Liqui-Box Corp. v. Scholle IPN Corp.

LIQUI-BOX CORPORATION, Plaintiff, v. SCHOLLE IPN CORPORATION, SCHOLLE IPN PACKAGING, INC.,and KEVIN BERGENTHUN, Defendants.

SCHOLLE IPN CORPORATION,SCHOLLE IPN PACKAGING, INC., Counterclaim-Plaintiffs, v. LIQUI-BOX CORPORATION, LIQUI-BOX FLEXIBLES, LLC, CORPLEX PLASTICS, UK LTD.,STANLEY BANAS, and LAWRENCE VOELKL, Counterclaim-Defendants.

No. 19 C 4069

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

September 18, 2020

Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER

Plaintiff Liqui-Box Corporation and Defendants Scholle IPN Corporation and Scholle IPN Packaging, Inc. (collectively "Scholle") are competitors that manufacture "bag-in-box and fitmented flexible liquid packaging solutions" used to hold and dispense products such as beverages.¹ (Countercl. [37] ¶ 15; Answer [37] ¶ 1.) In this lawsuit, Liqui-Box alleges that Scholle and one of its employees, Kevin Bergenthun, infringed one of Liqui-Box's patents and misappropriated Liqui-Box's trade secrets, among other claims. (See Am. Compl. [24].) Scholle responded with a thirteen-count Counterclaim [37] against Liqui-Box, other businesses, and two individuals. Relevant here, Scholle alleges that its former employee, Counter-Defendant Lawrence Voelkl, accepted a position with Liqui-Box and later disclosed to Liqui-Box employees Scholle's confidential and proprietary information, as well as its trade secrets, in violation of hiscontract with Scholle, the Defend Trade Secrets Act, and the Illinois Trade Secrets Act. Voelkl moves to dismiss the claims against him pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction [51]. For the reasons explained below, the motion is denied.

BACKGROUND

Lawrence Voelkl worked for Scholle from 1980 until he was laid off in April 2014. (Countercl. ¶¶ 72, 77; Voelkl Decl. ¶ 2, Ex. A to Mem. in Supp. Mot. to Dismiss ("Mot. to Dismiss") [52].) Voelkl held various positions with Scholle, including Technical Service Engineer, Service Manager, Service Director, Regional Business Manager, and Senior Customer Business Manager. He began his employment with Scholle in Irvine, California and continued working in California until 2001. (Voelkl Decl. ¶¶ 3, 10.) Then in 2001, Voelkl moved to Winter Garden, Florida, where he worked remotely for Scholle in sales management positions until April 2014 when he was laid off. (Id. ¶¶ 2, 9-10.) In 2015, Voelkl accepted a position to work remotely for Liqui-Box and, Scholle alleges, during his employment with Liqui-Box, disclosed Scholle's confidential and proprietary information as well as its trade secrets. (Id. ¶ 16; Countercl. ¶¶ 80-81.) Voelkl still lives in Florida, has never lived or owned property in Illinois, and has no plans to travel to Illinois. (Voelkl Decl. ¶¶ 9, 12, 17.)

In support of this motion, Voelkl has submitted a sworn declaration stating that he was never employed at a Scholle office or facility in Illinois; he has always worked either in California or remotely from Florida. (Id. ¶ 13.) Scholle does not dispute this. Scholle acknowledges that Voelkl never maintained a physical office in Illinois, but contends that Voelkl's remote work did involve frequent contacts with Illinois. Scholle offers the declaration of its General Counsel, Dan Buhrfiend, and documentation showing that from May 24, 2010 through December 5, 2013, Scholle reimbursed Voelkl for twenty-six roundtrip flights to Chicago, Illinois and sixty-eight nights at hotels in the Chicago area. (Buhrfiend Decl. ¶¶ 1, 4, Ex. 1 to Scholle Resp. to Voelkl's Mot. to Dismiss ("Scholle Resp.") [64].) Voelkl made five trips to Chicago in 2011, eight trips in 2012, and another eight trips in 2013. (Id. ¶ 4.) Voelkl initially stated that between 2001 and April 2014 he typically visited Illinois just two or three times per year, and only at Scholle's request. (VoelklDecl. ¶ 11.) In an attempt to dispute the accuracy of Scholle's documentation of a greater number of trips, Voelkl observes that flying to O'Hare airport is not the same as visiting Illinois. (Voelkl Reply [66] at 10.) But Voelkl does not dispute Scholle's documentation of his hotel stays other than to note that Voelkl spent three of the sixty-eight nights in Wisconsin. (Id. at 2 n.2.)

