Got Docs, LLC v. Kingsbridge Holdings, LLC

657 F.Supp.3d 1034

GOT DOCS, LLC, and IQL-RIGGIG, LLC, f/k/a Riveria MCS, LLC, Plaintiffs, v. KINGSBRIDGE HOLDINGS, LLC, Frank Mendicina, and AMF6 Solutions, LLC, Defendants.

No. 19 C 6155

United States District Court, N.D. Illinois, Eastern Division

Signed February 17, 2023

Matthew S. Ryan, Cotsirilos, Tighe, Streicker, Poulos & Campbell, Ltd., Chicago, IL, Lindsay L. Builder, Pro Hac Vice, Nelson Mullins Riley & Scarborough LLP, Greenville, SC, Michael Alan Brown, Pro Hac Vice, Nelson Mullins Riley & Scarborough LLP, Baltimore, MD, Philip M. Busman, Pro Hac Vice, Raymond G. Mullady, Jr., Pro Hac Vice, Nelson Mullins Riley & Scarborough LLP, Washington, DC, for Plaintiff IQL Riggig, LLC.

Matthew S. Ryan, Cotsirilos, Tighe, Streicker, Poulos & Campbell, Ltd., Chicago, IL, for Plaintiff Got Docs, LLC.

William Robert Bay, Thompson Coburn, St. Louis, MO, Jeffrey R. Fink, Thompson Coburn, Chicago, IL, for Defendants Kingsbridge Technologies, Frank Mendicina, AMF6 Solutions LLC.

William Robert Bay, Thompson Coburn, St. Louis, MO, Holly Hannah Campbell, Jeffrey R. Fink, Thompson Coburn, Chicago, IL, for Defendant Kingsbridge Holdings, LLC.

MEMORANDUM OPINION AND ORDER

Ronald A. Guzmán, United States District Judge

For the reasons stated below, Defendants' motion for summary judgment [273] is granted in part and denied in part.

STATEMENT

Background

Parties. Plaintiffs Got Docs, LLC, d/b/a IQ Logic ("Got Docs") and IQL-RIGGIG, LLC, formerly known as Riveria MCS, LLC ("Riveria")¹ bring the instant suit against Defendants Kingsbridge Holdings, LLC ("Kingsbridge"), AMF6 Solutions LLC ("AMF6"), and Frank Mendicina ("Mendicina"), the sole member of AMF6.² Generally, Plaintiffs allege that after leaving the employment of Got Docs, Mendicina joined Kingsbridge and "stole" Got Docs' business, including its clients, contracts, proprietary information, and employees. Many of the facts offered in support of Plaintiffs' allegations are in dispute.

Managed Print Services. Xerox and other manufacturers make and sell print devices (e.g., printers, copiers, and multifunction devices) and provide service and supplies for the devices, both directly and through their respective networks of authorized dealers. Xerox's managed print service ("MPS System") involves two primary components, a sales component and a service component, and functions through a suite of software programs that Xerox developed and provides to its dealers. Under the sales component of Xerox's MPS System, Xerox or its authorized dealer analyzes a customer's usage of its existing print devices and recommends how the customer can increase efficiency and save money when the customer is ready to replace its existing print devices with new ones. Under the service component of Xerox's MPS System, Xerox and its dealers use the Xerox software tools to continuously monitor and support a customer's print devices and provide service and supplies (e.g., toner) for the devices on a regular basis. With the service component, a Xerox dealer enters into service contracts with its customers and typically enters into a contract with Xerox to provide the actual service and supplies to the customers on the dealer's behalf. If the dealer fails to pay Xerox and becomes sufficiently in arrears, Xerox places the dealer on a "supply hold," meaning that the dealer's customers no longer receive service or supplies for their print devices (and, eventually, their print devices will not function) until the dealer pays Xerox.

Got Docs. Got Docs was founded by Mendicina and AMF6 in 2012. It was an authorized Xerox dealer that primarily sold Xerox print devices and service and supplies using Xerox's MPS System. IQ Connect was a "vendor-agnostic" proprietary software platform created by Got Docs that was similar to Xerox's software but, according to Got Docs, had other capabilities. IQ Connect was cloud-based and housed at Amazon Web Services. Got Docs contracted with Xerox to provide service and supplies to Got Docs' customers. Got Docs states that it did not work with Xerox exclusively.

In November 2015, Riveria and AMF6 became the two owners/members of Got Docs, with Riveria owning 60% and AMF6 owning 40%. As of November 2015, the Board of Managers of Got Docs consisted of Gibson, Gupta, and Mendicina. Effective November 18, 2015, Riveria and AMF6 entered into an Amended and Restated Limited Liability Company Agreement of Got Docs, LLC ("Operating Agreement"), which is governed by Nevada law. On the same date, Got Docs and Mendicina entered into an employment agreement ("Employment Agreement"), which is governed by California law, pursuant to which Mendicina was named Got Docs' Chief Executive Officer.

