Maximum Independent Brokerage, LLC v. Smith et al

Filing 31

MEMORANDUM OPINION Signed by the Honorable Samuel Der-Yeghiayan on 10/28/2016: Individual Defendants' partial motion to dismiss 8 is denied and B&W's partial motion to dismiss 20 is denied. Mailed notice (mw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MAXIMUM INDEPENDENT
BROKERAGE, LLC

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Plaintiff,
v.
ADRIAN SMITH, et al.
Defendants.

No. 16 C 5548

MEMORANDUM OPINION
SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Defendant Adrian Smith’s (Smith),
Defendant Erich Steinhaus’ (Steinhaus), Defendant Jody Oster’s (Oster), and
Defendant Stephen Bartell’s (Bartell) (collectively referred to as “Individual
Defendants”) partial motion to dismiss and Defendant Burns & Wilcox, LTD.’s
(B&W) partial motion to dismiss. For the reasons stated below, Individual
Defendants’ partial motion to dismiss is denied and B&W’s partial motion to dismiss
is denied.

BACKGROUND
Plaintiff Maximum Independent Brokerage, LLC (Maximum) allegedly offers
insurance brokerage and underwriting facilities to the construction, energy, gaming,
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healthcare, habitational, manufacturing, and real estate industries. From November
8, 2010 to April 4, 2016, Individual Defendants were employed by Maximum. Smith
was employed as a senior vice president, Steinhaus as an account manager, Oster as
an assistant vice president, and Bartell as an assistant vice president. The Individual
Defendants allegedly signed at-will Employment Agreements (Agreements) with
Maximum, which contained a non-solicitation covenant, non-recruitment provision,
and trade secrets covenant. (Comp. Par. 11). The Agreements also allegedly
contained a breach of covenant provision, which enables Maximum to enforce the
terms of the Agreement by an injunction. Maximum alleges that the Individual
Defendants violated the Agreement by uploading confidential information, stealing
client files, and destroying data on Maximum’s network. On April 4, 2016,
Individual Defendants allegedly resigned their employment with Maximum. On
April 4, 2016, Individual Defendants allegedly became employed by B&W.
Maximum alleges that while Individual Defendants were still employed by
Maximum, B&W poached the Individual Defendants and induced them to violate the
terms of their Agreements. B&W is allegedly an independent wholesale insurance
broker and underwriting manager in the environmental, recreation, marine, high net
worth, professional, transportation and excess casualty industries.
Maximum includes in its complaint breach of contract claims brought against
Individual Defendants (Counts I-IV), misappropriation of trade secret claims brought
against Individual Defendants (Counts V-VIII), a tortious interference with
agreement claim brought against B&W (Count IV), a tortious interference with
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reasonable expectation of economic advantage (TIPEA) claim brought against B&W
(Count X), claims alleging a violation of Computer Fraud and Abuse Act (CFAA),
18 U.S.C. § 1030, brought against Individual Defendants (Count XI), and civil
conspiracy claims brought against Individual Defendants and B&W (Count XII).
Individual Defendants now move to dismiss Counts I, II, III, IV, and XI pursuant to
Federal Rule of Civil Procedure 12(b)(6) (Rule 12(b)(6)). Individual Defendants
move to dismiss the complaint in its entirety, pursuant to Federal Rule of Civil
Procedure 12(b)(1) (Rule 12(b)(1)) for lack of subject matter jurisdiction. B&W
moves to dismiss Counts IX, X, and XII pursuant to 12(b)(6).

