Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Ocean Tomo, LLC v. Jonathan Barney and Patentratings, LLC

United States District Court, N.D. Illinois, Eastern Division

June 12, 2014

OCEAN TOMO, LLC, Plaintiff,
v.
JONATHAN BARNEY and PATENTRATINGS, LLC, Defendants.

MEMORANDUM OPINION & ORDER

JOAN B. GOTTSCHALL, District Judge.

Ocean Tomo, LLC sued its former managing director, Jonathan Barney, and his company, PatentRatings, LLC, for claims arising out of Barney's alleged failure to return a laptop computer after he left the company in 2011. Barney asserted state-law counterclaims for breach of contract and tortious interference, alleging that Ocean Tomo failed to pay Barney his proper share of Ocean Tomo's profits, disclosed Barney's confidential patent-rating system to third parties, and refused Barney access to Ocean Tomo's books and records. He also asserted a federal claim under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, et seq. (the "CFAA"), alleging that Ocean Tomo intentionally accessed his computers without permission.

Ocean Tomo has moved to dismiss Barney's state-law counterclaims, arguing that the court lacks supplemental jurisdiction over them. For the reasons stated below, the motion to dismiss is denied.

I. BACKGROUND

Jonathan Barney was a former managing director of Ocean Tomo, a Chicago-based "Intellectual Capital Merchant Banc firm" that provides "financial products and services related to expert testimony, valuation, investments, risk management, and transactions throughout the United States and overseas." (Am. Compl. ¶ 11, ECF No. 1-3.) Ocean Tomo hired Barney in 2004 so that it could use a system Barney had developed to rate the value of patents. When he was hired, Barney became a "member" of Ocean Tomo, meaning that he held equity in the firm and was a party to the firm's operating agreement.

The operating agreement governed how profits and losses would be allocated among Ocean Tomo's members. According to Barney, the agreement provided that Ocean Tomo's board of managers had discretion to allocate 75% of Ocean Tomo's "net profits from operations." The remaining 25% "net profits from operations" were to be allocated pro rata in accordance with each member's ownership interest. Other profits not constituting "net profits from operations" were also to be allocated pro rata.

According to Barney, he soon learned after joining Ocean Tomo that the environment at the company was "rife with conflict, back-biting, and shady business and accounting practices." (Second Am. Countercls. ¶ 17, ECF No. 59-1.) He alleges that Ocean Tomo attempted to freeze him out, deprive him of certain benefits he had been promised, and destroy him financially so that Ocean Tomo could steal his patent-ratings system.

For example, in 2009, Ocean Tomo sold one of its businesses to a third party. Barney alleges that the profits from that sale, which totaled approximately $10 million, constituted profits other than "net profits from operations" and thus were required to be distributed among members like Barney pro rata in accordance with their ownership interests. But Ocean Tomo treated the profits as "net profits from operations, " so Barney did not receive a share of the profits equal to his pro rata share. He alleges that Ocean Tomo engaged in these "shady accounting practices" on at least three separate occasions.

By February 2011, Barney claims that the working environment at Ocean Tomo became so intolerable that he had no choice but to resign. After he did so, Ocean Tomo sued Barney in state court, alleging that he had breached various agreements by failing to return his laptop computer. Ocean Tomo also brought a federal claim against Barney under the CFAA, which prohibits, among other things, "intentionally access[ing] a computer without authorization... and thereby obtain[ing]... information from any protected computer." 18 U.S.C. § 1030(a)(2)(c).

Barney removed the case to this court based on the federal claim. He then filed counterclaims against Ocean Tomo, including a claim under the CFAA, alleging that Ocean Tomo had "intentionally, and without authorization, accessed computer servers and related hardware... located in the Irvine, California data center that housed the PatentRatings system." (Second Am. Countercls. ¶ 86.) He also asserted four state-law counter-claims, comprising Counts I, III, IV, and V of his second amended counterclaims.

In brief, Count I asserts that Ocean Tomo breached the operating agreement by failing to pay Barney his proper share of the company's profits, by refusing to provide him with access to the books and records of Ocean Tomo after he resigned, and by deciding that he would no longer be entitled to receive dividend allocations after he left the company.

Count III asserts that Ocean Tomo breached an equity exchange agreement between Ocean Tomo and Barney. In that agreement, Ocean Tomo represented that there were "no [c]ontracts relating to the issuance, sale, or transfer of any equity securities of [Ocean Tomo]." (Second Am. Countercls. ¶ 32.) Barney alleges that, in fact, Ocean Tomo had a "secret agreement" with a man named Michael Lasinski under which Ocean Tomo had promised to transfer a significant number of shares in Ocean Tomo to Mr. Lasinski.

Count IV asserts that Ocean Tomo misappropriated PatentRatings' confidential information in violation of a license agreement between Ocean Tomo and PatentRatings. That agreement required Ocean Tomo to hold PatentRatings' confidential information "in strict confidence" and "not to use it commercially for its own benefit." ( Id. ¶ 36.) Barney alleges that, in September 2012, Ocean Tomo accessed PatentRatings's computer servers and copied its confidential information to "reverse engineer[] PatentRatings'[s] algorithms and related software and to create its own competing patent rating system" in violation of the license agreement. ( Id. ¶ 37.) He further alleges that Ocean Tomo disclosed PatentRatings's algorithm to various third-party software developers so that they could reverse engineer the algorithms for Ocean Tomo's benefit.

Finally, Count V asserts that Ocean Tomo tortiously interfered with Barney's prospective business relationship with a Japanese company, NTT Data. Barney says that he expected to sign an agreement with NTT Data and that Ocean Tomo falsely represented to NTT Data that the prospective ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.