Segerdahl Corp. v. Anthony Ferruzza, Michael Ferruzza, Daniella Tucci, Christopher Knoll, Erica Knoll, Eugene "corky" Czech, Vince Dante, Am. Litho, Inc.

• Decision Date: 02 January 2019
• Docket Number: Case No. 17-cv-3015
• Parties: THE SEGERDAHL CORP. d/b/a SG 360°, Plaintiff, v. ANTHONY FERRUZZA, MICHAEL FERRUZZA, DANIELLA TUCCI, CHRISTOPHER KNOLL, ERICA KNOLL, EUGENE "CORKY" CZECH, VINCE DANTE, AMERICAN LITHO, INC.; and WORLD VISUAL GROUP, LLC, Defendants.
• Court: U.S. District Court — Northern District of Illinois

THE SEGERDAHL CORP. d/b/a SG 360°, Plaintiff, v. ANTHONY FERRUZZA, MICHAEL FERRUZZA, DANIELLA TUCCI,CHRISTOPHER KNOLL, ERICA KNOLL, EUGENE "CORKY" CZECH, VINCE DANTE,AMERICAN LITHO, INC.; and WORLD VISUAL GROUP, LLC, Defendants.

Case No. 17-cv-3015

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

January 2, 2019

Judge Sharon Johnson Coleman

MEMORANDUM OPINION AND ORDER

Plaintiff, The Segerdahl Corp. d/b/a SG360° ("Segerdahl"), filed a Second Amended Complaint against former employees Anthony Ferruzza, Michael Ferruzza, Daniella Tucci, Christopher Knoll, Erica Knoll, Eugene "Corky" Czech, American Litho, Inc., (American Litho) and World Visual Group, LLC alleging violations of the Defend Trade Secrets Act ("DTSA"), 18 U.S.C. § 1836 et. seq., the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030 et seq., the Illinois Trade Secrets Act ("ITSA"), 765 Ill.Comp.Stat. 1065/1 et seq., breach of fiduciary duty, tortious interference with prospective economic advantage, aiding and abetting breach of fiduciary duty, conversion, unfair competition, civil conspiracy, unjust enrichment, and negligent spoliation of evidence.

Currently before the Court is Anthony Ferruzza, Michael Ferruzza, Daniella Tucci, Christopher Knoll, Erica Knoll and Eugene Czech (collectively "Individual Defendants'") Motion to

Dismiss [323] Segerdahl's Second Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons explained below, the motion is granted in part and denied in part.

Background

The following facts are summarized from the Second Amended Complaint and are taken as true for the purpose of this motion. Segerdahl is a commercial printing and marketing company. The Individual Defendants were employees of Segerdahl in various capacities, but all resigned between January 31, 2017 and February 2, 2017 to join American Litho, a competitor in the commercial printing and direct marketing industries.

Segerdahl alleges the Individual Defendants used their work computers to copy Segerdahl documents onto USB storage devices, sent Segerdahl documents to their personal email accounts, accessed third-party storage services such as DropBox and Google Drive, printed documents and confidential information, and deleted files from their work computers.

Segerdahl asserts that, six months before the Individual Defendants resigned, Anthony Ferruzza solicited those defendants to join American Litho and conspired to compete against Segerdahl by taking its customers to American Litho. Segerdahl states that Anthony Ferruzza used his work computer to access and print numerous documents and files and used a storage device to duplicate all the files that were on his work computer. These documents included files related to Segerdahl's 2017 budget, press schedules, operating procedures, operational initiatives, and customer job estimates. Segerdahl also asserts that Anthony Ferruzza deleted all his user-created documents and emptied the "Trash" folder on his computer on the last day of his employment with Segerdahl.

The day after she turned in her resignation letter on February 1, 2017, Daniella Tucci connected two USB storage devices to her computer and accessed files relating to customer high-resolution images, print ready files, and billing information. Christopher Knoll connected a USB device to his work computer from February 6 through February 10 and "accessed and interactedwith numerous files," including contact information for over 300 Segerdahl employees, organization charts, and billing data. Dkt. 292 ¶ 114-15. Further, Knoll sent approximately 4,500 documents from his Segerdahl email account to his personal email account.

