First Financial Bank, N.A. v. Bauknecht et al
Filing
134
ORDER & OPINION entered by Judge Joe Billy McDade on 10/24/2014: IT IS ORDERED: 1. Defendant Graymont's Motion to Overrule Objections and Allow Use ofAnswers and Admissions 98 is GRANTED IN PART and DENIED IN PART. 2. Plaintiff First Financia l's Motion for Summary Judgment 108 is GRANTED IN PART and DENIED IN PART. The motion is granted in part with respect to Counts I, III, and IV, but otherwise denied. 3. Defendant Graymont's Motion for Summary Judgment 107 is GRANTED IN PART and DENIED IN PART. The motion is granted with respect to Counts VI, VII, and VIII, granted in part with respect to Count IV, and otherwise denied. 4. Defendant Bauknecht's Motion for Summary Judgment 104 is GRANTED IN PART and DENIED IN PART. The motion is granted with respect to Counts V and VIII, granted in part with respect to Count IV, and otherwise denied. (SEE FULL WRITTEN ORDER & OPINION) (JRK, ilcd)
E-FILED
Friday, 24 October, 2014 10:22:32 AM
Clerk, U.S. District Court, ILCD
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
FIRST FINANCIAL BANK, N.A.
Plaintiff,
v.
SCOTT BAUKNECHT and STATE
BANK OF GRAYMONT,
Defendants.
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Case No. 12-cv-1509
ORDER & OPINION
This matter is before the Court on cross-motions for summary judgment.
Each of the three parties has filed a Motion for Summary Judgment, and each
Motion is fully briefed. A discovery motion (Doc. 98) relating to evidentiary issues is
also before the Court. For the reasons explained below, Plaintiff First Financial’s
Motion for Summary Judgment is granted in part with respect to Counts I, III, and
IV and otherwise denied, Defendant Bauknecht’s Motion for Summary Judgment is
granted with respect to Counts V and VIII, granted in part with respect to Count
IV, and otherwise denied, and Defendant State Bank of Graymont’s (“Graymont”)
Motion for Summary Judgment is granted with respect to Counts VI, VII, and VIII,
granted in part with respect to Count IV, and otherwise denied.
Graymont’s
discovery motion is granted in part and denied in part.
PROCEDURAL HISTORY
Plaintiff filed the present case on December 13, 2012, bringing numerous
claims relating to Defendant Scott Bauknecht’s transition from employment with
Plaintiff to his subsequent employment with Defendant Graymont. Plaintiff brings
eight claims: breach of contract against Defendant Bauknecht (Count I), breach of
fiduciary duty against Defendant Bauknecht (Count II), misappropriation of trade
secrets against both Defendants (Count III), conversion against both Defendants
(Count IV), violation of the Federal Computer Fraud and Abuse Act against
Defendant Bauknecht (Count V), tortious interference with contract against
Defendant Graymont (Count VI), tortious interference with prospective economic
advantage against both Defendants (Count VII), and civil conspiracy against both
Defendants (Count VIII).
Defendants previously moved to dismiss, in part, Plaintiff’s Complaint. These
motions were granted in part and denied in part, pursuant to the Report and
Recommendation by Magistrate Judge Cudmore, to which no objections were filed
and which was thus adopted by the Court. (Doc. 25). As a result, Plaintiff’s Count
IV was limited to conversion of property that does not constitute trade secrets. (Doc.
25 at 2). No other claims were dismissed. After the discovery period, which included
several discovery disputes, this matter now proceeds to summary judgment.
DISCOVERY MOTION
After the close of discovery, Defendant Graymont filed a Motion to Overrule
Objections and Allow Use of Answers and Admissions (Doc. 98). This Motion was
filed under seal, because it contains extensive quotations from a deposition that
contain some potentially confidential information. Because the ruling on this
Motion can be given without describing any confidential information, it is contained
herein and not under seal.
2
A deposition of Plaintiff’s General Auditor Barry Stuck, pursuant to Federal
Rule of Civil Procedure 30(b)(6), was taken on April 3, 2014. In response to several
questions about Plaintiff’s investigation and proof in this case, Plaintiff’s counsel
objected, primarily on the basis of work product. The answers in dispute are all
subject to this objection, and many of the answers are accordingly specified by
Plaintiff’s counsel to be only based on Mr. Stuck’s personal knowledge, not as a
representative of Plaintiff.
At various times in the deposition, Defendant Graymont questioned Mr.
Stuck about the proof Plaintiff had to prove its case and on what evidence Plaintiff
was basing its claims. For example, Graymont asked what information and
materials are being referenced in paragraph nineteen of the Complaint, which
alleges the use of confidential information taken from Plaintiff under Count III. Mr.
Stuck responded that he was only aware of one particular list of names. Graymont
seeks to use this information as an admission that no other evidence supports
Count III.
Under Rule 30(b)(6), a party may depose a corporation or other organization
through a designated representative. This representative testifies on behalf of the
organization about the identified topics. The work product doctrine protects from
discovery documents and items prepared in anticipation of litigation by a party or
its representative. Fed. R. Civ. P. 26(b)(3). The “mental impressions, conclusions,
opinions, or legal theories of a party’s attorney or other representative concerning
the litigation” are specifically protected. Fed. R. Civ. P. 26(b)(3)(B). However, it does
not protect the discovery of facts, only the legal theories drawn from the facts.
3
S.E.C. v. Buntrock, 217 F.R.D. 441, 446 (N.D. Ill. 2003) (“Such discovery clearly
seeks not the facts, but the manner in which the SEC intends to marshal them.”).
Defendant Graymont was not seeking to obtain any documents or items
prepared in anticipation of litigation. Accordingly, the work product doctrine does
not apply. But there is a somewhat related, unarticulated problem with the
questions. The problem with Defendant Graymont’s questions is not necessarily the
information they were attempting to obtain, but Graymont’s intended use of the
answers. Graymont was trying to pin Plaintiff down to make admissions about its
claims by questioning its representative about the facts in support.
Questions about legal theories or requiring the application of law are better
answered through interrogatories. See United States v. Taylor, 166 F.R.D. 356, 362
n.7 aff'd, 166 F.R.D. 367 (M.D.N.C. 1996). “Whether a Rule 30(b)(6) deposition or a
Rule 33(c) contention interrogatory is more appropriate will be a case by case
factual determination.” Id.
Here, the topics of Defendant Graymont’s questions are more appropriate for
contention interrogatories. They ask what evidence or facts were or will be used to
support each of Plaintiff’s claims. This is more appropriately done in the form of
written interrogatories, as they are filtered through an attorney that is familiar
with the case, the discovery, and the law. See Beloit Liquidating Trust v. Century
Indem. Co., 02 C 50037, 2003 WL 355743, *5-6 (N.D. Ill. Feb. 13, 2003) (concluding
30(b)(6) deposition topic of factual basis for claim more appropriate for written
interrogatories). Mr. Stuck could not be expected to review the entirety of discovery
productions and apply the law behind the various claims and reach a complete and
4
conclusive answer about what evidence supports which claims. Plaintiff’s objection
was geared toward preventing Graymont from doing what it correctly anticipated
Graymont would do: try to limit Plaintiff’s claims to the evidence known to Mr.
Stuck. Defendant Graymont could have filed a contention interrogatory to obtain
such information, but did not, and discovery has now closed. The Court finds that
although Plaintiff’s stated grounds for the objection were not entirely accurate, the
end result is adequate. Mr. Stuck’s testimony about the facts in support of the
claims was limited to his personal knowledge, to avoid Defendant Graymont using
them as evidentiary admissions. This is a happy medium, and requires no further
relief from the Court.1
However, there is one line of questioning which is removed enough from an
attempt to limit Plaintiff’s proof, and based more on factual information, for which
Plaintiff’s objection is overruled. Defendant Graymont asked about the inspection or
forensic examination that was conducted of Bauknecht’s computer after he left his
employment with Plaintiff. This is a reasonable line of questioning, not asked with
respect to specific complaints or seeking to limit evidence Plaintiff could use to
support its claims, but merely seeking facts. Defendant Graymont was entitled to
answers from Plaintiff, as a corporate entity, as to the inspection of Bauknecht’s
computer after he left, and this is not work product or otherwise more appropriate
to obtain through interrogatories. Accordingly, this objection is overruled. However,
it is not clear that any further remedy is necessary at this stage, as Mr. Stuck
In his Motion for Summary Judgment, Bauknecht attempts to limit Plaintiff’s
trade secret and conversion claims to evidence known by Stuck. Bauknecht, too, is
prevented from relying upon Stuck’s testimony as evidentiary admissions.
1
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provided answers to the questions presented, and apparently even answered them
as a corporate representative. Thus, Defendant Graymont’s discovery-related
motion is granted in part, and denied in part.
SUMMARY JUDGMENT STANDARD
Summary judgment shall be granted where “the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). In ruling on a motion for summary
judgment, the Court must view the evidence in the light most favorable to the nonmoving party. SMS Demag Aktiengesellschaft v. Material Scis. Corp., 565 F.3d 365,
368 (7th Cir. 2009). All inferences drawn from the facts must be construed in favor
of the non-movant. Moore v. Vital Prods., Inc., 641 F.3d 253, 256 (7th Cir. 2011).
To survive summary judgment, the “nonmovant must show through specific
evidence that a triable issue of fact remains on issues on which he bears the burden
of proof at trial.” Warsco v. Preferred Technical Grp., 258 F.3d 557, 563 (7th Cir.
2001) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). If the evidence on
record could not lead a reasonable jury to find for the non-movant, then no genuine
issue of material fact exists and the movant is entitled to judgment as a matter of
law. See McClendon v. Ind. Sugars, Inc., 108 F.3d 789, 796 (7th Cir. 1997). At the
summary judgment stage, the court may not resolve issues of fact; disputed
material facts must be left for resolution at trial. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249-50 (1986).
Cross-motions for summary judgment are considered separately, and each
party requesting summary judgment must satisfy the above standard before
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judgment will be granted in its favor. See Tegtmeier v. Midwest Operating Eng’rs
Pension Trust Fund, 390 F.3d 1040, 1045 (7th Cir. 2004); Santaella v. Metro. Life
Ins. Co., 123 F.3d 456, 461 (7th Cir. 1997). Thus, the facts are construed in favor of
the non-moving party, which differs depending on which motion is under
consideration. Tegtmeier, 390 F.3d at 1045.
FACTUAL BACKGROUND2
Defendant Scott Bauknecht (“Bauknecht”) began working for Pontiac
National Bank (“PNB”) in 1995. In 2006, the bank changed its name to Freestar,
and Freestar eventually merged with Plaintiff First Financial Bank on December
30, 2011. At the time of this merger, Bauknecht was an Agricultural Loan Officer,
as well as a Community Bank President.
Bauknecht’s Confidentiality Agreement and First Financial’s Security Protocol
While Bauknecht was employed with PNB, he received an employee
handbook in February 1996. PNB had a policy of keeping information such as
customer account information, financial data and personal information confidential.
While it was called Freestar, the bank had a policy of forbidding employees from
disclosing or using confidential customer information during or after employment.
Freestar also required encryption of data copied onto laptops or other devices. On
June 6, 2002, Bauknecht signed a Confidentiality Agreement with PNB, in which he
Unless otherwise indicated, these background facts reflect the Court’s
determination of the undisputed facts, and are drawn from the parties’ statements
of facts and responses thereto. (Docs. 111, 127, 133). “Disputes” that facts are
mischaracterized, or out of context, or not accurate descriptions of testimony, are
not genuine disputes absent cited evidence to the contrary. Disputed facts are
presented neutrally; inferences for one party or the other are discussed below when
considering each Motion for Summary Judgment.
2
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agreed not to disclose confidential customer information for a period of two years.
Such information includes:
all or any part of the Bank’s customer accounts; customer financial
records or related information; any existing or subsequently created
customer or potential customer lists; . . . trade secrets . . . ; information
regarding products and services offered by the Bank; and any other
documents made, compiled, obtained or acquired by the Employee
during employment concerning any customer or product or service
offered by the Bank.
(Pl.’s Ex. 17, Doc. 109-7 at 1). To access financial information on Freestar’s or
Plaintiff’s computers, the user must have the proper security codes.
On October 11, 2011, Bauknecht learned of the potential merger between
Freestar and Plaintiff. The merger closed on December 30, 2011. Bauknecht
retained his employment, in the same office.
