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“** FILED: BROWARD COUNTY, FL Howard C. Forman, CLERK 6/23/2016 10:58:55 AM.****
IN THE CIRCUIT COURT FOR THE
17TH JUDICIAL CIRCUIT IN AND FOR
BROWARD COUNTY, FLORIDA
DIRECT MERCHANTS FUNDING, LLC, a CASE NO: 16-008507 CACE (07)
Florida limited liability company, JUDGE: JACK TUTER
Plaintiff,
vs.
FLASHFI, LLC, a Florida limited liability
company; ALLISON CZAP, an individual;
CODY ROTH, an individual; and BRIAN
JEFFERSON, an individual,
Defendants.
/
ORDER ON DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S COMPLAINT
THIS CAUSE came before the court on Defendants’ Motion to Dismiss Plaintiff's
Complaint. The court, having reviewed the motion and responses, having heard argument of
counsel, and being otherwise duly advised in the premises, rules as follows:
On May 13, 2016, plaintiff, Direct Merchants Funding, LLC (“Plaintiff or “Merchants
Funding”), filed a nine-count complaint against defendants, FlashFi, LLC (“FlashFi”), Allison
Czap (“Czap”), Cody Roth (“Roth”), and Brian Jefferson (“Jefferson”) (collectively
“Defendants”), alleging causes of action for: (1) misappropriation of trade secrets (damages)
(count I against Defendants); (2) misappropriation of trade secrets (injunction) (count II against
Defendants); (3) tortious interference with advantageous business relationship (damages) (count
Ill against Defendants); (4) tortious interference with advantageous business relationship
(injunction) (count IV against Defendants); (5) infringement of common law trade name and
trademark (injunction) (count V against Defendants); (6) deceptive and unfair trade practices
(damages) (count VI against Defendants); (7) deceptive and unfair trade practices (injunction)
(count VII against Defendants); (8) conversion (damages) (count VIII against Defendants); and
C/CASE NO: 16-008507 CACE (07)
(9) conversion (injunction) (count IX against Defendants). According to the complaint, Merchants
Funding is engaged in the business of providing merchant cash advances and other financial
services to businesses throughout the United States. In 2012, Plaintiff originated and adopted the
trade name “Flash Advance.” Plaintiff alleges that Jefferson, a former employee, misappropriated
Merchants Funding’s trade secrets and other confidential and proprietary information to start
FlashFi, a competing business, with Czap and Roth.
On May 31, 2016, Defendants filed the instant motion to dismiss. In support thereof,
Defendants argue that Plaintiff fails to state a causes of action for misappropriation of trade secrets
(counts J and II), rendering all of Plaintiffs remaining causes of action defective. On June 2, 2016,
Plaintiff filed a response. A hearing was held before the court on June 3, 2016.
. The law is well settled that “the function of a motion to dismiss a complaint is to raise a
question of law as to the sufficiency of the facts alleged to state a cause of action.” Hitt v. N.
Broward Hosp. Dist., 387 So. 2d 482, 482 (Fla. 4th DCA 1980). “The motion admits as true all
well pleaded facts as well as all reasonable inferences arising from those facts.” Jd. “The
allegations must be construed in the light most favorable to plaintiffs and the trial court must not
speculate what the true facts may be or what will be proved ultimately in trial of the cause.” Id.
Thus,
on a motion to dismiss for failure to state a cause of action, a trial
court is restricted to a consideration of the well-pled allegations of
the complaint. It must accept those allegations as true and then
determine if the complaint states a valid claim for relief. A trial court
has no authority to look beyond the complaint by considering the
sufficiency of the evidence which either party is likely to produce,
or any affirmative defense raised by the defendant.
Holland v. Anheuser Busch, Inc., 643 So. 2d 621, 622 (Fla. 2d DCA 2004) (citing Varnes v.
Dawkins, 624 So. 2d 349, 350 (Fla. 1st DCA 1993)); see also Lewis v. Barnett Bank of S. Fla., 604
Page 2 of 6CASE NO: 16-008507 CACE (07)
So. 2d 937, 938 (Fla. 3d DCA 1992) (“The law is well settled that a motion to dismiss a complaint
is not a motion for summary judgment in which the court may rely on facts adduced in depositions,
affidavits, or other proofs.”).
