Mission Measurement Corp. v. Blackbaud, Inc.

Decision Date13 December 2017
Docket NumberCase No. 16 C 6003
Citation287 F.Supp.3d 691
Parties MISSION MEASUREMENT CORPORATION, Plaintiff, v. BLACKBAUD, INC., et al., Defendants.
CourtU.S. District Court — Northern District of Illinois

Stephen Shackelford, Jr., Tamar Lusztig, Susman Godfrey, LLP, New York, NY, Melissa A. Anyetei, Priya Ashley Desai, Richard M. Assmus, Joseph A. Mahoney, Mayer Brown LLP, Chicago, IL, for Plaintiff.

Paul E. Veith, Aryn Evans Sothbarr, Patrick Edward Croke, Sidley Austin LLP, Mark William Premo Hopkins, Kirkland & Ellis LLP, Brian E. Cohen, Courtney D. Tedrowe, Alexander Lawrence Berg, Novack and Macey LLP, Edmond Jason Tremblay, David Seth Wayne, Saul Ewing Arnstein & Lehr LLP, Chicago, IL, Rachel Rose Davidson, Sidley Austin LLP, Elizabeth L. Deeley, Latham & Watkins LLP, Mark Edward McKane, Ashley Elizabeth Littlefield, Kirkland & Ellis LLP, San Francisco, CA, Erika Clarke Birg, Lucas Allen Westby, Nelson Mullins Riley & Scarborough, Atlanta, GA, for Defendants.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE United States District JudgeOn July 25, 2017, Plaintiff Mission Measurement Corporation ("Mission Measurement") brought the present twelve-count Second Amended Complaint against Defendants Blackbaud, Inc. ("Blackbaud"), MicroEdge, LLC ("MicroEdge"), Vista Equity Partners Management, LLC ("Vista Management"), VFF I AIV I, L.P. ("Vista I Fund"), VFF I AIV I–A, L.P. ("Vista I–A Fund"), Bregal Sagemount I, L.P. ("Sagemount"), and individual Defendants Scott Adkins, Rachel Arnold, Todd Laddusaw, Joel Martins, Preston McKenzie, Benny Melumad, Phil Montgomery, Kristin Nimsger, and Charles Vanek ("Individual Defendants") alleging violations of the Defend Trade Secrets Act of 2016 ("DTSA"), 18 U.S.C. § 1831, et seq. , as well as state law claims, including an Illinois Trade Secrets Act ("ITSA") claim, 765 ILCS 1–65/1, et seq.

Before the Court are Defendants' motions to dismiss under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6) in which they challenge all of Mission Measurement's claims except for its DTSA and ITSA claims against Blackbaud and MicroEdge as alleged in Counts III and IV of the Second Amended Complaint. For the following reasons, the Court grants in part with prejudice, grants in part without prejudice, and denies in part Defendants' motions to dismiss. Specifically, the Court dismisses, without prejudice, Individual Defendants Todd Laddusaw, Benny Melumad, Scott Adkins, Joel Martin, and Rachel Arnold, as well as Vista I Fund and Vista I–A Fund, for lack of personal jurisdiction pursuant to Rule 12(b)(2). Further, the Court grants MicroEdge's Rule 12(b)(6) motion to dismiss Plaintiff's breach of the Confidentiality Agreement as alleged in Count I with prejudice. The Court grants Defendants' Rule 12(b)(6) motions to dismiss Plaintiff's fraudulent inducement claim as alleged in Count X without prejudice and Plaintiff's Illinois civil conspiracy claim alleged in Count XII without prejudice. The Court also grants Plaintiff leave to file a Third Amended Complaint as to its fraudulent inducement and civil conspiracy claims, keeping in mind counsel's Rule 11 obligations. Plaintiff's Third Amended Complaint is due on or before January 8, 2018.

The following claims remain in this lawsuit: (1) breach of MicroEdge's and Plaintiff's Letter of Intent (Count II); (2) breach of MicroEdge's and Plaintiff's oral contract (Count VI); (3) the DTSA claim against Blackbaud and MicroEdge (Count III); (4) the ITSA claim against Blackbaud and MicroEdge (Count IV); (5) the promissory estoppel claim against MicroEdge (Count V); (6) the unjust enrichment claim against all remaining Defendants (Count VII); (7) the Illinois tortious interference with contract claim and tortious interference with prospective economic advantage claim against Blackbaud, Vista Management, Sagemount, and the remaining Individual Defendants (Counts VIII and IX); and (8) the conversion claim against Blackbaud and MicroEdge (Count XI).

