United States District Court, N.D. Illinois, Eastern Division
General Electric Company, General Electric International, Inc., Plaintiffs,
Uptake Technologies, Inc., Ganesh Bell, Scott Bolick, Jay Allardyce, Ravi Marwaha, Kelly McGinnis, and Alex Paulsen, Defendants.
MEMORANDUM OPINION AND ORDER
Honorable Thomas M. Durkin, United States District Judge.
General Electric Company and General Electric International
(GE) seek injunctive relief and damages against Uptake
Technologies and six former high-level GE employees who left
GE to work for Uptake. GE alleges claims for breach of
contract, trade secret misappropriation, tortious
interference, unfair competition, and breach of fiduciary
duty. The defendants filed a motion to dismiss for failure to
state a claim. For the following reasons, the defendants'
motion is granted in part and denied in part.
12(b)(6) motion challenges the “sufficiency of the
complaint.” Berger v. Nat. Collegiate Athletic
Assoc., 843 F.3d 285, 289 (7th Cir. 2016). A complaint
must provide “a short and plain statement of the claim
showing that the pleader is entitled to relief, ”
Fed.R.Civ.P. 8(a)(2), sufficient to provide defendant with
“fair notice” of the claim and the basis for it.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). This standard “demands more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While
“detailed factual allegations” are not required,
“labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.”
Twombly, 550 U.S. at 555. The complaint must
“contain sufficient factual matter, accepted as true,
to ‘state a claim to relief that is plausible on its
face.'” Iqbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 570). “‘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.'” Boucher v. Fin. Sys. of Green Bay,
Inc., 880 F.3d 362, 366 (7th Cir. 2018) (quoting
Iqbal, 556 U.S. at 678). In applying this standard,
the Court accepts all well-pleaded facts as true and draws
all reasonable inferences in favor of the non-moving party.
Tobey v. Chibucos, 890 F.3d 634, 646 (7th Cir.
Electric and the Individual Defendants
2011, GE launched a campaign to connect heavy industrial
equipment to cloud-based software and analytics. R. 19 ¶
1. The purpose was to provide customers with a better way to
track production efficiency and monitor the health and life
of their machinery. Id. After finding initial
success, GE formed GE Digital, a GE subsidiary dedicated to
providing software for industrial equipment to other GE
businesses and outside companies. Id. GE Digital
works closely with GE Power, another GE subsidiary, to design
software for companies in the power industry. Id.
defendants Ganesh Bell, Scott Bolick, Jay Allardyce, Ravi
Marwaha, Kelly McGinnis, and Alex Paulsen all held high-level
positions with either GE Digital or GE Power. Id.
¶¶ 45-50. Bell, Allardyce, Marwaha, and McGinnis
are domiciled in and citizens of California. Id.
¶¶ 18, 20, 21-22. Bolick is domiciled in and a
citizen of Illinois and Paulsen is domiciled in and a citizen
of Pennsylvania. Id. ¶¶ 19, 23. The
individual defendants were critical to GE's strategic,
product development, sales, and marketing efforts, and had
access to GE's confidential and proprietary data,
including information regarding marketing, pricing, product
development, sales, and acquisition strategies. Id.
¶¶ 51, 67. As part of their employment, the
individual defendants each signed an Employee Innovation and
Proprietary Information Agreement (Confidentiality
Agreement). Id. ¶ 66. Through the
Confidentiality Agreement, the defendants agreed “not
to use, publish or otherwise disclose (except as my Company
duties may require), either during or subsequent to my
employment, any secret* or confidential* information or data
of the Company or its parent, subsidiaries, or
affiliates.” Id. ¶ 71. The Agreement
further provided that GE considers secret or confidential:
any information or data that is not generally known -
regardless of whether such information or data is in oral,
written, machine readable or other form.... Without
limitation, examples of information or data that may be of a
secret or confidential nature are: drawings, manuals,
notebooks, reports, models, inventions, formulas, processes,
machines, compositions, computer programs, accounting
methods, business plans, information systems, customer and
employee lists and any information and data in electric form.
Id. ¶ 72, Exs. 1-6 at 2. Bell's,
Bolick's Allardyce's, and McGinnis's
Confidentiality Agreements did not include choice-of-law
provisions. See Id. Exs. 1-3, 5.
Marwaha's and Paulsen's Agreements provided for New
York law. See Id. Exs. 4, 6.
individual defendants also each signed an Employee
Non-Solicitation Agreement (NSA). Id. ¶ 73.
Under the terms of the NSA, they agreed that during their
employment and for 12 months afterwards, they would not
“directly or indirectly, solicit or encourage any
person who is a Lead [or Senior] Professional Band or higher
employee of the Company (hereinafter ‘Restricted
Person') to terminate his or her employment relationship
with the Company or accept any other employment outside of
the Company[.]” Id. ¶ 74, Exs. 7-12 at 2.
Bell's, Bolick's, Allardyce's, and Paulsen's
NSAs contained a New York choice-of-law provision.
Id. ¶ 76. McGinnis's and Paulsen's NSAs
provided for New York law unless they lived and worked in
California at the time of the dispute, in which case
California law would apply. Id. None of the
individual defendants signed non-compete agreements.
Enters the Market
2014, Uptake Technologies, a Chicago-based startup, joined
the data analytics market for industrial equipment. Id.
