Overwell Harvest, Limited v. Widerhorn et al

Filing 233

OPINION AND ORDER. Signed by the Honorable Sara L. Ellis on 11/1/2021. Mailed notice(rj, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
OVERWELL HARVEST LIMITED, a British )
Virgin Islands company, individually and
)
derivatively on behalf of Neurensic, Inc.
)
)
Plaintiff,
)
)
v.
)
)
DAVID WIDERHORN, PAUL GIEDRAITIS, )
and TRADING TECHNOLOGIES
)
INTERNATIONAL, INC.
)
)
Defendants.
)

No. 17 C 6086
Judge Sara L. Ellis

OPINION AND ORDER
While Trading Technologies International, Inc. (“Trading Technologies”) was
negotiating with Neurensic, Inc. (“Neurensic”) to buy its assets, Overwell Harvest Limited
(“Overwell”) brought this suit individually and derivatively in its capacity as a Neurensic
shareholder to ensure the sale was lawful. Overwell initially sued Neurensic’s Chief Executive
Officer David Widerhorn 1 and its Chief Operating Officer Paul Giedraitis. 2 Approximately nine
months later, Overwell added Trading Technologies to the lawsuit, alleging it aided and abetted
certain of Widerhorn and Giedraitis’ breaches of fiduciary duties. Specifically, Overwell alleges
that Widerhorn and Giedraitis, with Trading Technologies’ aid, breached their fiduciary duties
by facilitating a transfer of certain Neurensic employees and assets to Trading Technologies
prior to the sale of Neurensic’s assets to Trading Technologies. Trading Technologies and
Overwell have now filed cross-motions for summary judgment. Because questions of material
Widerhorn filed for bankruptcy on December 15, 2017, automatically staying the proceedings against
him.

1

2

On October 25, 2021 the Court approved a settlement agreement between Overwell and Giedraitis.

fact exist with respect to each element of the claim, the Court denies the parties’ cross-motions
for summary judgment.
BACKGROUND 3
Neurensic was a Delaware start-up corporation in the financial technology industry
founded by Widerhorn, Giedraitis, and two others in October 2015. Overwell was formed the
same year “for the sole purpose of investing in Neurensic.” Doc. 198 ¶ 1. Overwell’s Board of
Directors consists of Kenneth Chu, Benedict Ng, and Hilton Tam. Overwell was one of
Neurensic’s shareholders and its largest investor, investing a total of $3.5 million. Overwell
initially invested $2.5 million in Neurensic in December 2015. Shortly after, in March 2016,
Widerhorn reported to Overwell that Neurensic was low on resources and needed $500,000 in
“emergency funding.” Id. ¶ 38. In July and August 2016, Overwell invested an additional $1
million in Neurensic. After this investment, Widerhorn was the only shareholder that held more
Neurensic stock than Overwell. In connection with this investment, Overwell negotiated a seat
on Neurensic’s Board of Directors and certain preferred stock options that entitled it to the first
$8 million owed to Neurensic’s shareholders from any sale of Neurensic or its assets. Chu took
the seat on Neurensic’s Board, joining Widerhorn and Giedraitis as the Directors of Neurensic.

The Court derives the facts in this section from the Joint Statement of Undisputed Material Facts and
accompanying exhibits. The Court has included in this background section only those portions of the
Joint Statement of Undisputed Material Facts that are appropriately presented, supported, and relevant to
resolution of the pending motions for summary judgment. The Court takes all facts in the light most
favorable to the non-movant for each motion. The parties filed their briefs, the Joint Statement of
Undisputed Material Facts, and most exhibits under seal, also providing redacted versions. When the
Court refers to a sealed document, it attempts to do so without revealing any information that could
reasonably be deemed confidential. Nonetheless, if the Court discusses confidential information, it has
done so because it is necessary to explain the path of its reasoning. See City of Greenville v. Syngenta
Crop Prot., LLC, 764 F.3d 695, 697 (7th Cir. 2014) (“[D]ocuments that affect the disposition of federal
litigation are presumptively open to public view . . . unless a statute, rule, or privilege justifies
confidentiality.” (citation omitted)); Union Oil Co. of Cal. v. Leavell, 220 F.3d 562, 568 (7th Cir. 2000)
(explaining that a judge’s “opinions and orders belong in the public domain”).
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2

Between March and August 2016, Jay Biondo, Morgan Trinkaus, Eric Eckstrand, and
Evan Story, among others, began working for Neurensic. Each signed an employee agreement
that required Neurensic to compensate them semi-monthly and provide them with health, vision,
and dental benefits. The agreement also included an appendix that contained non-disclosure and
restrictive covenant provisions. The non-disclosure provision forbade the employees from
“directly or indirectly disclos[ing] or us[ing] . . . any of the Company’s Confidential and
Proprietary Information for [their] own purposes or for the purposes of any person or entity other
than the Company.” Doc. 184 ¶ 22. The restrictive covenant forbade the employees from
“engag[ing] in or perform[ing] any activities that directly compete with the Business of the
Company,” including “working or consulting for a competitor who engages in the business of
trade surveillance, financial compliance data visualization, case management, market impact
analysis and/or regulatory compliance software.” Id. ¶ 23. Trading Technologies, a private
Delaware corporation, was not engaged in such business prior to acquiring Neurensic; it was in
the business of “developing, marketing, and licensing trading screens for professional futures
traders.” Doc. 198 ¶ 2.
By October 2016, Neurensic’s financial status was dire and Widerhorn indicated that
without immediate funding, Neurensic would need to file for bankruptcy. Accordingly,
Widerhorn understood that Neurensic’s “top mandate” from Overwell was selling the company.
Id. ¶ 42. At the time, Neurensic had seven potential acquirers. In January 2017, Biondo,
Trinkaus, Eckstrand, and Story entered into Revised Employment Agreements with Neurensic
that granted the employees additional Neurensic stock in exchange for a reduction in their base
salaries and, for Trinkaus and Story, a waiver of their right to the back pay owed to them. The
Revised Employment Agreements did not include any non-disclosure or restrictive covenants

