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RTC Industries, Inc. v. Haddon

September 10, 2007


The opinion of the court was delivered by: John F. Grady, United States District Judge


Before the court is Defendant's motion for partial judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). For the reasons explained below, the court denies Defendant's motion.


Haddon worked for RTC Industries, Inc. ("RTC"), a company which provides in-store merchandising services, from January 14, 1991 through May 10, 2006. (Compl. ¶¶ 1-2.) When he left the company in 2006, Haddon was RTC's Vice President of Customer Business Development. (Id.) In that position, he was exposed to and utilized confidential information concerning RTC's current business as well as its future business strategy. (Id. at ¶¶ 2, 8.) On March 21, 2006, Haddon executed an Agreement on Confidential Information and Non-Competition (the "Agreement").

(Id. at ¶ 3.) Among other post-employment restrictions, the Agreement contains the following non-compete covenant:

Associate agrees that Associate alone or as a partner, joint venturer, officer, director, member, employee, consultant, agent, representative, independent contractor, advisor, stockholder or in any other capacity of any company, person or busines, shall not: [ . . . ] (c) for 2 years following the termination of Associate's employment with RTC for any reason, directly or indirectly, provide services to any person or entity that engages in any business that makes or sells Products or Services if doing so would involve the actual or threatened unauthorized use or disclosure of Confidential Information or Confidential Documents.

(Agreement at Sections II & III, attached as Ex. A to the Compl.) "Products" and "Services" mean "the goods and services sold or provided by RTC at any time during Associate's employment with RTC." Id. at Section III(a).*fn1 The Agreement also contains a separate non-disclosure clause that prohibits Haddon from disclosing or using Confidential Information.

At some unspecified point during Haddon's employment with RTC, he began discussions with DCI Marketing, Inc. ("DCI"), RTC's competitor. These discussions culminated in Haddon's decision to leave RTC to join DCI. (Compl. ¶ 9.) RTC alleges that Haddon was hired by DCI with the "understanding" that he would have the opportunity to become DCI's president. (Id. at ¶ 10.)

On or about April 18, 2006, while still employed by RTC, Haddon attended a meeting at RTC at which he learned "confidential information" that a DCI employee, Dean Schipke, had accepted an employment offer from RTC.*fn2 (Id. at ¶ 11.) Immediately after the meeting, Haddon notified DCI of this fact. (Id. at ¶ 11.) This was news to DCI, as Schipke had not yet notified DCI that he had accepted RTC's offer. (Id. at ¶ 12.)*fn3 Schipke subsequently rescinded his acceptance of RTC's offer. (Id. at ¶ 13.) RTC alleges that Haddon caused Schipke to rescind by disclosing to DCI that Schipke had accepted RTC's offer, although Schipke's precise reasons for rescinding are unclear. (Id. at ¶ 15.) At some point after informing DCI about Schipke's imminent departure, RTC confronted Haddon. (Id. at ¶ 19.) According to RTC, Haddon made "false, shifting and inconsistent" statements concerning whether he had spoken to DCI at all about Schipke, or had only confirmed that Schipke was joining RTC after DCI told him that this was indeed the case. (Id.)

One week after the Schipke incident, Haddon announced to RTC that he was going to join DCI. (Id. at ¶ 17.) RTC then told Haddon not to return to RTC in order to terminate his access to RTC's confidential information. (Id. at ¶ 18.)*fn4 RTC further alleges that it would have asked Haddon to leave earlier had it known about his discussions with DCI. (Id. at ¶¶ 16, 18.) In connection with his departure, RTC asked Haddon to turn over his "daily planners," which contain customer contact information and meeting notes, among other things. (Id. at ¶ 20.) Haddon turned over his planners for 2006 (with two pages missing) and December 2005, only. (Id.) He told RTC that he had thrown out nine years of planners in January 2006. (Id.)

RTC asserts three claims against Haddon. First, RTC claims that Haddon breached his fiduciary duty to RTC when he disclosed to DCI Schipke's intention to join RTC. (Id. at ¶ 24.) Second, RTC claims that Haddon breached the Agreement by (i) again, disclosing that Schipke had accepted an offer from RTC; and (ii) working for an RTC competitor in a capacity that will entail the actual or threatened unauthorized use or disclosure of RTC's Confidential Information. (Id. at ¶ 30.) Third, RTC asks the court to enjoin Haddon from divulging RTC's trade secrets pursuant to Section 3 of the Illinois Trade Secrets Act (the "ITSA"). (Id. at ¶¶ 42-43.)


A. Legal Standard

A defendant may file a motion under Rule 12(c) after the close of the pleadings to raise various Rule 12(b) defenses regarding procedural defects. Alexander v. City of Chicago, 994 F.2d 333, 336 (7th Cir. 1993). The court will review such a motion under the same standard as a motion to dismiss pursuant to Rule 12(b). Frey v. Bank One, 91 F.3d 45, 46 (7th Cir. 1996); GATX Leasing Corp. v. National Union Fire Ins. Co., 64 F.3d 1112, 1114 (7th Cir. 1995). As a result, the court will deny the defendant's motion if the complaint (i) "describes the claim in sufficient detail to give the defendant fair notice of what the ... claim is and the grounds upon which it rests;" and (ii) "plausibly suggest[s] that the plaintiff has a right to relief, raising that possibility above a speculative level." E.E.O.C. v. Concentra Health Serv., Inc., --- F.3d ---, 2007 WL 2215764, *2 (7th Cir. Aug. 3, 2007) (internal citation ...

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