Polyone Corp. v. Lu
| Decision Date | 28 September 2018 |
| Docket Number | No. 14 CV 10369,14 CV 10369 |
| Parties | POLYONE CORPORATION, Plaintiff, v. YUN MARTIN LU, et al., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiff PolyOne Corporation developed a custom formula for a type of soft plastic for use in synthetic wine corks. It claims that the formula is a trade secret and that defendants misappropriated the formula by using it to develop their own. PolyOne also brings claims that defendants tortiously interfered with its contract with an employee and its prospective relations with customers, conspired with one of its former employees, and violated the Computer Fraud and Abuse Act. Defendants bring counterclaims of commercial disparagement and violation of the Illinois Uniform Deceptive Trade Practices Act. Now, defendants move for judgment on the pleadings and summary judgment on PolyOne's claims and to exclude the testimony of two PolyOne expert witnesses. PolyOne moves for summary judgment on the counterclaims.
The facts are largely taken from the parties' Local Rule 56.1 statements of material facts. [336]; [345]; [353]; [367].1 I consider all material facts admitted unless properly controverted. See Local Rule 56.1. For example, one of PolyOne's facts is that certain phone calls took place but does not say what was said on the phone calls. See [345] ¶ 15. Defendants admit that records reflect the phone calls, but they also insert the fact that the phone call participants have been friends for over 25 years and deny that the call participants shared formula information (even though the asserted fact said nothing about sharing formulas). See [345] ¶ 15. At times, PolyOne responds to defendants' facts in a similar way. See, e.g., [353] ¶ 9. Those facts are not properly controverted—I consider them admitted, and I disregard additional facts or argument inserted into responses.
Defendants move to strike most of the facts that PolyOne submitted in support of its motion for summary judgment because they go to PolyOne's claims, not the counterclaims that are the subject of PolyOne's motion. See [345] at 1-3. I agree that PolyOne should have only included facts material to the counterclaims in its statement of facts and included the facts about the trade secret misappropriation in the statement of additional facts accompanying its response to defendants' summary judgment motion. Nevertheless, I will consider them, because there is no prejudice todefendants in doing so—defendants have seen PolyOne's asserted facts and responded to them. Defendants have not argued, for example, that PolyOne has stolen an opportunity to put forth more facts than allowed under the local rules. The only prejudice defendants point to is that PolyOne's statements of facts "unnecessarily complicate these proceedings and create additional work for [d]efendants and the court." [345] at 2. To be sure, technical violations of Local Rule 56.1, including inappropriately argumentative responses of which defendants are guilty too, do create additional work for the court. But in this case, I exercise my discretion to look past the technicalities to avoid delaying resolution of the substance. See Stevo v. Frasor, 662 F.3d 880, 887 (7th Cir. 2011) . The same is true of defendants' complaints that PolyOne's facts are too long and complicated.
I also deny defendants' request for leave to supplement their responses to PolyOne's facts. Defendants provided sufficient responses to the facts and no explanation for why supplementation is necessary.
PolyOne, a provider of specialized polymer materials, purchased GLS Corporation in 2008. [336] ¶¶ 1-2. GLS manufactured custom formulations of a specific kind of soft plastic called thermoplastic elastomers. [336] ¶¶ 1-2. From around 1999 to 2002, GLS supplied custom-formulated TPE pellets to Nomacorc, a company that makes synthetic wine corks. [336] ¶¶ 11-12; [345] ¶ 13. During thistime, defendants Lu and Castile were working for GLS—Lu as a chemist and formulator and Castile in sales. [336] ¶¶ 23-24.
The development of GLS's TPE formula for Nomacorc was led by Joseph Kutka, [345] ¶ 7, and it took some trial and error over the course of two to three years. [345] ¶ 13. GLS started with a [Redacted] 2 SEBS, or styrene-ethlyene-butadiene-styrene block copolymer, but when Nomacorc complained of [Redacted] , GLS switched to a [Redacted] SEBS and added [Redacted] . [367] ¶¶ 3-4, 8; [344-22] at 34. Both these changes increased the risk of [Redacted] . [367] ¶¶ 6, 8, 14. Nomacorc also reported that customers were having difficulty [Redacted] . [367] ¶ 5. So despite the risk of [Redacted] , GLS [Redacted] . [367] ¶¶ 6-7. In around 2002, Nomacorc became involved in a patent dispute with a competitor and stopped using SEBS-based materials. [336] ¶ 13; [345] ¶ 14. Then, in 2010, Nomacorc regained the rights to use SEBS and began the search for a supplier. [336] ¶ 16. By this time, a new potential supplier had emerged.
