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Wells Lamont Industry Group LLC v. Mendoza

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

July 31, 2017

WELLS LAMONT INDUSTRY GROUP LLC, Plaintiff,
v.
RICHARD MENDOZA and RADIANS, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          John Z. Lee United States District Judge

         Plaintiff Wells Lamont Industry Group LLC (“Wells Lamont”) has sued Defendants Richard Mendoza (“Mendoza”) and Radians, Inc. (“Radians”). Against Mendoza, Wells Lamont alleges violation of the federal Defend Trade Secrets Act of 2016 (DTSA), 18 U.S.C. § 1836 et seq. (Count I), violation of the Illinois Trade Secrets Act (ITSA), 765 Ill. Comp. Stat. 1065/1 et seq. (Count II), breach of contract with regard to a confidentiality agreement (Count III), and breach of contract with regard to an information technology agreement (Count IV). Against Radians, Wells Lamont alleges tortious interference with contract with regard to both of its agreements with Mendoza (Count V). Mendoza has moved to dismiss Count I, and Radians has moved to dismiss Count V. For the reasons stated herein, Defendants' motions to dismiss [16] [19] are denied.

         Factual Background [1]

         Wells Lamont is a company that designs, manufactures, and sells industrial gloves, and its principal place of business is in Illinois. 1st Am. Compl. (“FAC”) ¶ 1, ECF No. 7. Mendoza is an Illinois citizen who was a sales representative for Wells Lamont from February 2011 until August 12, 2016, when he voluntarily resigned to take a similar position with Radians. Id. ¶¶ 2, 26. Radians, which is also in the business of selling industrial gloves, is in direct competition with Wells Lamont, and its principal place of business is in Tennessee. Id. ¶ 3.

         Mendoza was “Director of Sales - Primary Materials” for Wells Lamont from February 1, 2013, until his resignation. Id. ¶ 10. In this position, some of his responsibilities included establishing sales goals, developing and executing sales plans, and performing priority management for sales. Id. ¶ 11. In addition, he was exposed to confidential information in the course of his employment, such as product designs and prototypes. Id. ¶ 25.

         During the course of his employment, Mendoza signed a confidentiality agreement that defined “confidential information and trade secrets” as including “business information such as product costs, vendor and customer lists, . . . unpublished price lists, . . . and other financial information not yet announced or publicly disclosed.” Id. ¶¶ 12, 13. The agreement forbade him from “communicat[ing] such confidential information or trade secrets to any other person [or] firm” or “us[ing] such confidential information or trade secrets . . . for the benefit of any other person [or] firm.” Id. ¶ 13. Mendoza signed this agreement most recently on February 18, 2016. Id. ¶ 12. During the course of his employment, Mendoza also signed an information technology agreement that included a confidentiality provision forbidding him from disclosing trade secrets for any purpose other than his official duties. Id. ¶ 16. This agreement was most recently signed on February 22, 2016. Id. ¶ 15.

         In August 2016, Mendoza resigned from Wells Lamont and began working for Radians. Id. ¶ 26. Both before and after his resignation, he forwarded to his personal e-mail address confidential information such as customer data, pricing sheets, and sales reports. Id. ¶ 27. In September 2016, Wells Lamont learned that Mendoza had reached out to some of his former customers to attempt to convince them to do business with Radians, so Wells Lamont's counsel wrote Mendoza a letter demanding the documents be returned. Id. ¶¶ 29, 30. The letter was also sent to Radians and informed it of Mendoza's continuing duties to not disclose or use any confidential information. Id. ¶ 30; id., Ex. C, at 2.[2] On October 6, 2016, Wells Lamont received an e-mail from an attorney representing both Mendoza and Radians, admitting that Mendoza had some of Wells Lamont's confidential information in his possession. Id. ¶ 31. The next day, Mendoza returned a signed affidavit in which he recounted all the information he had forwarded to his personal e-mail address, and he also admitted that he had delivered a hard copy of one of Wells Lamont's confidential pricing lists to a Radians employee. Id. ¶ 32; id., Ex. F ¶ 4.

         While Mendoza worked for Wells Lamont, he maintained a relationship with Turner Industries (“Turner”) for about three years. Id. ¶ 37. In October 2016, after he began working for Radians, Mendoza contacted Turner to attempt to divert its business away from Wells Lamont. Id. In January 2017, Mendoza traveled to Turner's office in Texas and “presented replicas of several Wells Lamont Industry products.” Id. ¶ 38. After Mendoza's presentation, Turner canceled a meeting it had previously set with a Wells Lamont salesman. Id. Wells Lamont alleges that Mendoza has continued to use its confidential information to try to siphon away its customers. Id. ¶ 41.

         Legal Standard

         To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6), [3] a complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). The complaint “need only provide a short and plain statement of the claim showing that the pleader is entitled to relief, sufficient to provide the defendant with fair notice of the claim and its basis.” Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008) (internal quotation marks and citations omitted); see also Fed. R. Civ. P. 8(a)(2). When considering a motion to dismiss under Rule 12(b)(6), the Court must “accept[ ] as true all well-pleaded facts alleged, and draw[ ] all possible inferences in [the plaintiff's] favor.” Tamayo, 526 F.3d at 1081.

         Analysis

         Mendoza has moved to dismiss Count I of Wells Lamont's complaint, arguing that Wells Lamont has not sufficiently alleged that its information constitutes a trade secret under the DTSA. Mendoza also argues that Wells Lamont's complaint fails to sufficiently plead a violation of the DTSA because it fails to allege that Wells Lamont's goods were used in or intended for use in interstate commerce, and Radians repeats this argument in its own motion.[4] Radians has also moved to dismiss Count V, arguing that Wells Lamont fails to sufficiently allege that Radians tortiously interfered with Mendoza's confidentiality agreements. The Court will address each of these arguments below.

         I. Count I: Defend Trade Secrets Act

         A. ...


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