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CareerBuilder Still Faces Suit Over Deal Gone Bad

(CN) - A company that claims it was defrauded from a partnership with the job-hunting website CareerBuilder found new counsel and filed a new complaint after a federal judge dismissed 11 of 12 deficient claims from the original suit.

Jon and Daniel High claim that they entered into a limited licensing agreement with CareerBuilder for access to online computer-training courses the High brothers offer through their Minnesota company, CustomGuide.

The Highs say they spent two years and $1.75 million developing CustomGuide training courses in various software programs, such as Microsoft Windows.

Though CareerBuilder's license gave it rights only to sell CustomGuide's products to individual consumers, the job-search company nevertheless began marketing the courses to business and passing the products off as CareerBuilder property, according to the complaint.

The Highs say they had refused to included business-to-business sales as part of the deal because it would directly compete with its own sales.

After posting jobs on, the website displayed a link directing them "to unauthorized samples of CustomGuide's training product, rebranded with the CareerBuilder logo," according to the complaint.

Even after the limited licensing agreement expired, CareerBuilder continued to sell CustomGuide's products to consumers, the Highs claimed.

CustomGuide initially sued CareerBuilder in Cook County Circuit Court since the Delaware-based CareerBuilder conducts its principal business in Illinois. CareerBuilder later removed the 12-count complaint to federal court and moved to dismiss the entire suit.

On Aug. 24, U.S. District Judge James Holderman dismissed all but one count of fraud against CareerBuilder. Though Holderman gave CustomGuide the opportunity to refile seven of the dismissed claims, he dismissed four with prejudice.

The judgment upheld the High brothers' common-law fraud claim that CareerBuilder induced CustomGuide to enter into a contract while secretly intending to sell CustomGuide's products to businesses without its consent.

In dismissing the breach-of-contract claim, Holderman pointed out that the purported breaches occurred after the termination of the contract. CustomGuide had argued that the contract's confidentiality provision protected it for another two years, but Holderman said "the complaint does not reference this provision of the agreement."

The judge also ruled that federal copyright law pre-empts CustomGuide's allegations of deceptive trade practices and misappropriation of intellectual property rights.

Citing precedent, the judge found that CustomGuide's "allegations derive from nothing more than the inherent misrepresentation that accompanies the unauthorized copying and distribution of another's copyrighted work, which is simply not enough to avoid preemption."

Two of CustomGuide's lawyers moved to withdraw from the case shortly after this decision. Holderman terminated David Curkovic, of Schuyler, Roche and Crisham, and Jeffrey Kierstead Lamb, of Kirkland & Ellis, as counsel on Sept. 12.

Paul Evans Chronis with Duane Morris filed a five-count amended complaint against CareerBuilder on Sept. 15.


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