The opinion of the court was delivered by: Judge Joan H. Lefkow
The Federal Deposit Insurance Corporation ("the FDIC"), as receiver for Lincoln Park Savings Bank ("LPSB"), has brought suit against former LPSB employees Frank Binetti, Gerald Collins, Kimberly Gehrke, Donna Paler, Jeffrey Wheatley, and Larry Windel (collectively, "defendants"),*fn1 alleging that they breached their contracts with LPSB and misappropriated LPSB's trade secrets in violation of the Illinois Trade Secrets Act ("ITSA"), 765 Ill. Comp. Stat. 1065/1 et seq. LPSB also claims that Binetti breached his fiduciary duty to LPSB and tortiously interfered with LPSB's contractual relationships with the other defendants. Before the court is defendants' motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the motion [#7] is granted in part and denied in part.
Defendants were LPSB employees who began their employment at various times throughout 2008 and 2009 and left LPSB's employ in 2010. Binetti was LPSB's regional sales manager and in charge of recruiting mortgage loan officers. The remaining defendants were loan officers. Defendants signed compensation policies that governed their employment with LPSB. Although they were at will employees, they agreed to be bound by certain terms and conditions during their employment. These included soliciting and originating loans exclusively for LPSB, protecting LPSB's trade secrets, and not retaining, using, or disclosing LPSB's confidential information at any time. Defendants acknowledged that their jobs required access to LPSB's confidential information, which was made available to them only on a need to know basis. Defendants agreed to "comply with a 1-year non-compete agreement if [they] terminate[d] employment with Lincoln Park Savings Bank voluntarily." Group Ex. 1 to Compl. at ¶ VIII(L)(h).
LPSB used a loan origination system to maintain information on loans procured by defendants and to track these loans until they were completed. The system created "a confidential method for LPSB to continue to service its customers and to procure more business by tracking loans contained in [it]." Compl. ¶ 31. Defendants input, maintained, and updated information in the system. LPSB intentionally kept the information in the loan origination system secret and confidential.
Around July 2009, defendants began soliciting loans for other banks and lenders and removing pre-existing loans from the loan origination system and transferring them to another financial institution even though they were still employed by LPSB. In doing so, they used LPSB's proprietary information and customer lists. Binetti agreed to work for another bank and have his leads and loans transferred to this other bank around November 2009. Binetti also convinced the other defendants to leave LPSB and take customers with them. By January 2010, all defendants had agreed to leave LPSB and take LPSB loans with them to another financial institution. By departing, defendants entered direct competition with LPSB and deprived LPSB of existing customers.
A motion to dismiss under Rule 12(b)(6) challenges a complaint for failure to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6); Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). In ruling on a motion to dismiss, the court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. Dixon v. Page, 291 F.3d 485, 486 (7th Cir. 2002). In order to survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of the claim's basis, but must also establish that the requested relief is plausible on its face. Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). The allegations in the complaint must be "enough to raise a right of relief above the speculative level." Twombly, 550 U.S. at 555.At the same time, the plaintiff need not plead legal theories. Hatmaker v. Mem'l Med. Ctr., 619 F.3d 741, 743 (7th Cir. 2010). Rather, it is the facts that count.
To state a claim under ITSA, LPSB must allege that "the information at issue was a trade secret, that it was misappropriated and that it was used in the defendant's business."*fn3 Learning Curve Toys, Inc. v. PlayWood Toys, Inc., 342 F.3d 714, 721 (7th Cir. 2003). A trade secret is defined as information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that:
(1) is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and
(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality. 765 Ill. Comp. Stat. 1065/2(d). A trade secret is misappropriated if it is disclosed by a person who "knew or had reason to know that knowledge of the trade secret was . . . acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use." Id. 1065/2(b)(2).
Defendants argue that LPSB has failed to adequately allege both the existence of a trade secret and actual or threatened misappropriation of a trade secret. Instead, they contend that the complaint only recites the statutory elements of a trade secret claim and is improperly based on allegations made on information and belief. Defendants mistakenly rely on cases decided at stages other than a motion to dismiss or under Illinois's fact-pleading standard in support of dismissal. "The existence of a trade secret ordinarily is a question of fact . . . . best resolved by a fact finder after full presentation of evidence from each side." Learning Curve Toys, 342 F.3d at 723 (citations omitted) (internal quotation marks omitted). At the same time, however, "mere rote repetition of the statutory language does not suffice." Magellan Int'l Corp. v. Salzgitter Handel GmbH, 76 F. Supp. 2d 919, 927 (N.D. Ill. 1999). While "[i]t is not enough to point to broad areas of technology and assert that something there must have been secret and misappropriated," Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263, 1266 (7th Cir. 1992), trade secrets "need not be disclosed in detail in a complaint alleging misappropriation for the simple reason that such a requirement would result in public disclosure of the purported trade secrets." AutoMed Techs., Inc. v. Eller, 160 F. Supp. 2d 915, 921 (N.D. Ill. 2001) (quoting Leucadia, Inc. v. Applied Extrusion Techs., Inc., 755 F. Supp. 635, 636 (D. Del. 1991). In arguing that LPSB's complaint only repeats ITSA's language, defendants ignore that LPSB has provided enough factual detail to sufficiently put defendants on notice of the substance of the claims against them. See Dick Corp. v. SNC-Lavalin Constructors, Inc., No. 04 C 1043, 2004 WL 2967556, at *9 (N.D. Ill. Nov. 24, 2004) ("The query is whether the allegations provide the defendants with notice as to the substance of the claims."). Although the complaint is not a model of specificity, LPSB has alleged that defendants had access to its trade secrets, specifically, confidential customer and other information contained in its loan origination system. LPSB has further alleged that it expended extensive efforts to ensure that this information remained secret and confidential. The compensation policies reflect this, stating that LPSB only made confidential business information available to select employees on a need to know basis, that defendants agreed not to retain, use, or disclose this confidential information, and ...