LEGAL STANDARD
Rule 12(b)(1) requires a court to dismiss an action when it lacks subject matter
jurisdiction. United Phosphorus, Ltd. v. Angus Chemical Co., 322 F.3d 942, 946
(7th Cir. 2003)(overruled on separate grounds). If the concern of the court or party
challenging subject matter jurisdiction is that “subject matter jurisdiction is not
evident on the face of the complaint, the motion to dismiss pursuant to Rule 12(b)(1)
would be analyzed as any other motion to dismiss, by assuming for purposes of the
motion that the allegations in the complaint are true.” Id.; see also Ezekiel v. Michel,
66 F.3d 894, 897 (7th Cir. 1995)(stating that when reviewing a motion to dismiss
brought under Rule 12(b)(1), the court “must accept as true all well-pleaded factual
allegations, and draw reasonable inferences in favor of the plaintiff”). However, if
the complaint appears on its face to indicate that the court has subject matter
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jurisdiction, “but the contention is that there is in fact no subject matter jurisdiction,
the movant may use affidavits and other material to support the motion.” United
Phosphorus, Ltd., 322 F.3d at 946. For the purpose of determining subject matter
jurisdiction, the court “‘may properly look beyond the jurisdictional allegations of
the complaint and view whatever evidence has been submitted on the issue to
determine whether in fact subject matter jurisdiction exists.’” Ezekiel, 66 F.3d at 897
(quoting Capitol Leasing Co. v. Federal Deposit Insurance Corp., 999 F.2d 188, 191
(7th Cir. 1993)). The burden of proof in regards to a Rule 12(b)(1) motion is “on the
party asserting jurisdiction.” United Phosphorus, Ltd., 322 F.3d at 946.
In ruling on a motion to dismiss brought pursuant to Rule 12(b)(6), the court
must draw all reasonable inferences that favor the plaintiff, construe the allegations
of the complaint in the light most favorable to the plaintiff, and accept as true all
well-pleaded facts and allegations in the complaint. Appert v. Morgan Stanley Dean
Witter, Inc., 673 F.3d 609, 622 (7th Cir. 2012); Thompson v. Ill. Dep’t of Prof’l
Regulation, 300 F.3d 750, 753 (7th Cir. 2002). A plaintiff is required to include
allegations in the complaint that “plausibly suggest that the plaintiff has a right to
relief, raising that possibility above a ‘speculative level’” and “if they do not, the
plaintiff pleads itself out of court.” E.E.O.C. v. Concentra Health Services, Inc., 496
F.3d 773, 776 (7th Cir. 2007)(quoting in part Bell Atlantic Corp. v. Twombly, 127
S.Ct. 1955, 1965 (2007)); see also Morgan Stanley Dean Witter, Inc., 673 F.3d at
622 (stating that “[t]o survive a motion to dismiss, the complaint must contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible on
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its face,” and that “[a] claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged”)(quoting Ashcroft v. Iqbal, 556 U.S. 662
(2009))(internal quotations omitted).

DISCUSSION
I. Individual Defendants Motion to Dismiss
A. Rule 12(b)(6) Motion to Dismiss
1. Whether Maximum has Stated a Claim Under CFAA
Individual Defendants argue that Maximum’s complaint fails to state a valid
claim for relief under CFAA. CFAA provides a private right of action, stating that
“[a]ny person who suffers damage or loss by reason of a violation of this section may
maintain a civil action against the violator to obtain compensatory damages and
injunctive relief or other equitable relief.” 18 U.S.C. § 1030(g). To state a claim
under CFAA, a plaintiff must only allege “(1) damage or loss; (2) caused by (3) a
violation of one of the substantive provisions set forth in § 1030(a), and (4) conduct
involving one of the factors of harm set forth in § 1030(c)(4)(A)(i)(I)-(VI).”
Cassetica Software, Inc. v. Computer Sciences Corp., 2009 WL 1703015, at *3 (N.D.
Ill. 2009); Motorola, Inc. v. Lemko Corp., 609 F.Supp. 2d 760, 765 (N.D. Ill. 2009).
In this case, Maximum alleges a violation of § 1030(a)(2)(c), which provides a
remedy against an individual who “[i]ntentionally accesses a computer without
authorization or exceeds authorized access, and thereby obtains. . . (c)information
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from any protected computer.” 18 U.S.C. § 1030(a)(2)(c). Individual Defendants do
not dispute the allegations that they intentionally accessed Maximum’s protected
computers. The Individual Defendants contend, however, that Maximum failed to
satisfy the “damage or loss” requirement. CFAA defines the two terms, damage and
loss, differently.

