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Petra Michael, As Individual v. James A. Bell

August 13, 2012

PETRA MICHAEL, AS INDIVIDUAL, PLAINTIFF,
v.
JAMES A. BELL, AN INDIVIDUAL AND, JAB DISTRIBUTORS LLC, AN ILLINOIS LIMITED LIABILITY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

Plaintiff Petra Michael has filed a seven count complaint against Defendants James A. Bell and JAB Distributors LLC ("JAB"). Before the Court are Defendants' motions to dismiss [13, 16] and motion for a more definite statement of Plaintiff's complaint [10]. For the reasons stated below, Defendants' motions to dismiss [13, 16] are granted in part (as to Counts 1-3, 5, and 7) and denied in part (as to Counts 4 and 6), and Defendants' motion for a more definite statement of Plaintiff's complaint [10] is granted in part (as to Counts 4 and 6) and denied in part as moot (as to Counts 1-3, 5, and 7). The dismissal is without prejudice to Plaintiff filing an amended complaint within 21 days of this order.

I. Background*fn1

JAB, a limited liability organized in the state of Illinois, sells bedding products to hotels and pest control industries. It is known to the public as "Protect-A-Bed." Defendant James Bell is the CEO of JAB. In 2004, Plaintiff began working with Bell and JAB as an independent contractor. Plaintiff sold JAB's products to hotel industry clients. Through her work for JAB, Michael became close personal friends with Bell. According to Michael, she placed a great deal of trust, confidence, and reliance in Bell, which he knew.

In September 2005, while working on her own time, Michael conceived and developed a new idea for a bed bug encasement ("BBE") for mattresses and box spring covers. In November 2005, while still an independent contractor, Michael presented her idea for the BBE product to Bell. Bell was very enthusiastic about Michael's idea and expressed interest in having JAB develop the BBE. At that point, Bell raised the idea of having JAB employ Michael instead of having her work as an independent contractor. Michael was receptive to the idea.

In late 2005 and early 2006, while Michael was still an independent contractor, she continued to work on and refine the BBE. In April or May 2006, Michael and JAB developed a version of the BBE for the market and sold it to the EZ Hotel Group in San Diego for approximately $100,000. Michael received a commission for the sale and the balance was reinvested in the BBE. After the sale, Michael and JAB discussed making further improvements, including how to improve the zipper end stop.

In May or June 2006, Bell told Michael that JAB needed her to sign a written employment agreement with JAB. Michael agreed that an employment agreement made sense, so long as it was fair. In June 2006, Michael, on behalf of JAB, also made arrangements for a public relations firm to announce "our newest product 'Protect-A-Bed Bed Bug Encasement' fully encased mattress and box spring covers which are certified to be bed bug proof." According to Plaintiff, the BBE not only was her idea, but she also sewed many of the prototypes herself.

On June 14, 2006 Bell asked Michael to come to his office and showed her an employment agreement. The draft contained language pertaining to the "work for hire" doctrine, whereby products or ideas developed by an employee become the property of the employer. Michael discussed the language with Bell, and he assured her that she would be compensated and treated fairly if her product had commercial success. On July 5, 2006, Michael signed a slightly revised version of the employment agreement. The agreement had a two year term, expiring in July 2008.

Michael and JAB continued to advertise and sell the BBE, including at the company's annual convention in February 2007, where Plaintiff contends that Bell told everyone that the BBE was Michael's idea.

On May 31, 2007, Bell, as well as two individuals from China, applied for a patent for the BBE, and Patent 7,552,489 was issued by the United States Patent and Trademark Office on June 30, 2009. The '489 Patent discloses that Bell and his co-applicants assigned the patent to JAB. According to Michael, the Defendants never sought or obtained assignment of Michael's rights to the '489 Patent despite the fact that she was the inventor-or at minimum a coinventor-of the BBE.

On July 5, 2008, the parties' original employment agreement expired. Michael wanted a new employment agreement, but Bell and JAB declined. Instead Michael obtained an "override commission" in all sales of the BBE made by others, in addition to the commissions she earned on her own sales.

In the summer of 2009, around the time that the PTO issued the '489 Patent to JAB, Bell and JAB initiated a campaign that was intended to drive Michael out of the company. According to Michael, she terminated her employment with JAB in July 2010 in response to the campaign of intentional harassment and under duress.

On July 1, 2011, Plaintiff filed a seven count complaint in this court alleging the following claims: common law fraud (Count I); conversion (Count II); tortuous interference with prospective economic advantage (Count III); breach of fiduciary duty (Count IV); intentional infliction of emotional distress (Count V); breach of contract (Count VI); and correction of the inventor of the patent pursuant to 35 U.S.C. § 256 (Count VII).

II. Legal Standard

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint, not the merits of the case.See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to dismiss, the complaint first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief" (Fed. R. Civ. P. 8(a)(2)), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the "speculative level," assuming that all of the allegations in the complaint are true. E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts ...


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