Act II Jewelry, LLC v. Wooten

318 F. Supp. 3d 1073
District Court, E.D. Illinois·Decided July 11, 2018·No. Case No. 15 C 6950·Published·Cited by 7 cases

Opinion

Harry D. Leinenweber, Judge, United States District Court

Before the Court are Cross-Motions for Partial Summary Judgment. Plaintiffs Act II Jewelry, LLC, Kiam Equities Corp. ("KEC"), F-Five LLC, Victor K. Kiam, III, and Elena Kiam (collectively, "Act II") move for summary judgment on the breach of fiduciary duty claim and all remaining counterclaims. Defendants Elizabeth Ann Wooten, Adornable-U, LLC, Nicole Mead, Shannon Eckels, and Becka Daun (collectively, "Adornable-U" or "Defendants") move for summary judgment on Act II's trade secret and breach of contract claims. For the reasons stated herein, Act II's Motion for Summary Judgment and Adornable-U's Motion for Summary Judgment are granted in part and denied in part. Act II's Motion for Summary Judgment is granted as to the tortious *1079interference claims and the Illinois Consumer Fraud claim, but denied as to the breach of fiduciary duty claim, breach of Incentive Agreement claim and the Illinois Wage Payment and Collection Act claim. Defendants' Motion for Summary Judgment on Act II's trade secret claims against Mead, Eckels, and Daun is granted. The rest of Defendants' Motion is denied.

I. BACKGROUND

The Court assumes familiarity with the underlying facts of this case as recited in its previous opinions [ECF Nos. 90, 95, 252]. See, generally, Act II Jewelry, LLC v. Wooten, 301 F.Supp.3d 905 (N.D. Ill. 2018) (motion to dismiss and partial summary judgment); Act II Jewelry, LLC v. Wooten, No. 15 C 6950, 2016 WL 4011233 (N.D. Ill. July 27, 2016) (motion to dismiss counterclaims); Act II Jewelry, LLC v. Wooten, No. 15 C 6950, 2016 WL 3671451 (N.D. Ill. July 11, 2016) (motion to dismiss operative complaint). The Court reiterates the basic facts and will discuss in more detail in the analysis as necessary.

Plaintiff Act II Jewelry, LLC was in the jewelry sales industry. (Defs.' Resp. to Pls.' Facts, Dkt. No. 307, ¶ 4.) 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. ) Ann 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. (Id. ) As Vice President of Product Development, Wooten, and her team, selected, developed, and designed Act II's line of jewelry. (Id. ¶ 5.)

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. ¶ 8.) To ensure an orderly wind down process, Act II entered into a Key Employee Incentive Bonus Agreement (the "Incentive Agreement") with several employees, including Wooten.

The Incentive Agreement provided financial incentives for Wooten to remain employed with Act II and work diligently during the wind down period. (Dkt. No. 307, ¶ 8.) The Incentive Agreement included a reaffirmation of a previously agreed to Non-Disclosure Agreement stating that all trade secrets Wooten obtained during her employment were to be held in confidence solely in connection with and for the purposes of employment with Act II. (Id. ¶ 7.) The Incentive Agreement also specifically allowed Wooten to continue working in the jewelry field, stating that nothing in the agreement would prevent Wooten from "continuing her work as a jewelry designer, as long as [Wooten] does not infringe on any intellectual property belonging to the Company." (Id. ¶ 10.) Finally, the Incentive Agreement entitled Wooten to severance and bonus pay if she acted in accordance with the agreement so long as she was not terminated for cause. (Id. ¶ 11.)

Act II terminated its normal business at the end of December 2014, and ceased all operations as of March 7, 2015. (Pls.' Resp. to Defs.' Facts, Dkt. No. 294, ¶ 47.) Act II has not engaged in any business since March 7, 2015. (Id. )

When Act II decided to close shop, Wooten decided to open her own business in the same industry. The crux of the dispute between the parties here is the propriety of Wooten's activities from the fall of 2014 to her termination date with Act II on February 9, 2015. The parties tell very different stories of what occurred during this period. The Court outlines each parties' rendition in turn.

*1080According to Act II, Wooten used Act II's proprietary information to launch her new business, Adornable-U. While she was still employed by Act II, Wooten covertly directed Act II designers Bonnie Jaekel and Abbey Johnson to spend Act II work time to develop designs for Adornable-U. (Dkt. No. 307, ¶ 12.) She also coached Act II supplier La Radiant in its negotiations against Act II and secretly took Act II's jewelry styles, including pieces from the unreleased collection she and her team developed in 2014, and used them for Adornable-U. (Id. ) Wooten also took proprietary information from Act II prior to her termination. She forwarded numerous e-mails and attachments from her Act II business account to her personal email account including proprietary information regarding the Spring/Summer 2015 collection, sales trends for Act II styles, and other topics clearly related to the launch of her new business. (Id. ) While still employed and under contract with Act II, Wooten began operating Adornable-U's business by marketing Adornable-U to the public: she published Adornable-U's catalog online, registered and/or employed sales representatives to hold parties and take customer orders, and sold and distributed starter kits (containing actual product). (Dkt. No. 307, ¶ 13; Defs.' Reply to Pls.' Add'l Facts, Dkt. No. 334, ¶ 76.) In short, in Act II's view, Wooten stopped working in the best interests of Act II and further took Act II's proprietary information to benefit her new business. All of these activities, according to Act II, were undertaken without Act II's knowledge. While Act II had been generally aware of Wooten's intention to start her own direct-sales jewelry business after Act II shuttered its doors, Act II expected that Wooten would not take any of its proprietary information and would not begin operating prior to concluding her work with Act II.

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Act II Jewelry, LLC v. Wooten, 318 F. Supp. 3d 1073 (illinoised 2018).

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