Lumenate Technologies, LP v. Integrated Data Storage, LLC, 1:13-cv-03767

Background

Lumenate acquired Augmentity’s assets (including its confidential information and assigned NDAs) on April 2, 2013, and now services Augmentity’s former clients.
Three former Augmentity employees (Parchomenko, Scalera, Sprehe) left in Oct–Nov 2012 and took identical roles at competitor IDS; Lumenate alleges they planned departure, disparaged Augmentity, and solicited clients before leaving.
Forensic analysis allegedly shows Parchomenko and Sprehe copied files to external drives/databases and took steps (virtual machine removal, cleaning) to conceal activity before returning work computers.
Several long‑standing Augmentity clients (DeVry, Morningstar, Grant Thornton) ceased doing business with Augmentity/Lumenate after the departures; Sears significantly reduced work.
Lumenate sues under diversity jurisdiction asserting five counts: (I) breach of contract (NDAs) against Individual Defendants; (II) Illinois Trade Secrets Act (ITSA) misappropriation; (III) breach of fiduciary duty; (IV) tortious interference with prospective business expectancies; (V) tortious interference with NDAs against IDS. Defendants moved to dismiss under Rule 12(b)(6) and for a Rule 12(e) more definite statement.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Lumenate adequately pled trade secrets and reasonable secrecy measures under the ITSA	Augmentity took confidentiality measures (NDAs, handbook, passwords, watermarking) and Lumenate continues those measures after purchase	Complaint fails to show Lumenate itself maintained secrecy post‑acquisition; misappropriation is speculative	Denied dismissal: pleadings (¶23 tied to ¶60) plausibly allege secrecy and survived Twombly/Iqbal standard
Whether misappropriation (actual or threatened) was sufficiently pled	Allegations of suspicious downloads, attempts to cover tracks, client loss, and inevitable disclosure support both actual and threatened misappropriation	Allegations are routine or speculative and based on ‘‘information and belief’’ without direct proof	Denied dismissal: circumstantial facts plausibly support actual misappropriation and inevitable disclosure claim
Breach of NDAs (contract) and IDS’s tortious interference with NDAs	Individual Defs breached NDAs by using/disclosing confidential info; IDS knowingly interfered to benefit from that info	Same deficiencies as ITSA; plus ITSA preempts tortious interference	Breach of contract claim (Count I) survives; tortious interference against IDS (Count V) dismissed without prejudice as preempted by ITSA unless repleaded to allege independent wrongs
Breach of fiduciary duty by Individual Defendants	Employees breached loyalty by soliciting clients, slowing work, disparaging employer, copying files and concealing activity before resigning	Facts permit benign inferences; insufficient to show breach	Denied dismissal: pleaded facts (planning departure, slowdown, solicitation, copying/covering tracks) sufficiently infer pre‑departure disloyalty
Tortious interference with prospective business expectancies	Augmentity/Lumenate had longstanding client relationships and reasonable expectancy; Defendants induced clients to leave	Expectancy insufficiently pled or speculative	Denied dismissal: allegations of repeated business and specific client losses adequately plead expectancy and damages
Request for injunctive relief	Injunctive relief sought to stop continued use/disclosure of confidential info; Lumenate, as assignee, can seek relief	Lumenate knew of the misconduct when buying assets and cannot claim irreparable harm from known defects	Denied: defendants’ argument unsupported; injunction requests not struck at pleading stage
Motion for a more definite statement under Rule 12(e)	N/A (defendants sought clarification whether claims asserted as direct plaintiff or assignee)	Complaint ambiguous as to capacity and claims; needs specificity	Denied: complaint intelligible and defendants can clarify via discovery

Key Cases Cited

Lear Corp. v. Johnson Elec. Holdings Ltd., 353 F.3d 580 (7th Cir. 2003) (treatment of citizenship for diversity jurisdiction in partnerships)
Bell Atl. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for federal pleading)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (application of plausibility standard)
PepsiCo, Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995) (inevitable disclosure doctrine in trade secret context)
Hecny Transp., Inc. v. Chu, 430 F.3d 402 (7th Cir. 2005) (ITSA preemption analysis and independent common‑law duties)
Foodcomm Int’l v. Barry, 328 F.3d 300 (7th Cir. 2003) (employee solicitation and breach of fiduciary duty principles)