Bauknecht’s Subsequent Employment with Graymont
On either December 24 or December 31, 2011, Bauknecht spoke on the phone
with Ronald Minnaert (“Minnaert”), president of Graymont, a competitor of
Plaintiff. Bauknecht and Minnaert discussed the possibility that Bauknecht might
work for Graymont, but the exact content and tone of the discussion is disputed. On
January 10, 2012, Graymont’s Board of Directors met, and voted to approve hiring
Bauknecht as a loan officer. The nature of Bauknecht’s acceptance of this offer is
disputed, though no formal written offer or acceptance is on the record. On the
weekend of January 21–22, 2012, Bauknecht went into the office at Plaintiff bank,
and packed up his office. On that Monday, January 23, 2012, Bauknecht quit
without giving prior notice to Plaintiff and signed employment paperwork with
Graymont. Bauknecht’s salary at Graymont is based upon his loan volume.
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Bauknecht’s Transition to Graymont
The parties dispute several details concerning Bauknecht’s actions around
the time of his transition from First Financial to Graymont. The following facts are
undisputed.
After leaving his employment with Plaintiff, Plaintiff asked Bauknecht to
return his keys and provide his voicemail password. At least twice, Bauknecht gave
the wrong password. Bauknecht took with him soil maps, as well as farm
equipment guides, upon leaving his employment. The soil maps were purchased by
Bauknecht, but the farm equipment guides belong to Plaintiff and were returned to
it at a deposition for this litigation.
On January 24, 2012, Bauknecht drafted a letter on Graymont letterhead
that discussed his new employment at Graymont. Bauknecht wrote in his letter
that his “clients will continue to come first,” and told recipients, “[i]n the next couple
of weeks I will be calling on you personally.” He concluded with his contact
information and a note that he “look[s] forward to serving your banking needs.”
(Pl.’s Ex. 13, Doc. 109-6 at 1). The letter was sent to seventy-three people, including
many customers of Plaintiff’s.3 Minnaert personally reviewed and approved the
sending of this letter.
Graymont objects to Plaintiff’s stated fact that sixty-one of the recipients had prior
business with Plaintiff, and fifty-eight have accounts there, as Plaintiff cites to a
large span of pages in a deposition for support. Bauknecht has similar complaints
about this fact. However, the reason for the long span of pages is that the deposition
testimony goes through each recipient individually and discusses whether each was
a customer of Plaintiff’s. Rather than listing each individual in separate facts,
which would not be any less burdensome, Plaintiff conveniently condensed this into
one fact. Graymont’s objections are overruled.
3
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After sending this letter, Bauknecht followed up with many of the recipients.
About half of them called him directly, and he also called an additional twenty to
thirty percent later. A number of the list’s recipients, including customers of First
Financial, moved their loans to Graymont, where Bauknecht handles approximately
$20 million of the bank’s $110 million loan portfolio.
In April 2012, Bauknecht created a document that listed several loans closed
at Graymont through March 2012, four loans that were in the “pipeline” and
expected to close by the end of 2012, and a list of about thirty individuals on his
“calling list” that he intended to “continue to work on” in 2012. (Pl.’s Ex. 15, Doc.
111-10 at 1-2). This document notes that over $15 million in loans were “moved
over” since Bauknecht began his employment with Graymont, and that they were
the “low hanging fruit,” anticipating that obtaining more loans would be more
difficult. This document also identifies those customers who farm land managed by
Plaintiff, which Bauknecht knew because of his former employment.
It is further undisputed that Bauknecht told Graymont the amount of money
that one of Plaintiff’s customers carried in its deposit accounts, or at least provided
his best estimate of how much money the customer carried. He also told Graymont
that the deposit account held money that was used to offset the cost of the
customer’s use of First Financial’s Remote Deposit Capture.
The following facts remain in dispute. Defendants insist that Bauknecht
created this list of seventy-three people to which to send the letter from memory
after he left his employment with Plaintiff; Plaintiff has no evidence to the contrary,
but suggests a jury could infer otherwise.
10
Plaintiff also suggests that Bauknecht obtained customer names and contact
information from two additional documents: a document that it refers to as a
“Master Database” and two lists of open loans.
There is another document, referred to by Plaintiff as a “Master Database.”
This list contains names of 615 individuals, and includes contact information for a
portion of them, notes about them, and other miscellaneous data. (Pl.’s Ex. 8, Doc.
111-4). Bauknecht asserts that he stored the contact information for his friends,
relatives, business acquaintances, professional and business service providers, and
customers on his cell phone, and did so between 1995 and 2011. (Decl. of Scott
Bauknecht, Doc. 104-1, at ¶3). The parties all dispute the origins of the master
database and the manner in which Bauknecht obtained it.
Bauknecht also retained an iPad, given to him by Freestar, after his
employment with Plaintiff ended. Freestar allowed its employees to use the iPads
for personal use. Discovery revealed that Bauknecht’s iPad contained two lists of
open loans, one showing the loans Bauknecht serviced while employed by Plaintiff,
and the other showing the loans managed by Plaintiff’s junior loan officer, Dustin
Smith. (Pl.’s Ex. 9, Doc. 111-5). Bauknecht transferred the documents to the iPad on
January 9, 2012, and also sent it to his personal email account. Bauknecht claims
this was approved by Plaintiff and that he transferred the documents in order to
prepare for a meeting. Plaintiff claims that Bauknecht transferred the documents in
an effort to poach customers.
Finally, both Bauknecht and Graymont had in their possession a number of
Plaintiff’s financial documents, including collateral schedules and financial
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documents such as loan agreements and note modifications. It is undisputed that
Bauknecht and Graymont obtained certain information through their customers.
But the parties dispute the ways in which Defendants came into possession of other
documents.
First Financial’s Losses
It is undisputed that a number of Plaintiff’s customers took their business to
Graymont. The parties, however, dispute the reasons why this happened. Plaintiff
argues that Defendants’ misdeeds directly caused it to lose its business, but
Defendants’ argue that Plaintiff’s declining reputation in the small community that
it served, coupled with the ordinary business loss that accompanies the transition of
employees, resulted in the loss.
DISCUSSION
As explained below, there are disputed facts that preclude judgment in favor
of any party with respect to some of Plaintiff’s claims. For others, there is no
genuine dispute of material fact, and judgment may be awarded. The Court
addresses each claim separately, below. First, a preliminary matter concerning an
alleged admission is addressed.
Bauknecht’s Indemnification Letter
Shortly after the initiation of this litigation, counsel for Bauknecht wrote a
letter to counsel for Graymont. In this letter, Bauknecht’s counsel states:
All actions attributed to Bauknecht in the complaint were either
known to or authorized by appropriate officers of the State Bank of
Graymont. Accordingly, Bauknecht hereby makes demand upon
Graymont to save, hold harmless and indemnify him for any and all
damages that may accrue including without limitation, reasonable
attorney’s fees. Additionally, we request that you send to the
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undersigned any and all insurance policies in force at the time of the
facts described in the complaint which may cover Bauknecht’s actions
as an officer/employee of State Bank of Graymont . . . .
(Pl.’s Ex. 3, Doc. 111-2). This passage is nearly the entirety of the letter.
Plaintiff argues this letter, particularly the first sentence of the passage
recited above, should bring the litigation to an end, as both parties have thus
admitted every allegation in the Complaint. Such a reading is absurd as a factual
matter, and does not comport with the laws of evidence. In context, it is clear that
this statement, although very unfortunately worded, was not an admission that
everything alleged is true. Rather, it is an assertion that, to the extent Bauknecht is
found liable for any of the alleged actions, Graymont must be required to indemnify
him, because if he undertook the actions, they would have been approved by, or are
otherwise attributable to Graymont.
First, there are different types of admissions. “Judicial admissions are formal
concessions in the pleadings, or stipulations by a party or its counsel . . . .” Keller v.
United States, 58 F.3d 1194, 1198 n.8 (7th Cir. 1995). Such formal concessions
“must be deliberate, clear and unambiguous.” Robinson v. McNeil Consumer
Healthcare, 615 F.3d 861, 872 (7th Cir. 2010) (internal quotation marks omitted).
Essentially all other types of party statements are simply evidentiary admissions,
and may thus be admissible evidence under Federal Rule of Evidence 801(d)(2). See
Murrey v. United States, 73 F.3d 1448, 1455 (7th Cir. 1996). The difference between
these two types of admissions is crucial, because judicial admissions are conclusive,
while evidentiary admissions can later be controverted or explained by the party.
Keller, 58 F.3d at 1198 n.8.
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Bauknecht’s statement in the letter at issue, through his counsel, is not a
judicial admission. It was not made during any legal proceedings; rather, it was
written in a letter to another attorney. It also is not a deliberate and unambiguous
formal concession. However, as a statement made by Bauknecht’s attorney, it is an
evidentiary admission by a party opponent that would not be subject to a hearsay
objection. Fed. R. Evid. 801(d)(2). As such, if admitted into evidence, it could still be
contradicted, and thus is not dispositive of any issues in this case.
Bauknecht makes several arguments for why the contents of the letter should
not be admissible as a judicial admission. As explained above, the Court has not
adopted the statement as a judicial admission and is merely treating it as an
evidentiary admission. Even so, the Court addresses Bauknecht’s arguments in the
event that they also apply to evidentiary admissions. First, he argues that this is
not an admission because the word attribute or attribution does not mean admit or
admission. That, of course, is true. But it does not mean that Bauknecht’s
statements were not evidentiary admissions. Under Bauknecht’s argument, all
admissions would need to begin with the magic words, “I admit.” Here, First
Financial relies upon a possible implication of Bauknecht’s attorney’s statement
that if “all actions attributed to Bauknecht in the complaint were either known to or
authorized by appropriate officers of the State Bank of Graymont” then those
actions must have actually occurred. (See Pl.’s Ex. 2, Doc. 111-2).
Second, Bauknecht argues that the statement is a legal conclusion that
Bauknecht was acting within his employment relationship with Graymont. It may
well have been Bauknecht’s attorney’s intent to demand indemnification from
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Bauknecht’s employer. However, that is not the way in which First Financial is
attempting to use the statement. Instead, First Financial is attempting to use the
statement as evidence that Bauknecht engaged in the activities constituting the
factual underpinnings of its complaint.
Third, Bauknecht argues that he never adopted or consented to the
statement in the letter, although he was copied on it. However, there is no
requirement in the federal rules that a party opponent adopt or consent to
comments made by its agent or employee on a matter within the scope of that
relationship. See Fed. R. Evid. 801(d)(2)(D). Here, Bauknecht’s attorney wrote the
letter on Bauknecht’s behalf, and the letter concerned the matter in which
Bauknecht had retained him. Therefore, the provisions of Rule 801(d)(2)(D), which
pertain to admissions through an employee or agent, apply rather than the
provisions of Rule 801(d)(2)(B), which pertain to admissions through adoption. Cf.
United States v. Jung, 473 F.3d 837, 841 (7th Cir. 2007).
This is an evidentiary admission as to Bauknecht only. Plaintiff relies on
Rule 801(d)(2)(B), and argues Graymont adopted this admission by failing to object
to it and agreeing to indemnify Bauknecht. Plaintiff thus argues Graymont must
have believed Bauknecht’s statement was true because it agreed to the demanded
indemnification. But that is not necessarily the case. Graymont’s agreement to
indemnify Bauknecht likely has nothing to do with whether Bauknecht acted as the
Complaint alleges, and instead depends upon preexisting agreements between the
two Defendants. Graymont did not adopt this admission. There was also no reason
Graymont should have objected in any from to Bauknecht’s statement.
15
Defendants also argue that this evidence, even if an evidentiary admission,
should be inadmissible for other reasons. Bauknecht cites Rule 411, which prohibits
use of insurance coverage as evidence to prove liability. That is not what Plaintiff is
attempting to do; its focus is not on the existence of insurance, which is not even
apparent from the letter, but on the statement concerning liability. The Court also
sees no basis to exclude the statement under Rule 403 at this time. Accordingly, the
statement is evidence, not weighed at the summary judgment stage, that supports
Plaintiff’s claim that Bauknecht is liable. As to Graymont, the statement is hearsay
that may be inadmissible if used to prove that Graymont did authorize Bauknecht’s
actions; it thus is not used in that regard in ruling on the pending Motions.
First Financial’s Eight Counts
I.
Breach of Contract
Plaintiff alleges Bauknecht breached the confidentiality agreement, and
should be liable to it for breach of contract. The contract at issue is the
Confidentiality Agreement Bauknecht signed on June 6, 2002, while an employee of
PNB, Plaintiff’s predecessor. Plaintiff cites five ways in which it claims Bauknecht
breached this agreement. Bauknecht, in his Motion, argues he is entitled to
judgment as a matter of law on this claim.
To prove a breach of contract, a plaintiff must prove the existence of an
enforceable contract, performance by the plaintiff, breach by the defendant, and
harm from the breach. E.g., Horwitz v. Sonnenschein Nath & Rosenthal LLP, 926
N.E.2d 934, 942 (Ill. App. Ct. 2010).
