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COHEN v. LEWIS

November 1, 2004.

JOSEPH E. COHEN, Trustee for the Estate of Vision Tek, LLC, Plaintiff,
v.
RIC LEWIS, ROBERT SHANE VANCE, SCOTT A. HERKELMAN, JOHN R. MALLEY, JOHN F. HALL, BFG TECHNOLOGIES, INC., ADVANCED EQUITIES, INC., KEITH G. DAUBENSPECK, DWIGHT O. BADGER, CHRISTOPHER R. PRAVECEK, JOHN SLEVIN, JOHN VOSICKY, NVIDIA CORPORATION, HILTON SESSEL, MITAC INTERNATIONAL CORP., and BARBARA LEWIS, Defendants.



The opinion of the court was delivered by: MARTIN ASHMAN, Magistrate Judge

MEMORANDUM OPINION AND ORDER

Before the court is the motion of defendant MiTAC International Corporation ("MiTAC") to dismiss Counts XVII and XXIII of the Second Amended Complaint of plaintiff Joseph E. Cohen, Trustee for the Estate of VisionTek, LLC. For the following reasons, the court denies MiTAC's motion to dismiss those counts. I. Background

  Prior to its Chapter VII bankruptcy proceedings,*fn1 VisionTek manufactured and sold 3D computer graphics accelerators and memory modules — called "cards" — for the enhancement of graphics in computer games and personal computers. In August of 2002, several VisionTek employees left to either form, or work for, a new company, BFG Technologies, Inc. ("BFG"). In the seventy-page, twenty-seven-count Second Amended Complaint ("Complaint"), the Trustee characterizes the employees' actions as a mutiny against VisionTek, which involved the misappropriation of the company's trade secrets and confidential information. According to the Complaint, the mutinous employees solicited VisionTek's employees, suppliers, and customers, in order to form a new company to compete with VisionTek and run it out of business. The Trustee has named the former employees in counts charging breaches of those employees' non-competition agreements and confidentiality agreements.

  Defendant MiTAC is a Taiwanese corporation that manufactures graphic cards and was a key supplier to VisionTek. MiTAC and VisionTek had a "Mutual Confidentiality Agreement" that covered the information that passed between them during their business relationship. According to the Trustee, MiTAC was an essential participant in the conspiracy: if MiTAC had not agreed to terminate its relationship with VisionTek and do business with the new company, BFG, the former VisionTek employees would not have carried out their plan. Thus, in Count XXIII, the Trustee alleges that MiTAC committed tortious interference with the contractual relationships VisionTek had with its soon-to-be-former employees. In addition, under Count XVII, the Trustee claims that MiTAC breached the "Mutual Confidentiality Agreement" by using VisionTek's confidential information to help launch the new company. MiTAC moves to dismiss these counts, arguing that the Trustee has unnecessarily involved it in a dispute between VisionTek and its former employees.

  A. Trustee's Allegations

  For the purposes of considering the defendant's motion to dismiss, the court accepts all of the Trustee's well-pleaded allegations as true, and draw all reasonable inferences in the Trustee's favor. Bressner v. Ambroziak, 379 F.3d 478, 480 (7th Cir. 2004). Founded in 1988, VisionTek, as already noted, manufactured and distributed computer graphics cards for use in computer games and home computers. (Complaint, ¶ 23). As a participant in the highly competitive consumer electronics industry, VisionTek was understandably concerned with maintaining the confidentiality of its trade secrets and its design, development, and manufacturing methods. (Id., ¶¶ 24-25). To that end, the contracts it executed with its employees included confidentiality and non-competition agreements. (Id., ¶¶ 30-33, 36-38, 40, 42-44, 46-49). VisionTek also executed a confidentiality agreement with one of its key suppliers, MiTAC. (Id., ¶ 53). Pursuant to that "Mutual Confidentiality Agreement," dated February 1, 2002:
[e]ach party agrees that as a condition to Confidential Information being furnished to the other, each party shall hold and maintain all Confidential Information in strict confidence. Furthermore, each party agrees not to disclose Confidential Information to any company, entity or person without the prior written consent of the other party for a period of three (3) years from the date hereof.
(Id., ¶ 53, Ex. 14, at 1).

  In 2002, VisionTek began discussions with Advanced Equities, Inc. ("AEI") regarding efforts to raise capital. (Id., ¶ 57). The parties entered into a non-disclosure agreement to protect any confidential information that might be exchanged during the course of their discussions. (Id., ¶ 58). By July of 2002, discussions had progressed to a point where the parties had raised the possibility of AEI purchasing some or all of VisionTek's outstanding shares, and AEI conducted a due diligence examination of VisionTek. (Id., ¶ 60-61). On August 5, 2002, three VisionTek representatives — Ric Lewis, Robert Vance, and Scott Herkelman — met with AEI representatives — Keith Daubenspek, Dwight Badger, Christopher Pravecek, John Slevin, and John Vosicky — to negotiate AEI's purchase of VisionTek. (Id., ¶ 64). In these negotiations, the VisionTek representatives sought to secure positions and ownership interests in the successor company for themselves, but their demands were rejected. (Id., ¶ 64).

