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`Plaintiff,
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`
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`Index No. 651828/2023
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`Hon. Jennifer G. Schecter
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`
`
`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF NEW YORK
`----------------------------------------------------------------------x
`VALKYRIE AI LLC,
`:
`d/b/a RECLASSIFY AI LLC
`:
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`- against -
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`PRICEWATERHOUSECOOPERS US LLC,
`SAGENCE, INC., and PIERLUIGI
`MIRAGLIA
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`Defendants.
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`----------------------------------------------------------------------x
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`REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF MOTION
`TO DISMISS THE AMENDED COMPLAINT
`
`
`
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`WILK AUSLANDER LLP
`Stuart M. Riback
`Scott Watnik
`825 Eighth Avenue – Suite 2900
`New York, New York 10019
`(212) 981-2300
`sriback@wilkauslander.com
`swatnik@wilkauslander.com
`
`Attorneys for Defendants Sagence, Inc. and
`Pierluigi Miaglia
`
`
`
`Of Counsel:
`
`TAFT, STETTINIUS & HOLLISTER, LLP
`Marcus S. Harris
`Jillian S. Cole
`111 East Wacker Drive, Suite 2600
`Chicago, Illinois 60601
`(312) 527-4000
`mharris@taftlaw.com
`jcole@taftlaw.com
`
`KAUFMAN BORGEEST & RYAN LLP
`Dianna D. McCarthy
`875 Third Avenue, Fifth Floor
`New York, New York 10022
`(212) 980-9600
`dmccarthy@kbrlaw.com
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`TABLE OF CONTENTS
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`TABLE OF AUTHORITIES ........................................................................................................... i
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`INTRODUCTION .......................................................................................................................... 1
`
`ARGUMENT .................................................................................................................................. 2
`
`I.
`
`II.
`
`III.
`
`The conclusory Brown Affidavit does not save Reclassify’s claim for
`misappropriation of trade secrets (Count 8). ....................................................................... 2
`
`Reclassify’s breach of contract claim (Count 2) fails based on the Trade
`Secrets Clause and the Non-Competition and Non-Solicitation Clause. ............................ 3
`
`Reclassify’s unfair competition claim (Count 3) must be dismissed as
`duplicative of its misappropriation of trade secrets and breach of contract
`claims, and for failure to plead special damages. ............................................................... 5
`
`A.
`
`B.
`
`C.
`
`The unfair competition claim must be dismissed because the
`underlying claims for misappropriation of trade secrets and breach
`of contract premised on the same conduct also fail. ............................................... 5
`
`The unfair competition claim must be dismissed as duplicative of
`the misappropriation of trade secrets and breach of contract claims
`even if those claims survive. ................................................................................... 5
`
`The unfair competition claim should also be dismissed because
`Reclassify fails to allege special damages. ............................................................. 7
`
`IV. Miraglia’s alleged mentorship of Brown and status as an advisory board
`member do not give rise to a fiduciary duty, such that Reclassify’s claim for
`breach of fiduciary duty (Count 6) and aiding and abetting (Count 7) must
`be dismissed. ....................................................................................................................... 8
`
`A.
`
`B.
`
`C.
`
`Advisory board membership—even assuming Reclassify pleaded
`it—does not give rise to a fiduciary duty, and Reclassify cites no
`authority holding that it does. ................................................................................. 9
`
`Miraglia’s alleged “mentorship” of Brown does not support a
`fiduciary duty, and Reclassify cites no authority holding otherwise. ................... 10
`
`Reclassify’s aiding and abetting claim falls along with its breach of
`fiduciary duty claim. ............................................................................................. 11
`
`Reclassify’s fraud in the inducement claim (Count 3) fails because
`Reclassify does not identify what misrepresentation or omission the claim
`relies upon. ........................................................................................................................ 11
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`V.
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`VI.
