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Strom v. Strom Closures

February 20, 2008

VICTORIA STROM, PLAINTIFF,
v.
STROM CLOSURES, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Plaintiff / Counter-Defendant Victoria Strom's ("Strom") motion to dismiss the counterclaims and motion to strike affirmative defenses. For the reasons stated below, we grant the motion to dismiss and grant the motion to strike.

BACKGROUND

Strom alleges that she was employed by Defendant Strom Closures, Inc. ("SCI"). Defendants Terry Barnett ("T. Barnett") and David Barnett are allegedly principal officers of SCI and are involved in the day-to-day operations of SCI. Strom contends that SCI failed to pay her minimum wages for all the hours that she worked. Strom includes in her complaint a claim alleging violations of 29 U.S.C. § 206 of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (Count I), a claim alleging a violation of 820 ILCS 105/4 of the Illinois Minimum Wage Law, 820 ILCS 105/1 et seq. (Count II), and a claim alleging a violation of the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq. (Count III).

Defendants have also filed amended counterclaims in this case. Defendants assert that T. Barnett is the assignee of United States patent number 5, 819, 474 ("474 Patent"). Defendants state in their amended counterclaims that in 2002, Barnett and SCI brought an action in federal court against Strom, Counter-Defendant Willard Strom ("W. Strom"), and Counter-Defendant C & S Manufacturing Co. ("C&S") for patent infringement and other related claims ("Infringement Action") (Case No. 02 C 3747). According to Defendants, on June 4, 2003, the court in the Infringement Action issued a ruling finding that Defendants had infringed upon the 974 Patent by offering a product referred to as the "ZIPPER product" ("ZIPPER Product"). (A. CC. Par. 10). The court also allegedly estopped Strom, W. Strom, and C&S from denying that they had infringed the 474 Patent. On August 15, 2003, the court allegedly enjoined Counter-Defendants from further manufacture or sale of the ZIPPER Product.

Defendants contend that despite the injunction, Counter-Defendants began manufacturing and selling a new product referred to as the "PROZIP" product ("PROZIP Product"). On September 21, 2004, the district court allegedly entered an order enjoining Counter-Defendants from further manufacture or sale of the PROZIP Product and ordered them to recall the PROZIP Product from the marketplace.

Defendants contend that on April 6, 2005, they entered into a settlement agreement ("Settlement Agreement") with the Counter-Defendants, under which SCI was given sole control of the marketing, distribution, and sales of the ZIPPER Product and PROZIP Product. Under the terms of the Settlement Agreement, Counter-Defendants were also required to: (1) transfer the existing inventory of the products and raw materials and packaging for the products to SCI, (2) assign all rights to a zipper gluing machine and other machinery to SCI, (3) transfer all sales account information, data, and contact information to SCI, (4) forward all orders for the ZIPPER Product and PROZIP Product to SCI, (5) use their best efforts to assist SCI in the transfer of sales accounts, and (6) instruct all existing customers that all future orders and payments were to be sent to SCI. Defendants assert that Counter-Defendants failed to honor any of the above obligations under the Settlement Agreement and continue to engage in the sale of the prohibited products. Defendants also contend that on several occasions Counter-Defendants accepted and converted payments that they received for orders that were actually filled by SCI. In addition, parties allegedly acting in concert with Counter-Defendants have started selling a zipper product referred to as the GENZIP product ("GENZIP companies") that infringes on the 474 Patent.

Defendants include in their amended counterclaims a breach of contract claim (Count I), a conversion claim (Count II), an interference with contractual relations claim (Count III), an intentional interference with prospective economic advantage claim (Count IV), an unfair competition claim (Count V), a deceptive business practices claim (Count VI), and a patent infringement claim (Count VII). Strom moves to dismiss all counter-claims and moves to strike Defendants' affirmative defenses.

LEGAL STANDARD

In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6), the court must draw all reasonable inferences that favor the plaintiff, construe the allegations of the complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Thompson v. Ill. Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). In order to withstand a motion to dismiss, a complaint must allege the "operative facts" upon which each claim is based. Kyle v. Morton High Sch., 144 F.3d 448, 454-55 (7th Cir. 1998); Lucien v. Preiner, 967 F.2d 1166, 1168 (7th Cir. 1992). A plaintiff is required to include allegations in the complaint that "plausibly suggest that the plaintiff has a right to relief, raising that possibility above a 'speculative level'" and "if they do not, the plaintiff pleads itself out of court." E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir. 2007)(quoting in part Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007)). Under current notice pleading standard in federal courts a plaintiff need not "plead facts that, if true, establish each element of a 'cause of action. . . .'" See Sanjuan v. Amer. Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994)(stating that "[a]t this stage the plaintiff receives the benefit of imagination, so long as the hypotheses are consistent with the complaint" and that "[m]atching facts against legal elements comes later"). The plaintiff need not allege all of the facts involved in the claim and can plead conclusions. Higgs v. Carver, 286 F.3d 437, 439 (7th Cir. 2002); Kyle, 144 F.3d at 455. However, any conclusions pled must "'provide the defendant with at least minimal notice of the claim,'" Kyle, 144 F.3d at 455(quoting Jackson v. Marion County, 66 F.3d 151, 153-54 (7th Cir. 1995)), and the plaintiff cannot satisfy federal pleading requirements merely "by attaching bare legal conclusions to narrated facts which fail to outline the bases of [his] claims." Perkins, 939 F.2d at 466-67. The Seventh Circuit has explained that "[o]ne pleads a 'claim for relief' by briefly describing the events." Sanjuan, 40 F.3d at 251; Nance v. Vieregge, 147 F.3d 589, 590 (7th Cir. 1998)(stating that "[p]laintiffs need not plead facts or legal theories; it is enough to set out a claim for relief").

Federal Rule of Civil Procedure 12(b)(1) ("Rule 12(b)(1)") requires a court to dismiss an action when it lacks subject matter jurisdiction. United Phosphorus, Ltd. v. Angus Chemical Co., 322 F.3d 942, 946 (7th Cir. 2003). If the concern of the court or party challenging subject matter jurisdiction is that "subject matter jurisdiction is not evident on the face of the complaint, the motion to dismiss pursuant to Rule 12(b)(1) would be analyzed as any other motion to dismiss, by assuming for purposes of the motion that the allegations in the complaint are true." Id.; see also Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995)(stating that when reviewing a motion to dismiss brought under Rule 12(b)(1), this court "must accept as true all well-pleaded factual allegations, and draw reasonable inferences in favor of the plaintiff"). However, if the complaint appears on its face to indicate that the court has subject matter jurisdiction, "but the contention is that there is in fact no subject matter jurisdiction, the movant may use affidavits and other material to support the motion." United Phosphorus, Ltd., 322 F.3d at 946 (emphasis in original). For the purpose of determining subject matter jurisdiction, the court "'may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.'" Ezekiel, 66 F.3d at 897 (quoting Capitol Leasing Co. v. Federal Deposit Insurance Corp., 999 F.2d 188, 191 (7th Cir. 1993)). The burden of proof for a Rule 12(b)(1) motion is "on the party asserting jurisdiction." United Phosphorus, Ltd., 322 F.3d at 946.

DISCUSSION

I. Motion to Dismiss

Strom argues that this court lacks subject matter jurisdiction over the Counter- ...


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