  Meanwhile, according to the Trustee, the three VisionTek employees were planning a mutiny. The Trustee alleges that the same eight individuals engaging in the VisionTek-AEI negotiations, and perhaps others, were also engaging in clandestine discussions regarding the formation of a new company that would include many of VisionTek's employees. (Id., ¶ 65). To that end, the eight individuals sought to delay or derail the VisionTek-AEI negotiations until their plan could come to fruition. (Id., ¶ 65). During these discussions, these individuals "reviewed and utilized [VisionTek's] confidential information," which they had accumulated during the employees' tenures with VisionTek or during the AEI-VisionTek negotiations, in order to analyze and evaluate the feasibility of creating a new company. (Id., ¶ 66). Pursuant to their plan, the new company would solicit VisionTek's employees, customers, and suppliers, taking over VisionTek's business and eventually driving it from the market. (Id., ¶ 67). In order for the scheme to succeed, however, the mutinying VisionTek employees would have to solicit and convince certain key suppliers to cooperate by severing their business relationships with VisionTek in favor of the newly formed company. (Id., ¶¶ 68, 88).

  As already noted, MiTAC was one of those key suppliers. The Trustee claims that MiTAC met with Slevin, Vosicky, Daubenspek, Badger, Pravecek, Lewis, Vance, and Herkelman, and agreed to cooperate with the scheme, support the new company, and cease doing business with VisionTek. (Id., ¶ 70). According to the Trustee, this was of vital importance to the success of the plan: it could not succeed without MiTAC's participation. (Id., ¶ 70). As a part of the scheme, the Trustee also claims that MiTAC transferred VisionTek's confidential information to Slevin, Vosicky, Daubenspek, Badger, Pravecek, Lewis, Vance, and Herkelman. (Id., ¶ 71). The Trustee further alleges that, on August 5, 2002, the VisionTek mutineers — Lewis, Vance, and Herkelman — had a conference call with MiTAC's liaison officer, Anson Chen, at the VisionTek offices. (Id., ¶ 72). Their five AEI cohorts also participated, and the topic of the discussions was the plan to form a new company, which MiTAC would supply, and which would run VisionTek out of business. (Id., at ¶ 72). Pursuant to the plan, MiTAC agreed to create excess inventory, beyond VisionTek's requirements, for the purpose of supplying the new company. (Id., ¶ 81). Lewis identified those VisionTek employees who would be participating in the new company by transferring an organizational chart to Chen. (Id., ¶ 73).

  On August 13, 2002, Herkelman wrote to Chen regarding a meeting that would take place in Taiwan sometime before September 15, 2002. (Id., ¶ 79). The next day, August 14, the three VisionTek employees involved in the original discussions with AEI — Lewis, Vance, and Herkelman — abruptly resigned from VisionTek, but not before pirating away certain confidential files and business plans. (Id., ¶ 75, 82-83). By August 23, 2002, the three VisionTek mutineers solicited some additional employees — among them, John Malley and John Hall, now defendants in this lawsuit — to leave VisionTek as well. (Id., ¶ 85-86). On August 27, 2002, the new company, BFG, was incorporated. (Id., ¶ 84). That same day, according to the Trustee, Herkelman and Vosicky traveled to Taiwan to meet with MiTAC to discuss supplying the new company. (Id., ¶ 79). In addition, the trustee alleges that:
Lewis, Vance, Herkelman, Malley, Hall, Slevin, Vosicky, Daubenspek, Badger, Pravecek, and AEI . . . solicited suppliers of [VisionTek] to stop doing business with [VisionTek] and to do business with BFG. The suppliers that were solicited included: . . . MiTAC . . .
(Id., ¶ 88).

  As already noted, the Trustee names MiTAC in two of his Complaint's twenty-seven counts. In Count XVII, the Trustee alleges that MiTAC breached the Mutual Confidentiality Agreement by disclosing and using VisionTek's confidential information. (Id., ¶ 92). The Trustee also alleges, under Count XXIII, that MiTAC is liable for tortious interference with contractual relationships. According to the Trustee, MiTAC was aware of the various confidentiality and non-competition agreements VisionTek had with the employees that left it to form and work for BFG. (Id., ¶ 91-92). The Trustee claims that, nevertheless, MiTAC intentionally, and without justification, induced those employees to breach those agreements. (Id., ¶ 93).

  B. Defendant's Arguments

  MiTAC moves to dismiss both counts. It argues that Count XVII fails to state a claim for breach of the Mutual Confidentiality Agreement because it fails to allege that MiTAC shared any confidential information with any individuals who did not already know that information. In addition, MiTAC argues that the trustee's allegations do not establish the requisite material and substantial causal link between MiTAC's alleged misconduct and VisionTek's damages. As for Count XXIII, MiTAC contends that the trustee has failed to state a claim for tortious interference with contractual relationships because the Complaint alleges that VisionTek's employees formulated the plan to found BFG and solicited MiTAC to do ...


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