Apc Filtration, Inc. v. Becker

• Decision Date: 26 January 2009
• Docket Number: No. 07-CV-1462.,07-CV-1462.
• Citation: 646 F.Supp.2d 1000
• Parties: APC FILTRATION, INC., Plaintiff, v. William A. BECKER and SourceOne Plus, Inc., Defendants.
• Court: U.S. District Court — Northern District of Illinois

646 F.Supp.2d 1000

APC FILTRATION, INC., Plaintiff, v. William A. BECKER and SourceOne Plus, Inc., Defendants.

No. 07-CV-1462.

United States District Court, N.D. Illinois, Eastern Division.

January 26, 2009.

COPYRIGHT MATERIAL OMITTED

Jeanah Park, Richard Charles Bollow, Vedder Price, P.C., Chicago, IL, for Plaintiff.

Daniel A. Kaufman, Laura Shroyer Liss, Michael Best & Friedrich LLP, Jeremy J. Glenn, Nikki Annette Odom, Meckler, Bulger Tilson Marick & Pearson LLP, Chicago, IL, Shannon Daniel McDonald, Carroll & McDonald LLC, New Berlin, WI, for Defendants.

MEMORANDUM OPINION AND ORDER

ROBERT M. DOW, JR., District Judge.

This matter is before the Court on Defendants William A. Becker and SourceOne Plus, Inc's ("SourceOne") motion to reconsider [190] the Court's Memorandum Opinion and Order dated August 4, 2008, 2008 WL 3008032, which granted Plaintiff's motion for partial summary judgment [87] and denied Defendants' motion for summary judgment [109] as to Counts III and VI. For the following reasons, Defendants' motion to reconsider [190] is granted in part and denied in part. Specifically, the motion is granted to the extent that, in this opinion, the Court refines (and narrows in some respects) the categories of information deemed to be trade secrets in the Court's August 4, 2008 opinion, and is denied in all other respects.

I. Background

The facts in this case have been chronicled in the Court's Memorandum Opinion and Order of August 4, 2008, as well as by both Judge Gettleman and Judge Ashman in their prior orders. However, the Court will recite them briefly here. APC is a Canadian corporation incorporated in the province of Ontario. APC's business is the engineering and manufacturing of filters and bags for various types of industrial, commercial, and domestic vacuum cleaners. Defendant Becker was employed by APC from January 2002 until January 2007. At the time his employment with APC ended, Becker was APC's National Sales Manager. Becker is now President of SourceOne, an Illinois corporation that competes in the same product market as APC.

APC instituted this lawsuit on March 15, 2007. APC alleges that Becker used and continues to use proprietary information and contacts obtained during his employment with APC to enable his company, SourceOne, to compete with APC. APC seeks damages and injunctive relief, alleging that Becker's conduct constitutes a misappropriation of APC's trade secrets as well as a violation of Becker's employment contracts with APC. Of particular relevance are APC's allegations that Becker stole one of APC's supplier's, the Tongxiang Zehua Paper Company ("Zehua"); that he diverted a major potential client, AmSan, from APC to SourceOne; and that he competed with APC using propriety information such as customer and pricing data.

In the course of discovery, APC learned that Becker had destroyed a personal computer that contained some communications between Becker and another company that may have been relevant to APC's claims. Prior to the reassignment of this case, (i) Judge Gettleman found that Becker willfully destroyed relevant evidence after he had reasonable notice that the contents of his computer could become the subject of discovery requests and entered a temporary restraining order [17] and a preliminary injunction [107] against Source One and Becker; (ii) Magistrate Judge Ashman issued orders [101, 135] imposing sanctions in the amount of almost $100,000 against both Defendants; and (iii) both judges expressed their dismay over Becker's conduct during the course of this litigation. Judge Gettleman concluded that Becker "purposefully destroyed evidence in this case and continually lied about it." 10/23/07 Trans. at 10-11. Magistrate Judge Ashman found that Becker "willfully destroyed relevant evidence," "violated the Court's June 28, 2007 discovery order," and "acted in bad faith to prevent APC from discovering damaging evidence." 12/21/07 Order [135] at 2, 2007 WL 4569721 (summarizing 10/12/07 Order, 2007 WL 3046233).

