## Facts

- Hecny Transportation, Inc., a Hong Kong-based freight-forwarding company, employed George Chu as manager of its Chicago operations from 1989 to 1998.
- After Chu left, Hecny audited the Chicago station and alleged Chu used Hecny’s facilities, employees, and business information (including customer lists) to run competing ventures from Hecny’s premises.
- Hecny also alleged Chu took tangible items when departing, including files, computers, software, and other office equipment.
- Chu denied wrongdoing and asserted counterclaims for return of an investment and for bonuses and profit overrides allegedly owed under contract, accusing Hecny of manipulating accounting to avoid payment.
- Hecny’s theory included trade-secret misappropriation based on a customer list, but it conceded on appeal that customer identities were widely known in the shipping industry.

## Issues

1. Whether § 8(a) of the Illinois Trade Secrets Act displaces non-contract claims involving misuse of information when the information is not a statutory trade secret.
2. Whether allegations that could be styled as trade-secret misconduct bar independent tort theories such as breach of fiduciary duty, conversion/theft of tangible property, or diversion of corporate opportunities.
3. Whether the district court erred by disposing of both sides’ claims through a nominal “summary judgment” that relied on the pleadings without record-based analysis.

## Decision

- The Seventh Circuit vacated the judgment and remanded for further proceedings.
- The court held that ITSA displacement is limited: it prevents duplicative civil remedies for misappropriation of trade secrets, but it does not eliminate independent claims based on other wrongs.
- The court agreed that Hecny’s customer list was not a trade secret on the alleged facts, but ruled that the absence of a trade secret does not defeat conventional tort and contract claims alleging distinct misconduct.
- The court held the district court improperly treated the complaint as legally self-defeating and resolved the case without addressing evidence for either Hecny’s claims or Chu’s counterclaims.

## Legal Principles

- ITSA § 8(a) displaces only claims that are, in substance, claims for misappropriation of a trade secret; it does not displace independent duties and wrongs (e.g., fiduciary breaches, diversion of corporate opportunities, theft/conversion of tangible property).
- A plaintiff’s failure to prove a trade secret does not create immunity for other actionable conduct arising from the same relationship or course of dealing.
- A court may not grant “summary judgment” without engaging record evidence; legally sufficient allegations of non-preempted claims cannot be rejected solely because a trade-secret theory is also asserted and fails.

## Conclusion

The Seventh Circuit limited ITSA preemption to trade-secret misappropriation itself, preserved independent tort and contract theories alleging separate misconduct, and required that both the company’s claims and the manager’s counterclaims be addressed through proper evidence-based procedures on remand.


Hecny Transportation, Inc. v. Chu, 430 F.3d 402 (7th Cir. 2005)