Daniel Gilk and Samuel Gilk v. Mark L. Fisher

Background

Daniel Gilk and Samuel Gilk (the "Gilks") founded Fly Boatworks, LLC in 2012 to build and sell skiffs (flat-bottomed boats). Beginning in 2019, they worked with defendant Mark L. Fisher to develop a new model, the F2 Carbon. In 2021, Fisher, along with Errol Galt and Mark Baker (collectively, the "Individual Defendants"), invested in Fly Boatworks and entered into an Operating Agreement. Under that agreement, Daniel Gilk, Samuel Gilk, and Fisher each owned 22.22% of the company, while Galt and Baker each owned 16.67%. The Operating Agreement required unanimous owner approval for company actions and imposed a duty of loyalty.

The Gilks allege they are the primary inventors of certain "Skiff Innovations" incorporated into the F2 Carbon, including a specific jet pump integration method, a hull and stern design, an internally-actuated trim tab design, and a cap/deck assembly. In October 2024, Fly Boatworks began negotiating with Martac Corp. ("Martac") about a collaboration integrating F2 Carbon components into a Martac vessel. The projected profit from this partnership was alleged to be $23 million annually.

The Gilks allege that once the design was finalized, the Individual Defendants formed Axocon Polymers, LLC and began negotiating with Martac on Axocon's behalf, excluding Fly Boatworks. In May 2025, Fisher (on behalf of Axocon) accepted an offer from Martac. The Gilks also allege that Fisher filed a patent application on behalf of Axocon naming himself, Galt, and Baker as inventors using the Gilks' inventions; that Fisher directed payments to personal accounts to "avoid tracking"; and that the Individual Defendants took steps to dissolve Fly Boatworks or force a buyout. The Gilks filed suit on May 20, 2025, and the court previously granted a temporary restraining order (TRO) on July 11, 2025, preliminarily enjoining the defendants from, among other things, misappropriating Fly Boatworks' trade secrets and entering contracts on behalf of Fly Boatworks without consent.

Claims

Plaintiffs brought eleven counts in the First Amended Complaint: (1) misappropriation of trade secrets under the federal Defend Trade Secrets Act (DTSA) and the Minnesota Uniform Trade Secrets Act (MUTSA); (2) breach of contract; (3) breach of fiduciary duties; (4) breach of the covenant of good faith and fair dealing; (5) civil conspiracy; (6) conversion/civil theft; (7) unjust enrichment; (8) accounting; (9) tortious interference with prospective economic advantage and contract; (10) fraud; and (11) injunctive relief. Defendants moved to dismiss the First Amended Complaint under Federal Rules of Civil Procedure 8(a) (general pleading requirements), 9(b) (particularity for fraud), and 12(b)(6) (failure to state a claim).

Rule 8 — Group Pleading Challenge

Defendants argued the complaint was an improper "shotgun" pleading that lumped all defendants together without specifying who did what. The court rejected this argument, finding that the complaint's 102 paragraphs of factual allegations adequately described each defendant's specific conduct. The court noted that while each count incorporated prior allegations, the complaint defined distinct groups ("Defendants" and "Individual Defendants") and attributed specific conduct to each, providing defendants with fair notice.

Rule 23.1 — Derivative Action Requirements

Rule 23.1 requires a plaintiff bringing a derivative action (a lawsuit filed on behalf of a company rather than personally) to either make a pre-suit demand on the company or explain why such a demand would be futile. Under Minnesota law (Minn. Stat. § 322C.0902), a demand is excused if it would be futile. The court concluded the Gilks adequately alleged futility because: (1) the Individual Defendants collectively own 55.6% of Fly Boatworks — a majority — and would not sue themselves; and (2) the Operating Agreement requires unanimous owner approval, making it effectively impossible for the Gilks to get the company to act against defendants. The court denied defendants' request for additional briefing on this issue.

Rule 9(b) — Fraud Particularity

Fraud claims must be pleaded with particularity, identifying the "who, what, where, when, and how" of the alleged fraud. The court found that the Gilks satisfied this standard. Reading the complaint as a whole — rather than isolating only the nine-paragraph fraud count — the complaint identified specific dates of allegedly fraudulent statements, the individuals who made them, and the circumstances, including alleged false representations that profits would be shared with the Gilks and false claims that defendants were negotiating with Martac on Fly Boatworks' behalf.