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and stated, “The terms and conditions described in this revised employment agreement letter (the
‘Agreement’), will take effect immediately and replace any prior agreements, written or oral.”
Doc. 184 ¶ 26; Doc. 186 at 151. By June 2017, Neurensic was significantly behind on payroll,
most of its employees had left the company, and only five potential acquirers remained,
including Trading Technologies. Eckstrand and Story both resigned in June 2017. Eckstrand
estimates that Neurensic owed him approximately $40,000 in back pay and indicated that at
some point during his employment there, he did not receive health benefits. Story did not
receive pay multiple times while employed at Neurensic and also did not receive health benefits
for some amount of time.
By mid-August 2017, Neurensic was insolvent and Trading Technologies was the only
remaining potential acquirer. In an August 16 email regarding Trading Technologies’ due
diligence of Neurensic, Widerhorn sent the contact and base salary information for Biondo,
Trinkaus, and three other Neurensic employees to Trading Technologies. In return, Trading
Technologies’ Chief Legal Officer, Mike Ryan, requested copies of Neurensic’s employment
agreements with the five employees. Widerhorm replied, “We will need to dig these from our
prior attorney team, please give a day or two.” Doc. 195 at 2. Shortly after, Trading
Technologies’ Chief Financial Officer at the time, Michael Kraines, asked Trading
Technologies’ Global Head of Human Resources to tell the five employees that “we plan to
make permanent offers of employment to all” and informed her that these employees “may prove
to be our best form of leverage here in terms of landing Neurensic.” Doc. 194 at 2.
On August 18, in an email to Neurensic’s shareholders, Widerhorn stated, “I want to reiterate one clear point: if the investors (or a group of investors) would like to purchase the
company for a fair price that satisfies emergency liens ($1.5 million or greater), we will have

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fiduciary obligation to move forward with this offer and transfer full ownership of the business.”
Doc. 184 ¶ 48. Widerhorn informed them that Neurensic would need a letter of intent by August
21 to “stop the [Trading Technologies] process.” Id. On August 22, Overwell filed this lawsuit
against Widerhorn and Giedraitis and an application for a temporary restraining order (“TRO”)
to stop the sale. On August 24, the Court ordered Widerhorn and Giedraitis not to sell
Neurensic’s assets in the next fourteen days. The next day, Trading Technologies submitted a
term sheet to Neurensic that stated it would offer the five previously discussed Neurensic
employees consulting agreements, which the employees must accept to close the deal. At the
same time, Story began discussing potential employment opportunities with Trading
Technologies, noting that there were “Neurensic topics [he is] not at liberty to discuss,” that he
“wouldn’t discuss them regardless of negotiation state,” and that his “non-compete doesn’t
mention [Trading Technologies].” Doc. 195 at 11.
A few days later, on August 28, Trading Technologies’ Chief Technology Officer at the
time, Drew Shields, told Kraines that Trading Technologies “will add surveillance” regardless of
whether the deal with Neurensic “falls through” and it “will likely do it with a handful of exneurensic employees.” Doc. 184 ¶ 83; Doc. 193 at 13. Shields added, “Basically, we will take
on the op-ex we’d add if we bought them but without buying them.” Doc. 184 ¶ 83. The next
day, in an email to Kraines and Trading Technologies’ Global Head of Human Resources,
Shields said, “The three technical staff we are getting are not the people Jay [Biondo] said could
recreate the business for us and for the most part are just good maintainers. The real data science
power was a guy named Evan [Story] who I’m meeting Thur for coffee and the engineering
horsepower that stitched all together from UI to back end was a guy named Erick [Eckstrand] I

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met yesterday. . . . Based on Jay’s feedback, we need these two, not the three guys we’re getting
in the deal.” Id.
On August 31, Widerhorn asked Ng if Overwell was “proposing an acquisition deal or
investment deal of ANY kind as an alternative to the proposed [Trading Technologies]
transaction.” Id. ¶ 53. Overwell did not respond. Biondo resigned from Neurensic on
September 1 after not receiving any wages in 2017, and the same day, he received an
employment offer from Trading Technologies. Biondo began working at Trading Technologies
on September 5. Trinkaus resigned from Neurensic between September 4 and 7 after not
receiving any wages in 2017 and not receiving health benefits. On September 7, the Court held
an evidentiary hearing regarding Overwell’s TRO and ordered that Widerhorn and Giedraitis
“take no action with respect to the sale of [Neurensic’s] assets unless and until the Board satisfies
all applicable requirements of Delaware law and the Bylaws of Neurensic.” Doc. 19.
Widerhorn’s counsel informed Trading Technologies of the Court’s order the same day.
On September 11, Neurensic and Trading Technologies signed a final term sheet for the
sale of Neurensic’s assets to Trading Technologies for $300,000. The terms also included trueup and earnout provisions, which provided Neurensic’s shareholders the potential for additional
value. The terms were non-binding and included that Biondo would perform client services for
Neurensic from September 11 until the closing of the deal. Widerhorn stated that Trading
Technologies included this arrangement so that Neurensic “could use [Biondo] until the deal
closes so the other customer relationships don’t fall apart.” Doc. 186 at 147. Additionally, the
term sheet provided that Trading Technologies would offer five Neurensic employees consulting
agreements. Chu, as a Director of Neurensic, was aware of these terms. Id. at 146. Neurensic
and Trading Technologies also entered into an Exclusivity Agreement in connection with the

