GENESYS CLOUD SERVICES, INC. v. MORALES

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

GENESYS TELECOMMUNICATIONS )

LABORATORIES, INC., )

)

Plaintiff, )

)

v. ) Case No. 1:19-cv-00695-TWP-DML

)

DANIELLE MORALES, MICHAEL STRAHAN, )

MARK HERTEL, TALKDESK, INC., and )

RALPH MANNO, )

)

Defendants. )

ORDER ON DEFENDANTS’ MOTION TO DISMISS

OR, IN THE ALTERNATIVE, TO TRANSFER VENUE

This matter is before the Court on a Motion to Dismiss or, in the Alternative, to Transfer

Venue, filed pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6) by Defendants

Talkdesk Inc. (“Talkdesk”), Danielle Morales (“Morales”), Michael Strahan (“Strahan”), Mark

Hertel (“Hertel”), and Ralph Manno (“Manno”) (collectively, “Defendants”) (Filing No. 97).

Plaintiff, Genesys Telecommunications Laboratories, Inc. (“Genesys”), initiated this lawsuit,

seeking injunctive relief and damages against the Defendants for misappropriation of trade secrets,

breach of contract, and tortious interference with contract, among other things. After Genesys

filed its Second Amended Complaint, the Defendants filed their Motion to Dismiss based on a lack

of personal jurisdiction and the failure to state a plausible claim for relief. The Defendants

alternatively ask the Court to transfer this case to the Northern District of California. For the

following reasons, the Court grants in part and denies in part the Motion to Dismiss and declines

to transfer the case to the Northern District of California.

I. BACKGROUND

The following facts are not necessarily objectively true, but as required when reviewing a

motion to dismiss, the Court accepts as true all factual allegations in the Second Amended

Complaint (Filing No. 89) and draws all inferences in favor of Genesys as the non-moving party.

See Bielanski v. County of Kane, 550 F.3d 632, 633 (7th Cir. 2008).

Plaintiff Genesys is a California corporation with a significant presence in Indiana and is

the successor to a former Indiana company, Interactive Intelligence. Genesys conducts substantial

business in the state of Indiana and has corporate offices in Indianapolis, Indiana. It employs more

than 800 employees in Indiana at its Indianapolis office. Its corporate headquarters is in California.

Since the early 1990s, Genesys has been a longstanding and market-leading provider of cloud and

on-premises customer experience and contact center solutions. It offers customer-experience

platforms that enable enterprises to orchestrate and monitor multimodal omnichannel journeys and

interactions (Filing No. 89 at 1, 4, 7; Filing No. 98 at 7).

Defendant Talkdesk is a Delaware corporation with its headquarters in California.

Talkdesk is an upstart company in the cloud-based call center software business. On October 3,

2018, Talkdesk announced that it had raised $100 million in Series B funding. Talkdesk is a direct

competitor of Genesys, and it does business across the United States, including in Indiana, and

employs personnel in Indiana (Filing No. 89 at 2, 4, 7; Filing No. 98 at 7).

Defendant Manno was initially hired by Interactive Intelligence, now part of Genesys, as a

Director of Channel Sales in August 2004. He was most recently a Vice President of Sales at

Genesys. In that executive position, Manno oversaw all sales activities in Genesys’ mid-market

segment and managed a team of Area Directors and those Directors’ Account Executives. Manno,

a citizen of Missouri, signed an employment agreement containing an Indiana forum-selection

clause. Id at 4. His executive employment with Genesys ended on October 1, 2018. Manno is

now employed as a Vice President of Sales with Talkdesk (Filing No. 89 at 21–22).

Defendant Hertel was initially hired by Interactive Intelligence, now part of Genesys, as

West Area Director in November 2013. Hertel was most recently an Area Director of Sales at

Genesys. In that position, he oversaw all sales activities in Genesys’ West Region and managed a

team of Account Executives. Hertel, a citizen of California, signed an employment agreement

containing an Indiana forum-selection clause and Indiana choice-of-law provision. Id at 4-5. His

employment with Genesys ended on September 28, 2018. Hertel is now employed as a Vice

President of Sales with Talkdesk. Id. at 14, 17.

Defendant Strahan was initially hired by Interactive Intelligence, now part of Genesys, as

a Test Engineer in September 2000. He was most recently an Area Director of Sales at Genesys.

In that position, he oversaw all sales activities in Genesys’ Central Region and managed a team of

Account Executives. Strahan, a resident of Indiana, signed an employment agreement containing

an Indiana forum-selection clause. Id at 4-5. Strahan’s employment with Genesys ended on

September 30, 2018. He is now employed as a Vice President of Sales with Talkdesk. Id. at 18–

19.

Defendant Morales was an Account Executive employed by Genesys. In that position, she

was responsible for making sales to Genesys’ customers and potential customers and managing

customer accounts and relationships. Morales is a citizen of California. Morales resigned her

employment with Genesys effective September 28, 2018. She is now employed as an Enterprise

Account Executive with Talkdesk. Id. at 9, 13.

Manno, Hertel, Strahan, and Morales were highly-compensated, trusted executives of

Genesys and were entrusted by Genesys with substantial trade secrets to perform their duties. Id.

at 3. Manno, Hertel, Strahan, and Morales each entered into employment contracts that prohibited

them from disclosing confidential information, soliciting Genesys’ employees for a period of time

after leaving employment with Genesys, and soliciting Genesys’ customers for a period of time

after leaving employment with Genesys.

Talkdesk began a targeted strategy aimed at its competitor, Genesys, to recruit Genesys’

sales employees in the Genesys mid-market segment (Filing No. 89 at 2). “Talkdesk’s targeted

raid of Genesys[’] mid-market segment, including all of its top leadership, was carried out with

the purpose of crippling Genesys[’] mid-market sales organization.” Id. at 49. In a short time span

beginning in September 2018, at least fourteen Genesys employees targeted by Talkdesk left their

employment with Genesys and accepted employment with Talkdesk. Half of the Genesys mid-

market Vice Presidents left Genesys for Talkdesk, two-thirds of the mid-market Area Directors

went to Talkdesk, and approximately a quarter of the Genesys mid-market sales executives across

the country left Genesys to work for Talkdesk. A Technical Sales Consultant also left Genesys for

Talkdesk. Id. at 2. Four of these former Genesys employees are Defendants Morales, Strahan,

Hertel, and Manno. During the recruiting process, Talkdesk encouraged Genesys’ employees to

conduct a demonstration using Genesys’ products to disclose and discuss proprietary and

confidential information relating to Genesys for the benefit of Talkdesk. Id. at 7.

In or around August 2018, Talkdesk CEO Tiago Paiva (“Paiva”) personally recruited

Strahan, Hertel, Manno, and others during a conference call. Paiva encouraged these Genesys

executives to come to Talkdesk and build up Talkdesk’s sales organization contrary to their

contractual obligations to Genesys. Hertel and Strahan had between six and ten conversations

around this time, and the two influenced each other to leave Genesys for Talkdesk. Manno and

Hertel had between ten and fifteen discussions, during which Manno influenced Hertel to leave

Genesys and build Talkdesk’s sales organization. Manno also informed Hertel that he was

recruiting others, including Strahan. Id. at 7, 16, 19, 22.

While still employed by Genesys but having committed to joining Talkdesk, Manno,

Hertel, and Strahan recruited other Genesys personnel, including Morales, on behalf of and for the

benefit of Talkdesk. They continued these efforts after joining Talkdesk. They accomplished this

by utilizing their trade secret knowledge of the Genesys team’s performance, compensation, level

of job satisfaction, and account relationships that they had learned in their leadership roles at

Genesys. Id. at 2–3, 8.

