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EXPERIAN INFORMATION SOLUTIONS, INC. v. I-CENTRIX LLC

November 19, 2004.

EXPERIAN INFORMATION SOLUTIONS, INC. and EXPERIAN MARKETING SOLUTIONS, INC., Plaintiffs,
v.
I-CENTRIX LLC and ROBERT G. GAITO, Defendants.



The opinion of the court was delivered by: JAMES ZAGEL, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs Experian Information Solutions, Inc. and Experian Marketing Solutions, Inc., filed a four-count complaint against Defendants I-Centrix LLC and Robert G. Gaito alleging: (1) misappropriation of trade secrets under the Illinois Trade Secrets Act, 765 Ill. Comp. Stat. 1065/1; (2) breach of an Employee Agreement; (3) breach of a Consulting Services Agreement; and (4) breach of the duty of loyalty. Defendants seek to dismiss Experian's complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and (3) and 28 U.S.C. § 1406(a) for lack of jurisdiction and venue; or, in the alternative, seek to transfer this case to the United States District Court for the Northern District of New York pursuant to 28 U.S.C. § 1404(a).

Background

  Experian Information Solutions, Inc. ("EIS") is an Ohio corporation with its principal place of business in Costa Mesa, California. Experian Marketing Solutions, Inc. ("EMS") is a Delaware corporation with its principal place of business in Schaumburg, Illinois*fn1 and is a corporate affiliate of EIS. The two companies operate collectively as "Experian." I-Centrix LLC ("I-Centrix") is a New York limited liability company with its principal place of business in Rensselaer, New York. Robert Gaito is permanently domiciled in Troy, New York and maintains an office at I-Centrix's corporate headquarters in Rensselaer, New York.

  EMS's corporate predecessor, Brigar Computer Services ("BCS"), hired David Gaito in 1992. Gaito became a Senior Account Executive on January 2, 1997, and was promoted to Vice President for Database Solutions that same month. On September 8, 1997, Gaito entered into a confidentiality agreement with BCS.*fn2 Later that year, BCS liquidated into its parent company, Direct Marketing Technology, a subsidiary of Experian Holdings. On March 31, 2000, Direct Marketing Technology transferred substantially all of its assets to a wholly-owned subsidiary, Metromail Corporation. On May 8, 2000, Metromail changed its name to Experian Marketing Solutions ("EMS"), with its principal place of business in Schaumburg, Illinois. Gaito remained employed with the company through this process.

  Among other things, Experian is in the business of providing its clients data management services, including customer relationship management products and services. While employed by Experian, Gaito and his colleague Jeremy Green were involved in the strategic design of Experian's allegedly proprietary and confidential methods of using "pinning" or "linkage" technology, which assigns "PIN" identifiers to individuals in order to link those individuals across multiple databases. This project became the foundation of Experian's custom solution for Providian Bank and was called "Providian PIN." Based on that project, Experian developed Custom TrueVue, a pinning solution generally applicable to a wide variety of companies. Each of these projects involved Experian's allegedly proprietary and confidential method of using pinning technology, also known as its "matching technology." Gaito and Green had access to the designs, code, and documentation of this matching technology during their employment with Experian.

  Gaito left Experian and formed his own company, I-Centrix, in March, 2000.*fn3 One month later, Gaito entered into a consulting agreement with EIS. The agreement defined EIS as encompassing "any and all business units, divisions, subsidiaries, affiliates and joint ventures of Experian Information Systems, Inc.," which included EMS, its corporate affiliate. The agreement referred to these entities collectively as "Experian." The consulting agreement stipulated that I-Centrix's employees and approved subcontractors would perform work as requested by Experian at such times and places as mutually agreed upon, and was to continue indefinitely unless terminated by either party.

  The consulting agreement specified that any work product developed by I-Centrix within the scope and during the time period of the agreement belonged to Experian. It also contained a confidentiality agreement, which stated that I-Centrix and its employees would not disclose to any third party proprietary information provided by Experian to I-Centrix under the consulting agreement. Additionally, Gaito agreed not to solicit, hire, contract with, or engage the services of any Experian employee with whom I-Centrix personnel had contact during the performance of the consulting agreement or twelve months after its termination. Between May, 2000 and March, 2002, Gaito and I-Centrix consulted on several Experian projects, including the migration of two Experian products, Z-24 and Circbase, using the Custom TruVue package and pinning technology developed while Gaito was an Experian employee. The Experian teams responsible for the production and development of resources for the Z-24 and Circbase projects were located in Schaumburg, Illinois. While providing consulting services to Experian on these and other projects, Gaito and other I-Centrix personnel traveled to Experian's offices in Schaumburg twelve times. I-Centrix personnel also communicated by mail, fax, telephone, and e-mail with Experian personnel in Schaumburg and used computers that accessed servers located in Schaumburg. During this time, Gaito, Finnerty, and Green had access to Experian's allegedly proprietary methods of using its pinning technology, as well as access to a detailed proposal for marketing services to AOL that included a design based on Experian's pinning technology.

