## Facts

- Windrock, Inc. sold portable analyzer devices that generated machine-condition output data and sold software that translated the raw output into readable information.
- Josh Kelley worked for Windrock as a software developer from 2007 to 2019 (including a period as an independent contractor) and later joined Resonance Systems, Inc. (RSI), a direct competitor.
- Windrock was a subsidiary of Dover Corporation and was related to Dover Energy Automation (DEA).
- In 2017, while Kelley was employed at Windrock, Windrock and Kelley executed a retention agreement (RA) intended to secure Kelley’s continued employment.
- Under the RA, the “Employer” agreed to provide Kelley with “Confidential Information,” and Kelley agreed not to disclose it to outsiders or use it for unauthorized purposes; the RA’s confidentiality duties were indefinite.
- The RA defined “the Company” as Windrock but did not define “Employer,” and it used “the Company” in some clauses and “Employer/Employee” in others. The RA was printed on DEA letterhead, referenced Dover entities, and was signed by DEA’s president, which became central to defendants’ argument about who could claim protection under the RA.
- When Kelley later transitioned to contractor status, he and Windrock also signed a mutual confidentiality/non-disclosure agreement (NDA) providing that Windrock would share confidential information and Kelley would not disclose or misuse it; the NDA’s confidentiality term was three years.
- Windrock alleged its software depended on proprietary “C-structures” and a proprietary data-indexing scheme, and that only someone familiar with those structures/scheme (or with access to Windrock’s source code) could decode and translate the analyzer output data.
- By 2021, RSI began demonstrating and advertising an ability to decode and translate Windrock’s output data. Windrock alleged that, after ruling out other explanations, it concluded Kelley used confidential information from his Windrock work to help RSI translate the data.
- Windrock sued Kelley and RSI, asserting federal and state trade-secret claims (DTSA and TUTSA) and several contract- and interference-related claims, including breach of the RA and NDA by Kelley and procurement/interference claims against RSI.
- Defendants moved to dismiss portions of the amended complaint under Rule 12(b)(6), including challenges aimed at RSI-related procurement/interference counts and the RA-based breach theory.

## Issues

1. Whether Windrock plausibly alleged, at the pleading stage, that the 2017 retention agreement protected Windrock’s confidential information notwithstanding the RA’s undefined use of “Employer,” its DEA letterhead, and defendants’ expressio unius argument that “Employer” referred to a different Dover entity.
2. Whether Windrock stated plausible Tennessee-law claims against RSI for statutory procurement of breach of contract and intentional interference with contractual relations based on the alleged conduct.
3. Whether the challenged counts should be dismissed under Rule 12(b)(6) while allowing the trade-secret and core contract claims to proceed.

## Decision

- The court granted the motion to dismiss as to Count IV (statutory procurement of breach of contract against RSI) and Count V (intentional interference with contractual relations against RSI); those counts were dismissed.
- The court denied dismissal of the RA-based breach claim against Kelley at the pleading stage, concluding Windrock plausibly alleged the RA covered Windrock’s confidential information despite the drafting irregularities defendants relied on.
- The court allowed the remaining trade-secret and contract claims (including DTSA, TUTSA, and the direct contract claims not dismissed) to proceed.

## Legal Principles

- On a Rule 12(b)(6) motion, the court accepts well-pleaded factual allegations as true and draws reasonable inferences in the plaintiff’s favor; dismissal is proper only when the complaint fails to state a plausible claim.
- Contract interpretation at the pleading stage generally does not permit dismissal where the agreement’s text and context support more than one reasonable reading and the plaintiff’s reading is plausible.
- A drafting canon such as expressio unius est exclusio alterius does not require adopting a single reading on the pleadings when the contract’s language, structure, and surrounding context plausibly support a different construction.
- A plaintiff can plead breach of a confidentiality agreement by alleging the existence of confidentiality duties, access to confidential information, and facts supporting a reasonable inference of unauthorized use or disclosure.
- Tennessee procurement-of-breach and interference-with-contract theories require allegations that, beyond the plaintiff’s own breach allegations, plausibly connect the third party to actionable inducement or interference; conclusory or duplicative pleading may warrant dismissal of those tort-based counts.

## Conclusion

The Eastern District of Tennessee held that Windrock plausibly alleged its retention agreement with Kelley protected Windrock’s confidential information even though the document used the undefined term “Employer” and appeared on a related entity’s letterhead, so the RA-based breach claim (and the trade-secret and core contract claims) survived Rule 12(b)(6), but the court dismissed Windrock’s procurement-of-breach and intentional-interference counts against RSI.


Windrock, Inc. v. Resonance Systems, Inc., No. 3:21-CV-288, 2022 WL 202891 (2022)