ChatterPlug, Inc. v. Digital Intent, LLC et al
Filing
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MEMORANDUM Opinion and Order. Signed by the Honorable John W. Darrah on 10/28/2016. Mailed notice. (jl)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CHATTERPLUG, INC., a Delaware
corporation,
Plaintiff,
v.
DIGITAL INTENT, LLC, an Illinois
limited-liability company; and KINDRED
HEALTHCARE, INC., a Delaware
corporation,
Defendants.
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Case No. 1:16-cv-4056
Judge John W. Darrah
MEMORANDUM OPINION AND ORDER
On May 18, 2016, Plaintiff filed a twenty-nine count, ninety-six page First Amended
Verified Complaint [32], alleging violations of the Defend Trade Secrets Act of 2016,
18 U.S.C. § 1831, et seq.; violations of the Illinois Trade Secrets Act, 765 ILCS § 1065/1,
et seq.; breach of contract; and unfair competition in violation of the Lanham Act,
15 U.S.C. § 1125(a). Defendants have filed a Motion to Dismiss [62] Plaintiff’s Complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for which relief
can be granted. For the reasons discussed below, Defendants’ Motion to Dismiss [62] is denied
without prejudice with leave to re-file.
BACKGROUND
The following is a brief summary of a profuse number of facts alleged in the First
Amended Verified Complaint (“FAC”). JoyAnn Book founded ChatterPlug, Inc.
(“ChatterPlug”), a company that designs and develops healthcare management technology.
(FAC ¶ 30.) ChatterPlug has designed and developed, through Book, PatientConnecter™ – Post-
Acute Care (“PatientConnecter™ – PAC”), including the PatientConnecter™ – PAC Tool and
PatientConnecter™ – PAC Prototype. (Id. at e.g. ¶¶ 169, 206.) PatientConnecter™ – PAC
consists of an “enterprise platform and tools” available for authorized users. (Id. at ¶¶ 3-5, 8.)
The FAC alleges that an enterprise platform is a platform that can be used at one or more
locations; tools are products, applications, or apps. (Id.)
Digital Intent (“Digital”) is a consulting firm. (Id. at ¶ 35.) Kindred Healthcare
(“Kindred”) is a healthcare company that provides, among other things, rehabilitation and
physical therapy services. (Id. at ¶ 58.) Toward the end of 2014 or in early 2015, Kindred hired
Digital Intent to assist Kindred in improving patients’ rehabilitation experiences with technology.
(Id. at ¶¶ 124, 168.) The FAC does not allege that Kindred entered into any contract for services
or any confidentiality agreements with ChatterPlug or Book.
In November 2014, ChatterPlug and Digital Intent entered into a Mutual Confidentiality
Agreement (“MCA”). (Id. ¶ 13). In December 2014, Book began working at Digital Intent, as
an “Entrepreneur-In-Residence,” to help with the project for which Kindred hired Digital Intent.
(Id. ¶¶ 124, 132, 133, 158-60.) ChatterPlug alleges that in February and March 2015, it
disclosed confidential information, through Book, to Digital Intent and Kindred, including
preliminary portions and elements of the PatientConnecter™ – PAC Tool and
PatientConnecter™ – PAC Prototype. (Id. ¶¶ 174-180, 185, 211, 217-18, 236-41.) After Book
made these disclosures, ChatterPlug alleges that Digital Intent terminated Book. (Id. ¶ 254.)
In November 2015, Kindred held its annual Kindred Clinical Impact Symposium. (Id.
¶ 356.) During the symposium, Kindred discussed a rehabilitation patient experience “app,”
identified as “Maxwell,” that it was developing with Digital Intent, including showing a photo or
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screen shot of a user-interface screen. (Id. ¶ 359, Ex. K.) The screen shot was also viewable to
the public on Kindred’s website. (Id. Ex. K.)