a. Whether Maximum Properly Alleges Damage Under CFAA
Individual Defendants argue that Maximum’s complaint lacks sufficient
allegations regarding damage to data. CFAA states that “the term ‘damage’ means
any impairment to the integrity or availability of data, a program, a system, or
information.” 18 U.S.C. § 1030(e)(8). The Seventh Circuit has found that the
statutory requirement of damage was satisfied where the defendant’s acts impaired
the “integrity or availability of data, a program, or information” on the computer.
Citrin, 440 F.3d at 419.
Maximum alleges that Individual Defendants “attempted to destroy the data
that resided on the hard drives of those Maximum provided computers.” (Compl. Par.
32). Maximum also alleges that they are “in the process of forensically obtaining the
data that these defendants attempted to destroy.” (Compl. Par. 32). Maximum also
alleges that Individual Defendants “exceeded their authority in accessing
Maximum’s computers and wrongfully transferring and destroying data stored on
them, which violates” CFAA. (Compl. Par. 85).
Maximum is not required to plead specific factual allegations as to how the
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data was destroyed. See International Airport Centers, L.L.C. v. Citrin, 440 F.3d at
420)(stating that a plaintiff is not required to allege the exact method or medium
through which the defendant destroyed the data). Maximum has thus properly
alleged damage under the CFAA.

b. Whether Maximum Properly Alleges Loss Under CFAA
Individual Defendants also contend that Maximum has not sufficiently alleged
loss. In contrast to damage, “the term ‘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 to its condition
prior to the offense, and any revenue lost, cost incurred, or other consequential
damages incurred because of interruption of service.” 18 U.S.C. § 1030(e)(11). To
adequately plead a loss under CFAA, the plaintiff has the burden of alleging that
defendants actions caused the plaintiff “to incur losses of over $5,000 during a oneyear period related to damage and security assessments.” Motorola, Inc., 609
F.Supp. 2d at 768. Assessing and repairing damage to computers files “qualify as
compensable because they are a ‘cost of investigating or remedying damage to a
computer, or a cost incurred because the computer’s service was interrupted.’”
Patrick Patterson Custom Homes, Inc. v. Bach, 586 F.Supp. 2d 1026, 1036 (N.D. Ill.
2008).
Neither party disputes that CFAA requires a $5,000 threshold within the oneyear period. Individual Defendants argue, however, that Maximum fails to contain
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allegations displaying that Maximum exceeded this $5,000 threshold. (Def. P. 6). In
response, Maximum provided an affidavit signed by Maximum’s CEO, Joseph
Messina, alleging that Maximum’s investigation and response efforts following this
incident has required them to incur more than $3,000 in costs since April 4, 2016.
Importantly, the one-year timeline has not elapsed. Drawing all reasonable
inferences in favor of Maximum, this court finds that Maximum has sufficiently
alleged loss for the purposes of CFAA. Therefore, Individual Defendants’ Rule
12(b)(6) motion to dismiss Count XI is denied.

2. Maximum’s Breach of Contract Claims Against Individual Defendants
The Individual Defendants argue that Maximum failed to state a claim for
breach of contract because the Employment Agreements are overbroad and
unenforceable. In Illinois, a restrictive covenant will be enforced where “it contains
a reasonable restraint and the agreement is supported by consideration.” Reliable
Fire Equip. Co. v. Arredondo, 965 N.E.2d 393, 396 (Ill. 2011). The Illinois Supreme
Court has established the factors that must be considered in determining whether the
restrictive covenants are reasonable. Id. at 397. The Reliable Fire rule provides that
a covenant is reasonable only if it “(1) is no greater than is required for the protection
of a legitimate business interest of the employer-promissee; (2) does not impose
undue hardship on the employee-promisor, and (3) is not injurious to the public.” Id.
at 396. Importantly, the reasonableness of a restrictive covenant is determined
“based on the totality of the facts and circumstances of the individual case.” Id. at
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403. Accordingly, “unless the covenant is patently unreasonable, the parties must be
given a full opportunity to develop the necessary evidentiary record.” Traffic Tech,
2015 WL 9259544, at *5 (N.D. Ill. 2015). Courts in this district have found that
such a fact-based determination is not appropriate at the motion to dismiss stage.
Nortek Products Ltd. v. FNA Grp., Inc., 2011 WL 2110043, at *4 (N.D. Ill. 2011);
Restaurant.Com, Inc. v. Savad, 2008 WL 3992695, at *3 (N.D. Ill. 2008)(holding
that whether a restrictive covenant is reasonable is a fact-based determination not
appropriate at the motion-to-dismiss stage); Integrated Genomics, Inc. v. Kyrpides,
2008 WL 630605, at *6–8 (N.D. Ill. 2008) (same). Individual Defendants argue that
the non-solicitation provision and the trade secrets provision of the Agreements are
overbroad and unenforceable.

