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CPI Card Group, Inc. v. Dwyer

United States District Court, D. Minnesota

April 13, 2018

CPI Card Group, Inc., et al., Plaintiffs,
v.
John Dwyer, et al., Defendants.

          Karen McDaniel for Plaintiffs.

          Janet Olawsky for Defendant MultiPacking Solutions, Inc.

          Richard Voelbel for Defendant John Dwyer.

          ORDER

          FRANKLIN L. NOEL UNITED STATES MAGISTRATE JUDGE.

         THIS MATTER came before the undersigned United States Magistrate Judge on March 12, 2018, on Defendants Multi Packaging Solutions, Inc. (“MPS”), Ken Glinert, John Searfoss (collectively the “MPS Defendants”), and John Dwyer's motions to amend their answers to add an affirmative defense (ECF Nos. 246 and 252), and Plaintiffs CPI Card Group, Inc. and CPI Card Group-Minnesota's (collectively “CPI”) motion for leave to file a second amended complaint (ECF No. 258). For the reasons set forth below, Defendants' motions to amend (ECF Nos. 246 and 252) are GRANTED. CPI's motion for leave to file a second amended complaint (ECF No. 258) is GRANTED in part, and DENIED in part.

         I. SUMMARY OF FACTS

         On September 8, 2017, CPI filed an Amended Complaint alleging, amongst others, one count of misappropriation of trade secrets in violation of the Defend Trade Secrets Act (Count I), one count of fraudulent inducement of the amendment (Count III), one count of unfair competition (Count IX), and one count of civil conspiracy (Count X).[1] See generally, ECF No. 11. On September 21, 2017, MPS and Searfoss moved to dismiss counts III and IX of the Amended Complaint. ECF No. 48. On November 7, 2017, CPI moved for a preliminary injunction against the MPS Defendants and Dwyer. ECF No. 143. The parties conducted limited expedited discovery in connection with CPI's motion for a preliminary injunction. On December 29, 2017, the Court granted CPI's motion for a preliminary injunction, and granted in part and denied in part the Defendants' motion for partial dismissal. See ECF No. 213. In its Order, the Court dismissed without prejudice Count III of the Amended Complaint, but denied the motion to dismiss with regard to Count IX. Id. at 55. The Court found that Count III did not contain any factual assertions that supported a claim of fraudulent inducement against MPS and Searfoss, and that CPI's allegations of a civil conspiracy did not save its fraud claim under Federal Rule of Civil Procedure Rule 9(b). Id. at 49. Specifically, the Court found that, with regard to count III, the Amended Complaint was devoid of any ‘who, what, where, when, and how' of MPS and Searfoss' alleged fraudulent inducement. Id. The Court noted, however, that CPI was allowed to amend the Amended Complaint to add sufficient facts to support its claim under Count III, and add Defendant Ken Glinert. Id. at 50 n.16, and 55.

         III. CONCLUSION OF LAW

         A. The MPS Defendants and John Dwyer's Motion to Amend their Answer.

         The MPS Defendants and John Dwyer ask the Court for leave to amend their first amended answers to add an affirmative defense. See ECF Nos. 246 and 252. Specifically, they seek to add the following paragraph to their Answers:

Plaintiffs are barred from recovering exemplary damages or attorneys' fees under the Defend Trade Secrets Act because of their failure to comply with the mandatory notice requirements under the Act.

See ECF No. 266 at 1. The Defendants argue that this amendment would clarify their position that CPI is precluded from seeking exemplary damages and attorneys' fees under the Defend Trade Secrets Act. See Id. at 4; ECF No. 254. CPI takes the position that all amendments should be permitted at this stage, and does not oppose this request. See ECF No. 270. However, if the Court does not uniformly grant the parties' motions to amend, CPI argues that the Defendants' motion to amend should be denied because the amendment is futile. Id.

         Because the parties, for the most part, are in agreement that the Defendants' motions to amend should be granted, this Court grants the MPS Defendants and John Dwyer's motion to amend their answers to add an affirmative.

         B. CPI's Motion to File a ...


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