MEMORANDUM AND ORDER
NUECHTERLEIN, United States Magistrate Judge.
Plaintiff Credentials Plus, LLC brought this action on August 22, 2001 alleging violations of both Indiana and federal law against Defendants Jill S. Calderone and National Credentials Corporation stemming from Calderone's March 2001 departure from Credentials Plus. Calderone counterclaimed with two counts against Plaintiff. On June 18, 2002, both Plaintiff [Doc. No. 35] and Defendants [Doc. No. 37] moved for summary judgment on various aspects of this case. The parties' motions were soon followed by Defendants' Motion to Strike affidavit statements from Plaintiffs' supporting documents [Doc. No. 45]. For the following reasons, Plaintiff's Partial Motion for Summary Judgment [Doc. No. 35] is
I. FACTUAL HISTORY
While many factual allegations in the parties' filings conflict, the basic factual framework of this case is as follows. As of 1997, Defendant Jill Calderone and Anthony Nyers were members of Midwest Medical Services (MMS), an Indiana corporation with its principle place of business in Indiana. MMS served as a credentialing service for physician practice groups and health care providers. MMS's primary services included the assembly of credential-related data for physicians in client practice groups, delivering applications to health care organizations and government reimbursement programs, and providing client practice groups with reports of their physicians' data in relation to health providers and reimbursement programs. MMS's business prospects, unfortunately, were not bright. By July 1998, MMS only had one client, the South Bend Clinic (SBC), forcing Calderone and Nyers to look for outside assistance and investment. The two soon associated with Joseph Crowley to form Credentials Plus, LLC.
A. Formation and Operation of Credentials-Plus, LLC
On July 1, 1999 Nyers, Crowley, and Calderone entered into a "Letter Agreement" outlining Credentials-Plus's makeup and operation. Credentials-Plus was composed of MMS and Healthcare Economics Group, LLC (HEG), a South Carolina limited liability company. MMS was to provide the daily management and professional services for Credentials-Plus, and Healthcare Resources Group, a wholly-owned subsidiary of HEG, was to provide the new LLC with support services. (Letter Agreement at 1). Calderone, Nyers, and HEG each owned one-third of Credentials-Plus. Id. at 3. Credentials-Plus's stated purpose was to "provide medical credentials management services to providers, including complete, turnkey credentials management and on-demand credentials services." Id. The agreement also provided that Calderone would serve as president and chief operating officer of Credentials-Plus, as well as provided for Calderone's salary and vacation pay. Id. at 2. The company registered with the Indiana Secretary of State on October 4, 1999.
Until her departure, Calderone served as Credentials-Plus's sole officer and operating employee. Calderone's service, however, was marred by internal conflict.
Despite the poor working environment, Credentials-Plus thrived under Calderone's stewardship. In November 2000, Tony Walz created a website for Credentials-Plus allowing the company to advertise with potential clients and share information with existing customers. By March 2001, Credentials-Plus's clients included SBC, Lake Park Surgicare, Allied Physicians of Michiana, Grossnickle Eye Center, Chandana Surgery Center, Mercy Health Systems, and Coast-to-Coast Medical, LLC. Additionally, Credentials-Plus solicited business with other health care providers throughout the country. Calderone's duties included maintaining a database of physician credentials data, pricing information, client contacts, and health organizations' credentialing requirements. The database was protected using access passwords.
B. Formation of National Credentials Corporation and Calderone's Departure from Credentials-Plus
As previously stated, Calderone had expressed concern about her working environment to Crowley until her departure on March 28, 2001. The parties disagree as to whether Calderone's performance at Credentials-Plus waned prior to her departure. Amidst these conflicting stories, however, several documents establish a timeline pertinent to Plaintiff's allegations.
On March 17, 2001, prior to her departure, Calderone registered a domain name for National Credentials Corporation with the internet site Register.com, setting up an email for herself and listing the site's administrative contact as National Credentials Corporation. (Verisign, "Whois" internet search report). After her departure, while still owning shares in Credentials-Plus, Calderone filed articles of incorporation with the Georgia Secretary of State, incorporating National Credentials on April 6, 2001.
C. Credentials-Plus's Status After Calderone's Departure
Because Calderone served as Credentials-Plus's sole operating officer, the company was virtually unable to function after Calderone's departure.
