Single Source, Inc. v. Harvey, No. 07 C 1201, 2008 WL 927902 (N.D. Ill. Apr. 7, 2008) (Der-Yeghiayan, J.).
Judge Der-Yeghiayan denied defendants’ summary judgment motion. Defendant Harvey was employed by plaintiff Single Source (“SS”) as, among other things, its Sales Director. When Harvey was promoted to the Sales Director position he signed a confidentiality agreement which required that Harvey maintain the secrecy of SS’s trade secrets and only use them for SS’s benefit. SS alleged that Harvey became disgruntled and took a position with defendant Food Marketing Concepts (“FMC”). Before giving SS notice and leaving SS’s employ, Harvey allegedly solicited SS’s customers for FMC and used an SS expense account to pursue customers for FMC. Defendants argued that because Harvey was not an SS officer or director he did not owe SS a duty of loyalty. The Court, however, held that an employee owes it employer a duty not to compete with the employer or solicit the employer’s customers before terminating the employment. The Court also held that the parties’ competing evidence regarding whether Harvey had actually solicited SS’s customers prior to ending his employment with SS created a material question of fact.
Practice Tip: You must respond to Local Rule 56.1 statements of material facts. The Court noted that defendants did not respond to SS’s statement of additional facts. Because of that, the Court deemed each additional material fact admitted. The Court did not identify whether its decision turned on any of these admitted facts, but it is easy to imagine the circumstance in which the case could have turned on an inadvertently admitted fact.

Continue Reading Employee Owes Current Employer Duty of Loyalty

UTStarcom, Inc. v. Starent Networks, Corp., No. 07 C 2582, Min. Order (N.D. Ill. Aug. 16, 2007) (Lindberg, J.).
Judge Lindberg denied defendants’ motion to dismiss plaintiff’s state law claims and its claim seeking assignment of defendants’ patents to plaintiffs. The Court held that the claim seeking assignment of defendants patents to plaintiff was an invalidity contention. Plaintiff claimed that it had invented defendants’ patented inventions before defendants. While plaintiff did not use the correct terms, it met the notice pleading standards. Additionally, plaintiff’s state law trade secret and tortious interference claims were sufficiently related to the patent claims to come within the Court’s supplemental jurisdiction.
The Court refused to consider plaintiff’s requests for additional discovery because it was made orally in court and in plaintiff’s responsive pleading, but never as a written motion as required by Fed. R. Civ. P. 7(b)(1).

Continue Reading Notice Pleading Does Not Require Correct Claim Name

Ace v. Marn, No. 06 C 5335, 2007 WL 1541747 (N.D. Ill. Apr. 17, 2007) (St. Eve, J.).
Judge St. Eve granted in part and denied in part plaintiff/counterdefendant Ace Hardware Corp.’s (“Ace”) Fed. R. Civ. P. 12(b)(6) motion to dismiss defendants/counter-plaintiffs’ (collectively “Marn”) counterclaims. The Court denied the motion as to Marn’s breach of contract claim and dismissed Marn’s fraud and tortious interference claims. Ace and Marn entered an agreement (the “Agreement”) allowing Marn the right to use certain Ace trademarks and to purchase product for resale from Ace. Marn alleged that Ace and its representatives breached the Agreement, made numerous misrepresentations leading up to the signing of the Agreement and failed to provide promised inventory. Ace argued that Marn’s breach of contract claim should be dismissed because it did not identify a specific provision of the Agreement that was breached, citing several Northern District cases. But noted that each of Marn’s cases came down before the Seventh Circuit’s decision in Kolupa v. Roselle Park Dist., 438 F.3d 713, (7th Cir. 2006). In Kolupa the Seventh Circuit explained the Rule 8(a)(2) requirements:
[i]t is enough to name the plaintiff and the defendant, state the nature of the grievance, and give a few tidbits (such as the date) that will let the defendant investigate. . . . Any district judge (for that matter, any defendant) tempted to write “this complaint is deficient because it does not contain …” should stop and think: What rule of law requires a complaint to contain that allegation? Any decision declaring “this complaint is deficient because it does not allege X” is a candidate for summary reversal, unless X is on the list in Fed. R. Civ. P. 9(b).
Kolupa at 714-15 (emphasis in original). Based upon the Kolupa decision the Court held that Marn was not required to cite a specific breached section of the Agreement.
The Court dismissed, with leave to amend, Marn’s fraud claim because it failed to identify the specific Ace individuals that allegedly made the material false statements or where the statements were made. The Court dismissed Marn’s tortious interference claim because Ace is a party to the Agreement and, therefore, cannot tortiously interfere with the Agreement.

Continue Reading Rule 8 Does Not Require Identification of the Specific Contract Provision Allegedly Breached

Abanco Int’l., Inc. v. Guestlogix Inc., __ F. Supp.2d __, 2007 WL 1492928 (N.D. Ill. May 21, 2007) (Bucklo, J.).
Judge Bucklo dismissed plaintiff’s conspiracy claim but not its unjust enrichment and tortious interference claims, holding that the former was preempted by the Illinois Trade Secret Act (“ITSA”). Plaintiff alleged that it entered a business relationship with defendant, supported by a confidentiality agreement (the “Agreement”). The parties were working together to supply airlines with electronic “buy-on-board” systems that would allow passengers to pay for drinks and other in-flight purchases with credit cards. Plaintiff alleged that, based upon the Agreement, it provided defendant confidential, trade secret information about its buy-on-board system (the “Abanco System”) and that with defendant’s support, plaintiff entered negotiations to provide the Abanco System to third party American Airlines. But after the parties’ relationship soured, American Airlines allegedly ended negotiations with plaintiff and entered an agreement with defendant for a buy-on-board system. Plaintiff then filed suit against defendant alleging trade secret misappropriation, breach of the Agreement, unjust enrichment, tortious interference and conspiracy. The Court held that plaintiff’s unjust enrichment and tortious interference claims were not preempted by ITSA because they were based upon information protected by the Agreement in addition to plaintiff’s alleged trade secrets.

Continue Reading Conspiracy Claim Based Solely on Trade Secrets Preempted by ITSA