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Megacorp Logistics, LLC v. Turvo, Inc.

United States District Court, E.D. Kentucky, Northern Division, Covington

February 22, 2018



          David L. Bunning United States District Judge

         This matter is before the court on Defendants Turvo, Inc. and Pacific Sky Group, LLC's Motion to Transfer Venue pursuant to 28 U.S.C. § 1404(a). (Doc. # 20). Plaintiff MegaCorp Logistics, LLC having responded (Doc. # 26), and Defendants having replied (Doc. # 27), the Motion is ripe for review. For the reasons stated below, Defendants' Motion to Transfer is granted.


         According to its Amended Complaint, Plaintiff MegaCorp Logistics, LLC (“MegaCorp”) provides “freight brokerage services throughout the United States.” (Doc. # 7 at 2). Defendant Turvo, Inc. (“Turvo”) “operates a collaborative logistics software platform” related to freight brokerage, and Defendant Pacific Sky, LLC (“Pacific Sky”) is a “software development company that was and is affiliated with Turvo.” Id. In early 2013, MegaCorp's Vice President of Sales started a dialogue with Pacific Sky's owner, leading to the concept behind Turvo's software, which is designed to “enable [freight] brokers to operate more efficiently.” Id. at 7. About a year and a half later, the higher-ups at MegaCorp were brought into the discussion, and a Mutual Nondisclosure Agreement (“NDA”) was signed by the parties. Id.

         The NDA is for a term of two years, with the nondisclosure obligations extending to five years. (Doc. # 7-1). This agreement prohibits either party from disclosing “Confidential Information” or reproducing “Confidential Information” without permission. Id. In addition, the NDA limits the use of “Confidential Information to “evaluating or pursuing a business relationship between the parties, ” while expressly denying the recipients any rights to the “Confidential Information.” Id. The NDA defines “Confidential Information” as: (1) “designated in writing to be confidential or proprietary, or if disclosed orally, is confirmed in writing as having been disclosed as confidential within a reasonable time”; and (2) “information that would reasonably appear to be confidential or proprietary under the circumstances.” Id. The NDA also contains a merger clause:

This Agreement may not be amended except by a writing signed by both parties. Failure to enforce any provision of this Agreement by a party shall not constitute a waiver of any term hereof by such party. This Agreement sets forth the entire agreement between the parties with respect to the Confidential Information disclosed and supersedes all prior or contemporaneous, oral, or written agreements concerning such Confidential Information.


         Soon after executing the NDA, the parties further codified their relationship through a Consulting Services Agreement (“CSA”), which became effective on September 25, 2014. (Doc. # 7 at 10). Under this agreement, Pacific Sky agreed to perform certain services as a consultant to MegaCorp. (Doc. # 7-2). The CSA also contains limitations on the disclosure of “Confidential Information.” Id. at 4. Under the CSA, “Confidential Information” is defined as: “(a) relate[d] to the disclosing party's past, present and future research, development, business activities, products, software, services, and technical knowledge, provided such information has been identified as confidential or would be understood to be confidential by a reasonable person under the circumstances”; “(b) Proprietary Materials”; and “(c) Consultant Property.” Id.

         “Proprietary Materials” is broadly defined in the CSA:

All materials (whether written, printed, graphic, or electronically recorded) that are furnished by MegaCorp (including by its clients, partners, employees, contractors, or representatives) to Consultant in connection with Consultant's performance of the Services are “Proprietary Materials” and shall remain the property of MegaCorp. Proprietary Materials include, but is not limited to, MegaCorp client information, product information, business plans, marketing plans, pricing information, personnel information, engineering designs, research, software, all code related to the MegaCorp “Transportation Management System”, inventions, processes, finances or any other financial or accounting information.

Id. at 3.