With multiple former Genesys mid-market managers and sales executives now at Talkdesk,

Talkdesk began aggressively targeting customers and prospects with whom the former Genesys

employees were familiar. Talkdesk utilized Genesys’ trade secrets in doing so. Within weeks of

the employees leaving, Talkdesk targeted and underbid Genesys on multiple key opportunities for

Genesys’ customers. Hertel, Strahan, and Manno misappropriated Genesys’ confidential

information, including but not limited to pricing, quote information, and product roadmap

information, and while employed by Talkdesk in senior sales roles, they used this information to

underbid Genesys for business. Talkdesk usurped the business of Genesys’ customers or potential

customers in California and Hawaii using misappropriated trade secrets. The individual

Defendants breached their contractual agreements with Genesys by disclosing confidential

information and soliciting Genesys’ employees and customers (Filing No. 89 at 3, 8).

Before leaving Genesys to join Talkdesk, Morales secretly downloaded more than 700

confidential and proprietary Genesys documents, data, and materials constituting trade secrets. Id.

at 3. Beginning in early September and continuing until her departure, Morales took Genesys’

intellectual property, account and sales plans, pricing information, territory information, marketing

information, customer account information and documentation, product information, and

presentations. Among the files that Morales downloaded were twenty-one files from a folder titled

“Pricing,” nineteen files from a folder titled “QBR,” nearly fifty files from a folder titled

“Competition,” a folder titled “RFP Information,” nearly one hundred files from a folder titled

“Campaigns & Prospecting,” nearly one hundred files from a folder titled “Sales,” nearly fifty files

from a folder titled “Accounts,” and more than one hundred fifty files from a folder titled “Product

Information.” Morales took this confidential, propriety, and trade secret information to Talkdesk

and has used this information for Talkdesk’s benefit. Id. at 3, 9–14.

Similar to Morales, Hertel accessed and converted over 24,000 of Genesys’ documents,

many of which included confidential and proprietary Genesys data and materials constituting trade

secrets, when he left Genesys and joined Talkdesk. Hertel took Genesys’ proprietary and

confidential information used for bids and used the information for the benefit of Talkdesk in

attempting to win business for Talkdesk. In October 2018, Hertel disclosed Genesys’ proprietary

and confidential information to a Talkdesk executive vice president for the purpose of using the

information in Talkdesk’s bid with a California customer. Genesys demanded that Hertel cease

his conduct, but he has persisted. Id. at 3, 15, 17.

Strahan received communications from Talkdesk that identified September 17, 2018 as his

orientation and “Day One”. Between September 17 and September 30, 2018, Strahan continued

to email customers on behalf of Genesys from his Genesys email account. Unbeknownst to

Genesys, during this same period of time, Strahan also completed training for Talkdesk, attended

a sales conference on behalf of and paid for by Talkdesk, listened in on at least four live Talkdesk

sales calls, listened to two other recorded sales calls, and took a trip to New Jersey on behalf of

Talkdesk. Strahan was paid by Genesys up through his last day of work with Genesys, which was

September 30, 2018. Prior to leaving his employment with Genesys, Strahan deleted several files

and documents from his computer drive. Strahan also received and possessed Genesys’

confidential information and trade secrets and used this information to usurp business for the

benefit of Talkdesk. Id. at 19–20.

On February 15, 2019, Genesys initiated this lawsuit (Filing No. 1). On July 2, 2019,

Genesys filed a Second Amended Complaint, which is the operative complaint (Filing No. 89). In

the Second Amended Complaint, Genesys requests injunctive relief and damages for the

Defendants’ misappropriation of trade secrets, breach of contract, and tortious interference with

contract among other things. On July 11, 2019, the Defendants filed the instant Motion to Dismiss

(Filing No. 97), arguing a lack of personal jurisdiction and a failure to state a claim for relief.

Alternatively, the Defendants ask the Court to transfer the case to the Northern District of

California.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(2) allows a defendant to move to dismiss a complaint

where there is a “lack of personal jurisdiction” over the defendant. Fed. R. Civ. P. 12(b)(2). When

deciding a Rule 12(b)(2) motion, the court accepts the factual allegations in the complaint and

draws all reasonable inferences in favor of the plaintiff if they weigh on the issue of personal

jurisdiction. Int’l Medical Group, Inc. v. American Arbitration Ass’n, 149 F. Supp. 2d 615, 623

(S.D. Ind. 2001). But where a complaint consists of conclusory allegations unsupported by factual

assertions, the complaint fails even under the liberal standard of Rule 12(b). Id.

When considering a motion to dismiss for lack of personal jurisdiction, the court examines

the sufficiency of the complaint, not the merits of the lawsuit. Id. The complaint does not need to

include factual allegations concerning personal jurisdiction, but if the defendant moves to dismiss

the action under Rule 12(b)(2), the plaintiff bears the burden of demonstrating the existence of

personal jurisdiction. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th

Cir. 2003). The court may consider affidavits and all other documentary evidence that have been

filed, and any conflicts must be resolved in favor of the plaintiff as the non-moving party. Int’l

Medical Group, 149 F. Supp. 2d at 623.

The level of the plaintiff’s burden to show personal jurisdiction depends on whether an

evidentiary hearing has been held. Purdue Research, 338 F.3d at 782. Where a hearing has been

conducted, the plaintiff must show by a preponderance of the evidence that personal jurisdiction

exists. Id. Where no hearing is conducted and the motion to dismiss is decided solely on written

materials, the plaintiff must establish a prima facie case that personal jurisdiction exists. Id.

Federal Rule of Civil Procedure 12(b)(6) allows a defendant to move to dismiss a complaint

that has failed to “state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). When

deciding a motion to dismiss under Rule 12(b)(6), the Court accepts as true all factual allegations

in the complaint and draws all inferences in favor of the plaintiff. Bielanski, 550 F.3d at 633.

However, courts “are not obliged to accept as true legal conclusions or unsupported conclusions

of fact.” Hickey v. O’Bannon, 287 F.3d 656, 658 (7th Cir. 2002).

The complaint must contain a “short and plain statement of the claim showing that the

pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). In Bell Atlantic Corp. v. Twombly, the United

States Supreme Court explained that the complaint must allege facts that are “enough to raise a

right to relief above the speculative level.” 550 U.S. 544, 555 (2007). Although “detailed factual

allegations” are not required, mere “labels,” “conclusions,” or “formulaic recitation[s] of the

elements of a cause of action” are insufficient. Id.; see also Bissessur v. Ind. Univ. Bd. of Trs., 581

F.3d 599, 603 (7th Cir. 2009) (“it is not enough to give a threadbare recitation of the elements of

a claim without factual support”). The allegations must “give the defendant fair notice of what the

. . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555. Stated differently,

the complaint must include “enough facts to state a claim to relief that is plausible on its face.”

Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir. 2009) (citation and quotation marks omitted).

To be facially plausible, the complaint must allow “the court to draw the reasonable inference that

the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(citing Twombly, 550 U.S. at 556).

III. DISCUSSION

The Defendants seek dismissal of this action based on a lack of personal jurisdiction over

Talkdesk, Morales, Hertel, and Manno and, alternatively, based on the failure to state a claim for

which relief can be granted. The Defendants also alternatively ask the Court to transfer the case

to the Northern District of California.

As another district court within the Seventh Circuit succinctly noted, “jurisdiction is a

threshold requirement that must be satisfied before a court can pass judgments on the merits.”

