Higgs v. Carter, 286 F.3d 437, 439 (7th Cir. 2002); Kyle, 144 F.3d at 455. However, any
conclusions pled must “provide the defendant with at least minimal notice of the claim,” Jd, and
the plaintiff cannot satisfy federal pleading requirements merely “by attaching bare legal
conclusions to narrated facts which fail to outline the bases” of his claim. Perkins, 939 F.2d at
466-67.
DISCUSSION

As an initial matter we note that Verotix improperly attempts in its briefs to reference
arguments made in other documents. Absent leave by the court, briefs may be no more than
fifteen pages and court will not be burdened with piccing together appended arguments from
various documents in order to determine if a brief exceeds the maximum amount of pages.
Verotix is warned not to waste any more of the court’s time in this manner and that any

documents with such irregularities will not be tolerated in the future.

1. Illinois Trade Secrets Act Claim

Verotix brings ITSA claims against Ann Taylor and KSA. To state a claim for a violation
of the ITSA a plaintiff must allege: 1) a trade secret, 2) that the trade secret was misappropriated,
and 3) that it was used in the defendant’s business. Composite Marine Propellers, Inc. v. Van
Der Woude, 962 F.2d 1263, 1266-67 (7" Cir. 1992), A plaintiff is required to point to “concrete
secrets” and thus it is not sufficient to merely allude to “broad areas of technology and assert that
something there must have been secret and misappropriated.” Jd. at 1266. In this case Verotix
states in its complaint that “Verotix has certain technical information, data, patterns, programs,
devices, methods, techniques, drawings and process... which are ‘trade secrets .. . 2” Verotix
alleges that Ann Taylor misappropriated Verotix’s “technical information, data, paticrns,

programs, devices, methods, techniques, drawings and processes to implement Verotix’s design.”



contention. Ann Taylor cites Nuccio v. Chicago Commodities, Inc., 628 N.E.2d 1134, 1139 dl.
App. Ct. 1993) in which an Illinois state court held that a plaintiff must plead facts indicating an
offer, acceptance, and consideration. Immediately after this state court citation in Ann Taylor's
teply is a citation to Industrial Enclosure Corp,, 1998 WL 852845 (N.D. Ill. 1998) and a
parenthetical stating that the case applied the state court pleading standard. The parenthetical is
incorrect. Although the court in /ndustrial Enclosure Corp. cited some state court cases it did
not adopt the Illinois pleading requirements. Also, because of the proximity in the brief of
Industrial Enclosure Corp. to Nuccio, an apparently irrelevant case, the reader is lead to infer
that the two are related and that the court in Industrial Enclosure Corp. adopted the standards set
forth in Nuccio. Ilowever, the court in Jndustrial Enclosure Corp. made no reference to
requiring plaintiffs to plead elements such as an offer, acceptance, and consideration and the
court did not cite Nuccio. Verotix has pled sufficient facts for a breach of contract claim. Ann
Taylor allegedly offered to Verotix the opportunity to work on the warehouse control system and
allegedly promised to allow Verotix to do the implementation as well. Verotix accepted the offer
and began working on the project and a breach occurred when Ann Taylor gave the
implementation portion to another vendor. ‘Therefore, we find that Verotix has pled sufficient
facts for a breach of contract claim.

Ann Taylor also argues that the parties intended all agreements to be in writing and thus
there could not be an oral contract regarding the implementation. Ann Taylor argues that we
should infer that there was no oral agreement because of the large amounts of money involved in
the implementation project, Ann Taylor argues that we should infer that there was no oral
contract because other portions of the retrofit project were allocated by conducting a formal
bidding process. Ann Taylor also argues that we should infer that there was no oral agreement

because Verotix refused to sign a work for hire agrecment and there are conflicting facts relating



information confidential. Therefore, we deny the motion to dismiss the ITSA claims against

KSA (Count IT) and Ann Taylor (Count 1),

IL Fraud Claim

Verotix brings fraud claims against both Ann Taylor and KSA. Federal Rule
of Civil Procedure 9(b) requires all claims of fraud to be pled with particularity, Fed. R.Civ. P.
9(b), which requires a plaintiff to state “the identity of the person who made the
misrepresentation, the time, place and content of the misrepresentation, and the method by which
the misrepresentation was communicated to the plaintiff.” Vicom, Inc. v. Harbridge Merchant
Servs., Inc., 20 F.3d 771, 777 (7" Cir. 1994). Defendants claim that because the alleged
misrepresentation was a promise of future action, Verotix should also have to meet the
heightened pleading requirements for a promissory fraud claim. However, we need not address
that issue because we find that Verotix has not met the Rule 9(b) particularity requirements.

