Svanaco, Inc. v. Brand

417 F.Supp.3d 1042

SVANACO, INC., Plaintiff,

v.Jonathan BRAND and Marty Gilman, Inc., Defendants.

Marty Gilman, Inc., Counter-Claimant,

v.Svanaco, Inc., Counter-Defendant.

No. 15-cv-11639

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

Signed September 30, 2019

Cynthia H. Hyndman, Robert Lawrence Margolis, Robinson Curley P.C., Chicago, IL, for Plaintiff/Counter-Defendant.

Timothy D. Elliott, Emily A. Shupe, Raymond James Sanguinetti, Rathje & Woodward LLC, Wheaton, IL, for Defendants/Counter-Claimant.

Jonathan Brand, pro se.

MEMORANDUM OPINION AND ORDER

Andrea R. Wood, United States District Judge

This case arises from a soured business relationship between Plaintiff Svanaco, Inc., also known as Americaneagle.com ("Svanaco"), and Defendant Marty Gilman, Inc. ("MGI"). Svanaco creates, hosts, and maintains business websites. In 2012, MGI, a seller of sports equipment, retained Svanaco to design and redevelop its website. The parties disagree about which of them is at fault but do not dispute that by 2015, Svanaco had not delivered a completed website and MGI had not paid the full balance due under the contract. In October 2015, MGI retained Defendant Jonathan Brand as an independent consultant and informed him of its dispute with Svanaco. Over the course of the next few months, Brand launched various attacks against Svanaco on the internet; for example, Brand created more than a dozen websites with "americaneagle" in the URL, posted negative reviews about Svanaco on third-party websites, and launched distributed denial-of-service attacks to disrupt traffic on Svanaco's websites.

Svanaco has sued both MGI and Brand¹ pursuant to the Anticybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d) (Count I), and the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030 (Count II), and has also asserted state law claims of defamation (Count III), tortious interference with prospective economic advantage (Count IV), and civil conspiracy (Count VI).² In addition, Svanaco has sued MGI for breach of contract (Count VII), and MGI has likewise asserted a counterclaim against Svanaco for breach of contract. Now before the Court are MGI's motion for summary judgment as to Svanaco's claims (Dkt. No. 195-1) and Svanaco's motion for summary judgment as to MGI's counterclaim (Dkt. No. 191). For the reasons explained below, MGI's motion is granted in part and denied in part, and Svanaco's motion is denied.

BACKGROUND

The Parties

Svanaco is an Illinois corporation that, under the trade name americaneagle.com, creates, hosts, and maintains general and ecommerce websites for businesses and governmental bodies. (MGI's Resp. to Svanaco's Statement of Material Facts ("MGI's RSMF") ¶ 1, Dkt. No. 207.) Svanaco has created websites for clients such as the National Football League Hall of Fame and the Chicago Bears professional football team. (Pl.'s L.R. 56.1(b)(3)(A) Resp. to Def. MGI's L.R. 56.1(a)(3) Statement of Undisputed Material Facts ("Pl.'s RSMF") ¶ 79, Dkt. No. 206.) MGI is a Connecticut corporation that, under the trade name Gilman Gear, sells sports equipment and related products. (MGI's RSMF ¶ 2.) In 2012, Svanaco and MGI entered into a contract ("Agreement") under which Svanaco would design and redevelop MGI's website for $50,000. (Id. ¶¶ 7–8.) Under the terms of the Agreement, MGI would pay Svanaco in three equal payments: the first payment of $16,667 was due at the time of signing, the second payment was due upon completion of the Project Plan and Graphics, and the final payment would be due upon launch of the website. (Id. ¶ 8; see also MGI's RSMF Ex. 8.) MGI made the first two payments to Svanaco, but the parties came to a serious disagreement before MGI submitted the third payment. (MGI's RSMF ¶ 9.)

The Contract Dispute

To complete the website, Svanaco required certain product information from MGI, such as the pricing, color options, and stock keeping unit ("SKU") numbers of MGI's products. (Id. ¶¶ 13, 31.) But MGI never provided a completed spreadsheet of this information to Svanaco as requested. (Id. ¶¶ 28–30.) The parties disagree about who is responsible for MGI's failure to provide the information to Svanaco. According to Svanaco, it is standard practice for the customer to provide such information, but MGI repeatedly refused to do so despite multiple requests and reminders, causing a significant delay. (Id. ¶ 15.) However, according to MGI, Svanaco was responsible for devoting 55 hours to importing product information to the website or otherwise helping MGI with this task but only spent 6.5 hours doing so. (Id. ¶¶ 16, 24–25; Pl.'s RSMF ¶ 11.) Svanaco, in turn, claims its staff spent almost 55 hours on related tasks such as creating the product information spreadsheet, training MGI's staff to use the spreadsheet, and building an import tool that allowed MGI to import the data directly into the website. (Pl.'s RSMF ¶ 11.)

