MEMORANDUM AND ORDER GRANTING MOTION TO DISMISS
ALLISON D. BURROUGHS, District Judge.
Plaintiff Fast Enterprises, LLC ("FAST") filed this action seeking to prevent Defendant Stephanie Pollack, in her capacity as Secretary and CEO of the Massachusetts Department of Transportation ("MassDOT"), from disclosing FAST's trade secrets. FAST submitted bid proposal documents that contain trade secrets in response to a Request for Proposals ("RFP") issued by the MassDOT Registry of Motor Vehicles ("RMV"). Some of FAST's competitors and a reporter for a local television station requested the FAST documents under the Massachusetts public records law, Mass. Gen. Laws ch. 4, § 7. Now before the Court is Pollack's motion to dismiss for lack of subject matter jurisdiction. [ECF No. 43]. For the reasons set forth below, the motion is granted.
FAST is a limited liability corporation organized under the laws of the State of New York, with a principal place of business in Centennial, Colorado. MassDOT is a political subdivision of the Commonwealth of Massachusetts, and has its principal office and place of business in Boston, Massachusetts.
FAST designs, installs, and implements integrated computer software systems used primarily by various governmental departments and agencies. The software system at issue in this case is called the "FAST DS-VS," which assists in the administration of driver and vehicle services for state motor vehicle agencies. On June 20, 2016, FAST submitted a bid proposal in response to the RMV's Division Core System Replacement Request for Proposals Bid Number BD-16-1030-OR100-OR011-00000007660.
On October 3, 2016, MassDOT sent FAST an email informing FAST that MassDOT had received a public records request for the FAST bid proposal documents. FAST's in-house counsel, David Bishop, responded to MassDOT, and an email exchange ensued in which Mr. Bishop expressed FAST's position that the bid documents could not be disclosed without redaction of the claimed trade secrets and confidential information, while MassDOT asserted that the unredacted records were subject to disclosure under the Massachusetts public records law, Mass. Gen. Laws ch. 4, § 7. FAST subsequently engaged litigation counsel, who continued to advocate against disclosure of the records. MassDOT agreed to wait until October 24, 2016, before releasing FAST's bid proposal documents.
FAST filed this lawsuit on October 24, 2016 [ECF No. 1] and moved for a preliminary injunction on November 14, 2016. [ECF No. 13].
FAST contends that the Court has subject matter jurisdiction over this case pursuant to the 2016 Federal Defend Trade Secrets Act ("DTSA"), 18 U.S.C. § 1836 et seq., which creates a federal cause of action for the misappropriation of trade secrets. Pollack asserts that the DTSA does not grant jurisdiction in these circumstances.
FAST argues that disclosure of the records at issue here would violate the DTSA. Under the Massachusetts public records law, documents must be disclosed unless they are "specifically or by necessary implication exempted from disclosure by statute," Mass. Gen. Laws ch. 4, § 7(26)(a). In FAST's view, the DTSA is a statute that exempts the documents from disclosure. FAST, however, does not assert that Massachusetts state law would have exempted the records from disclosure prior to the enactment of the DTSA, or that any other provision of Massachusetts law prevents the records from being disclosed.
Pollack replies by asserting that the disclosure of the records would be lawful in the absence of the DTSA, and thus the "otherwise lawful" language of the DTSA precludes jurisdiction. The Court notes that the "otherwise lawful" language applies only to the activities of governmental entities, not private parties, and thus it appears that Congress specifically intended to circumscribe the DTSA so it would not interfere with the policy choices made by state governments in regard to their own operations.
FAST argues that the legislative history behind the statutory scheme at issue indicates that Congress did not intend this result. The "otherwise lawful" language originated with the Economic Espionage Act (EEA) of 1996, Pub. L. No. 104-294, 110 Stat. 3488 (Oct. 11, 1996), which criminalized the theft or misappropriation of trade secrets. FAST points out that a Congressional report concerning this legislation explained that the provision was included to make clear that the EEA did not proscribe any "lawfully authorized investigative, protective, or intelligence activity," H.R. Rep. 104-788, at 14 (1996), and asserts that this means that only these specifically enumerated governmental activities are exempt from the scope of the law. Even aside from the fact that this requires the Court to go well beyond the statutory language, this interpretation strains the text of the report. The sentence cited by FAST is preceded by a more general statement that the EEA "does not prohibit, and is not to be deemed to impair, any otherwise lawful activity conducted by an agency or instrumentality of . . . a State."
FAST also notes that the "otherwise lawful activity" exemption applies only to the activities of a state, and argues that because the defendant is Pollack, not the state of Massachusetts, this case does not fall within the exemption. Again, because the DTSA was passed so recently, courts have not yet had the opportunity to weigh in on this question. "[T]he
Finally, FAST asserts that the purpose of the DTSA was to "provide a single, national standard for trade secret misappropriation with clear rules and predictability for everyone involved," H.R. Rep. No. 114-529, at 6 (2016), and notes that, to achieve the goal of uniformity, the DTSA was modeled on the Uniform Trade Secrets Act ("UTSA"), S. Rep. No. 114-220, at 3 (2016), which has been adopted by 48 states, but not Massachusetts. FAST contends throughout its brief that Pollack's assertion that the DTSA does not create a cause of action in this case is "absurd, illogical," and contrary to the Congressional intent in enacting the DTSA. Nonetheless, the exemption at issue here applies only to the actions of federal, state, and local government entities and it is entirely reasonable to read the statute as demonstrating that Congress did not intend for the DTSA to abrogate state sovereign immunity or to otherwise interfere with lawful policy decisions made by state legislatures concerning the activities of the state. Thus, based on the plain text of the DTSA and the claims advanced by FAST, the Court must conclude that FAST seeks to enjoin the "otherwise lawful" activity of the state of Massachusetts, and because the DTSA does not create a cause of action in such circumstances, the case is dismissed.
Although the Court fully sympathizes with FAST and cannot help but wonder why the state would require the disclosure of proprietary bid information given the impact that it could have on future bid solicitations, it is constrained by the applicable statutes. Ultimately, as the federal statute does not provide for a cause of action in these circumstances, this issue must be resolved by the state courts or the state legislature.
Accordingly, Pollack's motion to dismiss [ECF No. 43] is GRANTED.