Verotix alleges that Ann Taylor made a misrepresentation when Ann Taylor promised
Verotix that it could implement the warehouse control system. However, those allegations are
insufficient to meet the particularity requirements. In its answer Verotix argues that it provided
names of forty employees of Ann Taylor “who were involved in this project” but that still fails to
inform Defendants who made the alleged misrepresentations, Verotix tries to side step this issue
by pointing out that it identified specific individuals that pressured Verotix to turn over their
alleged trade secrets, Again that docs not provide the required information to plead the fraud
claim with specificity. In its answer Verotix argues that “[i]t can be inferred from the alleged
facts that at least the promise to design and build was reiterated over and over by the conduct of
the defendant.” However, no such inference is apparent from the facts alleged in the amended

complaint and the particularity requirement is specifically intended to prohibit such speculation.



We find that the allegations are sufficiently concrete to withstand a motion to dismiss. Verotix
was hired by Ann Taylor for a specific purpose and it contends that all of the designs, blueprints,
and other documents that it produced in anticipation of the implementation of the designs in Ann
Taylor’s system are trade secrets. Whether Verotix will be able to eventually prove that all of
those documents contain trade scercts is a matter beyond the spectrum of the instant motion. It is
sufficiently clear at this stage of the proceedings what Verolix asserts are trade secrets. A
plaintiff is not required to plead all facts neccessary 10 support his claim or plead all the elements
of cach cause of action alleged in the complaint. Higgs v. Carter, 286 F.3d 437, 439 (7th Cir.
2002).

Defendants also argue that Verotix has not pled sufficient facts that indicates that Verotix
made efforts to keep the alleged trade secret information confidential as is required by 765 ILCS
1065/2. See Abbott Labs, v, Chiron Corp., 1997 WL 208369, at *3 (N.D. Ill. 1997)(dismissing
ITSA claim because complaint did nol contain any factual allegations regarding the plaintiff's
efforts to keep the alleged trade secret information confidential). Verotix mentions in its
amended complaint ils “efforts .. . to maintain [the trade secret documents’] confidentiality
which include safeguards clearly set out, at a minimum, on the blueprints themselves.” This
allogation is sufficient to allege the confidentiality of the blueprints. Verotix also alleges that it
“never disclosed or authorized the disclosure [or] the use of its design, plans, blueprints, ideas,
concepts and documents to third party competitors,” Vecrotix also alleges that its “blueprints,
ideas, concepts and documents would not have been disclosed to others and would not have been
prepared for Ann Taylor unless Verotix had been engaged to both create and implement the WCS
and GOH system,” Verotix also alleges that “the designs that Verotix prepared were illustrated

in blueprint form and marked as ‘NON PUBLIC INFORMATION.’” We find that these

allegations are sufficient to allege that Verotix attempted to keep the alleged trade secret



privilege. Therefore, we deny the motion to dismiss the tortious interference with a contract
claim (Count £X) and the tortious interference with prospective economic advantage claim

(Count X) against KSA.

IV. Breach of Contract Claim

Ann Taylor claims that Verotix has not properly pled a breach of contract
claim. In order to properly plead a breach of contract claim a plaintiff must plead that: 1) a valid
and enforceable contract existed, 2) the plaintiff performed obligations under the contract, 3) the
defendant breached the contract, and 4) the plaintiff was injured as a result of the breach.
Kundrat v. The Chicago Bd. Options Exch., Inc., 2002 WL 31017808, at *8 (N.D. Ill. 2002);
Industrial Enclosure Corp. v. Northern Ins. Corp. of New York, 1998 WL 852845, at *4 (N.D.
Ill. 1998). Ann Taylor contends that Verotix must allege all the elements of a breach of contract
cause of action such as an offer, acceptance, and consideration, However, the notice pleading
standard in the federal system does not require such extensive fact pleading. See Bennett v.
Schmidt, 153 F.3d 516, 518 (7" Cir. 1998)(stating that a complaint need not allege facts or law
sufficient to match up with every element of the cause of action).

It its reply brief Ann Taylor cites Ramirez v. NutraSweet Co., 1997 WL 684984, at *2
(NLD, Ill. 1997) in support of its position that the federal courts adopted the Illinois state courts’
pleading standard for breach of contract claims. A close reading of Ramirez reveals that the
court was addressing a motion for summary judgment rather than a motion to dismiss and thus in
Ramirez the court was not concerned with the federal pleading standard.