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`In the absence of intent to harm, Reclassify’s tortious interference with
`prospective contractual relations claim (Count 5) fails. ................................................... 12
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`VII. Reclassify is not entitled to injunctive relief (Counts 9 and 10). ...................................... 12
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`VIII. Leave to amend should be denied. .................................................................................... 13
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`CONCLUSION ............................................................................................................................. 13
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`Cases
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`TABLE OF AUTHORITIES
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`
`
`Page(s)
`
`Ashland Mgmt. Inc. v. Janien,
`82 N.Y.2d 395 (1993) ................................................................................................................2
`
`Carvel Corp. v. Noonan,
`3 N.Y.3d 182 (2004) ................................................................................................................12
`
`Clark-Fitzpatrick, Inc. v. Long Island R. Co.,
`70 N.Y.2d 382 (1987) ................................................................................................................6
`
`Coca-Cola N. Am. v. Crawley Juice,
`2011 WL 1882845 (E.D.N.Y. May 17, 2011) ...........................................................................8
`
`People ex rel. Cuomo v. Coventry First LLC,
`13 N.Y.3d 108 (2009) ................................................................................................................8
`
`DFP Mfg. Corp. v. Northrop Grumman Corp.,
`No. 97-CV-4494, 1999 WL 33458384 (E.D.N.Y. Mar. 23, 1999) ..........................................10
`
`Dreamco Dev. Corp. v. Empire State Dev. Corp.,
`191 A.D.3d 1444 (4th Dep’t 2021) ..........................................................................................11
`
`eCommission Sols., LLC v. CTS Holdings Inc.,
`860 F. App’x 758 (2d Cir. 2019) ...............................................................................................8
`
`Hogue v. Vill. of Dering Harbor,
`199 A.D.3d 900 (2d Dep’t 2021) .............................................................................................12
`
`Janus et Cie v. Kahnke,
`No. 12 CIV. 7201 WHP, 2013 WL 5405543 (S.D.N.Y. Aug. 29, 2013) ................................12
`
`Linkable Networks, Inc. v. Mastercard Inc.,
`184 A.D.3d 418 (1st Dep’t 2020) ..............................................................................................6
`
`Mastercraft Decorators, Inc. v. Orlando,
`356 F. Supp. 3d 259 (W.D.N.Y. 2018) ......................................................................................3
`
`Megaris Furs, Inc. v. Gimbel Bros.,
`172 A.D.2d 209 (1st Dep’t 1991) ......................................................................................11, 12
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`Palmetto Partners, L.P. v. AJW Qualified Partners, LLC,
`83 A.D.3d 804 (2d Dep’t 2011) ...............................................................................................10
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`i
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`Private One of New York, LLC v. JMRL Sales & Serv., Inc.,
`873 N.Y.S.2d 236 (Sup. Ct. Kings Cty. 2008).......................................................................7, 8
`
`SA Luxury Expeditions, LLC v. Schleien,
`No. 22-CV-3825 (VEC), 2022 WL 3718310 (S.D.N.Y. Aug. 29, 2022) ..............................7, 8
`
`Saulsbury v. Durfee,
`201 A.D.3d 1318 (4th Dep’t 2022) ........................................................................................6, 7
`
`Swersky v. Dreyer & Traub,
`219 A.D.2d 321 (1st Dep’t 1996) ............................................................................................12
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`Uni-Sys., LLC v. United States Tennis Ass’n, Inc.,
`350 F. Supp. 3d 143 (E.D.N.Y. 2018) .......................................................................................6
`
`Waste Distillation Tech., Inc. v. Blasland & Bouck Engineers, P.C.,
`136 A.D.2d 633 (2d Dep’t 1988) ...............................................................................................7
`
`WIT Holding Corp. v. Klein,
`282 A.D.2d 527 (2d Dep’t 2001) .........................................................................................8, 10
`
`Other Authorities
`
`NY CPLR 3016(b) .........................................................................................................................11
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`NY CPLR 3025(b) .........................................................................................................................13
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`INTRODUCTION
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`The claims Plaintiff Reclassify AI LLC (“Reclassify”) asserts against Defendants Sagence,
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`Inc. (“Sagence”) and Pierluigi Miraglia should be dismissed with prejudice. Reclassify’s attempt
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`to cure the deficient allegations of its Amended Complaint (“Complaint”) with an affidavit from
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`its president, Fatima Brown, should be rejected. The Brown affidavit, which strings together jargon
`
`and buzzwords to describe Reclassify’s purported “unique approach” does not salvage Reclassify’s
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`claim for misappropriation of trade secrets (Count 8). In the absence of a protectable trade secret,
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`the only potential basis for Reclassify’s breach of contract claim (Count 2), is the contractual
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`prohibition against client solicitation. But Reclassify’s claim that Sagence was “working with
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`Morgan Stanley” and told Reclassify it did not wish to damage the client relationship, do not allege
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`solicitation, and Reclassify therefore fails to state a claim for breach of contract.