a. Whether the Non-Solicitation Covenant is Patently Unreasonable
The Individual Defendants argue that the non-solicitation provision is
unreasonably overbroad, unenforceable, and fails to maintain any geographic
restriction. In addressing the geographic limitations, the Seventh Circuit has held
that “[g]enerally, courts will uphold a restriction on competition that is coextensive
with the area where the promisee is doing business.” Liautaud v. Liautaud, 221 F.3d
981, 988 (7th Cir. 2000). Distinguishing “a blanket prohibition on competition and
an activity restraint is important because the lack of a geographical restriction does
not automatically invalidate a postemployment restraint where the geographical
prohibition is qualified by an activity restraint.” Eichman v. Nat’l Hosp. and Health
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Care Services, Inc., 719 N.E.2d 1141, 1147 (Ill. App. Ct. 1999). Maximum
contends that there is a distinction between a non-solicitation agreement and a noncompete. Maximum argues that a geographical limitation is not necessary if the
restrictive covenant only prohibits the employee from engaging in certain activities,
such as soliciting his or her former employer’s customers. The Individual
Defendants argue that the non-solicitation agreement applies to activities beyond
solicitation and therefore the clause is overbroad. The agreement states that within
two years, the employee shall not “call upon, solicit, negotiate, arrange, provide or
sell insurance or insurance-related products of any kind. . .” (Exhibit A, Par. 6).
Maximum has shown that the non-solicitation clause is qualified by a reasonable
activity restraint. The activities stated in the Agreement are a specific set of
activities and are narrowly applied. These activities, therefore, do not arise to the
standard of being unreasonably overbroad and unenforceable.
Individual Defendants also argue that Illinois Courts are hesitant to enforce
noncompetition agreements that prohibit employees from soliciting customers whom
they never had contact with during their employment. Maximum points out,
however, that, the non-solicitation agreement states that the “limitation only applies
to such customers or actively solicited prospective customers of the Company at any
time during the twelve (12) months prior to the termination of Employee’s
employment.” (Compl. Par. 13). This restriction therefore has a reasonable scope as
it’s only intended to protect Maximum’s relationships with customers and customers
whom they have recently solicited or have ongoing communications. This provision
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does not, as Individual Defendants contend, apply to non-existent future customers.
This court recognizes that courts “frown upon an across the board limitation
on [an employee’s] right to ply his trade.” Bus. Records Corp. v. Lueth, 981 F.2d
957, 962 (7th Cir. 1992). However, the language contained in the Agreement
provides a reasonable scope that is consistent with Illinois law. Since the facts of the
case are highly important in determining this issue, the court does not find the
prohibition against competition to be patently unreasonable. Thus, the nonsolicitation agreement is not overbroad and unenforceable.

3. Whether the Trade Secrets Covenant is Enforceable
Individual Defendants argue that Section 8 relating to the Trade Secrets
Covenant is unreasonably overbroad and unenforceable. This section of the
agreement prohibits the Individual Defendants from disclosing or using the trade
secret-confidential information for their own benefit or the benefit of another. The
agreement defines Trade Secret-Confidential Information as follows:
(2) Trade Secret-Confidential Information is defined to include, without
