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U.S. Data Corporation v. Realsource, Inc.

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

July 23, 2014

U.S. DATA CORPORATION, Plaintiff,
v.
REALSOURCE, INC., Defendant.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EYE, District Judge.

In September 2013, Plaintiff U.S. Data Corp. ("U.S. Data") and Defendant RealSource, Inc. ("RealSource") went to trial on the two claims that survived summary judgment in this case: U.S. Data's breach of contract claim that RealSource breached a Non-Disclosure/Non-Circumvent Agreement ("NDA"), and RealSource's breach of contract counterclaim that U.S. Data breached a series of List Order Acknowledgement Agreements ("LOA"). On September 24, 2013, following a trial of approximately one week, the jury returned a verdict in favor of RealSource on U.S. Data's claim and in favor of U.S. Data on RealSource's counterclaim. (R. 274.) The Court entered judgment on both claims on September 24, 2013. (R. 275.) Before the Court are the parties' motions for a new trial. U.S. Data moves the Court for judgment notwithstanding the verdict or, in the alternative, a new trial as to Count I of its Third Amended Complaint. (R. 278.) RealSource moves for a new trial on its counterclaim. (R. 276.) For the following reasons, the Court denies both parties' motions.

BACKGROUND[1]

This breach of contract case involves the sale of lists of timeshare owners. Plaintiff U.S. Data buys and sells customer database lists of timeshare owners for direct mail, telemarketing, and e-mail marketing purposes. In August 2005, U.S. Data began ordering names of timeshare owners from RealSource. The parties executed a Non-Disclosure/Non-Circumvent Agreement ("NDA") to govern their relationship. As part of the terms of the NDA, the parties agreed that:

By signing this Agreement, the parties hereby mutually and irrevocably agree not to divulge each other's named sources and not to circumvent, either directly or indirectly, the relationships that each party has with their named sources, principals, clients, agents, brokers, associates, and subscribers and/or end users.
Each party agrees to not contact the clients of the other party for any reason without written consent of the other party. Each party agrees to take all the necessary precautions to insure that this does not happen.
Should circumvention occur, in addition to other legal remedies, compensation equal to that paid and/or scheduled to be paid by the breaching party from the transaction(s) related to the breach committed is due and payable to the non-breaching party by the breaching party.

(Pl. Ex. 1, Non-Disclosure/Non-Circumvent Agreement § 9.) The NDA also contained an "Obligation of Confidentiality" that provided:

The Recipient will use the same care and discretion to avoid disclosure, publication or dissemination of information as it uses with its own similar information that it does not wish to disclose, publish or disseminate. The Recipient may use information solely for the purposes of this agreement.

( Id., § 2.) Pursuant to the NDA, U.S. Data ordered timeshare data from RealSource. A List Order Acknowledgement ("LOA") initiated each order, and each LOA contained the following term: "[t]his order is for a one time rental and any other resale of the file will need to be paid by the client." (Pl. Ex. 2, 8/29/07 LOA.) After obtaining the data from RealSource, U.S. Data then sold it to its client, Timeshare Relief, Inc.

In March 2007, U.S. Data placed an order with RealSource for all timeshare names that it had not previously ordered, which amounted to 526, 750 names. After that order, U.S. Data's purchases of data from RealSource began to drop and stopped completely in August 2007. The events surrounding the drop in orders by U.S. Data remain mostly in dispute. The parties agree only that beginning at least in May 2007, U.S. Data filled orders for timeshare data from its own in-house timeshare database that it had created. U.S. Data contends that it created its own database of timeshare owners beginning in August 2006 with its purchase of 1.3 million names from third parties. RealSource asserts that U.S. Data's database was merely a copy of RealSource's database, which U.S. Data created by retaining and then merging all of the data it had purchased from RealSource over the years. Two former U.S. Data employees, Nicole Short List and Laura Acord, testified that they were directed to merge the 526, 750 names from RealSource into a single database for U.S. Data's use. In May 2007, Ms. Short List contacted RealSource's CEO Trenton Martin to tell him that U.S. Data was misusing RealSource's data. On September 7, 2007, RealSource sent U.S. Data a Notice of Termination pursuant to the terms of the NDA. RealSource contends that it terminated the agreement because U.S. Data had breached the LOAs by reusing timeshare data.

U.S. Data counters that the real reason RealSource terminated the NDA was to allow RealSource to sell directly to U.S. Data's client, Timeshare Relief. RealSource first acknowledged knowing that Timeshare Relief was one of U.S. Data's clients in an email dated July 17, 2006. RealSource again acknowledged knowing that Timeshare Relief was a client on June 25, 2007 when one of RealSource's owners, Karolyn Tincher, sent an email to U.S. Data's president Jeff Herdzina asking if Timeshare Relief was U.S. Data's largest client. Herdzina responded affirmatively. According to U.S. Data, once RealSource knew about Timeshare Relief, it sought to cut out U.S. Data as a middleman and sell directly to Timeshare Relief. In support, U.S. Data notes that in approximately the late summer of 2007, the volume of orders Timeshare Relief placed with U.S. Data began to drop. Around that same time, Mr. Herdzina asked Mr. Martin if RealSource had been in contact with Timeshare Relief, which Mr. Martin denied. Then in October 2007, Mr. Martin told one of the owners of Timeshare Relief that U.S. Data had stolen RealSource's timeshare database.

On October 23, 2007, Timeshare Relief placed its last order with U.S. Data. Rather than order from U.S. Data, Timeshare Relief continued ordering data from another middleman of RealSource, D&S Leads, from which it had first ordered in August 2007. RealSource knew that the data it sold D&S Leads was for Timeshare Relief. In January 2008, Timeshare Relief began to order directly from RealSource. As a result of these events, the parties have brought numerous claims against each other.

U.S. Data filed its initial complaint in February 2008, and RealSource filed a counterclaim in response. (R. 1, Complaint; R. 14, Counterclaim.) In its Third Amended Complaint, U.S. Data alleged the following: breach of contract against RealSource (Count I); tortious interference with prospective economic advantage against RealSource, Priority Direct, and D&S Leads (Count II); conversion against RealSource, Priority Direct, and D&S Leads (Count III); Unjust Enrichment against Priority Direct and D&S Leads (Count IV); and conspiracy to tortiously interfere with prospective economic advantage against RealSource, Priority Direct, and D&S Leads (Count V). In Realsource's amended counterclaim, it alleged the following: breach of contract (Count I); and misappropriation/unfair competition (Count II).

The only claims that survived summary judgment were U.S. Data's claim for breach of contract against RealSource (Count I) and RealSource's counterclaim for breach of contract (Count I). The parties began a jury trial on these claims on September 16, 2013. On September 24, 2013, the jury returned a verdict in favor of RealSource on U.S. Data's claim and in favor of U.S. Data ...


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