Zero Friction LLC v. Bali Leathers, Inc.

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ZERO FRICTION LLC, an Illinois limited liability company, Plaintiff, v. BALI LEATHERS, INC., a New York corporation, Defendant.

No. 1:20-cv-00070

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

June 2, 2023

MEMORANDUM OPINION

CHARLES P. KOCORAS, District Judge

Before the Court is Defendant Bali Leathers, Inc.'s (“Bali”) Motion for Summary Judgment under Federal Rule of Civil Procedure 56. For the following reasons, the motion is granted-in-part and denied-in-part.

BACKGROUND

In resolving a motion for summary judgment, the Court views the evidence in the light most favorable to the nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. 475 U.S. 574, 587 (1986). The following facts are taken from the record and are undisputed unless otherwise noted.^[1] Defendant Bali manufactures and distributes one-size golf gloves. At all times relevant to this action, John Widdemer was President of Bali.

Plaintiff Zero Friction LLC (“Zero Friction”)^[2] makes and sells a variety of golf products, including one-size gloves, which it sells to sporting goods retailers. John Iacono is the President and Owner of Zero Friction.

In approximately 2013 or 2014, Iacono and Widdemer discussed the possibility of Bali producing one-size gloves for Zero Friction. Iacono also traveled to Johnstown, New York to visit Bali's warehouse and offices. During this visit Iacono met with Widdemer and they discussed the Zero Fiction glove (“ZF glove”) and its features, including gussets and patterns needed to make the gloves. Iacono “pointed out all the features to the glove and what makes the glove work the way it does.” Dkt. # 101, ¶ 4.

The parties admit they never signed a formal confidentiality agreement during these meetings or at any point during their business relationship. However, Iacono testified that he and Widdemer discussed keeping matters confidential, and he fully believed Bali would maintain confidentiality.

Beginning in February 2014, and continuing through December 2016, the parties had a business agreement where Bali made the ZF gloves, which Zero Friction then resold to Dick's Sporting Goods (“Dick's”) and other retailers. The purchase orders Zero Friction issued to Bali for the ZF gloves included the following terms:

By acceptance of this purchase order, [Bali] acknowledges that [Zero Friction] has a proprietary interest in the Customer's business relationship and [Bali] further agrees that it will not contact, solicit, sell, or contract directly or indirectly with Customer pertaining to the products described in this purchase order. Any breach of the terms of this agreement by [Bali] may be enjoined and [Bali] shall also pay to [Zero Friction] all damages....

Dkt. # 112-6, ¶ 3 (emphasis added). The terms of the purchase orders were not negotiated, and Bali never raised any objection to the terms. The parties dispute whether the term “products”, as used in the terms of the purchase orders, means one-size gloves, or the specific one-size ZF gloves being purchased.

In August 2014, Zero Friction sent multiple requests to Bali to enter into a supplier agreement, which it has executed with other suppliers. The supplier agreement contained confidentiality, non-solicitation, and non-competition provisions. Despite Zero Friction's repeated requests to do so, Bali did not execute the supplier agreement with Zero Friction.

In or around November 2014, representatives from Bali and Dick's began emailing back and forth about a potential business relationship.^[3]In these emails, Bali provided Dick's with information about the gloves it supplied and its capabilities for sales and inventory. In emails dated around March 2015, Dick's and Bali began to discuss new product ideas and developments for gloves. Specifically, Widdemer wrote to Dick's on March 23, 2015, noting that Bali could develop one-size gloves using a new synthetic available in multiple different colors. Widdemer and Dick's representatives also went back and forth via email about materials and glove products “similar to Zero Frication [sic].” Dkt. # 93-13, at 2-3.

By August 5, 2016, Dick's and Bali came to a tentative agreement on a purchase order for Bali to produce gloves (the “Maxfli gloves”) for Dick's for their 2017 stock. Around this time in 2016, Dick's officially began placing purchase orders with Bali for the Maxfli gloves, as well as other products. Bali sold the Maxfli gloves to Dick's until about September 2021.

