# Tekway Inc. v. AT&T Services, Inc.

> District Court, N.D. Illinois · March 10, 2021

URL: https://www.frixlaw.com/law-library/cases/10144317

## Case

- **Court:** District Court, N.D. Illinois
- **Decided:** March 10, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

TEKWAY INC.,

Plaintiff, No. 20 C 4095

v. Judge Thomas M. Durkin

AT&T SERVICES, INC.,

Defendant.

MEMORANDUM OPINION AND ORDER

Tekway alleges that AT&T tortiously interfered with certain employment
contracts and relationships. AT&T has moved to dismiss for lack of personal
jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and for failure to
state a claim pursuant to Rule 12(b)(6). R. 12. The Court finds it has personal
jurisdiction over AT&T but grants in part and denies in part the motion to dismiss
for failure to state a claim.
Legal Standard
“A complaint need not include facts alleging personal jurisdiction. However,
once the defendant moves to dismiss the complaint under Federal Rule of Civil
Procedure 12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden of
demonstrating the existence of jurisdiction.” Purdue Research Found. v. Sanofi–
Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). When the court rules on the
motion without a hearing, the plaintiff need only establish a prima facie case of
personal jurisdiction. Id. The Court reads “the complaint liberally, in its entirety, and
with every inference drawn in favor” of the plaintiff to determine whether it has set
forth a prima facie case for personal jurisdiction. Cent. States, Se. & Sw. Areas
Pension Fund v. Phencorp Reinsurance Co., 440 F.3d 870, 877-78 (7th Cir. 2006).

“[O]nce the defendant has submitted affidavits or other evidence in opposition to the
exercise of jurisdiction, the plaintiff must go beyond the pleadings and submit
affirmative evidence supporting the exercise of jurisdiction.” Purdue, 338 F.3d at 783.
A Rule 12(b)(6) motion challenges the “sufficiency of the complaint.” Berger v.
Nat. Collegiate Athletic Assoc., 843 F.3d 285, 289 (7th Cir. 2016). A complaint must
provide “a short and plain statement of the claim showing that the pleader is entitled
to relief,” Fed. R. Civ. P. 8(a)(2), sufficient to provide defendant with “fair notice” of

the claim and the basis for it. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
This standard “demands more than an unadorned, the-defendant-unlawfully-
harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While “detailed
factual allegations” are not required, “labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.
The complaint must “contain sufficient factual matter, accepted as true, to ‘state a

claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 570). “‘A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.’” Boucher v. Fin. Sys. of Green Bay, Inc., 880 F.3d
362, 366 (7th Cir. 2018) (quoting Iqbal, 556 U.S. at 678). In applying this standard,
the Court accepts all well-pleaded facts as true and draws all reasonable inferences
in favor of the non-moving party. Tobey v. Chibucos, 890 F.3d 634, 646 (7th Cir. 2018).
Background

Tekway is a staffing company that has contracted employees to AT&T since
the 1990s. R. 1 ¶ 21. Beginning in 2014, Tekway staffed AT&T positions through a
third-party called Pinnacle. Id. In other words, Tekway no longer has a direct
contractual relationship with AT&T, but instead has staffing contracts with Pinnacle,
which in turn has contracts providing Tekway employees to AT&T. Many of the
people staffed with AT&T through Tekway and Pinnacle require visas to work in the
United States.

According to Tekway, two of its employees staffed with AT&T—Illinois
residents Gopi Krishna Potla and Sandeep Kumar Davuluri—became unhappy with
their compensation. Tekway alleges that AT&T and Pinnacle managers helped Potla
and Davuluri find an alternative staffing company that would pay them more but
allow them to continue to work with Pinnacle and AT&T. According to an affidavit
submitted by Tekway’s CEO, Puvan Kumar, AT&T manager Denise Perez

communicated with Potla and Davuluri while they were in Illinois. See R. 18-1. Perez
also traveled to Illinois to meet with Potla and Davuluri during the relevant time
period. See id. ¶ 15. The assistance AT&T and Pinnacle provided to Potla and
Davuluri included representing to the United States government that Potla and
Davuluri were already employed by a new staffing company when in fact they were
still employed by Tekway. R. 1 ¶ 44. AT&T delivered this government paperwork to
Potla and Davuluri in Illinois.
When Tekway discovered this activity, it terminated its contract with

