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Motorola, Inc. v. Lemko Corp.

April 12, 2010

MOTOROLA, INC., PLAINTIFF,
v.
LEMKO CORP., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly United States District Judge

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge

Plaintiff Motorola, Inc. has filed a second amended complaint against defendants Lemko Corp., Xiaohong Sheng, Shaowei Pan, Hanjuan Jin, Xiaohua Wu, Xuefeng Bai, Nicholas Labun, Bohdan Pyskir, Hechun Cai, Jinzhong Zhang, Angela Favila, Ankur Saxena, Raymond Howell, Faye Vorick, and Nicholas Desai. Defendants Lemko, Pan, Bai, Labun, Pyskir, Cai, Zhang, Saxena, Vorick, and Desai, joined by Howell (who is representing himself), have moved to dismiss the claims against them for failure to state a claim and to strike certain allegations.

Motorola's claims

Motorola asserts the following claims: - Count 1, against Lemko, Pan, Jin, Wu, Bai, and Sheng under the Computer Fraud and Abuse Act (CFAA); - Count 2, against all defendants, under the Illinois Trade Secrets Act (ITSA);

- Count 3, against Jin, Wu, Bai, and Sheng, for breach of fiduciary duty; - Count 4, against Pan, Labun, Pyskir, Cai, Zhang, Favila, and Saxena, for breach of fiduciary duty; - Count 5, against Pan, Labun, and Pyskir, for usurpation of corporation opportunities; - Count 6, against Lemko, Pan, and Labun for a declaratory judgment regarding patent ownership; - Counts 7 through 13, against Pan, Labun, Pyskir, Cai, Zhang, Favila, and Saxena, respectively, for breach of contract; - Count 14, against Lemko, for tortious interference with contract; - Count 15, against Pan, Labun, Pyskir, Cai, Zhang, Favila, and Saxena, for fraud; - Count 16, against Pan, Wu, and Lemko, for spoliation of evidence; - Count 17, against Lemko, for copyright infringement; and - Count 18, against Pan, Labun, Pyskir, Cai, Zhang, Favila, Saxena, Jin, Howell, Vorick, and Desai, for civil conspiracy.

A number of the defendants were, at various points in time, Motorola employees. Many of them are now with Lemko. In general terms, Motorola's claims arise from its allegations that several of the defendants, while still Motorola employees, established or worked for the benefit of Lemko, a competing venture, and took Motorola assets and diverted Motorola opportunities, and that other defendants assisted them in doing so.

Discussion

A court considering a motion to dismiss under Rule 12(b)(6) must accept the facts alleged in the complaint as true and draw reasonable inferences in favor of the plaintiff. See, e.g., Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). To survive the motion, the complaint must include enough facts to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009). A claim is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1949.

1. Limitations Defenses (Counts 1, 2, 4, 5, 14, 15, and 18)

The moving defendants argue that Counts 1, 2, 4, 5, 14, 15, and 18 are time-barred. It is undisputed that a five year limitations period applies to Counts 2, 4, 5, 14, 15, and 18.

"Complaints need not anticipate, and attempt to plead around, potential affirmative defenses. When Erickson v. Pardus, 551 U.S. 89 (2007), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), restated the [pleading] requirements of Fed. R. Civ. P. 8, the Justices did not revise the allocation of burdens concerning affirmative defenses . . . ." Davis v. Indiana State Police, 541 F.3d 760, 763 (7th Cir. 2008) (Easterbrook, C.J.). The defendants read the Seventh Circuit's decision in In re MarchFirst Inc., 589 F.3d 901 (7th Cir. 2009), as changing this, and requiring Motorola to allege, in its complaint, facts sufficient to negate not-yet-raised affirmative defenses. The Court does understand MarchFirst that way. In that case, the Seventh Circuit ruled not that the plaintiff had failed to state a claim because it had not anticipated and negated a limitations defense, but rather that the plaintiff had "ple[d] itself out of court."

Id. at 905. The court held that the complaint itself "establishe[d] an impenetrable defense to its claims that would have to be contradicted for [plaintiff] to prevail on the merits" and that based on the complaint it "would be mere speculation" to determine that the discovery rule applied to establish a later trigger date for the statute of limitations. Id. The proposition that the plaintiff could plead itself out of court on an affirmative defense was accepted even before Bell Atlantic and Iqbal. See, e.g., Berry v. Land O'Lakes Mun. Airport, 377 F.3d 682, 688 (7th Cir. 2004).

Motorola's complaint establishes no such "impenetrable defense" that Motorola can get around only by "mere speculation." It is true that certain of Motorola's claims arise from events that occurred more than five years before the second amended complaint, or even the original complaint, was filed. But there is plenty in the complaint that plausibly suggests that the statute of limitations was not triggered until a date well within the limitations period. It is undisputed that Illinois' "discovery rule" applies to the claims in Counts 2, 4, 5, 14, 15, and 18. That rule "delays the commencement of the relevant statute of limitations until the plaintiff knows or reasonably should ...


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