CHARLES RONALD NORGLE, District Judge.
Plaintiff Cornerstone Assurance Group, Inc. ("Plaintiff') sues Danielle Harrison ("Defendant") for breach of contract in connection with her June 15, 2015 employment agreement and a violation of the Illinois Trade Secrets Act ("ITSA"), 765 ILCS 1065/1 et seq. The Complaint alleges that Defendant breached the employment agreement by disclosing confidential information protected by the agreement. The protected information allegedly included trade secrets, such as client lists with detailed information regarding the individuals contained therein, which serves as the basis for Plaintiffs ITSA claim. Before the Court is Defendant's motion to dismiss. For the reasons that follow, the motion is denied.
Defendant writes comprehensive group insurance policies. Plaintiff entered her employment agreement with Defendant on June 15, 2015 and served as a sales representative. In that role, Plaintiff provided marketing services, handled enrollment, provided benefits consulting, and sold policies on Defendant's behalf. Plaintiff serviced clients across myriad states. As a sales representative, Defendant had access to confidential information related to client names, addresses, contact information, dates of binh, gender, years of service, income, private health and medical care information for those who had previously filed claims, and claims history information. Plaintiff alleges that this information constitutes trade secrets.
The employment agreement contains a confidentiality provision which applies to "(i) financial information concerning [Defendant's] business, marketing plans, personnel, contacts, leads, prospects, client lists, fee schedules, forms, information, business management and methods, or trade secrets; (ii) contact names, leads, prospect names, client names, records and/or client histories; and (iii) computer software, management information and information" (collectively, the "Restricted Information"). Compl .¶ 14, Ex. ¶ 6.1. Under this agreement, Plaintiff agreed "that she has a continuing duty to [Defendant] which shall survive termination of employment to: (i) maintain the secrecy of the Restricted Information and use such Restricted Information for the exclusive benefit and advantage of [Defendant]; and (ii) retain and keep any Restricted Information which comes into [her] knowledge, possession or control, regardless of whether by proper or improper means, as strictly confidential and shall not disclose such Restricted Information to any third party."
Plaintiff ultimately asserts that before and after terminating Defendant, Defendant disclosed Restricted information to third-parties, including Plaintiff s competitors. Specifically Plaintiff alleges that Defendant disclosed Plaintiff s trade secrets to Defendant's husband and the husband's company, USI Insurance Services, LLC ("USI"). According to the Complaint, Defendant's husband and USI then used that information to wrongfully recruit Plaintiff s clients. For essentially the same reasons and because the Restricted Information allegedly contains trade secrets, Plaintiff asserts that Defendant violated the ITSA.
A motion under Rule 12(b)(6) tests the sufficiency of the complaint under the plausibility standard,
To plead a breach of contract claim under Illinois law, "a plaintiff must allege: (1) the existence of a valid and enforceable contract; (2) substantial performance by the plaintiff; (3) a breach by the defendant; and (4) resultant damages."
Here, Defendant assumes, for purposes of this motion only, that Plaintiff has met all but the third element of the claim. Regarding the breach element, Defendant argues that Plaintiff states no more than mere labels and conclusions or formulaic recitations of the element. Defendant asserts that the Complaint fails to state the breach element because the allegations refer too vaguely to unspecified third-parties. Additionally, Defendant takes umbrage with Plaintiff s Complaint naming only one competitor to whom Plaintiff disclosed confidential information and the Complaint's failure to name a specific client in connection with the alleged wrongful disclosure.
The Court rejects Defendant's position. Plaintiff states in detailed manner the type of information it believes Defendant disclosed in breach of the employment agreement. Specifically, the Complaint explains that Defendant was privy to names, addresses, contact information of contacts at all union levels, union member lists and directories, dates of birth, gender, years of service, income, and health and medical information. Plaintiff also sets forth the particular terms of the employment agreement that protected the Restricted Information from disclosure. Even absent the specification of names, Plaintiff has provided more than enough information to put Defendant on notice of the claim against which she must defend. From naming in detail the buckets of information—all of which Defendant had access to throughout the duration of her employment with Plaintiff—Defendant would be on "fair notice of what . . . the claim is and the grounds upon which it rests."
Defendant's assertion that Plaintiff s failure to state more than one competitor likewise fails. Disclosing confidential information to only one competitor rather than several competitors still breaches the agreement "not to disclose such Restricted Information to any third party." Compl. ¶ 15, Ex. A ¶ 6.1 (emphasis added);
The Court turns to Plaintiff s ITSA claim. "To prevail on a claim for misappropriation of a trade secret under the [ITSA], the plaintiff must demonstrate that the information at issue was a trade secret, that it was misappropriated and that it was used in the defendant's business."