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A. Bauknecht’s Motion
Bauknecht argues Plaintiff does not have standing to enforce the
Confidentiality Agreement, because it was an agreement between Bauknecht and
PNB, not with Plaintiff. It is undisputed that PNB changed its name to Freestar in
2006, and that Plaintiff and Freestar then merged in December 2011. The change in
a corporation’s name has no effect on its ability to enforce a contract. See Terminal
Freezers, Inc. v. Roberts Frozen Foods, Inc., 354 N.E.2d 904, 908 (Ill. App. Ct. 1976).
Pursuant to Illinois law, the effect of a merger is that the surviving corporation
“possess[es] all the rights, privileges, immunities, and franchises, as of a public or a
private nature, of each of the merging or consolidating corporations,” and all
property, debts, and “all and every other interest” of the merging corporations are
“deemed to be transferred to and vested in” the surviving corporation “without
further act or deed.” 805 Ill. Comp. Stat. 5/11.50(4).4 Although Plaintiff cites no
cases applying this provision to facts similar to the present case, it seems quite
clear that Plaintiff, as the surviving corporation after its merger with Freestar,
possessed all of Freestar’s rights and interests, including those under the
Confidentiality Agreement with Bauknecht. Freestar retained those rights despite
its change in name from PNB since the contract was signed. Thus, even if the
Neither party suggests that any law other than Illinois law should apply, and
neither has briefed choice of law concerns. For that reason, the Court applies
Illinois corporate law to this question. However, because First Financial is an
Indiana Corporation, Indiana law may apply. Fortunately, the result is identical
under the law of either jurisdiction. In Indiana, as in Illinois, title to property
owned by each corporation that is party to the merger is vested in the surviving
corporation. See Ind. Code Ann. § 23-1-40-6(a)(2). Because the laws of Illinois and
Indiana are essentially the same on this issue, there is no need to conduct a choiceof-law analysis. See Allianz Ins. Co. v. Guidant Corp., 869 N.E.2d 1042, 1049 (Ill.
App. Ct. 2007).
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Confidentiality Agreement was not specifically assigned by PNB to Freestar or
Freestar to Plaintiff, Plaintiff is able to enforce its inherited rights under the
Agreement as the surviving corporation after the merger.
Bauknecht also argues the contract is unenforceable because it contains no
limit on the geography or duration of the requirement that Bauknecht not disclose
confidential information. This argument is without merit for several reasons. While
true that non-disclosure agreements without a geographical or durational limit may
be unenforceable, see Disher v. Fulgoni, 464 N.E.2d 639, 644 (Ill. App. Ct. 1984),
there was a duration limit of two years in the Confidentiality Agreement. Further,
the lack of geographical or durational limits does not make a duty to maintain
secrecy in a confidentiality agreement unenforceable, even if it is not limited
specifically to protection of trade secrets. See 765 Ill. Comp. Stat. 1065/8(b)(1) (“[A]
contractual or other duty to maintain secrecy or limit use of a trade secret shall not
be deemed void or unenforceable solely for lack of durational or geographical
limitation on the duty.”); Coady v. Harpo, Inc., 719 N.E.2d 244, 250 (Ill. App. Ct.
1999).
Bauknecht makes two final arguments. He seems to argue that because the
Confidentiality Agreement is only enforceable for two years following the end of
employment, and his employment with PNB ended in 2006, the Agreement no
longer restricted him from disclosing confidential information. He also argues that
First Financial cannot enforce the contract because the limited time period for
which he worked for First Financial cannot serve as adequate consideration for the
agreement. For similar reasons to those given above, these argument also fail. PNB
18
changed its name to Freestar, and later merged with Plaintiff. Through this merger,
Bauknecht retained his employment without notable change. His employment
clearly ended, for purposes of the time limit on the restriction of disclosing
confidential information, in January 2012. His alleged actions thus fell well within
the two-year time period. He was also consistently employed by PNB or its
successors since the day he signed the confidentiality agreement.
Bauknecht does not argue he did not disclose confidential information under
the agreement as Plaintiff alleges. As his legal arguments against enforcement or
applicability of the contract fail, he thus is not entitled to summary judgment on
this claim.
B. First Financial’s Motion
In its motion, First Financial argues the undisputed facts demonstrate that
Bauknecht breached the Confidentiality Agreement by disclosing to Graymont the
identities of First Financial’s customers and customer account information.
Bauknecht does not challenge First Financial’s assertion that he disclosed
confidential information.
1. Breach
Pursuant to the Confidentiality Agreement, Bauknecht agreed that he would
“hold in strict confidence and refrain from disclosing to others . . . confidential
information . . . [which] shall include . . . customer financial records or related
information; [and] any existing or subsequently created customer or potential
customer lists . . .” (Pl.’s Ex. 17, Doc. 109-7, at 1).
19
Plaintiff argues that Bauknecht breached the agreement on five occasions: he
created the list of 73 customers from memory, created a list of customers that he
had moved to Graymont or planned to move to Graymont, took the master database
of contact information, took the open loan documents, and told Graymont how much
one customer kept in its deposit account. Plaintiff has not presented any evidence
the Bauknecht shared the open loan documents with Graymont or that he shared
the master database with Graymont. However, it is undisputed that both
Bauknecht’s list of 73 and his list of low hanging fruit include First Financial
customers and it is also undisputed that Bauknecht specifically remembered certain
people as First Financial’s customers when he made this list. Further, Bauknecht
does not dispute that he disclosed the size of a commercial customer’s deposit
account.
Each of these undisputed disclosures falls squarely within a category of
information covered by the language of the confidentiality agreement. Therefore,
the court finds that undisputed material evidence shows that Bauknecht breached
his confidentiality agreement with First Financial. See Stampede Tool Warehouse,
Inc. v. May, 651 N.E.2d 209, 217 (Ill. App. Ct. 1995); Delta Med. Sys. v. Mid-Am.
Med. Sys., Inc., 772 N.E.2d 768, 785 (Ill. App. Ct. 2002)(noting that restrictive
covenants limit former employees’ rights to compete through solicitation of former
customers).
2. Damages
However, First Financial has not presented undisputed evidence of damages.
In support of its claim for damages, First Financial has provided a spreadsheet that
20
it claims “itemize[s] its lost profits to the penny on each of the loans it has lost
because of Defendants’ unlawful acts.” (Doc. 109 at 47). The spreadsheet includes
information regarding 46 loans taken out by 28 customers who moved their loans
from First Financial to Graymont. First Financial claims that the spreadsheet is a
summary of over 500 pages of loan documents. It uses those data points to calculate
lost profits.
This document is inadmissible for this purpose. A party “may use a summary,
chart, or calculation to prove the content of voluminous writings, recordings, or
photographs that cannot be conveniently examined in court.” Fed. R. Evid. 1006. In
United States v. White, the Seventh Circuit held that a spreadsheet that included
information regarding 236 property sale transactions was properly admitted under
Rule 1006. 737 F.3d 1121, 1135 (7th Cir. 2013). However, a party introducing such
evidence “must not misrepresent [the underlying documents’] contents or make
arguments about the inferences the jury should draw from them.” Id. In White, the
spreadsheet “catalogued instances of objective characteristics” about the mortgage
transactions, including identities of people who had provided down payments,
whether buyers had purchased multiple properties within a short period of time,
buyers’ listed employers, and identities of loan officers. See id. at 1134-35. From
there, the spreadsheet “added [the instances of these objective occurrences]
together,” to create totals. Id. at 1135.
In this case, Plaintiff’s spreadsheet is inadmissible under Rule 1006 because
it relies upon a number of inferences that a jury could draw and that the Plaintiff
21
has tacitly already made for the factfinder. See id. at 1135. Rather than serving as a
catalogue of “objective characteristics,” the spreadsheet is pure argument. See id.
First, Plaintiff relies upon an improper inference in selecting the universe of
loan documents from which it draws the data to populate the spreadsheet. It takes
for granted that it lost each of these loans to Graymont because of Bauknecht’s
breach. Evidence produced by Defendants—as well as common sense—dictates that
this cannot simply be assumed true. For instance, a number of the borrowers listed
on First Financial’s damages spreadsheet were not even included in Bauknecht’s
List of 73. (Compare Pl.’s Ex 18, Doc. 111-13, with Pl.’s Ex. 14, Doc. 111-9). The list’s
unreliability is also demonstrated by the fact that Plaintiff includes entries for
Bauknecht’s relatives. (See, e.g., Pl.’s Ex. 18, Doc. 111-13; Pl’s Ex. 1, Doc. 111-1, at
138). They could have been motivated to move loans by many reasons, including
simply receiving news of their relative’s new employer. Finally, Defendants have
produced evidence that a number of First Financial’s customers brought their
business to Graymont for reasons entirely independent of Bauknecht’s solicitation.
A reasonable jury could believe that some or all of First Financial’s damages were
self-inflicted or not otherwise attributable to Bauknecht.
Second, Plaintiff’s actual calculations of lost profits rely upon unverified
inferences that should be left for a jury to draw. Imbedded in this spreadsheet is the
assumption that borrowers regularly wait until the contractual maturity date to
repay their loans and never make partial or full prepayments in the absence of the
malfeasance of a competitor. It may be true that the spreadsheet accurately
catalogues data points contained in loan files such as the dates when the customers
22
prepaid their loans with Plaintiff, but the cause for such prepayment cannot be
assumed and definitely cannot be relied upon as an objective fact. Unfortunately,
Plaintiff uses those data points, which are based upon faulty assumptions, to
calculate the amount of projected income it lost in the form of interest payments.
Such a calculation is an inference that does not take into consideration the myriad
contingencies of life and business.
Plaintiff’s Chief Financial Officer Roger McHargue testified that he
calculated lost interest income by looking to the number of days between loans’
contractual maturity dates and the days on which they were actually paid off. (Pl.’s
Ex. 28, Doc. 131-4, at 154). For example, if a loan has a maturity date of January 1,
2015 but the borrower will pay it off on December 1, 2014, there would be 31 days
between the contractual maturity date and the payoff date. On each of these days, a
bank would lose interest payments it would receive if the borrower waited to pay
the balance until the loan’s maturity date. Again, there cannot be any underlying
data point contained in the range of produced documents that establishes, as an
objective fact, that those borrowers would have waited until the contractual
maturity date to fully repay their loans. See White, 737 F.3d at 1135.
Both the criteria used to select loans on the spreadsheet – the fact that those
customers moved from First Financial to Graymont – and the calculations used to
assess damages are based upon inferences and assumption. Therefore, the
23
spreadsheet is inadmissible as substantive evidence under Rule 1006. See Fed. R.
Evid. 1006; White, 737 F.3d at 1135.5
First Financial’s next argument is that the Court must accept its damages
calculations because neither Defendant has disclosed how much money Graymont
has made on those loans. In making this point, it relies upon an unpublished case
brought by a company that lost an exclusive distribution contract after its
consultants shared trade secrets with a competitor. See Lucini Italia Co. v.
Grappolini, No. 01 C 6405, 2003 WL 1989605 (N.D. Ill. Apr. 28, 2003). In Lucini
Italia, the Court credited the plaintiff’s damages forecast, noting that “specific and
certain proof of the actual amount of losses is not required” when “a defendant’s
unlawful act keeps a plaintiff out of a market.” Id. at *19. The court drew the
inference that the defendants’ sales and profits, if disclosed, would support the
plaintiff’s damage calculations. Id. Lucini Italia is inapposite. There, the defendant
attempted to eliminate competition by completely shutting the plaintiff out of the
market. Id. In this case, however, Graymont and First Financial remain
competitors in the same market space. There is nothing keeping First Financial
from trying to take back its prior customers. See id. Therefore, it would be
inappropriate to draw the same inference from the facts presented here that the
court drew in Lucini Italia.
For these reasons, the Court denies Bauknecht’s motion for summary
judgment on Count I. First Financial has established that Bauknecht breached his
confidentiality agreement, and summary judgment is therefore granted on the issue
However, as explained in White, with the proper foundation the spreadsheet may
be admissible under Rule 611(a) as a pedagogical chart. See 737 F3d at 1135-36.
5
24
of liability alone, but not damages. There is a genuine issue of material facts as to
damages that a jury must resolve.
II.