II. PROCEDURAL HISTORY
Plaintiff brought this action on August 22, 2001 alleging five causes of action under
On June 18, 2002, the parties filed simultaneous motions for summary judgment. Plaintiff moved for summary judgment on count four of its complaint, and Defendants moved for summary judgment on all aspects of the case. On August 6, 2002, Defendants filed a Motion to Strike affidavit statements from Plaintiffs' pleadings.
III. SUMMARY JUDGMENT STANDARD
Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c); Lawson v. CSX Transp., Inc., 245 F.3d 916, 922 (7th Cir.2001). In determining whether a genuine issue of material fact exists, this Court must construe all facts in the light most favorable to the nonmoving party as well as draw all reasonable and justifiable inferences in favor of that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); King v. Preferred Technical Group, 166 F.3d 887, 890 (7th Cir.1999). To overcome a motion for summary judgment, the nonmoving party cannot rest on the mere allegations or denials contained in its pleadings. Rather, the nonmoving party must present sufficient evidence to show the existence of each element of its case on which it will bear the burden at trial. Celotex v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Robin v. Espo Engineering Corp., 200 F.3d 1081, 1088 (7th Cir.2000); See also N.D. Ind. L.R. 56.1(b) ("In determining a motion for summary judgment, this court will assume that the facts as claimed and supported by admissible evidence by the moving party are admitted to exist without controversy, except to the extent that such facts are controverted ... as supported by the depositions, discovery responses, affidavits, and other admissible evidence on file."). Where a factual record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing Bank of Ariz. v. Cities Services Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)).
IV. DEFENDANTS' MOTION TO STRIKE
On August 6, 2002 Defendants moved to strike portions of Anthony Nyers's June 18, 2002 and July 18, 2002 affidavits used in support of Plaintiff's motion for summary judgment and memorandum in opposition to Defendants' motion for summary judgment. Defendants argued that the affidavits were "inadmissible speculative statements, half-truths, or false statements." (Defendants' Memo. in Support of Mot. to Strike at 1).
Affidavits made in support of and opposition to summary judgment "shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P.
The majority of Defendants' objections contend that Nyers was not involved in the daily functions of Credentials-Plus, and that he therefore lacks sufficient personal knowledge to testify as to Calderone's behavior. Although Defendants fail to cite adequate guiding authority, their accusations are based on well-settled legal principles. See e.g. Id. at 359 (striking an affidavit for lack of foundation and concern for matters not within an affiant's personal knowledge); Pfeil v. Rogers, 757 F.2d 850, 862 (7th Cir.1985) (stating that legal argument in an affidavit may be disregarded as conclusory).
This order will individually address the instances where it is necessary to rely on portions of Nyers's affidavit subject to Defendants' motion. All other objections which are not specifically addressed in this order, and hence not relied upon, are
V. CALDERONE'S BREACH OF FIDUCIARY DUTY
Both parties moved for summary judgment regarding Plaintiff's allegation that Calderone breached her fiduciary duty to Credentials-Plus. This Court may rule on this issue pursuant to 28 U.S.C. § 1367. Plaintiff's claim requires this Court to address Calderone's fiduciary breach in light of both contract and common law principles.
A. Credentials-Plus's Covenant Not to Compete
The July 1, 1999 letter agreement between Calderone, Nyers, and Crowley, stated that "[n]o shareholder may participate in any way in any venture that competes with [Credentials-Plus] either directly or indirectly without formal written approval of the other [Credentials-Plus] shareholders." (Letter Agreement at 1). Indiana courts view non-compete covenants as restraints on trade, and, as such, give them a narrow construction. Duneland Emergency Physician's Medical Group, P.C. v. Brunk, 723 N.E.2d 963, 965-966 (Ind.Ct.App.2000). Such covenants, however, are enforceable if the restrictions are reasonable as to the parties and the general public. Id. In determining the reasonableness of non-compete restrictions, this Court must look to: (a) whether the restrictions are wider than necessary for the protection of the covenantee; (b) the effect of the promise upon
The July 1, 1999 non-compete covenant was a reasonable restraint on Credentials-Plus's shareholder activities both temporally and geographically. Regarding temporal limits, the covenant only restricted competition while Calderone owned shares in Credentials-Plus. It made no restriction against her activities after selling her shares.
