contract dispute can be characterized as a dispute over whether the scope of the contract covers the parties’ disputes. According to Judge Jacobs, if BNYM received more than the contract allowed, the Powells had to prove a breach of contract claim, not unjust enrichment.