Rawlins v. Select Specialty Hosp. of Nw. Ind., Inc., 2014 U.S. Dist. LEXIS 57076, at *4 (N.D. Ill.

Apr. 23, 2014). “The court must satisfy itself that it can exercise personal jurisdiction over

[defendants] before it addresses the merits of the case. Accordingly, the court must consider [the]

motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2) before it can address the

Rule 12(b)(3) and Rule 12(b)(6) motions.” Id. at *5. “If the court determines that it lacks personal

jurisdiction over [defendants], it would be improper for this court to reach the merits of the case.”

Id. “‘Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is the power

to declare the law, and when it ceases to exist, the only function remaining to the court is that of

announcing the fact and dismissing the cause.’” United States v. Rachuy, 743 F.3d 205, 211 (7th

Cir. 2014) (quoting Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998)). For this

reason, the Court first reviews the Defendants’ Motion to Dismiss under Rule 12(b)(2).

A. Personal Jurisdiction over Talkdesk, Morales, Hertel, and Manno

“If jurisdiction is exercised on the basis of a federal statute that does not authorize

nationwide service of process, the law requires a federal district court to determine if a court of the

state in which it sits would have personal jurisdiction.”1 Philpot v. Dot Com Plus, LLC, 2015 U.S.

Dist. LEXIS 105016, at *2–3 (S.D. Ind. Aug. 11, 2015) (citation omitted). Indiana’s long-arm

statute, Indiana Trial Rule 4.4(A), governs personal jurisdiction in Indiana. “Although Rule 4.4(A)

enumerates eight bases for the assertion of jurisdiction on the basis of a defendant’s actions, the

rule also includes a provision that ‘a court of this state may exercise jurisdiction on any basis not

inconsistent with the Constitutions of this state or the United States.’” Annie Oakley Enters. v.

Sunset Tan Corporate & Consulting, LLC, 703 F. Supp. 2d 881, 886 (N.D. Ind. 2010) (quoting

Ind. R. Tr. P. 4.4(A)). Therefore, a court has personal jurisdiction to the limit allowed by the

Federal Due Process Clause. LinkAmerica Corp. v. Cox, 857 N.E.2d 961, 966–67 (Ind. 2006).

For a court to have personal jurisdiction over a defendant, the Due Process Clause requires

that the defendant have “certain minimum contacts with [the state] such that the maintenance of

the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).

Under federal due process standards, personal jurisdiction can be either specific or general.

“If the defendant’s contacts with the state are so ‘continuous and systematic’ that the defendant

should reasonably anticipate being haled into the courts of that state for any matter, then the

1 The federal statute serving as the basis for this litigation, the Defend Trade Secrets Act, does not authorize nationwide

service of process. See Mission Measurement Corp. v. Blackbaud, Inc., 287 F. Supp. 3d 691, 706 (N.D. Ill. 2017).

Therefore, determining personal jurisdiction in this case is governed by Indiana law.

defendant is subject to general jurisdiction.” LinkAmerica, 857 N.E.2d at 967 (citing Helicopteros

Nacionales de Colombia, S. A. v. Hall, 466 U.S. 408, 415 n.9 (1984)). “If the defendant’s contacts

with the forum state are not ‘continuous and systematic,’ specific jurisdiction may be asserted if

the controversy is related to or arises out of the defendant’s contacts with the forum state.” Id.

(citing Helicopteros, 466 U.S. at 418 & n.8). “Specific jurisdiction requires that the defendant

purposefully availed itself of the privilege of conducting activities within the forum state so that

the defendant reasonably anticipates being haled into court there.” Id. (citing Burger King Corp.

v. Rudzewicz, 471 U.S. 462, 474–75 (1985)).

Specific jurisdiction exists when a defendant has deliberately directed its activities toward

the forum and the cause of action results from alleged injuries that arise out of or relate to those

activities. See Burger King, 471 U.S. at 472. In Burger King, the Supreme Court explained the

“constitutional touchstone” of “minimum contacts” for personal jurisdiction:

The unilateral activity of those who claim some relationship with a nonresident

defendant cannot satisfy the requirement of contact with the forum State. . . . [I]t is

essential in each case that there be some act by which the defendant purposefully

avails itself of the privilege of conducting activities within the forum State, thus

invoking the benefits and protections of its laws.

This “purposeful availment” requirement ensures that a defendant will not be

haled into a jurisdiction solely as a result of “random,” “fortuitous,” or “attenuated”

contacts, or of the unilateral activity of another party or a third person. Jurisdiction

is proper, however, where the contacts proximately result from actions by the

defendant himself that create a “substantial connection” with the forum State. Thus

where the defendant deliberately has engaged in significant activities within a State,

or has created continuing obligations between himself and residents of the forum,

he manifestly has availed himself of the privilege of conducting business there, and

because his activities are shielded by the benefits and protections of the forum’s

laws it is presumptively not unreasonable to require him to submit to the burdens

of litigation in that forum as well.

Id. at 474–76 (internal citations, quotation marks, and footnote omitted).

Strahan is a citizen of the state of Indiana, and the parties do not dispute that this Court has

personal jurisdiction over Strahan. Genesys does not assert that the Court has general jurisdiction

over the other Defendants; therefore, the Court focuses its discussion on specific jurisdiction.

1. The Forum Selection Clauses

First, the Defendants argue that the forum selection clauses in the employment contracts of

Hertel and Manno are unreasonable and unjust and also violate California’s public policy; thus,

the Indiana forum selection clauses are invalid and cannot provide consent to personal jurisdiction

in Indiana. Quoting Indiana case law, the Defendants assert that forum selection clauses are

enforceable only “if they are reasonable and just under the circumstances.” Farm Bureau Gen.

Ins. Co. of Michigan v. Sloman, 871 N.E.2d 324, 329 (Ind. Ct. App. 2007). The Defendants argue

that filing suit in Indiana is a drastic and unlawful attempt to circumvent the public policy of

California, where Genesys and Talkdesk are headquartered and where Hertel resides. The

Defendants assert that Genesys itself made this argument in a different lawsuit in California

involving Avaya Holdings Corporation, another competitor of Genesys.

The Defendants argue that Genesys is incorporated and headquartered in California, and it

inherited the forum selection clause from Interactive Intelligence, a now-defunct Indiana company.

Hertel is a resident of California, and Manno is a resident of Missouri, and both are current

employees of Talkdesk, a company with its headquarters in California. The Defendants assert,

“[b]ecause any former connection to Indiana through Interactive Intelligence is long dissolved, it

is neither reasonable nor just to enforce the Indiana forum selection clauses and those clauses

cannot establish Indiana’s personal jurisdiction over Hertel and Manno.” (Filing No. 98 at 12.)

Additionally, the Defendants argue the forum selection clauses are void under California

law. This dispute is between a California corporation and a California citizen because of a years-

old forum selection clause in an agreement signed between the California citizen (Hertel) and his

former employer. But Section 925 of the California Labor Code prohibits an employer from

requiring an employee who works and lives in California to adjudicate claims outside of California

when the claims arise in California. Any contract provisions that violate this law are voidable by

the employee. The California law applies to contracts entered into or modified or extended after

January 1, 2017. The Defendants argue that Hertel’s contract was modified or extended after that

date, so the statute applies and voids the forum selection clause as to Hertel.

Genesys responds that the forum selection clauses were freely negotiated in the

employment contracts and are reasonable and just. It asserts that personal jurisdiction over Manno,

Hertel, and Strahan exists in this Court through the forum selection clauses because the claims

arose out of the Defendants’ employment and employment agreements. Forum selection clauses

are “given controlling weight in all but the most exceptional cases.” Atl. Marine Constr. Co. v.

