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Industrial Kinetics, Inc. v. Cinetic Automation Corp.

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

November 21, 2014

INDUSTRIAL KINETICS, INC., Plaintiff,
v.
CINETIC AUTOMATION CORPORATION, Defendant

For Industrial Kinetics, Inc., Plaintiff: James R. Figliulo, Marc S. Porter, LEAD ATTORNEYS, Michael Thomas Graham, Figliulo & Silverman, Chicago, IL; Melissa Nicole Eubanks, Figliulo & Silverman P.c., Chicago, IL.

For Cinetic Automation Corporation, Defendant: Brian S. Tobin, James J. Parks, LEAD ATTORNEYS, PRO HAC VICE, Jaffe, Raitt, Heuer & Weiss, P.c., Southfield, MI; Ethan Holtz, PRO HAC VICE, Jaffe Raitt Heuer & Weiss, P.c., Southfield, MI; Matthew Patrick Connelly, Patrick William Chinnery, Theresa Berousek Carney, Rock Fusco & Connelly, Llc, Chicago, IL.

MEMORANDUM OPINION AND ORDER

Sharon Johnson Coleman, United States District Judge.

Plaintiff Industrial Kinetics, Inc. (" IKI") filed a complaint seeking declaratory judgment that a joint venture agreement exists between it and Defendant Cinetic Automation Corporation (" Cinetic"), and alleging breach of joint venture agreement, breach of fiduciary duty, misappropriation of its trade secret in violation of the Illinois Trade Secret Act (765 ILCS 1065/1 et seq .), unjust enrichment, and unfair competition. Cinetic has filed a motion for summary judgment on all counts, which the Court grants in part and denies in part for the reasons set forth below.

BACKGROUND

The following facts are undisputed. In 2010, Caterpillar wanted to maximize the efficiency of its vehicle engine assembly line in its Griffin, Georgia manufacturing facility by using robotics instead of humans to perform various tasks to create the final engine. The Caterpillar Turnkey Automated Piston Sub-Assembly System (" CACS") was its solution. To implement the CACS project, Caterpillar sought a general contractor to handle all aspects of the design and installation of the robotic assembly line. Cinetic bid on and ultimately obtained a contract to design and construct the CACS. It is the events surrounding the development of the concept and design of the CACS and the overhead conveyor system that was incorporated into the CACS design that is the subject of this litigation.

As a part of its overall bid, Cinetic included a design for a conveyor system that would transport the various parts of the robotic assembly line. Initially, Cinetic developed a loop layout for the conveyor system where the conveyors were arranged in a loop on the Griffin factory floor, allowing empty pallets to be returned to the beginning of the assembly line after the engines are assembled by the robots. This loop layout proved unworkable for Caterpillar because Caterpillar sought to save more space on the factory floor. The Caterpillar CACS project manager, Larry Malnar, spoke with Dave Holt, Cinetic's Account Manager for the CACS bid, and suggested that Cinetic work with IKI as the conveyor supplier. IKI was Malnar's former employer and had worked with Caterpillar on various projects over the past approximately nine years. IKI had worked with Caterpillar on projects at the Griffin facility and also on earlier versions of the CACS.

In late September 2010, Cinetic and IKI began discussing the prospect of them working together to prepare the CACS bid. Holt, called IKI's Jerry Post to discuss the CACS project. They met and discussed the prospect of IKI providing the conveyor for the project. On October 7, 2010, Cinetic sent Power-Pack, another conveyor supplier, and IKI the same request for a quotation and a drawing that included specifications for the CACS conveyor loop design. IKI submitted its budget proposal for the loop conveyor on October 15, 2010. Power-Pack submitted its budget proposal for the loop conveyor about one month later, on November 10, 2010.

IKI and Cinetic worked together from October 2010 through April 2011 to prepare the conveyor proposal for the CACS bid. On December 3, 2010, Post requested from Cinetic a revised layout of the linear loop design that Cinetic initially proposed so that IKI " [could]start pricing." (Dkt. 68, Cinetic SOF Exh. L.) On December 13, 2010, Post emailed an update to Holt and Drabczyk regarding the CACS layout that IKI developed and discussed directly with Malnar, and attached a concept drawing to the email. (Dkt. 70, IKI SOF Exh. H.)

In an email to Malnar dated December 17, 2010, Holt suggested that the CACS use an overhead pallet return similar to the conveyor used in Caterpillar's Seguin, Texas plant. (Cinetic SOF Exh. M.) Using the overhead pallet return, the empty pallets are lifted via elevators and suspended along conveyors over the factory floor and returned to the beginning of the assembly line. Holt included a concept drawing but it is unclear whether the drawing was developed by Cinetic or IKI's engineers. In January, via email, Holt told Malnar that " Cinetic is finalizing a layout with IKI[.]" (Dkt. 70, IKI SOF Exh. I.) In the same email chain, Malnar replied to Holt's email regarding space concerns, stating:

" We are still working with both you and Jerry [IKI] to make the smallest floor plan that is practical. I believe you were looking into a smaller pallet length based on the information we provided to you on your visit in November. Jerry is also looking into pallet return conveyor. Discussing that with him yesterday, the overhead return conveyor is very attractive preserving aisle ways and floor space." (Id.)

In the meantime, between December 2010 and April 2011, Cinetic, IKI and Caterpillar worked on revising the CACS layout and overhead conveyor system design. The last document that IKI submitted to Cinetic containing pricing information and drawings occurred on April 11, 2011. The document's subject line stated " Proposal for Assembly Loop" and included the statement: " THERE ARE NO AGREEMENTS OR ORAL UNDERSTANDINGS OUTSIDE OF THIS PROPOSAL. This proposal shall become a contract when accepted by the Buyer [Cinetic] in writing and approved by an authorized executive of Industrial Kinetics, Inc." (Emphasis in original.) (IDkt. 70KI SOF Exh. U)

On or around August 6, 2011, Caterpillar awarded the contract to Cinetic and issued the first of two purchase orders to Cinetic for the CACS. The first purchase order incorporated IKI's pricing for the CACS design and conveyor system, which Caterpillar agreed to pay $1, 575, 000 for conveyor system and $79, 000 for the system controls. Caterpillar eventually paid Cinetic $1, 844, 320 for the conveyor system.

On August 31, 2011, Cinetic, IKI, and Caterpillar participated in a " kick-off" meeting to " kick-off" the beginning of the CACS Project. Holt testified that the purpose of the meeting was to introduce people, get schedules, and implement the work. Malnar did not attend the meeting because he had been removed as Project Manager and replaced by Kevin Wood, the Program Manager at the Griffin Facility. Halfway through the meeting, Wood asked IKI to leave the room. Holt told the IKI team that after IKI left the room, Wood expressed concern to Holt regarding using IKI as the conveyor supplier for the CACS project. Holt said that Wood indicated Caterpillar was having problems with IKI equipment at the Griffin facility and that Caterpillar was in the process of replacing some IKI ...


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