In re Adegoke
| Decision Date | 20 August 2021 |
| Docket Number | Case No. 19 BK 34092 |
| Citation | 632 B.R. 154 |
| Parties | IN RE: Adetayo ADEGOKE, Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Richard G. Fonfrias, Fonfrias Law Group, LLC., Chicago, IL, David P. Lloyd, David P. Lloyd, Ltd., LaGrange, IL, for Debtor.
Debtor Adetayo Adegoke ("Debtor") has objected to Claim No. 2-3 of 3Cloud LLC ("3Cloud"). For the reasons stated herein, Debtor's Objection to Claim 2-3 [Dkt. No. 52 ] will be SUSTAINED IN PART and OVERRULED IN PART by separate order entered concurrently herewith.
Subject matter jurisdiction lies under 28 U.S.C. § 1334. The district court may refer bankruptcy proceedings to a bankruptcy judge under 28 U.S.C. § 157 and 28 U.S.C. § 1334, and this proceeding was thereby referred here by Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. Venue lies under 28 U.S.C. § 1409. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B). A bankruptcy judge has constitutional authority to enter final judgment as to claim objections. In re Woodruff , 600 B.R. 616, 621 (Bankr. N.D. Ill. 2019) (Barnes, T.).
1. 3Cloud is a Delaware limited liability company, with its principal place of business located at 3025 Highland Parkway, Downers Grove, Illinois. 3Cloud was founded by former Microsoft executives and is a national consulting firm headquartered in Downers Grove, Illinois that helps businesses transition and maximize the Microsoft Azure cloud platform. [Joint Stipulation,2 at ¶ 1].
2. Specifically, 3Cloud assists businesses in migrating their onsite datacenter assets, including infrastructure, data, and applications, to Microsoft-hosted cloud data centers (titled the Azure cloud), as well as digitally transforming those businesses through the development of new applications and processes that utilize the capabilities made available through the Microsoft Azure cloud platform. [Joint Stipulation, at ¶ 1; Trial Tr. Vol. I3 23:24-26:23].
3. Debtor is a former employee of 3Cloud. [Joint Stipulation, at ¶ 2].
4. Debtor was hired on October 21, 2016, as employee number two after the founders, Mike Rocco ("Rocco") and Jim Dietrich ("Dietrich"), in the position of Practice Director for Cloud Modernization, with an annual base salary of $175,000. Additionally, Debtor was guaranteed a first-year bonus of $35,000, payable in two installments of $17,500 each, on July 31, 2017 and January 31, 2018, with each installment payable if Debtor was still employed on the date of the scheduled payment. [Joint Stipulation, at ¶¶ 5-6, 8-9; 3Cloud Trial Ex. 1; Trial Tr. Vol I 28:15-29:5, 39:11-40:7].
5. In his position as Practice Director for Cloud Modernization, Debtor's responsibility was to build a practice that specifically focused on helping clients migrate from their on-premises data centers into Microsoft Azure. Specifically, it was his job to position and complete 3Cloud's cloud readiness assessments – essentially, providing technical and engineering guidance on the migration process by evaluating opportunities, conducting discovery, and recommending and implementing 3Cloud solutions to customers. [Trial Tr. Vol I 29:4-33:25].
6. Due to his responsibilities, Debtor was issued a company laptop computer, property of 3Cloud, with access to the entirety of 3Cloud's secure network and database, including confidential and proprietary processes and information. [Joint Stipulation, at ¶ 14; Trial Tr. Vol I 43:16-44:6].
7. At the outset of his employment, Debtor signed an employment agreement (the "Employment Agreement") and, as a condition of the same, also executed a confidential information and non-solicitation agreement (the "Restrictive Covenant Agreement"). [Joint Stipulation, at ¶¶ 5-7; 3Cloud Trial Ex. 1; Trial Tr. Vol. I 37:16-40:20].
8. Debtor remained employed with 3Cloud on July 31, 2017, and, in accordance with the Employment Agreement, 3Cloud paid Debtor the first guaranteed bonus installment of $17,500. [Joint Stipulation, at ¶ 10; Trial Tr. Vol. I 39:11-42:21].
9. At some point in time towards the end of 2016, 3Cloud sent Debtor to Bellevue, Washington,4 for training to become certified in Movere (a Microsoft-endorsed analysis tool that would help assemble Azure consumption costs estimates). [Joint Stipulation, at ¶ 11; Trial Tr. Vol. I 95:20-97:3, 149:21-153:15].
10. On August 2, 2017, Debtor was informed that going forward his role would be shifted from Practice Director to Principal Architect – a position more focused on delivery implementation of 3Cloud's migration projects. 3Cloud informed Debtor that the intention of this transition was for Debtor to have supervisory support and to obtain learning experience from a more senior individual. [Joint Stipulation, at ¶ 13; Trial Tr. Vol. I 97:4-99:21].
11. At the meeting, Debtor was visibly upset with this announcement and spoke in an elevated voice, but ultimately Debtor agreed to the change. [Trial Tr. Vol. I 97:4-99:21; Trial Tr. Vol. III 310:15-311:2].