On March 17, 2001, prior to her departure, Calderone registered an internet domain name for National Credentials Corporation with the internet site Register.com, set up an email for herself, and listed the site's administrative contact as National Credentials Corporation. (Verisign, "Whois" internet search report). After leaving Credentials-Plus, but while still owning shares in the company, Calderone filed articles of incorporation for National Credentials with the Georgia Secretary of State on April 6, 2001. She also sent several letters and emails to health care providers soliciting business for her new company. See e.g. (April 7, 2001 email from Calderone to Neal Russell at Critical Health Systems) ("As you have probably guessed, I have resigned as President of Credentials-Plus. I am now doing some work for a company in Georgia. I would love to talk to you. It would be greatly appreciated if you do not mention my new job to any folks at C-Plus. They are not real happy with me right now!"); (May 18, 2001 letter from Calderone to Dawn McLane, Executive Director of Allied Surgery Center) (discussing credentialing contracts between National Credentials and Allied Surgery Center) ("I appreciate the opportunity to continue our relationship."); (June 1, 2001 letter from Calderone to Dawn McLane) (discussing an outsourcing agreement between National Credentials and Allied Surgery Center); (May 24, 2001 letter from Calderone to Paul Meyer of SBC)(soliciting credentialing business from SBC).
The aforementioned documents create an uncontested paper-trail of Calderone's
B. Common Law Principles of Fiduciary Duty
In addition to the contractual breach, Calderone's activities demonstrate a breach of her fiduciary duties under common law principles as well. Limited liability companies (LLCs) such as Credentials-Plus were not available in Indiana until the enactment of Indiana's Business Flexibility Act in 1993. Ind.Code 23-18-1-1 et seq. Because of the relative infancy of this statute, there is little Indiana case law regarding LLCs and relatively no case law regarding fiduciary duties under LLC operating agreements.
Because limited liability companies are relatively new business entities, courts are forced to grapple with financial and liability issues in terms of LLCs' similarities to partnerships and corporations. See e.g. Jordan v. Com., 36 Va.App. 270, 549 S.E.2d 621, 622 (2001); Lieberman v. Wyoming.com, LLC, 11 P.3d 353, 357 (Wyo. 2000); Ruggio v. Vining, 755 So.2d 792, 795 n. 2 (Fla.Dist.Ct.App.2000)(noting the similarities between LLCs, partnerships, and corporations); Herbst, Charles, New Business Entity Limits Liability, Taxability, 37 Res Gestae 14, 14 (1993) (examining the financial structure of LLCs) ("While an LLC is a distinct type of entity, it is a hybrid between a corporation and a partnership."); See also Copperthwaite Jr., William H., Limited Liability Companies: The Choice for the Future, 103 Comm. L.J. 222 (1998) (discussing the history of LLCs). In light of LLCs' hybrid nature, examination of Indiana's standards for fiduciary breaches under partnership and corporate law is helpful in assessing Calderone's conduct.
1. Partnerships
The evaluation of fiduciary duties within Indiana partnerships is governed by Indiana's Uniform Partnership Act. Ind. Code 23-4-1-1 et seq.
2. Corporations
Under Indiana law, a corporation is considered "close" if it has relatively few shareholders and does not have publically traded shares. G & N Aircraft, Inc. v. Boehm, 743 N.E.2d 227, 236 n. 2 (Ind. 2001). Because Credentials-Plus's membership consisted of only Calderone, Crowley, and Nyers, and there is no indication that the company's shares were publically traded, comparison to a close corporation is appropriate.
Shareholders of close corporations owe fiduciary duties substantially different from the duties owed by their counterparts in publicly traded corporations. Melrose v. Capitol City Motor Lodge, Inc., 705 N.E.2d 985, 990-91 (Ind.1998) ("Indiana courts have characterized closely-held corporations as `incorporated partnerships' and as such have imposed a fiduciary duty upon shareholding `partners' to deal fairly not only with the corporation but with fellow shareholders as well.") Shareholders may not act out of avarice, expediency or self-interest in derogation of their duty of loyalty to other shareholders and the corporation. Barth v. Barth, 659 N.E.2d 559, 561 n. 6 (Ind.1995). A shareholder's fiduciary duty requires that he "not appropriate to his own use a business opportunity that in equity and fairness belongs to the corporation." McLinden v. Coco, 765 N.E.2d 606, 615 (Ind.Ct.App.2002). The standard imposed by a fiduciary duty is the same whether it arises from the capacity of a director, officer, or shareholder in a close corporation. G & N Aircraft, 743 N.E.2d at 240.
