Different Harms Allow Re-Litigation of Same TS Misappropriation

Posted on January 21, 2008 by R. David Donoghue

Junction Solutions, LLC v. MBS Dev., Inc., No. 06 C 1632, 2007 WL 4233995 (N.D. Ill. Nov. 20, 2007) (Gottschall, J.).*

Judge Gottschall denied defendant’s Fed. R. Civ. P. 12(c) motion to dismiss plaintiff’s trade secret misappropriation complaint based upon the parties’ prior settlement agreement and resulting dismissal with prejudice by the District of Colorado. While the alleged misappropriation was the same — defendant employees leaving plaintiff to start their own competing software company — the use of the trade secrets was different. In the Colorado case, defendants allegedly harmed plaintiff by starting a competitor using plaintiff’s trade secrets. In this case, the alleged harm was developing competing software, after the Colorado settlement and dismissal. Claim preclusion, therefore, did not apply. Issue preclusion did not apply because the Colorado court did not make any substantive final judgments. The settlement agreement could have barred plaintiff’s claim, but the agreement’s release expressly excluded claims arising after the agreement’s effective date.

* Click here for more on this case in the Blog’s archives.

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Settlement Agreement Extinguishes Related Employment and Confidentiality Agreements

Posted on January 31, 2007 by R. David Donoghue

Junction Solutions, LLC v. MBS DEV, Inc., No. 06 C 1632, 2007 WL 114306 (N.D. Ill. Jan. 9, 2007) (Gottschall, J.).

Judge Gottschall denied defendants' motion to dismiss plaintiff's, Junction Solutions, trade secret and tortious interference case for lack of venue and denied plaintiff's motion to remand the case to Cook County Circuit Court, from where defendants removed the case.  Individual defendants, Jeffrey Ernest, Mitch Tucker and Kenneth Paul, were plaintiff's employees and helped it develop it its Junction Multi-Channel Distribution Software ("JMCD Software").  Shortly after developing the JMCD Software, the individual defendants left Junction Solutions and joined its competitor MBS DEV.  MBS DEV then began marketing software that competed with the JMCD Software.  Junction Solutions sued MBS DEV in the District of Colorado in 2004.  The parties eventually settled that case, a settlement which was also signed by the individual defendants.  In 2006, MBS partnered with Iteration2 and again began planning to market a software product very similar to the JMCD Software.  In response, plaintiff filed the instant suit in Cook County Circuit Court and defendants removed it to the Northern District.

Defendants moved to dismiss plaintiff's claims arguing that the suit was governed by the prior case's Settlement Agreement which retained exclusive jurisdiction and venue in the District of Colorado.  The Court, however, held that Judge Figa's, the District of Colorado judge, ruling that the Northern District case did not arise from the Settlement Agreement collaterally estopped defendants' argument.  Because the District of Colorado was not the exclusive jurisdiction and because defendants had not argued there was any other issue with the Northern District's venue, the case was not dismissed.

The Court also dismissed plaintiff's motion to remand the case to Cook County Circuit Court arguing that the individual defendants' employment agreement required that any disputes be litigated in Cook County.  But the Court held that the various employment agreements were extinguished by the Settlement Agreement.  As a result, the Northern District was an acceptable venue.

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