Breach of Fiduciary Duty
Plaintiff alleges Bauknecht breached his fiduciary duty of loyalty in five
ways: (1) using Plaintiff’s computer system to create the master database of
customers that he later used to compete against Plaintiff; (2) conducting targeted
inquiries into Plaintiff’s customer’s loans so he could bring that information and
deposit account information to Graymont; (3) stealing bank property from Plaintiff;
(4) denying Plaintiff access to his work phone, which he used to compete against
Plaintiff even before he resigned; and (5) coordinating with Graymont about moving
over Plaintiff’s loans. Both First Financial and Bauknecht have moved for summary
judgment on Count II. For the reasons discussed below, the existence of disputed
material facts precludes summary judgment for either party.
In order to prevail on a breach of fiduciary duty claim, a plaintiff must prove
that (1) a fiduciary duty exists, (2) the fiduciary duty was breached, and (3) such
breach proximately caused plaintiff’s injury. Neade v. Portes, 739 N.E.2d 496, 502
(Ill. 2000).
Under Illinois law, an employee owes a fiduciary duty of loyalty to his
employer. Lawlor v. N. Am. Corp. of Illinois, 983 N.E.2d 414, 433 (Ill. 2012);
Mullaney, Wells & Co. v. Savage, 402 N.E.2d 574, 580 (Ill. 1980). Employees,
however, “may compete with their former employer and solicit former customers so
long as there was no demonstrable business activity by the former employee before
the termination of employment.” Id. Employees breach their fiduciary duty when
25
they take action, such as downloading or copying employer data, in order to compete
with the employer after their employment has ended. See RKI, Inc. v. Grimes, 177
F. Supp. 2d 859, 877 (N.D. Ill. 2001). This includes, for example, improperly taking
customer lists. Veco Corp. v. Babcock, 611 N.E.2d 1054, 1059 (Ill. App. Ct. 1993).
In his motion, Bauknecht argues that he did not owe Plaintiff a fiduciary
duty of loyalty because he was not Plaintiff’s officer. Although corporate officers’
fiduciary duties of loyalty are broader than those of non-officer employees, and thus
subject officers to liability for a greater range of infidelities, Veco Corp., 611 N.E.2d
at 1059, all employees, regardless of title, owe their employers a duty of loyalty. See
Lawlor, 983 N.E.2d at 433. It is undisputed that Bauknecht was First Financial’s
employee, thus he cannot escape liability on the basis that he was not Plaintiff’s
officer. Bauknecht’s motion for summary judgment is based upon this fundamental
misunderstanding of Illinois law, and is therefore denied.
Plaintiff’s motion is also denied, as Bauknecht’s alleged breach of his
fiduciary duty turns on disputed facts. Plaintiff claims that Bauknecht “’min[ed] its
databases and computers for loan terms, download[ed] customer lists and other
financial documents to a Bank-issued iPad, stor[ed] customer information on his
bank-issued smart phone, [and] email[ed] highly confidential ‘Open Loan’
documents and additional customer lists to his private email account from work,”
all while he was negotiating an employment agreement with Graymont. (Doc. 109
at 33). Based on the proximity of these events, a reasonable jury could infer that
Bauknecht breached his fiduciary duty because he undertook these actions in order
26
to compete against Plaintiff after his employment ended. See RKI, Inc., 177 F. Supp.
2d at 877.
However, Bauknecht has introduced evidence that he undertook each of these
actions for reasons independent of competition with Plaintiff. For example, he
testified in his deposition that he looked up customers out of concern for Plaintiff’s
business. (See Pl.’s Ex. 1, Doc. 111-1, at 288 (“I had concerns that if many farmers
paid down right after the first of the year, that would decrease the size of the
bank”)). He testified that the customer lists remained on his iPad in spite of his
efforts to remove them from it. (Id. at 245-46). And he testified that he emailed the
two confidential open loans documents from his work email account to his private
email account in order to prepare for a First Financial meeting and at the
instruction of Plaintiff’s IT department. (Id. at 261).
Because a reasonable jury could credit Bauknecht’s reasons for engaging in
this behavior, granting judgment on Plaintiff’s fiduciary duty claim is premature,
since there is a genuine dispute as to the material facts. Plaintiff’s motion with
respect its fiduciary duty claim is denied.
III.
Illinois Trade Secrets Act
Plaintiff alleges that both Bauknecht and Graymont misappropriated its
trade secrets, including customer lists and account information, in violation of the
Illinois Trade Secrets Act (ITSA). Under the ITSA, a person is entitled to recover
damage for the misappropriation of trade secrets. 765 Ill. Comp. Stat. 1065/4. To
establish a violation, a plaintiff must show that (1) a trade secret existed; (2) it was
misappropriated through improper acquisition, disclosure, or use; and (3) the
27
misappropriation damaged the trade secret’s owner. Liebert Corp. v. Mazur, 827
N.E.2d 909, 925 (Ill. App. Ct. 2005); 765 Ill. Comp. Stat. 1065/2.
Plaintiff’s ITSA claim involves a variety of customer lists and financial
information, including (1) the list of 73 customers that was created by Bauknecht
when he moved to First Financial and served as a mailing list for his letter
announcing his new employment; (2) the master database of all of Bauknecht’s
contacts which he created while he was employed by First Financial, a fraction of
which include Bauknecht’s First Financial clients; (3) a list of low hanging fruit
identifying Bauknecht’s early successes and future challenges in bringing clients to
Graymont; (4) lists of open loans held by First Financial clients of Bauknecht and
Dustin Smith that included the customer’s name, the note’s origination date and
maturity date, the principal balance, and the available line of credit; and (5) the
disclosed deposit information of one customer. The gist of First Financial’s claim is
the identities of its customers and their financial needs are economically valuable to
its competitors, not generally known to its competitors, were protected by its
confidentiality policy and other procedures, and were improperly used by
Defendants in order to target potential customers.
Each party has moved for summary judgment on Count III. The Court
concludes that First Financial’s customer lists and financial information constitute
trade secrets under the ITSA, and also concludes that Bauknecht misappropriated
them when he moved from First Financial to Graymont. The issues of Graymont’s
liability and damages are disputed, and must be determined by a trier of fact.
A. Trade Secret
28
The ITSA defines a trade secret as “information, including but not limited to .
. . [a] list of actual or potential customers” that “is sufficiently secret to derive
economic value, actual or potential, from not being generally known to other
persons who can obtain economic value from its disclosure or use” and “is the
subject of efforts that are reasonable under the circumstances to maintain its
secrecy or confidentiality.” 765 Ill. Comp. Stat. 1065/2(d). Plaintiff has produced
undisputed evidence sufficient to show that the customer lists and financial
information are secret and economically valuable and that it took reasonable steps
to keep the information confidential.
1. Sufficient Secrecy
The first issue is whether the allegedly misappropriated information is
sufficiently secret to derive economic value. Plaintiff claims that it is, relying upon
the circular argument that Defendants would not have taken the information if it
did not have value. Defendants argue that it is not because such information is
readily available in public sources. The Court finds that First Financial’s open loan
lists are sufficiently secret to derive economic value.
Under appropriate circumstances, a list of actual or potential customers may
qualify as a trade secret, but such a determination turns on the facts of a case.
Multitut Corp. v. Draiman, 834 N.E.2d 43, 50 (Ill. App. Ct. 2005). Protection reflects
“a balancing of conflicting social and economic interests,” in which employers should
be able to protect trade secrets into which they have “invested substantial time,
money, and effort” but employees in competitive markets “must be entitled to utilize
the general knowledge and skills acquired through experience in pursuing his
29
chosen occupation.” Delta Med. Sys. v. Mid-America Med. Sys., Inc., 772 N.E.2d 768,
780 (2002).
Illinois courts have used demanding language to describe the threshold
showing needed for customer lists to qualify as sufficiently secret, sometimes
requiring that plaintiffs show they have “developed the information over a number
of years, at great expense, and kept the information under lock and key.” Am. Wheel
& Eng’g Co. v. Dana Molded Prods., Inc., 476 N.E.2d 1291, 1295 (Ill. App. Ct. 1985).
Courts have also turned their focus to “the ease with which information can be
readily duplicated without involving considerable time, effort, or expense.”
Stampede Tool, 651 N.E.2d at 215. In many cases, courts do both. See, e.g., Delta
Med. Sys., 772 N.E.2d at 781 (holding the trial court abused its discretion when it
concluded that a mammography equipment dealer’s customer list was a trade secret
because the company “presented no [evidence] . . . as to the amount of effort
expended in acquiring its customer list,” which could “be duplicated with little
effort” by “merely looking in the yellow pages or from a FOIA request”); Stampede
Tool, 651 N.E.2d at 215-16 (holding that a tool distributor established that its
customer list was sufficiently secret because it would have cost a great deal of time
and effort to recreate it, and it required a substantial amount of time, effort, and
expense to develop). Both factors need not be present if a list is developed through
relationships. In Liebert Corp. v. Mazur, the court concluded that a computer
network protection company’s customer list was sufficiently secret because it
required “discovering and developing relationships with appropriate buyers,” an
undertaking conducted over a span of thirty-five years. 827 N.E.2d 909, 923 (Ill.
30
App. Ct. 2005). This value-added was sufficient to accord the list trade secret status
in spite of the fact that a competitor could find the identity of all of its customers in
an online industry directory. Id.
Without the value-added of developed relationships, however, courts decline
to accord trade secret status when customer lists are readily reproducible. For
example, in Hamer Holding Group, Inc. v. Elmore, the court held that a customer
list comprised of non-profit organizations was not a trade secret because it was
simply distilled from a publicly available list held by the Illinois Secretary of State.
560 N.E.2d 907, 1011 (Ill. App. Ct. 1990). Even though the court acknowledged that
distilling names from the list was costly, it concluded that “anyone having access to
the Secretary’s information could have easily duplicated the same process of
‘distillation.’” Id.
This is especially true in industries where potential customers are easily
identifiable because of broad and non-specific needs. For example, in Carbonic Fire
Extinguishers Inc. v. Heath, the court held that customer lists and pricing
information were not trade secrets for a business that serviced fire extinguishers
and cleaned restaurant hoods because the service is commonly used by most
restaurants. 547 N.E.2d 675, 677 (Ill. App. Ct. 1989). Therefore, the court reasoned
that any potential competitor could easily compile a list of potential customers that
included the plaintiff’s customers “simply by contacting restaurants through the
telephone directory.” Id. More recently, in System Development Services, Inc. v.
Haarmann, the court held that a computer network services company’s customer
list was not a trade secret because “computers and computer networks are common
31
business tools. . . [and] [l]ocating potential customers is merely a matter of
identifying businesses in a particular . . . area and looking up their contact
information.” 907 N.E.2d 63, 75 (Ill. App. Ct. 2009). There, because the customer
list was simply a list of names, addresses, and telephone numbers that was not
differentiated by business type, the court concluded that the plaintiff was trying to
protect a list that was “susceptible to common knowledge.” Id. at 76. Such customer
lists are distinct from customer lists developed by businesses that serve diffuse
customers that have particular needs. See, e.g., Elmer Miller, Inc. v. Landis, 625
N.E.2d 338, 342 (Ill. App. Ct. 1993) (granting trade secret status to a custom tailor’s
customer list).
Although the evidence that Plaintiff has provided is limited, the customer
lists are sufficiently secret to derive economic value. Plaintiff has not provided any
evidence as to the cost of development of its customer list. See Am. Wheel & Eng’g
Co., 476 N.E.2d at 1295. However, Plaintiff has provided undisputed, but thin,
evidence that identifying and developing customers does take effort. See Stampede
Tool, 651 N.E.2d at 215. First, Plaintiff has presented undisputed evidence that
developing
banking
customers
requires
building
relationships
with
them.
Bauknecht himself affirmed the importance of relationships in his letter
announcing his move to Graymont, writing, “At the State Bank of Graymont, my
clients will continue to come first and loan decisions will be made by people who
know you and know how you operate your business . . . Your financial needs will
always be put first.” (Pl.’s Ex. 13, Doc. 109-6). And he admitted in his deposition
that relationships are important, take years and hard work to maintain, and First
32
Financial Bank and Freestar Bank were “all about relationships.” (Pl.’s Ex. 1, Doc.
111-1, at 27). Therefore, First Financial’s customer list resembles the list in Liebert
Corporation, which was sufficiently secret and built through “discovering and
developing relationships with appropriate buyers.” 827 N.E.2d at 923. See also
Stampede Tool, 651 N.E.2d at 216 (discussing the importance of relationships in
prospecting).
Further, evidence tends to show that First Financial’s customer list could not
be duplicated with little effort. See Delta Medical Sys., 772 N.E.2d at 792.
