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List Interactive, Ltd. v. Knights of Columbus

United States District Court, D. Colorado

May 24, 2019

LIST INTERACTIVE, LTD. d/b/a Uknight Interactive, Plaintiff,
v.
KNIGHTS OF COLUMBUS, DAVID J. KAUTTER, IN HIS OFFICIAL CAPACITY AS ACTING COMMISSIONER OF THE INTERNAL REVENUE SERVICE, Defendants. KNIGHTS OF COLUMBUS, Counterclaim Plaintiff,
v.
LIST INTERACTIVE, LTD. D/B/A UKNIGHT INTERACTIVE, LEONARD S. LABRIOLA, WEBSINC.COM, INC., STEPHEN S. MICHLIK, JONATHAN S. MICHLIK, AND TERRY A. CLARK, Counterclaim Defendants.

          ORDER

          R. Brooke Jackson, United States District Judge.

         This matter is before the Court on two motions of defendant Knights of Columbus: (1) its motion for summary judgment and permanent injunction on its counterclaim, ECF No. 148, and (2) its motion for summary judgment on plaintiff's fifth claim for relief - misappropriation of trade secrets, ECF No. 153. For the reasons discussed herein the first motion, ECF No. 148, is MOOT and the second motion, ECF No. 153, is DENIED.

         I. BACKGROUND

         I have described the factual background of this litigation in prior orders. See e.g. ECF Nos. 54, 90, 118; List Interactive, Ltd. v. Knights of Columbus, No. 17-CV-00210-RBJ, 2017 WL 3217817 (D. Colo. July 28, 2017). Briefly here, plaintiff in this action is List Interactive, Ltd., d/b/a UKnight Interactive (“UKnight”)-a Colorado-based web design company. This dispute arises out of a web system it developed for defendant Knights of Columbus, a religious and charitable fraternity registered in Connecticut with subsidiary councils all around the world. As a 501(c)(8) tax-exempt organization, the Knights of Columbus must provide life insurance for its members and be organized under the “lodge system.” See 26 U.S.C. § 501(c)(8)(A)-(B). The latter qualification means that the organization must have a parent organization along with subordinate branches that are chartered by the parent organization but nonetheless self-governing. I use the term “Knights of Columbus” to describe the parent organization headquartered in New Haven that effectively runs the fraternity's insurance business in the United States. I will refer to the broader organization that is comprised of this parent company, the chartered branches (known as councils, assemblies or chapters), local members, and insurance agents as “the Order.”

         UKnight was created in 2011 by a Knights of Columbus insurance agent, Steve Michlik, and his son Jonathon Michlik in an effort to build a website to promote his insurance business and communicate with other Knights of Columbus members in the Dallas/Fort Worth area. ECF No. 153-2 at 12. They met with various entities of the Order - agents, councils, chapters and assemblies - to further grow and develop their web platform for these entities.

         In August 2011, UKnight contacted the Knights of Columbus to outline a proposal for providing a unified online platform for purchases of life insurance and management of membership activities across the Order. ECF No. 167-3. Following a series of meetings, UKnight alleges that it reached an agreement with the Knights of Columbus whereby it would designate UKnight as its web platform vendor for the fraternity's members-only life insurance business. In the following year, UKnight made modifications to the platform incorporating data files sent from the Knights of Columbus. ECF No. 167-6. However, UKnight asserts that over the next few years, the Knights of Columbus delayed announcing UKnight as its exclusive vendor. The relationship ultimately soured and disintegrated without such an announcement. UKnight contends that the Knights of Columbus was running its life insurance business fraudulently and reneged on the deal because it realized UKnight's web system would expose this fraud. ECF No. 58-1 at ¶52. The Knights of Columbus assert that there was never a deal, and that it declined to do business with UKnight because its web system was inadequate. ECF Nos. 153 at 4, 153-1 at ¶7.

         UKnight asserted a number of claims against the Knights of Columbus, ECF No. 58-1 (Second Amended Complaint), and at issue here is its claim for misappropriation of trade secrets. It contends that the Knights of Columbus solicited information about its web platform under the guise of preparing to implement the system across the Order, but instead used its trade secrets to seek out other vendors or replicate the system itself. The events underlying this alleged misappropriation began in February 2014 when UKnight partner and technology manager Terry Clark met with a consultant hired by the Knights of Columbus, Ian Kinkade, over two days. ECF No. 167 at 5. Based upon information shared in these meetings, Mr. Kinkade prepared a series of reports for the Knights of Columbus describing the web platform and its technological capabilities and shortcomings. ECF Nos. 167-12, 153-2. The parties dispute what was shared in these meetings and the “trade secret” status of the information Mr. Kinkaid shared with the Knights of Columbus.

         In early 2015, members of the Knights of Columbus, including Matt St. John, the Director of Insurance Marketing, and Mr. Kinkade traveled to Dallas, Texas to meet with Mr. Clark about the UKnight platform and its roll-out. At the conclusion of these meetings, Mr. Kinkade stayed behind an additional day to continue discussions with Mr. Clark. During that meeting, Mr. Kinkade shared with Mr. Clark an email from Mr. St. John that directed him to report the functions that UKnight custom-designed for the Knights of Columbus. Mr. St. John's email explained that such information could help the Knights of Columbus seek out another vendor. ECF Nos. 167-15 (169-12 unrestricted version), 167-21 ¶16.

         In early 2016, the Knights of Columbus informed UKnight that it would consider other potential vendors, and the parties' relationship ended. ECF No. 153-1 at ¶8. According to UKnight, Mr. St. John directed it to cease using the Knights of Columbus's name in any of its business solicitations. ECF No. 58-1 at ¶61.

         After UKnight filed suit, the Knights of Columbus asserted counterclaims against UKnight and its principals Leonard Labriola, Stephen Michlik, Jonathan Michlik, and Terry Clark for UKnight's continued use of the Knights of Columbus name and trademarks. ECF No. 101 (Answer to Second Amended Complaint). These “cybersquatting” claims were also brought against WebsInc.com, Inc., a listed registrant of several “domain names” that UKnight allegedly has registered unlawfully. ECF No. 101 at 29. I will refer to these parties collectively as the “UKnight defendants.”

         At issue here are the Knights of Columbus's claims for trademark infringement, false designation of origin, cybersquatting and common law trademark infringement. The Knights of Columbus asserts that the UKnight defendants are using Knights of Columbus trademarks to promote UKnight's website business on UKnight's primary website, council websites, agent sites, and in marketing presentations; and that UKnight continues to own infringing domain names. ECF No. 148 at 3-4.

         II. STANDARD OF REVIEW

         The Court may grant summary judgment if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden to show that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The nonmoving party must “designate specific facts showing that there is a genuine issue for trial.” Id. at 324. A fact is material “if under the substantive law it is essential to the proper disposition of the claim.” Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A material fact is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. The Court will examine the factual record and make reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. Concrete Works of Colo., Inc. v. City & Cnty. of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994).

         III. ...


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