Segerdahl alleges that Michael Ferruzza connected an external USB hard drive to his work computer and copied about 1,350 documents from the computer to the hard drive. The documents included standard operating files, proprietary software scripts, customer production files, and vendor contracts. Segerdahl alleges that this hard drive was later connected to an American Litho computer. Segerdahl also states that each of the Individual Defendants ran a "Disk Defragmenter executable file" on the computers of their current employer, American Litho, before turning the computers over in discovery. Dkt. 292 ¶ 319.

Legal Standard

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the complaint, not the merits of the allegations. To overcome a motion to dismiss, a complaint must contain sufficient factual allegations to state a claim for relief that is plausible on its face, Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009), and raises the right to relief above a speculative level, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). When ruling on a motion to dismiss, the Court must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Park v. Ind. Univ. Sch. of Dentistry, 692 F.3d 828, 830 (7th Cir. 2012).

Discussion

The Individual Defendants are seeking to dismiss the Second Amended Complaint in its entirety.¹ The Court will address each argument in turn.

1. Counts I and III: Defend Trade Secrets Act and Illinois Trade Secret Act

The Individual Defendants argue that the Court should dismiss Segerdahl's trade secret misappropriation allegations for failure to state a claim. As a preliminary matter, the motion to dismiss the DTSA and ITSA claims against Eugene Czech and Erica Knoll is granted. Although Segerdahl asserts violations of DTSA and ITSA by "Individual Defendants," the Second Amended Complaint does not include allegations against Czech or Erica Knoll as it relates to any trade secret misappropriation. Accordingly, the Court need only analyze the DTSA and ITSA claims pertaining to Daniella Tucci, Anthony Ferruzza, Christopher Knoll, and Michael Ferruzza.

DTSA creates a private cause of action in favor of the "owner of a trade secret that is misappropriated...if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce." 18 U.S.C. § 1836(b)(1). Under the DTSA, the term "trade secret" is defined as:

all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—

(A) the owner thereof has taken reasonable measures to keep such information secret; and

(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information;

18 U.S.C. § 1839(3). For the purposes of this Act, "misappropriation" is either: "(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means" or "(B) disclosure or use of a trade secret of another without express or implied consent" under certain conditions. 18 U.S.C. § 1839(5).

To state a claim under ITSA, a plaintiff must demonstrate (1) the trade secret's existence, (2) misappropriation, and (3) damages. See Covenant Aviation Security, LLC v. Berry, 15 F. Supp. 3d 813,818 (N. D. Ill. 2014) (Lefkow, J.); Liebert Corp. v. Mazur, 827 N.E. 2d 909, 925, 357 Ill. App. 3d 265, (2005). ITSA defines "trade secret" as:

[I]nformation, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that:

(1) is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and

(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality.

765 Ill. Comp. Stat. Ann. 1065/2(d). The Act's statutory requirements focus on the secrecy of the information sought to be protected. Learning Curve Toys, Inc. v. PlayWood Toys, Inc., 342 F.3d 714, 723 (7th Cir. 2003); Mangren Research & Dev. Corp. Nat'l Chem. Co., Inc., 87 F.3d 937, 942 (7th Cir. 1996).

Segerdahl alleges that Anthony Ferruzza used a storage device to access confidential information like the 2017 budget, operational initiatives, and customer job estimates. Daniella Tucci, according to Segerdahl, accessed files relating to resolution images and customer billing information. Christopher Knoll is stated to have sent thousands of documents to his personal email including contact lists, organizational charts, and billing data. Lastly, Segerdahl alleges that Michael Ferruzza copied documents from his computer including vendor contracts, production files, and operating files. The data Segerdahl alleges were appropriated have trade secret protection. See SKF USA, Inc. v. Bjerkness, 636 F. Supp. 2d 696, 712 (N. D. Ill. 2009) (Pallmeyer, J.) ("[K]nowing the prices offered by a competitor to a specific customer for a specific set of services certainly would enable a competitor to make a more attractive bid in an attempt to displace the current provider").

The Individual Defendants argue that Segerdahl has failed to specify the alleged misappropriated trade secrets. However, trade secrets "need not be disclosed in detail in acomplaint alleging misappropriation for the simple reason that such a requirement would result in public disclosure of the purported trade secret." Covenant Aviation Security, LLC, 15 F. Supp. 3d at 818 (internal quotation omitted)....