LEGAL STANDARDS
I. Federal Rule of Civil Procedure 12(b)(2)

A motion to dismiss under Rule 12(b)(2) tests whether a federal court has personal jurisdiction over a defendant. See Fed. R. Civ. P. 12(b)(2) ; Wells Fargo Bank, N.A. v. Younan Prop., Inc. , 737 F.3d 465, 467 (7th Cir. 2013). Although the "plaintiff bears the burden of establishing personal jurisdiction," Brook v. McCormley , 873 F.3d 549, 552 (7th Cir. 2017), when ruling on a Rule 12(b)(2) motion to dismiss based on the submission of written materials, a plaintiff need only make a prima facie case of personal jurisdiction. Northern Grain Mktg., LLC v. Greving , 743 F.3d 487, 491 (7th Cir. 2014). In analyzing a Rule 12(b)(2) motion without conducting an evidentiary hearing, courts accept the well-pleaded facts in the complaint as true. Felland v. Clifton , 682 F.3d 665, 672 (7th Cir. 2012).

II. Federal Rule of Civil Procedure 12(b)(6)

"A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted." Camasta v. Jos. A. Bank Clothiers, Inc. , 761 F.3d 732, 736 (7th Cir. 2014) ; see also Hill v. Serv. Emp. Int'l Union , 850 F.3d 861, 863 (7th Cir. 2017). Under Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Pursuant to the federal pleading standards, a plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Put differently, a "complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ).

When determining the sufficiency of a complaint under the plausibility standard, courts must "accept all well-pleaded facts as true and draw reasonable inferences in the plaintiffs' favor." Roberts v. City of Chicago , 817 F.3d 561, 564 (7th Cir. 2016). Also, although a plaintiff's ability to state allegations based on "information and belief" is restricted in the context of fraud allegations pursuant to Rule 9(b), under Rule 8(a), "[w]here pleadings concern matters peculiarly within the knowledge of the defendants, conclusory pleading on ‘information and belief’ should be liberally viewed." Brown v. Budz , 398 F.3d 904, 914 (7th Cir. 2005) (citation omitted); see also 5 Wright & Miller, Federal Practice & Procedure § 1224, at 300 & n. 7 (3d ed. 2004) ("Pleading on information and belief is a desirable and essential expedient when matters that are necessary to complete the statement of a claim are not within the knowledge of the plaintiff."); see, e.g., Huon v. Denton , 841 F.3d 733, 743 (7th Cir. 2016).

III. Federal Rule of Civil Procedure 9(b)

With respect to claims of fraud, Rule 9(b) applies and imposes a higher pleading standard than that required under Rule 8(a). See Camasta , 761 F.3d at 736 ; Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co. , 631 F.3d 436, 446–47 (7th Cir. 2011). Specifically, "plaintiffs must plead the ‘who, what, when, where, and how: the first paragraph of any newspaper story’ of the alleged fraud." Rocha v. Rudd , 826 F.3d 905, 911 (7th Cir. 2016) (quotation omitted). In other words, "[t]he requirement of pleading fraud with particularity includes pleading facts that make the allegation of fraud plausible"; therefore, "[t]he complaint must state ‘the identity of the person making the misrepresentation, the time, place, and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff.’ " United States ex rel. Grenadyor v. Ukrainian Vill. Pharmacy, Inc. , 772 F.3d 1102, 1106 (7th Cir. 2014) (citation omitted); see also United States ex. rel. Hanna v. City of Chicago , 834 F.3d 775, 779 (7th Cir. 2016). Allegations based on information and belief will not suffice under Rule 9(b) unless "(1) the facts constituting the fraud are not accessible to the plaintiff and (2) the plaintiff provides ‘the grounds for his suspicions.’ " Id. , 772 F.3d at 1108 (quotation omitted).

BACKGROUND

In its Second Amended Complaint, Mission Measurement alleges that it is the market leader in social sector data and insights relating to social change programs aimed at addressing issues such as poverty, hunger, access to healthcare, and climate change. (R. 75, Second Am. Compl. ¶ 30.) One of Mission Measurement's goals is to change the way non-profits, corporations, governments, and foundations invest in philanthropic causes by using data to measure and forecast social impact program outcomes. (Id. ) Using data collected from social program evaluations, Mission Measurement has compiled a database of over 75,000 different data points, which it has categorized into approximately 130 social outcome types. (Id. ¶ 31.) Mission Measurement maintains that these data are used to grade whether a particular program will achieve its objectives, the average expected cost to do so, and the total number of people the program will serve. (Id. )

Over the last eleven years, Mission Measurement has developed its proprietary database—the Outcome Taxonomy™—that implements its vision for database and software products and methods to gauge social impact. (Id. ¶ 32.) Certain aspects of Mission Measurement's system are detailed in the pending U.S. Patent Application Ser. No. 14/137,580 entitled "System and Method for Analyzing and Predicting the Impact of Social Programs," filed on December 20, 2013. (Id. ) The application, which published on September 18, 2014 as U.S. Pub. No. 2014/0278756, claims priority to an earlier provisional application No. 61/793,908 filed on March 15, 2013. (Id. ) The application is pending at the U.S. Patent and Trademark Office. (Id. )

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