confidential files for the purpose of developing her lawsuit against the
CTA. The CTA filed a counterclaim alleging that Ms. McLaughlin had
breached her fiduciary duty to it and seeking reimbursement of the salary
it paid Ms. McLaughlin from the time she first accessed such files for
her own purposes until the time of her termination. Ms. McLaughlin moved
to dismiss the counterclaim for failure to allege a cause of action under
Illinois law. I deny the motion.
Dismissal of a claim or counterclaim is proper only when it is evident
that the claimant can prove no set of facts to support the allegations of
the claim. First Ins. Funding Corp. v. Federal Ins. Co., 284 F.3d 799,
804 (7th Cir. 2002). To state a claim for breach of fiduciary duty under
Illinois law, a plaintiff must plead: (1) the existence of a fiduciary
duty; (2) breach of that duty; and (3) damages to the plaintiff as a
result of that breach. LaSalle Bank Lake View v. Seguban,
937 F. Supp. 1309, 1324 (N.D. Ill. 1996) (Norgle, J.).
For the purposes of this motion to dismiss, I accept as true the
allegations contained in the counterclaim. Thompson v. Illinois Dep't for
Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). The counterclaim
alleges, (1), that Ms. McLaughlin was a managerial employee and fiduciary
of the CTA; (2), that she deliberately violated its Code of Ethics by
reading, copying, and removing other employees' confidential files; and
(3), that the CTA paid $150,000 in compensation to a disloyal employee.
This is adequate to state a claim for breach of fiduciary duty.
Ms. McLaughlin points out that she was not a corporate officer for the
CTA. However, non-officers may be fiduciaries; a manager owes a fiduciary
duty to her employer. See Seguban, 937 F. Supp at 1313. She also argues
that the claim is inadequate because the CTA fails to cite to any case
law suggesting that accessing and removing confidential files from an
employer for the purpose of pursuing a lawsuit against the employer is a
breach of duty. That is true, but the CTA need not cite case law at this
stage. Ms. McLaughlin bears the burden of showing that the claim against
her is unsustainable. Next, Ms. McLaughlin argues that the counterclaim
should be dismissed because it does not allege that Ms. McLaughlin's
action injured the CTA. But it does allege that the CTA was damaged to
the extent of the salary it paid Ms. McLaughlin during the period when it
mistakenly believed her to be a loyal fiduciary. In a breach of fiduciary
duty claim, "forfeiture-of-salary damages are available even where the
defendant employer is not otherwise injured by the breach." Robinson v.
SABIS, No. 98-4251, 2000 U.S. Dist. LEXIS 5797, at *9 n. 2 (N.D. Ill.
Mar. 31, 20CC)) (Coar, J.), citing ABC Trans Nat'l Transp. Inc. v.
Aeronautics Forwarders, Inc., 413 N.F2.2d 1299, 1315 (ILL. App. CT.
Finally, Ms. McLaughlin points to Riad v. 520 S. Mich. Ave. Assoc.
Ltd., 78 F. Supp.2d 748 (N.D. Ill. 1999) (Moran, J.), to support her
contention that CTA fails to state a claim. In Riad, which, like this
case, involved a defendant employer's counterclaim against a fired
employee, the counterclaim was dismissed because it was "devoid of facts
which would support a claim for breach of [employee] Riad's duty." Id. at
763. For example, Riad's employer accused him of soliciting his staff
members to work outside the hotel, but the court noted that "there is
nothing actionable unless Riad's entreaties were not in the best
interests of his principal." Id. at 763. Unlike Mr. Riad's actions,
however, Ms. McLaughin's alleged violation of the CTA's confidentiality
rules for the purpose of supporting a lawsuit against it cannot possibly
be in the CTA's best interests. Thus, the dismissal in Riad does not
indicate that the instant counterclaim ought to be dismissed.
The CTA's counterclaim states a valid claim. Ms. McLaughlin's motion to
dismiss the counterclaim is DENIED.
© 1992-2003 VersusLaw Inc.