Defendant Nantong Polymax is a China-based TPE manufacturer formed by Lu in 2005. [336] ¶¶ 3, 25. In late 2010, Castile, who had left PolyOne and was working for a different company, informed Lu of the Nomacorc opportunity, which he had learned from a friend at Nomacorc. [336] ¶¶ 24, 26; [345] ¶ 11. Castile began collaborating with Lu in early 2011, and Castile sent him samples of PolyOne's TPV-and TPO-based (not SEBS-based) TPE pellets he received from Nomacorc for testing. [336] ¶¶ 27-28; [345] ¶ 17. At around the same time, Kutka, the lead formulator behind PolyOne's TPE formula, emailed with Castile about the prospect of joining Nantong Polymax. [345] ¶ 15. Kutka forwarded Castile a letter from his attorney about the restrictions in his PolyOne employment agreement and stated that though he felt PolyOne would sue him if he left, they could "always chance it." [345] ¶ 15. In January 2011, Kutka was in contact with Lu and Castile by telephone and email. [345] ¶¶ 15-18. A Nomacorc employee recalled Castile telling him "[s]omething to the effect of [Kutka's] working for us now." [345] ¶ 19. Kutka went on a PolyOne business trip to China the following month. [345] ¶ 21. Around that time, Lu began creating his TPE formula for Nomacorc. [345] ¶ 22. In early March, Polymax prepared its first samples. [345] ¶ 24. Kutka participated in several Skype video conferences and phone calls with Castile and Lu over the next week or two. [345] ¶¶ 24-28. Kutka also told Polymax about an opportunity to purchase compounding equipment that was being auctioned by a Nomacorc competitor. [345] ¶ 29.
Nomacorc received its first Polymax samples in mid-April. [345] ¶ 33. Shortly after, Nomacorc told Castile that when processed, a sample was [Redacted]. [345] ¶ 34. Castile informed Lu about the [Redacted] issue, and the two exchanged emails trying to figure out the cause. [345] ¶ 34. A couple of days later, Kutka and Castile had a series of phone calls, and soon after, Lu came up with two new TPE formulas. [345] ¶¶ 35-36. The new formulas [Redacted] and added [Redacted] . [345] ¶ 37. Lu submitted new samples to Nomacorc and went to the United States to observe Nomacorc's production trials, which were successful for the most part. [345] ¶¶ 40-41. Lu also met with Kutka during his visit. [345] ¶ 43. After the successful trial, Lu made some small changes to the formula, and then Nomacorc reported an [Redacted] issue. [345] ¶¶ 45-46. Two days after being informed about the issue, Castile had two phone calls with Kutka. [345] ¶ 46. Then Lu created four new versions of the formula. [345] ¶ 47.
PolyOne also submitted TPE pellets for Nomacorc's consideration, using the same formula it used for the Nomacorc supply in the past. [336] ¶ 18. But Nomacorc informed PolyOne that that the pellets did not meet their requirements. [336] ¶ 19. Eventually, Nomacorc chose Polymax to be its TPE supplier, though the pellets required some other modifications before final acceptance. [345] ¶¶ 48-51.
In September 2011, around the time Nomacorc accepted Polymax's pellets, Kutka transferred to a different PolyOne division, believing that it would start the clock running on the non-competition provision in his employment agreement. [345] ¶ 52. Kutka relayed this belief to Lu and Castile and remained in contact with them over the next two years. [345] ¶¶ 52-53. In September 2013, Kutka notified PolyOne that he would be resigning and joining Polymax Thermoplastic Elastomers, LLC (therecently registered United States arm of Polymax), which he did. [345] ¶ 54; [336] ¶ 5. PolyOne then sued Kutka in the Northern District of Ohio and won a jury verdict against him for breach of contract, breach of the duty of loyalty, and intentional spoliation of evidence. [345] ¶ 54. The jury awarded PolyOne $981,391.40 in damages on those claims, plus attorneys' fees. [345] ¶ 54. PolyOne moved for injunctive relief for its trade secret misappropriation claim against Kutka. [345] ¶ 55. Ultimately, the parties submitted an agreed entry of a permanent injunction and final judgment, which consisted of a monetary judgment of $1,481,391.60 (the jury's award plus $500,000 for attorneys' fees) and a permanent injunction barring Kutka from possessing, using, or disclosing PolyOne's confidential and trade secret information and prohibiting Kutka from working for Polymax. [345] ¶ 56.
Defendants move for judgment on the pleadings with respect to PolyOne's claims for tortious interference with contract, tortious interference with prospective relations, and civil conspiracy. [315]. "After the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R....
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