On August 4, 2008, the Court entered summary judgment in favor of Plaintiff on Counts III (breach of fiduciary duty) and VI (violation of the Illinois Trade Secrets Act). The Court concluded that "Becker crossed the line by competing with APC for customers and suppliers while still employed by APC and by using APC's customer and price lists to give himself an advantage." The Court entered partial summary judgment with respect to monetary damages in the amount of $174,195.92 to reimburse APC for the compensation, expenses, and severance package paid to Becker while he was in breach of his fiduciary duty. The Court also advised the parties that it was prepared to grant relief with respect to Counts III and VI in the form of a permanent injunction with respect to Becker's and SourceOne's solicitation of APC's current customers and use of APC's suppliers. The Court requested that Plaintiff submit to the Court and serve on counsel for Defendants a draft proposed permanent injunction order, consistent with the law of Illinois and reasonable in scope and duration on or before August 18, 2008. Defendants were given ten days from the date on which they received the proposed order to submit to the Court and to Plaintiff's counsel any objections that they had to the proposed order. The Court also recognized that Defendants' motion for summary judgment as to Counts I, II, IV, and V remained pending, as did APC's motions for rule to show cause why Defendants should not be held in contempt for violating the preliminary injunction. In response to the Court's inquiry, APC advised that it no longer wished to pursue the remaining counts in its complaint, but did wish to further pursue its request for a contempt hearing on Defendants' alleged violations of the preliminary injunction.¹

II. Discussion

A. Standard for a Motion to Reconsider

A court may alter or amend a judgment under Federal Rule of Procedure 59(e) when the movant "clearly establish[es]" that "there is newly discovered evidence or there has been a manifest error of law or fact." Harrington v. City of Chicago, 433 F.3d 542, 546 (7th Cir. 2006). While Rule 59(e) allows a movant to bring to a court's attention a manifest error of law, it "does not provide a vehicle for a party to undo its own procedural failures, and it certainly does not allow a party to introduce new evidence or advance arguments that could and should have been presented to the district court prior to the judgment." Bordelon v. Chicago School Reform Bd. of Trustees, 233 F.3d 524, 529 (7th Cir.2000). Here, that judgment was entered on summary judgment, which the Seventh Circuit has stressed is "not a dress rehearsal or practice run; it is the put up or shut up moment in a lawsuit, when a party must show what evidence it has that would convince a trier of fact to accept its version of the events." Hammel v. Eau Galle Cheese Factory, 407 F.3d 852, 859 (7th Cir.2005). Once that moment has passed, a district court is "not required to give [Defendants] a `do over'" (Winters v. Fru-Con Inc., 498 F.3d 734, 743 (7th Cir.2007)), simply because Defendants have obtained new counsel.

B. Lack of Capacity to Sue

In their opening brief in support of their motion for reconsideration, Defendants argued that APC lacks "the authority to maintain this lawsuit" because it failed to register to transact business in Illinois pursuant to Article 13 of the Illinois Business Corporation Act ("IBCA").² In their reply brief, Defendants added another, related argument, contending that APC has not paid "requisite franchise taxes associated" with the IBCA's registration requirement for foreign corporations and, therefore, "lacks the authority to maintain this lawsuit." Defendants submit that the argument that Plaintiff lacks capacity to sue because it failed to pay Illinois franchise fees cannot be waived and, therefore, despite the extensive proceedings and rulings to date, this suit must be dismissed. Plaintiffs contend that Defendants' capacity arguments are based on a fundamental misreading of the law and that Defendants can, and have, waived this argument.

Section 13.70 of the IBCA states that "[n]o foreign corporation transacting business in this State without authority to do so is permitted to maintain a civil action in any court of this State, until the corporation obtains that authority." 805 ILCS 5/13.70. Section 15.65 of IBCA, which Defendants cite in support of their "franchise tax" argument, appears to incorporate Section 13.70. Section 15.65 states that any franchise fees payable under this section are necessary to a foreign corporation's "privilege of exercising its authority to transact such business in this State as set out in its application therefore." 805 ILCS 5/15.65. Thus, the franchise fee requirement appears to work in tandem with the requirement that a foreign corporation obtain a certificate of authority. In any event, both arguments, whether made pursuant to Section 13.70 or Section 15.65, pertain to APC's capacity to sue (or lack thereof).

The threshold question, then, is whether these arguments can be waived. In Wagner Furniture Interiors, Inc. v. Kemner's Georgetown Manor, Inc., the Seventh Circuit addressed the question of whether a plaintiff lacked capacity to sue because it had not obtained a certificate of authority to maintain a civil action pursuant to Section 13.70 of the Act. 929 F.2d 343, 345 (7th Cir.1991). In Wagner, defendants answered plaintiff's complaint and the parties engaged in substantial pre-trial discovery over two years. Id. at 344-45. As is the case here, jurisdiction was based on diversity of citizenship. See 28 U.S.C. § 1332. Id. at 344. After the trial date was set, defendants filed a motion to dismiss for want of jurisdiction under Section 13.70 of the IBCA, arguing (as Defendants here have argued) that the court lacked jurisdiction because plaintiff was a foreign corporation not licensed to do...