Kuryakyn Holdings v. Ciro - 242 F. Supp. 3d 789 (W.D. Wis. 2017)

Rule:

Summary judgment is appropriate if the moving party shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment."

Facts:

After more than 25 years as the founder and president of plaintiff Kuryakyn Holdings, a motorcycle aftermarket parts design company, defendant Thomas Rudd resigned. Rather than simply retiring, the defendant helped his son start a competing motorcycle aftermarket parts company, defendant Ciro, and poached the plaintiff's three main designers, defendants Darron May, Ken Madden, and Christopher Lindloff. Plaintiff, displeased with the sudden loss of its designers and the simultaneous entrance of a new competitor on the market, brought suit against the defendants, and alleged that the individual defendants used the plaintiff's trade secrets and other resources to benefit the defendant company and that some of their actions occurred while they were still collecting a salary from plaintiff. Plaintiff’s 18 claims were gradually being whittled down. Eight active claims remain. Defendants moved for summary judgment on these eight remaining claims. The court granted seven of these claims in favor of defendants. 

Issue:

Did the court err in granting defendants summary judgment on these claims?

Answer:

No. The court granted in part, and deny in part, defendants' motion for summary judgment on plaintiff's breach of fiduciary duty claim.

Conclusion:

The court granted summary judgment in favor of defendants on seven of those claims but the court held that defendants are not entitled to summary judgment on plaintiff’s breach of fiduciary duty claim which will remain for trial. The court found that defendant did not dispute this breach but he contends that he only prepared defendant company to compete with plaintiff in the future, but the court held that although it is true that employees do enjoy a privilege allowing them to make preparations to compete with their employer before their employment relationship ends, that privilege does not extend to circumstances in which the employee misuses confidential information, conspires to effectuate mass resignation of key employees, or usurps a business opportunity of the employer. The court agreed that should plaintiff established a breach of defendant’s fiduciary duty, plaintiff may recover defendant’s salary, or an appropriate portion of it, paid during the time he was actively breaching his fiduciary duties.