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`Reclassify’s other claims likewise fail. Its unfair competition claim (Count 1) is duplicative
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`of its misappropriation and contract claims, regardless of whether those claims are dismissed. Its
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`conclusory allegations about Miraglia’s supposed membership on an advisory board—the details
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`of which are entirely opaque—provide no basis to assert a claim for breach of fiduciary duty
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`(Count 6). Further, rather than alleging that she placed significant trust in Miraglia because of his
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`expertise, Brown doubles down in her affidavit on allegations that Miraglia lacked any knowledge
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`of AI and required constant training and coaching.
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`For the reasons stated herein, Reclassify’s claims for fraud in the inducement (Count 3)
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`and tortious interference with prospective contractual relations (Count 5) also fail, and Reclassify
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`is not entitled to injunctive relief (Counts 9 and 10). The Complaint should be dismissed.1
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`1 To the extent applicable, Sagence and Miraglia incorporate by reference those arguments raised in the reply
`filed by Defendant PricewaterhouseCoopers LLP (“PwC”) in support of its motion to dismiss.
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`1
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`I.
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`ARGUMENT
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`The conclusory Brown Affidavit does not save Reclassify’s claim
`misappropriation of trade secrets (Count 8).
`
`for
`
`Reclassify claims that it has adequately alleged the existence of a trade secret in Paragraphs
`
`14 and 15 of the Complaint, and to the extent it has not, the newly submitted Brown Affidavit
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`cures any defects. (See Resp. at 17-21.) Even when the Brown Affidavit is considered, Reclassify
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`fails to allege a protectable trade secret and therefore does not state a claim for misappropriation.
`
`As Sagence and Miraglia argued in their motion to dismiss (the “Motion”), Reclassify’s
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`conclusory allegations that it developed a “non-standard” or “novel software approach,” as claimed
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`in Paragraphs 14 and 15 of the Complaint, are insufficient to establish the existence of a protectable
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`trade secret. (Mot. at 6-8.)2 The Brown Affidavit does not compel a different conclusion. In an
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`attempt to explain the technology at issue, Brown repeats Paragraph 14 of the Complaint and
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`purports to add unintelligible details about Reclassify’s “unique approach to Metadata
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`management” and “unique approach to indexing the graph for use in machine learning.” But the
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`Affidavit does not coherently explain what these “unique approaches” do, why they are valuable,
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`or how they give Reclassify “an opportunity to obtain an advantage over competitors,” which is
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`essential to pleading the existence of a trade secret. See Ashland Mgmt. Inc. v. Janien, 82 N.Y.2d
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`395, 407 (1993) (quoting Rstmt. (First) of Torts § 757, cmt. b)).
`
`In attempting to address the factors for trade secret protection set forth in Section 757 of
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`the Restatement, the Brown Affidavit similarly falls short. Brown states in a conclusory fashion
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`that Reclassify’s methods are “unique in the industry,” valuable, and “difficult if not impossible”
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`
`2 Reclassify repeatedly claims that in moving to dismiss, Sagence and Miraglia ignored various allegations
`of the Complaint. (See Resp. at 7, 9-10, 18.) Reclassify’s claims are based upon careless reading of the Motion and
`should be rejected. For example, Reclassify’s claim that Sagence and Miraglia “ignored” Paragraphs 14 and 15 is
`baseless, as the Motion specifically addresses the language of the Complaint contained in those paragraphs. (See Mot.
`at 7-8.)