Defendants argue that Bauknecht created his customer lists easily, simply through
his memory and with a phone book. But this argument does not speak to how easy
it might be to recreate the list without prior knowledge of its contents. Both
Plaintiff and Bauknecht agree that “obtaining agricultural borrower names would
require an individual to go to a courthouse with a name and look up mortgages oneby-one.” (Doc. 109 at 20; Doc. 116 at 9). And, unlike in Carbonic Fire Extinguishers,
547 N.E.2d at 677, where the customer list could be reproduced by reference to
business listings, and in System Development Services, 907 N.E.2d at 75, where the
list could be reproduced by identifying all businesses in a geographic area, here two
parties agree that reproducing a list of borrowers would require already knowing
the identity of potential borrowers. Graymont disputes this fact, and provides
evidence that competitors could obtain customer identities’ and financial
information by reviewing reports prepared by a third-party service, reviewing state
Uniform Commercial Code filings, and reviewing USDA payments. (Graymont Ex.
2, Doc. 106-4, at 25-26). Even so, Minnaert testified that with that information, a
33
person still would not be able to identify all customers or identify a bank’s largest
customers. (Id. at 29).
Finally, Plaintiff’s customers have tailored and unique needs. Information
present in the open loans documents, including loan origination dates, loan
maturity dates, loan amounts, and available credit, is helpful in identifying the
particular financial needs that individual clients have. Compare Elmer Miller, 625
N.E.2d at 342 with Carbonic Fire Extinguishers, Inc., 547 N.E.2d at 677.
As
Graymont’s corporate representative testified, there is value in this information
that is not publically available. Even if Graymont could have identified each of the
customers through publicly available sources, Bauknecht’s relationships and unique
knowledge of their specific financial needs provided additional economic value. See
Liebert Corp. v. Mazur, 827 N.E.2d at 923.
2. Reasonable Efforts to Maintain Secrecy or Confidentiality
In determining whether a customer list is a trade secret, the manner in
which an employer maintains its confidentiality is the most important factor. Alpha
School Bus Co., Inc. v. Wagner, 910 N.E.2d 1134, 1152 (Ill. App. Ct. 2009). The
determination of “[w]hether the measures taken by a trade secret owner are
sufficient to satisfy the Act’s reasonableness standard ordinarily is a question of fact
for the jury.” Learning Curve Toys, Inc. v. Play Wood Toys, Inc., 342 F.3d 714, 725
(7th Cir. 2003). However where, as here, Plaintiff has provided ample evidence of
measures that it took to secure its confidential information, summary judgment is
appropriate. Plaintiff has presented undisputed evidence that it took the types of
precautions that Illinois courts have considered reasonable, and Defendants have
34
responded by presenting evidence that Plaintiff’s confidential information remained
unsecured in spite of these precautions. Defendants’ evidence does not create a
genuine factual dispute as to the reasonableness of Plaintiff’s efforts to keep its
customer lists confidential.
Illinois courts have looked to a variety of factors in assessing the
reasonableness of security measures taken by plaintiffs, including whether a
plaintiff implemented efforts to keep confidential information secure, informed
employees of the information’s confidential value, and required non-disclosure
agreements. Nondisclosure agreements, such as the confidentiality agreement that
Bauknecht signed, are important evidence of reasonable steps. See Liebert Corp.,
827 N.E.2d at 923-24. However, confidentiality agreements alone are not sufficient
to meet the reasonableness standard. See Arcor v. Haas, 842 N.E.2d 265, 271 (Ill.
App. Ct. 2005) (holding trial court abused its discretion in granting a preliminary
injunction when trade secret holder relied solely on a confidentiality agreement to
protect its information). Rather, Illinois decisions suggest that employers must
show employee understanding of confidentiality. See Gillis Associated Indus. v.
Cari-All, Inc., 564 N.E.2d 881, 886 (Ill. App. Ct. 1990) (suggesting plaintiff could
show reasonable measures taken by demonstrating “employees understood that lists
were to be kept confidential”); Liebert Corp., 824 N.E.2d 909, 923-24 (noting that in
the absence of a confidentiality agreement, plaintiff must “show, at a minimum,
that its employees understood he information was to be kept confidential.”).
In this case, the parties do not dispute that Bauknecht understood that the
customer information was confidential. And it is undisputed that Bauknecht signed
35
a confidentiality agreement that covered customer information while employed by
First Financial’s predecessor. Therefore, Plaintiff has provided sufficient evidence to
survive Defendants’ summary judgment motion on this ground. See, e.g., Gillis, 564
N.E.2d at 886.
Plaintiff has provided further evidence that it took reasonable steps, pointing
to measures that it took to keep its documents secure. Specifically, it has presented
evidence that employees needed security codes to access its computer system and it
has presented evidence that employees were instructed in how to remove
confidential information from personal iPads. In Stampede Tool, the court held that
the company’s customer list was reasonably confidential because, among other
things, the company limited computer access to two key employees, provided
customer information to others on a need-to-know basis, kept all hard copies of the
customer list in an office under lock-and-key, and prohibited salespeople from
removing customer information from that office. 651 N.E.2d at 216. And in Elmer
Miller, the court held that a small company took reasonable measures to protect its
customer lists confidentiality by keeping it in “a closed file drawer” and informing
its employees that the list was confidential. 625 N.E.2d at 342. In this case, in
addition to employing confidentiality agreements and promoting employee
understanding that certain information such as customer lists and financial
information was to be kept confidential, Plaintiff took steps to protect the integrity
of its computer systems by limiting access to those with company-provided access
codes constituted a reasonable step to keep its information confidential.
36
These steps are reasonable as a matter of law. The fact that Bauknecht, as
Plaintiff’s trusted employee, operated outside the limits of certain policies does not
call this reasonableness into question. Defendants have produced evidence that
Plaintiff could have done more, and actually left its customer lists and financial
information rather exposed. They argue that Plaintiff failed to reasonably restrict
access to its confidential information in a number of ways. First, Bauknecht was
permitted to use his iPad for personal use and Plaintiff failed to inspect it to
determine whether it contained confidential data. Second, Plaintiff’s IT staff
advised Bauknecht that he could email confidential information to his personal
account and also advised Bauknecht to back up his contact list (which included
bank customers) onto his own thumb drive. Third, Plaintiff failed to limit
Bauknecht’s access to Dustin Smith’s loan list.
These purported failures are all legally insufficient to allow a reasonable jury
to find that Plaintiff had failed to take reasonable measures sufficient to warrant
trade secret status to its customer list and related financial information. The failure
to totally secure confidential information from every conceivable risk of disclosure
by an employee entrusted with such information in furtherance of his job duties is
not the sine qua non of reasonable protective measures. Perhaps in retrospect
Plaintiffs could have done more to make it difficult for an employee such as
Bauknecht to make use of confidential information available to him in furtherance
of his job duties. However when reasonable measures have been taken, the law does
not require additional measures adequate to forestall an unanticipated situation
like the one presented by Bauknecht. In this case, Plaintiff had a confidentiality
37
agreement in place, employees generally understood that such information covered
by the agreement was confidential, employees needed security codes to access
Plaintiff’s system, and Plaintiff had policies in place requiring that employees
encrypt data before moving or copying it onto electronic media such as laptops and
USB storage devices.
Despite the fact that Plaintiff’s employees allowed Bauknecht to possess
confidential information outside of these measures does not vitiate the
reasonableness of the measures instituted to protect the security of the confidential
information. The existence of confidentiality agreement is premised on the
assumption that as the employee’s job responsibilities will of necessity give him
access to confidential or secret information. Baukencht’s access to Dustin Smith’s
loan list was premised on the same restrictions and requirements that governed
access to his own loan list. See Stampede Tool, 651 N.E.2d at 216; Elmer Miller,
Inc., 625 N.E.2d at 342. Failing to inspect Bauknecht’s iPad and by permitting him
to email confidential documents to his personal email account may mean that
Plaintiff’s documents were not perfectly secured, but Plaintiff continued to limit
access to confidential documents and monitor access to hard and electronic copies by
requiring security codes to access its computers. See Liebert, 827 N.E.2d at 923-24.
There are no material factual disputes concerning the sufficiently secret
nature of First Financial’s customer lists and the reasonableness of the steps First
Financial took to keep the information secure. Therefore, the Court concludes that
First Financial’s customer lists and customer financial information qualify as trade
secrets under the ITSA.
38
B. Misappropriation
The second element that a plaintiff must prove is that defendants
misappropriated the trade secret. The ITSA provides that a plaintiff can show
misappropriation through improper acquisition, unauthorized disclosure, or
unauthorized use of trade secrets. 765 Ill. Comp. Stat. 1065/2(b).
1. Bauknecht’s Misappropriation
First Financial argues that Bauknecht used its trade secrets when he created
the list of 73 and his solicitation letter. It also argues that he used its trade secrets
when he created the low hanging fruit list, and when told Graymont how much a
key commercial customer kept in a deposit account.
A reasonable jury could not help but find that First Financial’s financial
information, such as information about how much customers keep in their bank
accounts, qualifies as a trade secret. Therefore, there is little doubt that Bauknecht
misappropriated the information by disclosing it to Graymont. See 765 Ill. Comp.
Stat. 1065/2(b)(2) (“’Misappropriation’ means . . . disclosure or use of a trade secret
of a person without express consent by another person who . . . used improper
means to acquire knowledge of the trade secret.”) ; Id. at 1065/2(a) (“’Improper
means’ includes . . . breach . . . of a confidential relationship or other duty to
maintain secrecy or limit use.”).
Furthermore, there is undisputed evidence that Bauknecht misappropriated
First Financial’s customer lists. It is true that Bauknecht has provided seemingly
innocuous reasons for possessing both the open loan documents and the master
database, both of which are unrelated to the creation of the list of 73 or the low
39
hanging fruit list. Bauknecht argues that he possessed the master database because
it was his own personal contact list and because a First Financial employee
instructed him to download it to a thumb drive. Bauknecht also argues that he
possessed the open loan documents because he needed them to prepare for a First
Financial meeting that he attended before leaving for Graymont. Bauknecht argues
that he did not rely upon either in creating the list of 73 on his first day at
Graymont, and that he instead relied upon his memory and a phone book.
A reasonable jury could believe Bauknecht and conclude that he did not rely
upon either the open loan documents or the master database, and instead created
his mailing list at Graymont entirely through memory. However, no reasonable jury
could find that Bauknecht’s actions do not constitute misappropriation of First
Financial’s customer lists.
Bauknecht admitted during his deposition that he created the list of 73 by
remembering the names of his past customers and his former colleague Dustin
Smith’s customers. Memorization is one manner in which a trade secret may be
misappropriated. See Televation Telecommunication Sys. v. Saindon, 522 N.E.2d
1359, 1363 (Ill. App. Ct. 1988) (noting that it is irrelevant as a matter of law
whether a defendant took copies of a trade secret or memorized them). Evidence
that a defendant has remembered names of customers is sufficient to establish
memorization. See Stampede Tool, 651 N.E.2d at 216. In Stampede Tool, the court
did not disturb the lower court’s finding that the defendant intentionally memorized
customer lists on the basis of testimony that he “obtained their telephone numbers
from directory assistance or telephone books” after “remembering their names and
40
locations . . . because he worked with them over some period of time.” Id. at 212,
217.
Bauknecht admitted to doing exactly that in his deposition testimony.
Although he provided personal reasons for soliciting a number of former customers
he had at First Financial,6 he also simply acknowledged that he remembered a
great number of the people that he solicited as his customers or Dustin Smith’s
customers.7 He testified that he knew the names “from memory mostly . . . [b]ut I
was able to open up a phone book and go down alphabetically, and these aren’t
uncommon names in the phone book. . . And that just kind of jogged my – jogged my
memory.” (Pl.’s Ex. 1, Doc. 111-1, at 190).
As in Stampede Tool, Bauknecht testified that he remembered customers’
names and then cross-referenced a telephone directory. See 651 N.E.2d at. at 217.
And, there is substantial overlap between the customers included on the list of 73
and the customers included on the open loan documents. (Compare Pl.’s Ex. 14, Doc.
111-9, with Pl.’s Ex. 9, Doc. 111-5).
This goes beyond competing with former
employers by soliciting former customers, because Bauknecht improperly took a
For example, Bauknecht testified that he knew one former customer because “[his]
father is my godfather,” they grew up together, and their kids play on a baseball
team together. (Pl.’s Ex. 1, Doc. 111-1, at 137). He also testified that he knew
another former customer because, “[He] has provided labor for me if I – on the farm
side of things also. When I have to scoop out a bed of corn or something to that
effect, I usually call [him] up, and [he] and I will do it together.” (Id. at 146). Other
former customers from First Financial were his close relatives. (See, e.g., id.at 139,
157)).
7 For example, he testified that a number of people he solicited were already at First
Financial’s predecessor when he arrived in the mid-1990s. (See, e.g., Pl.’s Ex. 1, Doc.
