Poblocki Paving Corporation v. Johnson & Sons Paving LLC et al

Filing 27

ORDER signed by Judge J P Stadtmueller on 4/27/16: granting 19 Defendants' Motion to Disimss the Amended Complaint; DISMISSING this action with prejudice; and, denying as moot Defendants' Motion to Vacate Plaintiff's Voluntary Dismissal of Count II of the Amended Complaint. See Order. (cc: all counsel)(nm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
POBLOCKI PAVING CORPORATION,
Plaintiff,
v.

Case No. 15-CV-1515-JPS

JOHNSON & SONS PAVING, LLC and
JASON B. JOHNSON,
Defendant.

1.

ORDER

INTRODUCTION
On March 8, 2016, the defendants Johnson & Sons Paving, LLC and

Jason B. Johnson (collectively, “Johnson”) jointly moved to dismiss the
entirety of the plaintiff Poblocki Paving Corporation’s (“Poblocki”) amended
complaint. (Motion, Docket #19; Amended Complaint, Docket #13). Johnson
filed a brief in support that same day. (Docket #20). Pursuant to Civil Local
Rule 7(b) and Federal Rule of Civil Procedure 6(d), Poblocki’s response to the
motion to dismiss was due on or before April 1, 2016. On April 21, 2016,
Poblocki filed a notice of dismissal for Count Two of the amended complaint,
as well as a response. (Notice of Dismissal, Docket #23; Brief in Opposition,
Docket #24). Unfortunately, Poblocki did so without requesting leave to file
its response out of time or otherwise explaining the lengthy delay.
2.

STANDARD OF REVIEW
Johnson has moved to dismiss Poblocki’s amended complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6). This rule provides for
dismissal of complaints which fail to state a viable claim for relief. Fed. R.
Civ. P. 12(b)(6). To state a viable claim, a complaint must provide “a short
and plain statement of the claim showing that the pleader is entitled to
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relief.” Fed. R. Civ. P. 8(a)(2). In other words, the complaint must give “fair
notice of what the…claim is and the grounds upon which it rests.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). The
allegations must “plausibly suggest that the plaintiff has a right to relief,
raising that possibility above a speculative level[.]” Kubiak v. City of Chicago,
810 F.3d 476, 480 (7th Cir. 2016) (citation omitted).
In reviewing Poblocki’s complaint, the Court is required to “accept as
true all of the well-pleaded facts in the complaint and draw all reasonable
inferences in favor of the plaintiff.” Id. at 480-81. However, a complaint that
offers “labels and conclusions” or “a formulaic recitation of the elements of
a cause of action will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Twombly, 550 U.S. at 555). The Court must identify allegations “that,
because they are no more than conclusions, are not entitled to the assumption
of truth.” Id. at 679.
3.

THE AMENDED COMPLAINT
Accepting the truth of Poblocki’s well-pleaded allegations and

drawing all reasonable inferences in its favor, the relevant facts are as
follows. Poblocki advances a two-count amended complaint. (Docket #13).
The first is for copyright infringement pursuant to 17 U.S.C. § 502. Id. at 9.
The second is for misappropriation of trade secrets in violation of Wisconsin
law. Id. at 10-11. Poblocki asks the Court to exercise federal question
jurisdiction over the copyright claim, and supplemental jurisdiction over the
trade secret claim. Id. at 2-3.
3.1

The Database

Poblocki is an asphalt paving contractor which has been in business
for forty-seven years. Id. at 4. Starting in 2002, it gathered customer contact

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and specification information into a “customer relationship management
database,” or CRM database (“Database”). Id. The data gathered included
contact information, work orders, marketing and bid information, project
specifications, and other material relevant to the customer’s project. Id. The
Database was created to give Poblocki employees secure and easy access to
the information as needed. Id. Poblocki has never licensed the Database to
anyone, including Johnson. Id.
The Database contains the above-described data from over 55,400
commercial and residential customers. Id. at 5. The data and documents in
the Database are entered by employees based on customer interactions. Id.
The Database then “selects, coordinates, and arranges the raw data in such
a way that the resulting digital data compilation…, as a whole, constitutes an
original work of authorship.” Id. The information has been gathered since
Poblocki’s inception and could not have been created by any means other
than Poblocki’s business operations. Id.
Poblocki derives value from the Database because it contains
information not known to its competitors. Id. at 6. The data therein is kept
secret by requiring a login and limiting an employee’s access to what is
necessary to accomplish their duties. Id. at 6-7. The data and documents are
also stored in a manner which makes them difficult to download or save to
an external drive. Id. at 7. The Database contains trade secret information,
namely the manner in which the CRM software operates to create the final,
useable Database. Id. at 6. That trade secret was purposefully created to
increase business efficiency and “reasonable” efforts have been made to
maintain its secrecy. Id.

