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International Tax Advisors, Inc.; and Creative Tax Strategies, Inc v. Tax Law Associates

February 15, 2011


The opinion of the court was delivered by: Magistrate Judge Maria Valdez


Plaintiffs International Tax Advisors, Inc. ("ITA") and Creative Tax Strategies, Inc. ("CTS") brought this complaint against Defendants Tax Law Associates, LLC; Tax Law Associates, Inc.; Tax Law Advisors, Inc.; Michael Scott Fussell; and Crystal Kinder*fn1 alleging, among other things, that Defendants used Plaintiffs' copyrighted and trade secret materials in their own business. The fourteen-count complaint alleges violations of various federal and state statutes as well as common law causes of action. This matter is now before the Court on the following motions: (1) Plaintiffs' Motion for Summary Judgment [Doc. No. 96]; (2) Defendants' Motion for Partial Summary Judgment [Doc. No. 101]; (3) Plaintiffs' Motion to Strike Defendants' Counter Motion for Summary Judgment [Doc. No. 108]; (4) Plaintiffs' Motion to Strike Affidavit of Mitchell B. Katten [Doc. No. 123]; and (5) Plaintiffs' Motion to Strike Affidavit of Scott N. Gilbert [Doc. No. 125]. For the reasons that follow, Plaintiffs' Motion for Summary Judgment is denied, Defendants' Motion for Partial Summary Judgment is granted in part, and the remaining motions are denied as moot.


The following facts material to this decision are undisputed or are deemed admitted due to a party's failure to comply with Local Rule 56.1, which this Court strictly enforces. See Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003); Malec v. Sanford, 191 F.R.D. 581, 583-84 (N.D. Ill. 2000). Plaintiffs ITA and CTS are businesses involved in providing tax consulting services. (Pls.' LR 56.1(a)(3) ¶¶ 1-2.) Plaintiffs have four registered copyrights related to materials they use to provide strategic tax planning services (the "Materials"), three with effective dates of registration of May 5, 2005, and one with an effective date of March 31, 2008. (Defs.' LR 56.1(a)(3) ¶¶ 28-30.) The Materials, taken together, constitute a "process" or "method" for providing Plaintiffs' clients with tax consulting services that will assist their clients in reducing their tax exposure. (Id. ¶ 34.) The '186 copyright describes the goal as reducing the client's taxes as much as legally possible. (Id. ¶ 39.) The '439 copyright states that the client will realize tax savings by following Plaintiffs' consulting advice. (Id. ¶ 40.) Plaintiffs' '438 and '440 copyrights graphically chart the client's projected tax savings from following Plaintiffs' consulting advice. (Id. ¶ 41.) The '438, '439, and '440 copyrights state that the advice is based on existing law. (Id. ¶¶ 42-43.) Plaintiffs are not in the business of selling the Materials; they sell strategic tax planning services and consulting advice on how to reduce tax exposure. (Id. ¶ 38.)

The corporate defendants are also in the business of providing strategic tax plans to individuals and corporations. (Pls.' LR 56.1(a)(3) ¶ 18; Defs.' LR 56.1(a)(3) ¶ 23.) Defendant Fussell, a CPA and licensed attorney, was employed by ITA from June 2002 to October 2003. (Pls.' LR 56.1(a)(3) ¶¶ 6, 11; Defs.' LR 56.1(a)(3) ¶¶ 1.) Fussell is the sole owner of all three corporate defendants, which were created or incorporated in 2004. (Pls.' LR 56.1(a)(3) ¶¶ 3-5; Defs.' LR 56.1(a)(3) ¶¶ 2, 5-7, 22.) Immediately upon leaving Plaintiff's employ, Fussell began using the Materials in order to prepare strategic tax plans for his own clients. (Pls.' LR 56.1(a)(3) ¶¶ 19, 39; Defs.' LR 56.1(a)(3) ¶ 24.)