United States Dist. Court, 571 U.S. 49, 60 (2013).

Genesys asserts that the Defendants’ reliance on California public policy is misplaced

because there is a strong federal public policy of enforcing forum selection clauses, and there is

no public policy in Indiana prohibiting forum selection clauses. “A contractual choice-of-forum

clause should be held unenforceable if enforcement would contravene a strong public policy of

the forum in which suit is brought.” The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)

(emphasis added). This suit was brought in Indiana, not California. Thus, Section 925 of the

California Labor Code does not apply here. Genesys argues California’s statute and public policy

do not apply here for the additional reasons that the controversy did not arise in California, and the

employment contracts were not entered into or modified or extended after January 1, 2017,

contrary to the Defendants’ assertion.

Concerning the Defendants’ argument about Genesys’ position in the Avaya case, Genesys

notes and the Court agrees, that the Seventh Circuit has made clear that parties are free to make

different legal arguments in different cases involving different facts. Ogden Martin Systems of

Indianapolis, Inc. v. Whiting Corp., 179 F.3d 523, 527 (7th Cir. 1999). The Avaya California case

involved no judicial ruling and involved different facts and public policy concerns. That case

concerned a non-compete provision where a competitor sought to prohibit an employee from

working for Genesys, and there were no allegations of misappropriation of trade secrets. In this

case, Genesys is not seeking to keep the Defendants from working for Talkdesk and is not seeking

to prohibit any of the Defendants from earning a livelihood by working at Talkdesk. Rather,

Genesys seeks to keep the Defendants from soliciting Genesys’ employees and customers and

from misappropriating trade secrets. The public policy considerations are entirely different for

each case. Thus, Genesys’ arguments in the Avaya case concerning the forum selection clause are

not binding or applicable in this case.

When considering personal jurisdiction and the forum selection clause, the Court applies

the law of Indiana, not California or Delaware. See Bremen, 407 U.S. at 15; Philpot, 2015 U.S.

Dist. LEXIS 105016, at *2–3. Therefore, the Defendants’ reliance on other states’ laws is not

helpful. The Defendants have not provided any strong public policies of Indiana that are

contravened by the forum selection clauses in the individual Defendants’ employment contracts.

The Defendants’ only reason for why the Court should deem the Indiana forum selection clauses

unreasonable and unjust is “because any former connection to Indiana through Interactive

Intelligence is long dissolved.” The Court is not convinced that this provides justification to

declare the contractually agreed upon forum selection clauses unreasonable, unjust, and

unenforceable. Manno, Hertel, and Strahan each agreed to the Indiana forum selection clause in

their employment contracts. In the absence of a “statute or judicial decision” embodying a “strong

public policy” that would be undermined by enforcing the forum selection clauses, the parties’

valid forum selection clauses “should be given full effect.” Bremen, 407 U.S. at 13, 15. Therefore,

the Court concludes that the Indiana forum selection clauses are valid and enforceable as to Manno,

Hertel, and Strahan, and the forum selection clauses support personal jurisdiction in this Court.

2. Specific Jurisdiction

The Defendants argue that specific personal jurisdiction cannot be established over

Talkdesk, Manno, Hertel, and Morales because there are insufficient relevant connections between

Indiana and these Defendants. They explain, “The inquiry whether a forum State may assert

specific jurisdiction over a nonresident defendant focuses on the relationship among the defendant,

the forum, and the litigation. For a State to exercise jurisdiction consistent with due process, the

defendant’s suit-related conduct must create a substantial connection with the forum State.”

Walden v. Fiore, 571 U.S. 277, 283–84 (2014) (internal citations and quotation marks omitted).

Regarding the trade secret claims, the Defendants argue the Complaint’s allegations that

the misappropriated documents were created in Indiana by Indiana employees is not enough to

support specific jurisdiction. The Defendants assert there are no allegations that any of the

misappropriated documents were taken from Indiana or that any of the out-of-state Defendants’

alleged actions took place in Indiana. Genesys, the alleged owner of the documents, resides in

California.

Concerning the contract and tortious interference claims, the Defendants argue that the

forum selection clauses in Hertel’s and Manno’s employment contracts do not create personal

jurisdiction for the breach of contract and tortious interference claims. They further argue the

allegation that Talkdesk interfered with contracts that provided for Indiana remedies is not enough

to create specific jurisdiction because “[k]nowing about a potential for harm in a particular state is

not the same as acting in that state—and it takes the latter to permit personal jurisdiction under

state law.” Ariel Investments, LLC v. Ariel Capital Advisors LLC, 881 F.3d 520, 522 (7th Cir.

2018). The Defendants assert that the allegation of specific jurisdiction over Talkdesk based on

Strahan’s breach of contract after becoming “an employee and agent of Talkdesk” is insufficient.

The Indiana Court of Appeals held that agency relationships and agency contacts do not establish

personal jurisdiction. Prof’l Billing, Inc. v. Zotec Partners, LLC, 99 N.E.3d 657, 662 (Ind. Ct.

App. 2018).

The Defendants assert there is no specific jurisdiction to adjudicate the fiduciary duty of

loyalty claims because Genesys is a California entity, and neither Hertel nor Manno lived or

worked in Indiana. Thus, Indiana does not have jurisdiction over any alleged common-law duty

these non-Indiana residents had to their non-Indiana employer.

Regarding the raiding claim against Talkdesk, the Defendants argue there is no substantial

connection between Indiana and Talkdesk. The only allegation is that Talkdesk’s CEO recruited

one Indiana resident, Strahan, and two non-Indiana residents with Indiana contracts, Manno and

Hertel. The Defendants assert that this is not enough to establish personal jurisdiction over

Talkdesk; the contacts alleged against Talkdesk are, at most, a contact with one person who resides

in Indiana, not a contact with Indiana itself.

Lastly, the Defendants argue there is no specific jurisdiction over Morales for the computer

trespass claim because there are no allegations indicating that Morales, a California resident,

committed any act in Indiana that might have violated the Indiana computer trespass law, and

Genesys’ conclusory allegations that Morales violated an Indiana law do not establish personal

jurisdiction over her in Indiana.

Genesys responds that specific jurisdiction exists in this Court over Talkdesk because it

aimed its conduct at Indiana. Talkdesk intentionally recruited and raided employees it knew were

located in Indiana, misappropriated Indiana documents, and interfered with Indiana contracts.

Talkdesk benefited from the breach of Indiana contracts involving the unlawful solicitation of

Indiana employees. Talkdesk’s CEO personally raided Genesys of its Indiana employee, Strahan.

Talkdesk raided at least eight of Genesys’ Indiana employees, and Talkdesk encouraged the

employees to download and demonstrate Genesys’ products and disclose confidential and

proprietary information as part of the interview process while the employees were still employed

by Genesys.

Genesys argues that Talkdesk has, through its employees, misappropriated Genesys’ trade

secrets and other confidential information, and many of these misappropriated documents were

created in Indiana by Indiana-based employees for an Indiana company. As an employee and

agent of Talkdesk, Strahan was located in Indiana and breached his Genesys agreement,

wrongfully solicited other Genesys employees, and misappropriated trade secrets for Talkdesk’s

benefit. Genesys asserts that courts have found such conduct to bind the corporate entity

responsible for that agent’s conduct. See e.g., Daimler AG v. Bauman, 571 U.S. 117, 127 (2014)

(“the commission of some single or occasional acts of the corporate agent in a state may sometimes

be enough to subject the corporation to jurisdiction in that state’s tribunals with respect to suits

relating to that in-state activity”); Campbell v. Campbell, 262 F. Supp. 3d 701, 708 (N.D. Ill. 2017)

(“court may exercise personal jurisdiction over a company based on the actions of its agents”).