  On March 6, 2002, Gaito filed a patent application for a "Contact Relationship Management System and Method," assigning rights to I-Centrix. On August 7, 2002, Gaito terminated the consulting agreement. Experian claims that Gaito's patent application "disclosed core capabilities of Experian's proprietary and confidential methods of using pinning technology," as well as "proprietary system architecture details substantially similar to Experian's proposed AOL solution" and to another project on which Gaito, Green and Finnerty participated while Experian employees. Experian also alleges that I-Centrix provides marketing services in direct competition with Experian and solicits Experian customers (some of whom have transferred their business to I-Centrix) using Experian's proprietary information. These allegations form the basis of Experian's complaint claiming violations of the Illinois Trade Secrets Act, breach of contract by Gaito and I-Centrix, and breach of the duty of loyalty.

  Personal Jurisdiction

  In order to defeat Defendants' motion to dismiss for lack of personal jurisdiction, Plaintiff Experian need only make a prima facie showing of personal jurisdiction. Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002); Master Tech Prods., Inc. v. Smith, 181 F. Supp. 2d 910, 911 (N.D. Ill. 2002). In reviewing the complaint and affidavits, I must draw all reasonable inferences in favor of Plaintiffs. Master Tech, 181 F. Supp. 2d at 911. Furthermore, when faced with conflicting evidence, I must resolve factual disputes in the Plaintiffs' favor. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272 (7th Cir. 1997).

  In a case based on diversity of citizenship, a federal district court sitting in Illinois has personal jurisdiction over a nonresident defendant only if an Illinois court would have jurisdiction. Hyatt, 302 F.3d at 713. In Illinois, the long-arm statute extends personal jurisdiction to the limit allowed under the due process clause of the Fourteenth Amendment. See 735 ILCS 5/2-209(c); and Sutherland v. Cybergenics Corp., 907 F. Supp. 1218, 1221 (N.D. Ill. 1995). Thus, the court's inquiry is whether the district court could assert personal jurisdiction over the defendant consistent with due process. Sutherland, 907 F. Supp. at 1221 (citations omitted). Due process requires that a defendant have "minimum contacts" with a forum "such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" See Glass v. Kemper Corp., 930 F. Supp. 332, 338 (N.D. Ill. 1996) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). A defendant establishes "minimum contacts" through actions demonstrating purposeful availment of "the privilege of conducting activities within the forum." Hanson v. Denckla, 357 U.S. 235, 253 (1958). Moreover, the defendant should "reasonably anticipate being haled into court" in the forum as a result of these minimum contacts. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).

  A federal district court may exercise two types of jurisdiction over an out-of-state defendant: general and specific. Glass, 930 F. Supp. at 338. In this case, Plaintiff does not allege grounds for general jurisdiction over Defendant but argues that specific jurisdiction exists. For a court to assert specific jurisdiction, the defendant's contacts with the forum must be "related to the controversy underlying the litigation." Id. at 339 (citing Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239, 1244 (7th Cir. 1990)). If there is such a relationship, the plaintiff must show only that the defendant's contacts with the forum reached a "minimum" threshold. Sutherland, 907 F. Supp. at 1222.

  Gaito and I-Centrix argue that this court has no personal jurisdiction in this matter, either specific or general, because they did not establish sufficient minimum contacts with Illinois to anticipate being haled into court. I disagree. Defendants were present in Illinois twelve times during the course of the consulting agreement; far fewer visits to the forum state have been found sufficient to constitute minimum contacts. See, e.g., Vandeveld v. Christoph, 877 F. Supp. 1160, 1165 (N.D. Ill. 1995) (holding that "one visit to the state is sufficient to establish the minimum contacts necessary to support personal jurisdiction, if the cause of action arose out of the defendant's conduct on that visit"). A defendant's presence in the forum state "while conducting business relevant to the dispute" is a significant factor in determining whether personal jurisdiction may be exercised validly. Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209, 1213-14 (7th Cir. 1984); and United States Gypsum Co. v. All Tank Sales & Supply Co., 977 F. Supp. 1340, 1343 (N.D. Ill. 1997) ("All Tank's [single] visit to Illinois during the course of performance is a significant contact with the state.") Experian alleges that Defendants maintained an ongoing relationship with Experian staff in Illinois as a result of the consulting agreement and Gaito's former employment with Experian. Defendants also admit communicating with individuals located in Schaumburg via telephone and e-mail throughout the consulting agreement. ...


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