For the foregoing reasons, this Court finds that Indiana LLCs, being similar to Indiana partnerships and corporations impose a common law fiduciary duty on their officers and members in the absence of contrary provisions in LLC operating agreements. The Credentials-Plus letter agreement had no provision limiting liability, and Calderone attempts to argue that she is not subject to common law fiduciary principles by stating that she was not a member of Credentials-Plus, but rather owned her shares in the LLC through Chandler-Dadyn Group, LLC, of which she was the sole member. (Defendant's Memo. in Opp. to Plaintiff's Mot. at 7). Calderone's argument is unpersuasive, especially given the fact that, even if she was able to shield herself from membership by operating behind the veil of a LLC, Calderone admits that she "owed a fiduciary duty to the other members of
Calderone's correspondence to physicians groups including language such as "I am now doing some work for a company in Georgia ... I would love to talk to you;" "It would be greatly appreciated if you do not mention my new job to any folks at C-Plus ... They are not real happy with me right now;" and "I appreciate the opportunity to continue our relationship" is clear evidence of self-dealing and a breach of her duty of loyalty under Indiana law. Calderone's client solicitation and competitive practices both while an officer and shareholder of Credentials-Plus demonstrates a fiduciary breach.
Therefore, Plaintiff's Partial Motion for Summary Judgment regarding Defendant Calderone's breach of fiduciary duty is
VI. TRADE SECRETS
Defendants moved for summary judgment regarding count one of Plaintiff's complaint, which alleged that Calderone and National Credentials violated the Indiana Uniform Trade Secrets Act. Ind. Code 24-2-3-1 et seq. Plaintiff's complaint lists the following items as trade secrets: (1) Credentials-Plus's database of credential-related information; (2) the software adapted to manipulate this information; (3) Credentials-Plus's pricing and costing information; (4) information on client needs and contacts; (5) Credentials-Plus's marketing plan; and (6) methods for organizing and presenting data to physician groups and other clients. (Complaint at ¶ 31). Plaintiff alleges that Defendants misappropriated its trade secrets through improper means and are currently benefitting from those secrets. Id. at ¶ 34. This Court may rule on this issue pursuant to 28 U.S.C. § 1367.
The six items listed in Plaintiff's complaint can be narrowed into three general categories. The first, prong two of Plaintiff's trade secret allegation, consists of the software packages used by Credentials-Plus in its operations. The second, prongs one, three, four, and five of Plaintiff's allegation, allege that Defendants used data collected concerning Plaintiff's client contacts, marketing strategy, and pricing information in an effort to obtain clients for National Credentials. The third, prong six of Plaintiff's allegation, concerns Plaintiff's methods for organizing and presenting data to physician groups and other clients.
A. Indiana's Uniform Trade Secrets Act
Indiana courts have held that a protectable trade secret has four characteristics: (1) it is information, (2) which derives independent economic value, (3) that is not generally known, or readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and (4) is the subject of efforts, reasonable under the circumstances, to maintain its secrecy. Ind.Code 24-2-3-2; Hydraulic Exchange and Repair, Inc. v. KM Specialty Pumps, Inc., 690 N.E.2d 782, 785 -786 (Ind.Ct.App.1998). Unlike other states, Indiana does not require a trade secret to provide its holder with a competitive advantage. Weston v. Buckley, 677 N.E.2d 1089, 1092 n. 1 (Ind.Ct. App.1997). The determination of whether a particular device or process is a trade secret is a fact-sensitive test. Amoco Production Co. v. Laird, 622 N.E.2d 912, 916 (Ind.1993); Weston, 677 N.E.2d at 1092.
In light of the fact-sensitive nature surrounding trade secrets, this Court is reluctant to rule on this issue as a matter of law. Anderson, 477 U.S. at 248, 106 S.Ct. 2505 ("Summary judgment is not appropriate if the evidence is such that a reasonable jury could return a verdict for the non-moving party."). No genuine fact issues exist, however, with regard to Calderone's use of Credentials-Plus's computer software. While working at Credentials-Plus, Calderone used two commercially available software programs: "Quickbooks," an accounting program, and "Cactus," a program used to generate credentialing reports. (Nyers March 5, 2002 Dep. at 99) (stating that Credentials-Plus never developed its own software program). After forming National Credentials, Calderone developed a new software system named "Plan Manager," which she used to complete and track credentialing applications. Defendants maintain that the creation of Plan Manager occurred wholly independent of any information Calderone obtained while working at Credentials-Plus, and Plaintiffs have done little to contradict Defendants' assertion. See e.g. (Nyers March 5, 2002 Dep. at 117-118) (admitting that he has little to no knowledge regarding National Credentials's software program).
