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Customguide v. Careerbuilder

November 15, 2011

CUSTOMGUIDE, PLAINTIFF,
v.
CAREERBUILDER, LLC DEFENDANT.



The opinion of the court was delivered by: James F. Holderman, Chief Judge:

MEMORANDUM OPINION AND ORDER

On August 24, 2011, the court granted in part and denied in part the motion to dismiss of defendant CareerBuilder, LLC ("CareerBuilder"). (Dkt. No. 20.) Thereafter, plaintiff CustomGuide filed its First Amended Complaint (Dkt. No. 32), alleging breach of contract (Count I), common law fraud (Count II), and copyright infringement (Counts III-V). Currently before this court is CareerBuilder's "Motion to Dismiss First Amended Complaint." (Dkt. No. 33.) For the reasons explained below, CareerBuilder's motion is granted in part and denied in part.

BACKGROUND

The following are the relevant facts of this case, viewing the factual allegations in CustomGuide's First Amended Complaint in the light most favorable to CustomGuide. See Cole v. Milwaukee Area Tech. Coll. Dist., 634 F.3d 901, 903 (7th Cir. 2011).

CareerBuilder owns and operates the CareerBuilder.com and CareerBuilderInstitute.com websites. (First Am. Compl. ¶ 6.) CustomGuide is a Minnesota-based company owned by brothers Jon and Daniel High (collectively the "High brothers"). (Id. ¶ 11.) The High brothers developed and own online computer application training modules, courses, and related Quick Reference Guides, which train users on how to operate various software programs, such as Microsoft Windows. (Id. ¶ 12.) CustomGuide dedicated approximately two years and $1.75 million to develop CustomGuide's online training products. (Id. ¶ 13.)

At some point, CareerBuilder engaged CustomGuide in negotiations to obtain a license to sell certain CustomGuide products. (Id. ¶ 17.) Throughout those negotiations, the High brothers expressed their concern to Christian Idiodi ("Idiodi"), Director of the CareerBuilder Institute, that CareerBuilder sell CustomGuide's products only to individual consumers and not to businesses because sales to businesses would directly compete with CustomGuide's business-to-business sales. (Id. ¶ 18.) Idiodi repeatedly represented to the High brothers in January and February 2008 that CareerBuilder would use CustomGuide's products only for business-to-consumer sales and as otherwise authorized by the parties' contemplated licensing agreement. (Id. ¶ 19.) The High brothers relied on Idiodi's representations and entered into a Partnership and Development Agreement ("Agreement"), which was dated February 4, 2008, and had a one-year term. (Id. ¶ 22; Agreement (attached as Ex. A to First Am. Compl.)) Under the terms of the Agreement, CareerBuilder's license was limited to business-to-consumer sales. (First Am. Compl. ¶ 23.) CareerBuilder nevertheless decided that it wanted to sell CustomGuide's content in the business-to-business market. (Id. ¶25.)

On or about August 4, 2008, Idiodi and CareerBuilder.com's Chief Marketing Officer, Richard Castellini ("Castellini"), flew to Minnesota to meet with the High brothers. (Id ¶ 28.) CareerBuilder's purported purpose for the meeting was to enter into an agreement with CustomGuide to allow CareerBuilder to use CustomGuide's content for business-to-business sales.

(Id. ¶ 28.) The High brothers ultimately decided against signing the contract. (Id. ¶ 37.)

Despite not having a license for business-to-business sales of CustomGuide's content, CareerBuilder made unauthorized access to CustomGuide's system and used CustomGuide's content for business-to-business sales. (Id. ¶ 39.) CareerBuilder also actively promoted and misrepresented CustomGuide's products as CareerBuilder's own products. (Id. ¶ 40.) In addition, CareerBuilder.com promoted CustomGuide's products as a value-add to the businesses posting jobs on CareerBuilder.com. (Id. ¶42.) When posting a job, CareerBuilder.com would provide employers with a hyperlink advertising online training for the posted position. (Id.) The hyperlink would be directed to unauthorized samples of CustomGuide's training products, re-branded with the CareerBuilder logo. (Id.) CareerBuilder also bundled CustomGuide's Quick Reference Guides with other CareerBuilder products, giving the Reference Guides to CareerBuilder's customers for free. (Id. ¶43.) CustomGuide eventually demanded that CareerBuilder discontinue this process. (Id. ¶ 44.) Initially, CareerBuilder complied with CustomGuide's request but then returned to distributing CustomGuide's Quick Reference Guides for free to CareerBuilder's customers. (Id.) After the termination of the Agreement, CareerBuilder continued to access CustomGuide's system and to sell CustomGuide's products to consumers. (Id. ¶ 45.)

LEGAL STANDARD

Under the Federal Rules of Civil Procedure, a complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The complaint must "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). While "detailed factual allegations" are not required, "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. The complaint must "include sufficient facts 'to state a claim for relief that is plausible on its face.'" Cole v. Milwaukee Area Tech. College Dist., 634 F.3d 901, 903 (7th Cir. 2011) (quoting Justice v. Town of Cicero, 577 F.3d 768, 771 (7th Cir. 2009)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). In ruling on a Rule 12(b)(6) motion, the court "construe[s] the . . . [c]omplaint in the light most favorable to Plaintiff, accepting as true all well-pleaded facts and drawing all possible inferences in his favor. Id.

ANALYSIS

I. Count I: Breach of Contract

CareerBuilder first moves to dismiss Count I, CustomGuide's breach of contract claim that CareerBuilder used CustomGuide's software beyond the scope of the license in ¶ 4 of the Agreement. CareerBuilder argues that because the Agreement expired on February 4, 2009, CustomGuide cannot maintain a breach of contract action for CareerBuilder's activities after that date. Paragraph 10(e) of the Agreement, however, provides that "the obligations of the parties with regard to indemnification and payment shall survive the termination of this Agreement. Sections 2, 4, 6 and 7 shall also survive and remain in effect in accordance with their terms." Agreement ¶ 10(e). CareerBuilder discounts that provision by contending that the phrase "in accordance with their terms" limits ¶ 10(e) so that it applies only if the relevant paragraphs contain explicit survival terms. Thus, for example, ¶ 2 provides that CustomGuide will let CareerBuilder's existing customers continue to access its software for 90 days after termination, and ¶ 7 extends a confidentiality provision ...


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