In support of their motion to dismiss, Defendants first argue that Plaintiff fails to state
claims for misappropriation of trade secrets. Under Florida law, to state a claim for
misappropriation of trade secrets, a plaintiff must allege that:
(1) the plaintiff possessed secret information and took reasonable
steps to protect its secrecy and (2) the secret it possessed was
misappropriated, either by one who knew or had reason to know that
the secret was improperly obtained or by one who used improper
means to obtain it. See Fla. Stat. § 688.002. To qualify as a trade
secret, the information that the plaintiff seeks to protect must derive
economic value from not being readily ascertainable by others and
must be the subject of reasonable efforts to protect its secrecy. See
American Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d
1407, 1410 (llth Cir.1998) (applying Florida law);
Bestechnologies, Inc. v. Trident Env’t Sys., Inc., 681 So.2d 1175,
1176 (Fla. 2d DCA 1996) (defining trade secret). Additionally, if
the information in question is generally known or readily accessible
to third parties, it cannot qualify for trade secret protection. See
American Red Cross, 143 F.3d at 1410.
Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 136 F. Supp. 2d 1271, 1291 (S.D. Fla. 2001).
Additionally, a plaintiff must identify the alleged trade secret with reasonable particularity. See
Treco Int'l S.A. v. Kromka, 706 F. Supp. 2d 1283, 1286 (S.D. Fla. 2010) (“A plaintiff has the
burden to describe the alleged trade secret with reasonable particularity.” (citing Levenger Co. v.
Feldman, 516 F. Supp. 2d 1272, 1287 (S.D. Fla. 2007))).
Defendants argue that Plaintiff fails to identify its alleged trade secret with reasonable
particularity. After a careful review, the court disagrees. In its complaint, Plaintiff alleges the
following:
17. In order to establish, market, and promote its financial services
business, Merchants Funding made a substantial investment of
Page 3 of 6CASE NO: 16-008507 CACE (07)
capital and other resources to acquire a database of business contacts
and to engage a vendor to utilize the database to monitor the
activities of the businesses in order to identify possible leads and
characteristics of potential customers.
18. Over a period of time, Merchants Funding acquired the database
consisting of over 8 million records at a substantial cost and
financial investment.
(Pl.’s Compl. {§ 17-18).
After a careful review, the court determines that these allegations sufficiently identify the
claimed trade secret. Moreover, whether this information is a trade secret and whether Merchants
Funding utilized reasonable efforts to protect the secrecy of this information are questions of fact
that are not amenable on a motion to dismiss. See Del Monte Fresh Produce Co., 136 F. Supp. 2d
at 1291 (“Absent clear authority that such information is not protected under Florida’s Uniform
Trade Secret’s Act, Del Monte’s complaint will not be dismissed on the basis that the MD-2
variety is not a trade secret. This is because whether a particular type of information constitutes a
trade secret is a question of fact.”); see also, Treco Int’! S.A., 706 F. Supp. 2d at 1287 (“[W]hether
a party has taken reasonable steps under the circumstances to preserve its trade secrets is a factual
inquiry that cannot be resolved on a motion to dismiss.”). Therefore, Defendants’ motion to
dismiss counts I and II is denied. Since Defendants’ argument in support of dismissal of counts
II, IV, VI, VII, VIIL, and IX is predicated on the dismissal of counts I and II, Defendants’ motion
to dismiss these counts is likewise DENIED.
Next, Defendants argue that Plaintiff fails to state a cause of action for infringement of
common law trade name or trademark (count V). Under Florida law, in order to state a claim for
injunctive relief based on infringement of a trade name or trademark, a plaintiff must allege the
following:
Page 4 of 6CASE NO: 16-008507 CACE (07)
(1) [t]he plaintiff first adopted and used a certain name (or mark or
symbol or logo or sign design) in a certain market or trade area, as a
means of establishing good will and reputation and to describe,
identify or denominate particular services rendered or offered by it
(or goods made or sold by it) and to distinguish them from similar
services rendered or offered (or similar goods marketed) by others,
and
(2) through its association with such services or goods the plaintiff's
tradename (or mark, etc.) has acquired a special significance as the
name of the services rendered (or goods marketed) by the plaintiff
in its trade area because plaintiff's tradename (or mark, etc.)