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`2
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`to recreate, and that these “secret processes” are protected by NDAs and industry-standard
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`encryption and password protection. (Brown Aff. ¶¶ 5-7; see also Resp. at 20 (claiming that
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`Reclassify’s technology “is not readily available for duplication by anyone without towering
`
`intelligence”)). General allegations such as these do not save Reclassify’s claim. See Mastercraft
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`Decorators, Inc. v. Orlando, 356 F. Supp. 3d 259, 272 (W.D.N.Y. 2018) (dismissing
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`misappropriation of trade secrets claim based on conclusory allegations that plaintiff’s information
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`was not “generally available” to the public, identified as confidential in an employee handbook,
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`and gave plaintiff a “commercial advantage”). Reclassify’s claim for misappropriation of trade
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`secrets should accordingly be dismissed.3
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`II.
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`Reclassify’s breach of contract claim (Count 2) fails based on the Trade Secrets
`Clause and the Non-Competition and Non-Solicitation Clause.
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`As set forth in the Motion, even assuming the alleged breach is based on the Trade Secrets
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`Clause contained in the Consultant NDA or the Non-Competition and Non-Solicitation Clause
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`contained in the Subcontractor Agreement—the only two contractual provisions potentially at
`
`issue here—Reclassify’s contract claim fails. (See Compl. ¶¶ 32-34; Mot. Ex. B.) Reclassify
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`contends that its breach claim based on the Trade Secrets Clause survives along with its
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`misappropriation claim, and that Sagence must have solicited Morgan Stanley because it wanted
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`to continue its working relationship with Morgan Stanley. Both arguments are without merit.
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`As an initial matter, Reclassify does not dispute that it cannot state a claim for breach of
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`contract based on the Trade Secrets clause where it fails to allege a protectable trade secret.
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`Because Reclassify has failed to allege a protectable trade secret, any breach of contract claim
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`based on the Trade Secrets Clause must also be dismissed.
`
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`3 Sagence and Miraglia incorporated by reference all of PwC’s applicable arguments in support of dismissal.
`(See Mot. at 1 n.1.). The element of misappropriation is contested for the reasons stated in PwC’s motion. (See PwC
`Mot. to Dismiss at 11 & n.5.)
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`3
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`As to the Non-Competition and Non-Solicitation Clause, Reclassify does not dispute that
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`the Complaint fails to state a claim for violation of Section 10.2, which prohibits Sagence from
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`soliciting Reclassify employees or independent contractors. Instead, Reclassify appears to rely
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`exclusively on Section 10.1, which prohibits Sagence from soliciting Reclassify’s clients “directly
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`or indirectly.” (See Comp. ¶ 34.) Reclassify’s sole argument is that Sagence solicited Morgan
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`Stanley, in violation of Section 10.1, because Sagence was “working with Morgan Stanley to
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`ensure there was no interruption.” (Resp. at 8.) As alleged in the Complaint, Sagence was retained
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`by Reclassify as an independent contractor on the LCD Innovation Ontologies Project (the “LCD
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`Project”) for Morgan Stanley, which led to the development of a working relationship between
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`Sagence and Morgan Stanley. That Sagence was working with Morgan Stanley, however, does not
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`reflect that Sagence was soliciting Morgan Stanley.
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`Reclassify alleges that after Sagence announced that it was being acquired by PwC,
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`Sagence’s Larry Kolek told Reclassify’s Brown that Sagence did not want to “damage the
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`relationship with the client and/or derail the project.” (Id. (quoting Compl. ¶ 45).) This too fails to
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`demonstrate solicitation. Specifically, Sagence’s desire to continue and protect the parties’ shared
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`relationship with Morgan Stanley—and its communication of that goal to Reclassify—does not
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`demonstrate any effort to “solicit clients directly or indirectly” from Reclassify, as prohibited
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`under Section 10.1. Nor does it show that Sagence was “working with Morgan Stanley” to solicit
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`its business, as Reclassify claims. If anything, Paragraph 45 demonstrates that Sagence and
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`Reclassify were in discussion about the future of the LCD Project after PwC’s acquisition of
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`Sagence. Indeed, Sagence urged Reclassify to enter into a “Joint Business Relationship” agreement
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`with PwC and to continue its involvement in the LCD Project. (See Compl. ¶¶ 51, 54.) Simply put,
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`Reclassify does not plead solicitation, and without solicitation, there can be no claim for breach of
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`contract. This claim should accordingly be dismissed.
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`III. Reclassify’s unfair competition claim (Count 3) must be dismissed as duplicative of
`its misappropriation of trade secrets and breach of contract claims, and for failure to
`plead special damages.