Genesys argues that the decision in Professional Billing, Inc. v. Zotec Partners, relied upon by the

Defendants, is inapplicable here because Talkdesk’s agents (including Strahan) specifically

targeted their suit-related conduct toward Indiana. Their suit-related conduct aimed at Indiana, not

merely Strahan’s residency in Indiana, gives rise to specific jurisdiction.

Genesys further asserts that Talkdesk’s connection to Indiana is strong. It employs

personnel in Indiana, including four former Genesys/Interactive Intelligence employees (including

Strahan). Talkdesk pays Indiana payroll taxes and has shipped computer equipment to Indiana.

Talkdesk has earned over $35,000.00 in revenue from twenty-three transactions with Indiana

businesses, and it has targeted at least thirteen other Indiana prospects.

Concerning personal specific jurisdiction over Manno and Hertel, Genesys argues that they

freely entered into employment contracts containing Indiana forum selection clauses, and those

forum selection clauses provide jurisdiction over Manno and Hertel. The claims in this case arise

from the Defendants’ conduct in violation of their employment contracts, so specific jurisdiction

exists pursuant to the forum selection clauses. Genesys further explains that Hertel repeatedly

traveled to Indiana for business purposes and misappropriated documents that originated as

Interactive Intelligence documents in Indiana or were created by Genesys’ employees residing and

working in Indiana. Genesys also explains that the documents likely were taken from a cloud-

based storage server, but those servers are supported by Genesys’ data centers located in Indiana

and Colorado.

Regarding personal specific jurisdiction over Morales, Genesys argues that many of the

documents misappropriated by Morales were created by Interactive Intelligence employees for

Interactive Intelligence’s business or were otherwise created by and for Indiana employees. Over

two hundred pages of documents Morales misappropriated were created by Indiana-based

employees, and misappropriation of documents created in the forum state can bind a defendant to

that forum state’s jurisdiction. See e.g., Neopart Transit, LLC v. Mgmt. Consulting, Inc., 2017

U.S. Dist. LEXIS 25255, at *12–20 (E.D. Pa. Feb. 23, 2017) (“the trade secrets allegedly

misappropriated were created in Pennsylvania, and therefore this state has the greatest interest in

adjudicating the dispute”); Ivanti, Inc. v. Shea, 2018 U.S. Dist. LEXIS 28719, at *12 (D. Utah Feb.

21, 2018) (“alleged misappropriation concerned information created in Utah, by a Utah-based

company, and was obtained as a result of Defendant's relationship with Utah-based employees”).

Additionally, Morales spent ten days in Indianapolis for business travel related to her

employment, and while she lived and worked for Genesys out of California, she interacted and

emailed with Genesys’ Indianapolis office on a daily basis. She received materials from Indiana-

based employees that helped her do her job, including quotes for customers with Genesys’ address

listed as being in Indianapolis. Morales had an office telephone with an Indiana area code and

paystubs from her early employment identifying Interactive Intelligence as payor. Morales had

extensive employment communications directed at the forum state, which supports personal

jurisdiction.

The Court agrees that the Defendants’ isolated contacts with the forum state that do not

relate to the claims raised in the litigation, do not support specific personal jurisdiction. Nor does

Genesys’ contacts with the forum state support specific personal jurisdiction over the Defendants.

However, the forum selection clauses (discussed in the previous section) do support personal

jurisdiction over Manno and Hertel. The alleged misappropriation of trade secrets from Indiana

by Hertel, Manno, and Morales supports specific jurisdiction in this case over these Defendants.

Manno’s and Hertel’s allegedly wrongful solicitation of Strahan, an Indiana employee of Genesys,

further supports specific jurisdiction. The allegations against Talkdesk concerning its persuading

Genesys’ employees to misappropriate trade secrets from Indiana and wrongfully solicit Indiana

employees and customers support specific jurisdiction in this case over Talkdesk. The Court

agrees with the decisions in Daimler, 571 U.S. at 127, and Campbell, 262 F. Supp. 3d at 708, that

a court may exercise personal jurisdiction over a company based on the actions of its agents when

that suit-related conduct is specifically aimed at the forum state. Much of the Defendants’ suit-

related conduct was aimed at Indiana. The Court concludes that the relationship among the

Defendants, their suit-related conduct, and Indiana supports the exercise of specific personal

jurisdiction in this case over these Defendants by this Court.

B. Request to Transfer the Case to the Northern District of California

The Defendants assert, “even assuming that venue is proper in this district, this action

should be transferred to the Northern District of California.” (Filing No. 98 at 20.) They explain

that a district court may transfer an action to another district court where it might have been brought

“[f]or the convenience of parties and witnesses, in the interest of justice.” 28 U.S.C. § 1404(a).

The Defendants argue,

[T]ransfer to California would be both proper and convenient because four parties

out of six are residents of California. Only one party is a resident of Indiana.

California has jurisdiction over the two non-California residents, Strahan and

Manno, because this action arises out of their former employment with a California

company (Plaintiff) and their current employment with a different California

company (Talkdesk). Venue would be proper in the Northern District of California

because both Plaintiff and Talkdesk reside in that district, indicating that a

substantial portion of the events underlying Plaintiff’s claims occurred there.

Additionally, given the nature of Plaintiff’s claims, the largest concentration of

witnesses is likely to be in California. In fact, ten of the sixteen potential deponents

already identified by the parties are residents of California. Only five are residents

of Indiana. For these reasons, even if the Court finds that it has jurisdiction over

Talkdesk and that venue is proper in Indiana, Talkdesk respectfully requests that it

transfer venue to the Northern District of California.

(Filing No. 98 at 20–21.)

The Defendants further argue that Morales’ arbitration agreement specifies California as

the venue for arbitration, and thus, Genesys has acknowledged that California is the most

appropriate venue to adjudicate employment claims with Morales. Additionally, the bulk of the

evidence relevant to the claims is located in California, and most of Talkdesk’s employees and

clients who would be called as witnesses are in California.

In response, Genesys points out that three of the five Defendants have Indiana forum

selection clauses that identify this District as the chosen venue for litigation, and one of those

Defendants (Strahan) resides in Indiana. Each of the non-resident individual Defendants have

travelled to Indiana for business purposes related to the litigation. Many of the misappropriated

documents are Indiana documents, and while the documents likely were taken from a cloud-based

storage server, those servers are supported by Genesys’ data centers located in Indiana and

Colorado.

Genesys explains that its largest site is in Indianapolis where it has hundreds of employees

and has a majority of its administrative, operational, and legal functions. Additionally, the events

giving rise to this lawsuit relate to Indiana. None of the conduct at issue in the case occurred in

the Northern District of California, and while Morales and Hertel live and work in California, they

are not in the Northern District. Furthermore, many of Talkdesk’s executives, corporate witnesses,

attorneys, employees, and potential witnesses are in Utah, not in the Northern District of

California. Genesys asserts that most witnesses will be representatives of the parties, and Genesys

expects to call several witnesses in Indiana.

Moreover, Indiana resident Strahan solicited at least five Indiana-based employees while

employed by and working for the benefit of Talkdesk. Talkdesk recruiters made more than thirty

calls to recruits within Indiana. Those recruited by Talkdesk include at least eight Indiana

employees of Genesys, who work in this District, including Strahan and another individual who is

now employed by Talkdesk. Genesys argues that “sufficient events giving rise to this litigation

have occurred in Indiana.” (Filing No. 111 at 19.)