(a) is inherently distinctive (fanciful, novel or
arbitrary), or
(b) while generic, descriptive, or geographic,
plaintiff's tradename (or mark, etc.) has, by actual
usage, acquired in a certain trade area, a secondary,
special or trade meaning as indicating, describing,
identifying or denominating the plaintiff as the
source of certain services (or goods), and
(3) the defendant has commenced, or intends to commence, the use
of an identical or confusingly similar tradename (or mark, etc.) to
indicate or identify similar services rendered (or similar goods
marketed) by it in competition with plaintiff in the same trade area
in which the plaintiff has already established its tradename (or mark,
etc.) and
(4) as a consequence of the defendant’s action, or threatened action,
customer confusion of source or as to the sponsorship of the services
(or goods) offered, or to be offered, by the defendant is probable
(likely) or inevitable.
Am. Bank of Merritt Island v. First Am. Bank & Trust, 455 So. 2d 443, 445-46 (Fla. Sth DCA
1984) (citations and footnotes omitted). After careful review, the court determines Plaintiff fails
to state a cause of action for infringement of common law trade name and trademark. Specifically,
the court determines that Plaintiffs allegations in count V are conclusory and lack sufficient
ultimate facts. See Fla. R. Civ. P. 1.110 (b); see also, Barrett v. City of Margate, 743 So. 2d 1160,
Page 5 of 6CASE NO: 16-008507 CACE (07)
1163 (Fla. 4th DCA 1999) (noting “i]t is insufficient to plead opinions, theories, /egal conclusions
or arguments” (emphasis added)). Therefore, Defendants’ motion to dismiss count V is granted.
Accordingly, it is hereby:
ORDERED that Defendants’ Motion to Dismiss Plaintiffs Complaint is GRANTED as to
count V and DENIED as to counts I, II, III, IV, VI, VII, VIII, and [IX. Count V is DISMISSED
WITHOUT PREJUDICE. Plaintiff may file an amended complaint within twenty (20) days of the
date of this Order.
DONE AND ORDERED in Chambers, Fort Lauderdale, Florida, this 23" day of June,
2016.
Copies to:
Jeffrey Gutchess, Esq., AXS Law Group, 1815 Purdy Avenue, Miami Beach, FL 33139
Garry W. O’Donnell, Esq., Greenspoon Marder, P.A., One Boca Place, 2255 Glades Road, Suite 400-E, Boca Raton,
FL 33431
Page 6 of 6
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“** FILED: BROWARD COUNTY, FL Howard C. Forman, CLERK 6/23/2016 10:58:55 AM.**** IN THE CIRCUIT COURT FOR THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA DIRECT MERCHANTS FUNDING, LLC, a CASE NO: 16-008507 CACE (07) Florida limited liability company, JUDGE: JACK TUTER Plaintiff, vs. FLASHFI, LLC, a Florida limited liability company; ALLISON CZAP, an individual; CODY ROTH, an individual; and BRIAN JEFFERSON, an individual, Defendants. / ORDER ON DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S COMPLAINT THIS CAUSE came before the court on Defendants’ Motion to Dismiss Plaintiff's Complaint. The court, having reviewed the motion and responses, having heard argument of counsel, and being otherwise duly advised in the premises, rules as follows: On May 13, 2016, plaintiff, Direct Merchants Funding, LLC (“Plaintiff or “Merchants Funding”), filed a nine-count complaint against defendants, FlashFi, LLC (“FlashFi”), Allison Czap (“Czap”), Cody Roth (“Roth”), and Brian Jefferson (“Jefferson”) (collectively “Defendants”), alleging causes of action for: (1) misappropriation of trade secrets (damages) (count I against Defendants); (2) misappropriation of trade secrets (injunction) (count II against Defendants); (3) tortious interference with advantageous business relationship (damages) (count Ill against Defendants); (4) tortious interference with advantageous business relationship (injunction) (count IV against Defendants); (5) infringement of common law trade name and trademark (injunction) (count V against Defendants); (6) deceptive and unfair trade practices (damages) (count VI against Defendants); (7) deceptive and unfair trade practices (injunction) (count VII against Defendants); (8) conversion (damages) (count VIII against Defendants); and C/CASE NO: 16-008507 CACE (07) (9) conversion (injunction) (count IX against Defendants). According to the complaint, Merchants Funding is engaged in the business of providing merchant cash advances and other financial services to businesses throughout the United States. In 2012, Plaintiff originated and adopted the trade name “Flash Advance.” Plaintiff alleges that Jefferson, a former