Pinnacle, although Tekway was contractually obligated to continue to permit its
employees already staffed with AT&T and Pinnacle to complete the terms of their
staffing contracts. Tekway alleges that AT&T and Pinnacle continued to attempt to
convince these remaining employees to leave Tekway by threatening them with loss
of their AT&T assignments if they did not leave Tekway. See R. 1 ¶ 50. These actions
allegedly caused additional Tekway employees Kruthika Agarwal and Vishal Burra
to leave their employment with Tekway. Id. ¶ 53. Tekway brings claims for tortious

interference with contract and tortious interference with prospective advantage and
business relationships based on AT&T’s alleged disruption of Tekway’s employment
relationships with Potla, Davuluri, Agarwal, and Burra.
Analysis
I. Personal Jurisdiction
“The primary focus of [a court’s] personal jurisdiction inquiry is the defendant’s

relationship to the forum State.” Bristol-Myers Squibb Co. v. Superior Court of Cal.,
San Francisco Cty., 137 S. Ct. 1773, 1779 (2017). The defendant must have “sufficient
minimum contacts” with the forum State so that “maintenance of the suit [there] does
not offend traditional notions of fair play and substantial justice.” Felland v. Clifton,
682 F.3d 665, 673 (7th Cir. 2012).
Specific personal jurisdiction (as opposed to general personal jurisdiction
which is not relevant here) requires: “(1) the defendant [to] have . . . purposefully
directed his activities at the state; [and] (2) the alleged injury [to] have arisen from

the defendant’s forum-related activities.” Id. In other words, the defendant’s
intentional and allegedly tortious conduct must be “expressly aimed” at the forum
state “with knowledge that its effects would be felt in the forum state.” Id. at 674-75.
However, mere foreseeability that the alleged tortious conduct might cause harm to
the plaintiff in the forum state because the plaintiff is located there is insufficient to
show the defendant purposefully directed his activities at the forum state. See Walden
v. Fiore, 571 U.S. 277, 289 (2014) (“This approach to the “minimum contacts” analysis

impermissibly allows a plaintiff's contacts with the defendant and forum to drive the
jurisdictional analysis.”). Rather, there must be a “relationship among the defendant,
the forum, and the litigation” that is independent of the mere fact that the plaintiff
suffered harm in the forum state. Id. at 284.
Here, AT&T’s communications with Illinois residents through email, phone,
and in-person meetings when viewed in the aggregate are sufficient to establish the

minimum contacts with Illinois required for specific personal jurisdiction. Tekway
alleges that AT&T, through its manager Denise Perez, communicated through email
and over the phone with Tekway’s employees Potla and Davuluri (both Illinois
residents) about their employment issues with Tekway. See R. 18-1 ¶ 14. Perez also
traveled to Illinois and met with Davuluri and Potla to discuss their plan to change
employers. See id. ¶ 15. Additionally, AT&T sent documents to Potla and Davuluri in
Illinois necessary for them to change employers. See id. ¶ 16. By sending
communications to Illinois and visiting Illinois, AT&T (through its agent) expressly
aimed its conduct at Illinois. AT&T knew that the Tekway employees were located in

Illinois when it communicated with them an visited them. And Tekway’s claims arise
out of the actions AT&T directed toward Illinois. Thus, these actions are sufficient to
establish personal jurisdiction over AT&T in Illinois for purposes of Tekway’s claims.
In its reply, AT&T disputes factual assertions made in the affidavit of Tekway’s
CEO, Kumar, contending that they are not supported by personal knowledge. See R.
19 at 6. AT&T argues that Kumar’s statements are hearsay based on information
obtained in related litigation in Texas. Kumar’s statements may be hearsay, but the