limitation, specialized business methods, techniques, plans and
know-how relating to the business of the Company; advertising and marketing
materials and concepts; customer information, including without
limitation mailing lists, customer lists, rolodexes, customer files, supplier
lists, non-public information concerning present, past or potential
customers and suppliers (names, addresses, policy expiration dates, policy
numbers, underwriters, coverage information, underwriting information,
etc.), and methods for developing and maintaining business relationships
with customers and prospects; procedural manuals; employee training
and review programs and techniques; personnel data of the Company; the
Company's electronic data; pricing structures, policies, practices or methods;
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and methods or practices of obtaining or doing business used by the
Company. Trade Secret-Confidential Information also includes any
information that is marked "Confidential," any information which
Employee has been told is confidential or which he might reasonably
expect the Company to regard as confidential, any information given to
the Company in confidence by any of the Company's clients, customers
or vendors, and any information derived from Company's Trade
Secret-Confidential Information. Employee agrees that any information
stored in any computer software or hardware, electronic storage devices
or electronic data communication devices assigned to Employee by the
Company belongs to the Company.
(3) Employee recognizes that this Trade Secret-Confidential
Information constitutes a valuable and unique asset of the Company,
developed and perfected over considerable time and at substantial expense
to the Company. During his employment and after the termination of
employment, the Employee shall not disclose, without the written consent of
the Company, to any person, film, partnership, association or corporation
such Trade Secret-Confidential Information that came into his possession
while in the employ of the Company; or otherwise use such Trade
Secret-Confidential Information not for the benefit of the Company but
for his own benefit or the benefit of another, and employee agrees to
hold such Trade Secret-Confidential Information in trust for the sole
benefit of the Company. A breach of this provision during employment
shall be grounds for immediate termination of employment.
(P. Ex. A 1). Individual Defendants argue that this prohibition is overbroad because
it prohibits the use or disclosure of any information obtained by Individual
Defendants during the course of their employment with Maximum concerning the
business or affairs of Maximum and its affiliates. Maximum argues, to the contrary,
that the confidential information is reasonably limited to specific items that provide
Maximum with a competitive edge and are not generally known outside the
company.
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Maximum further alleges that Individual Defendants removed lists of
Maximum customers to an external site without written consent, uploaded
confidential information to an external Google drive, and uploaded additional PDF
files relating to customer accounts. The pleadings indicate that Individual
Defendants resorted to downloading/uploading information from Maximum’s
network. Thus, it can be reasonably inferred that the information is proprietary, nonpublic, and confidential. Maximum alleges these significant details relating to the
confidential information, the definition of which is not overly broad. Therefore,
Section 8 of the Employment Agreement is not patently unreasonable. Individual
Defendants’ motion to dismiss Count XI is denied.