employee, misappropriated Merchants Funding’s trade secrets and other confidential and proprietary information to start FlashFi, a competing business, with Czap and Roth. On May 31, 2016, Defendants filed the instant motion to dismiss. In support thereof, Defendants argue that Plaintiff fails to state a causes of action for misappropriation of trade secrets (counts J and II), rendering all of Plaintiffs remaining causes of action defective. On June 2, 2016, Plaintiff filed a response. A hearing was held before the court on June 3, 2016. . The law is well settled that “the function of a motion to dismiss a complaint is to raise a question of law as to the sufficiency of the facts alleged to state a cause of action.” Hitt v. N. Broward Hosp. Dist., 387 So. 2d 482, 482 (Fla. 4th DCA 1980). “The motion admits as true all well pleaded facts as well as all reasonable inferences arising from those facts.” Jd. “The allegations must be construed in the light most favorable to plaintiffs and the trial court must not speculate what the true facts may be or what will be proved ultimately in trial of the cause.” Id. Thus, on a motion to dismiss for failure to state a cause of action, a trial court is restricted to a consideration of the well-pled allegations of the complaint. It must accept those allegations as true and then determine if the complaint states a valid claim for relief. A trial court has no authority to look beyond the complaint by considering the sufficiency of the evidence which either party is likely to produce, or any affirmative defense raised by the defendant. Holland v. Anheuser Busch, Inc., 643 So. 2d 621, 622 (Fla. 2d DCA 2004) (citing Varnes v. Dawkins, 624 So. 2d 349, 350 (Fla. 1st DCA 1993)); see also Lewis v. Barnett Bank of S. Fla., 604 Page 2 of 6CASE NO: 16-008507 CACE (07) So. 2d 937, 938 (Fla. 3d DCA 1992) (“The law is well settled that a motion to dismiss a complaint is not a motion for summary judgment in which the court may rely on facts adduced in depositions, affidavits, or other proofs.”). In support of their motion to dismiss, Defendants first argue that Plaintiff fails to state claims for misappropriation of trade secrets. Under Florida law, to state a claim for misappropriation of trade secrets, a plaintiff must allege that: (1) the plaintiff possessed secret information and took reasonable steps to protect its secrecy and (2) the secret it possessed was misappropriated, either by one who knew or had reason to know that the secret was improperly obtained or by one who used improper means to obtain it. See Fla. Stat. § 688.002. To qualify as a trade secret, the information that the plaintiff seeks to protect must derive economic value from not being readily ascertainable by others and must be the subject of reasonable efforts to protect its secrecy. See American Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407, 1410 (llth Cir.1998) (applying Florida law); Bestechnologies, Inc. v. Trident Env’t Sys., Inc., 681 So.2d 1175, 1176 (Fla. 2d DCA 1996) (defining trade secret). Additionally, if the information in question is generally known or readily accessible to third parties, it cannot qualify for trade secret protection. See American Red Cross, 143 F.3d at 1410. Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 136 F. Supp. 2d 1271, 1291 (S.D. Fla. 2001). Additionally, a plaintiff must identify the alleged trade secret with reasonable particularity. See Treco Int'l S.A. v. Kromka, 706 F. Supp. 2d 1283, 1286 (S.D. Fla. 2010) (“A plaintiff has the burden to describe the alleged trade secret with reasonable particularity.” (citing Levenger Co. v. Feldman, 516 F. Supp. 2d 1272, 1287 (S.D. Fla. 2007))). Defendants argue that Plaintiff fails to identify its alleged trade secret with reasonable particularity. After a careful review, the court disagrees. In its complaint, Plaintiff alleges the following: 17. In order to establish, market, and promote its financial services business, Merchants Funding made a substantial investment of Page 3 of 6CASE NO: 16-008507 CACE (07) capital and other resources to acquire a database of business contacts and to engage a vendor to utilize the database to monitor the activities of the businesses in order to identify possible leads and characteristics of potential customers. 