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Konica Minolta Business Solutions, U.S.A., Inc. v. Lowery Corp.

United States District Court, E.D. Michigan, Southern Division

November 18, 2016

KONICA MINOLTA BUSINESS SOLUTIONS, U.S.A., INC., Plaintiff,
v.
LOWERY CORPORATION, d/b/a APPLIED IMAGING SYSTEMS, INC., et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS (DOC. 118)

          HONORABLE VICTORIA A. ROBERTS UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION & BACKGROUND

         Plaintiff Konica Minolta and Defendant Applied Imaging are printing companies and direct competitors who provide similar goods and services in Michigan. Konica alleges the individual defendants breached employment agreements ("Agreement(s)") with it, and then conspired with Applied Imaging to misappropriate its trade secrets, convert its confidential business information, and tortiously interfere with its relationships and business expectancies with its customers and prospective customers.

         The Agreements are identical, and contain confidentiality and non-compete provisions. Konica alleges an Agreement with only six of the seven individual defendants: Jon Livingston, Matt Aron, Rob Bell, Linda Boyle, Randy Magner, and Anna Stewart (the "Contract Defendants"). It does not allege an agreement with Steve Hurt.

         The Amended Complaint states six claims: Count I - breach of contract against all individual defendants; Count II -Tortious Interference with Contractual Relations against Applied Imaging, Hurt and Livingston; Count III -Tortious Interference with Business Expectancy; Count IV -Violation of Michigan Uniform Trade Secrets Act ("MUTSA"); Count V - Civil Conspiracy; and Count VI - Statutory Conversion. Counts III-VI are against all defendants.

         This matter is before the Court on Defendants' motion for judgment on the pleadings. The motion is fully briefed, and the Court held a hearing on November 16, 2016. Defendants' motion is GRANTED IN PART and DENIED IN PART. The Court DISMISSES the breach of contract claim against Hurt and the statutory conversion claim in its entirety. All other claims are plausible on their face and may proceed.

         II. STANDARD OF REVIEW

         A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) tests the legal sufficiency of a plaintiff's complaint. The Court reviews such a motion under the same standard as a motion to dismiss under Rule 12(b)(6). Sensations, Inc. v. City of Grand Rapids, 526 F.3d, 291, 295-96 (6th Cir. 2008). As such, it must accept as true all well-pled material allegations in the complaint and "determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The Court may grant a motion for judgment on the pleadings only where the movants clearly establish that no material issue of fact remains unresolved and that they are entitled to judgment as a matter of law. Poplar Creek Dev. Co. v. Chesapeake Appalachia, LLC, 636 F.3d 235, 240 (6th Cir. 2011); Drew v. Kemp-Brooks, 802 F.Supp.2d 889, 892 (E.D. Mich. 2011). To withstand a Rule 12(c) motion, "a complaint must contain direct or inferential allegations respecting all the material elements under some viable legal theory." Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 336 (6th Cir. 2007).

         III. ANALYSIS

         A. Count I - Breach of Contract

         Konica Minolta alleges a breach of contract claim against all individual defendants. At the hearing, Konica conceded that no agreement with Hurt exists, and stipulated to dismissing this claim against him. Thus, Count I is dismissed against Hurt.

         The underlying Agreements contain a choice of law clause stating that they "shall be interpreted in accordance with the laws of the State of New York." Based on that provision, the parties agree that New York law governs the breach of contract claims.

         Contract Defendants say this claim should also be dismissed against them; specifically, they argue that the Agreements are too vague and indefinite to enforce as a matter of law, because the amended complaint says the Agreements attached to it are true and correct copies, "but the Definitions called for and referenced as attached [to the Agreements] are not attached to those copies." In support, they cite Swan Media Grp., Inc. v. Staub, 841 F.Supp.2d 804, 808 (S.D.N.Y. 2012), which held that "if the terms of [an] agreement are so vague and indefinite that there is no basis or standard for deciding whether the agreement had been kept or broken, or to fashion a remedy, and no means by which such terms may be made certain, then there is no enforceable contract." Defendants' argument fails for multiple reasons.

         First, regardless of whether a separate definitions section exists, Contract Defendants fail to demonstrate that the Agreements, as is, are so vague or indefinite that it is impossible to determine if a breach occurred. Based on this alone, Contract Defendants fail to show that the Agreements are unenforceable as a matter of law under Staub.

         Moreover, as Konica points out, there is no evidence that a "definitions" attachment actually exists. Notably, certain terms are defined throughout the document (e.g., "Confidential Information" is defined on page one of the Agreements). Even if a separate definitions attachment exists, Contract Defendants would not be entitled to judgment as a matter of law due to Konica not attaching it, especially where it is clear the parties entered into an agreement. The Court will not just throw the claim out.

         The breach of contract claim survives against Contract Defendants and is governed by New York law.

         B. Choice of Law ...


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