On August 2, 2016, Dick's notified Zero Friction of an issue regarding duplicate cartons in a recent shipment of the ZF gloves. On August 11, 2016, Iacono emailed Dick's and explained Zero Friction was not at fault for the duplicate carton issue. Matthew Sharick of Dick's responded to Iacono and stated he understood that the duplication was not the fault of Zero Friction. However, Sharick also expressed concern over the demand for the Zero Friction gloves because they were “fully in-stock” for two months. Sharick stated Dick's could “no longer support the line” of ZF gloves.^[4] Iacono testified that Dick's later followed up by phone call and said it would be pausing orders with Zero Friction for a period of time.

Approximately one month after Dick's informed Zero Friction that it was pausing its orders for the ZF gloves, in September 2016, Iacono purchased a Maxfli glove from a Dick's store. Upon examining the Maxfli glove and taking it apart, Iacono found marked similarities between the Maxfli glove and the ZF glove. More specifically, Iacono found that the design patterns, gussets, cuts, elasticity palm patch, and colors were all the same. So, in the fall of 2016, Iacono flew out to meet with Dick's and showed a Dick's representative the Maxfli glove. Zero Friction denies that it had knowledge that Bali was the manufacturer of the Maxfli glove at this time, or at any time prior to 2019.

On July 27, 2016, a Zero Friction representative notified Iacono by email that the gloves it received from Bali and provided to Dick's were peeling. Iacono then notified Widdemer of the peeling issue, and they discussed potential solutions by email over the next few days. Later, on March 9, 2017, Iacono notified Widdemer of the peeling issue which occurred in another Zero Friction shipment and told him it “[l]ooks like your glove.” Dkt. # 104-11, at 2. On March 10, 2017, Widdemer notified Bali's international manufacturer of the issue and expressed concern for the issue “because [Bali] could lose the whole Dick's program if many failures occurred.” Id.

On January 8, 2019, counsel for Dick's sent a letter to Widdemer informing Bali that Dick's received a letter from Zero Friction claiming Dick's infringed on its intellectual property.

Based on these events, Zero Friction filed a complaint against Bali on January 3, 2020, alleging claims for breach of contract, unjust enrichment, and tortious interference with prospective economic advantage. Dkt. # 1. In its First Amended Complaint (“FAC”), filed on February 8, 2021, Zero Friction added claims for misappropriation of trade secrets under the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1831 et seq., and the Illinois Trade Secrets Act (“ITSA”), 765 ILCS 4065/1 et seq. Dkt. # 39. On May 17, 2021, Zero Friction filed a Second Amended Complaint (“SAC”), alleging claims for breach of contract, unjust enrichment, tortious interference, and misappropriation of trade secrets under the DTSA and the ITSA. Dkt. # 57. Bali now moves for summary judgment on the claims in the SAC.

LEGAL STANDARD

Summary judgment is proper “if the pleadings, depositions answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citation omitted). In determining whether summary judgment is appropriate, the Court must construe all facts in a light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Majors v. Gen. Elec. Co., 714 F.3d 527, 532 (7th Cir. 2013) (citation omitted). But the nonmovant “is only entitled to the benefit of inferences supported by admissible evidence, not those supported by only speculation or conjecture.” Grant v. Trs. of Ind. Univ., 870 F.3d 562, 568 (7th Cir. 2017) (cleaned up).

It is not the role of the Court to scour the record in search of evidence to defeat a motion for summary judgment; instead, the nonmoving party bears the responsibility of identifying evidence to defeat summary judgment. Harney v. Speedway SuperAmerica, LLC, 526 F.3d 1099, 1104 (7th Cir. 2008). To avoid summary judgment, the nonmoving party must go beyond the pleadings and “set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (cleaned up). The party opposing summary judgment “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586. And the “mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252.

Local Rule 56.1 requires a party moving for summary judgment to submit a statement of material facts as to which the movant contends there is no genuine issue and entitles the movant to judgment as a matter of law. The party opposing the motion for summary judgment is then required to file “any opposing affidavits and other materials referred to in [Federal Rule of Civil Procedure 56(e)]” and a “concise response” to the movant's statement of facts containing “any...