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SKF USA Inc. v. Bjerkness

August 9, 2010

SKF USA INC., PLAINTIFF,
v.
DALE H. BJERKNESS, KEVIN KOCH, JOSEPH J. SEVER, AND WALTER REMICK, JR., DEFENDANTS.
SKF USA INC., PLAINTIFF,
v.
EQUIPMENT RELIABILITY SERVICES, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER

Defendant Dale Bjerkness worked for Preventive Maintenance Company, Inc. ("PMCI"), which was acquired by Plaintiff SKF USA in January 2007. Bjerkness left the company in May 2008 and started a competing firm, Defendant Equipment Reliability Services, Inc. ("ERSI"). Defendants Kevin Koch, Joseph Sever, and Walter Remick followed Bjerkness from SKF to ERSI. Before leaving, the individual Defendants copied thousands of SKF computer files onto their own computer storage devices. Several of SKF's customers took their business to ERSI, and in servicing those customers, ERSI used some of the SKF files that they had taken.

SKF has sued Bjerkness, Koch, Sever, and Remick, alleging, as relevant here, that they violated the Illinois Trade Secrets Act ("ITSA"), committed the tort of unfair competition, and breached secrecy agreements. In addition, SKF alleges that Bjerkness breached his fiduciary duties owed to SKF. In a separate lawsuit, which was consolidated with this one, SKF has sued ERSI, alleging that ERSI misappropriated trade secrets and committed tortious interference with current and prospective contractual interests.

On April 24, 2009, the court entered a preliminary injunction requiring the individual Defendants to destroy the proprietary information taken from SKF. The parties then proceeded to a bench trial. Based on the evidence presented at that trial, the court concludes that the individual Defendants violated ITSA by taking and using SKF's trade secrets, and awards compensatory damages equal to the profits that ERSI earned while using those trade secrets, $41,068.40. The court also finds that the individual Defendants' conduct was willful and malicious, and, therefore, orders an award of exemplary damages of $40,000 and the payment of attorney's fees in an amount to be determined.

BACKGROUND

SKF/PMCI and ERSI are competitors in the "reliability services" business, providing customers with services focused on monitoring the performance of industrial equipment. These monitoring services enable the companies to "provide basic maintenance for [their customers'] equipment, suggest ways to improve its functioning, and detect problems to avoid unexpected equipment failures." SKF USA, Inc. v. Bjerkness, 636 F. Supp. 2d 696, 703 (N.D. Ill. 2009). Before SKF acquired PMCI on January 1, 2007, Defendant Bjerkness worked for PMCI as a director for the Northern Upper Midwest Region, Defendant Koch was a technical reliability engineering manager, and Defendants Remick and Sever were technicians. (Trial Tr., Vol. I, at 40-41.) After the acquisition, all four became employees of SKF. (Id. at 267-68; Uncontested Facts ¶ 1.)

Before the merger, each of the individual Defendants had signed an employment agreement with PMCI that restricted them from competing with PMCI or soliciting PMCI's customers. (Pl's Ex. 11, 27, 34, 122.) After the merger, they each signed a secrecy agreement with SKF that, unlike the earlier agreement, did not contain non-competition provisions. (Trial Tr., Vol. II, at 389-90, 400-01, 437-38, Vol. III, at 492-93; Pl's Ex. 13, 29, 36, 124.) The court has previously held that the SKF Secrecy Agreement superseded the PMCI Agreement, and that the SKF Secrecy Agreement is enforceable. SKF, 636 F. Supp. 2d at 706-710. Defendants are, therefore, not bound by non-competition language, but are bound by secrecy provisions as set forth below:

Employee agrees that he will not in any way during his employment and at any time thereafter, without SKF's written approval, disclose or publish to any unauthorized person, firm or corporation any technical or proprietary information, trade secrets and confidential business matters, including but not limited to, secret processes, formulae, sequences, equipment, research items and results, drawings, prints, customer lists, costs, technical sales and marketing programs. All documents, memoranda, reports, prints, and drawings, including all copies thereof in respect of the above items, are the sole and entire property of SKF which Employee will surrender to SKF upon any termination of employment with SKF. (Pl's Ex. 13, 29, 36, 124.)

Defendant Bjerkness's last day at SKF was May 23, 2008. (Trial Tr., Vol. III, at 493; Uncontested Facts ¶ 3.) He had filed papers to incorporate ERSI three days earlier. (P.I. Hearing Tr., at 712; Pl's Ex. 50.) Within two months, Defendants Koch, Sever, and Remick had all followed Bjerkness from SKF to ERSI. (Trial Tr., Vol. II, at 390, 401, 438; Uncontested Facts ¶¶ 5-6, 8-9, 11-12.) Before leaving SKF, all four individual Defendants transferred files from SKF computers to their own electronic storage devices--USB flash drives, external hard drives, CDs, and DVDs. At trial, Stephen Wareham, an SKF employee with responsibilities for human resources as well as supporting technical operations, testified at length about the files found on thirty-one different computer storage devices owned by the individual Defendants. (Pl's Ex. 8.) Wareham testified that the thousands of files found on those devices included the following:

* A document outlining SKF's salary review process for employees. (Trial Tr., Vol. I. at 50.)

* SKF's code of conduct for employees and a training procedure for the code. (Id. at 51.)

* A folder of files from a salesman containing all of the information he assembled to present to a customer. (Id. at 53.)

* SKF's employee handbooks. (Id. at 54.)

* A draft training manual for technicians. (Id. at 55-56.)

* Reports from a customer's facility. (Id. at 58, 63.)

* A list of a customer's equipment that SKF was responsible for monitoring. (Id. at 59.)

* A report template created by PMCI. (Id.)

* Databases containing information produced by monitoring customers' ...


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