12. Debtor's compensation remained the same despite the change in role. [Trial Tr. Vol. I 99:1-21].
13. Shortly thereafter, while still being employed by 3Cloud, Debtor began discussions with Concurrency, Inc. ("Concurrency") (another Microsoft partner firm – a competitor of 3Cloud), about overseeing their Azure cloud datacenter practice in Chicago. On August 31, 2017, Debtor conducted a phone interview with Concurrency and discussed a position at Concurrency for Debtor. [Joint Stipulation, at ¶¶ 19 & 21; 3Cloud Trial Ex. 59, at ¶ 10].
14. On September 7, 2017, Debtor had an on-site job interview at Concurrency. [3Cloud Trial Ex. 59, at ¶ 10; Trial Tr. Vol. III 328:22-329:20].
15. On September 8, 2017, Debtor accessed nearly four hundred confidential documents from 3Cloud's secure network (to which he had password protected access) and bulk file copied these documents from the network to his laptop. [Joint Stipulation, at ¶ 15; 3Cloud Trial Ex. 27; Trial Tr. Vol. III 305:15-327:20, 322:6-323:9, 328:19-21].
16. The files pulled on September 8, 2017 pertained to three clients of 3Cloud. [3Cloud Trial Ex. 27; Trial Tr. Vol. III 327:21-328:10].
17. Debtor was not working on any of those three clients at the time. [Trial Tr. Vol. III 328:11-328:10].
18. The only client Debtor was working on in September of 2017 was Boston Consulting Group. [Trial Tr. Vol. I 111:11-20].
19. On September 11, 2017, Debtor emailed Concurrency discussing a position at Concurrency for Debtor. [3Cloud Trial Ex. 59, at ¶ 10].
20. On September 13, 2017, Debtor accessed fourteen files from 3Cloud's network relating to a new managed services business 3Cloud was creating at the time. The files accessed contained information on the pricing model, staffing support, and how the new business was being built. [Joint Stipulation, at ¶ 15; 3Cloud Trial Ex. 27; Trial Tr. Vol. III 329:21-331:4].
21. Debtor had no role in this managed services business. [Trial Tr. Vol. III 331:5-9].
22. On September 14, 2017, Debtor interviewed on-site at Concurrency with Concurrency CEO James Savage ("Savage"). [3Cloud Trial Ex. 59, at ¶ 10; Trial Tr. Vol. III 331:10-20].
23. On September 18, 2017, Debtor emailed Savage discussing a job position for Debtor at Concurrency. [3Cloud Trial Ex. 59, at ¶ 10].
24. On September 18, 2017, Debtor accessed sixty files from 3Cloud's network, which included, among others, highly confidential pricing tools, price structures, and proprietary documents of 3Cloud. [Joint Stipulation, at ¶ 15; 3Cloud Trial Ex. 27; Trial Tr. Vol. III 331:21-344:18].
25. In his delivery role with the only client he was handling, Boston Consulting Group, Debtor had no need for these documents. [Trial Tr. Vol. III 331:21-344:18].
26. On September 19, 2017, Debtor conducted an on-site job interview at Concurrency with Concurrency's operational leadership. [3Cloud Trial Ex. 59, at ¶ 10; Trial Tr. Vol. III 346:16-347:15].
27. On September 19, 2017, Debtor accessed an additional two files from 3Cloud's network. One of the two files accessed was a spreadsheet containing 3Cloud's 2017 pricing rate for services charged and discounting structure. The other file was, essentially, a blueprint of the migration project for one of 3Cloud's clients. [Joint Stipulation, at ¶ 15; Trial Tr. Vol. III 344:24-346:6].
28. Debtor was neither involved in this migration project nor was he working on this particular client. [Trial Tr. Vol. III 346:7-15].
29. Despite still being employed by 3Cloud, on October 6, 2017, Debtor signed an employment agreement with Concurrency to lead its competing Azure practice in Chicago starting October 23, 2017. [3Cloud Trial Exs. 13 & 59, at ¶ 10].
30. On October 8, 2017, Debtor called Rocco and notified him of his two-weeks' notice of his voluntary resignation from 3Cloud. When questioned where he was planning to go, Debtor stated he was going to work for another company but declined to provide the name of the new employer. [Joint Stipulation, at ¶ 16; Trial Tr. Vol. I 99:22-100:9].
31. On October 9, 2017, Debtor submitted his written notice of resignation to 3Cloud. [3Cloud Trial Ex. 15; Trial Tr. Vol. I 100:10-18].
32. On October 11, 2017, Debtor requested a company laptop from Concurrency, which he received on October 20, 2017. [3Cloud Trial Ex. 16 & 69, at 41-47].
33. Debtor's last day of employment with 3Cloud was October 20, 2017. [Joint Stipulation, at ¶ 17; 3Cloud Trial Ex. 15; Trial Tr. Vol. I 77:10-23].
34. Paragraph 2(e)(ii) of the Restrictive Covenant Agreement states:
[Debtor] agrees that upon termination of his employment with [3Cloud], for any reason, [Debtor] shall return to [3Cloud], in good condition, all property of [3Cloud], including without limitation, the originals and all copies of any materials which contain, reflect,...
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