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Fasteners For Retail, Inc v. Gerald andersen and K International Inc

August 30, 2011

FASTENERS FOR RETAIL, INC., PLAINTIFF,
v.
GERALD ANDERSEN AND K INTERNATIONAL INC., DEFENDANTS.



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

MEMORANDUM OPINION AND ORDER

Plaintiff Fasteners for Retail, Inc. (FFR) has sued K International (KI) and Gerald Andersen. FFR has asserted claims against KI for patent infringement, false advertising, consumer fraud, unfair competition, and misappropriation of trade secrets. FFR also asserts the latter claim against Andersen. Andersen is a former senior FFR sales executive. FFR terminated Andersen's employment in November 2009. Andersen went to work for KI about a year later, in November 2010. FFR alleges that KI has assigned Andersen to market the accounts he managed for FFR and that he is using FFR's confidential information to advance his own and KI's interests.

FFR brings its has used misappropriation claim (Count 5) against Andersen and KI under the Illinois Trade Secrets Act, 765 ILCS 1065/3 & 4. In that claim, FFR alleges that it has taken extensive steps to prevent disclosure and use of its confidential information concerning customers, sales strategies, pricing, costs, and customer preferences and that it will suffer irreparable injury if this information is used by or disclosed to others. FFR alleges that Andersen had access to this information by virtue of his position at FFR. The parties agree that Andersen was subject to a written employment agreement while employed at FFR. The agreement required him to keep confidential FFR's trade secrets and confidential information, prohibited him from taking any materials from FFR, and required him to return all such materials to FFR on termination of his employment. According to FFR, Andersen retained or copied trade secrets and confidential information without authorization. FFR alleges that when he went to work for KI, Andersen took essentially the same job that he held with FFR, as sales executive responsible for customers in the western U.S. FFR contends that Andersen has attempted to divert his former FFR customers to KI and has done so using FFR samples and price lists, while representing that KI can sell the same or similar products at lower prices. It also alleges that he has used and will continue to use FFR's confidential information to his and KI's advantage.

Andersen has moved to dismiss Count 5. He contends that he is not subject to personal jurisdiction here; that venue is improper here; and that the claim is barred by a release in a settlement agreement that he entered into with FFR following litigation in 2010.

Discussion

1. Personal jurisdiction

On a motion to dismiss for lack of personal jurisdiction, factual disputes are resolved in the non-moving party's favor. See, e.g., Purdue Research Fdn. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). FFR has established prima facie that this Court has personal jurisdiction over Andersen. See Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2001). He went to work for KI, which is headquartered in this district, and there is evidence that he has solicited certain of his former FFR customers that have Illinois stores or subsidiaries in Illinois. There is also evidence that Andersen regularly sends information to KI in Illinois. This information included an FFR sales presentation and FFR sales figures.

In sum, there is sufficient evidence to establish prima facie that Andersen disclosed FFR's trade secrets in Illinois and caused harm to FFR in this state by soliciting its Illinois customers. This amounts to commission of a tortious act in Illinois, which confers a court in this state with jurisdiction over him for claims like FFR's that arise (at least in part) from those acts. See 735 ILCS 5/2-209(a)(2). In addition, because there is evidence that Andersen purposefully directed his activities toward Illinois; Illinois has a significant interest in remedying tortious acts alleged to have taken place in this state; and FFR's claim against Andersen is intertwined with at least one of its claims against KI, personal jurisdiction over which is unquestioned, the exercise of jurisdiction over Andersen here comports with the principles of due process. See generally Tamburo v. Dworkin, 601 F.3d 693 (7th Cir. 2010).

The Court is unpersuaded by Andersen's contention that the "fiduciary shield" doctrine insulates him from the exercise of jurisdiction here. FFR has established prima facie that in committing the allegedly tortious acts, Andersen was acting, at least in significant part, on his own behalf and to further his own interests. The Court is likewise unpersuaded by Andersen's argument, made only in his reply brief (and thus likely forfeited), that a release of claims in his settlement agreement with FFR arising from a prior lawsuit means that Andersen's Illinois contacts do not "count" for purposes of personal jurisdiction. The Court notes that Andersen has cited no authority supporting this contention.

2. Venue / forum selection clause

Andersen's next challenge is to venue. There is no question that venue, as a statutory matter, is appropriate in this district as to Andersen. A substantial part of the events giving rise to the claim occurred here, as the Court has just described. See 28 U.S.C. § 1391(a).

Andersen argues that the only appropriate venue for the case is in a federal or state court in Cuyahoga County, Ohio, by virtue of a forum selection provision in his employment agreement with FFR. The provision states that

[i]f a proceeding or claim relating or pertaining to this Agreement is initiated between either party hereto, such proceeding or claim shall and must be filed in any state or federal court located in Cuyahoga County, Cleveland, Ohio, and this Agreement and such proceeding or claim shall be governed by ...


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