United States District Court, N.D. Illinois
April 23, 2004.
FOX CONTROLS, INC., an Illinois corporation, Plaintiff,
HONEYWELL, INC., a Delaware corporation, Defendant
The opinion of the court was delivered by: JOHN GRADY, Senior District Judge
Before the court is defendant Honeywell, Inc.'s motion to dismiss
Counts V and VI of the Second Amended Complaint. For the reasons stated
below, the motion is granted in part.
Plaintiff, Fox Controls, Inc. ("Fox Controls"), brought this action
against Honeywell, Inc. ("Honeywell"), claiming that defendants
misappropriated confidential and proprietary information created by Fox
Controls. Honeywell manufactures machine safety products, and Fox
Controls distributes and installs Honeywell's products.
The Second Amended Complaint alleges six claims: copyright infringement
(Counts I and II); violation of the Illinois Trade Secrets Act (Count
III); breach of contract (Count IV); quasi-contract/unjust enrichment (Count V); and quantum meruit (Count VI).
Honeywell now moves to dismiss Counts V and VI of the Second Amended
Complaint, arguing that they are preempted by the Illinois Trade Secrets
Section 8 of the Illinois Trade Secrets Act (the "ITSA"), 765 ILCS
1065/1 et seq., provides in relevant part:
(a) Except as provided in subsection (b), this Act is
intended to displace conflicting tort,
restitutionary, unfair competition, and other laws of
this State providing civil remedies for
misappropriation of a trade secret.
(b) This Act does not affect:
(1) contractual remedies, whether or not based
upon misappropriation of a trade secret, . . .
(2) other civil remedies that are not based upon
misappropriation of a trade secret;
(3) criminal remedies, whether or not based upon
misappropriation of a trade secret; or
(4) the definition of a trade secret contained in
any other Act of this State.
765 ILCS 1065/8. By its plain terms, the ITSA preempts common-law
claims that are based on misappropriation of trade secrets. Honeywell
contends that Counts V and VI of the Second Amended Complaint, which are
claims for "quasi-contract/unjust enrichment" and quantum meruit, are
preempted by the ITSA. The issue is whether those claims are based on the
misappropriation of trade secrets or on something more. See Fox Controls, Inc. v. Honeywell Inc.,
No. 02 C 346, 2002 WL 1949723, at *2 (N.D. Ill. Aug. 22, 2002).*fn2
Count V alleges that Fox Controls "conferred good and valuable benefits
upon Honeywell by virtue of the consulting services and documentation that
it provided to Honeywell" with the expectation of compensation and that
"Honeywell accepted and unjustly retained the benefits conferred by Fox
Controls without compensating Fox Controls." (Second Amended Complaint,
¶¶ 41-43.) The allegations of Count VI are virtually identical. (Id., ¶¶
46-47.) Both counts incorporate and re-allege the general factual
allegations of the complaint (which include allegations regarding
misappropriation of trade secrets) and the allegations of Count IV, the
breach of contract claim. Count IV alleges that Honeywell failed to pay
Fox Controls for consulting services and for the creation of a safety
training materials, and failed to "appoint Fox Controls as a safety
distributor with the right to sell safety products to sub-distributors or
otherwise receive an override on all North American sales of safety products." In addition, plaintiff claims in Count
IV that Honeywell misused Fox Controls's confidential materials.
(Id., ¶ 38.)
Because Counts V and VI incorporate factual allegations concerning the
misappropriation of plaintiff s confidential and proprietary information,
those claims are based in part on the alleged misappropriation. To the
extent that Counts V and VI rely on misappropriation, they are preempted
by the ITSA. For the most part, though, Counts V and VI are not based on
misappropriation, but simply on allegations that Fox Controls was not
paid for services that it rendered to Honeywell.*fn3 The claims are not
preempted to the extent that they rely on these factual allegations.
For the foregoing reasons, Honeywell's motion to dismiss Counts V and
VI of the Second Amended Complaint is granted to the extent that Counts V
and VI are based on the misappropriation of trade secrets. Counts V and
VI are therefore dismissed without prejudice. Plaintiff is given leave to
file a Third Amended Complaint by May 7, 2004, that deletes from Counts V and VI those
allegations that are preempted by the Illinois Trade Secrets Act.
A status hearing is set for May 12, 2004, at 10:30 a.m.