Mission Measurement Corp. v. Blackbaud, Inc.

216 F.Supp.3d 915

MISSION MEASUREMENT CORPORATION and Mission Metrics, LCC,¹ Plaintiffs,

v.BLACKBAUD, INC., and Microedge, LLC, Defendants.

Case No. 16 C 6003

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

Signed October 27, 2016

Joseph A. Mahoney, Christopher Patrick Eby, Richard M. Assmus, Mayer Brown LLP, Chicago, IL, for Plaintiffs.

Paul E. Veith, Aryn Evans Sothbarr, Sidley Austin LLP, Chicago, IL, Rachel Rose Davidson, Sidley Austin LLP, San Francisco, CA, for Defendants.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Court Judge:

On June 8, 2016, Plaintiff Mission Measurement Corporation ("Mission Measurement") brought the present seven-count Complaint against Defendants Blackbaud, Inc. ("Blackbaud") and MicroEdge, LLC ("MicroEdge") alleging violations of the Defend Trade Secrets Act of 2016, 18 U.S.C. § 1831, et seq. , as well as supplemental state law claims. See 28 U.S.C. §§ 1331, 1367(a). Before the Court is Defendants' motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6), or in the alternative, motion for a more definite statement under Rule 12(e). For the following reasons, the Court denies Defendants' motions.

LEGAL STANDARDS

I. Motion Under Rule 12(b)(6)

"A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted." Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014). The relevant question at the motion to dismiss stage is not whether the plaintiff will ultimately prevail on the merits, but whether the complaint is sufficient to cross the federal pleading threshold. See Skinner v. Switzer, 562 U.S. 521, 529–30, 131 S.Ct. 1289, 179 L.Ed.2d 233 (2011). Under Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Under the federal notice pleading standards, a plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Put differently, a "complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ). In determining the sufficiency of a complaint under the plausibility standard, courts must "accept all well-pleaded facts as true and draw reasonable inferences in the plaintiffs' favor." Roberts v. City of Chicago , 817 F.3d 561, 564 (7th Cir. 2016). Also, "a plaintiff ordinarily need not anticipate and attempt to plead around affirmative defenses." Hyson USA, Inc. v. Hyson 2U, Ltd., 821 F.3d 935, 939 (7th Cir. 2016).

II. Motion Under Rule 12(e)

Under Rule 12(e), a party may move for a more definite statement of a pleading that is "so vague or ambiguous that the party cannot reasonably prepare a response." Fed.R.Civ.P. 12(e). The rule "is designed to strike at unintelligibility rather than want of detail." Gardunio v. Town of Cicero, 674 F.Supp.2d 976, 992 (N.D. Ill. 2009). "Motions under Rule 12(e) are disfavored generally, and courts should grant such motions only if the complaint is so unintelligible that the defendant cannot draft responsive pleading." Rivera v. Lake Cnty., 974 F.Supp.2d 1179, 1195 (N.D. Ill. 2013).

BACKGROUND

In the Complaint, Mission Measurement alleges that it is the market leader in social sector data and insights relating to social change programs aimed at addressing issues such as poverty, hunger, access to healthcare, and climate change. (R. 1, Compl. ¶ 14.) One of Mission Measurement's goals is to change the way non-profits, corporations, governments, and foundations invest in philanthropic causes by using data to measure and forecast social impact program outcomes. (Id. ) Using data collected from social program evaluations, Mission Measurement has compiled a database of over 75,000 different data points, which it has categorized into approximately 130 social outcome types. (Id. ¶ 15.) Mission Measurement alleges that these data are used to grade whether a particular program will achieve its objectives, the average expected cost to do so, and the total number of people the program will serve. (Id. )

Over the last eleven years, Mission Measurement has developed its proprietary database—the Outcome Taxonomy™—that implements Mission Measurement's vision for database and software products and methods to gauge social impact. (Id. ¶ 16.) Certain aspects of Mission Measurement's novel system are detailed in the pending U.S. Patent Application Ser. No. 14/137,580 entitled "System and Method for Analyzing and Predicting the Impact of Social Programs," filed on December 20, 2013. (Id. )