111-1, at 161). Others he “inherited” from a former loan officer. (See, e.g., id. at 163,
177). And Dustin Smith was the loan officer for others. (See, e.g., id. at 156
(testifying, “I was not directly a loan officer for them. I guess this loan was handled
by Dustin Smith.”)).
6
41
customer list through memorization in order to compete.8 See Delta Med. Sys. v.
Mid-Am. Med. Sys., Inc., 772 N.E.2d 768, 785 (Ill. App. Ct. 2002).
2.
Graymont’s Misappropriation
A third party can be liable for the misappropriation of a trade secret when it
knows or has reason to know that the trade secret was acquired by improper means
or obtained in violation of a duty of confidence owed to the trade secret owner. See
765 Ill. Comp. Stat. 1065/2(b)(2)(B). Courts have held that third parties can be
liable when they have actual knowledge of misappropriation or have constructive
knowledge of misappropriation. See, e.g., RKI, Inc. v. Grimes, 177 F. Supp. 2d 859,
868-69 (N.D. Ill. 2001) (holding that a third party had actual knowledge that new
employee held competitor’s trade secrets when employee informed it that it
possessed customer lists and it required employee to sign an indemnification
agreement protecting it); C&F Packing Co., Inc. v. IBP, Inc., No. 93 C 1601, 1998
WL 1147139, at *6-7 (N.D. Ill. Mar. 16, 1998) (holding that a third-party had
For the same reasons, a reasonable jury could discredit Bauknecht’s testimony and
conclude that he did in fact misappropriate the customer lists by purposely taking
digital copies of customer lists. Plaintiffs in trade secrets cases most often must rely
upon “a web of perhaps ambiguous circumstantial evidence” of misappropriation
rather than “convincing direct evidence.” Pepsi. Co., Inc. v. Redmond, No. 94 C
6838, 1996 WL 3965, at *15 (N.D. Ill. Jan. 2, 1996). Here, First Financial has
produced circumstantial evidence that suggests Bauknecht’s purported reasons for
downloading the open loan documents are pretextual. Specifically, Bauknecht
emailed himself the open loan documents on January 9, 2012, just one day before
the Graymont Board voted to hire him, two weeks before he quit his job at First
Financial, and fifteen days before he drafted the solicitation letter. Considering the
substantial overlap between the Open Loans documents, the list of people to whom
Bauknecht sent his solicitation letter, and the proximity of all of the events, a
reasonable jury could conclude that Bauknecht relied upon the digital copies and
therefore misappropriated the customer lists. See id.
8
42
constructive knowledge when it obtained information that is ordinarily kept
confidential and that it should have realized originated with a competitor).
Graymont argues that it did not misappropriate First Financial’s customer
lists for the same reasons discussed above: First Financial has not produced
evidence that it created the list of 73 using First Financial’s customer lists.
Graymont’s argument regarding use falters for the same reason that Bauknecht’s
does: First Financial has produced evidence that Bauknecht possessed documents it
asserts are trade secrets, produced circumstantial evidence that tends to show
misappropriation, and also produced evidence sufficient to demonstrate that
Bauknecht memorized names on First Financial’s customer list. See Rotec
Industries, Inc. v. Mitsubishi Corp., 179 F. Supp. 2d 885, 894 (C.D. Ill. 1994)
(granting summary judgment for the defendants when the plaintiff’s only evidence
of use was based on “unsupported speculation”); Stampede, 651 N.E.2d at 216.
In arguing that it did not use First Financial’s customer lists, Graymont only
obliquely raises an argument that it did not have actual or constructive knowledge
that Bauknecht had misappropriated First Financial’s trade secrets. And First
Financial simply assumes that Graymont had actual or constructive knowledge,
arguing that “Graymont misappropriated [customer information] by placing
Bauknecht into a job in which it ‘knew or had reason to know’ that it was getting
information because of a breach of confidence.” (Doc. 109 at 52-53). However, First
Financial has produced evidence sufficient to prove that Graymont had constructive
knowledge that Bauknecht had misappropriated trade secrets. First Financial
produced deposition testimony that suggests Graymont and Bauknecht discussed
43
moving over its customers, evidence that Graymont approved of Bauknecht’s
solicitation letter, and evidence that Graymont and Bauknecht both understood
that customer identities and financial information is ordinarily confidential within
the industry. Although this evidence does not indicate that Graymont had actual
knowledge that Bauknecht breached a confidentiality agreement, see RKI, Inc., 177
F. Supp. 2d at 868-69, it is enough to create a triable issue that Graymont had
constructive knowledge that Bauknecht’s information about customers was derived
from a misappropriated trade secret. See C&F Packing Co., Inc., 1998 WL 1147139,
at *6-7. This, however, is not the only reasonable inference that a jury could draw.
Because a past employee may solicit former customers provided there is no trade
secret or confidentiality agreement, see Delta Med. Sys., 772 N.E.2d at 785, a jury
could conclude that Graymont acted under the assumption that Bauknecht was
complying with the law.
C. Damages
The third element in an ITSA case is damages. For the same reasons that
Plaintiff’s alleged breach of contract damages remains disputed, the issue of
damages here remains in dispute as well.
Therefore, because Plaintiff has produced undisputed evidence that its
customer lists and financial information were trade secrets and undisputed
evidence that Bauknecht created customer lists for Graymont by memorizing the
identities of First Financial’s customers, summary judgment is granted on
Plaintiff’s motion with respect to Bauknecht’s liability. There is a genuine dispute
44
as to the issues of damages and Graymont’s misappropriation, which must be
decided by the trier of fact.
IV.
Conversion
Plaintiff alleges Bauknecht and Graymont converted its property. The
elements of a conversion claim are that “(1) [the plaintiff] has a right to the
property; (2) [the plaintiff] has an absolute and unconditional right to the
immediate possession of the property; (3) [the plaintiff] made a demand for
possession; and (4) the defendant wrongfully and without authorization assumed
control, dominion, or ownership over the property.” Cirrincione v. Johnson, 703
N.E.2d 67, 70 (Ill. 1998).
Plaintiff’s complaint alleges that Bauknecht took with him “the Master
Database and information from the targeted loan inquiries, as well as highly
confidential business documents from First Financial, including, without limitation,
business plans, strategic plans, and quarterly reports. In addition, Bauknecht took
soil maps and farm equipment guides, which were the property of the bank.” (Doc. 1
at 4). Plaintiff moves for summary judgment on three grounds. First, it argues
that Bauknecht’s apparent admission makes him liable for conversion, second it
argues that Bauknecht admitted to stealing farm equipment guides and returned
them, and third it argues that Bauknecht admitted that he took First Financial’s
collateral schedules. In its opposition to Bauknecht and Graymont’s motions to
dismiss, it also alleges that Bauknecht converted its cell phone.
First, Plaintiff’s conversion claim must be limited to the farm equipment
guides, the soil maps, First Financial’s collateral schedules, and other First
45
Financial documents in which it is not claiming a trade secret. Although Plaintiff
has produced evidence that Bauknecht kept its cell phone even after it requested
that he return it, there are no allegations that Bauknecht took a cell phone in the
complaint. Plaintiff cannot move to amend its complaint “through arguments in [its]
brief in opposition to a motion for summary judgment.” Anderson v. Donahoe, 699
F.3d 989, 998 (7th Cir. 2012).
Any claim that Bauknecht and Graymont took customer lists or financial
information in which it is claiming a trade secret is preempted by the ITSA. This
Court has previously concluded that the ITSA preempts any conversion claim based
on conduct that misappropriates trade secrets and has held that “[t]he conversion of
trade secrets would be preempted.” (Doc. 24 at 9-10). First Financial now argues
that the Court should allow its conversion claim to go forward with respect to
certain specific customer lists and financial information if the Court or a fact finder
determine that they are not trade secrets. Even if some of these customer lists and
financial information do not qualify as trade secrets under the ITSA, any value that
Plaintiff could claim in them is “dependent upon the existence of competitively
significant secret information.” See Hecny Transp., Inc. v. Chu, 430 F.3d 402, 405
(7th Cir. 2005). Although plaintiffs are permitted to plead in the alternative,
Plaintiff’s conversion claim and its ITSA claim with respect to confidential
information are not truly alternative because each claim rests upon the idea that its
confidential information has unique value. Plaintiff should not be permitted to do
an end-run around the ITSA in this case and present a conversion claim based upon
competitively secret information if it cannot succeed in its ITSA claim. The Seventh
46
Circuit’s decision in Hecny supports this conclusion. In Hecny, the Seventh Circuit
held that the ITSA did not preempt claims for damages that were entirely
independent of a trade secret claim, such as conversion of fax machines and a
breach of fiduciary duty. See 430 F.3d at 404. Here, Plaintiff’s conversion claim is
not entirely independent of the ITSA claim as they relate to customer lists and
financial information.
The Court grants Plaintiff’s motion for summary judgment against
Bauknecht with respect to the 2012 Farming Equipment Guides. Bauknecht has
admitted that the 2012 Farming Equipment Guides belonged to First Financial’s
predecessor in interest, Freestar, and he returned the 2012 Farming Equipment
Guides at his deposition. This undisputed evidence, therefore, establishes that
Bauknecht converted First Financial’s 2012 Farming Equipment Guides.
The Court grants Defendants’ motion for summary judgment with respect to
the soil maps. Bauknecht admits that he took soil maps from First Financial, but
has presented undisputed evidence that the soil maps are his personal property.
First Financial has attempted to dispute Bauknecht’s claim of ownership by
pointing to the so-called admission in his demand for indemnification. But
Bauknecht’s admission cannot carry First Financial that far. Even if a jury believes
that Bauknecht admitted to all actions attributed to him in the complaint, the only
action that the complaint attributes to him regarding the soil maps is the fact that
he took them – something he already admitted to doing in his deposition. (See Doc.
1 at ¶ 18 (“In addition, Bauknecht took soil maps and farm equipment guides,
which were the property of the Bank.”)). Because First Financial has not presented
47
evidence that the soil maps were its property, summary judgment is granted for
Defendants.
Defendants’ motion is also granted with respect to the collateral schedule.
First Financial’s claim that Bauknecht converted the collateral schedule is
supported only through cherry-picked parts of Bauknecht’s deposition. See Malin v.
Hospira, Inc., 762 F.3d 552, 564 (7th Cir. 2014) (criticizing a party for “cherrypick[ing] isolated phrases” from depositions as failing to “comport with the parties’
duty of candor to the courts.”). The sole evidence that First Financial provides to
support the contention that Bauknecht converted its collateral schedule is from his
deposition. In his deposition, Bauknecht admits that he modified a collateral
schedule by crossing out the name “Freestar Bank” and handwriting in the name
“State Bank of Graymont.” He also admits that he crossed out other references to
Freestar Bank throughout the collateral schedule and replaced them with
references to Graymont. (Pl.’s Ex. 1, Doc. 111-1, at 276-277). However, he does not
in his deposition admit to taking the collateral schedule from First Financial.
Instead, he states that one of his customers provided him with the schedule. (See id.
at 277-78).
First Financial has no evidence to the contrary. There is no reference to the
collateral schedule in its Complaint, so it cannot rely upon Bauknecht’s demand for
indemnification. Because First Financial has failed to present evidence that
Bauknecht misappropriated its collateral schedule, summary judgment is granted
for Defendants.
48
If First Financial is not claiming that the documents that Graymont or
Bauknecht have in their possession, including cash flow statements, financial
reports, note modifications, mortgage extensions, and business loan agreements, are
trade secrets, its conversion claim can proceed to trial. Graymont and Bauknecht
have both disputed First Financial’s claim of ownership. Graymont argues that
many of Bauknecht’s documents found on his Graymont computer are his personal
financial statements and cash loan documents. And it presents evidence that it
obtained some of the other business records through customers and other means.
However, a reasonable jury could conclude that Bauknecht took at least some of the
documents from First Financial. The documents are in Graymont’s possession, and
many of them have Bauknecht’s name on them.
In conclusion, Plaintiff’s motion for summary judgment is granted with
respect to the Farm Equipment Guides. Defendants’ motion for summary judgment
is granted with respect to the soil maps and the collateral schedule, and granted
with respect to all other items that Plaintiff asserts are trade secrets. The motions
are denied in all other respects.
V.