At this stage of the litigation, Plaintiff has set forth sufficient factual allegations such that it could plausibly show that at least some of the information allegedly misappropriated may legally be considered trade secrets. For example, `a list of actual or potential customers may qualify as a trade secret, but such a determination turns on the facts of a case."
Defendant also argues that Plaintiff "fails to appreciate the distinction between personal or private information on the one hand and trade secret information on the other." Def.'s Mot. to Dismiss at 9, ¶ 25. But, "[w]hether customer lists are trade secrets depends on the facts of each case."
Here, Plaintiff alleges that it spent years developing the Restricted Information, including union clients' members' claim histories and claims data—data which is not likely to be ascertainable to others from readily available sources—and specifically states that the information at issue is not generally accessible to other persons. Further, Plaintiff alleges that it "uniquely tailored" its insurance policies "to the individual needs of its clients based upon: (a) private member information . . . and (b) [Plaintiff's] consideration of the members' prior claims history and claims data." Compl. ¶ 24. The Complaint states a plausible claim under the ITSA and therefore withstands Defendant's attack on motion to dismiss.
Defendant's argument that Plaintiff failed to allege that Defendant misappropriated the trade secret also fails. On Defendant's view, the claim fails because Plaintiff only names one competitor and does not "allege when or how [Plaintiff] supposedly disclosed the trade secrets, or which particular trade secrets she even disclosed." However, Plaintiff correctly points out that "the degree of specificity defendant claims is necessary is, in fact, not necessary. The [employment agreement] clearly prohibits defendant from contacting customers of plaintiff and asking them to buy someone else's product . . . land Defendant] is not entitled to dismissal because [Plaintiff] did not plead the method of defendant's alleged contacts with these customers, or when they occurred or name them in the complaint."
The Court next addresses Defendant's argument that the Illinois marital privilege statute bars both the breach of contract and ITSA claims because the claims are premised entirely on privileged marital communications. Illinois privilege law governs in this case. Fed. R. Evid. 501 (In civil cases, "state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.").
The marital communication privilege issue is best addressed after discovery. First, the allegations state that Defendant "disclosed the Trade Secrets to [Defendant's husband] and USI so that [Defendant's husband] and USI could use the information for their own benefit to solicit [Plaintiff's] clients." Compl. ¶ 57 (emphasis added). Thus, construing the Complaint in favor of Plaintiff as the Court must on motion to dismiss, Plaintiff asserted disclosure beyond conversations with Defendant's husband. It is plausible that Plaintiff shared information with the USI itself through USI employees other than her husband; the marital communication privilege would not cover such communications.
Second, as Plaintiff points out, it makes little sense to enable Defendant to cloak herself from liability at this early stage of the litigation when the Complaint plausibly shows that discovery may reveal that the marital communications were disclosed to third parties, namely, other USI employees. Where a spouse shares a marital communication with third party, he or she waives the marital privilege, and it becomes fair game for the opposing party to reveal the information at issue.
Likewise, the marital communication privilege would not prohibit a jury from analyzing circumstantial evidence—for example, what USI may have done with Restricted information provided by Defendant's husband after he received the confidential information from Plaintiff— to find that Plaintiff breached the contract and violated the ITSA.
In the event that Defendant's motion is denied, Defendant requests, in the alternative, that the Court enter a protective order "to protect from inquiry or disclosure the communications between [Defendant] and her husband." Def.'s Mot. to Dismiss at 10. The request is denied. Plaintiff is correct that the Court will only entertain a request for a protective order after the parties have had an opportunity to meet and confer pursuant to Local Rule 37.2, which directs the Court to "refuse to hear any and all motions for discovery and production of documents under Rules 26 through 37 of the Federal Rules of Civil Procedure." Rule 26(c) governs protective orders. Accordingly, the Court will address any motion for a protective order at a later time, should either party elect to file such a motion.
In sum, Plaintiff has stated a plausible claim that Defendant breached her employment agreement by disclosing confidential information to a competitor. Plaintiff has also demonstrated that it is plausible that Defendant, in allegedly misappropriating Restricted Information covered by the employment agreement, also wrongfully disclosed trade secrets. Lastly, Defendant's request for a protective order is denied and can be addresse d at a later date once an appropriate motion has been filed. In light of the foregoing, Defendant's motion to dismiss is denied.
IT IS SO ORDERED.