Ann Taylor also argues in her memorandum in support of its motion that the federal
courts adopted the Illinois state court pleading standard for breach of contract claims. However,

Ann Taylor’s string of citations in support of that proposition fails to support Ann Taylor’s



‘Minute Order Form (06007)

United States District Court, Northern District of Illinois

ame of Assigned Judge . . Sitting Jud;

vie Magistrate ludge | __Samtuel Der-Yeghiayan thaw Assigned Judge

CASE NUMBER 02 C 8639 DATE 11/12/2003
CASE Verotix System vs. Ann Taylor
TITLE

[In the following box (a) indicate the party filing the motion, c.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nuture
of the motion being presented.]

MOTION:

DOCKET ENTRY:

om a Filed motion of [ use listing in “Motion” box above.]

Qe a Brief in support of motion duc

(3) i) Answer briefto motionduc__. Reply to answer briefdue___.

(4) Oo Ruling/Hearing on set for_ at

(5) oO Status hearing[hcld/continued to] [set for/re-set for]on__setfor at
(6) oO Pretrial conference[held/continued to] [set for/re-set for}on set for at
(7) Q Trial[sct for/re-set for] on ____at

(8) aq [Bench/Jury trial] [Hearing] held/continued to at

(9) oO This case is dismissed [with/without] prejudice and without costs[by/agrecment/pursuant to]

OOFRCP4(m) ClLoca! Rule 41.1 OO FRCP41(a)(1) OO FRCP4I1(a)(2).

(10) +4 [Other docket entry] Status hearing held and continued to 11/19/03 at 9:00 a.m. to set discovery
deadlines. Also before the court is defendants Kurt Salmon Associates’ motion to dismiss the plaintiffs’
first amended complaint and on defendants Ann Taylors’ motion to dismiss Counts 1, IIL, V, VI, VI and
VIL of the plaintiff's first amended complaint. For the reasons stated on the attached memorandum
opinion, the Court hereby grants the motions to dismiss in part and denies them in part. Enter
Memorandum Opinion,

(il) {For further detail see order attached to the original minute order.]

No notices required, advised in open court. ;
‘Number

HGR

‘No notices required. ‘umber of notices

NOV 1 3 2003

dare docketed

wv | Docketing to mail notices. 4 C )
Mail AO 450 form. oA Ahk sopury ints

rung Lomsia’s’n
Vite

Natices mailed by judge's staff.

Notified counsel by telephone.

Copy to judge/magistrate judge.

courtroom e? sPy ity 24 RaW ea ate mailed notice
MW deputy’s
initials

Sui iputkaitelreceivedin! TA
central Cletk’ Office mailing deputy initials



to its representations made in its briefs submitted to the court and Verotix will not be allowed to
receive damages under the implied contract claim resulting from a misuse of secret information,
Therefore, we deny the motion to dismiss the implied contract claim (Count VI) and grant the

motion to dismiss the quantum meruit claim (Count VII).

VL. Promissory Estoppel Claim

In order to state a promissory estoppel claim in Illinois a plaintiff must allege:

*(1) an unambiguous promise; (2) reasonable and justifiable reliance by the party to whom the
promise was made; (3) the reliance was expected and foreseeable by the promisor; and (4) the
promisee relied upon the promise to her detriment.” Fischer v. First Chicago Capital Mkt., 195
F.3d 279, 283 (7" Cir. 1999), Ann Taylor argues that Verotix failed to properly plead a
promissory estoppel claim because Verotix failed to allege an unambiguous promise. However,
as stated above, Verotix is not required to allege every fact necessary in support of its claim and
all inferences are to be drawn in its favor. From the complaint there are sufficient facts to infer
that Ann Taylor promised Verotix in an ambiguous fashion that Verotix would handle the
implementation of the warehouse control system and that Verotix justifiably relied on that
promise when it began working on the system, and that in reliance on that promise Verotix
declined other projects from other customers and charged a reduced price to Ann Taylor, and that
Verotix was harmed when Ann Taylor refused to honor the alleged promisc. Therefore, we deny

the motion to dismiss the promissory estoppel claim (Count VIII).

CONCLUSION
Based on the foregoing analysis we deny the motion to dismiss the ISA

claims against Ann Taylor (Count I) and KSA (Count Il). We also grant the motion to dismiss

11



to the existence of an oral contract. However, under the federal pleading standard all inferences
are to be drawn in Verotix’s favor, Bontkowski, 998 F.2d at 461, and there are sufficient facts in
the amended complain to infer that there was a contract relating to implementation. Ann Taylor
also claims that the alleged oral contract is barred by the statute of frauds, but we find that there
are sufficient facts to infer that the contract could possibly have been completed within a year.

Therefore we deny the motion to dismiss the breach of contract claim (Count V).