Court finds it highly plausible that this information is accurate, considering Kumar’s
position as Tekway’s CEO and his relationships with the relevant Tekway employees
and AT&T and Pinnacle managers, and AT&T admission that the information was
revealed in other litigation. Indeed, AT&T does not dispute the veracity of Kumar’s
assertions, and in assessing personal jurisdiction, the Court need not “address the
admissibility of [statements in a plaintiff’s affidavit] [unless] they are controverted

by evidence submitted by Defendants.” See Receivership Mgmt. v. AEU Holdings,
LLC, 2019 WL 4189466, at *6 (N.D. Ill. Sep. 4, 2019). Furthermore, most courts have
found that hearsay is properly considered in determining whether a plaintiff has
established a prima facie case of personal jurisdiction. See Philips Med. Sys.
(Cleveland), Inc. v. Buan, 2021 WL 83736, at *4 (N.D. Ill. Jan. 11, 2021). Thus, it is
proper to consider Kumar’s affidavit on this motion.
AT&T also argues that this case is analogous to Advanced Tactical Ordnance
Systems v. Real Action Paintball, in which the Seventh Circuit reversed a district
court’s exercise of personal jurisdiction. 751 F.3d 796 (7th Cir. 2014). But in Advanced

Tactical, the defendant’s contacts were not specifically directed at the forum state,
but instead reached the forum state solely because of mass marketing or a generally
accessible website. By contrast here, the alleged conduct here was focused on Illinois.
Sending communications into Illinois and visiting Illinois are not incidental contacts
like those in Advanced Tactical and other similar cases cited by AT&T. Other district
courts have drawn this distinction in exercising personal jurisdiction. See, e.g., Cafe
Real Estate LLC v. VSP N. Am. LLC, 262 F. Supp. 3d 637, 640 (N.D. Ill. 2017)

(distinguishing Advanced Tactical and finding personal jurisdiction based on a series
of emails and visits to Illinois).
Therefore, the Court finds that Tekway has established a prima facie basis for
personal jurisdiction over AT&T.
II. Failure to State a Claim
Tekway had contracts with each employee and a contract to staff those

employees with Pinnacle. Tekway claims that AT&T tortiously interfered with those
contracts and the prospective advantage and business relationships underlying them.
A. Tortious Interference with Contract
To state a claim for tortious interference with contract, a plaintiff must allege
that the defendant knowingly induced a third-party to breach a contract with the
plaintiff. See Webb v. Frawley, 906 F.3d 569, 579 (7th Cir. 2018) (citing Strosberg v.
Brauvin Realty Servs., Inc., 691 N.E.2d 834, 845 (Ill. App. Ct. 1st Dist. 1998)). Tekway
argues that these contracts were breached when its employees terminated their
employment contracts before the terms of the contracts were complete. AT&T points

out, however, that the employment contracts and the contracts with Pinnacle were
all terminable without cause or at will. See R. 13-2 at 3 (Pinnacle contract); R. 13-1
(employment contract). On this basis, AT&T argues that termination of the contracts
cannot support a claim for tortious interference of contract. See R. 13 at 12 (citing
ATC Healthcare Servs., Inc. v. RCM Techs., Inc., 192 F. Supp. 3d 943, 958 (N.D. Ill.
2016)). But AT&T cites only one case in support of its argument and ignores more
recent Seventh Circuit authority noting that Illinois law on this issue is murky. See

Webb, 906 F.3d at 580-81 (“Opinions from this Court interpreting Illinois decisions
have not provided a consistent view. Although most of our opinions leave open the
possibility that an at-will employee may bring a claim for tortious interference with
contract, some of our opinions appear to foreclose that possibility.”); see also Bergholz
v. John Marshall Law Sch., 2018 WL 5622052, at *9 (N.D. Ill. Oct. 30, 2018) (citing
Webb and denying a motion to dismiss a claim for tortious interference with an at-

will contract due to the lack of clarity in Illinois law). Since it appears that
termination of at-will contracts and contracts terminable without cause can
sometimes support a tortious interference with contract claim, and neither party has
addressed this authority, the Court will not dismiss Tekway’s claims for interference
with contract without more fulsome briefing on this issue.
Tekway also argues that AT&T’s conduct was tortious because it caused the
employees to violate non-compete provisions in their contracts. AT&T argues that
these provisions should be found to be unenforceable for lack of consideration because

under Illinois law when continued employment is the only consideration for a non-
compete provision, the employee must have been employed for at least two years. See
Axion RMS, Ltd. v. Booth, 138 N.E.3d 6, 15 (Ill. App. Ct. 1st Dist. 2019) (“[I]t is well-
established by this court that a promise of continued employment for an at-will
employee is adequate consideration to render a restrictive covenant enforceable, as
long as there is at least two years of continued employment following the execution
of the restrictive covenant.” (citing Fifield v. Premier Dealer Services, Inc., 993 N.E.2d

