Act II Jewelry, LLC v. Wooten

301 F. Supp. 3d 905
CourtDistrict Court, E.D. Illinois
DecidedMarch 14, 2018
DocketCase No. 15 C 6950
StatusPublished
Cited by8 cases

This text of 301 F. Supp. 3d 905 (Act II Jewelry, LLC v. Wooten) is published on Counsel Stack Legal Research, covering District Court, E.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Act II Jewelry, LLC v. Wooten, 301 F. Supp. 3d 905 (illinoised 2018).

Opinion

Harry D. Leinenweber, Judge

Before the Court are two Motions: a Partial Motion to Dismiss Additional Parties [ECF No. 199] brought by Defendants Elizabeth Ann Wooten, Adornable-U, LLC, Nicole Mead, Shannon Eckels, and Becka Daun (collectively, the "Defendants") and a Motion for Summary Judgment on the breach of fiduciary duty claim [ECF No. 202] brought by Defendant Elizabeth Ann Wooten ("Wooten"). For the reasons stated herein, Defendants' Motion to Dismiss Certain Parties [ECF No. 199] is granted with leave to amend and Wooten's Partial Motion for Summary Judgment [ECF No. 202] is denied.

I. BACKGROUND

The Court assumes familiarity with the underlying facts of this case as recited in its opinions [ECF Nos. 90, 95] granting in part and denying in part the parties' respective *909motions to dismiss the operative complaint and the counterclaims. See, generally, Act II Jewelry, LLC v. Wooten , No. 15 C 6950, 2016 WL 4011233 (N.D. Ill. July 27, 2016) (motion to dismiss the counterclaims); Act II Jewelry, LLC v. Wooten , No. 15 C 6950, 2016 WL 3671451 (N.D. Ill. July 11, 2016) (motion to dismiss the operative complaint). The facts relevant to the Motion to Dismiss were taken from the Third Amended Complaint and the facts relevant to the Motion for Summary judgment were taken from the parties' 56.1 statements.

Plaintiff Act II Jewelry, LLC ("Act II") was in the jewelry sales industry. (3d Am. Compl. ¶¶ 1, 11, ECF 188.) It marketed and sold jewelry by having a network of sales representatives hold parties in customers' homes, commonly known as the "party plan" business model. Id. Wooten was employed as Vice President of Product Development by Act II for approximately three and a half years from July 2011 to February 9, 2015. (Act II's Resp. to Wooten's Facts ¶ 14, ECF No. 214.) As Vice President of Product Development, Wooten selected, developed, and designed Act II's line of jewelry. (3d Am. Compl. ¶¶ 21-22.) Over the course of her employment, Wooten entered into several contracts with Act II, including a "Loan Agreement" between herself, Act II, and another company, Kiam Equities Corp. ("KEC"), pursuant to which Wooten was lent $300,000. (Id. ¶¶ 25-26, 51-61.) As consideration for the loan, Wooten agreed to repay KEC the principal amount plus interest, although the contract also specified circumstances in which the loan would be forgiven. (Id. )

On December 1, 2014, Act II announced it would be winding down its direct-selling, party plan jewelry business in the United States and Canada and its sales advisors would be selling its Fall/Winter 2014 collection at discounted prices through December 31, 2014. (Id. ¶ 13.) To ensure an orderly wind down process, Act II entered into a Key Employee Incentive Bonus Agreement (the "Incentive Agreement") with Wooten, which provided financial incentives for Wooten to remain employed with Act II and work diligently during the wind down period. (Id. ¶¶ 62-71.) The only signatories to the Incentive Agreement were Act II and Wooten. (Id. )

When Act II decided to close shop, Wooten decided to open her own business in the same industry. (Id. ¶ 78-79.) On October 30, 2014, several months prior to her termination, Wooten incorporated Adornable-U, a direct-selling jewelry business. (Id. ) The crux of the dispute is the propriety of Wooten's activities from October 2014 to her termination date with Act II on February 9, 2015. (Id. ¶¶ 72-130.) However, we need not delve into the details of her actions here. The pending Motion to Dismiss revolves around Wooten's relationship with KEC and one other company, not her relationship with Act II.

KEC was one of Act II's creditors. Following the wind down of Act II's business, Act II transferred its inventory and most of its other assets to KEC pursuant to an asset foreclosure. (3d Am. Compl. ¶ 1.) KEC then established K-FIVE LLC ("K-FIVE") as a Delaware limited liability company to market and license jewelry styles under Act II's brand through e-commerce channels. (Id. ¶ 3.) It is unclear exactly what rights were transferred from Act II to KEC and, similarly, from KEC to K-FIVE.

Relevant to Wooten's Partial summary judgment motion, Wooten was never a member, controlling member, manager, or director of Act II. (Act II's Resp. to Wooten's Facts ¶ 16.) Her sole relationship with Act II was as an employee, even if a prominent one. Additionally, Wooten never played any role-employee, member, manager, *910or director-at KEC or K-FIVE. (Id. ¶¶ 18, 21.)

After a prior ruling which dismissed several counts, four counts remain against Wooten: the breach and default of the Loan Agreement (Count II); the breach of the Incentive Agreement (Count III); the breach of fiduciary duty (Count IV); and the violation of the Illinois Trade Secrets Act (Count VI). The Third Amended Complaint alleges these same claims, but adds two new parties, KEC and K-FIVE, as well as several counts that were previously dismissed. (See, generally, 3d Am. Compl.) Defendants' Motion to Dismiss takes issue with the additional parties and Wooten's Motion for Summary Judgment deals exclusively with the breach of fiduciary duty claim. The Court takes each in turn.

II. ANALYSIS

A. Motion to Dismiss

1. Standard of Review

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint "must state a claim that is plausible on its face." Adams v. City of Indianapolis , 742 F.3d 720, 728 (7th Cir. 2014) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). When considering motions to dismiss under Rule 12(b)(6), a district court accepts as true all well-pleaded factual allegations and draws reasonable inferences therefrom in favor of the non-moving party. See, e.g., Jakupovic v. Curran , 850 F.3d 898

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Bluebook (online)
301 F. Supp. 3d 905, Counsel Stack Legal Research, https://law.counselstack.com/opinion/act-ii-jewelry-llc-v-wooten-illinoised-2018.