V. Implied Contract and Quantum Meruit Claims

Ann Taylor argues that the implied contract and quantum meruit claims arc preempted by
the Illinois Trade Secrets Association. See Nilssen v. Motorola, Inc., 963 F.Supp. 664, 683-84
(N.D. IIL 1997)(finding that the ITSA preempted implied contract and quantum meruit claims).
Ann Taylor correctly points out that the amended complaint appears to indicate that Vcrotix is
seeking damages both under the implied contract ¢laim and the quantum meruit claim for alleged
harm to Verotix resulting from the misappropriation of the alleged trade secrets. Verotix argues
that it is solely sceking damages under those claims for alleged harm to Verotix resulting from
the refusal to allow Verotix to complete the project and the loss of the anticipated compensation.
Verotix states clearly in its answer that it is not seeking compensation for the misuse of secret
information under the implied contract and quantum meruit claims. We shall dismiss the
quantum meruit claim because Verotix alleges (hat a valid contract governed the obligations
between Verotix and Ann Taylor. See First Commodity Traders, Inc. v. Heinold Commodities,
Inc., 766 F.2d 1007, 1011 (7" Cir. 1985); Watts v. Advanced Transformer Co., 2002 WL
31356449, at *4 (N.D. Ill. 2002). In regards to the implied contract claim we will acccpt
Verotix’s interpretation of (he amended complaint since Verotix wrote that complaint and we are

required to liberally interpret the amended complaint in its favor. However, we will hold Verotix



Verotix also claims in its answer that the fraudulent misrepresentations took place in a meeting
referenced in the amended complaint, but again this is not apparent from the allegations in the
amended complaint. We therefore, grant the motion to dismiss the fraudulent misreprescntation
claim against Ann Taylor (Count ILL) and the fraudulent misrepresentation claim against KSA

(Count IV).

IL. Tortious Interference with Contract Claim

KSA argucs that Verotix failed to state a tortious interference claim because KSA’s
alleged conduct is privileged. KSA cites numerous Illinois state court cases that deal with fact
pleading in the state courts which have little relevance in a federal venue. KSA contends that
under Illinois law, since KSA acted as an agent for Ann Taylor, KSA had a qualified privilege
barring a tortious interference claim against KSA. See Langer v. Becker, 531 N.E.2d 830 (Ill.
App. Ct. 1998). However, KSA concedes that courts should consider various factors such as the
actor’s motive and the proximity or remoteness of the actor’s conduct and the interference. Such
factors present unanswered factual issues and it is premature to address them al this juncture.
KSA cites Citylink Group, Lid. v. Hyatt Corp., 729 N.E.2d 869, 877 (7" Cir. 2000) for the
proposition that it is well settled under Ilinois aw that an agent for a corporation has a qualified
privilege. However, in that case the court noted that the plaintiffs “failed to allege any facts
sufficient to demonstrate that [the agent] was not acting in the interests of its principals... .” Jd.
The instant case is thus distinguishable because Verotix alleges that KSA manipulated the
rigging of the bidding process in rctaliation for the lost StrideRite contract. In such
circumstances KSA would not be acting in the best interest of Ann Taylor. KSA has not

established that accepting all {acts in the complaint as true that Verotix can prove no set of facts

in support of its claim which would support a finding that KSA does not have a qualified



Verotix to implement the warehouse control system at the Louisville facility and to implement
design enhancements created by Verotix such as the “one Ilanger” design. In its first amended
complaint Verotix brings an Illinois Trade Secret Act (“ITSA”), 765 ILCS 1065 et seg., claim
against Ann Taylor (Count I), an ITSA claim against KSA (Count 11), a fraudulent
misrepresentation claim against Ann Taylor (Count II!), a fraudulent misrepresentation claim
against KSA (Count IV), a breach of contract claim against Ann Taylor (Count V), a breach of
implied contract claim against Ann Taylor (Count VI), a quantum meruit claim against Ann
Taylor (Count VID, a promissory estoppel claim against Ann Taylor (Count VIIL), a tortious
interference with contract claim against KSA (Count LX), and a tortious interference with

prospective economic advantage against KSA (Count X).

LEGAL STANDARD

The purpose of a Rule 12(b)(6) motion to dismiss is to test the legal
sufficiency of the complaint, Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In
ruling on a motion to dismiss, the court must draw all reasonable inferences that favor the
plaintiff, construe the allegations of the complaint in the light most favorable to the plaintiff, and
accept as true all well-pleaded facts and allegations in the complaint. Bontkowski v. First Nat’l
Bank of Cicero, 998 F.2d 459, 461 (7th Cir. 1993); Perkins y. Silverstein, 939 F.2d 463, 466 (7th
Cir. 1991), The allegations of a complaint “should not be dismissed for a failure to state a claim
unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim
which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Nonetheless,
in order to withstand a motion to dismiss, a complaint must allege the “operative facts” upon
which each claim is based, Kyle v. Morton Ligh School, 144 F.3d 448, 454-55 (7th Cir. 1998).