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proposed sale that indicated the parties would continue discussing the deal on an exclusive basis
but that Neurensic could accept an unsolicited offer. The next day, Widerhorn facilitated
Biondo’s ability to install Neurensic software and use his Neurensic email address while working
at Trading Technologies.
On September 14, a majority of Neurensic’s Board (Widerhorn and Giedraitis) voted to
approve the sale of Neurensic to Trading Technologies, with Chu voting against it. At the
meeting, Chu asked whether Widerhorn had reminded the five employees referred to in the term
sheet “that there is IP and confidential information from Neurensic and they owe an obligation as
previous employees? What has been done from that perspective in terms of protecting our IP?”
Id. at 147. Widerhorn responded, “Yes of course. All of the employees signed an Employment
Agreement which contains a very long section over several pages called ‘Restrictive Covenants.’
In this agreement, one of the restrictive covenants is non-disclosure, and another one is noncompetition. . . . From the date that they sign there are multiple levels of legal protection and it is
made clear that employees cannot talk about any confidential company information outside of
Neurensic. Once they resign we immediately terminate access to email and all Neurensic data.”
Id. Widerhorn added that Neurensic “store[s] confidential data from customers on our own
servers” so many customers “require [Neurensic] to put strong security measures in place.” Id.
147–48.
Chu then asked if Neurensic planned to take legal action against the employee already
working at Trading Technologies “due to violation of [his] non-compete agreements?” Doc. 184
¶ 36. Widerhorn responded, “At the moment it is difficult to say whether [Trading
Technologies] could be considered a competitor . . . we consulted with our attorneys and believe
it would be difficult to pursue legal action since they are in a bit of a grey area as far as the non-

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compete provisions in the agreement.” Id. On September 15, as required by Neurensic’s bylaws
and the Court’s order, Widerhorn provided notice of the sale to Neurensic’s shareholders and
scheduled a final shareholder vote to approve the sale on October 5, 2017.
On September 20, as described in the Trading Technologies term sheet, Biondo used
Neurensic data, software, and an email address to perform work on behalf of Neurensic clients
while working at Trading Technologies. Trinkaus began working at Trading Technologies on
September 19 and Eckstrand began working for Trading Technologies on September 29. On
September 22, a Trading Technologies employee informed Kraines that “Paul [Giedraitis] had
just reiterated their sensitivities to current Neurensic employees involved in product related
conversations before closing.” Doc. 197 at 27. Kraines replied, “Lets [sic] discuss later but I
think its [sic] completely normal to begin some transition. Also pre closing we dont hv [sic]
their code or anything like that.” Id. Two days later, Shields indicated via email that Trading
Technologies’ “tech/product diligence [of Neurensic] is done.” Id. at 29.
On September 27, Giedraitis asked Ryan to “remind Morgan [Trinkaus] about the
obligations of his employment agreement with Neurensic and that he is not to communicate with
Neurensic customers about company business, nor discuss confidential company IP with anyone
at Trading Technologies until a sale is final.” Doc. 184 ¶ 87. The next day, Ryan responded, “I
spoke with Morgan [Trinkaus] this morning to clarify his role as a [Trading Technologies]
employee and remind him of his continuing obligations under his terminated employment
agreement with Neurensic.” Id. Ryan added, “I can also assure you that [Trading Technologies]
is not interested in any transfer of Neurensic IP to [Trading Technologies] prior to the close and
no such transfer has occurred.” Doc. 198-4 at 32.

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On October 2, 2017, Trading Technologies employees discussed going to Neurensic’s
storage facility to assess Neurensic’s physical assets and determine “how/when to move it.”
Doc. 192 at 107. In the same discussion, Ryan said, “Neurensic told us today that we can take
the servers to [Trading Technologies] tomorrow to set them up in an environment that is separate
from [Trading Technologies].” Id. at 106. That same day, Giedraitis confirmed with Trading
Technologies that Story would “coordinate a[n] . . . IP diligence demo” of Neurensic’s main
product at Trading Technologies’ office the following morning. Doc. 198-4 at 77. On the night
of October 3, outside counsel for Trading Technologies emailed various Trading Technologies
employees, Widerhorn, Giedraitis, and Neurensic’s counsel informing them of the plan for the
“Pre-Closing Meeting” the next day. Id. at 80. The attorney said they would “need to confirm”
that “[a]ll physical files, documents, hard drives, etc. should be in our possession at the time of
the Pre-Closing.” Id. A meeting agenda for the “Pre-Closing” meeting on October 4 listed as
topics: “[a]ll servers previously delivered to [Trading Technologies]” and “[a]ll other physical
assets (hard drives, disks, paper agreements, etc.) previously delivered to [Trading Technologies]
or delivered to Foley at the meeting.” Id. at 82.
Widerhorn sent the login credentials for several of Neurensic’s service providers to
Trading Technologies on October 4. The same day, Widerhorn sent Trading Technologies, for
the first time, the initial employment agreements for Trinkaus, Eckstrand, and Story and
indicated that he was “still searching” for Biondo’s agreement. Doc. 198 ¶ 35; Doc. 198-3 at 14.
At 10:23 p.m. that night, Kraines assured his team that the “non contract side [of the deal] has
been carried out, e.g., major asset transfers are locked down.” Doc. 197 at 38. When asked to
explain what he meant by this, Kraines testified that in an asset sale, typically “there are a myriad
of assets of all kinds that need to be identified, secured, and get ready for transfer of title. . . . So

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there’s a tremendous workload in advance of any asset acquisition to go about and -- and identify
each and every asset, to -- to tag the assets, to compare. This is something that [outside counsel]
would do, compare the list of assets that we understood there to be against the actual physical
assets in the case of a physical asset. And in some cases, as advised and directed by counsel to
segregate those assets, to make them ready for the date of closing.” Doc. 186 at 85. Kraines said
“it is very common for work to be done in advance of the closing date, to identify those assets,
sometimes segregate those assets, to effect an orderly and legally intelligent transfer of title to
those assets on the date of closing. You can’t just blink and move desk chairs. It doesn’t work.”
Id. at 84.
Later on the night of October 4, Overwell submitted a term sheet to purchase Neurensic’s
assets for $400,000. The terms were non-binding; “subject to due diligence, legal review, and
further documentation;” and “required Neurensic to agree to an ‘Exclusive Period’” during
which Neurensic could not engage in negotiations with any other entity, including Trading
Technologies. Doc. 184 ¶ 60. Prior to this, Ng testified that Overwell had not “suggested or
intimated to Neurensic that [it] might be willing to buy Neurensic’s assets.” Id. ¶ 59. Ng also
testified that after the Court’s TRO order, Overwell conducted due diligence regarding Neurensic
to determine if it would submit a bid for Neurensic’s assets. Ng said that this due diligence
consisted of conversations with certain Neurensic investors, former Neurensic employees, and
potential investors regarding the value of Neurensic’s assets. Chu and Ng testified that based on
this due diligence, Overwell was prepared to bid up to $1.5 million for Neurensic’s assets.
At approximately 4:20 a.m. on October 5, pursuant to their Exclusivity Agreement with
Trading Technologies, Neurensic forwarded Overwell’s term sheet to Trading Technologies. In
response, Trading Technologies informed Neurensic that it would be willing to increase the cash