On May 18, 2016, Plaintiff filed the FAC, asserting twenty-nine counts against
Defendants. (Dkt. No. 32.) At issue in this litigation are trade secrets relating to ChatterPlug’s
(1) PatientConnecter™ – PAC Tool and (2) PatientConnecter™ – PAC Prototype (“Trade
Secrets”). (FAC at ¶ 226.) ChatterPlug alleges that Digital Intent and Kindred misappropriated
the Trade Secrets to create Maxwell, in violation of state and federal statutes, breached contracts
and violated the Lanham Act. (Id. at ¶¶ 344-557.) The following chart sets forth the twenty-nine
claims alleged against Digital Intent and Kindred; Defendants seek dismissal of all counts in the
FAC, except Count 25:
Cause of Action
Violations of the
Illinois Trade Secrets Act
Defendant
Count
Digital Intent
1, 5, 7, 11
Kindred
3, 9
Violations of the
Federal Defend Trade Secrets
Act
Digital Intent
2, 6, 8, 12
Kindred
4, 10
Breach of Contract
Digital Intent
13, 15, 17, 19, 21, 23, 26
Breach of Oral Contract
Digital Intent
25
Kindred
14, 16, 18, 20, 22, 24
Digital Intent
27, 28
Kindred
28, 29
Tortious Interference
Violations of the
Lanham Act Unfair
Competition
LEGAL STANDARD
Federal Rule of Civil Procedure 8 compels litigants to file a “short and plain statement of
the claim showing that the pleader is entitled to relief.” This requirement of brevity fosters two
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goals: it allows trial courts to speed a case to resolution, and it allows a defendant to capably
respond to the allegations in the complaint. Hardy v. Illinois Dep’t of Corrections, Case No.
3:15-cv-00437-JPG, 2015 WL 4573302, at *1 (S.D. Ill. July 29, 2015) (citing United States ex
rel. Garst v. Lockheed-Martin Corp., 328 F.3d 374, 378 (7th Cir. 2003). While a minor amount
of surplus material in a complaint is not enough to frustrate these goals and violate Rule 8,
unnecessary length coupled with repetitiveness, needless complexity, and immaterial allegations
can push a complaint past Rule 8’s breaking point — in other words, it can make a “complaint
unintelligible” by “scattering and concealing in a morass of irrelevancies the few allegations that
matter.” Id. (citing Kadamovas v. Stevens, 706 F.3d 843, 844 (7th Cir. 2013)). When faced with
that type of pleading, district judges have the power to dismiss the complaint and require a redo.
Id.
ANALYSIS
The FAC in this case is ninety-six pages in length (without exhibits); the Factual
Background section is almost three-hundred paragraphs and nearly forty pages; the “Prayer for
Relief,” alone, is almost eight pages. The FAC is verbose and full of circular and repetitive
allegations, making the FAC difficult to navigate. By way of example, the First Claim for Relief
(Trade Secret Misappropriation by Digital Intent under the Illinois Trade Secrets Act)
incorporates not only the prior paragraphs 1-343 of the FAC, but it also incorporates thirteen
claims that later follow it (claims Twelve through Twenty-Four contained in paragraphs 435-472
of the Complaint). While the three-hundred paragraphs of “facts” are detailed, the five-hundredfifty-seven paragraphs spread out in over ninety pages and an eight-page “Prayer for Relief” lose
their purpose. ChatterPlug may argue that its FAC is bulky because it asserts twenty-nine
claims. In evaluating the FAC, however, the FAC has the kind of length, repetition and
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discussion of irrelevant material that makes the pleading confusing and unintelligible in violation
of Rule 8.
Numerous circuits have found that this type of complaint violates Rule 8. Lindell v.
