Second Measure, Inc. v. Kim

Second Measure, Incorporated, along with its corporate founders, Michael Babineau and Lillian Chou (plaintiffs), brought an action against Steven Kim (defendant), seeking a declaration that Kim held no equity interest in Second Measure. Kim counterclaimed, alleging that he and Babineau had formed a partnership to develop a business focused on analyzing credit-card-spending data. According to Kim, the two orally agreed to share equally in ownership, profits, and management, and subsequently worked together for several months. Kim asserted that Chou later joined the venture and conspired with Babineau to exclude Kim from the partnership. Kim further claimed that in September 2014, Babineau and Chou shut him out of the business by blocking his access to their servers, their applications, and his prior work product. Babineau and Kim then incorporated the venture as Second Measure and carried on in the same line of business. Second Measure denied the existence of any partnership agreement and contended that if any partnership were created, it was dissolved in September 2014. Second Measure moved to dismiss Kim’s claims, arguing that after the partnership was dissolved, Babineau was released of any fiduciary duties, including the duty not to compete, and was therefore free to continue operating in the same line of business.