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component of its offer to $400,000. Widerhorn and Giedraitis met at 8:00 a.m. that morning to
discuss Overwell’s bid. According to Widerhorn, Chu did not attend the meeting even though
Neurensic informed him of it as a member of the Board. Doc. 191 at 20. However, Ng testified
that Neurensic did not invite Overwell to the meeting. Doc. 185 at 240. At the meeting,
Widerhorn and Giedraitis decided that they must accept the “completed deal which is imminent,
versus a deal which is not even fleshed out yet.” Doc. 191 at 20. As planned, Neurensic’s
shareholders met at noon to vote on the sale of Neurensic’s assets to Trading Technologies. All
three Overwell Board members, along with the other Neurensic shareholders, were present at the
meeting. At the beginning of the meeting, Widerhorn said, “Be advised that the board has
determined that the [Overwell] offer is an inferior offer to the Trading Technologies offer and is
therefore not going to pursue that offer with [Overwell]. The transaction with Trading
Technologies will close in the very near future and is in the best interests of the Company’s
shareholders and creditors. Note also that Trading Technologies has increased the purchase price
payable at closing to $400,000.” Id. at 15.
Overwell expressed concerns that Neurensic “ha[d] not reached out to the competitive
bid,” id. at 20, and in response, Widerhorn said Overwell’s bid was not competitive because it
was “a non-binding term sheet which does not have any of the details fleshed out” compared to
Trading Technologies, which had “completed extensive diligence,” id. at 19. After more
discussion regarding the two bids, Neurensic’s shareholders voted to approve the sale of
Neurensic to Trading Technologies, with 1,848,677 shares voting in favor, 19,585 shares voting
against, and 17,195 shares abstaining from voting. Although Overwell expressed concerns about
Neurensic’s failure to solicit another bid from it, at no point during the October 5 meeting did
Overwell offer to increase its bid and no one “did anything to prevent [it] from increasing its

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offer during that meeting.” Doc. 184 ¶ 68. When asked why Overwell did not increase its bid
during meeting, Ng testified that “the fact that [Overwell] didn’t raise that or . . . was not able to
raise in our opinion at the shareholder meeting, again, has no bearing on why David Widerhorn
did not run the proper bidding process and . . . why there was asset transfers, IP transfers, server
transfers a week, two weeks before this -- before this meeting. . . . [A]gain, that just leads us to
believe this was, in fact, a fait accompli. This was already a done deal.” Doc. 185 at 239.
Neurensic executed an Asset Purchase Agreement with Trading Technologies on October
6, through which it sold Neurensic’s assets to Trading Technologies for $400,000 in cash with
the possibility for true-up and earn-out payments. Story began working for Trading
Technologies on October 9. Although Trading Technologies wanted him to start earlier, after
consulting with a lawyer, Story chose to start after the sale closed because he had concerns about
disclosing Neurensic’s confidential information.
In March 2018, Overwell amended its complaint against Widerhorn and Giedraitis,
alleging they breached many fiduciary duties to Neurensic’s shareholders in connection with the
sale of Neurensic’s assets. In June 2018, Overwell added Trading Technologies to the lawsuit,
alleging it aided and abetted Widerhorn and Giedraitis in certain breaches by facilitating the
transfer of certain Neurensic employees and assets to Trading Technologies prior to the sale.
LEGAL STANDARD
Summary judgment obviates the need for a trial where “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). To determine whether a genuine dispute of material fact exists, the Court must pierce the
pleadings and assess the proof as presented in depositions, documents, answers to
interrogatories, admissions, stipulations, and affidavits or declarations that are part of the record.

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Fed. R. Civ. P. 56(c)(1); A.V. Consultants, Inc. v. Barnes, 978 F.2d 996, 999 (7th Cir. 1992).
The party seeking summary judgment bears the initial burden of demonstrating that no genuine
dispute of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Bunn v. Fed.
Deposit Ins. Corp. for Valley Bank Ill., 908 F.3d 290, 295 (7th Cir. 2018). In response, the nonmoving party cannot rest on mere pleadings alone but must use the evidentiary tools listed above
to identify specific material facts that demonstrate a genuine dispute for trial. Fed. R. Civ. P.
56(c)(1); Celotex, 477 U.S. at 324; Sterk v. Redbox Automated Retail, LLC, 770 F.3d 618, 627
(7th Cir. 2014). The Court must construe all facts in the light most favorable to the non-moving
party and draw all reasonable inferences in that party’s favor. Wehrle v. Cincinnati Ins. Co., 719
F.3d 840, 842 (7th Cir. 2013). However, a bare contention by the non-moving party that an issue
of fact exists does not create a factual dispute, Bellaver v. Quanex Corp., 200 F.3d 485, 492 (7th
Cir. 2000), and the non-moving party is “only entitled to the benefit of inferences supported by
admissible evidence, not those ‘supported by only speculation or conjecture,’” Grant v. Trs. of
Ind. Univ., 870 F.3d 562, 568 (7th Cir. 2017) (citation omitted). The same standard applies
when considering cross-motions for summary judgment. Int’l Bhd. of Elec. Workers, Local 176
v. Balmoral Racing Club, Inc., 293 F.3d 402, 404 (7th Cir. 2002). Therefore, when considering
Trading Technologies’ motion for summary judgment, the Court views all evidence in the light
most favorable to Overwell, and when considering Overwell’s motion for summary judgment,
the Court views all evidence in the light most favorable to Trading Technologies. Id.
ANALYSIS
Overwell brings one claim against Trading Technologies: aiding and abetting a breach of
a fiduciary duty. To prove the claim, Overwell must show: (1) “the existence of a fiduciary
relationship” between Neurensic’s shareholders and Widerhorn and Giedraitis (2) “a breach of

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the fiduciary’s [(Widerhorn and Giedraitis’)] duty,” (3) “knowing participation in that breach” by
Trading Technologies, and (4) “damages proximately caused by the breach.” Malpiede v.
Townson, 780 A.2d 1075, 1096 (Del. 2001). 4 The parties agree that the undisputed facts
demonstrate that a fiduciary relationship existed between Neurensic’s shareholders and
Widerhorn and Giedraitis. Therefore, the Court need not address this element but will address
the remaining three elements in turn.
I.