The plaintiff need not allege all of the facts involved in the claim and can plead conclusions.



began a retrofit project for its Louisville facility and allegedly hired Verotix to consult, design,
and implement the warehouse control system. Verotix contends that it came up with a design
change for Ann Taylor that became known as the “one hanger” or “garment on a hanger”
(“GOH”) system. Verotix alleges that the invention of the GOH system resulted in a more
efficient routing system and saved Ann Taylor significant costs. Verotix claims that its
consulting services were billed at a reduced rate because of Ann Taylor’s promise to use Verotix
to design, implement, license software and maintain the warehouse control system at the
Louisville facility. Verotix also claims that it devoted over 4000 man hours to do consulting
work for the retrofit project and that it limited the amount of business from other customers in
order to have the manpower necessary to work on the retrofit project.

Ann Taylor hired KSA as the project integrator for the retrofit project. Verotix contends
that KSA held a grudge against Verotix because in March 2000 KSA acted as a project
coordinator for a project funded by StrideRite and KSA lost its contract because Verotix
demonstrated that it was capable of mecting the customer’s goals without a project integrator. In
July 2000 as part of the retrofit project, Ann Taylor decided to make changes to its receiving and
shipping conveyor system and instructed KSA to solicit outside bids for the work. Verotix
alleges that it submitted a bid for the project, but that KSA put pressure on Verotix to submit
designs sooner than other vendors. Verotix also contends that KSA made Verotix include costs
in its bid that other vendors did not have to include and thus KSA was able to rig the bidding so
that Verotix could not submit the lowest bid. On October 20, 2000, Verotix was informed that
Key Handling Systems submitted the lowest bid for the project. KSA also informed Verotix that
another outside vendor would be completing the implementation portion of the warehouse
control system. Ann ‘Taylor allowed Verotix to finish the project through February of 2001.

Verotix alleges that Ann Taylor subsequently used the designs and blueprints submitted by



TN THE UNITED STATES DISTRICT COURT a SY
FOR THE NORTHERN DISTRICT OF ILLINOIS We
EASTERN DIVISION @

VEROTIX SYSTEMS, INC.,
Plaintiff,

v. No. 02 C 8639
ANN TAYLOR, INC., ANN TAYLOR
STORES CORPORATION, ANN TAYLOR
DISTRIBUTION SERVICES, INC., ANN
TAYLOR RETAIL, INC., KURT SALMON
ASSOCIATES, INC., KURT SALMON
ASSOCIATES, KURT SALMON
ASSOCIATES CAPITAL ADVISORS, INC.,

wee SS ee Se eee ere

Defendants.

MEMORANDUM OPINION
SAMUEL DER-YEGHIAYAN, District Judge
‘This matter is before the court on Defendant Kurt Salmon Associates’ (“KSA”) motion
to dismiss Plaintiffs’ first amended complaint and on Defendant Ann Taylor’s motion to dismiss
Counts I, III, V, V1, VII and VIII of Plaintiff's first amended complaint. For the reasons stated

below we grant the motions to dismiss in part and deny them in part.

BACKGROUND
Beginning in early 1998 Ann ‘laylor Inc. (“Ann Taylor”) hired Plaintiff
Verotix Systems Inc. (“Verotix”) to trouble shoot its control system for the Ann ‘laylor
warehouse in Louisville Kentucky. In late 1998 Ann Taylor installed the new control system at

the Louisville facility called the warehouse control system. In February of 2000 Ann Taylor

Ye



the fraudulent misrepresentation claims against Ann Taylor (Count II) and KSA (Count lV). We
deny the motion to dismiss the breach of contract claim against Ann Taylor (Count V). We also
grant the motion to dismiss the quantum meruit claim against Ann Taylor (Count VII) and deny
the motion to dismiss against Ann Taylor (Count V1) , but note that Ann Taylor asserts that it is
not seeking any damages under that claim for an alleged misuse of secret information. We also
deny the motion to dismiss the promissory estoppel claim against Ann Taylor (Count VIII), deny
the motion to dismiss the tortious interference with contract claim against KSA (Count TX), and
deny the motion to dismiss the tortious interference with prospective economic advantage against

KSA (Count X).

San De 6 af I

United States District Court Judge

Dated: Lf 12-03