## Facts

- Hicklin Engineering, L.C., an Iowa LLC, owned Axi-Line Precision Products, which designed and manufactured automobile and truck transmission testing equipment.
- R.J. Bartell worked part-time for Axi-Line from 1993 to 2000; he did not sign a noncompete or confidentiality agreement.
- After leaving, Bartell formed R.J. Bartell & Associates, L.L.C., a competing business selling transmission testing equipment.
- Hicklin sued Bartell and his LLC under Wisconsin’s Uniform Trade Secrets Act (Wis. Stat. § 134.90), alleging misappropriation of trade secrets related to Axi-Line’s products and materials.
- The parties consented to final disposition by a magistrate judge under 28 U.S.C. § 636(c).
- The magistrate judge granted summary judgment for Bartell and imposed Rule 37(c) sanctions against Hicklin for refusing to admit Bartell was an independent contractor rather than an employee.
- Hicklin appealed the summary judgment and sanctions; Bartell cross-appealed seeking additional fees and costs.

## Issues

1. Whether diversity jurisdiction existed and, if so, how to determine an LLC’s citizenship for diversity purposes.
2. Whether Hicklin produced sufficient evidence of (a) a protectable trade secret and (b) misappropriation (use or disclosure) to survive summary judgment under Wis. Stat. § 134.90.
3. Whether Rule 37(c) sanctions were proper for Hicklin’s refusal to admit Bartell’s independent-contractor status.
4. Whether Bartell was entitled to additional litigation fees and costs beyond those awarded.

## Decision

- The court held diversity jurisdiction existed but corrected the citizenship analysis: an LLC’s citizenship is that of each of its members, not its state of organization and principal place of business.
- The court affirmed summary judgment for Bartell because Hicklin failed to identify specific trade secrets with adequate precision and failed to offer evidence permitting a reasonable inference that Bartell used or disclosed any Hicklin trade secret.
- The court affirmed Rule 37(c) sanctions, concluding Hicklin lacked a reasonable basis to deny that Bartell was an independent contractor and its denial forced unnecessary proof-related expenses.
- The court denied Bartell’s cross-appeal for additional recompense, finding no abuse of discretion in the magistrate judge’s fee and cost rulings.

## Legal Principles

- For diversity jurisdiction, an LLC is a citizen of every state in which any of its members is a citizen; if a member is itself an entity, its citizenship must be traced through its ownership.
- A trade secret plaintiff must identify the alleged secret with specificity and show it meets statutory requirements (secrecy and economic value from not being generally known), not merely describe general product knowledge or engineering skill.
- Under the UTSA, liability requires evidence of misappropriation—use or disclosure of a trade secret—rather than inference from competition alone.
- Under Fed. R. Civ. P. 37(c), a party that unreasonably refuses to admit a fact may be ordered to pay the expenses incurred to prove that fact.

## Conclusion

The Seventh Circuit affirmed judgment for the defendants because the plaintiff failed to specify protectable trade secrets or present evidence of misappropriation, clarified that LLC citizenship for diversity follows member citizenship, upheld cost-shifting sanctions for an unjustified refusal to admit a plainly supported fact, and declined to expand fee recovery on cross-appeal.


Hicklin Eng'g, L.C. v. Bartell, 439 F.3d 346 (7th Cir. 2006)