Danaher Corp. v. Lean Focus, LLC

DANAHER CORPORATION, Plaintiff, v. LEAN FOCUS, LLC, and DAMON BAKER, Defendants.

19-cv-750-wmc

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN

July 24, 2020

OPINION AND ORDER

Plaintiff Danaher Corporation asserts sundry claims against its former employee, Damon Baker, and his new company, Lean Focus, LLC. Before the court is defendants' motion to dismiss a number of those asserted claims, though not all claims. For the reasons that follow, the court will grant the motion as to plaintiff's claims for: (1) breach of the non-solicitation provision of Baker's 2012 Proprietary Interests Agreement and the nondisclosure provision of his 2014 Nondisclosure Agreement; and (2) tortious interference with Danaher employees. In all other respects, however, the motion will be denied.

ALLEGATIONS OF FACT¹

A. Overview of the Parties

Plaintiff Danaher Corporation is a "diversified, global company specializing in the fields of science and technology, with more than 67,000 employees working directly forDanaher or one of its 30 operating companies." (Compl. (dkt. #1) ¶ 17.)

Defendant Damon Baker is a former Danaher employee, who worked in various roles at Danaher and various of its operating companies for approximately nine years, including: "Senior Corporate Director of the Global DBS Office in Madison, Wisconsin; General Manager of Danaher Corporation at Orascoptic in Middleton, Wisconsin; Corporate Director at the Global Danaher Business System Office in Chicago; and Global Director of the Danaher Business System, Product Identification Platform at VideoJet Technologies in Chicago." (Id. ¶ 27.) "As a Senior Director and Master Trainer of DBS, Baker had access to and regularly used a variety of confidential information." (Id. ¶ 28.) In late 2016, Baker left his employment with Danaher. After a brief stint with another company, Baker then began operating his own company -- defendant Lean Focus, LLC -- full time in February of 2017.

B. DBS

"Danaher has invested substantial resources over the years to develop its Danaher Business System ('DBS')," which allegedly "combines the core principals of growth, leadership, and lean to drive every aspect of Danaher's culture, guide what Danaher does, and measure Danaher's execution on its goals." (Id. ¶¶ 5, 18.) "Danaher employees are trained in the principles and application of the DBS," with certain employees deemed "DBS experts." (Id. ¶ 19.)

Danaher further alleges that it takes measures to maintain DBS's confidentiality, including "implementing physical and electronic security measures, such as employing locks on physical offices and facilities, as well as passwords, segregating confidential information, and employing security time-outs on computers and electronic equipment." (Id. ¶ 21.) "Danaher and its operating companies also maintain handbooks and procedures that remind, implement, and enforce security protocols, and conduct regular training of personnel concerning those safeguards." (Id.)

C. Employment Agreements

Consistent with these measures, Danaher requires employees to commit to maintain confidentiality. In Baker's case, on July 12, 2012, he signed an "Agreement Regarding Competition and Protection of Proprietary Interests Agreement" ("Proprietary Interests Agreement" or "PIA"). The agreement provides:

At all times during and after the termination of my employment or relationship with the Company, I will not, without the Company's prior written permission, directly or indirectly for any purpose other than performance of my duties for the Company, utilize or disclose to anyone outside of the Company any Confidential Information, or any information received by the Company in confidence from or about third parties, as long as such matters remain trade secrets or confidential. The restrictions regarding utilizing or disclosing confidential information shall cease thirty-six (36) months after the termination of my employment or relationship with the Company and shall only apply in all countries in which I performed work for the Company during the twenty-four (24) months preceding the termination of my employment or relationship with the Company.

(Id. ¶ 23; see also Mot. to Dismiss, Ex. A (dkt. #17-1) ¶ 1.b.)² "Confidential information" is defined in the Proprietary Interests Agreement as "the trade secrets and otherconfidential information of the Company which is not generally known to the public," listing examples as "customer and supplier identification and contacts, information about customers, . . . business and customer strategy, techniques, [and] information regarding all or any portion of the Danaher Business System." (Id.; Mot. to Dismiss, Ex. A (dkt. #17-1) ¶ 1.a.)³

Baker's Proprietary Interests Agreement with Danaher also contained a Non-Solicitation Provision at Paragraph 6, which states in pertinent part:

I agree that during my employment or relationship with the Company and for a period of 12 months thereafter, I will not, nor will I assist any third party to, directly or indirectly, (i) raise, hire, solicit, encourage or attempt to persuade any employee or independent contractor of the Company, or any person who was an employee or independent contract of the Company during the 6 months preceding the termination of my employment or relationship with the Company, who possesses or had access to Confidential Information of the Company, to leave the employ of or terminate a relationship with the Company; (ii) interfere with the performance by any such persons of their duties for the Company; or (iii) communicate with any such persons for the purposes described in Paragraph 6(d)(i) and (ii).