B. Whether the Court has Subject Matter Jurisdiction
Individual Defendants argue that this court lacks subject matter jurisdiction
under Rule 12(b)(1). The Individual Defendants argue that if the CFAA claim is
dismissed, the court should then dismiss the case in its entirety for lack of subject
matter jurisdiction. As indicated above, the 12(b)(6) motion to dismiss CFAA claim
is denied. Even if granted, that would be no basis to deprive the court of subject
matter court jurisdiction on the remaining claims. Therefore, the Rule 12(b)(1)
motion to dismiss is denied.

II. B&W’s Motion to Dismiss
A. Tortious interference with a Contractual Relationship
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B&W argues that Maximum fails to state a valid claim for tortious
interference with a contractual relationship. To state a claim for tortious interference
with a contractual relationship under Illinois law, plaintiff must plead: “(1) the
existence of a contract; (2) the defendants' awareness of the contract; (3) the
intentional inducement of a contract breach; (4) an actual breach of the contract; and
(5) damages.” Cody v. Harris, 409 F.3d 853, 859 (7th Cir. 2005).
Here, B&W does not challenge Maximum’s complaint regarding the first two
elements. Rather, B&W argues that case law prohibits Maximum from pleading
tortious interference of a contract where the contract may be terminated at-will by
either party to the contract. Illinois law provides that “inducing the termination of a
contract, even when the termination is not a breach because the contract is terminable
at will, can still be actionable under the tort law of Illinois, either as an interference
with prospective economic advantage, or as an interference with the contract at will
itself.” Speakers of Sport, Inc. v. ProServ, Inc., 178 F.3d 862, 865 (7th Cir. 1999).
Maximum agrees that the contracts are at-will but argues that this fact is not
dispositive of their claim for tortious interference with a contract. Maximum
contends that courts in this jurisdiction have allowed claims for tortious interference
of an at-will contract to survive the motion to dismiss claim. Rather than alleging
that B&W induced a cancellation of the at-will contracts, Maximum alleges that
B&W induced a violation and breach of the at-will contracts. The latter falls within
the proper pleading requirements for the third element of tortious interference with a
contractual relationship.
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A plaintiff can plead tortious interference of an at-will contract when the
contract contains a valid non-compete provision. See ATC Healthcare Services, Inc.
v. RCM Technologies, Inc., 2016 WL 3521883, *11 (N.D. Ill. 2016)(stating that
plaintiff could adequately allege a breach of an at-will contract by alleging that
defendant intentionally tried to induce employees to violate the non-compete
provisions in their contracts); see also Europlast, Ltd. v. Oak Switch Systems, Inc., 10
F.3d 1266, 1274 (7th Cir. 1993)(stating that the court does not agree that defendant is
excused from liability merely because of the individual’s status as an at-will
employee). Until the at will contract is terminated, “the contract is valid and
subsisting, and the defendant may not improperly interfere with it.” Kemper v.
Worcester, 435 N.E.2d 827 (Ill. App. Ct. 1982).
Maximum alleges that “[B&W] intentionally interfered with Maximum’s
rights under Sections 6, 7 and 8 of the Agreements with [Individual Defendants] by
knowingly employing or otherwise associating with them to solicit customers,
misappropriate Maximum’s confidential information, and induce Maximum’s
employees to be disloyal and terminate their employment to work for a competing
business.” (Compl. Par. 78). Maximum also alleged that B&W “knew, was aware, or
was on notice that [Individual Defendants] were bound by the Agreements with
Maximum.” Notably, Maximum also alleged that on January 6, 2016, B&W
exchanged email communication with Smith regarding a face-to-face meeting. It can
be reasonably inferred that information was exchanged during this face-to-face
meeting. Maximum should have the opportunity to engage in fact discovery to
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determine the nature of this meeting and other communications that took place.
Maximum also alleges that on March 24, 2016, B&W employee Dennis Brady
emailed Smith stating that B&W “will indemnify you so long as you are not in
breach of any of your contractual obligations.” (Compl. Par. 35). B&W argues that
this statement displays that B&W did not seek to induce or tortiously interfere with
Maximum’s contracts with Individual Defendants. However, Maximum alleges facts
displaying that B&W’s actions show otherwise. Maximum alleges that from January
6, 2016 to March 24, the contracts between Maximum and the Individual Defendants
were still operative and enforceable. Maximum alleged facts that B&W engaged in
conversations with Smith regarding the Individual Defendants’ employment with
B&W. Despite the contract being at-will, it was still in effect when B&W engaged
in these discussions with the Individual Defendants. It can be reasonably inferred
that B&W, through their employment discussions, tortiously interfered with
Maximum’s contractual agreements.
Maximum also alleges that B&W, and the Individual Defendants, violated
Section 7 of the Agreement, which states as follows:
“Non-Recruitment Provision. Employee agrees that he will not, both
during employment and for a period of one year following the
termination of his employment, either alone or in conjunction with any
other person or entity, solicit, induce, encourage or recruit any employee
of Company to leave the employ of Company.”
(P. Ex. A 1). This provision displays that Individual Defendants had an ongoing
contractual duty not to recruit employees during and one year following their

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employment with Maximum. The non-recruitment provision, which is not
challenged by any of the Defendants, imposes a contractual duty on the Individual
Defendants for one year following their April 4, 2016 resignation. It can be
reasonably inferred that B&W was fully aware of this ongoing contractual duty.
B&W’s employing Individual Defendants and allowing those individuals to use
potentially confidential information to recruit customers constitutes an inducement of
a contract breach, which proximately caused the actual breach and damages suffered
by Maximum. Therefore, B&W’s motion to dismiss Count IX is denied.

