U.S. Data Corp. v. Realsource, Inc.

910 F. Supp. 2d 1096, 2012 WL 5845427, 2012 U.S. Dist. LEXIS 164507
CourtDistrict Court, N.D. Illinois
DecidedNovember 19, 2012
DocketNo. 08 CY 1092
StatusPublished
Cited by9 cases

This text of 910 F. Supp. 2d 1096 (U.S. Data Corp. v. Realsource, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
U.S. Data Corp. v. Realsource, Inc., 910 F. Supp. 2d 1096, 2012 WL 5845427, 2012 U.S. Dist. LEXIS 164507 (N.D. Ill. 2012).

Opinion

MEMORANDUM AND ORDER

BLANCHE M. MANNING, District Judge.

One timeshare trade association estimates that 7 million Americans own 8.3 million intervals (typically a week’s stay) at one of the more than 1,500 resorts across the country. See American Resort Development Association, State of the Vacation Timeshare Industry 2012 Edition 1 (2012) (available at http://www.arda.org/uploaded Files/ARDA/N ews_and_Information/ [1099]*1099IndustryJnformation/2012%20state%20of %20industry%20fact%20sheet.pdf) (last visited November 19, 2012). Despite the state of the economy, timeshare sales grew to $6.5 billion in 2011, a 2.4% increase over 2010 sales. Id. at 2.

It’s little wonder, then, that the industry to direct market to those many millions of timeshare owners is competitive. Competition among direct marketers is what gave rise to the events at issue in this lawsuit. Plaintiff U.S. Data Corporation is in the business of selling lists of timeshare owners to direct marketers. U.S. Data operated as a middle-man, obtaining its lists from defendant RealSource, Inc., and reselling them to former defendant Timeshare Relief, Inc., among others. (All claims against Timeshare Relief were previously dismissed). U.S. Data contends that, with help from defendants Priority Direct, LLC and D & S Leads, Inc., Real-Source violated the parties’ sales agreement by selling directly to Timeshare Relief, Inc., cutting U.S. Data out of the equation. In response, RealSource contends that U.S. Data took data it purchased for use with one customer, and resold it to other customers without permission and without paying RealSource.

Plaintiff U.S. Data and defendants Real-Source, Priority Direct, and D & S Leads have filed cross-motions for summary judgment. The claims on which U.S. Data seeks summary judgment are the following: the breach of contract claim (Count I) in its complaint, and the claims for breach of contract (Count I) and misappropriation (Count IV) in the counterclaim. The claims on which the defendants seek summary judgment are the following: the claims for breach of contract (Count I), tortious interference with prospective economic advantage (Count II), unjust enrichment (Count IV), and conspiracy (Count V) in the complaint, and the claims for breach of contract (Count I) and misappropriation (Count IV) in the counterclaim.

For the reasons that follow, the motions are resolved as follows. For the Third Amended Complaint, U.S. Data’s motion for summary judgment on Count I is denied, as is RealSource’s motion; on Counts II & V, the defendants’ motion for summary judgment is granted; and on Count IV, the motion for summary judgment of Priority Direct and D & S Leads is granted. For RealSource’s counterclaim, on Count I the cross-motions for summary judgment are denied; and on Count II, U.S. Data’s motion for summary judgment is granted while RealSource’s motion is denied.

BACKGROUND

The following facts are undisputed except where noted. Plaintiff U.S. Data Corporation is in the business of buying and selling customer database lists for direct mail, telemarketing, and e-mail marketing. In August 2005, it began ordering names of timeshare owners from defendant RealSource, Inc. The parties executed two agreements to govern their relationship, a Pre-Screen List Agreement, which is not at issue in this lawsuit, as well as a N on-Disclosure/N on-Cireumvent Agreement. Under the terms of the Non-Disclosure Agreement, the parties agreed that they would not circumvent the relationship each party had with its clients. Specifically, the parties agreed to the following:

By signing this Agreement, the parties hereby mutually and irrevocably agree not to divulge each other’s named sources and not to circumvent, either directly or indirectly, the relationships that each party has with their named sources, principals, clients, agents, brokers, associates, and subscribers and/or end users.
[1100]*1100Each party agrees to not contact the clients of the other party for any reason without written consent of the other party. Each party agrees to take all the necessary precautions to insure that this does not happen.
Should circumvention occur, in addition to other legal remedies, compensation equal to that paid and/or scheduled to be paid to the breaching party from the transaction(s) related to the breach committed is due and payable to the non-breaching party by the breaching party.

N on-Disclosure/N on-Circumvent Agreement (attached as Exhibit A to the Third Amended Complaint [122-1]) ¶ 9. The agreement also contained the following terms:

Either party may terminate this Agreement by providing written notice to the other.
If any portion of this Agreement is held to be invalid or unenforceable for any reason, the remaining provisions will continue in full force without being impaired or invalidated in any way. The parties agree that any such invalid provision shall be replaced with a valid provision which most closely approximates the intent and economic effect of the invalid provision.

Id. ¶ 10(d), (g).

Pursuant to those agreements, U.S. Data ordered timeshare data from Real-Source. Each order was initiated by a List Order Acknowledgment, and each List Order Acknowledgment contained the following term:

This order is for a one time rental and any other resale of the file will need to be paid by the client.

See, e.g., List Order Acknowledgment dated April 19, 2007 [185-1 Page ID# 2066]. After obtaining the data ordered from RealSource, U.S. Data then sold the timeshare data to its client, Timeshare Relief, Inc.

U.S. Data’s purchases from RealSource continued uneventfully until around March 2007. At that time, U.S. Data placed an order with RealSource for all timeshare names not previously ordered by U.S. Data, which amounted to 526,750 names. After that order, U.S. Data’s purchases of data from RealSource began to drop and stopped completely in August 2007.

The- events surrounding the drop in orders by U.S. Data are mostly in dispute. The parties agree only that beginning at least in May 2007, U.S. Data filled orders for timeshare data from its own in-house timeshare database that it had created. But the parties do not agree on the origins of that in-house database. U.S. Data contends that it created its own database of timeshare owners beginning in August 2006 with its purchase of 1.3 million names from Todd Davis who, at the time, was a member of Revenue Channels, LLC, followed by its purchase of 1.8 million names from Wright Direct in May 2007.

RealSource disputes U.S. Data’s account. It contends that U.S. Data’s database was merely a copy of RealSource’s database, which U.S. Data created by retaining and then merging all of the data it had purchased from RealSource over the years, all in violation of the one-time rental provision of the List Order Acknowledgment. It contends that U.S. Data’s replication of RealSource’s database culminated in March 2007, when U.S. Data ordered from RealSource all of the timeshare names it had not previously ordered. In support, U.S. Data relies on deposition testimony from Nichole Short List and Laura Acord, former U.S. Data employees who testified that they were directed to merge the RealSource data into a single database for U.S. Data’s use.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Mission Measurement Corp. v. Blackbaud, Inc.
287 F. Supp. 3d 691 (E.D. Illinois, 2017)
Fuentes-Fernandez & Company, Psc v. Corvus Group, Inc.
174 F. Supp. 3d 378 (District of Columbia, 2016)
Doctor's Data, Inc. v. Barrett
170 F. Supp. 3d 1087 (N.D. Illinois, 2016)
First Financial Bank, N.A. v. Bauknecht
71 F. Supp. 3d 819 (C.D. Illinois, 2014)

Cite This Page — Counsel Stack

Bluebook (online)
910 F. Supp. 2d 1096, 2012 WL 5845427, 2012 U.S. Dist. LEXIS 164507, Counsel Stack Legal Research, https://law.counselstack.com/opinion/us-data-corp-v-realsource-inc-ilnd-2012.