Breach of a Fiduciary Duty
Under Delaware law, establishing a “breach of fiduciary duty requires proof of two

elements: (1) that a fiduciary duty existed and (2) that the defendant breached that duty.” Henkel
of Am., Inc. v. Bell, 825 F. App’x 243, 254 (6th Cir. 2020). Overwell alleges that Widerhorn and
Giedraitis breached their fiduciary duties by allowing Neurensic employees to work for and
transfer confidential information to Trading Technologies “in violation of their employment
agreements” and by allowing Trading Technologies to take possession of certain Neurensic
assets and confidential information prior to the sale. Doc. 99 at 26. Trading Technologies
argues that the employment agreements upon which these allegations rely were not enforceable
when the transfers took place in September and October 2017 and therefore, Widerhorn and
Giedraitis’ failure to enforce the restrictive covenants within the agreements did not constitute a
breach. Overwell asserts that the employment agreements were enforceable at the time of the
transfers but argues that regardless, Widerhorn and Giedraitis’ actions constituted a breach of
their fiduciary duty to protect and not misuse confidential information.

As discussed in the Court’s prior opinions, Doc. 93 at 6–7; Doc. 126 at 6 n.4, it applies Delaware law to
the aiding and abetting claim because it “cannot exist without the underlying allegation of breach of
fiduciary duty,” Schartz v. Parish, No. 16 C 10736, 2016 WL 7231613, at *3 (N.D. Ill. Dec. 14, 2016),
and Delaware law governs the breach of fiduciary duty claims under the “internal affairs doctrine,” CDX
Liquidating Tr. v. Venrock Assocs., 640 F.3d 209, 212 (7th Cir. 2011).
4

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Regardless of a contractual agreement to do so, “[a]n agent has a duty not to use or
communicate confidential information of the principal for the agent’s own purposes or those of a
third party.” Triton Constr. Co. v. E. Shore Elec. Servs., Inc., No. 3290, 2009 WL 1387115, at
*15 (Del. Ch. May 18, 2009). “This common law duty obligates an employee to protect any
confidential information entrusted to him by his employer.” SEC v. Cherif, 933 F.2d 403, 411
(7th Cir. 1991). Corporate fiduciaries are bound by “[t]hese hallmark principles of agency law.”
Beard Rsch., Inc. v. Kates, 8 A.3d 573, 601 (Del. Ch. 2010). Therefore, “[a] breach of fiduciary
duty occurs when a fiduciary commits an unfair, fraudulent, or wrongful act, including
misappropriation of trade secrets, misuse of confidential information, solicitation of employer’s
customers before cessation of employment, conspiracy to bring about mass resignation of an
employer’s key employees, or usurpation of the employer’s business opportunity.” Id. at 602
(citing Sci. Accessories Corp. v. Summagraphics Corp., 425 A.2d 957, 965 (Del. 1980)).
Trading Technologies relies heavily on its argument that the employment agreements of
Biondo, Trinkaus, Eckstrand, and Story were not enforceable when Trading Technologies hired
them and therefore, no breach occurred. However, regardless of whether the agreements were
enforceable, Widerhorn and Giedraitis owed a fiduciary duty to Neurensic’s shareholders to
protect Neurensic’s confidential information. Beard Rsch., 8 A.3d at 601. Trading Technologies
also repeatedly argues that Overwell’s complaint limits its claim against Trading Technologies to
Widerhorn and Giedraitis’ failure to enforce the employee agreements of Biondo, Trinkaus,
Eckstrand, and Story. However, this is not the case. Overwell’s complaint alleges that Trading
Technologies hired key employees, “took possession of certain of the Company’s assets,
including its proprietary and confidential software,” Doc. 99 ¶ 95, and “allowed a Company
employee to work on and solicit the Company’s existing clients while working for and on behalf

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of Trading Technologies,” id., all while “knowing that its conduct furthered Widerhorn and
Giedraitis’ breach of their fiduciary duties to the Company,” id. ¶¶ 94, 95. As explained,
Trading Technologies’ alleged conduct can facilitate a breach even absent any employee
agreement.
Overwell argues that no genuine dispute of material fact exists as to whether Widerhorn
and Giedraitis breached their fiduciary duty to protect Neurensic’s confidential information.
Specifically, Overwell points to the fact that Widerhorn and Giedraitis explicitly approved of and
facilitated Biondo’s work for Neurensic clients using Neurensic data, software, and email while
Biondo was working at Trading Technologies, see, e.g., Doc. 186 at 148 (Widerhorn and
Giedraitis voted to approve the Trading Technologies agreement that allowed Biondo to service
Neurensic’s clients with working at Trading Technologies); Doc. 184 ¶¶ 90–92, 94–95
(September 2017 emails regrading Biondo’s work with Neurensic clients using Neurensic
software and email and Widerhorn’s facilitation of it). See Triton Constr., 2009 WL 1387115, at
*11–12, 15 (finding that employee breached fiduciary duties by working for competitor while
also working for employer and by using confidential information “for the disloyal purpose of
assisting a direct competitor”).
In response, Trading Technologies submits that Neurensic granted Biondo access to its
data, software, and email and allowed him to do this work for Neurensic’s benefit and therefore,
Widerhorn and Giedraitis allowing him to do so did not constitute a fiduciary breach. See, e.g.,
Doc. 186 at 147 (Widerhorn asserting that Trading Technologies included Biondo’s arrangement
in its agreement with Neurensic so that Neurensic “could use [Biondo] until the deal closes so
the other customer relationships don’t fall apart”). Trading Technologies also asserts that until it
acquired Neurensic’s assets on October 6, 2017, it was not a competitor of Neurensic and

