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Woodard v. Harrison

October 24, 2008


The opinion of the court was delivered by: David G. Bernthal U.S. Magistrate Judge


In July 2008, Plaintiff Joshua Woodard filed a complaint against Defendants Ken Harrison and Weather Commodities Solutions, LLC, in the Champaign County Circuit Court (Case No. 08-CH-269). Defendants subsequently removed the case to federal court, alleging federal jurisdiction based on diversity pursuant to 28 U.S.C. § 1332. (Notice of Removal, #1.) The parties have consented to the exercise of jurisdiction by a federal magistrate judge.

In August 2008, Defendants filed a Motion To Dismiss Plaintiff's Complaint (#6). In September 2008, Plaintiff filed his Response to Motion To Dismiss (#11). After reviewing the parties' pleadings and memoranda, this Court GRANTS in part and DENIES in part Defendants' Motion To Dismiss Plaintiff's Complaint (#6).

I. Background

Plaintiff's complaint alleges four counts as follows: Counts I and II, against Defendant Harrison and Defendant Weather Commodities Solutions, respectively, seek an injunction. Count III, against Harrison, alleges misappropriation of trade secrets, and Count IV, against Harrison, alleges fraud.

In Counts I and II, Plaintiff alleges that he developed rating system software for the insurance industry called the Wedge Combo System and Method Documentation. (#1, ¶ 3.) Defendant Harrison told Plaintiff he was interested in a prospective business arrangement to develop an insurance product using Plaintiff's software. (#1, ¶ 4.) Defendant entered into a Confidentiality Agreement in which Plaintiff agreed to disclose confidential and proprietary information in order to further the prospective business. (#1, ¶ 5.) Plaintiff subsequently disclosed to Defendant certain proprietary and confidential information regarding his software. (#1, ¶ 7.) After that, the parties terminated their relationship and Defendant claimed ownership interest in Plaintiff's software. (#1, ¶¶ 8-9.) Defendant is contacting other parties in an effort to develop business relationships with them based on Plaintiff's software. (#1, ¶ 10.) Plaintiff will suffer irreparable harm in the absence of an injunction. (#1, ¶ 13.)

In his claim for misappropriation of trade secrets, Plaintiff alleges that the information he disclosed constitutes a trade secret and he disclosed this information specifically for the purpose of discussing a prospective business arrangements. (#1, ¶¶ 21, 24.) Defendant Harrison was aware of that. (#1, ¶ 22.) Harrison claimed the information as his own and intends to use it to develop business and to market Plaintiff's software as his own, thus misappropriating Plaintiff's trade secrets. (#1, ¶¶ 23-24.) Defendant's misappropriation damaged Plaintiff's ability to market his software. (#1, ¶ 25.)

In his fraud claim, Plaintiff alleges that Defendant Harrison told Plaintiff that he intended to use the information disclosed pursuant to the Confidentiality Agreement for the development of mutual business. (#1, ¶ 18.) Defendant knew that Plaintiff would rely on this statement and Plaintiff did rely on the statement. (#1, ¶¶ 19-20.) Based on Defendant's assurance, Plaintiff disclosed the confidential information. (#1, ¶ 21.) As a result, Plaintiff has been damaged. (#1, ¶ 22.)

II. Standard

The purpose of a motion to dismiss for failure to state a claim is to test the sufficiency of the complaint, not to decide the merits of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." The United States Supreme Court has interpreted this language to impose two "easy-to-clear hurdles": First, the plaintiff must plead sufficient facts to give fair notice of the claim and the grounds upon which it rests, and second, those facts, if true, must plausibly suggest that the plaintiff is entitled to relief, "raising that possibility above a 'speculative level'." E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776-77 (7th Cir. 2007) (citing Bell Atl. Corp. v. Twombly, --- U.S. ----, 127 S.Ct. 1955, 1965, 1973 n.14 (2007)).

In considering a motion to dismiss for failure to state a claim, the Court is limited to the allegations contained in the pleadings. Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993). Furthermore, the Court must treat all well-pleaded allegations in the complaint as true, and draw all reasonable inferences in the plaintiff's favor. McMillan v. Collection Prof'ls, Inc., 455 F.3d 754, 758 (7th Cir. 2006); see Bell Atl., 127 S.Ct. at 1965 (requiring plausible grounds for inferences if those inferences are to sustain a complaint).

III. Analysis

Defendants argue that the Court should dismiss the claims for the following reasons:

(1) Counts I and II are moot because Defendants do not use and will not use or disclose the intellectual property at issue; (2) Count III fails to state a claim because Plaintiff failed to allege the existence of a trade secret or that Defendants had actually used the trade secret; (3) Count IV fails to plead fraud with particularity; and (4) alternatively, the Illinois ...

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