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`In moving to dismiss, Sagence and Miraglia demonstrated that Reclassify’s unfair
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`competition claim must be dismissed as duplicative of the underlying trade secrets and contract
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`claims, regardless of whether those claims fail. Reclassify argues that its unfair competition claim
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`should only be dismissed as duplicative if the underlying claims fail, and that dismissal is not
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`warranted because its breach of contract claim is broader than the unfair competition claim.
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`Reclassify is wrong on both fronts. The claim should also be dismissed for failure to plead special
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`damages.
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`A.
`
`The unfair competition claim must be dismissed because the underlying claims
`for misappropriation of trade secrets and breach of contract premised on the
`same conduct also fail.
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`As set forth above, Reclassify fails to state a claim for misappropriation of trade secrets
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`and breach of contract. There is no dispute that to the extent that these underlying claims do not
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`survive dismissal, any unfair competition claim premised on the same conduct must likewise fail.
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`(See Resp. at 4-6.)
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`B.
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`The unfair competition claim must be dismissed as duplicative of the
`misappropriation of trade secrets and breach of contract claims even if those
`claims survive.
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`Even if the underlying misappropriation and breach of contract claims survive, Reclassify’s
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`duplicative unfair competition claim must be still dismissed. Reclassify does not address authority
`
`cited in the Motion establishing that an unfair competition claim will be dismissed as duplicative
`
`of an underlying misappropriation of trade secrets claim premised on the same conduct, even
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`where the trade secret claim survives. (See Mot. at 11 (citing NYWC, Inc. v. Pro Beauty Concepts,
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`Inc., 997 N.Y.S.2d 99 (Sup. Ct. Queens Cty. 2014) (allowing trade secrets claim to proceed but
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`dismissing unfair competition claim “as duplicative of the cause for misappropriation of trade
`
`secrets”)). A cause of action for unfair competition is not available where, as here, it is premised
`
`on the same underlying conduct as a tort or contract claim. See also Uni-Sys., LLC v. United States
`
`Tennis Ass’n, Inc., 350 F. Supp. 3d 143, 179 (E.D.N.Y. 2018) (dismissing unfair competition claim
`
`that was “premised on the same allegations as [plaintiff’s] trade secrets claim and fails to plead
`
`any additional conduct,” even where underlying misappropriation claim survived dismissal). Here,
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`Reclassify’s unfair competition claim is premised, in part, on Sagence’s allegedly inducing
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`Miraglia to “breach a confidentiality agreement and disclose privileged information,” specifically,
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`trade secrets protected under the Consultant NDA. (See Compl. ¶ 33, 75.) To the extent
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`Reclassify’s unfair competition claim duplicates its common law misappropriation of trade secrets
`
`claim, and is premised on the same conduct, it should be dismissed as duplicative.
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`Reclassify’s unfair competition claim should also be dismissed as duplicative of its breach
`
`of contract claim against Sagence and Miraglia because it is “predicated on the same conduct
`
`purportedly prohibited by the contract.” Saulsbury v. Durfee, 201 A.D.3d 1318, 1323 (4th Dep’t
`
`2022); see also Linkable Networks, Inc. v. Mastercard Inc., 184 A.D.3d 418 (1st Dep’t 2020)
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`(dismissing unfair competition claim based on alleged conduct proscribed by contract); Clark-
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`Fitzpatrick, Inc. v. Long Island R. Co., 70 N.Y.2d 382, 388 (1987) (“The existence of a valid and
`
`enforceable written contract governing a particular subject matter ordinarily precludes recovery in
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`quasi contract for events arising out of the same subject matter.”)