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therefore, Biondo did not misuse Neurensic’s confidential information. While the record
suggests that Trading Technologies was not a competitor of Neurensic in 2017, see, e.g., Doc.
184 ¶ 36 (Widerhorn asserting on September 14, 2017 that “it is difficult to say whether [Trading
Technologies] could be considered a competitor”), it also suggests the opposite, see, e.g., id. ¶ 83
(August 28, 2017 email in which Shields asserts that Trading Technologies “will add
surveillance” regardless of whether they acquire Neurensic’s assets and will “likely do it with a
handful of ex-neurensic employees”). Therefore, a genuine issue of material fact exists as to
whether Biondo’s access to and use of Neurensic data, software, and email to work with
Neurensic employees while employed by Trading Technologies constituted a misuse of
Neurensic’s confidential information of which Widerhorn and Giedraitis approved. See, e.g., Act
II Jewelry, LLC v. Wooten, 318 F. Supp. 3d 1073, 1083 (N.D. Ill. 2018) (finding genuine issue of
material fact existed as to whether agent breached her duties because the parties told “striking
[sic] different stories about whether [agent’s] work during [her employer’s] winding down
process was for the benefit of [her employer] or [competitor]”).
Overwell also submits that Widerhorn and Giedraitis breached their duties by facilitating
the transfer of Neurensic’s servers containing confidential information to Trading Technologies,
coordinating a demonstration of Neurensic’s main product at Trading Technologies’ office, and
providing Trading Technologies with the login credentials for several of Neurensic’s service
providers prior to the sale. See Dweck v. Nasser, C.A. No. 1353, 2012 WL 161590, at *17 (Del.
Ch. Jan. 18, 2012) (finding that officers breached their fiduciary duties by “directing [company]
employees to transfer [the company’s] expected orders and customer accounts to [competitor],
taking [company’s] property and files, and arranging a mass employee departure”); Beard Rsch.,
8 A.3d at 603 (finding that officer breached fiduciary duty by disclosing confidential information

17

to a competitor in a presentation and taking “a large amount of other confidential information”
with him when he went to work for the competitor including “slide presentations, a customer list,
proposal templates, analytical and pricing information, a bottle of a key chemical compound, and
computer disks”). Trading Technologies argues that the record does not sufficiently demonstrate
that Trading Technologies possessed the servers or that Trading Technologies used any of
Neurensic’s confidential information prior to the closing. However, the record allows for a
reasonable inference that these things occurred, see, e.g., Doc. 198-4 at 77 (October 2, 2017
email confirming that Story would “coordinate a[n] . . . IP diligence demo” of Neurensic’s main
product at Trading Technologies’ office the following morning); id. at 80 (meeting agenda for
October 4, 2017 “Pre-Closing Meeting” including the following topics: “[a]ll servers previously
delivered to [Trading Technologies]” and “[a]ll other physical assets (hard drivers, disks, paper
agreements, etc.) previously delivered to [Trading Technologies] or delivered to Foley at the
meeting”); Doc. 184 ¶ 110 (October 4, 2017 email from Widerhorn to Trading Technologies
containing login credentials for certain Neurensic service providers), which is sufficient for
Overwell to survive a motion for summary judgment, see Wehrle, 719 F.3d at 842 (stating that
the Court must “construe all facts in the light most favorable to the nonmovant . . . and draw all
reasonable inferences in that party’s favor”). Therefore, a question of fact also exists as to
whether Widerhorn and Giedraitis breached their duties by facilitating the transfer of certain
Neurensic assets and confidential information to Trading Technologies prior to the sale.
Last, Overwell asserts that Widerhorn and Giedraitis allowed Trading Technologies to
hire Trinkaus and Eckstrand, who brought confidential information with them, prior to the sale.
Trading Technologies makes similar arguments—that the record does not demonstrate that these
employees used Neurensic’s confidential information prior to the closing, see, e.g., Doc. 198-4 at

18

32 (September 27, 2017 email from Ryan to Giedraitis in which Ryan states, “I spoke with
Morgan [Trinkaus] this morning to clarify his role as a [Trading Technologies] employee . . . I
can also assure you that [Trading Technologies] is not interested in any transfer of Neurensic IP
to [Trading Technologies] prior to the close and no such transfer has occurred.”), and therefore,
no breach occurred. See, e.g., Kuryakyn Holdings, LLC v. Circo, LLC, 242 F. Supp. 3d 789, 801
(W.D. Wis. 2017) (finding fiduciary did not breach duty simply by taking employer’s
confidential information because employer “adduce[d] no evidence that [fiduciary], his wife, or
his son used or benefited from that specific information”).
However, to constitute a breach, “there is no requirement that an agent’s use of the
principal’s confidential information reveal that information.” Triton Constr., 2009 WL 1387115,
at *15. In other words, one can utilize confidential information in their work without explicitly
sharing it with others. See id. (finding that employee breached fiduciary duties by using
confidential information in preparing overlapping bids for two companies and stating that “even
if [employee] never explicitly revealed [company’s] confidential information . . . it is more likely
than not that he used that information for the disloyal purpose of assisting a direct competitor”).
Therefore, a reasonable juror could infer from the record that Trinkaus and Eckstrand used
Neurensic’s confidential information for Trading Technologies’ purposes prior to the closing
simply because they were working at Trading Technologies, a competitor. See, e.g., Doc. 184
¶ 83 (internal Trading Technologies emails on August 28 and 29, 2017 from Shields stating that
Trading Technologies would “add surveillance” regardless of the outcome of the Neurensic deal,
that it “will likely do it with a handful of ex-neurensic employees,” and that they needed
Eckstrand to “recreate the [Neurensic] business” at Trading Technologies); Doc. 197 at 27 (in
response to Giedraitis’ concerns regarding former Neurensic employees being “involved in