938, 943 (Ill. App. Ct. 1st Dist. 2013); Brown & Brown, Inc. v. Mudron, 887 N.E.2d
437, 440-41 (Ill. App. Ct. 3d Dist. 2008)). Tekway does not materially contest this
principle, except with arguments that have been rejected by Illinois courts in the
cases cited. See R. 18 at 14. Therefore, although the Court permits Tekway’s tortious
interference with contract claims to proceed, those claims may not be based on breach
of the non-compete provisions unless Tekway can replead those claims with

allegations that plausibly demonstrate the enforceability of the non-compete
provisions.
B. Tortious Interference with Prospective Advantage
or Business Relationship

To state a claim for tortious interference with prospective advantage or
business relationship requires, a plaintiff must allege: “(1) a reasonable expectancy
of entering into a valid business relationship, (2) the defendant’s knowledge of the
expectancy, (3) an intentional and unjustified interference by the defendant that
induced or caused a breach or termination of the expectancy, and (4) damages to the
plaintiff resulting from the defendant's interference.” Foster v. Principal Life Ins. Co.,

806 F.3d 967, 971 (7th Cir. 2015) (citing Voyles v. Sandia Mortgage Co., 751 N.E.2d
1126, 1133 (Ill. 2001)). AT&T argues that this claim must also be dismissed because
it is based on the employment and business relationships underlying the relevant
contracts. But even courts that have found the termination of at-will or without cause
contracts to be an insufficient basis for claims for tortious interference with contracts
have held that termination of such contracts can plausibly be a basis for claims for
interference with business advantage and relationship. See Cody, 409 F.3d at 859

(“Under Illinois law, [a] defendant’s inducement of the cancellation of an at-will
contract constitutes at most interference with a prospective economic advantage, not
interference with contractual relations.”). AT&T has not cited any authority that
Tekway’s expectation that the terms of the contracts would be fulfilled is not a
“reasonable expectancy” sufficient to state a claim. And the Court notes that some
courts have found that continued employment is a reasonable expectancy. See, e.g.,

Reyes v. Walker, 2018 WL 6062320, at *5 (N.D. Ill. Nov. 19, 2018) (“Plaintiff’s
alleged at will employment. . . creates a reasonable expectation of continued
employment.”).
Furthermore, whether conduct intended to injure a business relationship is
unjustified or wrongful, as is required by the claim’s third element, is generally a
question of fact requiring discovery. See XPO Logistics, Inc. v. Gallatin, 2013 WL
3835358, at *6 (N.D. Il. July 24, 2013). The Court also notes that the reasonableness
of an economic expectancy, and the justification for interference with that expectancy,
are two sides of the same coin. If an expectancy is reasonable, then it is likely that
any interference with that expectancy is not justified. Conversely, if an interfering
action is justified, then the expectancy is likely unreasonable. And generally,
questions of reasonableness are questions of fact requiring discovery.
Conclusion
Therefore, AT&T’s motion to dismiss [12] is denied in part and granted in part.
The motion is denied in all respects except that any claim for tortious interference
with contract based on the non-compete provisions is dismissed without prejudice. If
Tekway believes it can cure the deficiencies outlined above with respect to these
claims, Tekway may file a motion for leave to amend of no more than five pages
attaching the amended complaint as an exhibit.
The parties should submit a status report proposing a discovery schedule by
March 18, 2021.
ENTERED:
Abonsts M Suthur.
Honorable Thomas M. Durkin
United States District Judge
Dated: March 10, 2021

11

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10144317. Public record. Not legal advice.