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McFreen v. Alcatel-Lucent Usa, Inc.

United States District Court, S.D. Indiana, Indianapolis Division

December 10, 2014



WILLIAM T. LAWRENCE, District Judge.

This cause is before the Court on Defendant Alcatel-Lucent USA, Inc.'s ("ALU") motion to dismiss (dkt. no. 8). The motion is fully briefed, and the Court, being duly advised, GRANTS IN PART AND DENIES IN PART the motion for the reasons, and to the extent, set forth below.


ALU moves to dismiss Plaintiff Padraic McFreen's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that the Complaint fails to state a claim for which relief can be granted. In reviewing a Rule 12(b)(6) motion, the Court "must accept all well pled facts as true and draw all permissible inferences in favor of the plaintiff." Agnew v. National Collegiate Athletic Ass'n, 683 F.3d 328, 334 (7th Cir. 2012). For a claim to survive a motion to dismiss for failure to state a claim, it must provide the defendant with "fair notice of what the... claim is and the grounds upon which it rests." Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009) (quoting Erickson v. Pardus, 551 U.S. 89, 93 (2007)) (omission in original). A complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Agnew, 683 F.3d at 334 (citations omitted). A complaint's factual allegations are plausible if they "raise the right to relief above the speculative level." Bell Atlantic Corp v. Twombly, 550 U.S. 544, 556 (2007).


The facts alleged in McFreen's Complaint are as follow. Around 1998, McFreen began developing the technology at issue in this case, which pertains to an efficient and effective means of delivering various entertainment products and services through the Internet (the "MiVu Concept"). Complaint, ¶ 5. Recognizing the ingenuity of the MiVu Concept, McFreen reached out to Lucent Technologies, Inc. ("LTI"), ALU's predecessor, [1] id. at ¶ 2, in 2000 to discuss a potential business relationship revolving around the concept. Id. at ¶ 20. On October 18, 2000, McFreen, as MiVu, and ALU entered into a mutual Nondisclosure Agreement ("NDA"), which prohibited either party from disclosing any confidential information received through their business relationship, except to those bound by the NDA. Id. The NDA also required ALU to notify McFreen if it learned of any use or disclosure of the confidential information in violation of the NDA. Id. at ¶ 23. The parties agreed that the NDA would be governed by California law and it would be effective until October 18, 2005. Id. at ¶ 25.

On February 15, 2001, after extensive discussions about the MiVu Concept between both parties, ALU informed McFreen that "unplanned internal financial developments" forced them to put a "hold" on the MiVu Concept project. Id. at ¶ 59. Ultimately, the parties' business relationship ended in April 2001. Id. at ¶ 64. Subsequently, ALU went to market with the MiVu Concept under the "MiLife" trademark without notice or payment to McFreen. Id. at ¶ 65.

On May 13, 2014, after a number of years had passed without McFreen's apparent knowledge of ALU's use of the MiVu Concept, McFreen filed suit against ALU in this Court.


In his Complaint, McFreen brings three counts against ALU: (1) breach of contract; (2) violation of the California Uniform Trade Secrets Act ("CUTSA"), Cal. Civ. Code § 3426 et seq.; and (3) unjust enrichment. ALU moves to dismiss all counts. Its arguments are addressed below.

A. Breach of Contract

Count I of McFreen's Complaint is a claim for breach of contract. Specifically, McFreen alleges that ALU breached their mutual NDA by using confidential information and materials derived therefrom for purposes that violated the NDA. At issue in the present motion is whether McFreen is barred by the statute of limitations from bringing Count I.

As a preliminary matter, neither party disputes[2] that Count I is subject to Indiana's ten-year statute of limitations for breach of contract actions. Ind. Code. § 34-11-2-11 (2014) ("An action upon contracts in writing... must be commenced within ten (10) years after the cause of action accrues."). Even if the issue were in dispute, federal courts sitting in diversity jurisdiction applying the substantive law of another state still apply the Indiana statute of limitations. See Albrecht v. Indiana Harbor Belt R. Co., 178 F.2d 577, 578 (7th Cir. 1949). Thus, the critical date for Count I is May 13, 2004, ten years before the Complaint was filed.[3]

ALU argues that Count I is barred by Indiana's statute of limitations and that the "discovery rule" does not toll the onset of the limitations period because McFreen, in the exercise of ordinary diligence, could have discovered ALU's breach of contract before May 13, 2004. In Indiana, the "discovery rule" provides that "the cause of action accrues, and the statute of limitations begins to run, when the plaintiff knew or, in the exercise of ordinary diligence, could have discovered" the breach of contract. Wehling v. Citizens Nat'l Bank, 586 N.E.3d 840, 842 (Ind. 1992). ALU claims that McFreen could have discovered its breach of the NDA in the exercise of ordinary diligence because it entered the market before May 13, 2004, with a system (the "MiLife product") that embodied the ideas McFreen disclosed under the NDA. For instance, ALU described the product at an industry trade show, secured content provider agreements, and publicly marketed and promoted the product before May 13, 2004. See ...

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