B. Tortious Interference with a Prospective Economic Advantage (TIPEA)
B&W argues that Maximum fails to plead a claim for TIPEA. For a plaintiff
to properly state a claim for TIPEA, they must plead the following elements: “(1) a
reasonable expectation of entering into a valid business relationship; (2) defendants'
knowledge of this expectation; (3) defendants' purposeful interference that prevents
the plaintiff's legitimate expectation from becoming a valid business relationship; and
(4) damages.” Cody, 409 F.3d at 859; citing to Fellhauer v. City of Geneva, 568
N.E.2d 870, 878 (1991). Also, for a TIPEA claim brought under Illinois law, “there
is a rebuttable presumption that at-will employment will continue as long as both
parties desire that the economic relationship remain in place.” Ali v. Shaw, 481 F.3d
942, 944–45 (7th Cir. 2007).
B&W argues that Maximum could have no reasonable expectation of entering
into a valid business relationship with the Individual Defendants because they were
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at-will employees. In contrast, Maximum argues that there is a rebuttable
presumption that the at-will employment will continue and that B&W has failed to
overcome the rebuttable presumption. Maximum alleges that Maximum invested
significant resources into the Individual Defendants and entrusted them with a
considerable amount of confidential information. Maximum argues that these
allegations provide the basis that Maximum had a reasonable expectation of entering
into a valid business relationship. It can be reasonably inferred, based on
Maximum’s allegations, that B&W and the Individual Defendants were on notice
that Maximum expected that the Individual Defendants would continue employment
with Maximum.
B&W also argues that Maximum failed to plead around the competitor’s
privilege. In Illinois, “commercial competitors are privileged to interfere with one
another’s prospective business relationships provided their intent is at least in part, to
further their businesses and is not solely motivated by spite or ill will.” Imperial
Apparel, Ltd. v. Cosmo’s Designer Direct, Inc., 882 N.E.2d 1011, 1019 (Ill. 2008).
The competitor’s privilege “allows one to divert business from one’s competitors
generally as well as from one’s particular competitors provided one’s intent is, at
least in part, to further one’s business and is not solely motivated by spite or ill will.”
Soderlund Brothers., Inc. v. Carrier Corp., 663 N.E.2d 1 (Ill. App. Ct. 1995).
Generally, a company may try to take a competitor’s employees if it can do so
without inducing a breach of contract. Speakers of Sport, Inc. v. ProServ. Inc., 178
F.3d 862, 865 (7th Cir. 1999). Notably, the competitor’s privilege “is an affirmative
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defense to the tort of intentional interference with prospective business advantage.”
General Motors Corp. v. State Motor Vehicle Review Bd., 862 N.E.2d 209, 220 (Ill.
2008). The Seventh Circuit notes that “[c]omplaints need not anticipate or attempt to
defuse potential defenses.” See U.S. Gypsum Co. v. Indiana Gas Co., 350 F.3d 623,
626 (7th Cir.2003). Thus, Maximum was not required to plead allegations that
consider anticipatory defenses, such as the competitor’s privilege, in their complaint.
The court notes that even it were to require Maximum to plead around the
competitor’s privilege, which it is not, Maximum has successfully done so by
alleging facts displaying that B&W’s actions were motivated by spite or ill will.
Maximum has alleged that B&W has used, and continues to use, through its
employees, confidential information that was improperly stolen from Maximum.
These allegations are sufficient for pleading tortious interference with a prospective
economic advantage. See Lawson Prods., Inc. v. Chromate Indus. Corp., 158
F.Supp. 2d 860, 866 (N.D. Ill. 2001)(court recognizes that using wrongfully obtained
confidential information constitutes a showing of bad faith). Therefore, B&W’s
motion to dismiss Count X is denied.

C. Civil Conspiracy
B&W argues that Maximum fails to properly allege the elements for civil
conspiracy. Civil conspiracy, in Illinois, is defined as “a combination of two or more
persons for the purpose of accomplishing by some concerted action either an
unlawful purpose or a lawful purpose unlawful means.” Adcock v. Brakegate, Ltd.,
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645 N.E.2d 888, 894 (Ill. 1994). To succeed in a cause of action for civil conspiracy
under Illinois law, “[a] plaintiff must allege facts establishing both (1) an agreement
to accomplish such a goal and (2) a tortious act committed in furtherance of that
agreement.” Independent Trust Corp. v. Stewart Information Services Corp., 665
F.3d 930, 939 (7th Cir. 2012). Civil conspiracy claims “ha[ve] the effect of
extending liability for a tortious act beyond the active tortfeasor to individuals who
have not acted but have only planned, assisted, or encouraged the act.” McClure v.
Owens Corning Fiberglas Corp., 720 N.E.2d 242, 258 (Ill. 1999); citing to Adcock,
645 N.E.2d at 894.
B&W argues that Maximum claim for civil conspiracy fails because
Maximum fails to allege facts establishing that a tortious act was committed in
furtherance of the agreement. B&W contends that because Count IX and Count X
fail, the civil conspiracy claim fails. However, as stated above, Count IX and Count
X are not dismissed from this action. Moreover, Maximum alleges that B&W
exchanged emails with Smith, met with Smith, had discussions regarding the hiring
of the Individual Defendants, and subsequently employed those Individual
Defendants. At this stage of the proceedings, it can be reasonably inferred that B&W
understood the general objectives of the scheme, possibly furthered the scheme, and
implicitly accepted the tortious acts based on the totality of the circumstances. Based
on the foregoing analysis, B&W’s motion to dismiss Count XII is denied.

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CONCLUSION
Based on the foregoing analysis, Individual Defendants’ partial motion to
dismiss is denied and B&W’s partial motion to dismiss is denied.

___________________________________
Samuel Der-Yeghiayan
United States District Court Judge
Dated: October 28, 2016

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