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`Reclassify asserts that the unfair competition claim is not duplicative of the contract claim
`
`because “the breach of contract claim is based not only on the violation of the NDA, but also of
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`the Non-Compete.” (Resp. at 4-5.) This argument is a non-starter. To the extent the breach of
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`contract claim is broader than the unfair competition claim, it encompasses that claim. Moreover,
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`the language of the unfair competition claim makes clear that it is premised on the Consultant
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`NDA and Subcontractor Agreement. In support of its unfair competition claim, Reclassify alleges:
`
`(1) that Miraglia was induced “to breach a confidentiality agreement and disclose privileged
`
`information,” which was protected under the Consultant NDA; (2) that it had a “valid agreement
`
`to refrain from unfairly competing against Plaintiff”; and (3) that it was damaged “as a direct and
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`proximate result of Defendants’ breaches of the agreements.” (See Compl. ¶¶ 75-79.) Even
`
`assuming the breach of contract claim survives dismissal, it should be dismissed as duplicative
`
`because it is “predicated on the same conduct purportedly prohibited by the contract.” Saulsbury,
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`201 A.D.3d at 1323.
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`C.
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`The unfair competition claim should also be dismissed because Reclassify fails
`to allege special damages.
`
`In addition, dismissal of this claim is also warranted based on Reclassify’s failure to plead
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`special damages. New York courts have routinely required special damages to be pleaded as part
`
`of an unfair competition claim. See Waste Distillation Tech., Inc. v. Blasland & Bouck Engineers,
`
`P.C., 136 A.D.2d 633, 634 (2d Dep’t 1988); Private One of New York, LLC v. JMRL Sales & Serv.,
`
`Inc., 873 N.Y.S.2d 236 (Sup. Ct. Kings Cty. 2008). Special damages encompass “direct financial
`
`loss, lost dealings, or an accounting of the profits caused by the anticompetitive acts at issue.” SA
`
`Luxury Expeditions, LLC v. Schleien, No. 22-CV-3825 (VEC), 2022 WL 3718310, at *4 (S.D.N.Y.
`
`Aug. 29, 2022).
`
`Reclassify argues, without any citation to authority, that a plaintiff need only plead special
`
`damages for unfair competition claims based on a “business defamation theory,” but cites no
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`authority in support of this proposition. Indeed, courts applying New York law have required
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`special damages in unfair competition cases under a wide variety of circumstances, not limited to
`
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`defamation. See Private One, 873 N.Y.S.2d 236 (dismissing unfair competition counter claim
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`based on attempts to stop competitor from selling buses and to operate in the same market in part
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`because counterclaimant failed to allege special damages); see also SA Luxury, 2022 WL 3718310,
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`at *4 (dismissing unfair competition claim based on false leads and fraudulent clicks on
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`advertisements for failure to plead special damages); Coca-Cola N. Am. v. Crawley Juice, Inc.,
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`No. 09 CV 3259 JG RML, 2011 WL 1882845, at *6 (E.D.N.Y. May 17, 2011) (requiring special
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`damages in unfair competition claim based on various non-defamatory conduct); eCommission
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`Sols., LLC v. CTS Holdings Inc., 860 F. App’x 758, 760 (2d Cir. 2019) (requiring special damages
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`in unfair competition claim based on defendant’s use of pricing and customer list information).
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`Here, Reclassify fails to allege special damages or provide any authority for its claim that
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`they are not required. The Complaint is devoid of any allegations of direct financial loss or lost
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`dealings as a result of Sagence and Miraglia’s conduct, except the most conclusory allegation of
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`“substantial economic damages.” (See Compl. ¶ 79.) The unfair competition claim should be
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`dismissed for this additional reason.
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`IV. Miraglia’s alleged mentorship of Brown and status as an advisory board member do
`not give rise to a fiduciary duty, such that Reclassify’s claim for breach of fiduciary
`duty (Count 6) and aiding and abetting (Count 7) must be dismissed.
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`Contrary to Reclassify’s argument, neither Miraglia’s supposed role as an advisory board
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`member nor his “mentorship” of Brown give rise to a fiduciary duty. First and foremost, a fiduciary
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`duty exists only when a person places a high level of confidence and reliance in another, who
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`exercises dominance and control over that person. People ex rel. Cuomo v. Coventry First LLC,
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`13 N.Y.3d 108, 115 (2009). Courts look to whether one party “reposes confidence in another and
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`reasonably relies on the other’s superior expertise or knowledge.” WIT Holding Corp. v. Klein,
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`282 A.D.2d 527, 529 (2d Dep’t 2001). No such allegations of trust, control, or reliance on
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`Miraglia’s professed expertise exist in the Complaint. To the contrary, Brown avers the opposite—
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`8
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`that Miraglia lacked an understanding of “practical implementation skills and relevant semantic
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`AI experience” and required “constant meetings and training, and real-time coaching.” (See Brown
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`Aff. ¶ 12; see also Compl. ¶¶ 19, 37.) Reclassify cannot have it both ways.
