Glob. Charter Servs. v. LaRocca

• Decision Date: 26 April 2023
• Docket Number: 22 C 1849
• Parties: GLOBAL CHARTER SERVICES, INC., d/b/a THE BUSBANK, Plaintiff, v. MARK LAROCCA, RUDY ORTIZ, and 9139249 CANADA INC. d/b/a BUS.COM, Defendants.
• Court: U.S. District Court — Northern District of Illinois

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GLOBAL CHARTER SERVICES, INC., d/b/a THE BUSBANK, Plaintiff, v. MARK LAROCCA, RUDY ORTIZ, and 9139249 CANADA INC. d/b/a BUS.COM, Defendants.

No. 22 C 1849

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

April 26, 2023

OPINION AND ORDER

SARA L. ELLIS UNITED STATES DISTRICT JUDGE

Plaintiff Global Charter Services, Inc. (“GCS”), an online charter bus booking platform, filed this eighteen-count lawsuit against two of its former employees, Mark LaRocca and Rudy Ortiz (the “Former Employee Defendants”) and their new employer, Bus.com. LaRocca left GCS on May 26 2021 and immediately joined Bus.com, a competing charter bus booking platform. LaRocca then solicited Ortiz to join Bus.com, and on February 1, 2022, Ortiz left GCS and immediately joined Bus.com. GCS alleges that the Former Employee Defendants violated their employment agreements and misused proprietary information and trade secrets. GCS brings claims against all Defendants for misappropriation of trade secrets in violation of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836(b); tortious interference with GCS' business relationships; and civil conspiracy. GCS also alleges that the Former Employee Defendants breached their contracts and fiduciary duties. GCS additionally brings claims against LaRocca and Bus.com for tortious interference with contract and aiding and abetting breach of fiduciary duty. Finally, GCS brings a claim for unjust enrichment against Bus.com. The Former Employee Defendants and Bus.com separately moved to dismiss GCS' amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).^[1] Because GCS has not sufficiently alleged its DTSA claim, GCS has not pleaded a sufficient basis for this Court's subject matter jurisdiction. The Court therefore dismisses GCS' amended complaint without prejudice.

BACKGROUND^[2]

I. The Former Employee Defendants and GCS

LaRocca worked as an Event Manager at GCS from August 2014 until May 26, 2021, when he left to join GCS' competitor, Bus.com. After leaving GCS, LaRocca solicited Ortiz, then a GCS Sales Associate and Senior Account Executive, and another GCS employee, to follow suit and join him at Bus.com. In December 2021, LaRocca forwarded Ortiz a sample Bus.com consulting agreement, and in February 2022, Ortiz resigned from GCS and joined Bus.com.

During their time working for GCS, the Former Employee Defendants accessed highly confidential information and trade secrets, including client information, GCS systems and strategy, and GCS Marketplace, an “electronic compilation of information relating to reliable bus operators in the transportation industry across the United States.” Doc. 26 ¶ 14. GCS spent “thousands of hours over the course of two decades travelling for in-person and telephonically conducted interviews with bus operators to compile relevant information to formulate the GCS Marketplace.” Id. ¶ 15. The GCS Marketplace uses “highly valuable sophisticated proprietary software” to “track ongoing performance of bus operators, conduct unique scoring exercises relating to bus operators, prepare and maintain performance records of bus trips, perform government record checks, store and monitor bus operator insurance information, maintain contacts and fleet information, and store pricing information.” Id. ¶¶ 16, 18. Additionally, LaRocca and Ortiz attended meetings where people discussed GCS' future strategy, including plans to update its proprietary platform.

GCS has taken significant steps to protect its confidential information and trade secrets, including “restricting access to the GCS Marketplace through the use of encrypted usernames and passwords, storing information only on GCS's platform where only certain employees are granted access, requiring a single sign-on process tied to GCS's corporate Google profiles,” and requiring its employees to sign employment agreements with non-compete, confidentiality, nondisclosure, non-solicitation, and non-disparagement clauses. Id. ¶ 21. Both Former Employee Defendants signed employment agreements containing such clauses.

The non-competition clause states “[d]uring my employment with GCS, and during [the twelve-month period following the end of my employment with GCS], I agree not to, directly or indirectly, engage in any Competitive Activity.” Doc. 26-1 at 2; Doc. 26-2 at 2. “Competitive Activity” includes:

becom[ing] an employee of a Competitive Enterprise in a capacity that is similar to the capacity I was in, or provide services that are similar to the services I provided, or with responsibilities that are similar to the responsibilities I had, in each case, when I was employed by GCS.

