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American Transport Group LLC v. Power

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

April 27, 2018

AMERICAN TRANSPORT GROUP, LLC, Plaintiff,
v.
JOHN POWER and DIRECT TRAFFIC SOLUTIONS, INC., Defendants, JOHN POWER and DIRECT TRAFFIC SOLUTIONS, INC., Counter-Plaintiffs,
v.
AMERICAN TRANSPORT GROUP, LLC, Counter-Defendant.

          MEMORANDUM OPINION AND ORDER

          Virginia M. Kendall United States District Judge.

         Plaintiff American Transport Group, LLC (“ATG”) brings suit against its former employee Defendant John Power and his new employer Defendant Direct Traffic Solutions, Inc. (“DTS”) alleging breach of contract, tortious interference with a contract, tortious interference with business relationships, and civil conspiracy arising from the employment relationship between the Defendants. (Dkt. 1). Defendants have asserted a counterclaim against ATG alleging abuse of process. (Dkt. 37). Currently before the Court are Defendants' motion to dismiss ATG's complaint under Federal Rule of Civil Procedure 12(b)(6) (Dkt. 14), and ATG's motion to dismiss the counterclaim. (Dkt. 40). For the reasons set forth below, Defendants' motion is granted in part and denied in part and ATG's motion is granted.

         LEGAL STANDARD

         For a claim to survive a motion to dismiss brought pursuant to Rule 12(b)(6), it must contain sufficient factual matter to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim is plausible on its face when the complaint (or counterclaim) contains factual content that supports a reasonable inference that the defendants are liable for the harm. Id. In making the plausibility determination, the Court relies on its “judicial experience and common sense.” McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) (quoting Iqbal, 556 U.S. at 679). The complaint (or counterclaim) should be dismissed only if the plaintiff or counter-plaintiff would not be entitled to relief under any set of facts that could be proved consistent with the allegations. Christensen v. Cty. of Boone, 483 F.3d 454, 458 (7th Cir. 2007) (citations omitted). That being said, a “pleading that offers ‘labels and conclusions' or a ‘formulaic recitation of the elements of a cause of action will not do.'” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). For purposes of this motion, the Court accepts as true all well-pleaded allegations in the complaint and counterclaim and draws all reasonable inferences in favor of the non-moving party. See Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007).

         DISCUSSION

         I. Defendants' Motion To Dismiss

         A. Background[1]

         ATG, an Illinois corporation with its principal place of business in Illinois, is a licensed interstate freight broker, meaning that it arranges for the transportation of freight tendered by shippers (its customers) by motor carriers. (Dkt. 1) at ¶¶ 1-2. Power is an Indiana citizen and a former employee of ATG. Id. at ¶ 3. DTS is also a licensed interstate freight broker and is a Pennsylvania corporation with its principal place of business in New Jersey. Id. at ¶ 4.

         From August 2002 to April 2017, Power was employed by ATG as either a sales representative or a sales manager. In those positions, Power both (1) solicited and serviced ATG's customers and also (2) recruited, trained, and managed other customer sales representatives. Id. at ¶ 9. For his job, Power was privy to and used ATG confidential information, like customer files that ATG “cultivated over years of business with said customers” and maintained at great expense and time. Id. at ¶¶ 10-11, 16.

         On February 20, 2006, Power entered into an Employee Confidentiality and Non-Compete Agreement (“Agreement”), which is attached as Exhibit A to ATG's complaint. See Id. at ¶ 12; (Dkt. 1-1). The Agreement provided that Power would “keep secret and confidential, and not use, copy or assist any other person or firm in the use, disclosure or copying of any of ATG's confidential information” both during and after his term of employment with ATG. (Dkt. 1-1) at 1. With regard to non-competition and non-solicitation, the Agreement provided:

         In addition, Employee further agrees that during Llie period that Employee is Working at ATG and during the period 3 months of following termination of employment with ATG, for whatever reason, Employee shall not directly or indirectly work at or have any financial interest in or be in any way connecected or affiliated With, or render advice or services to, any business similar to that of ATG or that of a freight broker Also for a one year period following termination employee During this period, Employee also agrees not to directly or indirectly divert, take away or solicit any customer or carrier of ATG. Employee specifically acknowledges and agrees that this short term of one (1) year will not preclude Employee from being gainfully employed and that if Employee was no longer working at ATG, for whatever reason, and wanted to work in the same industry for a competitor of ATG that these specific restrictions are reasonable to protect ATG the business and the other employees of ATG.

         Id. In other words, Power agreed to a non-compete provision that prohibited him, during his employment with ATG and for three months following his termination, from directly or indirectly working at, having a financial interest in, being connected or affiliated with, or rendering advice or services to “any business similar to that of ATG or that of a freight broker.” (Dkt. 1) at ¶ 15. The remainder of the paragraph contains a non-solicitation provision, whereby Power agreed to not directly or indirectly divert or solicit any customer or carrier of ATG. Id. at ¶ 14. In between the non-compete clause and the non-solicitation clause is a handwritten modification reading “[a]lso for a one year period following termination of employment.” See (Dkt. 1-1). ATG alleges that all of the handwritten modifications were added by Power and that the one-year handwritten addition applies to the non-solicitation clause. (Dkt. 1) at ¶¶ 12, 14.

         While Power was employed by ATG, DTS, one of ATG's competitors, contacted him and offered him employment and compensation; DTS did this to get access to ATG's confidential customer files. Id. at ¶ 29. On April 13, 2017, Power's employment was “voluntarily terminated” and ATG immediately began experiencing a drop in business from Power's customers. Id. at ¶¶ 17-18. ATG alleges Power downloaded and disclosed confidential ATG customer information to DTS in violation of his Agreement. Less than three months after Power's termination, he formally took up employment with DTS. Id. at ¶¶ 17, 19-20. Further, Power solicited or diverted at least three of ATG's customers to DTS while he was still employed by ATG and he also used the confidential information while working for DTS to take other customers away from ATG. Id. at ¶¶ 19, 21. ATG claims to have lost $800, 000 in revenue on account of Power's actions. Id. at ¶ 22.

         In November 2017, ATG filed a four-count complaint alleging: breach of the Agreement's confidentiality, non-compete, and non-solicitation provisions by Power (Count I); tortious interference with Power's Agreement's confidentiality, non-competition, and non-solicitation provisions by DTS (Count II); tortious interference with ATG's business relationships by Power and DTS (Count III); and civil conspiracy (Count IV). (Dkt. 1). ATG seeks injunctive relief, an accounting of all customers “disclosed, solicited and ...


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