Computer Fraud & Abuse Act
Plaintiff claims Bauknecht violated the Computer Fraud and Abuse Act
(“CFAA”) by knowingly and intentionally accessing Plaintiff’s computers and
therefore wrongfully obtaining Plaintiff’s confidential information. Specifically,
Plaintiff alleges that Bauknecht violated four subsections of the CFAA: 18 U.S.C. §
§ 1030(a)(2),(4)(5), and (b). Under the CFAA, individuals may not (1) intentionally
access a computer without authorization or exceed their authorized access in order
49
to obtain “information contained in a financial record of a financial institution,” 18
U.S.C. § 1030(a)(2); (2) “knowingly and with intent to defraud, access[ ] a protected
computer without authorization, or exceed[] authorized access, and by means of
such conduct, further[] the intended fraud and obtain[] anything of value,” id. §
1030(a)(4); (3) “knowingly cause[] the transmission of a program, information, code,
or command, and as a result of such conduct, intentionally cause[] damage without
authorization, to a protected computer;” id. § 1030(a)(5); or (5) “conspire[] to commit
or attempt[] to commit an offense under subsection (a).” Id. § 1030(b).
To state a civil claim under the CFAA, a plaintiff must establish either
damage or loss. See 18 U.S.C. § 1030(g) (creating private right of action for any
person “who suffers damage or loss by reason of a [CFAA] violation.”); Motorola, Inc.
v. Lemoko Corp., 609 F. Supp. 2d 760, 766 (N.D. Ill. 2009) (construing section
1030(g) to require damage or loss rather than damage and loss). Both damage and
loss are defined by the statute in a way that departs from their ordinary meaning.
Plaintiff’s CFAA claims take on a number of flavors. First, Plaintiff moves for
summary judgment on the ground that Bauknecht violated the act when he
accessed and downloaded the master database and when he used Plaintiff’s
computers to conduct targeted inquiries into customer loans. Second, Plaintiff
opposes Bauknecht’s motion for summary judgment on the ground that Bauknecht
used its computers in an unauthorized way and created an interruption of service
when he stole and then disposed of its smartphone and failed to disclose his
voicemail password. Such a theory does not appear in the Complaint and is
announced for the first time in Plaintiff’s response.
50
Although they are not well-delineated, Bauknecht makes two major
arguments in support of his motion for summary judgment. First, he argues that
the misappropriation of trade secrets alone does not constitute damage under the
statute. Second, he argues that Plaintiff cannot establish loss as defined by the
statute.
A. Unauthorized Access
Plaintiff argues that Bauknecht violated the CFAA when he created his
master database and accessed customer lists and other confidential information
that were located within its computer system. There may be some merit to such a
claim. The Seventh Circuit has held that employees’ authorization to access
employer computers terminates when employees breach a duty of loyalty. See Int’l
Airport Centers, L.L.C. v. Citrin, 440 F.3d 418, 420-21 (7th Cir. 2006). Because
Plaintiff’s fiduciary duty claim cannot be resolved on summary judgment, it is
premature to determine whether Bauknecht’s access was unauthorized. See id.
This is beside the point, however. As explained below, Plaintiff has not established
“damage or loss” exceeding $5,000 as defined by the statute. See 18 U.S.C. § 1030(g)
(requiring plaintiff prove conduct involving at least one statutory factor, which
includes “loss to 1 or more persons during any 1-year period . . . aggregating at least
$5,000 in value. . .”).
B. Damage
Plaintiff has not presented evidence that Bauknecht caused it damage under
the CFAA. Plaintiff argues it was damaged when Bauknecht exceeded his
authorization to access its computer network and took its confidential information.
51
However, Plaintiff presents no evidence that Bauknecht removed, deleted, altered,
destroyed, corrupted, or otherwise diminished the completeness or usability of its
data. Such an allegation is required to establish damage under the CFAA.
Under the CFAA, damage has a specific and particular definition. It is “any
impairment to the integrity or availability of data, a program, a system, or
information.” 18 U.S.C. § 1030(e)(8); see also Citrin, 440 F.3d at 419 (defining
damage to include both impairment of hardware and stored files). “[T]he cardinal
rule of statutory interpretation is that courts must look first to the language of the
statute and assume that its plain meaning accurately expresses the legislative
purpose.” United States v. Miscellaneous Firearms, Explosives, Destructive Devices
and Ammunitions, 376 F.3d 709, 712 (7th Cir. 2004). District courts have relied on
the CFAA’s statutory language to limit CFAA damages to “destruction, corruption,
or deletion of electronic files, the physical destruction of a hard drive, or any
diminution in the completeness or usability of the data on a computer system.”
Farmers Ins. Exchange v. Auto Club Group, 823 F. Supp. 2d 845, 852 (N.D. Ill.
2011). “The mere copying of electronic information from a computer system is not
enough to satisfy the CFAA’s damage requirement.” Id. In Motorola, Inc. v. Lemko
Corp., the district court dismissed certain CFAA claims, noting that “[t]he CFAA’s
definition of damage does not cover [the disclosure to a competitor of its trade
secrets and other confidential information],” because “the plain language of the
statutory definition refers to situations in which data is lost or impaired because it
was erased or because (for example) a defendant smashed a hard drive with a
hammer.” 609 F. Supp. 2d 760, 769 (N.D. Ill. 2009).
52
In this case, all Plaintiff has alleged Bauknecht did is access documents to
which he had no right. He did not delete or corrupt those files, as the employee in
Citrin was alleged to have done. See 440 F.3d at 419. For that reason, any argument
that Bauknecht caused damage as defined by 18 U.S.C. § 1030(e)(8) is untenable.
C. Loss
In its response to Bauknecht’s motion, Plaintiff does not appear to contest
the lack of statutory damage, and instead argues that Bauknecht’s actions have
caused it loss in the form of “any revenue lost, cost incurred, or other consequential
damages incurred because of interruption of service.” 18 U.S.C. § 1030(e)(11).
Plaintiff makes two arguments: first, it argues that it does not need to establish an
interruption of service and can establish statutory loss by simply showing lost profit
as a result of Bauknecht’s unauthorized access. Second, it argues that Bauknecht
caused an interruption of service by refusing to return his work-issued cell phone or
disclose his voicemail passcode.
The statute and law are clear: in order to establish loss through lost revenue,
a plaintiff must establish an interruption in service. “Loss” means “any reasonable
cost to any victim, including the cost of responding to an offense, conducting a
damage assessment, and restoring the data, program, system, or information or its
condition prior to the offense, and any revenue lost, cost incurred, or other
consequential damage incurred because of interruption of service.” 18 U.S.C. §
1030(e)(11). Therefore, there are two categories of statutory loss: expenses incurred
while responding to or investigating a violation, and costs incurred, or revenue lost,
because of a service disruption. See id.; see also SKF USA, Inc. v. Bjerkness, 636 F.
53
Supp. 2d 696, 721 (N.D. Ill. 2009); Quantlab Techns. Ltd v. Godlevsky, 719 F. Supp.
2d 766, 776 (S.D. Tex. 2010); Nexan Wires S.A. v. Sark-USA, Inc., 319 F. Supp. 2d
468, 472 (S.D.N.Y. 2004), aff’d 166 F. App’x 559, 562-63 (2d Cir. 2006). Some courts
have made it even more difficult for plaintiffs to establish loss under the CFAA, and
have conditioned recovering investigative costs on an interruption of service. See,
e.g., Cassetica Software, Inc. v. Computer Science Corp., No. 09-C-0003, 2009 WL
1703015, at *4 (N.D. Ill. June 18, 2009).
Plaintiff
relies
upon
C.H.
Robinson
Worldwide,
Inc.
v.
Command
Transportation, LLC for the proposition that plaintiffs can recover for lost revenue
without proving an interruption of service. See 05-C-3401, 2005 WL 3077998, at *3
(N.D. Ill. Nov. 16, 2005). However, C.H. Robinson Worldwide is not persuasive in
this context. There, the court refused to dismiss a CFAA case, concluding that a
commercial logistics service provider properly alleged loss by pleading both the “loss
in value of trade secrets . . . and confidential information that was not previously
known to the public” and “the loss of competitive advantage.” C.H. Robinson does
not analyze the statutory definition of loss, and instead relies upon outdated
authority that interpreted an earlier version of the CFAA that did not define the
term. See id. (relying upon Pacific Aerospace & Elec., Inc. v. Taylor, 295 F. Supp. 2d
1188, 1195 (E.D. Wash. 2003)); CoStar Realty Information, Inc. v. Field, 737 F.
Supp. 2d 496, 514 (D. Md. 2010) (explaining that Pacific Aerospace is “based on
another case that explicitly interpreted the term ‘loss’ under its ordinary meaning
because the CFAA statute had not yet defined the term.”). For that reason, the
54
Court rejects Plaintiff’s argument that lost revenue need not be premised on
interruption of service.
Plaintiff makes a last-ditch effort to save its CFAA claim by arguing that
Bauknecht caused an interruption of service by refusing to return his cell phone and
later disposing of it. The Court need not consider this argument. In its complaint,
Plaintiff premises its CFAA claim on Bauknecht’s unauthorized access of
confidential information and his use of such information. There are no allegations
that Bauknecht created an interruption of service, nor is there any indication that
Plaintiff’s CFAA claim is premised on an interruption of service. Plaintiff cannot
move to amend its complaint “through arguments in [its] brief in opposition to a
motion for summary judgment.” Anderson v. Donahoe, 699 F.3d 989, 998 (7th Cir.
2012). Moreover, the Court is skeptical of Plaintiff’s claim that it lost revenue as a
result of an interruption in service. If anything, Plaintiff’s lost revenues appear to
be attributable to Bauknecht’s outreach to Plaintiff’s former customers. See
CustomGuide v. CareerBuilder, LLC, 813 F. Supp. 2d 990, 998 (N.D. Ill. 2011)
(holding that lost revenues unrelated to the impairment of a computer system,
including lost sales, are not recoverable under the CFAA). Plaintiff argues that
Bauknecht created an interruption in service and that it lost revenue, but it fails to
connect the two phenomena other than through conjecture that it could have
retained customers if Bauknecht had not kept the phone.
For these reasons, Plaintiff’s motion for summary judgment on Count V is
denied and Bauknecht’s motion for summary judgment on Count V is granted.
55
VI.
Tortious Interference with Contract against Defendant Graymont
In Count VI, First Financial alleges that Graymont tortuously interfered
with its confidentiality agreement with Bauknecht. Both Graymont and First
Financial have moved for summary judgment on the claim.
To succeed in a claim of tortious interference, First Financial must prove (1)
that there was a legally enforceable contract of which Graymont had knowledge, (2)
that Graymont intentionally interfered with the contract and induced a breach by a
party to the contract, and (3) that the breach resulted in damages. TABFG, LLC v.
Pfeil, 746 F.3d 820, 823 (7th Cir. 2014)(rehr’g denied May 23, 2013).
In its motion, the only evidence that First Financial provides is the apparent
admissions contained in Bauknecht’s indemnification letter. Because Graymont
never adopted the apparent admission included in the letter, and because the letter
is inadmissible hearsay evidence that cannot be used against Graymont, First
Financial’s motion for summary judgment is denied.
In its motion, Graymont argues that First Financial has not provided any
proof that it knew about Bauknecht’s confidentiality agreement prior to August
2012. First Financial has three rejoinders: first, it attempts to rely upon the
inadmissible indemnification letter. Second, it argues that Graymont’s argument is
unbelievable because Graymont has a similar agreement in place. Third, it argues
that Graymont’s argument is unbelievable because of the Gramm Leach Bliley Act
and the Illinois Banking Act.
Neither of First Financial’s second two rejoinders succeeds. The fact that
Graymont requires its employees to sign a confidentiality agreement is not proof
56
that Graymont had knowledge of Bauknecht’s old confidentiality agreement; it is
proof that Graymont knew that Bauknecht signed a confidentiality agreement with
it.
Similarly, Graymont’s knowledge of federal and state laws pertaining to
financial institutions’ legal requirements to keep customer information confidential
cannot prove that Graymont had knowledge of Bauknecht’s confidentiality
agreement. Neither law requires that financial institutions have their employees
sign confidentiality agreements. See 15 U.S.C. § 6801; 205 Ill. Comp. Stat. 48.1(c).
Moreover, it is unclear that either law would prohibit banks from sharing most of
the information that First Financial claims Bauknecht shared with Graymont. The
Illinois Department of Financial and Professional Regulation has made it clear that
the Illinois Banking Act does not prohibit the disclosure of customer lists. See State
of Illinois Dep’t of Fin. and Prof. Reg., Interpretive Letter No. 01-01, 2001 WL
36286522 (March 9, 2001) (“Section 48.1 of the Act contains no specific statutory
provision governing the sharing of customer lists by banks.”). And the Gramm
Leach Bliley Act does not apply to a customer list that “contains only publicly
available information” that “is not derived in whole or in part using personally
identifiable financial information that is not publicly available.” 12 C.F.R. §
332.3(n)(3)(ii). Information is publicly available “if an institution has a reasonable
basis to believe that the information is lawfully made available to the general public
from government records . . . includ[ing] in a telephone book or a publicly recorded
document, such as a mortgage or securities filing.” Fed. Dep. Ins. Corp., FDIC
57
Compliance
Manual
VIII-1.2
(Jan.