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Poblocki applied for copyright protection for the Database on
December 16, 2015. Id. at 5. Poblocki has not alleged that the copyright
has actually been registered. See generally, Docket #13. The Database is
Poblocki’s sole property and employees are given no rights to distribute the
software or the data contained therein. Id. at 5.
3.2

Defendant Jason B. Johnson’s Relevant Conduct

Defendant Jason B. Johnson (“Jason”) was employed by Poblocki for
an unspecified duration. Id. at 7. He left Poblocki on January 2, 2014, to start
his own paving company. Id. Prior to leaving, Jason opened the Database and
used a video camera to record the information that appeared on the
computer screen. Id. at 8. The video is hours long and shows the compiled
data for every Poblocki customer. Id. Jason also took numerous screenshots
of individual customers’ entries in the Database. Id. He shared the
information with Johnson salespeople and used it in marketing materials. Id.
Jason was aware that he was not entitled to take the Database’s
information with him upon leaving Poblocki. Id. at 7. He took the
information in a manner designed to disguise his activity and leave no
“digital fingerprints.” Id. at 8. Conversely, he bragged to his own employees
and others outside his company of taking the Database information. Id.
Through Jason’s activity, Johnson has taken customers from Poblocki,
causing monetary loss to Poblocki. Id.
4.

ANALYSIS
4.1

Copyright Infringement

Johnson makes three arguments in support of its request for dismissal
of Count One, Poblocki’s copyright infringement claim. First, Johnson claims
that a computer program cannot be an author of a copyrightable work.

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Second, it contends that regardless of authorship, the Database itself is not
copyrightable as a data compilation. Finally, Johnson maintains that Poblocki
has failed to register its copyright, a necessary precondition to an
infringement lawsuit.
The third point is dispositive. A plaintiff claiming copyright
infringement must register their copyright prior to initiating litigation. See 17
U.S.C. § 411(a) (“[N]o civil action for infringement of the copyright in any
United States work shall be instituted until preregistration or registration of
the copyright claim has been made[.]”); Reed Elsevier, Inc. v. Muchnick, 559
U.S. 154, 166 (2010) (“Section 411(a) imposes a precondition to filing a
claim[.]”); DeliverMed Holdings, LLC v. Schaltenbrand, 734 F.3d 616, 622 (7th
Cir. 2013) ([T]he Copyright Act provides that a copyright holder must
register its copyright in a work with the United States Copyright Office
before filing suit for infringement.”); Neri v. Monroe, 726 F.3d 989, 991 (7th
Cir. 2013). Prior Seventh Circuit precedent held that “an application to
register must be filed, and either granted or refused, before suit can be
brought.” Gaiman v. McFarlane, 360 F.3d 644, 654-55 (7th Cir. 2004). Though
it is unclear whether Gaiman reflects a firm, final stance by the Court of
Appeals on the issue, the quoted holding has not been called into question.
It is irrelevant for the Court’s purposes here; Poblocki has failed to allege that
it completed registration or that its application was refused. Because it
merely alleges that “[sic] Federal Copyright protection for the CRM has been
sought by application,” and the Database is an “applied-for copyright work,”
Section 411(a) bars Poblocki’s infringement claim. (Docket #13 at 5). Johnson’s
motion to dismiss Count One of the amended complaint will be granted.

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4.2

Trade Secret Misappropriation

Johnson also seeks dismissal of Poblocki’s trade secret claim. (Docket
#20 at 7). Preliminarily, the Court notes that, despite Poblocki’s efforts, it may
appropriately consider this argument. As noted above, Poblocki filed a notice
of voluntary dismissal of its trade secret misappropriation count pursuant to
Federal Rule of Civil Procedure 41(a)(1)(A)(i). (Docket #23). That rule may
only be used to dismiss entire actions, not individual counts of a complaint.
Taylor v. Brown, 787 F.3d 851, 857 (7th Cir. 2015). Thus, Poblocki’s attempted
dismissal is ineffective and Count Two remains subject to Johnson’s motion
to dismiss.
Johnson directs the majority of its argument at the actual information
taken by Jason, namely the “contact person, phone numbers, email
addresses, work orders, marketing information, bid information, project
specifications,” and other data contained in the Database which were shown
in his video and pictures. (Docket #13 at 4, 8). Johnson contends that this
information is not a protectable trade secret. (Docket #20 at 7-11) (“What
Poblocki is complaining about is the alleged misappropriation of a customer
list[.]”). Johnson misunderstands Poblocki’s claim. Poblocki does not seek
trade secret protection for the data in the Database, but rather for the
Database itself. Specifically, Poblocki alleges that the “the architecture and
methodologies of the CRM software program, to select, coordinate, and
arrange raw data, including a pattern, compilation, program, method,
technique or process” is a trade secret. (Docket #13 at 10). It further alleges
that “Poblocki has been damaged as a result of Defendants’ unlawful

