In a decision and order dated May 10, 2022, in Sure, Inc. vs. Boost Ins. United States, Inc., New York Slip 2022. Op. 31523(U), Judge Joel M. Cohen denied the defendant’s motion to dismiss a claim for misappropriation of confidential information. The Court explained:

Here, giving the complaint a liberal interpretation (see Leon v Martinez, 84 NY2d 83, 87-88, 638 NE2d 511, 614 NYS2d 972 [1994]), Sure adequately alleges a cause of action for misappropriation of confidential information and/or trade secrets. First, Sure sufficiently alleges that while Maffeo served on Sure’s board of directors, he received Sure’s proprietary backend system and software, in addition to its customer lists, partner lists, its business model and business plan (NYSCEF Doc #15, Complaint ¶¶ 33-40, 42-43, 51-59). Sure also alleges that its new backend system, software, customer lists, partner lists, strategy and business model were developed at considerable effort and expense (id. ¶¶ 3-4, 16 -22). Sure further alleges that it took steps to maintain confidentiality, including requiring third parties to sign nondisclosure agreements, adopting policies and procedures for employees, and employing strong security and confidentiality measures. on computer systems (NYSCEF Doc #15, Complaint ¶ 23).

Second, Sure sufficiently alleges that Boost acquired the confidential information through improper means, namely through Maffeo’s use of information provided to him in his capacity as a Sure board member (see Bender Ins. Agency v. Treiber Ins. Agency, 283 AD2d 448, 450, 729 NYS2d 142 [2d Dept 2001]; Taro Maintenance Corp. against Culkin, 267 AD2d 431, 433, 700 NYS2d 490 [2d Dept 1999]). Where a breach of fiduciary duty is established, “‘third parties who knowingly participated in the breach may be held liable'” (Alpha Funding Group, Inc. v. Aspen Funding LLC, 17 Misc 3d 1126[A]2007 NY Slip Op 52160[U]*6 [Sup Ct, Kings County 2007]citing Schneider Leasing Plus v Stallone, 172 AD2d 739, 741, 569 NYS2d 126 [2d Dept 1991]appeal dismissed 78 NY2d 1043, 582 NE2d 594, 576 NYS2d 211 [1991]reconsideration refused 79 NY2d 823, 588 NE2d 100, 580 NYS2d 202 [1991]). According to Sure’s allegations, Boost directly copied Sure’s backend software system, products and business model (id. ¶¶ 69-70, 71-75). Sure alleges that Boost executives and members of its board of directors – including Maffeo and Andy Lerner – knew that Boost (via Maffeo) had wrongly obtained Sure’s confidential information (id. ¶¶ 48, 55, 83 ).

Third, Sure alleges that Boost used its confidential information and/or trade secrets. After reviewing Boost’s website in August 2019, Slavin allegedly discovered that Boost had pivoted its business model to turn Boost into a “carbon copy” of Sure (cf. Meer Enters., LLC v Kocak, 173 AD3d 629, 630 , 105 NYS3d 415 [1st Dept 2019]), and attempted to steal from one of his longtime business associates using this information (NYSCEF Doc #15, Complaint ¶¶ 69-70, 71-75). Considering Sure’s factual allegations to be true, Boost is not entitled to the dismissal of the first claim.