On June 30, 2014, Svanaco presented a "beta website for testing and training" to MGI. (MGI's RSMF ¶ 32.) Svanaco claims it had completed all programming work for MGI's website by then, and MGI could fully test the website's functionality through the beta website. (Id. ¶ 38.) Svanaco also claims the website contained a product import tool that would allow MGI to import its product information without further assistance by Svanaco. (Id. ¶¶ 36–37.) By contrast, MGI claims the beta website was incomplete and had multiple issues; for example, it did not link to MGI's Facebook page or Twitter, was missing the home page with welcome text and audio, and had no company profile page, no banner ads for the various categories of equipment, and no subpages. (Id. ¶ 32.) Thus, according to MGI, the website could not be tested or evaluated in any meaningful way. (Id. ¶ 37.) Svanaco also sent MGI an invoice for the third and final payment around the same time it provided the beta website, which MGI did not pay. (Pl.'s RSMF ¶ 23.) MGI accuses Svanaco of attempting to use the beta website to obtain the third and final payment from MGI, with no intention of completing the website. (Id. ¶ 22.)

On May 8, 2015, Svanaco sought payment of $8,666.66 to resume work on the website and told MGI that payment was due within 30 days of the beta website delivery. (Id. ¶ 27.) Then, on May 18, 2015, Svanaco requested payment of $8,000 to "continue work on this project," informing MGI that it had spent over 700 hours working on the website. (Id. ) MGI refused to pay, and in June 2015, Neil Gilman, MGI's CEO, stated that he would "post [the beta website] online and invite comment from people who are expert [sic ] in web development." (Id. ¶ 28.)

MGI Hires Jonathan Brand

In October 2015, Gilman posted various public advertisements seeking a web designer. (Id. ¶ 30.) On October 11, 2015, Brand contacted Gilman via email. (Id. ) Brand and Gilman had never met or had any contact prior to this point. (Id. ¶ 31.) On October 13, 2015, Gilman interviewed Brand and offered him $900. (Id. ) According to MGI, Gilman hired Brand as an independent consultant to review the beta website and determine whether it reflected 700 hours of work. (Id. ) Gilman did not hire Brand as an employee nor did Gilman provide him with any equipment. (Id. ¶¶ 56–57.) Gilman gave Brand a copy of Svanaco's business proposal and several emails containing passwords and links to access the beta website. (Id. ¶ 32.) After Brand accessed the beta website, he told Gilman that based on what he had seen, it would be difficult for Svanaco to argue that it had worked for more than 5–10 hours on it. (Id. ¶ 33.)

Gilman asked Brand if Svanaco could be "shamed" into repaying his money. (Id. ¶ 34.) According to MGI, Gilman meant (and Brand understood him to mean) that Svanaco would be presented with "truthful statements" about how little time had been spent on the beta website. (Id. ¶ 34.) Brand replied, "yes, they can be shamed," and sent Gilman a link to a website Brand had created, americaneaglereviews.com. (MGI's Resp. to Svanaco's L.R. 56.1(b)(3)(A) Statement of Additional Facts ("MGI's RSAF") ¶ 9, Dkt. No. 220.) Brand also invited Gilman to make "comments/edits" to his website. (Id. ¶ 11.) MGI claims Gilman did not click the link but does not dispute that he later asked Brand, "has this gone live yet? Why is it that American Eagle hasn't reached out to me if this is on the web?" and "Are they [Svanaco] aware of your review?" (Id. ¶ 12.)

On October 28, 2015, Brand met with Gilman and MGI's financial administrator, Nadine Parker, to "go over [his] work" and obtain the $900 payment. (Pl.'s RSMF ¶ 35.) Brand did not receive any other payment from MGI after this point. (Id. ¶ 36.) At the meeting, Brand talked about posting an online review about Svanaco. (Id. ¶ 37.) Parker told Brand this would be acceptable "as long as it is truthful." (Id. ¶ 37.) That evening, Gilman reviewed Brand's post and told him to "make it very clear exactly what [Svanaco] put up which they think is a Beta Site," and include a title "something like 700 hours of AE done in 30 minutes using Word Press." (Id. ¶ 38.) Gilman also stated in his email to Brand, "The big point is that AE didn't do any work for us. Just minimal design concept stuff. I am concerned that AE won't feel intimidated by this review." (Id. ) The parties dispute whether Brand incorporated Gilman's edits. (Id. ¶ 39.)

The following week, Brand sent Gilman a series of emails urging Gilman to write a demand letter to Svanaco and aggressively seek a refund. (Id. ¶ 40.) Brand also sent Gilman a proposed letter he drafted for Gilman to send to Svanaco, which stated, "My [Gilman's] understanding is that squaring up with Gilman Gear as soon as possible, you may see my consultant's personal warning website taken offline, rather than see it strengthened through aggressive social media and backlink campaigns." (Id. ¶ 43.) In another email to Gilman, Brand voiced his intent to damage Svanaco financially to the tune of "$100k – 500k in...