U.S. Data Corporation v. RealSource Inc
1:08-cv-01092
N.D. Ill.Nov 19, 2012Background
- U.S. Data buys and sells timeshare owner lists; RealSource supplied data under a non-disclosure framework.
- Two contracts governed the relationship: a Non-Disclosure/Non-Circumvent Agreement and List Order Acknowledgments; the latter required one-time rental with resale paid by the client.
- U.S. Data allegedly breached the NDA by indirectly circumventing U.S. Data’s client relationship with Timeshare Relief; RealSource terminated the NDA after alleged data misuse.
- Beginning May 2007, U.S. Data began using an in-house timeshare database; RealSource contends U.S. Data copied RealSource data to replicate a database.
- RealSource terminated the NDA on September 7, 2007; thereafter, Timeshare Relief gradually shifted to other vendors and eventually ordered directly from RealSource in 2008.
- Both sides moved for summary judgment on multiple counts; the court denied or granted various claims, partially in favor of U.S. Data and partially for the defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of NDA by circumvention | U.S. Data argues RealSource sold data to D&S Leads for TSR, violating the NDA’s indirect circumvention prohibition. | RealSource contends NDA prohibits only direct circumvention or direct contact; interpretations render parts superfluous. | Disputed facts preclude summary judgment; contract interpreted as prohibiting direct and indirect circumvention. |
| Enforceability of the non-circumvention clause as a restrictive covenant | N/A | Non-circumvention is an unreasonable restrictive covenant when applied between corporations in the marketplace. | Court finds the clause is not unenforceable as a restrictive covenant given the temporary, in-place nature and business context. |
| Material breach excusing performance | If U.S. Data breached List Order Acknowledgments, RealSource could be excused from NDA obligations. | Whether U.S. Data breached is fact-intensive and material; requires disputed questions of fact. | Fact issues preclude summary judgment on whether breach excused RealSource from NDA obligations. |
| Misappropriation claim and economic loss doctrine | RealSource misappropriation via use of data is improper and tortious independent of contract. | Economic loss doctrine bars tort claims when contract governs the same conduct; misappropriation coextensive with contract. | Misappropriation claim barred by economic loss doctrine; contract governs the misappropriation conduct. |
| Tortious interference with prospective economic advantage (with TSR) | Defendants interfered with TSR’s relationship with U.S. Data, causing curtailed future business. | Lack of reasonable expectancy or improper interference; TSR engaged multiple vendors. | Summary judgment for defendants; no reasonable expectancy shown. |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard; burden on movant; burden-shifting framework)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (nonmovant must show genuine dispute of material fact)
- Salce v. Saracco, 949 N.E.2d 284 (Ill. App. Ct. 2011) (contract interpretation; avoid superfluous terms)
- Gassner v. Raynor Mfg. Co., 948 N.E.2d 315 (Ill. App. Ct. 2011) (contract interpretation as a whole; give effect to all terms)
- Clinton Imperial China, Inc. v. Lippert Marketing, Ltd., 878 N.E.2d 730 (Ill. App. Ct. 2007) (contract interpretation principles; holistic view)