On August 10, 2017, Gibson told Mendicina that Got Docs was "at a stand still in terms of paying people or making any progress," and on August 11, 2017, Mendicina resigned as President and CEO of Got Docs. In the fall of 2017, Got Docs failed to pay Xerox for servicing and supplies it provided to Got Docs' customers on behalf of Got Docs. Accordingly, in November 2017, Xerox stopped providing service and supplies to Got Docs' customers, and Got-Docs ceased operations in or around December 2017. In mid-January 2018, Xerox terminated Got Docs as an authorized dealer.

A few days after Mendicina left Got Docs, Kingsbridge hired him to form a new division called Kingsbridge Technologies, through which Kingsbridge became an authorized Xerox dealer. After Got Docs ceased operations and had its phone service discontinued, Kingsbridge acquired Got Docs' former phone number from the phone service provider. At some point after Mendicina joined Kingsbridge (the date is disputed), Kingsbridge developed its own software interface called Bridge-Connect. Between August 2017 (when Mendicina joined Kingsbridge) and December 2017 (when Got Docs ceased operations), Kingsbridge Technologies was just beginning operations and had no significant sales or revenues. Kingsbridge hired several Got Docs salespeople at various times between August and November 2017. It is undisputed that after Got Docs and Xerox stopped providing service and supplies to Got Docs' customers, some of those customers contacted Kingsbridge, which attempted to provide those customers with service and supplies at Kingsbridge's expense and with no assurance of an ongoing relationship. In late January 2018, Xerox formally allowed Kingsbridge to take over servicing of Got Docs' customers that were willing to switch to Kingsbridge.

Plaintiffs allege 17 counts against Defendants as follows: Count 1--Tortious Interference with Contract (IQ Logic³ v. Kingsbridge); Count 2--Tortious Interference with Prospective Economic Advantage (IQ Logic v. Kingsbridge); Count 3--Breach of the Mendicina Employment Agreement⁴ (IQ Logic v. Mendicina); Count 4--Tortious Interference with Mendicina Employment Agreement (IQ Logic v. Kingsbridge); Count 5--Breach of the IQ Logic Operating Agreement (IQ Logic v. Mendicina and AMF6 Solutions); Count 6--Tortious Interference with the IQ Logic Operating Agreement (IQ Logic v. Kingsbridge); Count 7--Unfair Competition under the Lanham Act (IQ Logic v. Kingsbridge); Count 8--Violation of the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/2 (IQ Logic v. Kingsbridge); Count 9--Violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2 (IQ Logic v. Kingsbridge); Count 10--Trade Secret Misappropriation under the Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq. ("DTSA") (IQ Logic v. Kingsbridge and Mendicina); Count 11--Trade Secret Misappropriation under the Illinois Trade Secrets Act, 765 ILCS 1065 ("ITSA") (IQ Logic v. Kingsbridge and Mendicina); Count 12--Copyright Infringement (IQ Logic v. Kingsbridge); Count 13--Conversion (IQ Logic and IQL Riggig v. Kingsbridge); Count 14--Unjust Enrichment (IQ Logic v. Kingsbridge); Count 15--Breach of Fiduciary Duty (IQ Logic v. Mendicina); Count 16--Aiding and Abetting Breach of Fiduciary Duty (IQ Logic v. Kingsbridge); Count 17--Civil Conspiracy (IQ Logic and IQL Riggig v. Kingsbridge and Mendicina). The state-law claims are variously raised under Nevada, California, or Illinois law, as identified in the relevant discussion of the claims.

Defendants move for summary judgment on all counts.

Standard

Summary judgment is proper where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine dispute as to any material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court "consider[s] all of the evidence in the record in the light most favorable to the nonmoving party, and [ ] draw[s] all reasonable inferences from that evidence in favor of the party opposing summary judgment." Logan v. City of Chi., 4 F.4th 529, 536 (7th Cir. 2021) (quotation omitted).

Analysis

The Court first addresses the federal-law claims: copyright infringement and violation of the Defend Trade Secrets Act ("DTSA").

Copyright Infringement (Count 12)

Defendants assert that they are entitled to summary judgment on Got Docs' copyright infringement claim because "there is no evidence that [Kingsbridge] copied Got Docs' website or website content."⁵ (Defs.' Mem. Law Supp. Mot. Summ. J., Dkt. # 274, at 12.) Got Docs responds with "overlooked facts" it sets forth in a table covering Counts 12 through 16 and from which Got Docs asserts a "reasonable jury could return a verdict" for Got Docs. The table contains only one section addressing the copyright infringement claim, which states that "Got Docs managers testified to personal knowledge that Defendants copied [GotDocs'] website, [a] developer of [the] copycat site testified regarding...