Scholle also connects Voelkl with Illinois by noting that Voelkl's direct supervisor between 2012 and March 2014 was Kent Kisselle, who worked out of Scholle's offices in Illinois. (Buhrfiend Decl. ¶ 6.) Moreover, Voelkl used a Scholle-issued computer and "regularly, most likely daily, accessed emails and files that were stored in the Northlake, Illinois servers." (Id. ¶ 10.) Scholle asserts that Voelkl communicated regularly with his supervisor and with other Scholle employees in Northlake, Illinois. (Scholle Resp. at 9.) Voelkl also "coordinated the submission of sales orders on behalf of Scholle customers to the Order Management team in Scholle's offices in Northlake." (Buhrfiend Decl. ¶ 11.) Neither party identifies the locations of the customers to which Voelkl sold Scholle products, but Scholle has received and processed sales orders in Northlake since 1952. (Id.)

Many of Scholle's employee services are based in its Northlake, Illinois offices. The headquarters of Scholle IPN Packaging, Inc. has been in Northlake since October 1, 2005,² and prior to October 1, 2005, Scholle IPN Packaging was a division of Scholle Corporation, which had "some, but not all, headquarter activities located in Northlake, Illinois." (Id. ¶ 5.) Both Scholle IPN Corporation and Scholle IPN Packaging, Inc. are currently incorporated in Nevada but have their principal places of business in Northlake, Illinois. (Countercl. ¶¶ 2-3.) Since 1959, Scholle's employees responsible for payroll processing and benefits administration have been located in Northlake. (Buhrfiend Decl. ¶ 7.) Since 1997, Scholle has maintained a bank account with Bank of America in Illinois, and Scholle's payroll processor, ADP, is in Elk Grove Village, Illinois. (Id. ¶ 8.) Scholle stores files containing its confidential and proprietary information on servers located in Northlake, Illinois and routes all email communications through those servers. (Id. ¶ 9.)

Neither party describes Voelkl's job responsibilities in any detail, but Scholle asserts that Voelkl's work gave him a deep understanding of Scholle's confidential and proprietary information and trade secrets. This information includes the design, production, manufacturing, marketing, sales, and distribution of Scholle's products. (Countercl. ¶ 73.) Voelkl was also involved in the "field implementation of prototype and proprietary filling equipment, bag-in-box fillers, and aseptic equipment," and Voelkl continued to "design and implement equipment" after he moved into managerial roles. (Id.) Additionally, through his sales management positions, Voelkl learned about the cost, pricing, and margins of Scholle's products, along with "other financial, economic, and customer information." (Id.) This information includes "customer specifications, requirements, product preferences, contacts, contracts, sales and marketing strategies, financial and economic information relating to fitment and flexible bag product pricing, costs, margins, and sales volumes." (Id. ¶ 74.) Scholle also alleges that Voelkl had close relationships with many of Scholle's customers. (Id.)

To protect its confidential and proprietary information, Scholle requires its employees to sign confidentiality agreements. (Id. ¶ 54.) Voelkl signed such an agreement with Scholle on March 19, 1984 in Irvine, California where he was working at the time. (Id. ¶ 76; Voelkl Decl. ¶ 6.) The Scholle Corporation Employee Patent, Confidential Information and Non-Solicitation Agreement ("Employee Agreement") requires employees, among other obligations, to maintain the confidentiality of Scholle's confidential and proprietary information regarding the "Company's products, sales, business and affairs," "during [their] employment and thereafter." (Employee Agreement ¶ 4, Ex. 14 to Countercl. [37-14].) Upon termination of employment, the Employee Agreement prohibits former employees from retaining in their personal possession materials and other documents relating to the "business of the Company" and "used, prepared, or received by [the former employees] in connection with or by virtue of [their] employment." (Id. ¶ 5.) The Agreement specifies that former employees must "promptly deliver to the Company all such materials in [their] possession or under [their] control and [they] shall not make, retain or give away copies of any such materials." (Id.) The Employee Agreement also contains a choice-of-law and venue clause. (Id. ¶ 15.) The Agreement "shall be governed by California law," and "venue shall be proper either in Orange County, California, or in the county, city, or district in which the Company's office or facilities at which [the employee] last was employed is located." (Id.)

As noted, Voelkl was laid off from his position with Scholle in 2014. In April of the following year, Voelkl accepted a position as Liqui-Box's Global Equipment Service and Support Manager, and remained in that position until his retirement in March 2019. (Countercl. ¶¶ 8, 80; Voelkl Decl. ¶¶ 14-15.) Liqui-Box is incorporated in Ohio and has its principal place of business in Richmond, Virginia (Am. Compl. ¶ 7), but during his employment with Liqui-Box, Voelkl worked remotely from Winter Garden, Florida. (Voelkl Decl. ¶ 16.) Scholle believes that Liqui-Box offered Voelkl employment "in exchange for, amongst other things, his disclosure of Scholle confidential and proprietary information relating to Scholle's design, development, manufacturing, distribution, shipping details, sales and promotion of Scholle's bag-in-box products and fitments." (Countercl. ¶ 79.) Voelkl denies this allegation. (Voelkl Decl. ¶ 14.)

Scholle alleges that Voelkl breached the Employee Agreement (Count IX) and misappropriated...