Plaintiff's response to Defendants' motion hardly addresses its initial allegation that the software used by Credentials-Plus constituted a trade secret or that Calderone misappropriated this software for the benefit of National Credentials. Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548 (holding that a nonmoving party cannot rest on the mere allegations or denials contained in its pleadings, but must present sufficient evidence to show the existence of each element of its case on which it will bear the burden at trial). It is also difficult to imagine how two commercially available software programs could constitute information that was not generally known, or readily ascertainable by proper means by other persons. Because the evidence Plaintiff presents could not lead a rational trier of fact to find that Calderone's use of these programs violated the Indiana Uniform Trade Secrets Act, Defendants motion for summary judgment with regard to the use of Plaintiff's software programs is
C. Credentials-Plus's Customer and Pricing Information
Plaintiff's claims with respect to Defendants' use of its client contact and pricing information are more problematic. Whether customer information constitutes a trade secret or confidential information depends upon the facts of each individual case. Harvest Life Ins. Co. v. Getche, 701 N.E.2d 871, 876 (Ind.Ct.App.1998) (citing Woodward Insurance, Inc. v. White, 437 N.E.2d 59, 67(Ind.1982)). In Harvest Life, the court held that an insurance company's policyholder list was not a trade secret because the information, which included names of customers, policy coverage, premium amounts, and expiration dates, was obtainable from individual policyholders, actual insurance policies, and other materials. Id. (citing Prudential Insurance Company Of America v. Baker, 499 N.E.2d 1152 (Ind.Ct.App.1986)). Defendants follow this reasoning, contending that Calderone solicited potential clients by obtaining their names and addresses by calling chambers of commerce, examining the yellow-pages, and obtaining information from the Medical Group Management Association's membership roster. (Def. Memo. in Supp. of Def. Mot. at 13).
Were Plaintiff's allegations limited to client contact lists, Indiana law would require that this Court grant summary judgment favoring Defendants. Plaintiff,
Where customer compilations include more than the customer names, such as pricing information, profits, sales, and special suppliers that are specific to each customer, a party's effort of compiling its customer and pricing information is entitled to protection even if the customer names may generally be known. Hydraulic, 690 N.E.2d at 786 (citing Amoco, 622 N.E.2d at 920). The juxtaposition between the evidence submitted in this matter precludes entry of summary judgment. Defendants' motion for summary judgment with regard to the misappropriation of Plaintiff's client information and pricing structure is therefore
D. Methods for Organizing and Presenting Data
Prong six of Plaintiff's trade secret allegation argues that Plaintiff's methods for organizing and presenting data to physician groups and other clients were trade secrets, and that Defendants misappropriated them for use at National Credentials. It is unclear what constitutes Plaintiff's organization and presentation methods. To the extent that organization procedures relate to Credentials-Plus's informational database, summary judgment with regard to that issue was dealt with in the preceding section. In addition to the company's database, however, both Credentials-Plus and National Credentials maintained similar operating procedures.
While at Credentials-Plus, Calderone developed policies, procedures, and form proposals which Defendants admit are similar to operating policies and procedures that Calderone developed for National Credentials. (Def. Memo. in Supp. of Def. Mot. at 9). Defendants maintain, however, that both companies' procedures were similar to national standards, and that any similarity between them stems from their mutual resemblance to national criteria. Id.; (Calderone Dep. at 79, 81). Defendants further submit evidence that Calderone provided copies of Credentials-Plus's standards material to clients upon request, indicating that the information was not confidential. (Calderone Dep. at 78-79). Plaintiff offers no evidence to contradict Defendants' claims. Because this Court must assume that the facts as claimed and supported by admissible evidence by the moving party are admitted to exist without controversy, except to the extent that such facts are controverted, N.D. Ind. L.R. 56.1(b), Defendant's motion with regard to methods for organizing and presenting data to physician groups and other clients is
VII. INTERFERENCE WITH BUSINESS RELATIONSHIPS
Plaintiff alleges that Calderone and National Credentials intentionally interfered with Credentials-Plus's business relations by (1) soliciting Credentials-Plus clients using misappropriated, confidential, and/or proprietary information; (2) interfering with Credentials-Plus's ability to serve its clients; (3) soliciting potential Credentials-Plus clients; (4) re-routing email from the Credentials-Plus website;
In Indiana, tortuous interference with a business relationship consists of five elements: (1) the existence of a valid relationship; (2) defendant's knowledge of the relationship; (3) defendant's intentional interference with that relationship; (4) the absence of justification; and (5) damages resulting from defendant's interference. Levee v. Beeching, 729 N.E.2d 215, 222 (Ind.Ct.App.2000); Harvest Life, 701 N.E.2d at 876.