Genesys relies on Atlantic Marine, in which the Supreme Court directed that, in analyzing

a request to transfer venue where a forum selection clause is involved, the district court “should

not consider arguments about the parties’ private interests” because, by agreeing to the forum

selection clause, the parties “waive the right to challenge the preselected forum as inconvenient or

less convenient for themselves or their witnesses, or for their pursuit of the litigation.” Atl. Marine

Constr., 571 U.S. at 64. “[A] district court may consider arguments about public-interest factors

only. . . . [Thus,] forum-selection clauses should control except in unusual cases.” Id. Genesys

also asserts there is “a strong presumption in favor of the plaintiff’s choice of forum.”

Commissioning Agents, Inc. v. Long, 187 F. Supp. 3d 980, 986 (S.D. Ind. 2016).

Regarding public-interest factors, Genesys argues this Court has a more efficient docket

than the Northern District of California, more familiarity with the Indiana claims, and already has

scheduled a preliminary injunction hearing, so this Court should retain the case and deny the

request to transfer. Genesys asserts the overall average of months to disposition in civil cases is

only approximately one-half month faster in the Northern District of California, but the other

measures of disposition are faster in the Southern District of Indiana, so this Court should retain

the case.

Because this case involves forum selection clauses, the traditional analysis for considering

transfer is modified.

When the case involves a forum-selection clause, however, private interests drop

out of the equation. . . . [T]he analysis is limited to public-interest factors. And

because those factors are rarely strong enough to override the parties’ preselected

forum, the practical result is that forum-selection clauses should control except in

unusual cases.

Mueller v. Apple Leisure Corp., 880 F.3d 890, 894 (7th Cir. 2018) (internal citations and quotation

marks omitted). The Defendants have not presented any argument concerning the public-interest

factors that could support their request to transfer this case to the Northern District of California.

On the other hand, Genesys has provided 2018 federal court caseload statistics from the U.S.

Courts’ Administrative Office, and those statistics suggest that this District is equally efficient or

more efficient in disposing of cases than the Northern District of California. Because the only

“public-interest factors” argument before the Court suggests that transfer is not warranted, and

because the forum selection clauses involved in this case direct that litigation occur in Indiana, the

Court concludes that transfer to the Northern District of California is not warranted. Therefore,

the Court denies the Defendants’ request to transfer this case.

C. Request to Dismiss for Failure to State a Claim

The Defendants argue that each of the claims brought by Genesys should be dismissed

under Rule 12(b)(6) because the allegations fail to state claims upon which relief can be granted.

1. Trade Secret Claims

Under the federal Defend Trade Secrets Act and the Indiana Uniform Trade Secret Act,

“information only qualifies as a ‘trade secret’ if the owner makes a reasonable effort to maintain

its secrecy, and it derives economic value or potential value from not being generally known to or

readily ascertainable by others.” (Filing No. 98 at 22 (citing 18 U.S.C. § 1839(3)(A); Ind. Code §

24-2-3-2).) If information does not meet these standards, then it does not qualify for protection

under either statute. Trade secrets are a narrow category of confidential information, and the

statutes apply only to trade secrets, not all confidential information. The Defendants argue that

Genesys’ trade secret claims fail because Genesys has not sufficiently and plausibly alleged the

misappropriation of any trade secret. They argue that Genesys has not adequately identified its

trade secrets, has not asserted that any of the alleged trade secret information derives independent

economic value from not being generally known, and has not alleged what reasonable measures it

has taken to keep the information secret or even whether such measures were taken. The

Defendants assert Genesys’ conclusory allegations fail to state a claim.

Genesys responds that the Defendants seek to impose a heightened pleading standard that

is not required at this stage of the litigation. Genesys points out that the cases relied upon by the

Defendants for the alleged heightened pleading standard are inapposite because those cases

involved summary judgment or preliminary injunction motions, not a motion to dismiss. See IDX

Sys. Corp v. Epic Sys. Corp., 285 F.3d 581 (7th Cir. 2002); M.K. Plastics Corp. v. Rossi, 838

N.E.2d 1068 (Ind. Ct. App. 2005). Relying on a decision from the Northern District of Indiana,

Genesys asserts that, “at the pleading stage, the Complaint need only provide enough facts to show

that the claim is plausible on its face . . . [and] [c]ourts are in general agreement that trade secrets

need not be disclosed in detail in a complaint alleging misappropriation.” Romary Assocs., Inc. v.

Kibbi LLC, 2011 U.S. Dist. LEXIS 75194, at *13 (N.D. Ind. June 17, 2011).

Genesys has sufficiently alleged the misappropriation of trade secrets, including that

Defendants misappropriated information related to employee performance, compensation, level of

job satisfaction, and account relationships; pricing, quote information, and product roadmap

information; territory information; accounts; product information; intellectual property; account

and sales plans; marketing information; customer account information and documentation;

presentations; and sales strategy. Genesys also has alleged that Talkdesk utilized this

misappropriated information to damage Genesys. Furthermore, Genesys listed thirty specific

examples of potential trade secrets that were misappropriated by Morales in the Second Amended

Complaint (Filing No. 89 at 10–13). These factual allegations are sufficient to give the Court and

the Defendants notice of what the trade secret claims are and the grounds upon which the claims

rest. Assuming all the facts to be true, there are enough factual allegations to allow the Court to

draw the reasonable inference that the Defendants are liable for the misappropriation of trade

secrets. At this stage of the litigation, dismissal of the trade secret claims is not appropriate.

2. Breach of Contract Claims

Next, the Defendants argue that the breach of contract claims against Strahan, Hertel, and

Manno should be dismissed because Genesys itself argued in the Avaya case in California that the

restrictive covenants violate California public policy and cannot be asserted by a California entity

against employees of another California entity protected by California law. The Defendants point

out that Genesys argued in the Avaya case that California has a public policy against non-compete

agreements, which hinders free and healthy competition, to help California companies secure the

best talent. Genesys argued in the Avaya case that non-resident employees of California companies

should be free from restraints of non-compete agreements. The Defendants assert that Genesys

cannot argue in the Avaya case that the restrictive covenants are unlawful and, in this case, try to

enforce the restrictive covenants. Thus, they argue, the contract claims should be dismissed under

California law.

The Defendants argue that the breach of contract claims also should be dismissed under

Indiana law because the non-solicitation covenants are unenforceable. The Second Amended

Complaint alleges that Hertel is contractually obligated “not to solicit Genesys employees or

customers for 12 months after leaving employment with Genesys.” (Filing No. 89 at 15.) The

Second Amended Complaint alleges that Strahan and Manno are contractually obligated “not to

solicit Genesys employees or customers for 18 months after leaving employment with Genesys.”

Id. at 18, 21. However, the Second Amended Complaint does not allege that any of these

restrictive covenants contain any geographical limitation. The Defendants also argue that the

restrictive covenants are not limited to only customers that interacted with Strahan, Hertel, or

Manno, thereby making the restrictive covenants overly broad and unenforceable.

In Indiana, an employer may restrict competition after the period of employment if “the

employer has a protectable interest” and if the restricted area “is not unreasonably broad” and the

duration “is also not unreasonable.” Norlund v. Faust, 675 N.E.2d 1142, 1155 (Ind. Ct. App.

