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Teksystems, Inc. v. Lajiness

United States District Court, Seventh Circuit

July 8, 2013

TEKSYSTEMS, INC., Plaintiff,
v.
RYAN M. LAJINESS and INSTANT TECHNOLOGY LLC, Defendants.

MEMORANDUM OPINION AND ORDER

VIRGINIA M. KENDALL, District Judge.

Plaintiff TEKsystems, Inc. sued Defendants Ryan M. Lajiness and Instant Technology, LLC alleging breach of contract, misappropriation of trade secrets, tortious interference with contract, and equitable accounting. Defendants have moved to dismiss Counts I, III, and IV pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. For the reasons set forth below, the Defendants' motion is granted in part and denied in part.

BACKGROUND

The following facts are taken from TEKsystems's Complaint and are assumed to be true for purposes of this Motion to Dismiss. See Voelker v. Porsche Cars North America, Inc., 353 F.3d 516, 520 (7th Cir. 2003). TEKsystems is in the business of recruiting, employing and providing the services of technical service personnel on a temporary or permanent basis to companies in the Chicago area. (Complaint, Doc. 1 at ¶ 1.) Teksystems' employees who are engaged in the recruitment and placement of potential candidates develop intimate knowledge of Teksystems' clients, financial information, contacts, client needs, and potential candidates. ( Id. at ¶ 10.) This information is economically valuable to TEKsystems and would have significant economic value to Teksystems' competitors in the professional recruitment and placement industry. ( Id. at ¶ 11.) To protect this information, TEKsystems requires its employees who serve as professional recruiters to sign restrictive covenants and non-disclosure agreements as a condition of employment. ( Id. at ¶ 12.)

On or about December 27, 2010, TEKsystems hired Lajiness for the position of Recruiter Trainee in its Chicago office. ( Id. at ¶ 13.) He was subsequently promoted to a Recruiter position on April 11, 2011. ( Id. at ¶ 13.) Through the use of TEKsystems' resources, Lajiness could access and learn the identity of TEKsystems' clients, contacts, billing rates, placement/recruitment history and future staffing requirements, sales and marketing strategies, and the contact information of potential candidates for employment. ( Id. at ¶ 20.) Lajiness signed an Employment Agreement with TEKsystems, which included non-compete, non-solicit and non-disclosure obligations. ( Id. at ¶ 22.) The Agreement provided that upon termination of employment, for 18 months, Lajiness was not to engage in, or be employed by, any business within 50 miles of TEKsystems' Chicago office that is engaging in any aspect of TEKsystems' business for which Lajiness performed services or about which he gained confidential information during the two years preceding termination. ( Id. at ¶ 24.) The non-solicitation covenant contains similar boundaries. ( Id. at ¶ 24.) The Agreement contains a choice of law provision that states that it should be governed according to Maryland law. ( Id. at ¶ 27.)

On October 26, 2012, Lajiness resigned from TEKsystems and was hired by Instant Technology. ( Id. at ¶¶ 28, 31.) Instant Technology is also in the business of recruiting and placing employees to address clients' technology needs. It is a competitor of TEKsystems. ( Id. at ¶ 32.) Lajiness holds the same position at Instant Technology that he did at Teksystems. He also works within a 50 mile radius of the TEKsystems' Chicago office. ( Id. at ¶ 33-34.)

STANDARD OF REVIEW

When considering a motion to dismiss under Rule 12(b)(6), the Court accepts as true all facts alleged in the complaint and construes all reasonable inferences in favor of the plaintiff. See Voelker, 353 F.3d at 720; accord Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 619 (7th Cir. 2007). To state a claim upon which relief may be granted, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). "Detailed factual allegations are not required, but the plaintiff must allege facts that, when "accepted as true... state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In analyzing whether a complaint meets this standard, the "reviewing court [must] draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1950. When there are well-pleaded factual allegations, the Court assumes their veracity and then determines if they plausibly give rise to an entitlement to relief. See id.

DISCUSSION

Counts I, III and IV of the Complaint assert claims for breach of contract, tortious interference with contract and equitable accounting against the Defendants respectively. Counts I and IV are directed against Lajiness while Count III is directed against Instant Technology.

I. The Governing Law

Before evaluating the merits of Defendants' motion, the Court must determine which state's substantive law applies. In diversity cases, courts apply the choice of law of the forum state to determine how that state's "conflict of law principles treat choice of law clauses in contracts." DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 330 (7th Cir. 1987); see also Echo, Inc. v. Whitson Co., Inc, 52 F.3d 702, 707 (7th Cir. 1995). "Illinois courts honor a contractual choice of law clause provided that (1) it does not contravene a fundamental policy of Illinois and (2) the state chosen bears a reasonable relationship to the parties or the transaction." LaSalle Bank Nat'l Assoc. v. Paramont Props., 588 F.Supp.2d 840, 849 (N.D. Ill. 2008); see also, e.g., Amakua Develop., L.L.C. v. Warner, 411 F.Supp.2d 941, 948 (N.D. Ill. 2006); Potomac Leasing Co. v. Chuck's Pub, Inc., 509 N.E.2d 751, 758 ( Ill. App. 1987).

The Agreement explicitly provides that it should be governed according to Maryland law. Maryland bears a reasonable relationship to the parties and the transaction by virtue of the fact that TEKsystems is headquartered in Maryland. See Mastrobuono v. Shearson Lehman Hutton, Inc., 20 F.3d 713, 719 (7th Cir. 1994) (holding that the state of the principle place of business of one of the parties was a reasonable choice after applying Illinois conflicts of law principles); rev'd on other grounds, 514 U.S. 52 (1995); Sarnoff v. American Home Prods. Corp., 798 F.2d 1075, 1082 (7th Cir. 1986) (applying Illinois conflicts of law principles, a defendant former employer "was reasonable in wanting all of its legal obligations with its former employees to be governed by the law of the headquarters state if the employees could be persuaded to agree"). ...


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