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Fasteners for Retail, Inc. v. Gerald Andersen and K International, Inc.

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

August 22, 2014

FASTENERS FOR RETAIL, INC., Plaintiff,
v.
GERALD ANDERSEN and K INTERNATIONAL, INC., Defendants.

MEMORANDUM OPINION AND ORDER

THOMAS M. DURKIN, District Judge.

On March 29, 2011, Fasteners for Retail, Inc. ("FFR") brought an action against K International ("Kinter") and Gerald Andersen alleging patent infringement, false advertising under the Lanham Act, violation of the Illinois Consumer Fraud and Deceptive Trade Practices Act, unfair competition, and trade secret misappropriation. R. 1. While that action was pending in this Court, FFR filed an action in Ohio state court against several of its former employees who are currently employed by Kinter, and subsequently sought to amend that complaint to add Kinter as a defendant. See Fasteners for Retail, Inc. v. DeJohn, CV-12-786894 (Ct. C.P. Cuyahoga Cnty. Ohio). By written agreement dated February 11, 2013 (the "Settlement Agreement"), FFR and Kinter agreed to settle both the action in this Court and the potential action in Ohio. R. 234-1. The next day, the parties jointly moved to dismiss the action in this Court, R. 221, and the case was dismissed. R. 222. The Ohio action remains pending against FFR's former employees.

In the Ohio action, FFR now seeks to depose Kinter and several of its executives regarding work performed for Kinter by the former FFR employees who FFR has sued in Ohio. Kinter objects to the depositions contending that the terms of the Settlement Agreement preclude FFR from taking any future discovery from Kinter. FFR moves to have the Court decide whether the Settlement Agreement precludes FFR from seeking discovery from Kinter in general, and the depositions FFR seeks in the Ohio action in particular. R. 245; R. 250.[1]

Additionally, FFR contends that Kinter failed to comply with a provision of the Settlement Agreement that required Kinter to produce a declaration listing the "products sold by Kinter (and revenues and gross profits on those products) on which Kump"-one of FFR's former employees-"consulted on behalf of Kinter." R. 234 at 5-6; R. 239 at 2-4. Kinter produced a declaration purporting to satisfy this provision, see R. 234-1 at 220-21, but FFR argues that documents produced during the course of the Ohio action demonstrate that the declaration Kinter produced was incomplete. FFR moves to have the Court enforce this provision of the Settlement Agreement and require Kinter to produce a complete declaration. R. 225; R. 234.

FFR also contends that the documents produced in the Ohio action demonstrate that Kinter impermissibly withheld documents related to Kump's work during the litigation in this Court after the Court granted FFR's motion to compel these documents. On this basis, FFR moves to have the Court "allow FFR the option to make a request for additional relief relating to Kinter's discovery violations in the [litigation in this Court]." R. 234 at 10; R. 225 at 10.

For the following reasons, the Court grants FFR's motions to the extent that the Court finds that (1) the Settlement Agreement does not preclude the depositions FFR seeks; (2) the Settlement Agreement does not preclude the parties from seeking discovery from each other in the Ohio action or any future litigation; and (3) Kinter must produce a complete declaration as required by ยง 6(c) of the Settlement Agreement in accordance with the Court's interpretation of that section.

I. Relevant Settlement Agreement Provisions

The Settlement Agreement provides the following in relevant part:

WHEREAS, the Parties... have determined that it is in their best interests to resolve the differences between them by compromise and settlement of the claims and causes of action that were or could have been asserted against each other by FFR and/or Kinter in the Illinois Action and the Ohio Action....
* * *
2. FFR Release of Kinter. In consideration of the mutual covenants executed herein, the sufficiency of which is hereby acknowledged, and upon full execution of this Agreement, FFR for itself, its predecessors, successors, assigns, subsidiaries, affiliates, parents, divisions, owners, current officers, agents, employees and consultants (the "FFR Releasors"), do hereby irrevocably, unconditionally and forever release, acquit, and discharge Kinter, its predecessors, successors, divisions, subsidiaries, parents, and affiliates, and their current officers, directors, shareholders, owners, employees, servants, agents and attorneys, of and from any and all action, lawsuit, cause of action, suit, injury, damage, claim, attorney's fees and/or liability or obligation of any kind, name, and nature whatsoever, whether at law or equity, which FFR has or may have against Kinter. Notwithstanding the foregoing, the release granted by FFR Releasors does not release any claims that FFR Releasors may have against Daniel Kump, Michael DeJohn, Bruce Hrvatin, Gary Andersen and any other persons formerly employed by FFR.
* * *
5. Withdrawal of Motion to Amend in the Ohio Action. FFR shall withdraw its Motion for Leave to Amend the Complaint, filed January 4, 2013 in the Ohio Action within 14 days of the effective date of this Agreement.
6. Former FFR Employees.... (c) Kinter further represents and warrants that it has provided or will provide a sworn Declaration on or before January 31, 2013 listing products sold by Kinter (and revenues and gross profits on those products) on which Kump consulted on behalf of ...

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