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misappropriation of the trade secret information contained within the
database structure[.]” Id.1
With the nature of Poblocki’s trade secret allegations properly framed,
most of Johnson’s argument becomes inapposite. The Court can nevertheless
engage in a simple analysis of the claim. To state a claim for trade secret
misappropriation under Wisconsin law, a plaintiff must show that: 1) the
“material complained about is a trade secret under [WIS. STAT. §]
134.90(1)(c)”; and 2) “a misappropriation has occurred in violation of [WIS.
STAT. §] 134.90(2).” Minuteman, Inc. v. Alexander, 434 N.W.2d 773, 778 (Wis.
1989).
The second element is dispositive; the Court assumes without
deciding that the Database is a trade secret. Misappropriation occurs when
trade secrets are acquired by “improper means,” which are defined as
“espionage, theft, bribery, misrepresentation and breach or inducement of a
breach of duty to maintain secrecy.” WIS. STAT. § 134.90(2)(a) and (1)(a).
Taking Poblocki’s allegations as true, Johnson’s actions qualify as “improper
means.” He took the Database video and screenshots despite knowing he
was not permitted to do so. (Docket #13 at 7).

1

The Court admits that Poblocki’s complaint contains language which could
lead to the conclusion that it also desires trade secret protection for the customer
data. (Docket #13 at 6) (“The CRM Data derives independent economic value to
Poblocki[.]”); Id. at 10 (“Mr. Johnson disclosed not only the data within the CRM
Database, but the structure of the customer information, and was able to use
valuable and confidential information contained within the copyrighted digital data
compilation to derive economic value to Johnson Paving, diverting profits from
Poblocki.”). However, the majority of Poblocki’s allegations, particularly within the
paragraphs of Count Two itself, reveal that the claim rests on the Database, not the
data.

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Johnson counters that Poblocki does not allege that he took a copy of
the Database program; he merely took video and pictures of the program
while it was displayed on a computer screen. Id. at 8. The Court’s analysis
discloses no controlling, or even persuasive, precedent on the issue of
whether taking video or screenshots of images—in this instance details of
customer information generated with a computer program—qualifies as
“acquiring” the program under the Uniform Trade Secrets Act (which
Wisconsin has adopted).
Nevertheless, the Court agrees with Johnson and holds that Poblocki’s
allegations do not establish that he “acquired” the Database under Section
134.90(2)(a). As noted above, Poblocki specifically alleges that Johnson did
not take an electronic copy of the Database. Id. at 8. Poblocki’s allegations
appear to assume that “acquisition” occurred via Johnson’s actions and so
provide no additional factual details on the matter. Id. at 7-8, 10. Poblocki
does not allege, and it would not be reasonable to infer, that Johnson could
reverse engineer the Database’s coding merely by reviewing the video and
screenshots. Further, Poblocki fails to allege that Johnson actually recreated
the Database program for his company’s use. Johnson’s motion to dismiss
Count Two of the amended complaint will be granted.
5.

CONCLUSION
Count One of the Poblocki’s amended complaint will be dismissed

because Poblocki failed to properly allege registration of its copyright. Count
Two will be dismissed because Poblocki did not allege “acquisition” of the
Database by Johnson in violation of Wisconsin law. Thus, both counts of the
amended complaint will be dismissed with prejudice.
Accordingly,

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IT IS ORDERED that the defendants’ Motion to Dismiss the
Amended Complaint (Docket #19) be and the same is hereby GRANTED;
IT IS FURTHER ORDERED that this action be and the same is hereby
DISMISSED with prejudice; and
IT IS FURTHER ORDERED that the defendants’ Motion to Vacate
Plaintiff’s Voluntary Dismissal of Count II of the Amended Complaint
(Docket #25) be and the same is DENIED as moot.
The Clerk of Court is directed to enter judgment accordingly.
Dated at Milwaukee, Wisconsin, this 27th day of April, 2016.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

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