Defendant Kinder was employed by ITA and then CTS from June 2002 to April 2008. (Pls.' LR 56.1(a)(3) ¶ 7; Defs.' LR 56.1(a)(3) ¶ 3.) Around July 2005, while Kinder was employed by Plaintiffs, she was hired by Fussell, who had already left ITA. (Pls.' LR 56.1(a)(3) ¶¶ 13, 20; Defs.' LR 56.1(a)(3) ¶ 4.) During her employment with Fussell, Kinder also used the Materials in preparing strategic tax plans. (Pls.' LR 56.1(a)(3) ¶¶ 20-21, 37.)

Plaintiffs' complaint alleges the following causes of action: Count I -Infringement of a Federal Copyright, 17 U.S.C. § 106(1), (2), and (3); Count II -Fraud; Count III - Conversion; Count IV - Breach of Fiduciary Duty; Count V - Violation of Illinois Trade Secret Act, 765 Ill. Comp. Stat. § 1065/1 et seq.; Count VI - Violation of the Consumer Fraud and Deceptive Trade Practices Act,*fn2 815 Ill. Comp. Stat. § 510/1 et seq.; Count VII - Violation of Federal Deceptive Trade Practices Act,*fn3 15 U.S.C. § 45; Count VIII - Accounting; Count IX - Tortious Interference with Contract; Count X - Tortious Interference with Prospective Economic Gain; Count XI - Unjust Enrichment; Count XII - Civil RICO Substance and Conspiracy; Count XIII - Conspiracy; and Count XIV - Breach of Contract (CTS v. Kinder). The parties have filed cross-motions for summary judgment as well as related motions to strike.


I. Summary Judgment Standard

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c);see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (holding that summary judgment is proper "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial"). The Court must draw all reasonable inferences in favor of the non-movant. Bennington v. Caterpillar Inc., 275 F.3d 654, 658 (7th Cir. 2001).

However, once the movant has carried its burden under Rule 56(c), "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The party opposing summary judgment must offer admissible evidence in support of his version of events, and hearsay evidence does not create a genuine issue of material fact. McKenzie v. Ill. Dep't of Transp., 92 F.3d 473, 484 (7th Cir. 1996); see Larimer v. Dayton Hudson Corp., 137 F.3d 497, 500 (7th Cir. 1998) ("'If the non-moving party bears the burden of proof on an issue, . . . that party may not rest on the pleadings and must instead show that there is a genuine issue of material fact.'") (citation omitted). "The mere existence of an alleged factual dispute is not sufficient to defeat a summary judgment motion. . . . The non-movant will successfully oppose summary judgment only when it presents 'definite, competent evidence to rebut the motion.'" Vukadinovich v. Bd. of Sch. Trs. of N. Newton Sch. Corp., 278 F.3d 693, 699 (7th Cir. 2002) (citations omitted).

"In considering a motion for summary judgment, this court is not required to scour the record in search of evidence to defeat the motion; the nonmoving party must identify with reasonable particularity the evidence upon which the party relies." Pleniceanu v. Brown Printing Co., No. 05 C 5675, 2007 WL 781726, at *7 (N.D. Ill. Mar. 12, 2007) (citing Johnson v. Cambridge Indus., Inc., 325 F.3d 892, 898 (7th Cir. 2003)); see also Knapp v. County of Jefferson, No. 06 CV 4028, 2007 WL 496396, at *1 (S.D. Ill. Feb. 13, 2007) (denying summary judgment where defendant's brief "contains no facts section and . . . fail[s] to point to the relevant portions of the record to establish the facts of this case"). Finally, the Court is "'not required to draw every conceivable inference from the record,"' McCoy v. Harrison, 341 F.3d 600, 604 (7th Cir. 2003) (citation omitted).

II. Plaintiffs' Motion for Summary Judgment

Plaintiffs' motion seeks summary judgment on all fourteen counts of the complaint, but it discusses the elements of only Count I, copyright infringement. As the movants, Plaintiffs are obligated to set forth all elements of their claims and demonstrate that there is no disputed issue of fact as to any of them. Plaintiffs, however, have failed to disclose the elements of ...

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