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Deloitte & Touche Llp v. Lyle Carlson and David A. Deckter

July 18, 2011

DELOITTE & TOUCHE LLP, PLAINTIFF,
v.
LYLE CARLSON AND DAVID A. DECKTER, DEFENDANTS.



The opinion of the court was delivered by: Judge James B. Zagel

MEMORANDUM OPINION AND ORDER

Plaintiff Deloitte & Touche LLP sues two of their former employees, Lyle Carlson and David A. Deckter, for actions they allegedly took in the late stages of their employment with Deloitte, and continuing into their employment with another entity, Edgile, Inc.

Counts I, III, IV, VII, and X are leveled at Carlson. Respectively, they allege a violation of the Computer Fraud and Abuse Act, breach of the non-solicitation provision of an employment contract, breach of a right-to-inspect provision of the contract concerning access to personal computers, breach of the fiduciary duty of loyalty, and tortious interference with prospective economic relations. Count II, V, VI, VIII, and IX are aimed at Deckter. They allege violations of the Computer Fraud and Abuse Act, breach of a provision of his Senior Management Agreement concerning the right to inspect, breach of another provision concerning return of computer hardware and data, tortious inducement to breach the fiduciary duty of loyalty, and tortious interference with contract.

Defendants jointly move to dismiss all claims under Rule 12(b)(6). For the reasons that follow, the motion is denied as to each of the numbered counts but is granted for an additional, implied claim of breach of contract for client solicitation.

BACKGROUND

The alleged facts, which I take as true for purposes of this motion, are as follows. Deloitte & Touche LLP ("Deloitte" or "Plaintiff") is a consulting and professional services firm. It is organized as a Delaware limited liability partnership and has its principal place of business in New York City. Deloitte also operates an office in Chicago, where most of the alleged conduct was centered.

Carlson, an Indianapolis resident, worked for Deloitte but now works for Edgile, Inc. Carlson had started his most recent stint with Deloitte in 2002 as a Senior Manager in Deloitte's Security and Privacy Practice. Senior Manager is the third-highest position level at Deloitte. He eventually rose to the position of Director, the second-highest position level within the firm. As a Director, Carlson had access to a large volume of confidential and proprietary information, ranging from client lists to internal security protocols. Carlson's specific duties in the Security and Privacy group meant that he was well-acquainted with computer hardware and software and with technological security.

Carlson's and Deckter's Employment Agreements

Carlson signed an employment contract - a "Director Agreement"- on August 18, 2006. One provision of the agreement is that during his employment and for one year after his employment ends, he would not "directly or indirectly...solicit or attempt to solicit, or participate in the solicitation of or any attempt to solicit any partner, principal, member, officer, or employee of [Deloitte] to leave [Deloitte]...or to join any firm or business with which [he] may be or become affiliated."

An additional provision stated that Carlson "agree[d] to allow [Deloitte] to inspect any of [Carlson's] personal or home computers to determine whether any Proprietary Information or Property belonging to the Employer or a Connected Entity resides on such computers and to permit [Deloitte] to remove such Proprietary Information or Property from such computers."

Deckter signed a "Senior Manager Agreement" on September 20, 2004. Deckter's agreement had an identical inspection provision to Carlson's Director Agreement. Also relevant here, Deckter's Senior Manager Agreement had a provision stating that upon the termination of his employment he would "immediately deliver to [Deloitte] any Proprietary Information of [Deloitte] in a tangible form that [Deckter] may then or thereafter hold or control."

The Carlson and Deckter Departures

Carlson voluntarily resigned from Deloitte on October 29, 2010 to work for Edgile, Inc. Like the group Carlson worked for at Deloitte, Edgile provides computer network security and privacy services. On August 15, 2010 - two and a half months prior to Carlson's departure -Deckter sent an email to Carlson with the subject line "ddeckter@gmail.com" and no body text other than Deckter's electronic signature. Plaintiff alleges that this email was sent from Deckter to Carlson to facilitate Carlson's solicitation of Deckter to work at Edgile. Plaintiff avers on information and belief that Deckter and Carlson thereafter engaged in email exchanges and video conferencing, the goal of which was for Carlson to solicit Deckter and ultimately for both of them to coordinate their departures to Edgile. Deckter in fact did leave Deloitte for Edgile, on November 26, 2010 - less than one month after Carlson.

Additionally, Plaintiff claims that Carlson told other Deloitte employees to "Sit tight...I'll be in touch," which Plaintiff claims was a loaded statement implying that Carlson would reach back to solicit them to join him at Edgile along with Deckter.

The Hardware and Data Destruction

When Carlson resigned from Deloitte, he returned his company-issued laptop computer but did not return the hard drive originally issued with that computer, despite an exit checklist commanding him to return all computer hardware and data. Rather than return the originally issued hard drive, he destroyed that hard drive by physically shattering it. The computer he returned had a new, blank hard drive.

A letter from Carlson's attorney is attached as an exhibit to the complaint. In it, counsel explained that Carlson destroyed the hard drive because he had personal data stored on it, including such personal documents as tax returns and private account information. The letter represents that Carlson uploaded all Deloitte documents from the hard drive onto Deloitte's servers prior to destroying it, but Deloitte disputes this fact. Additionally, Deloitte claims that even for data which was downloaded, they were only able to restore it to a usable form at some effort and cost. Further, Deloitte notes that Carlson's lawyer's letter expressly does not say that he no longer also has the Deloitte data himself - it merely says that he uploaded Deloitte files onto Deloitte's servers.

Using what Deloitte describes as "a more contemporary approach" than physically smashing his computer hardware, Deckter downloaded a commercially available software program called "Eraser" from the Internet. Running the program had the effect of permanently deleting substantial volumes of Deloitte data. Client Solicitation

Plaintiff claims that Carlson has "contacted" several of his clients from Deloitte, in violation of a client non-solicitation provision in his Director Agreement.

STANDARD OF REVIEW

With exceptions not relevant here, complaints asserting claims for relief in the federal courts are governed by the notice pleading standard of Rule 8. See Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). A motion under rule 12(b)(6) requests dismissal of a complaint, or a claim within a complaint, for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P 12(b)(6). Such motions test the legal sufficiency of the complaint, not the underlying factual merits. Christensen v. County of Boone, 483 F.3d 454, 458 (7th Cir. 2007).

I must take all facts alleged in a plaintiff's complaint as true and draw all reasonable inferences from those facts in favor of that plaintiff. Pisciotta v. Old Nat. Bancorp, 499 F.3d 629, 633 (7th Cir.2007). Plaintiffs need not plead particularized facts, but the factual allegations in the complaint must be enough to raise a right to relief above the speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 569 n. 14 (2007). Plaintiffs must plead their facts so that, when accepted as true, they show the plausibility of their claim for relief. Ashcroft v. Iqbal, 129 ...


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