VIII. STATUTORY CONVERSION
Plaintiff alleges that Defendants exercised unauthorized control over Credentials-Plus's property including, but not limited to Credentials-Plus's: (1) printer; (2) office supplies; (3) contractual right to attend a professional conference with the National Association of Medical Staff Services (NAMSS); (4) trade secrets; (5) credit cards; and (6) website email. (Complaint at ¶ 52). This Court may rule on this issue pursuant to 28 U.S.C. § 1367.
In Indiana, a person who knowingly or intentionally exerts unauthorized control over the property of another commits criminal conversion. Ind.Code 35-43-4-3.
Although not listed in count three of Plaintiff's complaint, Defendants move for summary judgment as to the conversion of a website template used by Credentials-Plus in the creation of National Credentials's website. (Def. Memo. in Supp. of Def. Mot. at 16-17). Plaintiff's opposing memorandum does not address this issue. Therefore, summary judgment with respect to the website template is
A. Plaintiff's Factual Support in Opposition to Defendants' Motion is Sufficient to Defeat Summary Judgment
In opposing Defendants' motion with regard to Calderone's alleged conversion of office supplies and attendance at a professional conference, Plaintiff relies on paragraphs 9-11 of Nyers supplemental affidavit. Because these paragraphs are subject to Defendants' motion to strike, it is necessary to address the basis for Nyers's supplemental statements.
This Court has "great discretion" in determining whether an affidavit is sufficient under Rule 56(e). Maldonado v. U.S. Bank, 186 F.3d 759, 769 (7th Cir.1999). Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Fed.R.Civ.P. 56(e). Defendants contend that Nyers never affirmatively demonstrated that he is competent to testify as to the alleged conversion of an office printer, (Nyers Supp. Aff. at ¶ 9), various office supplies including a copy of Marquis Who's Who, Id. at ¶ 10, and an unreturned registration fee for a March 2001 NAMSS conference. Id. at ¶ 11.
Every witness is presumed competent to testify, unless it can be shown that the witness does not have personal knowledge of the matters about which he is to testify, that he does not have the capacity to recall, or that he does not understand the duty to testify truthfully. United States v. Gutman, 725 F.2d 417, 424 (7th Cir. 1984).
Statements in Nyers's supplemental affidavit, to which Defendants do not object, establish that Nyers had personal knowledge of Credentials-Plus's operations and procedures. See e.g. (Nyers Supp. Aff. at ¶ 1)("I have personal knowledge of the following facts"); Id. at ¶ 2 ("I ... have owned interest in Credentials-Plus since its inception"); See also (Nyers Dep. at 53-54) (stating that Nyers frequently spoke with Crowley and Calderone regarding Credentials-Plus). In addition to Nyers' own statements, Plaintiff has submitted evidence to buttress Nyers' claims. See e.g. (Feb. 8, 2001 invoice for an office printer); (April 2001 Citibank USA statement including charges for office supplies); (February 2001 American Express Statement including charges for the NAMSS conference).
