United States District Court, S.D. Indiana, Indianapolis Division
INSTITUTE FOR THE INTERNATIONAL EDUCATION OF STUDENTS, Plaintiff,
QIAN CHEN, et al., Defendants.
ORDER ON MOTION TO DISMISS (ECF NO. 21)
R. SWEENEY, II, JUDGE
International Education Foundation, Inc. (“IEF”)
moves to dismiss Counts II, III, and IV for failure to state
a claim upon which relief can be granted and for failure to
join a party under Rule 19. (ECF No. 21.) In the alternative,
IEF moves for a more definite statement. (Id.)
IEF's motion, now fully briefed and ripe for decision, is
denied for the following reasons.
Institute for the International Education of Students
(“Plaintiff”) provides study abroad programs,
international internships, customized programs, and direct
enrollment study abroad opportunities to students worldwide.
(Compl. ¶ 2, ECF No. 1-2 at 7.) In March 2017, Plaintiff
merged with The Study Abroad Foundation, Inc.
(“SAF”). (Id. ¶ 3.) As the
surviving entity, Plaintiff owns all SAF's assets.
(Id.) On October 31, 2017, Plaintiff and its
affiliates acquired SAF-IUNS, a Hong Kong company engaged in
the recruitment of students in China exclusively on behalf of
SAF. (Id. ¶ 4.) Plaintiff relies on the
goodwill it generates through its representatives'
contact with universities and member schools in the United
States, China, and elsewhere. (Id. ¶ 8.)
Plaintiff maintains strict confidentiality of sensitive
student information, member school information, business
information, program leads, and other information.
Qian Chen (“Chen”) began working for SAF as its
Executive Director beginning July 5, 2016. (Id.
¶ 5.) Chen had access to confidential information about
SAF and its sending and receiving schools, which information
included customer leads, enrollment histories, pricing
information, strategies, discounts provided and received,
employee information, student information, and primary
contact information. (Id. ¶ 12.) Chen further
had access to SAF's marketing plans, recruiting methods,
pricing information, strategies, enrollment figures,
enrollment histories by institution, key school contacts,
exclusive recruiting agreements and their terms, student
information, employee information, customer lists, customer
leads and information, revenues, programs, program costs,
program margins, overall margins, cost information,
commission information, markups, and know-how. (Id.
SAF's Executive Director, Chen visited the offices of
SAF-IUNS and met its employees, including Daniel Shen
(“Shen”). (Id. ¶ 9.) Chen was aware
that Shen's employment agreement with SAF-IUNS included a
two-year non-compete agreement. (Id.) As Executive
Director, Chen had contact with SAF's and SAF-IUNS's
key contacts and primary customer representatives at their
member schools in China, their sending schools in China, and
their receiving schools in the United States, Europe, the
United Kingdom, and elsewhere. (Id. ¶ 10.)
employment with SAF ended February 2, 2017, when Chen and SAF
entered into separation and non-disclosure agreements.
(Id. ¶¶ 14-15.) The agreements provide
that Chen be paid $30, 833; that Chen not return to SAF's
or its affiliates' property; and that Chen keep SAF's
confidential information secret for five years. (Id.
¶ 15; id., ex. 2, ¶¶ 4-6.)
following month, Chen formed Defendant International
Education Foundation, Inc. (“IEF”), which
competes directly with Plaintiff. (Id. ¶ 5.) In
September 2017, Chen, together with Shen, returned to
SAF-IUNS's offices. (Id. ¶ 18.) There they
met with SAF-IUNS employees, attempted to recruit the
employees to Chen's and Shen's new companies, falsely
told the employees that Plaintiffs would terminate all
employees upon acquiring SAF-IUNS, and dissuaded the
employees from meeting with Plaintiff's representatives
to discuss the acquisition. (Id. ¶ 19.)
Shen, and IEF induced certain SAF-IUNS employees to solicit
SAF's and SAF-IUNS's university partners and member
schools on behalf of IEF. (Id. ¶ 20.) As part
of this effort, Chen and IEF induced SAF-IUNS employees to
use confidential information, to create an IEF website using
SAF-IUNS resources, and to create and use deceptive email
addresses. (Id. ¶¶ 46, 48.)
Failure to State a Claim Rule 12(b)(6)
survive a motion to dismiss for failure to state a claim, a
plaintiff must allege “enough facts to state a claim to
relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). In
considering a Rule 12(b)(6) motion to dismiss, the court
takes the complaint's factual allegations as true and
draws all reasonable inferences in the plaintiff's favor.
Orgone Capital III, LLC v. Daubenspeck, 912 F.3d
1039, 1044 (7th Cir. 2019). The court need not “accept
as true a legal conclusion couched as a factual
allegation.” Papasan v. Allain, 478 U.S. 265,
286 (1986). “[I]f a plaintiff pleads facts that show
its suit [is] barred . . ., it may plead itself out of court
under a Rule 12(b)(6) analysis.” Orgone
Capital, 912 F.3d at 1044 (quoting Whirlpool Fin.
Corp. v. GN Holdings, Inc., 67 F.3d 605, 608 (7th Cir.
1995)); Bogie v. Rosenberg, 705 F.3d 603, 609 (7th
Cir. 2013) (on a motion to dismiss “district courts are
free to consider ‘any facts set forth in the complaint
that undermine the plaintiff's claim'”)
(quoting Hamilton v. O'Leary, 976 F.2d 341, 343
(7th Cir. 1992)).
Counts II and III - Tortious Interference
alleges claims against IEF for tortious interference with a
contract and for tortious interference with a business
relationship. Under Indiana law,
The elements of an action for tortious interference with a
contract are (1) existence of a valid and enforceable
contract; (2) defendant's knowledge of the existence of
the contract; (3) defendant's intentional inducement of
breach of the contract; (4) the absence of justification; and
(5) damages resulting from defendant's wrongful
inducement of the breach.
In addition, it has been recognized that an action may lie
under Indiana law for tortious interference with a business
relationship even though there was no valid contract. In such
cases, however, it appears to be critical that the defendant
acted illegally in achieving his end.
Syndicate Sales, Inc. v. Hampshire Paper Corp., 192
F.3d 633, 641 (7th Cir. 1999) (quoting Biggs v.
Marsh, 446 N.E.2d 977, 983 (Ind.Ct.App. 1983)).
Absence of justification
contends that Plaintiff does not adequately allege absence of
justification. The Complaint contains conclusory allegations:
“Defendants' conduct was without
justification” (Compl. ¶ 33) and
“Defendants' conduct was without justification and
unlawful” (id. ¶ 40). But it also
contains substantive allegations tending to show the absence
of justification, which allegations IEF's argument wholly
determine whether interference with a contract is justified,