1997). The Defendants assert that restrictive covenants “are not generally favored in Indiana

because they restrain trade, and such agreements will be construed against the one seeking the

restraint.” Oxford Fin. Group, Ltd. v. Evans, 795 N.E.2d 1135, 1143 (Ind. Ct. App. 2003).

Furthermore, “Indiana courts will not hesitate to strike down any such restrictive covenants which

are the least bit overly broad with respect to the ‘protectable interest’ at stake.” Buffkin v. Glacier

Group, 997 N.E.2d 1, 11 (Ind. Ct. App. 2013). The Defendants argue Genesys has failed to allege

a protectable interest, but even if one existed, the restrictive covenants are unreasonable in scope

(with no geographic limitation) and duration (with a 12- or 18-month restriction). Therefore, the

contract claims should be dismissed under Indiana law.

In response, Genesys argues that the Second Amended Complaint clearly sets out a

protectable interest in its goodwill and customer base and the development of its customer base.

Concerning the reasonableness of the restrictive covenants, Genesys asserts the Court must look

at the contract as a whole and the particular circumstances of the case. The twelve- or eighteen-

month duration for the restrictions in this case are reasonable as other courts have found a two-

year restriction to be reasonable. See e.g., Hannum Wagle & Cline Eng’g, Inc. v. American

Consulting, Inc., 64 N.E.3d 863, 882 (Ind. Ct. App. 2016). Genesys further asserts that restrictive

covenants may be enforceable without geographic limitations where they are limited to a specific

class of persons like customers or employees. See e.g., Field v. Alexander & Alexander of Indiana,

Inc., 503 N.E.2d 627, 635 (Ind. Ct. App. 1987). Genesys argues that, in this case, the restrictive

covenants are limited in scope by prohibiting solicitation of Genesys’ customers and employees,

so a lack of geographic limitation does not make the restrictive covenants unenforceable under

Indiana law.

At this stage of the litigation, the Court concludes that the breach of contract claims are

sufficiently supported by factual allegations and case law to allow the claims to proceed. The

employment contracts of Strahan, Hertel, and Manno, which form the basis of the breach of

contract claims, each contain an Indiana choice of law provision, and the claims allege the

existence of a contract, a breach thereof, and damages. Based on the factual allegations being

taken as true, the non-solicitation clauses are adequately limited in duration and scope to Genesys’

employees and customers to relate to Genesys’ protectable interest in its goodwill and customer

base. Therefore, the Court denies the request to dismiss the breach of contract claims.

3. Tortious Interference Claims

The Defendants assert that, to the extent the tortious interference claims rely on allegations

of misappropriation of confidential information, the claims should be dismissed because the

Indiana Uniform Trade Secret Act “displaces all conflicting law of this state pertaining to the

misappropriation of trade secrets, except contract law and criminal law.” Ind. Code § 24-2-3-1(c).

The statute “abolishes all free-standing alternative causes of action for theft or misuse of

confidential, proprietary, or otherwise secret information falling short of trade secret status.”

HDNet LLC v. N. Am. Boxing Council, 972 N.E.2d 920, 924–25 (Ind. Ct. App. 2012). The tortious

interference claims rely on allegations that the Defendants misappropriated or participated in the

misappropriation of trade secrets. Therefore, the Defendants argue, the claims are alternative

causes of action for theft or misuse of confidential, proprietary, or otherwise secret information

that are preempted under the Indiana Uniform Trade Secret Act.

The Defendants also argue that the tortious interference claims should be dismissed

because the non-solicitation provisions are invalid and also because Genesys did not adequately

plead the element of an absence of justification. A tortious interference claim requires, “(1) the

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.”

Konecranes, Inc. v. Davis, 2013 U.S. Dist. LEXIS 52815, at *5–6 (S.D. Ind. Apr. 12, 2013)

(citations omitted). The Defendants argue the Second Amended Complaint fails to allege a lack

of justification and actually contradicts such an allegation. “Indiana courts have held that

competition is a legitimate interest that establishes justification for purposes of a tortious

interference claim.” Id. at *9. The Defendants assert that the “allegations acknowledge that

Talkdesk was motivated by a legitimate and competitive business interest.” (Filing No. 98 at 29.)

Talkdesk is an upstart competitor of Genesys, and its recruitment of employees was justified;

therefore, the tortious interference claims are legally deficient.

Genesys responds that “claims addressing or arising out of wrongs distinct from pure

information piracy survive passage of the trade secret statute.” HDNet, 972 N.E.2d at 925.

Genesys asserts that its tortious interference claims are not preempted because they seek redress

for wrongs distinct from the misappropriation of trade secrets. Genesys points out that its Second

Amended Complaint alleges Talkdesk encouraged and benefitted from Hertel and Strahan

breaching their agreements not to recruit Genesys personnel. Genesys argues the tortious

interference with its contracts is not justified as “competition” because Talkdesk misappropriated

trade secrets and raided Genesys’ employees with the intent to cripple Genesys’ mid-market sales

organization.

To the extent that the tortious interference claims are based upon the misappropriation of

trade secrets or confidential information, the Court concludes that this basis for the claim is

preempted by the Indiana Uniform Trade Secret Act. However, the Second Amended Complaint

bases the tortious interference claims on the additional allegations of the wrongful recruitment and

raiding of Genesys’ employees for the purpose of crippling Genesys’ mid-market sales

organization. The Court determines that these allegations are enough to support the absence of

justification and a tortious interference claim at the motion to dismiss stage.

4. Breach of Fiduciary Duty of Loyalty Claims

The Defendants next argue the claims for breach of fiduciary duty of loyalty against

Strahan, Hertel, and Manno should be dismissed where the allegations supporting the claims only

show recruitment of Genesys’ personnel, participating in a call with Talkdesk’s CEO, and

participating in training activities. The Defendants argue that these actions only suggest

preparation to compete, not actual competition. Pointing to an Indiana Court of Appeals decision,

the Defendants argue, “although an employee may not actively and directly compete with his

current employer, he may prepare to do so without breaching his fiduciary duty of loyalty.” SJS

Refractory Co., LLC v. Empire Refractory Sales, Inc., 952 N.E.2d 758, 768 (Ind. Ct. App. 2011).

The Defendants assert, because Genesys’ allegations suggest only preparation to compete, these

claims should be dismissed.

In response, Genesys asserts that the Defendants’ position presents a factual dispute or

question that is not suited for resolution through a motion to dismiss. Suggesting that the

Defendants’ actions only rose to the level of “preparation to compete” is a factual challenge and

one that cannot support dismissal at this stage. Genesys contends that the Defendants’ argument

ignores many of the allegations in the Second Amended Complaint: Strahan began working for

Talkdesk on September 17, 2018, even though he was still employed by Genesys; and Manno,

Hertel, and Strahan solicited Genesys’ employees to leave Genesys and work for Talkdesk while

these three still worked for Genesys.

Taking the allegations as true and drawing all inferences in favor of the non-moving party

as the Court must do when deciding a motion to dismiss, the Court determines that Genesys’

pleadings are sufficient to support a viable claim for breach of fiduciary duty of loyalty against

Strahan, Hertel, and Manno. The allegations suggest that these three Defendants, while still

employed by Genesys, actively solicited employees of Genesys to leave the company and work

for its competitor, Talkdesk. The allegations further suggest that Strahan actively began working

for Talkdesk while still employed by Genesys. These allegations are enough to support the claims

at this stage of the litigation. Thus, the request to dismiss these claims is denied.

