§ 1312 (2d ed. 1990). Mr. Magner’s counterclaim will not be
dismissed for failing to allege special damages with specificity.
II. The Affirmative Defense

Count I of V.I.M.’s complaint alleges that Mr. Magner breached
his fiduciary duty to V.I.M. In response to this count, Mr. Magner
asserts as an affirmative defense that “[b]y virture of plaintiff’s
conduct, including its failure to pay Magner all amounts earned by
him and its failure to reimburse Magner fully for expenses he
incurred on plaintiff’s behalf, Magner was relieved and excused
from various duties and obligations that he might have otherwise
had as an employee of plaintiff.” (Answer at 17.) V.I.M. seeks to
strike this defense pursuant to Fed. R. Civ. P. 12(f).

The Seventh Circuit has indicated that

[a]ffirmative defenses will be stricken only when they are
insufficient on the face of the pleadings. Motions to strike
are not favored and will not be granted unless it appears to
a certainty that plaintiff[] would succeed despite any state
of the facts which could be proved in support of the defense
and are inferable from the pleadings.
Williams v. Jader Fuel Co., 944 F.2d 1388, 1400 (7th Cir. 1991)
(internal quotations and citations omitted). In a diversity case,
I examine the legal and factual sufficiency of an affirmative
defense by reference to state law. Id. It is well-settled under
Illinois law? that an employee owes a duty of fidelity and loyalty

to his employer. Dames & Moore v. Baxter & Woodman, Inc., 21 F.

3 Neither party argues that anything other than Illinois law

applies.



understand “the gravamen” of the claim. Id. at 951-52. Mr.
Magner’s counterclaim does just that when it alleges that “VIM
failed to pay Magner all commissions or other compensation due to
Magner from VIM, and failed to reimburse Magner for all expenses
incurred by Magner during the course of his activities as a VIM
Salesperson.” (Counterclaim 7 5.) V.I.M.’s citations to Illinois
and pre-Leatherman federal cases requiring anything other than
general notice pleading are irrelevant, and its complaints about
the conclusory nature of the counterclaim are unavailaing.

V.I.M. also argues that Mr. Magner’s counterclaim fails to
allege special damages with specificity. Fed. R. Civ. P. 9(g)}
states that “[w]hen items of special damage are claimed, they shall
be specifically stated.” Special damages are those that are
“unusual for the type of claim in question--that are not the
natural damages associated with such a claim.” LINC Fin. Corp. v.
Onwuteaka, 129 F.3d 917, 922 (7th Cir. 1997). V.I.M. argues that
Mr. Magner’s allegation that V.I.M. failed to pay him “other
compensation due” is an allegation of special damages that must be
pleaded with specificity. Mr. Magner, on the other hand, argues
that he is not seeking any special damages. Whether or not Mr.
Magner is claiming special damages, failure to allege such damages
with the requisite specificity does not render the counterclaim
insufficient, it simply bars recovery of those damages. 5 Charles

Alan Wright & Arthur R. Miller, Federal Practice and Procedure



Supp. 2d 817, 823 (N.D. Til. 1998) (Gettleman, J.) (citing ABC
Trans Nat’l Transp., Inc. v. Aeronautics Forwarders, Inc. 379
N.E.2d 1228, 1237 (Ill. App. Ct. 1978)). This duty ends, however,
once the employment relationship ends. Id. (citing Prudential Ins.
Co. v. Van Matre, 511 N.E.2d 740, 748 (Ill. App. Ct. 1987)). Here,
Mr. Magner’s affirmative defense asserts that V.I.M.’s failure to
pay various amounts owed to him relieved Mr. Magner of duties he
may have had as an employee of V.I.M. As failure to compensate an
employee is a violation of the employment relationship, Francorp,
Inc. v. Siebert, 126 F. Supp. 2d 543, 547 (N.D. Ill. 2000) (Moran,
J.), and Mr. Magner’s duty of fidelity and loyalty ceased upon
termination of the employment relationship, Mr. Magner states a
valid affirmative defense to V.I.M.’s breach of fiduciary duty
claim.
III. Conclusion
Plaintiff’s motions to dismiss the counterclaim and to strike

the first affirmative defense to count I are DENIED.

