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Huang v. Fluidmesh Networks, LLC

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

July 18, 2017

ROBERT HUANG, Plaintiff,



         This matter is before the Court on Defendant Fluidmesh Networks, LLC's motion [23] to dismiss Plaintiff Robert Huang's complaint for lack of jurisdiction and for failure to state a claim. For the reasons set forth below, Defendant's motion [23] is granted. Plaintiff is given until August 18, 2017 to file an amended complaint consistent with this opinion.

         I. Background[1]

         This case involves the termination of Plaintiff Robert Huang's employment with Defendant Fluidmesh Networks, LLC over alleged whistleblowing activities. The complaint invokes the Court's diversity jurisdiction, alleging that Plaintiff is a citizen of Taiwan, [2]Defendant is a Delaware corporation with its principal place of business in Illinois, and the amount in controversy exceeds $75, 000. See [1] at ¶¶ 1-3.

         According to the complaint, Defendant sells certain products to Cisco Systems, Inc. (“Cisco”)-a publicly traded company-for resale. See id. at ¶¶ 6-7. Plaintiff began working for Defendant in December 2011 as a “Supply Chain and Manufacturing Manager, ” and he performed his work “remotely from his homes in Taiwan and California.” Id. at ¶ 5. Plaintiff also asserts that he was a “subcontractor of Cisco, ” presumably at the same time he worked for Defendant, although the complaint is not clear on the details of this arrangement. Id. at ¶ 13.

         In February 2013, Defendant's Chief Executive Officer, Umberto Malesci, wrote to Plaintiff at a Taiwan address, offering him (1) a raise in salary, (2) a bonus, and (3) a 1% profit interest in a new, wholly owned subsidiary of Defendant-Bitlomat, LLC (“Bitlomat”). Malesci stated that the interest “shall vest linearly over the five years starting March 1, 2013 as long as you are engaged as a full-time employee of the [Defendant].” The offer letter noted that its terms were subject to approval by Defendant's Board of Managers, and it was signed by both Malesci and Plaintiff. See [1-1].

         Plaintiff asserts that, following this letter, Defendant provided a contract “detailing the terms and conditions” of the profit interest. [1] at ¶ 22. The contract, which Plaintiff attached to the complaint, see [1-2], is titled an “Interest Grant Agreement” (“Agreement”), and Bitlomat and Plaintiff are listed as the contracting parties. The document appears to have contemplated an effective date in November 2013; neither Plaintiff nor an agent of Bitlomat executed the document. See id. at 1, 12.

         Years later, in January 2016, Plaintiff alleges that Defendant's Chief Technology Officer, Alessandro Erta, “told a third party that Cisco intended to purchase” Defendant. [1] at ¶ 8. Believing the information to be false and also having the potential to influence Cisco's stock price, Plaintiff reported the incident internally to his immediate supervisor, who happened to be Erta. Plaintiff contends that he also reported the incident to Erta's supervisor. According to Plaintiff, he told both individuals that he believed the disclosure of information about Cisco's purchase of Defendant was “illegal” and he “indicated that he would report the rule violation to the appropriate authorities.” [1] at ¶ 11. Plaintiff does not allege that he reported the incident to anyone else.

         On February 19, 2016, Defendant terminated Plaintiff's employment. Plaintiff asserts that Defendant “provided no basis for the termination, ” id. at ¶¶ 15-16; he alleges that he was fired for “reporting securities law violations, ” and he cites to 18 U.S.C. § 1514A, which he states prohibits “retaliation against employees of public companies” that report “certain types of allegedly unlawful conduct.” See id. at ¶¶ 12, 17.

         In October 2016, Plaintiff filed a three-count complaint [1], asserting a violation of the Illinois Whistleblower Act, 740 ILCS 174/1 et seq. (Count I), id. ¶¶ 26-28; retaliatory discharge (Count II), id. ¶¶ 30-32; and seeking a declaration that his ownership interest in Bitlomat is fully vested (Count III), id. ¶¶ 34-36. Defendant filed a motion to dismiss all three claims pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing that (1) Plaintiff does not have standing to pursue his Illinois employment law claims and (2) all three counts fail to state a claim upon which relief can be granted. Defendant has provided a declaration by Malesci as support for its 12(b)(1) arguments. According to Malesci, who, along with Erta, is based in Italy, Plaintiff was responsible for developing Defendant's business relationships in China. Plaintiff was not responsible for developing business relationships in the United States, his employment was never based in Illinois, and he never physically worked in or traveled to Illinois as part of his employment with Defendant. In addition, Malesci states that the “January 2016 meeting referenced in the Complaint was held in Taiwan.” See [24-3] (Declaration of U. Malesci) at ¶¶ 2-6.

         II. Legal Standard

         “For purposes of a motion to dismiss under either Rule 12(b)(1) or Rule 12(b)(6), the court accepts all well-pleaded factual allegations as true and construes all reasonable inferences in the plaintiff's favor.” Mutter v. Madigan, 17 F.Supp.3d 752, 756 (N.D. Ill. 2014). A Rule 12(b)(1) motion challenges federal subject matter jurisdiction. In ruling on the motion, the district court may look beyond the jurisdictional allegations alleged in the complaint and take into consideration whatever evidence has been submitted on the issue to determine if subject matter jurisdiction exists. County of Cook v. HSBC N. Am. Holdings Inc., 136 F.Supp.3d 952, 957-58 (N.D. Ill. 2015). The burden is on the party asserting jurisdiction to demonstrate that it exists. Id.

         A Rule 12(b)(6) motion challenges the legal sufficiency of the complaint. To survive a motion to dismiss under Rule 12(b)(6), a plaintiff's complaint must allege facts which, when taken as true, “‘plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level.'” Cochran v. Ill. State Toll Highway Auth., 828 F.3d 597, 599 (7th Cir. 2016) (quoting EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007)). The Court reads the complaint and assesses its plausibility as a whole. See Atkins v. City of Chicago, 631 F.3d 823, 832 (7th Cir. 2011). Still, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In deciding a Rule 12(b)(6) motion, the court may consider documents attached to a complaint, such as contract documents. Bible, 799 F.3d at 639.

         III. Analysis

         A. Illinois Whistleblower Act

         According to Plaintiff, by firing him following his report of “securities law violations, ” Defendant violated the Illinois Whistleblower Act (“IWA”). The purpose of the IWA is “to protect employees from adverse employment actions in retaliation for reporting or refusing to engage in unlawful conduct by their employers.” Young v. Alden Gardens of Waterford, LLC, 2015 ...

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