2014),
available
at
https://www.fdic.gov/regulations/compliance/manual/.
Because First Financial has not presented evidence that Graymont knew of
the confidentiality agreement before Bauknecht breached it, it has not provided
evidence sufficient to prove that Graymont tortuously interfered with the contract.
Therefore, Graymont’s motion for summary judgment on this count is granted.
VII.
Tortious Interference with Prospective Economic Advantage Against Both Defendants
All parties have moved for summary judgment on Count VII. To succeed in a
claim for tortious interference with prospective economic advantage, a plaintiff
must prove (1) that it had a reasonable expectation of entering into a valid business
relationship, (2) that defendant knew of this reasonable expectation, (3) that
defendant’s purposeful interference prevented its legitimate expectancy from
ripening into a valid business relationship, and (4) damages. Felhauer v. City of
Geneva, 568 N.E.2d 870, 877-78 (Ill. 1991).
First Financial has alleged that Bauknecht made misrepresentations to one
of its elderly customers, Bill Livingston, who then moved his account to Graymont
because of this misrepresentation.
In First Financial’s motion for summary judgment on Count VII, it relies
entirely upon the purported admission contained in Bauknecht’s indemnification
demand. For reasons discussed above, the admission is inadmissible against
Graymont and merely serves as disputed evidence against Bauknecht. For that
reason, First Financial has failed to present undisputed evidence sufficient to prove
58
that Defendants tortiously interfered with its prospective economic advantage. Its
motion for summary judgment is denied.
Defendant Graymont’s motion for summary judgment on Count VII is
granted. Graymont argues that First Financial has failed to present evidence
sufficient to support the claim in count VII. First Financial responds with two
pieces of evidence: the apparent admission, and the testimony of First Financial
employee Dustin Smith.
As discussed earlier, the apparent admission is not admissible against
Graymont. Smith’s testimony does not help Plaintiff either. In his deposition, Smith
testified that Bill Livingston told him that Bauknecht had misrepresented to him
things about First Financial’s products. (Smith Dep., Doc. 106-6, at 203-204). Smith
learned of each of the details about what Bauknecht apparently said through
Livingston. (See id. at 209 (Livingston “just told me Scott told him that.”)).
First Financial relies upon this testimony for proof that Bauknecht purposely
interfered with its business relationship with Livingston. However, the evidence is
inadmissible hearsay, as Smith’s testimony depends upon the truth of Livingston’s
assertion to him: that Bauknecht made certain comments to him. See Fed. R. Evid.
801(c)(2).
Smith’s testimony relies upon two separate sets of statements: the first is
Bauknecht’s statements to Livingston, the second is Livingston’s statements to
Smith. If First Financial had presented deposition testimony or an affidavit from
Livingston, then it might have survived summary judgment on this claim, as
Baunknecht may have made his comments as a Graymont employee in the scope of
59
his employment. See Fed. R. Evid. 801(d)(2)(D). However, First Financial has not
presented evidence from Livingston. Instead, it has presented evidence from Smith.
Livingston’s comments to Smith are not subject to any of the hearsay exceptions
included in the Federal Rules of Evidence. See Haywood v. Lucent Tech., Inc., 323
F.3d 524, 533 (7th Cir. 2003) (granting summary judgment for defendant on
defamation claim because only available evidence had multiple layers of hearsay).
First Financial attempts to rehabilitate its evidence by arguing that it does
not depend upon the truth of Bauknecht’s statements, and that it is “enough that
the statements . . . were made, and they’re admissible not for the truth of any
matter asserted but because they explain what prompted the elderly customer to
leave.” (Doc 121 at 58). First Financial ignores that it must depend upon hearsay
evidence – Livingston’s words as told through Smith – to establish that Bauknecht
even made comments to begin with. Without Livingston, Plaintiff can’t even get to
Bauknecht’s comments. See Fed. R. Evid. 801(c)(2). Graymont’s motion for summary
judgment on this count is granted.
Bauknecht’s motion for summary judgment is denied. Although First
Financial’s admissible evidence on Count VII against Bauknecht is quite thin – a
letter seeking indemnification that qualifies as a statement of a party opponent
under Federal Rule of Evidence 801(d) – it is enough to create fact disputes and
preclude summary judgment for Bauknecht.
VIII. Civil Conspiracy Against Both Defendants
To succeed in a civil conspiracy claim, a Plaintiff must produce evidence of
“(1) an agreement between two or more person to accomplish either an unlawful
60
purpose or a lawful purpose by an unlawful means; and (2) at least one tortious act
by at least one of the conspirators in furtherance of the agreement.” U.S. Data Corp.
v. RealSource, Inc., 910 F. Supp. 2d 1096, 1110 (N.D. Ill. 2012). Plaintiff’s complaint
alleges that Defendants entered into a conspiracy to commit each of Counts I
through VII.
A. First Financial’s Motion
First Financial’s motion for summary judgment must be denied, as it relies
upon the apparent admission that “[a]ll actions attributed to Bauknecht in the
complaint were either known to or authorized by appropriate officers of the State
Bank of Graymont.” As with every other count, Plaintiff over-relies upon the
apparent admission.
First, as discussed above, such an admission can at most be attributed to
Bauknecht and cannot be attributed to Graymont. This is true even for the purpose
of a conspiracy claim, because the apparent admission was made after litigation had
been filed, on December 27, 2012, and it has nothing to do with the furtherance of
any purported conspiracy between the two. See Fed. R. Evid. 801(d)(2)(E) (requiring
that statement offered against an opposing party that was made by party’s
coconspirator be made during and in furtherance of the conspiracy). Therefore, the
letter is not admissible evidence against Graymont for purposes of the conspiracy
charge.
Second, the letter hardly admits to any sort of conspiratorial agreement. At
best, as proof against Bauknecht, it shows that Graymont knew about certain of his
actions and authorized certain of his actions. It in no case specifies whether
61
Graymont agreed to particular actions that were required in furtherance of a
conspiracy. Further, any acts that Graymont authorized are irrelevant to a
conspiracy claim. The only acts that Graymont could have authorized are acts that
Bauknecht engaged in while an employee or agent of Graymont. And, there can be
no conspiracy between a principal and an agent. See Buckner v. Atlantic Plaint
Maintenance, Inc., 694 N.E.2d 585, 602 (Ill. 1998).
Therefore, the only mileage that Plaintiff can get from the apparent
admission is evidence to be used against Bauknecht that Graymont knew about his
actions. This does not go very far on a conspiracy claim. Plaintiff’s motion is denied.
B. Defendants’ Motions
The Court grants Defendants’ motions with respect to the conspiracy count.
The Court considers the conspiracy count claim-by-claim.
1. Breach of Contract
A claim for a conspiracy to breach a contract depends upon one party
breaching its contract and the other party inducing that party to breach. See Blivas
v. Klein, 282 N.E.2d 210, 213 (Ill. App. Ct. 1972) (“While it is true that a party
cannot be sued in tort for inducing the breach of his own contract, he can be sued for
conspiracy with a third person who has induced him to breach his contract resulting
in actual damage.”). In this case, Plaintiff has established that Bauknecht breached
his confidentiality agreement. However, it has not provided sufficient evidence to go
to trial on its tortious interference with contract against Graymont. Therefore, it
has not presented evidence sufficient to support a conspiracy claim based on
Bauknecht’s breach of contract. See Blivas, 282 N.E.2d at 213.
62
2. Breach of Fiduciary Duty
Plaintiff has produced sufficient evidence to get to a trial on the matter of
Bauknecht’s breach of a fiduciary duty. As explained above, to succeed on a
fiduciary duty claim, Plaintiff must show that Bauknecht began to improperly
compete against it while he was still a First Financial employee or that he took
actions to compete against it while he was still a First Financial employee.
However, Plaintiff cannot point to any evidence on the record that suggests
Defendants entered into an agreement regarding this activity. The only evidence
that Plaintiff presents is testimony from Bauknecht and Graymont’s president Ron
Minnaert that they discussed the possibility of Bauknecht bringing First Financial
accounts with him. Even if the Court ignores Bauknecht and Graymont’s dispute
over the characterization of that testimony and assumes that the two expressly
agreed that Bauknecht would attempt to move over First Financial customers, it is
not enough to save Plaintiff’s conspiracy claim here. Rather, Plaintiff would need to
point to evidence of an agreement that Bauknecht would take steps prior to his
start date with Graymont. See Veco Corp. v. Babcock, 611 N.E.2d 1054, 1059 (Ill.
App. 1993).
All evidence of agreement points to actions that Bauknecht was to take
subsequent to Graymont hiring him. Therefore, Defendants’ motion for summary
judgment on the conspiracy claim as it relates to Bauknecht’s breach of fiduciary
duty is granted.
63
3. ITSA
Plaintiff’s conspiracy claim as it relates to the ITSA is preempted by the ITSA
because the underlying activity giving rise to its conspiracy claim is identical to the
underlying activity giving rise to its ITSA claim. See Abanco Int’l v. Guestlogix, Inc.,
486 F. Supp. 2d 779, 782 (N.D. Ill. 2007). Plaintiff argues that the Court is
foreclosed from concluding that its conspiracy cause of action is preempted based on
the law of the case. Plaintiff is correct that the Magistrate Judge denied
Defendants’ motion to dismiss count VIII, concluding that the conspiracy claim was
based on alleged wrongful conduct that is unrelated to the misappropriation of
trade secrets. (Doc. 24 at 10-11). Then, just as now, Plaintiff’s conspiracy claim
rested on the tortious conduct underlying each of its other counts, not just the ITSA
claim. Therefore, it is not inconsistent with this Court’s prior decisions to conclude
that the conspiracy count is preempted insofar as it rests on conduct covered by its
ITSA claim. Because case law is clear that the ITSA preempts conspiracy claims
that are based upon the misappropriation of trade secrets, Defendants’ motion is
granted with respect to any conspiracy to misappropriate trade secrets.
4. Conversion
Although parts of Plaintiff’s conversion claim can proceed to trial, Plaintiff
has not provided evidence that Defendants entered into an agreement to convert its
property. Although it has presented some evidence that suggests Defendants agreed
that Bauknecht would bring customers with him from First Financial, such an
agreement relates to Plaintiff’s preempted ITSA claim and is unrelated to Plaintiff’s
conversion claim.
64
5. Computer Fraud
Because the Court has granted summary judgment against Plaintiff on the
CFAA count, its conspiracy count as it relates to the CFAA cannot succeed. Plaintiff
cannot show that either party committed a tortious act in furtherance of the
conspiracy. See U.S. Data Corp., 910 F. Supp. 2d at 1110.
6. Tortious Interference with Contract
Because the Court has granted summary judgment against Plaintiff on the
tortious interference with contract count, its conspiracy count as it relates to
tortious interference with a contract cannot succeed. Plaintiff cannot show that
either party committed a tortious act in furtherance of the conspiracy. See id.
7. Tortious Interference with Prospective Economic Advantage
The court has granted summary judgment for Graymont on Plaintiff’s
Tortious
Interference
with
Prospective
Economic
Advantage,
but
denied
Bauknecht’s motion due to the unfortunate language in the indemnification letter.
However, the conspiracy count does not just, ipso facto, follow. Rather, it fails
because the only allegations of tortious interference with prospective economic
advantage relate to Bauknecht’s alleged activity after Graymont employed him.
Because he was, at that point, Graymont’s agent, there can be no conspiracy charge.
See Buckner, 694 N.E.2d at 602.
65
CONCLUSION
IT IS THEREFORE ORDERED:
1. Defendant Graymont’s Motion to Overrule Objections and Allow Use of
Answers and Admissions (Doc. 98) is GRANTED IN PART and DENIED IN
PART.
2. Plaintiff First Financial’s Motion for Summary Judgment (Doc. 108) is
GRANTED IN PART and DENIED IN PART. The motion is granted in part
with respect to Counts I, III, and IV, but otherwise denied.
3. Defendant Graymont’s Motion for Summary Judgment (Doc. 107) is
GRANTED IN PART and DENIED IN PART. The motion is granted with
respect to Counts VI, VII, and VIII, granted in part with respect to Count IV,
and otherwise denied.
4. Defendant Bauknecht’s Motion for Summary Judgment (Doc. 104) is
GRANTED IN PART and DENIED IN PART. The motion is granted with
respect to Counts V and VIII, granted in part with respect to Count IV, and
otherwise denied.
Entered this 24th day of October, 2014.
s/Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge
66
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