¶¶ 3, 17. Uptake does not manufacture its own
industrial equipment, but instead competes with GE to develop
software. Id. ¶ 4.
relevant events all occurred between January and December
2018, when GE filed its first complaint in this case. First,
Bell left GE on February 2 and was named president of Uptake
just over two weeks later. Id. ¶ 60. Almost
immediately, Bell began soliciting Bolick, Allardyce, and
Marwaha, all of whom resigned from GE on April 9 to join
Uptake. Id. ¶ 85. After their resignations, GE
forensically examined their company computers. Id.
¶ 89. The examination revealed that Bell emailed Bolick
at least twice after becoming Uptake's president,
including sending a link to an article on Uptake's
private investments. Id. In addition, the
examination showed Marwaha opened a series of articles about
Uptake minutes after reading a LinkedIn message, which GE
alleges was sent from someone at Uptake at the behest of
Bell. Id. ¶ 90. The examination also revealed
that all three possessed GE trade secrets. Id.
¶ 98. Further, Bolick, Allardyce, and/or Marwaha
performed the following acts prior to their resignations:
• Allardyce and Marwaha scheduled and attended meetings
with GE personnel outside the scope of their duties to
inquire about GE confidential and trade secret information.
Id. ¶¶ 91-92;
• Bolick accessed a series of documents that, while
dated for GE, would provide an enormous advantage for a
startup company. Id. ¶¶ 93-94;
• All three rendered their GE-issued phones and iPads
unreadable by either wiping the devices or refusing to
provide GE with the passwords. Id. ¶ 96;
• Marwaha failed to return at least one GE-issued laptop
computer. Id. GE alleges Bolick, Allardyce, and
Marwaha coordinated wiping their devices to conceal their
misappropriation of GE information and Bell's
solicitation. Id. ¶ 97.
April 2018, GE sent letters to Bolick, Allardyce, and Marwaha
to remind them of their ongoing obligations to GE and to
demand that they return GE's confidential and trade
secret information. Id. ¶ 99. Following these
letters, Uptake's counsel admitted that Marwaha had a
significant number of GE files stored on a cloud-based
repository, and that Bolick and Allardyce had photographs of
GE whiteboards that contained confidential and trade secret
information. Id. ¶ 101. GE and Uptake agreed on
a forensic protocol through which these items were allegedly
deleted. Id. ¶ 104. Bolick, Allardyce, and
Marwaha denied that they had any other GE information.
Id. ¶ 102.
around the same time, Uptake hired Kelly McGinnis.
Id. ¶ 105. Prior to leaving GE, McGinnis
solicited another GE employee to join her at Uptake, which
the employee eventually did. Id. ¶ 106.
McGinnis also erased the contents of her GE-issued phone,
which GE believes was done to hide misappropriation of
information and solicitations by Bell, Allardyce, Bolick, and
Marwaha. Id. ¶ 107.
the same period, Uptake repeatedly approached GE about a
joint venture or acquisition. Id. ¶¶ 78,
81, 108. On one such occasion, GE and Uptake executed a
confidentiality agreement. Id. ¶ 108. Within
days of their discussions falling through, the Wall Street
Journal published an article indicating that GE had hired
bankers to consider the sale of its digital assets.
Id. ¶ 110. Further, Uptake began directly
targeting GE customers, citing the recent news of GE selling
its digital business. Id. ¶ 111. GE alleges
that Uptake leaked their discussions to the press to harm
GE's standing in the marketplace and to target GE
customers. Id. ¶ 112.
August, Alex Paulsen also left GE for Uptake. Id.
¶ 114. GE examined one of his company-issued devices,
which revealed a June email with the subject line,
“Uptake Availability - Got your Info from Kelly
McGinnis - Sr. Director, Commercial Finance.”
Id. ¶ 116. After Paulsen's departure,
Uptake again inquired about a deal with GE and GE again
declined. Id. ¶ 117.
mid-November, Uptake scheduled a joint interview for five GE
employees, at which time they met with three Uptake
employees, including Paulsen. Id. ¶ 123. Two
days later they all received offer letters from Uptake, which
four of the five accepted. Id. ¶¶ 125-26.
At least one of the letters offered a salary five percent
higher than the individual's GE salary, despite that
individual not sharing his salary information during the
interview. Id. ¶ 125. Later that week,
Uptake's CEO again contacted GE about entering into a
transaction. Id. ¶ 127.
contends that Uptake's repeated hiring of its employees
followed by attempts to acquire GE Digital demonstrate
Uptake's desire to supplant GE by acquiring its
employees, confidential information, and customers.
Id. ¶ 128. Further, GE asserts that
Uptake's hiring of Bell, Allardyce, Bolick, Marwaha,
McGinnis, and Paulsen put GE Power's and GE Digital's
confidential information and trade secrets at risk.
Id. ¶¶ 67, 133. Specifically, Bell is a
software engineer who is deeply aware of GE Digital's
software applications; Allardyce, Bolick, and Marwaha are
uniquely positioned to replicate GE's Digital's
software; and McGinnis and Paulsen know GE's financial
and sales information and clients who Uptake should target.
Id. ¶¶ 45-50, 131-135.
brings this action against Uptake and the individual
defendants, seeking injunctive relief and damages, for Breach
of Contract (Count I), violations of the Illinois Trade
Secrets Act (Count II) and Defend Trade Secrets Act (Count
III), Tortious Interference with Contract (Count IV),
Tortious Interference with Prospective Economic Advantage
(Count V), Unfair Competition (Count VI), and Breach of
Fiduciary Duty (Count VII).
Breach of Contract (Count I) (Against the Individual
Count I, GE alleges Bell, Bolick, Allardyce, Marwaha,
McGinnis, and Paulsen breached their NSAs and Confidentiality