“Wore L Bustle
Elaine E. Bucklo
United States District Judge

Dated: July iy 1 2003



ae
Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge

Elaine E. Bucklo

Sitting Judge if Other

vacated.

or Magistrate Judge than Assigned Judge
CASE NUMBER 03 C 343 DATE 7/14/2003
CASE VIM Recyclers vs. Magner, et al.
TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintifY, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
(1) i) Filed motion of [ use listing in “Motion” box above.}
(2) Oo Brief in support of motion due
(3) Oo Answer brief to motion due___. Reply to answer briefdue___-
(4) o Ruling/Hearingon set fora
(5) oOo Status hearing[held/continued to] [set for/re-set for] on set for
(6) im Pretrial conference[held/continued to] [set for/re-set for]on__setfor__—at__—.
(7) oO Trial[set for/re-set for] on__at
(8) Oo [Bench/Jury trial] [Hearing] held/continuedto__at
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) O Local Rule 41.1 OFRCP41(a\(1) O FRCP41(a)(2).

ao) =f [Other docket entry] Plaintiffs motions to dismiss the counterclaim [20-1] and to strike the first

affirmative defense (21-1] are denied. Enter memorandum opinion and order. Ruling date of 8/1/03 is

ay a [For further detail see order (on reverse side offattached to) the original minute order.]

No notices required, advised in open court.

No notices required.

X._ | Notices mailed by judge's staff.
Notified counsel by telephone,
Docketing to mail notices.
Mail AO 450 form.

Copy to judge/magistrate judge.

courtroom
MPI deputy’s
initials

1YNOI LowLSsid “sn

|
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HE Zid Al Tr eu

Cetera 2



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

V.I.M. RECYCLERS, L.P.,
Plaintiff,

Vv.
No. 03 C 343
LUKE MAGNER, and INDUSTRECYCLE,
L.L.c.,

Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiff V.I.M. Recyclers, L.P. (“V.I.M.”), an Illinois
limited partnership, provides waste recycling services on a
National basis. Defendant Luke Magner, a Massachusetts citizen,
was employed by V.I.M. as a salesperson. V.I.M. alleges that
during the course of his employment, Mr. Magner formed defendant
Industrecycle, L.L.C. (“Industrecycle”), a Massachusetts limited
liability company, to compete with V.I.M. V.I.M. further alleges
that Mr. Magner and Industrecycle concocted fraudulent schemes to
divert V.I.M. customers to Industrecycle. V.I.M. brought a three-
count complaint against Mr. Magner and Industrecycle alleging
breach of fiduciary duty, fraud, and tortious interference with
contractual relations.’ Both defendants raised affirmative

defenses in their answer, and Mr. Magner brought a counterclaim for

1 The breach of fiduciary duty claim was brought against Mr.
Magner alone; the fraud and tortious intereference claims were
brought against both defendants.

DOCKETED

JUL 15 2003


breach of contract. V.I.M. now moves to dismiss Mr. Magner’s
counterclaim, and to strike one of his affirmative defenses. I
deny the motions.

I. The Counterclaim

Mr. Magner’s counterclaim alleges that V.I.M. failed to pay
him all commissions and other compensation due, and that it failed
to reimburse him for all expenses incurred while a V.I.M.
salesperson. V.I.M. seeks to dismiss the counterclaim for failure
to state a claim and for failure to allege special damages with
specificity.?

A federal court sitting in diversity applies federal rules of
pleading. Beanstalk Group, Inc. v. AM Gen. Corp., 283 F.3d 856,
863 (7th Cir. 2002) (“Federal pleading rules ... govern even in
diversity suits.”). Under federal notice pleading requirements, a
counterclaim need only set out “a short and plain statement of the
claim that will provide the [counterclaim] defendant with fair
notice of the claim.” Scott v. City of Chicago, 195 F.3d 950, 951
(7th Cir. 1999) (citing Leatherman v. Tarrant County Narcotics
Intelligence and Coordination Unit, 507 U.S. 163, 168 (1993)). A
counterclaim need not spell out every element of a legal theory; it

need contain only enough to allow the counterclaim defendant to

2 v.I.M. also argues that Mr. Magner’s invocation of the
Illinois Sales Representative Act, 820 ILCS 120, as a basis for
seeking treble damages, attorneys’ fees, and costs is
inappropriate. Mr. Magner has agreed to strike his claim for
relief based on that act.