Regarding paragraphs 9 and 10 of Nyers's supplemental affidavit, Defendants further contend that the affidavits should be stricken because they conflict with Nyers's earlier deposition. A party may not create an issue of fact by submitting an affidavit whose conclusions contradict a prior deposition or other sworn testimony. Kalis v. Colgate-Palmolive Co., 231 F.3d 1049, 1055 (7th Cir.2000). See also Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795, 806, 119 S.Ct. 1597, 143 L.Ed.2d 966 (1999)("[A] party cannot create a genuine issue of fact sufficient to survive summary judgment simply by contradicting his or her own previous sworn statement (by, say, filing a later affidavit that flatly contradicts that party's earlier sworn deposition) without explaining the contradiction or attempting to resolve the disparity."). An affidavit contradicting earlier deposition testimony need not be disregarded if it is demonstrable that the statement in the deposition was mistaken, perhaps because the question was phrased in a confusing manner or because a lapse of memory is a plausible explanation for the discrepancy. Maldonado, 186 F.3d at 769; See also Holland v. Jefferson Nat'l Life Ins. Co., 883 F.2d 1307, 1315 (7th Cir.1989) ("An inconsistent affidavit may preclude summary judgment ... if the affiant was confused at the deposition and the affidavit explains those aspects of the deposition testimony or if the affiant lacked access to material facts and the affidavit sets forth the newlydiscovered evidence.").
Plaintiff is not attempting to contradict statements made in Nyers's deposition with its supplemental affidavit. To the contrary, Nyers was unable to answer many of Defendants' questions regarding office products because he could not remember the specifics surrounding payment for office supplies "off the top of [his] head". (Nyers Dep. at 59 ll. 10). Nyers's supplemental affidavit is simply an attempt to produce evidence such as transaction receipts to rebut Defendants' claim that no factual dispute exists as to the conversion of Credentials-Plus's office products and a conference registration. It is not an attempt to backtrack on damaging statements made during a deposition. Therefore, Defendants' motion to strike paragraphs 9-11 from Nyers's supplemental affidavit is
IX. COMPUTER FRAUD AND ABUSE ACT
Genuine fact questions also preclude summary judgment on Plaintiff's CFAA claim. An individual violates the Computer Fraud and Abuse Act if he or
Plaintiff alleges that Defendants, acting in concert with Tony Walz who created Credentials-Plus's website, intentionally accessed Credentials-Plus's computer and obtained information on clients and potential clients residing outside Indiana by rerouting client email originally sent to Credentials-Plus. (Complaint at ¶ 61). Plaintiff's computer was used to send and receive email to customers throughout the country and therefore qualifies as a protected computer under the CFAA.
After Calderone resigned from Credentials-Plus, Plaintiff discovered that the Credentials-Plus website was altered to redirect email sent by potential clients to an email address entitled "credentialsplus@yahoo.com." Defendants argue that Calderone has no knowledge of the email address and cite to Nyers's deposition in which he states that he is uncertain as to who established the account. See (Calderone Dep. at 183-84) (denying that she created the Yahoo account); (Nyers Dep. at 77-78) (stating that he is unaware as to who exactly established the account). Plaintiff counters Defendants' assertions, however, with evidence linking Calderone to the surreptitious email. See (Yahoo! Inc. Affidavit) (stating that the Yahoo account was created on January 1, 2001 and listing jcalderone@credentialsplus.com as an alternate email address for the account).
Even if Defendants are correct, and Calderone has no knowledge of the Yahoo account, Plaintiff has produced sufficient evidence to create and inference that Defendants violated the CFAA and preclude summary judgment. See Anderson, 477 U.S. at 255, 106 S.Ct. 2505 ("Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge."). Defendants' motion for summary judgment as it pertains to Plaintiff's CFAA claims is therefore
X. DEFENDANTS' COUNTERCLAIMS
Pursuant to Fed.R.Civ.P. 13, Defendant Calderone brought two counterclaims against Credentials-Plus.
A. Count I: Back Wages
The Credentials-Plus letter agreement provided Calderone with a base salary of $3,428.00 per month to be increased by four percent of the company's baseline revenue per year as well as three weeks paid vacation per year. (Letter Agreement at 2). The contract also granted MMS a "preferred payment" of $2400.00 per month for thirty-six months from Credentials-Plus's revenues and $1,200.00 per month for twenty-four months. Id. at 1.
Under the Indiana Wage Payment Statute, employees, upon separation from employment, must be paid the amount due them at their next and usual payday. Ind. Code 22-2-5-1(b). Indiana courts have held that vacation pay constitutes deferred compensation in lieu of wages and is thus subject to the provisions of the statute. Indiana Heart Associates, P.C. v. Bahamonde, 714 N.E.2d 309, 311 (Ind.Ct.App.1999)(citing Jeurissen v. Amisub, Inc., 554 N.E.2d 12, 13 (Ind.Ct.App. 1990)). An employee is entitled to her accrued vacation pay to the time of termination "provided no agreement or published policy exist[s] to the contrary...." Indiana Heart Associates, 714 N.E.2d at 311-312. (citing Die & Mold, Inc. v. Western, 448 N.E.2d 44, 48 (Ind.Ct.App.1983)). Employers have the burden of showing a violation of employment policies when denying an employee accrued vacation pay. Id. at 312-313.