19

product related conversations before closing,” Kraines said “its [sic] completely normal to begin
some transition . . . pre closing we don’t hv [sic] their code or anything like that”).
The parties’ arguments demonstrate that a genuine issue of material fact exists as to
whether Widerhorn and Giedraitis breached their fiduciary duties to Neurensic’s shareholders by
allowing Trading Technologies to hire Neurensic’s employees and take possession of certain
Neurensic assets and confidential information prior to the sale of Neurensic’s assets to Trading
Technologies. See Poller v. BioScrip, Inc., 974 F. Supp. 2d 204, 231 (S.D.N.Y. 2013) (finding a
“dispute of material fact as to the extent to which information [employee] sent to herself from
her [employer’s] account . . . was intended for use in direct competition with [employer’s
business], thus constituting a breach of [employee’s] duty of loyalty”); cf. SMC Networks Inc. v.
Hitron Techs. Inc., No. SACV 12-1293, 2013 WL 12114079, at *9 (C.D. Cal. Nov. 13, 2013)
(finding genuine issue of material fact existed as to whether former officer breached fiduciary
duty by soliciting key employees to join competitor where record suggested both that the officer
recruited employee and that employee left for other reasons).
Finally, Trading Technologies argues that the business judgment rule protects Widerhorn
and Giedraitis’ decisions because Overwell has failed to show that the presumption does not
apply. “The business judgment rule is a presumption that in making a business decision . . . the
directors of a corporation acted on an informed basis, in good faith and in the honest belief that
the action taken was in the best interests of the company.” Lowinger v. Oberhelman, 924 F.3d
360, 366 (7th Cir. 2019) (alteration in original) (citation omitted). Overwell may rebut the
presumption by “raising a reason to doubt” whether Widerhorn and Giedraitis acted in good faith
when allowing the transfers of certain Neurensic employees, confidential information, and assets
to Trading Technologies prior to the sale. In re Walt Disney Co. Derivative Litig., 825 A.2d 275,

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286 (Del. Ch. 2003). A director acts in bad faith where “the fiduciary intentionally acts with a
purpose other than that of advancing the best interests of the corporation.” In re Comverge, Inc.,
C.A. No. 7368, 2014 WL 6686570, at *13 (Del. Ch. Nov. 25, 2014) (citation omitted). Here, a
juror could conclude that Widerhorn and Giedraitis acted with a purpose other than advancing
the best interests of Neurensic by allowing the pre-sale transfers. See Beard Rsch., 8 A.3d at
601–02 (explaining that misusing confidential information is one way a fiduciary can “plac[e]
himself in a position antagonistic to his principal”). Therefore, whether the business judgment
rule protects Widerhorn and Giedraitis’ decisions is another question for the trier of fact. See
Expansion Cap. Grp., LLC v. Patterson, 514 F. Supp. 3d 1095, 1115 (D.S.D. 2021) (denying
motion for summary judgment and rejecting business judgment rule defense where there was a
genuine dispute of material fact regarding claim that former officer used confidential
information); cf. Best W. Int’l, Inc. v. Furber, No. CV-06-1537, 2008 WL 2045701, at *6 (D.
Ariz. May 12, 2008) (denying motion for summary judgment because plaintiff “presented
evidence that [director] is personally interested . . . [so] the business judgment rule does not
apply”).
II.

Knowing Participation
Knowing participation by a third party in a fiduciary’s breach “requires that the third

party act with the knowledge that the conduct advocated or assisted constitutes such a breach.”
Malpiede, 780 A.2d at 1097. To prove knowledge, Overwell must demonstrate that Trading
Technologies “had ‘actual or constructive knowledge that [its] conduct was legally improper.’”
RBC Cap. Mkts., LLC v. Jervis, 129 A.3d 816, 862 (Del. 2015) (citation omitted). To prove
sufficient participation, Overwell can show that Trading Technologies “participated in the
[directors’] decisions, conspired with [the directors], or otherwise caused the [directors] to make

21

the decisions at issue.” Malpiede, 780 A.2d at 1098. All of Trading Technologies’ arguments
again revolve around the employee agreements and whether Trading Technologies knew its
conduct violated the agreements. However, as previously explained, Widerhorn and Giedraitis
owed Neurensic’s shareholders a fiduciary duty to protect Neurensic’s confidential information
irrespective of the employment agreements.
Overwell argues that the undisputed facts demonstrate that Trading Technologies
knowingly participated in Widerhorn and Giedraitis’ breaches. Specifically, Overwell submits
that Trading Technologies knew that the Court ordered Widerhorn and Giedraitis to “take no
action with respect to the sale of [Neurensic’s] assets” until after the final shareholder vote, Doc.
19, and Trading Technologies knew that taking possession of Neurensic’s confidential
information prior to the final vote would be unlawful, see, e.g., Doc. 184 ¶ 87 (Ryan assuring
Giedraitis that Trading Technologies “is not interested in any transfer of Neurensic IP to
[Trading Technologies] prior to the close”). And yet, prior to the final shareholder vote, Trading
Technologies caused Widerhorn and Giedraitis to transfer certain Neurensic assets containing
confidential information to it and to share certain confidential information with it at a meeting.
See, e.g., Beard Rsch., 8 A.3d at 604 (finding third party knowingly participated in breach by
facilitating presentation at which officer revealed confidential information because third party
“knew or should have known that [the officer] was using and disclosing to [third party]
confidential information of [employer] and thereby breaching his fiduciary duties to
[employer]”). However, a juror could also reasonably conclude that Trading Technologies did
not know its possession of certain Neurensic assets and information prior to the sale constituted a
breach. See, e.g., Doc. 186 at 84 (Kraines asserting that in asset sales, “it is very common for
work to be done in advance of the closing date” regarding the moving and segregating of assets).