Doc. 26-1 at 2; Doc. 26-2 at 2. The agreements define a “Competitive Enterprise” as:

any business that (i) engages in any charter bus booking service identical or similar to any service engaged in by GCS, or (ii) owns or controls a significant interest in any entity that engages in any charter bus booking service identical or similar to any service engaged in by GCS.

Doc. 26-1 at 3; Doc. 26-2 at 3.

The agreements also included confidentiality and non-disclosure clauses:

9. Confidentiality. I recognize and acknowledge that the systems and strategy which GCS owns, plans or develops, whether for its own use or for use by its clients, are confidential and are the property of GCS. I further recognize and acknowledge that in order to enable GCS to perform services for its motor carriers and charter clients, such motor carriers and charter clients may furnish to GCS confidential information concerning their business affairs, property, methods of operation or other data; that the goodwill afforded to GCS depends upon, among other things, GCS and its employees keeping such services and information confidential (collectively, including GCS systems and strategy and GCS client information, the “Confidential Information”).

10. Non-Disclosure. I agree that, except as directed by GCS, I will not at any time, whether during or after my employment with GCS, disclose to any person or use any Confidential Information, or permit any person to examine and/or make copies of any documents which contain or are derived from Confidential Information, whether prepared by me or otherwise coming into my possession or control without the prior written permission of GCS.

Doc. 26-1 at 5-6; Doc. 26-2 at 5-6.

The agreements also contain non-solicitation clauses:

4. Non-Solicitation of GCS Motor Carriers and Charter Clients; Non-Interference.

(a) During my employment with GCS, and during the 24 month period following the end of my employment, I agree not to, directly or indirectly, in any capacity, contact and/or solicit any GCS motor carrier or charter client (other than in my capacity as an employee of GCS) for purposes of coordinating charter bus booking services that utilize any strategies that are identical or similar to any coordination of charter bus booking services or strategies utilized by GCS.

(b) During my employment with GCS, and during the 24 month period following the end of my employment, I agree not to, directly or indirectly, in any capacity, accept payment for travel services from any GCS charter client (other than in my capacity as an employee of GCS).

(c) During my employment with GCS, and during the 24 month period following the end of my employment, I agree not to, directly or indirectly, in any capacity, interfere, or attempt to interfere, with the relationship between any GCS motor carrier or charter client and GCS.

(d) “Motor carrier” means any person or entity that actually provided transportation services for GCS during the 12 month period preceding the end of my employment (i) that I knew was a motor carrier that provided transportation services to GCS, or (ii) with whom I had contact as an employee. Motor carrier also means any person or entity that was an advisor, consultant, or manager of any person or entity referred to in clauses (i) or (ii) of the preceding sentence.

(e) “Charter client” means any person or entity that utilizes the services of GCS in connection with its charter bus booking service during the 12 month period preceding the end of my employment (i) that I knew was a charter client of GCS, or (ii) with whom I had contact as an employee. Charter client also means any person or entity that was an advisor, consultant, or manager of any person or entity referred to in clauses (i) or (ii) of the preceding sentence.

5. Non-Solicitation of GCS Employees.

(a) During the 24 month period following the end of my employment, I agree not to, directly or indirectly, in any capacity, employ any GCS Employee.

(b) During any employment with GCS, and during the 24 month period following the end of my employment, I agree not to, directly or indirectly, in any capacity, solicit any GCS Employee to cease employment with GCS.

(c) During my employment with GCS, and during the 24 month period following the end of my employment, I agree not to, directly or indirectly, in any capacity, induce any GCS Employee to cease employment with GCS.

(d) “GCS Employee” means any person that (i) is an employee of GCS at the time of my contact, solicitation or inducement, or (ii) was an employee of GCS at any time within the 30 day period immediately preceding such contact, solicitation or inducement.

Doc. 26-1 at 4-5; Doc. 26-2 at 4-5.

Further the employment agreements required the Former Employee Defendants to “not make any oral or written statement to any third party that disparages, defames, or reflects adversely upon GCS, or any of its principals, officers, employees or services.” Doc. 26-1 at 5; Doc. 26-2 at 5. Notwithstanding this clause, while LaRocca was still employed by GCS, he made false and disparaging statements about the financial...