Houser, 442 F.3d 1033, 1034 n.1 (7th Cir. 2006) (“[Plaintiff’s] complaint was probably
dismissable for not being ‘simple, concise and direct’ (see Rule 8(e) of the Federal Rules of Civil
Procedure). District courts should not have to read and decipher tomes disguised as pleadings.”);
Lockheed-Martin Corp., 328 F.3d at 378 (“Rule 8(a) requires parties to make their pleadings
straightforward, so that judges and adverse parties need not try to fish a gold coin from a bucket
of mud.”); Harrison v. Bd. of Regents of Univ. Sys. of Georgia, 519 Fed. App’x. 641, 643
(11th Cir. 2013) (eighty-two page complaint that took a “shotgun” approach to asserting claims
violated Rule 8); Rueb v. Zavaras, 371 Fed. App’x. 982, 986 (10th Cir. 2010) (ninety-five page
complaint that discussed claims linked to other individuals and often “failed to mention a
specific time, place, or person involved with the alleged offenses” violated Rule 8). What is
required here is an amended, streamlined pleading, narrowing the facts and issues to comport
with the spirit of Rule 8 of the Federal Rules of Civil Procedure.
On a related point, despite the FAC’s prolixity, the “trade secrets” associated with the
PatientConnecter™ – PAC Tool or the PatientConnecter™ – PAC Prototype are not apparent.
The FAC repeatedly alleges that Defendants misappropriated the PatientConnecter™ – PAC
Tool and the PatientConnecter™ – PAC Prototype and that the PatientConnecter™ – PAC Tool
and the PatientConnecter™ – PAC Prototype contain “preliminary” portions and elements
designed and owned by Plaintiff. However, Plaintiff does not clearly allege what the
PatientConnecter™ – PAC Tool and the PatientConnecter™ – PAC Prototype are. Is the Tool
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an “app”? Is the Prototype a model of the Tool or something else? The answers to these
questions may be easy for Plaintiff to answer, but they are not clear to the Court.
In addition, what emerges in the parties’ briefing is that the monikers used by
ChatterPlug in the FAC were not used during the time that Book worked at Digital Intent.
(Reply at p. 13.) This poses a problem because the FAC does not provide Defendants with the
general contours of the alleged trade secrets that ChatterPlug is seeking to protect. ChatterPlug
is not required to compromise its trade secrets, but Defendants are entitled to be able to discern
what trade secrets are at issue. See Carpenter v. Aspen Search Advisers LLC, No. 10 C 6823,
2011 WL 1297733, at *3, *10 (N.D. Ill. Apr. 5, 2011) (finding that it was not enough to “‘point
to broad areas of [information] . . . and assert that something there must have been secret’” and
dismissing claim for misappropriation of “business model, strategies, ideas and processes.”)
(quoting Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263, 1266
(7th Cir. 1992)); see also, Thermal Zone Products Corp. v. Echo Engineering, Ltd.,
No. 93 C 0556, 1993 WL 358148, at *5 (N.D. Ill. Sept. 14, 1993) (finding allegations that plans
and specifications for ovens were trade secrets were not sufficient to survive a motion to dismiss
without allegations that the information was unique and protected); Sit-Up Ltd. v.
IAC/InterActive Corp., et al., No. 05 Civ. 9292 (DLC), 2008 WL 463884, at *10 (S.D.N.Y. Feb.
20, 2008) (“[T]he law requires the trade secret claimant to describe the secret with sufficient
specificity that its protectability can be assessed.”). As noted above, ChatterPlug’s descriptions
of its trade secrets do not suffice; but ChatterPlug will be allowed to re-plead its complaint
against Defendants.
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CONCLUSION
For the reasons set forth above, Defendants’ Motion to Dismiss [62] is denied without
prejudice with leave to re-file. ChatterPlug’s First Amended Verified Complaint is dismissed
without prejudice. ChatterPlug is granted leave to amend, if it can do so in strict compliance
with the letter and spirit of Rule 8 and pursuant to Rule 11, within thirty days of this Order.
Date:
10/28/16
JOHN W. DARRAH
United States District Court Judge
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