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Overwell also contends that Trading Technologies knew that allowing Neurensic
employees to use Neurensic’s confidential information while working at Trading Technologies
constituted a breach of Widerhorn and Giedraitis’ fiduciary duties. See, e.g., Doc. 184 ¶ 87
(Ryan reminded Trinkaus “of his continuing obligations under his terminated employment
agreement with Neurensic” and assured Giedraitis that Trading Technologies “is not interested in
any transfer of Neurensic IP to [Trading Technologies] prior to the close”); Doc. 195 at 11 (Story
informed Trading Technologies that there were “Neurensic topics [he is] not at liberty to
discuss” and that he “wouldn’t discuss them regardless of negotiation state”). And yet, Trading
Technologies caused Widerhorn and Giedraitis to facilitate Biondo’s access to Neurensic’s
confidential information while working at Trading Technologies and caused Widerhorn and
Giedraitis to acquiesce to Trading Technologies’ hiring of Trinkaus and Eckstrand prior to the
sale. See, e.g., Triton Constr., 2009 WL 1387115, at *16 (finding third party knowingly
participated in breach by hiring employee because it knew the employee worked for a competitor
and deliberately concealed the hiring from the competitor, indicating scienter).
However, the record also contains evidence from which a juror could reasonably infer
that Trading Technologies did not allow Neurensic employees to use Neurensic’s confidential
information prior to the sale and did not know that such conduct constituted a breach. See, e.g.,
Doc. 197 at 27 (in response to Giedraitis’ concerns regarding former Neurensic employees being
“involved in product related conversations before closing,” Kraines said “its [sic] completely
normal to begin some transition . . . pre closing we don’t hv [sic] their code or anything like
that”); Doc. 184 ¶ 87 (Ryan assured Giedraitis that Trading Technologies “is not interested in
any transfer of Neurensic IP to [Trading Technologies] prior to the close and no such transfer has

23

occurred”). Therefore, a genuine issue of material fact exists regarding whether Trading
Technologies knowingly participated in Widerhorn and Giedraitis’ breaches.
III.

Causation and Damages
“[U]nlike a claim for breach of fiduciary duty, a claim for aiding and abetting a breach of

fiduciary duty under Delaware law . . . require[s] damages and proximate causation as elements
of the claim.” Henkel, 825 F. App’x at 260. A proximate cause is one that “produces the injury
and without which the result would not have occurred.” RBC Cap. Mkts., 129 A.3d at 864. To
establish proximate cause, Overwell “must show that the result would not have occurred ‘but for’
[Trading Technologies’] action[s],” id. (citation omitted), or in other words, that the “damages to
[Overwell] resulted from the concerted action of [Widerhorn and Giedraitis] and [Trading
Technologies],” Gotham Partners, L.P. v. Hallwood Realty Partners, L.P., 817 A.2d 160, 172
(Del. 2002). Overwell alleges that Widerhorn and Giedraitis’ breaches “denied [Neurensic and
its shareholders of] a more valuable and financially superior opportunity than that which was
offered by Trading Technologies.” Doc. 99 ¶ 98. Trading Technologies argues that no
reasonable juror could conclude that the transfer of Neurensic’s employees and assets to Trading
Technologies prior to the sale deprived Neurensic of a higher bid because the record does not
suggest that a potential acquirer refrained from bidding more because of the transfers. However,
Overwell submits that it would have bid up to $1.5 million for Neurensic’s assets but did not
because the transfers made it so that no “other bidder had any legitimate chance of acquiring
Neurensic’s assets.” Doc. 213 at 16l.
During the October 5, 2017 shareholder meeting, although Overwell raised concerns
regarding Neurensic’s failure to solicit another bid from Overwell, it never raised concerns
regarding the transfers or suggested that it would have bid more but for the transfers. See Doc.

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191 at 15–25. However, when asked why Overwell did not submit a higher bid at the meeting,
Ng testified that it seemed as though the sale to Trading Technologies was “a fait accompli” and
“already a done deal” in part because “there was asset transfers, IP transfers, server transfers”
completed before the meeting. Doc. 185 at 239. Therefore, a reasonable juror could conclude
either that Widerhorn and Giedraitis’ breaches proximately caused Overwell to refrain from
increasing its bid or that they did not. See, e.g., RBC Cap. Mkts., 129 A.3d at 865–66 (upholding
aiding and abetting judgment against financial advisor where evidence supported that but for the
advisor’s actions in misleading the Board, the Board would have chosen a higher bid and the
shareholders would have received more value for the company); Morgan v. Cash, C.A. No.
5053, 2010 WL 2803746, at *5 (Del. Ch. July 16, 2010) (noting, in dismissing aiding and
abetting a breach of a fiduciary duty claim, that even if the breach occurred, “there is no reason
. . . to believe that it mattered in a material way”). As a result, a genuine issue of material fact
exists as to whether Widerhorn and Giedraitis’ breaches proximately caused damages to
Neurensic’s shareholders. See, e.g., In re Transkaryotic Therapies, Inc., 954 A.2d 346, 373 (Del.
Ch. 2008) (denying motion for summary judgment on aiding and abetting claim where plaintiff
created a genuine issue of material fact regarding whether breach proximately caused damages
by pointing to deposition testimony that called into question whether the tainted Board vote was
immaterial to the merger’s approval).
Last, Trading Technologies argues that no damages exist because, due to its preferred
stock options, Overwell would have received the first $8 million of any proceeds to Neurensic’s
shareholders from the sale of its assets. So, to avoid a windfall to Overwell, the Court should
offset any damage award by the amount Overwell was to receive, which would net to zero.
However, as the Court previously explained, “Overwell brings a derivative, not an individual

25

claim. Because this is Neurensic’s cause of action, damages would be awarded to the company.
As such, the proper measure of damages is the harm to the company, not the individual
shareholders.” Doc. 126 at 13. Further, “it does not matter if Overwell would have bid more
than the company’s liabilities in order to recoup its own investment. It only matters that
Neurensic could have extracted a more favorable sale price than it did.” Id. at 14. Therefore, it
does not matter that, functionally, Overwell may not receive any damage award here. A genuine
issue of material fact exists as to whether Neurensic could have received a higher sale price and
therefore, as to whether damages exist.
CONCLUSION
For the foregoing reasons, the Court denies Trading Technologies’ and Overwell’s
motions for summary judgment [181, 201].
Dated: November 1, 2021

______________________
SARA L. ELLIS
United States District Judge

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