18. Over a period of time, Merchants Funding acquired the database consisting of over 8 million records at a substantial cost and financial investment. (Pl.’s Compl. {§ 17-18). After a careful review, the court determines that these allegations sufficiently identify the claimed trade secret. Moreover, whether this information is a trade secret and whether Merchants Funding utilized reasonable efforts to protect the secrecy of this information are questions of fact that are not amenable on a motion to dismiss. See Del Monte Fresh Produce Co., 136 F. Supp. 2d at 1291 (“Absent clear authority that such information is not protected under Florida’s Uniform Trade Secret’s Act, Del Monte’s complaint will not be dismissed on the basis that the MD-2 variety is not a trade secret. This is because whether a particular type of information constitutes a trade secret is a question of fact.”); see also, Treco Int’! S.A., 706 F. Supp. 2d at 1287 (“[W]hether a party has taken reasonable steps under the circumstances to preserve its trade secrets is a factual inquiry that cannot be resolved on a motion to dismiss.”). Therefore, Defendants’ motion to dismiss counts I and II is denied. Since Defendants’ argument in support of dismissal of counts II, IV, VI, VII, VIIL, and IX is predicated on the dismissal of counts I and II, Defendants’ motion to dismiss these counts is likewise DENIED. Next, Defendants argue that Plaintiff fails to state a cause of action for infringement of common law trade name or trademark (count V). Under Florida law, in order to state a claim for injunctive relief based on infringement of a trade name or trademark, a plaintiff must allege the following: Page 4 of 6CASE NO: 16-008507 CACE (07) (1) [t]he plaintiff first adopted and used a certain name (or mark or symbol or logo or sign design) in a certain market or trade area, as a means of establishing good will and reputation and to describe, identify or denominate particular services rendered or offered by it (or goods made or sold by it) and to distinguish them from similar services rendered or offered (or similar goods marketed) by others, and (2) through its association with such services or goods the plaintiff's tradename (or mark, etc.) has acquired a special significance as the name of the services rendered (or goods marketed) by the plaintiff in its trade area because plaintiff's tradename (or mark, etc.) (a) is inherently distinctive (fanciful, novel or arbitrary), or (b) while generic, descriptive, or geographic, plaintiff's tradename (or mark, etc.) has, by actual usage, acquired in a certain trade area, a secondary, special or trade meaning as indicating, describing, identifying or denominating the plaintiff as the source of certain services (or goods), and (3) the defendant has commenced, or intends to commence, the use of an identical or confusingly similar tradename (or mark, etc.) to indicate or identify similar services rendered (or similar goods marketed) by it in competition with plaintiff in the same trade area in which the plaintiff has already established its tradename (or mark, etc.) and (4) as a consequence of the defendant’s action, or threatened action, customer confusion of source or as to the sponsorship of the services (or goods) offered, or to be offered, by the defendant is probable (likely) or inevitable. Am. Bank of Merritt Island v. First Am. Bank & Trust, 455 So. 2d 443, 445-46 (Fla. Sth DCA 1984) (citations and footnotes omitted). After careful review, the court determines Plaintiff fails to state a cause of action for infringement of common law trade name and trademark. Specifically, the court determines that Plaintiffs allegations in count V are conclusory and lack sufficient ultimate facts. See Fla. R. Civ. P. 1.110 (b); see also, Barrett v. City of Margate, 743 So. 2d 1160, Page 5 of 6CASE NO: 16-008507 CACE (07) 1163 (Fla. 4th DCA 1999) (noting “i]t is insufficient to plead opinions, theories, /egal conclusions or arguments” (emphasis added)). Therefore, Defendants’ motion to dismiss count V is granted. Accordingly, it is hereby: ORDERED that Defendants’ Motion to Dismiss Plaintiffs Complaint is GRANTED as to count V and DENIED as to counts I, II, III, IV, VI, VII, VIII, and [IX. Count V is DISMISSED WITHOUT PREJUDICE. Plaintiff may file an amended complaint within twenty (20) days of the date of this Order. DONE AND ORDERED in Chambers, Fort Lauderdale, Florida, this 23" day of June, 2016. Copies to: Jeffrey Gutchess, Esq., AXS Law Group, 1815 Purdy Avenue, Miami Beach, FL 33139 Garry W. O’Donnell, Esq., Greenspoon Marder, P.A., One Boca Place, 2255 Glades Road, Suite 400-E, Boca Raton, FL 33431 Page 6 of 6