Many unfair competition cases in the digital era involve allegations of computer misconduct.\u00a0 Several federal statutes may provide former employers a cause of action for such misconduct, including the Computer Fraud and Abuse Act and the Stored Communication Act.\u00a0 The rise in the use of these claims has brought an increase in the number of unfair competition cases filed in federal courts.\u00a0 Federal courts though are, of course, of limited subject matter jurisdiction.\u00a0 Two recent decisions from Georgia federal courts are a reminder that federal judges will often exercise restraint in monitoring their courts\u2019 jurisdictional boundaries.<\/p>\n
The plaintiff\u2019s primary claim in Advanced Technology Services, Inc. v. KM Docs LLC<\/em>, 2013 WL 1501476 (N.D. Ga. April 9, 2013) was for copyright infringement in violation of the federal Copyright Act.\u00a0 The case was filed in the Superior Court of Fulton County on September 2011.\u00a0 In addition to the Copyright Act claim, the plaintiff asserted claims for misappropriation of trade secrets, conversion, tortious interference, breach of contract, fraud, violations of the Georgia RICO Act, breach of fiduciary duty and other state law tort claims.\u00a0 The case was removed to federal court and was litigated there for almost eighteen months.<\/p>\n The defendants filed a motion for summary judgment as to all of the plaintiff\u2019s claims.\u00a0 Judge Thrash first found that summary judgment was appropriate as to the plaintiff\u2019s Copyright Act claim.\u00a0 He then noted that the Court had exercised supplemental jurisdiction over the remaining state law claims pursuant to 28 U.S.C. \u00a7 1367(c).\u00a0 The Court declined to maintain supplemental jurisdiction over the state law claims, noting in particular that \u201c[t]he interpretation of the Georgia Trade Secrets Act . . . definition of \u2018trade secret\u2019 contained therein, is a matter of state law clearly within the competence of the state courts.\u201d\u00a0 He therefore remanded the case and denied the defendants\u2019 motion for summary judgment as to the state law claims without prejudice so that the defendants could renew their motion in state court.<\/p>\n Visalus, Inc. v. Then<\/em>, 2013 WL 427077 (S.D. Ga. Feb. 1, 2013), is another case where a federal judge showed restraint in exercising jurisdiction in an unfair competition case.\u00a0 The plaintiff was a marketing company that sells weight management, nutritional and energy products.\u00a0 The individual defendant, Amber Then, was a former distributor for the plaintiff.\u00a0 She had agreed to a non-compete which specifically prohibited her from working for Ocean Avenue, LLC, for one year following her employment with Visalus.\u00a0 However, when she resigned, she immediately began to work for Ocean Avenue.<\/p>\n Visalus filed a lawsuit against her and Ocean Avenue in federal court alleging that Then\u2019s actions violated the non-compete.\u00a0 Visalus sought a temporary restraining order.\u00a0 Faced with Visalus\u2019 emergency motion, Judge Moore first examined whether there was subject matter jurisdiction.<\/p>\n Visalus had alleged that the Court had diversity jurisdiction.\u00a0 Judge Moore noted that for purposes of diversity jurisdiction a limited liability company is a citizen of any state in which any of its members is a citizen.\u00a0 Examining the plaintiff\u2019s complaint, Judge Moore found that the plaintiff had failed to allege the names of the members of Ocean Avenue, LLC.\u00a0 Judge Moore thus found that Visalus\u2019 general allegations were insufficient to carry its burden of establishing that complete diversity existed between the parties.\u00a0 He ordered Visalus to file an Amended Complaint that includes the citizenship of each party to the case, namely the names and citizenship of each member of Ocean Avenue, LLC.\u00a0 Judge Moore deferred ruling on Visalus\u2019 emergency motion for a restraining order until he was satisfied that he had jurisdiction to hear this dispute.<\/p>\n These two cases illustrate that federal courts are mindful of the boundaries of their jurisdiction and will frequently guard those boundaries stringently.\u00a0 Practitioners who handle unfair competition cases should take these issues into consideration when deciding which court system in which to pursue relief.\u00a0 Indeed, Visalus<\/em> illustrates that a defect in jurisdiction can block a former employer from promptly obtaining emergency relief.\u00a0 Proper planning and careful pleading can minimize the likelihood that a jurisdictional flaw will impact a plaintiff\u2019s (or a defendant\u2019s) litigation strategy.<\/p>\n","protected":false},"excerpt":{"rendered":" Many unfair competition cases in the digital era involve allegations of computer misconduct.\u00a0 Several federal statutes may provide former employers a cause of action for such misconduct, including the Computer Fraud and Abuse Act and the Stored Communication Act.\u00a0 The rise in the use of these claims has brought an increase in the number of […]<\/p>\n","protected":false},"author":18,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_mo_disable_npp":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4,9],"tags":[27,28,16],"acf":[],"yoast_head":"\n