Defendant MicroEdge is a provider of software solutions to automate the charitable giving process. (Id. ¶ 17.) On February 29, 2012, Alan Cline ("Cline"), Principal at Vista Equity Partners ("Vista"), contacted Mission Measurement's CEO Jason Saul ("Saul") to help MicroEdge develop a way to measure outcomes. (Id. ) Mission Measurement contends that Vista is a private equity firm that has held significant investments in MicroEdge. (Id. ) Also, Mission Measurement alleges, upon information and belief, that Vista and MicroEdge knew that MicroEdge had little to no knowledge or experience in measuring outcomes from philanthropic programs and that they needed Mission Measurement's expertise. (Id. ¶ 18.) In addition, Mission Measurement maintains that Cline's initial contact led to a series of communications between Mission Measurement and MicroEdge with the goal of jointly developing and owning a new software application based on Mission Measurement's trade secrets, the Outcome Taxonomy, and other intellectual property. (Id. )

On March 16, 2012, MicroEdge's CEO Preston McKenzie ("McKenzie") communicated with Saul that MicroEdge desired to engage Mission Measurement to help it develop a software product to measure outcomes. (Id. ¶ 20.) According to Plaintiff, Saul made it clear that Mission Measurement had intended to develop a software application for its own commercialization and would not be interested in helping MicroEdge develop a product unless Mission Measurement received equity in MicroEdge or royalties based on sales of the software product. (Id. ) In April and May 2012, Saul and McKenzie began discussing the terms of this agreement. (Id. ¶ 21.) To protect the confidential and proprietary nature of such discussions, Mission Measurement and MicroEdge executed a Confidentiality and Non–Disclosure Agreement dated June 26, 2012. (Id. ¶ 22.) Two months later, Mission Measurement sent MicroEdge an email with attachments that described the joint project and included confidential information. (Id. ¶ 23.) In the fall of 2012, Mission Measurement and MicroEdge conducted focus groups to determine market demand and to test potential client response to their jointly-developed product. (Id. ¶ 24.) During that time, Mission Measurement and MicroEdge negotiated a Joint Development Agreement ("JDA"), which specified that the software was jointly-owned by the parties, that Mission Measurement exclusively owns the Outcomes Taxonomy, and that MicroEdge would pay royalties and a development fee to Mission Measurement upon commercialization. (Id. ) The parties never executed the JDA. (Id. )

According to Plaintiff, throughout the course of their dealing, MicroEdge repeatedly recognized the significant value of Mission Measurement's intellectual property and its importance to the joint software product. (Id. ¶ 26.) In 2012 and early 2013, Mission Measurement and MicroEdge began discussing the terms of a definitive agreement to memorialize their understanding that the software product they were developing was and is jointly-owned and that they would share the revenues based on the sales of the product. (Id. ) As of January 2013, Mission Measurement and MicroEdge had reached an agreement on essential terms, but other terms and conditions had yet to be finalized. (Id. ¶ 27.) The parties, however, wanted to finalize the jointly-developed product and launch it as soon as possible, therefore, on January 16, 2013 Mission Measurement and MicroEdge executed a Letter of Intent. (Id. ) The Letter of Intent explicitly acknowledged the joint nature of the product in terms of joint product development, joint technology development, and joint sales pitch meetings. (Id. ¶ 29.) Moreover, the Letter of Intent clearly stated that the Outcomes Taxonomy is Mission Measurement's sole property. (Id. )

After execution of the Letter of Intent on January 16, 2013, Mission Measurement continued to share intellectual property with MicroEdge in order to develop a project plan. (Id. ¶ 30.) On February 19, 2013, MicroEdge's development team visited Mission Measurement in Chicago where Mission Measurement shared additional confidential information, after which multiple meetings and telephone calls occurred to develop and finalize the product. (Id. ¶¶ 30, 31.) Mission Measurement and MicroEdge worked in close collaboration for over two years, from June 2012 through May 2014, to educate MicroEdge's software engineers and executives on Mission Measurement's intellectual property, including its Outcomes Taxonomy, that would be integrated into the jointly-owned software product. (Id. ¶ 32.) According to Plaintiff, despite MicroEdge's representations and conduct, MicroEdge failed to act in good faith in negotiating the definitive agreement, but instead embarked on an intentional and consistent strategy of delay and obfuscation in its communications with Mission Measurement. (Id. ¶ 37.) Shortly thereafter, in the summer of 2014, MicroEdge ceased communications with Mission Measurement. (Id. ¶ 39.)

In early September 2014, Charles Vanek ("Vanek"),...