(Id. ¶ 25; Mot. to Dismiss, Ex. A (dkt. #17-1) ¶ 6.d.)

On January 30, 2014, Baker also signed a Nondisclosure and Assignment Agreement ("Nondisclosure Agreement"), which requires in pertinent part:

During and after my employment, I will not directly or indirectly utilize or disclose to anyone outside of the Company trade secrets or other confidential information of the Company. . . . Examples of confidential information include, but are not limited to, customer and supplier lists, pricing,margins, business and marketing plans and strategy, technical know-how, formulae, processes, designs, manufacturing techniques and software.

(Id. ¶ 31; Mot. to Dismiss, Ex. B (dkt. #17-2) ¶ 1.) "At the Company's request or upon termination of my employment," the Nondisclosure Agreement further requires Baker to "return all originals and copies off Company property to the Company." (Id. ¶ 32; Mot. to Dismiss, Ex. B (dkt. #17-2) ¶ 2.)

D. Baker's Departure and Development of Lean Focus

Baker left his employment with Danaher on or about September 12, 2016. Seven days later, he joined Eaton Corporation as Senior Vice President of Quality & Eaton Business Excellence. Baker worked for Eaton for approximately five months, during which time Danaher expressed its concerns to Eaton about Baker's pre-departure behavior and his role with Eaton. Specifically, Danaher expressed concern that Baker had retained confidential information in light of his pre-departure computer activities, which suggested that, among other things, he had downloaded information, including his contact list, retained USB devices, and wiped clean certain "external" hard drives and his company iPhone before returning them.

In February 2017, after leaving the Eaton Corporation, Baker founded defendant Lean Focus, LLC, and is its CEO, President and sole member.⁴ Plaintiff alleges that "Lean Focus is set up as a DBS clone," citing Lean Focus's own LinkedIn page, which describes a "Lean Focus Business System" that plaintiff claims "mirrors the elements of DBS." (Id. ¶50.) More specifically, plaintiff's complaint includes a grid and topics taken from the Lean Focus Business System, which it alleges copies DBS. (Id. ¶¶ 65-66.) Plaintiff further identifies Danaher references on Lean Focus's website and in social media posts. (Id. ¶¶ 67-73.)

In addition to alleging that Lean Focus has copied plaintiff's DBS model, plaintiff also alleges that Lean Focus "has engaged in a concerted and coordinated effort to recruit and hire Danaher-affiliated employees, including employees working in Danaher's DBS Office," identifying a LinkedIn post by Baker that seeks employees for Lean Focus's "Talent Search Practice," and states "You MUST be FORMER Danaher Corporation experienced in HR functions." (Id. ¶¶ 51, 54.) Since 2017, Lean Focus has also hired nine former Danaher or Danaher operating company employees, at least some of whom had access to confidential information and trade secrets. (Id. ¶¶ 7, 55-63.)

OPINION

As an initial matter, plaintiff Danaher is a Delaware Corporation, with its principal place of business in Washington, DC. (Compl. (dkt. #1) ¶ 11.) Defendant Lean Focus LLC's sole member is defendant Damon Baker, who is a citizen of Wisconsin. (Id. ¶¶ 13, 15.) Thus, there is complete diversity. Moreover, the amount in controversy exceeds $75,000. The court is satisfied, therefore, that it has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332(a). In addition, since plaintiff alleges one federal law claim -- misappropriation under the Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq. -- the court also has subject matter jurisdiction over this claim under 28 U.S.C. § 1331 and can exercise supplemental jurisdiction over any remaining state law claims under 28 U.S.C. § 1367.

Plaintiff filed its complaint on September 11, 2019, asserting ten causes of action: (1) breach of Proprietary Interest Agreement against defendant Baker; (2) breach of Nondisclosure Agreement against Baker; (3) tortious interference with contract against both defendants; (4) conversion against both; (5) breach of duty of loyalty against Baker; (6) aiding and abetting breach of fiduciary duty against defendant Lean Focus; (7) violation of Wisconsin Computer Crimes Act, Wis. Stat. § 943.70 against Lean Focus; (8) civil theft, Wis. Stat. §§ 895.446, 943...