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Reilly Partners v. Fair Isaac Corp.

June 8, 2009

REILLY PARTNERS, PLAINTIFF,
v.
FAIR ISAAC CORPORATION AND MATTHEW D. BECK, DEFENDANTS.



The opinion of the court was delivered by: Wayne R. Andersen District Judge

MEMORANDUM OPINION AND ORDER

This case is before the court on the motion of Fair Isaac Corporation ("Fair Isaac") and Matthew D. Beck ("Beck") (collectively "defendants") to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the motion is denied with respect to Count I, which alleges breach of contract against Fair Isaac. The motion is granted with respect to Count II, which alleges breach of contract against Beck. Plaintiff Reilly Partners ("Reilly") has also filed a motion to strike portions of defendants' reply brief pursuant to Federal Rule of Civil Procedure 12(f). Because Reilly's motion seeks to strike factual allegations that were not relevant to our decision on the motion to dismiss and were properly included in Fair Isaac's reply to its motion, the motion to strike is denied.

BACKGROUND

Reilly filed a complaint against defendants on January 16, 2009. The complaint alleges one count of breach of contract against Fair Isaac and one count of breach of contract against Beck. The allegations in the complaint stem from four retainer agreements reached on October 22, 2007 between Reilly and an entity known as River North.

In 2007, Fair Isaac decided to sell its marketing services group. Compl. ¶ 11. As part of this effort, Fair Isaac began the process of divesting this group to become a stand-alone entity. Id. Fair Isaac named the division that was to be divested River North. Id. Fair Isaac enlisted Joe Paulsen ("Paulsen"), the head of the marketing services division at Fair Isaac, to serve as CEO of River North. Def's Mot. Dismiss at 2. Thereafter, Paulsen engaged Reilly to begin a search for several executives to fill key positions with River North. Compl. ¶ 21. Ultimately, four letter agreements were reached between Paulsen, on behalf of River North, and Simon Blanks, on behalf of Reilly. Id. As per these agreements, Reilly initiated its search for candidates to fill the executive positions at River North. Id. River North, however, never did become incorporated as a stand-alone entity. Compl. ¶ 13. Shortly after the agreements with Reilly were reached, Fair Isaac decided that the divestment of River North would not occur. Compl. ¶ 24. On October 31, 2007, Reilly received word from Fair Isaac that the River North divestment plan was no longer being pursued. Id. Specifically, Matthew Beck, senior director of product management with Fair Isaac sent an email to Reilly informing the company that Fair Isaac had abandoned its plans for River North. Compl., Ex. E. Thereafter, the deal with Reilly collapsed. Compl. ¶ 24.

Reilly's complaint alleges that it fulfilled its obligations under the agreements with River North but did not receive the agreed upon payment for these services. Compl. ¶¶ 22-28. Reilly alleges that liability for this breach of contract rests with the named defendants, Fair Isaac and Beck, because each defendant allegedly acted as a promoter of River North. Compl. ¶¶ 30-42.

On March 19, 2009, defendants moved to dismiss the complaint. We now turn to the motion to dismiss.

STANDARD OF REVIEW

In order to survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. ___, 2009 U.S. LEXIS 34782, at *29, 2009 WL 1361536 (May 18, 2009)(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 2009 U.S. LEXIS 34782, at *29 (citing Twombly, 550 U.S. at 556). The complaint must be construed in a light favorable to the plaintiff and the court must accept all material facts alleged in the complaint as true. Jackson v. E.J. Branch Corp., 176 F.3d 971, 978 (7th Cir. 1999). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of a cause of action, supported by mere conclusory statements do not suffice." Iqbal, 2009 U.S. LEXIS 34782, at *29 (citing Twombly, 550 U.S. at 555).

Additionally, a complaint must describe the claim with sufficient detail as to "give the defendants fair notice of what the...claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). However, a complaint does not need to set forth all relevant facts or recite the law. Rather, all that is required is "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a); see also Doherty v. City of Chicago, 75 F.3d 318, 322 (7th Cir. 1996).

DISCUSSION

I. Count I: Breach of Contract Claim Against Fair Isaac

Count I alleges that Fair Isaac, acting as a promoter of River North, entered into and terminated four letter agreements with Reilly without issuing payment for services rendered. Compl. ¶¶ 30-35. Defendants argue that, because the relevant agreements do not explicitly mention the Fair Isaac Corporation, Fair Isaac is insulated from liability resulting from these agreements. Def's Mot. Dismiss at 3.

However, the pleadings do not give any indication that Fair Isaac divested the marketing services division it referred to as River North. Compl. ¶ 13. Rather, based upon the pleadings it appears that River North remained at all times an unincorporated division of the Fair Isaac Corporation. Id. Thus, Reilly has properly alleged that Fair Isaac is the appropriate party to sue. An unincorporated division of a corporation is not an independent actor for liability purposes because the division "has no separate assets; all its assets are owned by the organization of which it is a part." See Albers v. Church of the Nazarene, 698 F.2d 852, 857 (7th Cir. 1983); Salzstein v. Bekins Van Lines, Inc., 747 F. Supp. 1281, 1282 n.1 (N.D. Ill. 1990) ("[B]y definition a corporate division is not a separate legal entity and hence is not suable."). Moreover, Joe Paulsen, who signed each of the contracts on behalf of ...


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