         The CSA contains other provisions codifying the relationship between MegaCorp and Pacific Sky. In particular, the CSA contains a choice-of-law provision, as well as a forum-selection clause. As to choice of law, the parties agreed that: “[The CSA] shall be interpreted and enforced in accordance with the laws of California without regard to the conflict of laws provisions thereof.” Id. at 10. For choice of forum, the CSA provides as follows:

The parties agree to the exclusive jurisdiction of the state and federal courts located in, or having jurisdiction over, Santa Clara County, California.


         The CSA also contains two merger clauses:

The terms and conditions of this Agreement contain the entire understanding and agreement of the parties regarding the subject matter hereof. This Agreement supersedes all existing agreements, including all oral or written proposals, all negotiations, conversations, or discussions between the parties relating to this Agreement, and past course of dealing or industry custom.

Id. at 8; and

This Agreement and its Appendices, Exhibits and SOWs constitute the entire agreement between Consultant and Client with respect to the subject matter hereof and supersede, and are not entered into in reliance on, any and all prior agreements, statements, promises, understandings, and negotiations, whether written or oral, regarding the subject matter hereof, and any terms and conditions included on client's purchase orders, whenever delivered. This Agreement and any SOW cannot be amended unless in writing and signed by duly authorized representatives of each party and in no event shall any terms or conditions included on client's purchase orders issued after the date of this Agreement have any force or effect between the parties.

Id. at 9.

         Both the NDA and the CSA contain prohibitions against disclosing confidential or proprietary information to any third parties, except as permitted under the contracts. (Docs. # 7-1 and 7-2 at 4-5).

         On October 8, 2014, MegaCorp and Pacific Sky entered into a third agreement: the Letter of Understanding (“LOU”). (Doc. # 7 at 12). The LOU focuses on the “Transportation Management System Software” (”TMS”):

Both parties agree that all code and documentation regarding MegaCorp's “Transportation Management System Software” utilized in discovery and analyses for the purpose of finalizing the “Consulting Services Agreement” between the two parties may not be reused or sold without the written permission of MegaCorp. All code that is part of the “Transportation Management System Software” specified in the scope of work provided to Pacific Sky as part of the “Consulting Services Agreement” and code modified or developed as part of the deliverables in the scope of work for the “Transportation Management System Software” may not be reused or sold without the written permission of MegaCorp.

(Doc. # 7-3).

         While the relationship between MegaCorp and Pacific Sky was being memorialized, the owner of Pacific Sky incorporated Turvo, Inc. (Doc. # 7 at 12). Soon after, MegaCorp's Vice President of Sales left to become Turvo's Chief Operations Officer, and for several months served both companies. Id. at 13. The relationship among the parties was maintained through the summer of 2015, until, according to Plaintiff, “Turvo and Pacific Sky's inability to produce a working model of its software became a growing concern for MegaCorp” and “MegaCorp elected to withdraw from the business relationship.” Id. at 19.

         Almost two years later, MegaCorp filed suit against Pacific Sky and Turvo, alleging that Turvo “continued to use MegaCorp's confidential and proprietary information” after MegaCorp withdrew from the relationship; that Turvo's software “contains MegaCorp's confidential and proprietary information”; that “Turvo software incorporates proprietary aspects of MegaCorp's Source Code”; and that Turvo is placing MegaCorp's confidential and propriety information into the hands of MegaCorp's competitors. Id. at 20. In addition, MegaCorp claims that Defendants' “employees were surreptitiously accessing” its system “to gain access to all the information they could.” Id. at 16.

         MegaCorp alleges six claims for relief: (1) breach of the NDA; (2) breach of the LOU; (3) misappropriation of trade secrets under Kentucky law; (4) tortious interference with a business relationship; (5) unjust enrichment; and (6) negligent misrepresentation. Id. at 21-25. Notably, MegaCorp has not alleged breach of the CSA. See id.

         In response to the Amended Complaint, Defendants Turvo and Pacific Sky filed the instant Motion to Transfer Venue, requesting that the Court transfer this action to the Northern District of California.[1] (Doc. # 20).

         II. ...

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