United States District Court, N.D. Illinois
JOHNSON COLEMAN UNITED STATES DISTRICT COURT JUDGE
plaintiff Jack Mann (“Mann”) brought this suit
alleging a single violation of the Defend Trade Secrets Act
of 2016, 18 U.S.C. § 1836, against defendants Heather
Bales and James Bales (collectively, “Bales
Defendants”); and George F. Mann III, Julia A. Mann,
Judson H. Mann, Mann Insurance Agency, Inc., G.F. Mann
Agency, LTD., Global Risk Services, LTD., and Maintenance
Value Plan, LLC. (collectively, “Mann
Defendants”). The Bales Defendants and Mann Defendants
now move to dismiss Mann's Second Amended Complaint
pursuant to Federal Rules of Civil Procedure 12(b)(1) and
12(b)(6). Both motions are granted.
jointly owned and operated Mann Insurance Agency
(“MIA”) with his then wife, Heather Bales. During
the co-ownership, a Book of Business (“BOB”) was
created for MIA, containing contact information and
proprietary sales information for clients from multiple
jurisdictions. In 2010, Mann was incarcerated for an
unrelated matter. Heather Bales initiated divorce proceedings
shortly thereafter. Mann and Heather Bales signed a marital
settlement agreement (“Settlement Agreement”) on
August 30, 2010, which awarded Heather sole ownership of MIA,
including all of its assets. The Settlement Agreement also
stated that Mann waived, released, and relinquished any
rights, title, and interest in the future of MIA. The
Settlement Agreement was later incorporated into the
dissolution judgment order (“Dissolution
Judgment”) dated September 22, 2010. The Dissolution
Judgment also barred Mann and Heather Bales from ever
asserting any right, claim, demand or interest in the
personal property, marital property, or business property of
their former spouse. Neither the settlement agreement nor the
dissolution judgment specifically noted the BOB belonged to
Mann or was included as an MIA asset.
around April 2014, the Bales Defendants sold MIA and its
assets to the Mann Defendants. The BOB was included in this
sale. In December 2017, Mann filed the Second Amended
Complaint in this Court alleging that the Defendants violated
the Defend Trade Secrets Act of 2016 by misappropriation in
2007. That same month, Heather Bales sought a declaratory
judgment to clarify ownership of the BOB. The Will County
Circuit Court issued an order on February 1, 2018
(“Clarification Order”), explaining that the BOB
is an asset of MIA and that Mann had relinquished all claims
to that asset. All defendants now move to dismiss Mann's
Second Amended Complaint for lack of jurisdiction and for
failure to state a claim.
Rule of Civil Procedure 12(b)(1) permits a court to dismiss a
case when it lacks subject-matter jurisdiction. Under
12(b)(1), the Court must accept all well-pleaded facts as
true and draw reasonable inferences in favor of the
plaintiff. Ctr. for Dermatology & Skin Cancer, Ltd.
v. Burwell, 770 F.3d 586, 590 (7th Cir. 2014).
The party alleging jurisdiction bears the burden of proving
that the jurisdictional requirements are satisfied. See
Glaser v. Wound Care Consultants, Inc., 570 F.3d 907,
913 (7th Cir. 2009).
order to bring suit under DTSA, the plaintiff must be the
owner of a trade secret that has been misappropriated,
meaning the person has a “rightful legal or equitable
title” to the trade secret. 18 USCS § 1836(b)(1);
18 U.S.C. §1839(4). A misappropriation occurs when a
trade secret of another is acquired by a person through
improper means, such as theft, bribery, misrepresentation,
breach of duty to maintain secrecy, or espionage. 18 U.S.C.
§1839(5)(A) and (6)(A). Here, Mann contends that the BOB
was the misappropriated trade secret; however, the Settlement
Agreement and the Clarification Order establish that Heather
Bales was awarded exclusive ownership of MIA and all its
assets, including the BOB. Mann explicitly relinquished any
right to the BOB, so he cannot now raise a claim. As the DTSA
claim is the sole basis for being before this Court, this
case must be dismissed for a lack of subject-matter
jurisdiction pursuant to Rule 12(b)(1).
Rule of Civil Procedure 12(b)(6) tests the viability of a
complaint by examining whether it properly states a claim
upon which relief may be granted. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955 (2012). Here,
ownership of the BOB is critical to the success of a DTSA
claim. The record reflects that the Bales or Mann Defendants
obtained the alleged trade secrets lawfully, not by nefarious
means as is required to find liability under the statute.
Material elements of Mann's claim are factually
impossible to prove. Accordingly, the DTSA claim must be
dismissed. See generally Stachowski v. Town of
Cicero, 425 F.3d 1075, 1078 (7th Cir. 2005) (recognizing
that dismissal is proper where no set of facts would entitle
the plaintiff to relief).
in order to have a sufficient claim under DTSA, the offending
conduct must have occurred when the statute was enacted on
May 11, 2016. Opus Fund Servs. United States (USA) LLC v.
Theorem Fund Servs., LLC, No. 17 C 923, 2017 U.S. Dist.
LEXIS 160649, 15 - 16 (N.D. Ill. Sep. 29, 2017) (Coleman,
J.). Mann's Second Amended Complaint indicates, and he
later concedes in his Response, that the alleged
misappropriation all occurred prior to the enactment of DTSA,
between 2007 and 2014. Since Defendants were lawful owners of
BOB during the period of the alleged wrongdoing, Mann cannot
allege that their actions after May 2016 can create
foregoing reasons, both Defendants' motions to dismiss
pursuant to 12(b)(1) and 12 (b)(6) are granted and Mann's