5. Computer Trespass Claim

The Defendants argue that, to the extent the computer trespass claim relies on allegations

of misappropriation of confidential information, the claim should be dismissed because of

preemption by the Indiana Uniform Trade Secret Act. The Defendants assert that Genesys’ claim

against Morales for computer trespass includes the allegation that she knowingly and intentionally

accessed Genesys’ internal network and company-owned computer without the consent of

Genesys when she misappropriated its confidential, proprietary, and trade secret information.

Because this is simply an alternative cause of action for theft or misuse of confidential, proprietary,

or otherwise secret information, it is preempted. Additionally, there are no allegations that Morales

committed any acts in Indiana that could give rise to her violating the Indiana computer trespass

statute. The Defendants also argue that Genesys’ claim for treble damages for computer trespass

under the Indiana Crime Victim Recovery Act is deficient because there are no allegations

plausibly suggesting that Indiana could exercise criminal jurisdiction over Morales’ actions.

Genesys responds that proof for the computer trespass claim requires that Morales

knowingly or intentionally accessed a computer system or network without consent of the owner.

Ind. Code § 35-43-2-3. Therefore, computer trespass does not require any downloading or

misappropriation, and it stands as a distinct claim from misappropriation of trade secrets or

confidential information. The claim does not require the same proof as a misappropriation claim,

and thus, the claim is not preempted by the Indiana Uniform Trade Secret Act. Genesys further

asserts that, because Morales’ connections with Indiana related to her employment are substantial,

Genesys adequately stated its relief against Morales related to the Indiana Crime Victim Recovery

Act.

While Genesys is correct that the computer trespass statute does not require the “same

proof” as a misappropriation claim, in this case, the allegations in the Second Amended Complaint

base the computer trespass claim entirely on misappropriation of confidential information and

trade secrets. The allegations are that “Morales knowingly and intentionally accessed Genesys

internal network and company-owned computer without the consent of Genesys when she

misappropriated its confidential, proprietary, and trade secret information from Genesys internal

network and/or Genesys company-owned computer.” (Filing No. 89 at 25, ¶163.) “Genesys has

been damaged by Morales’ violation of the Indiana Computer Trespass law and subsequent

misappropriation of its trade secret information thereby.” Id. at 25, ¶164. “Morales’ violation of

the Indiana Computer Trespass law falls within Indiana’s Victim’s Recovery Act, Ind. Code Ann.

§ 34-24-3-1, entitling Genesys to treble damages and attorney’s fees.” Id. at 25, ¶165.

Even accepting as true all the factual allegations and drawing all inferences in favor of

Genesys, it is clear that the computer trespass claim is founded solely on the misappropriation of

information. The only reasonable inference is that Morales had the consent of Genesys to access

its computer system or network while Morales was employed by Genesys. Only when Morales

began to misappropriate information from the computer system or network does it appear that

consent would no longer have existed. Because the computer trespass claim is based entirely on

the misappropriation of information, it is preempted by the Indiana Uniform Trade Secret Act.

Therefore, the Defendants’ request to dismiss the computer trespass claim and the ancillary

demand for damages under the Indiana Crime Victim Recovery Act is granted.

6. Raiding Claim

Lastly, the Defendants again argue that, to the extent the raiding claim relies on allegations

of misappropriation of confidential information, the claim should be dismissed because of

preemption by the Indiana Uniform Trade Secret Act. The raiding claim against Talkdesk includes

the allegation that Talkdesk utilized trade secrets to facilitate its raiding effort, so the claim is

preempted.

The Defendants further argue that Genesys alleged that Talkdesk illegally raided Genesys

by widely recruiting its mid-market sales management team, but “Indiana does not recognize

‘corporate raiding’ as an independent cause of action separate and apart from a claim of unfair

competition.” Howmedica Osteonics Corp. v. DJO Glob., Inc., 2018 U.S. Dist. LEXIS 227687,

at *19 (S.D. Ind. Mar. 15, 2018). And under Indiana law, “unfair competition extends to acts that

although generally considered a fair and welcomed part of vibrant competition, are engaged in for

the primary purpose of destroying a competing business.” Finish Line, Inc. v. Foot Locker, Inc.,

2006 U.S. Dist. LEXIS 3294, at *23 (S.D. Ind. Jan. 18, 2006) (alteration and internal quotation

marks omitted). The Defendants argue that Genesys has not and cannot plausibly allege that

Talkdesk’s primary purpose was to destroy Genesys; Genesys has not alleged any act in support

of its raiding claim that goes beyond the normal range of fair and healthy competition. The

Defendants conclude, “The nationwide recruitment of ‘14 Genesys employees,’ especially from a

corporation that is a self-proclaimed ‘longstanding and market-leading provider’ in the industry,

does not qualify as unfair competition under this standard.” (Filing No. 98 at 31.)

Genesys responds that its raiding claim is not preempted by the Indiana Uniform Trade

Secret Act because the claim is based on Talkdesk’s targeted poaching of its sales employees while

encouraging those employees to breach their contractual obligations to Genesys, including their

duty not to solicit Genesys’ employees or customers and also their breach of fiduciary duties owed

to Genesys. Genesys asserts that it has adequately stated its raiding claim against Talkdesk by

alleging facts that plausibly suggest that Talkdesk raided its employees involving independent

unlawful conduct with the motivation of crippling its business. Genesys points out that the case

relied upon by the Defendants recognizes “corporate raiding as a form of unfair competition,”

Howmedica Osteonics, 2018 U.S. Dist. LEXIS 227687, at *19, and Indiana courts have recognized

that raiding a competitor’s workforce with the intent to cripple its business, or part of its business,

is actionable. See CDW LLC v. NETech Corp., 722 F. Supp. 2d 1052, 1063–64 (S.D. Ind. 2010).

The Court concludes that the raiding claim is not preempted by the Indiana Uniform Trade

Secret Act because the claim is based on Talkdesk’s alleged efforts to poach Genesys’ mid-market

sales organization by encouraging Genesys’ employees to breach their contractual obligations to

Genesys. Taking the allegations as true, “Talkdesk’s targeted raid of Genesys mid-market

segment, including all of its top leadership, was carried out with the purpose of crippling Genesys

mid-market sales organization.” (Filing No. 89 at 49, ¶371 (emphasis added).) This is sufficient

to support a raiding claim at this stage of the litigation, so the Court denies the request to dismiss

the raiding claim.

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS in part and DENIES in part the

Defendants’ Motion to Dismiss or, in the Alternative, to Transfer Venue (Filing No. 97). The

Court concludes that it has personal jurisdiction over the Defendants and that transferring the case

to the Northern District of California is not warranted and is therefore denied. Genesys’ claim for

computer trespass against Morales is dismissed, but each of the other claims asserted in the Second

Amended Complaint remain pending. If necessary, the Court is able to reschedule the

preliminary injunction hearing in short order.

SO ORDERED. )

Date: 11/5/2019 tu cl nth

TANYA WALTON PRATT, JUDGE

United States District Court

Southern District of Indiana

DISTRIBUTION:

John R. Maley

BARNES & THORNBURG, LLP

jmaley@btlaw.com

Kathleen M. Anderson

BARNES & THORNBURG, LLP

kathleen.anderson@btlaw.com

Thomas C Payne

BARNES & THORNBURG LLP

thomas.payne@btlaw.com

John W. Harbin

MEUNIER CARLIN & CURFMAN LLC

jharbin@mceciplaw.com

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David S. Moreland

MEUNIER CARLIN & CURFMAN LLC

dmoreland@mcciplaw.com

Fred Anthony Paganelli

PAGANELLI LAW GROUP

tony@tonypaganelli.com

James P. Strenski

PAGANELLI LAW GROUP

jstrenski@paganelligroup.com