In Indiana Heart Associates, an employee sued her former employer for accrued vacation pay after she was terminated for gross misconduct. The court denied the employee summary judgment because her employment handbook stated that vacation pay would be denied for such a termination. Indiana Heart Associates, 714 N.E.2d at 313.
The Credentials-Plus letter agreement has no language similar to the handbook in Indiana Heart Associates, and Plaintiff has provided absolutely no law in its effort to rebut Calderone's claim. Rather, Plaintiff has cited numerous contested and uncontested facts concerning Calderone's conduct and fiduciary breaches prior to her departure, possibly alluding to its affirmative defenses of unclean hands, waiver, and estoppel. See (Defendant's Memo. in Opp. to Plaintiff's Mot. at 16-18); See also Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548 (holding that the nonmoving party cannot rest on the mere allegations or
This Court can find no Indiana caselaw regarding the parties' situation in relation to the equitable doctrines of waiver and estoppel, and Plaintiff's reliance on the doctrine of unclean hands is misguided. The doctrine of unclean hands is not favored by Indiana courts and must be applied with "reluctance and scrutiny." Wagner v. Estate of Fox, 717 N.E.2d 195, 202 (Ind.Ct.App.1999). For the doctrine to apply, the party who is charged with having unclean hands must be guilty of intentional misconduct. Id.; Tomahawk Village Apts. v. Farren, 571 N.E.2d 1286, 1294 (Ind.Ct.App.1991). In addition, the misconduct charged must be directly related to the case at issue. See Keller v. Indiana Dept. of State Revenue, 530 N.E.2d 787, 789 (Ind.Tax1988)(addressing Indiana's interpretation of the unclean hands doctrine).
Although Calderone breached her fiduciary duties to Plaintiff, Plaintiff has no basis for its allegation that, simply because Calderone committed wrongdoings, she is not entitled to vacation pay, some of which was accrued prior to her fiduciary breaches. In light of Plaintiff's lackluster opposition to Calderone's counterclaim and the fact that Credentials-Plus's letter agreement has no pertinent provision, this Court will not expand upon matters of common law attributed to Indiana courts. Therefore, Calderone's motion for summary judgment with respect to her accrued vacation pay of $2,388.37 is
Calderone also demanded three unpaid monthly distribution checks in the amount of $1,200.00 each for April, May, and June. The reasoning awarding her accrued vacation pay is inapplicable to this amount. Calderone left Credentials-Plus on March 28, 2001, prior to the months for which she is demanding distribution checks. Furthermore, the letter agreement states that monthly distribution checks are to be paid to MMS, consisting of both Nyers and Calderone, not Calderone individually. For these reasons, it would be inequitable to award Calderone the entire amount she requests. Therefore, Calderone's motion for summary judgment with respect to the April, May, and June distribution checks is
B. Count II: Unpaid Credit Card Charges
Calderone was issued a MasterCard while employed by Credentials-Plus for use in making purchases on behalf of Plaintiff. Calderone alleges that she used the credit card to purchase furniture and various office supplies, and that Plaintiff has yet to reimburse her for the cost. Plaintiff counters with evidence that it paid portions of the credit card debt attributable to Credentials-Plus. See (Nyers Supp. Aff. at ¶ 13) ("Credentials-Plus has paid for the office furniture Calderone charged on her MasterCard account.");
Defendants' motion to strike attacks paragraph thirteen of Nyers's supplemental affidavit, arguing that "[t]his statement does not address the issue; it may be half-true. Standing alone it is meaningless and thus irrelevant and not admissible." (Defendants' Memo. in Support of Mot. to Strike at ¶ 8). For the reasons stated in section VIII.A, Nyers has sufficient basis for his statement. Defendants' motion to strike paragraph thirteen of Nyers's supplemental affidavit is therefore
XI. CONCLUSION
For the foregoing reasons, Plaintiff's Partial Motion for Summary Judgment [Doc. No. 35] is
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