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`A.
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`Advisory board membership—even assuming Reclassify pleaded it—does not
`give rise to a fiduciary duty, and Reclassify cites no authority holding that it
`does.
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`Miraglia’s purported membership on an advisory board does not give rise to a fiduciary
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`duty. First, the Complaint does not even allege that Miraglia accepted a seat on or participated in
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`advisory board activities, but instead claims that “from 2022 onward, Miraglia and Brown had
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`one-on-one bi-weekly ‘mentoring sessions’ as well as ad hoc meetings” where he and Brown
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`discussed various aspects of Reclassify’s business. (Id.) Reclassify has not alleged that Miraglia
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`was actually an advisory board member, or entered into any agreement to serve as one. It therefore
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`cannot state a claim based on his purported advisory board membership.
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`Second, Reclassify cites to no authority—and certainly none addressing the law of
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`corporations and limited liability companies in New York—regarding so-called “advisory boards”
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`or establishing that advisory board membership establishes a fiduciary duty akin to those owed by
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`directors and officers. Nor does Reclassify cite to any operating or other agreement explaining
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`what the advisory board is, or whether its members are considered fiduciaries. There is simply no
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`support for Reclassify’s argument that advisory board membership entails a fiduciary duty.
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`Third, the Complaint provides no details about what the advisory board did, who comprised
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`it, or how often it met, such that a fiduciary duty could be inferred. (See Mot. at 2.) For example,
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`the Complaint does not allege what projects board members advised on, how Reclassify relied on
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`their advice, or what confidential information they were given access to in order to fulfill their
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`(unspecified) duties. Because Reclassify has not alleged Miraglia’s membership on an advisory
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`board, much less what, if anything, such a board did, its breach of fiduciary duty claim premised
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`9
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`on advisory board membership fails. See Palmetto Partners, L.P. v. AJW Qualified Partners, LLC,
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`83 A.D.3d 804, 808 (2d Dep’t 2011) (“A cause of action sounding in breach of fiduciary duty must
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`be pleaded with the particularity required by CPLR 3016(b).”)).
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`B. Miraglia’s alleged “mentorship” of Brown does not support a fiduciary duty,
`and Reclassify cites no authority holding otherwise.
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`For the same reasons, Miraglia’s alleged “mentorship” of Brown does not support a
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`fiduciary duty, and Reclassify cites no authority suggesting otherwise. Absent factual allegations
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`supporting a relationship of trust and confidence, courts have declined to find a fiduciary
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`relationship based on professional mentoring. See, e.g., DFP Mfg. Corp. v. Northrop Grumman
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`Corp., No. 97-CV-4494, 1999 WL 33458384, at *10 (E.D.N.Y. Mar. 23, 1999) (agreement “d[id]
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`not create a fiduciary relationship, notwithstanding use of the terms mentor and mentee”). Nor is
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`there any support for the notion that the professional mentorship of a single individual would lead
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`to the mentor owing a fiduciary duty to an entire corporation, as Reclassify claims is the case here.
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`Reclassify does not say what the “mentorship” entailed or why it imposes a fiduciary duty.
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`The Complaint alleges that at one-on-one “ad hoc” meetings with Miraglia, Brown shared
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`information about Reclassify’s business dealings. (See Compl. ¶ 16.) But this does not mean that
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`Brown reposed in Miraglia trust and confidence based on his superior expertise or knowledge. See
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`WIT Holding, 282 A.D.2d at 529. To the contrary, Brown asserts that Miraglia lacked an
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`understanding of AI and required constant training from Reclassify. (See, e.g., Brown Aff. ¶ 12.)
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`What Reclassify is left with is nothing more than an arm’s length business relationship which
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`cannot support a fiduciary duty. See id. Its claim for breach of fiduciary duty should therefore be
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`dismissed.
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`10
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`FILED: NEW YORK COUNTY CLERK 10/02/2023 03:05 PM
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