In a case with multiple parties and a convoluted fact-pattern pending in the Northern District of Illinois, the Court discussed the trade secrets claim and its bearing on other claims in plaintiffs' First Amended Complaint.
Defendant Providential Bancorp, Ltd. ("PBL") filed a Motion to Dismiss numerous counts pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6), including the count based on the Illinois Trade Secrets Act ("ITSA"). This claim revolved around proprietary software created by one of the plaintiffs for use by the defendants. In its motion , PBL argued that the Court should apply the heightened pleading requirements found in Rule 9(b) to the trade secrets count (and other counts) since plaintiffs' entire complaint was "grounded in fraud." The Court rejected this argument, holding that allegations of non-fraudulent conduct, such as the trade secrets claim, simply need to meet the liberal notice pleading standard of Rule 8(a).
To state a claim for relief under the ITSA, 765 ILCS 1065/1 et seq., a plaintiff need only allege that the (1) information at issue was a trade secret, (2) defendant misappropriated it, and (3) used it in defendant's business. The Court found that plaintiffs' allegations met this standard under the liberal pleading requirements of Rule 8(a)(2).
The Court, however, dismissed plaintiffs' conversion count based on preemption under the ITSA. Although it found that plaintiffs' allegations were sufficient under notice pleading standards, the Court ruled that the ITSA preempts other laws providing civil remedies for the misappropriation of trade secrets (with an exception for breach of contract claims). See 765 ILCS 1065/8. Since it found that plaintiffs' conversion claim rested solely on defendants' alleged misappropriation of the software product, the Court dismissed this count with prejudice.
Systems America, Inc., et al. v. Providential Bancorp, Ltd., et al., 2006 WL 463314 (N.D. Ill., February 24, 2006).
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