Orbital Engineering v. Short Elliott Hendrickson
Orbital Engineering, Inc. v. Short Elliott Hendrickson, Inc., Douglas M. Cabak, and Daniel Messner
- Jeffrey Bryan
- 0:25-cv-02121
- U.S. District Court · District of Minnesota
- 15
In Orbital Engineering, Inc. v. Short Elliott Hendrickson, Inc., Douglas M. Cabak, and Daniel Messner, Judge Jeffrey M. Bryan allowed most of Orbital's claims to proceed — including trade secret theft and tortious interference — but dismissed the unfair competition count without prejudice because it either duplicated other claims or was barred by Minnesota's trade secrets law.
Engineering and professional services companies whose employees depart to join competitors, and those competitors who hire them; former employees who signed confidentiality agreements; plaintiffs seeking to bring unfair competition claims in Minnesota federal court alongside trade secrets claims.
What happened
Orbital Engineering, Inc. v. Short Elliott Hendrickson, Inc., Douglas M. Cabak, and Daniel Messner arises from allegations that a former Orbital manager, Cabak, stole confidential business information before leaving to build a competing division at SEH, a direct rival engineering firm, and that another former Orbital employee, Messner, helped divert a valuable customer away from Orbital to SEH. Orbital sued all three defendants for misappropriating trade secrets under both federal and Minnesota law, breaching employment contracts, tortiously interfering with Orbital's business relationships and contracts, and engaging in unfair competition. Defendants asked the court to dismiss every claim except the two breach-of-contract counts.
The court found that Orbital's complaint contained enough factual detail to allow the trade secret and tortious interference claims to survive. Specifically, Orbital described the types of confidential information allegedly taken — including project pricing models, cost estimation tools, billing rates, and a detailed project-tracking spreadsheet — and explained measures it took to protect that information, such as confidentiality agreements, employee handbook policies, password protections, and need-to-know access limits. On tortious interference, the court concluded those claims rested on more than just stolen trade secrets (they also involved improperly poaching employees and customers), so Minnesota's trade secrets statute did not wipe them out.
Judge Bryan granted the motion only as to Count VII, the unfair competition claim, dismissing it without prejudice (meaning Orbital could potentially refile if it can identify a proper legal basis). The court explained that Minnesota does not recognize a standalone unfair competition tort; to the extent the count was based on the same conduct as the tortious interference claims it was duplicative, and to the extent it was based on stolen trade secrets it was displaced by Minnesota's trade secrets law. The remaining counts — trade secret misappropriation (federal and state), breach of contract against Cabak and Messner, and both tortious interference claims — will proceed.
The detailed version
- Orbital Engineering, Inc. v. Short Elliott Hendrickson, Inc., Douglas M. Cabak, and Daniel Messner, File No. 25-CV-02121 (JMB/SGE)
- Jeffrey M. Bryan
Background
Orbital Engineering provides engineering services, including through an Electrical Distribution Services (EDS) division serving electric utility customers. Cabak was a former Orbital manager who allegedly downloaded confidential documents — including a 'Master Tracker' spreadsheet containing project budgets, timelines, and staffing data — before leaving to join SEH, a competitor, where he led a newly created 'Distribution Design' group. Messner, another former Orbital employee, was allegedly recruited away by SEH and helped divert an existing Orbital customer's business to SEH, costing Orbital hundreds of thousands of dollars in revenue.
Claims asserted by Orbital
- Count I: Misappropriation of trade secrets under the federal Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836 et seq. - Count II: Misappropriation of trade secrets under the Minnesota Uniform Trade Secrets Act (MUTSA), Minn. Stat. § 325C.01 et seq. - Count III: Breach of contract by Cabak - Count IV: Breach of contract by Messner - Count V: Tortious interference with existing and prospective business relations by all defendants - Count VI: Tortious interference with existing contractual relationships by SEH - Count VII: Unfair competition by all defendants
Defendants moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss all counts except III and IV.
Legal standard
On a Rule 12(b)(6) motion to dismiss, the court accepts all facts in the complaint as true and asks whether the plaintiff has stated a claim that is 'plausible on its face,' meaning the facts alleged allow a reasonable inference that the defendant is liable. The court draws all reasonable inferences in the plaintiff's favor but does not accept bare legal conclusions dressed up as facts.
Trade secret claims (Counts I and II — DENIED)
Both the DTSA and MUTSA require that the allegedly secret information (1) qualify as a trade secret, (2) have independent economic value from not being generally known, and (3) have been subject to reasonable protective measures by the owner. The court rejected defendants' argument that Orbital's allegations were too vague, distinguishing the case from Hot Stuff Foods, LLC v. Dornbach, 726 F. Supp. 2d 1038 (D. Minn. 2010), where the complaint made only conclusory statements. Here, Orbital identified specific categories of trade secrets (pricing models, cost estimation tools, project processes, billing rates), described a specific document taken (the Master Tracker), and alleged that defendants successfully used the stolen information to divert actual customer business — supporting an inference of real economic value. The court also found Orbital adequately pled reasonable protective measures: confidentiality agreements signed by both Cabak and Messner, employee handbook policies, need-to-know access controls, and technological safeguards such as passwords. The court cited Ahern Rentals, Inc. v. EquipmentShare.com, Inc., 59 F.4th 948 (8th Cir. 2023), Deluxe Fin. Servs., LLC v. Shaw, 2017 WL 3327570 (D. Minn.), and a prior Orbital Engineering case in federal court in Indiana as supporting authority.
Tortious interference claims (Counts V and VI — DENIED)
Defendants argued these claims were 'displaced' (i.e., preempted) by MUTSA, which replaces conflicting state tort remedies based on trade secret misappropriation. The court disagreed. MUTSA displaces only claims that are based solely on misappropriation of trade secrets. Here, Orbital's tortious interference claims rested on broader conduct — specifically, the wrongful poaching of employees who had valuable customer relationships and experience, which caused customer diversion independent of any stolen documents. This additional factual basis meant the claims were not displaced. The court cited TE Connectivity Networks, Inc. v. All Sys. Broadband, Inc., 2013 WL 6827348 (D. Minn.), and Cardiac Pacemakers, Inc. v. Aspen II Holding Co., 413 F. Supp. 2d 1016 (D. Minn. 2006).
Unfair competition claim (Count VII — GRANTED, dismissed without prejudice)
Minnesota does not recognize an independent tort of 'unfair competition.' See Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301 (Minn. Ct. App. 1987). The court analyzed Count VII two ways: (1) insofar as it alleged improper solicitation of employees and customers, it was duplicative of Counts V and VI; (2) insofar as it alleged misappropriation of proprietary information, it was displaced by MUTSA. Orbital argued it could plead unfair competition as an alternative theory, but the court found the complaint did not identify any independent underlying tort to support it. Dismissal was without prejudice, meaning Orbital could potentially seek leave to amend — though the court noted that any such request must be made by formal motion under the local rules and did not express a view on whether amendment would be appropriate.
Disposition
Defendants' Partial Motion to Dismiss is GRANTED IN PART and DENIED IN PART. Counts I, II, V, and VI survive. Count VII is dismissed without prejudice.
Reviewer note from the AI+
Read the full 15-page opinion on CourtListener, the free public archive maintained by the Free Law Project.