Rule 12(b)(6) — Failure to State a Claim

Independent Duty Rule

Defendants argued that six tort claims were barred by Minnesota's "independent duty rule," which generally prevents a plaintiff from recovering in tort for conduct that is nothing more than a breach of contract. The court rejected this defense for all challenged claims:

- Breach of Fiduciary Duty (Count 3): The Gilks based this claim on statutory duties under Minn. Stat. § 322C.0409 and common law duties, not solely on the Operating Agreement. Where independent statutory or common law fiduciary duties exist, the independent duty rule does not apply. - Civil Conspiracy (Count 5): Civil conspiracy is a theory of liability requiring an underlying tort. Because the tortious interference claim survived, so did civil conspiracy on this basis. - Conversion/Civil Theft (Count 6): Not barred because the complaint alleges fiduciary duties independent of contract — though the claim ultimately failed on other grounds. - Unjust Enrichment (Count 7): The independent duty rule applies to tort claims; unjust enrichment is an equitable claim, not a tort, so the rule does not apply. - Tortious Interference (Count 9) and Fraud (Count 10): Not barred because both rest on duties arising independently of the contract.

Count 1: Trade Secrets (DTSA and MUTSA)

To state a trade secret misappropriation claim, a plaintiff must allege (1) the existence of a trade secret and (2) misappropriation. Defendants challenged only the first element, arguing the Gilks failed to allege reasonable steps to maintain secrecy and failed to adequately describe the trade secrets.

On reasonable steps: The court found the Gilks plausibly alleged secrecy measures. Disclosure of the Skiff Innovations to Martac was likely for the purpose of commercializing them, which does not destroy trade secret status. Disclosure to an industry expert (Chris Morejohn) was accompanied by his written acknowledgment that the information would be kept confidential. The court also noted that in a five-member closely held company, reliance on fiduciary duties to preserve confidentiality is reasonable.

On description: The court found that Paragraph 19 of the complaint, which lists and describes four critical innovations in the F2 Carbon, was sufficient at the pleading stage. A plaintiff need not fully identify trade secrets in the complaint, as doing so could itself destroy the secret. The court denied dismissal of Count 1.

MUTSA Displacement

MUTSA displaces (supersedes) state law tort and restitution claims that are based on the misappropriation of trade secrets, but it does not displace contractual remedies or claims with factual bases beyond trade secret misappropriation. The court analyzed each non-trade-secret claim:

- Breach of Contract (Count 2): Not displaced — grounded in contract and rests on conduct beyond trade secret theft (usurping business opportunities, competing with Fly Boatworks, executing contracts without consent, etc.). - Breach of Fiduciary Duty (Count 3) and Civil Conspiracy (Count 5): Displaced only to the extent based on trade secret misappropriation; otherwise survive. - Breach of Covenant of Good Faith and Fair Dealing (Count 4): Not displaced — grounded in contract (the Operating Agreement). - Conversion/Civil Theft (Count 6): Partially displaced, but ultimately dismissed on the merits regardless. - Unjust Enrichment (Count 7): Displaced only to the extent based on trade secret misappropriation. - Tortious Interference (Count 9): Displaced only to the extent based on trade secret misappropriation. - Fraud (Count 10): Displaced only to the extent based on trade secret misappropriation.

Count 6: Conversion and Civil Theft — Dismissed

The court dismissed the conversion and civil theft claims in full.

Count 7: Unjust Enrichment — Survives (in Part)

Defendants argued unjust enrichment should be dismissed because plaintiffs have adequate legal remedies (breach of contract and trade secret claims). The court declined to dismiss at this stage, finding it premature. Under Federal Rule of Civil Procedure 8(d)(2), parties may plead alternative theories of relief, and plaintiffs are entitled to pursue unjust enrichment as an alternative. The claim was dismissed only to the extent it is based on trade secret misappropriation.

Counts 8 and 11: Accounting and Injunctive Relief — Dismissed as Standalone Claims

The court agreed with defendants that accounting and injunctive relief are remedies, not independent causes of action, and dismissed them as such. The court clarified, however, that plaintiffs may still pursue these remedies in connection with their surviving claims.

Count 9: Tortious Interference — Survives (in Part)

The court found the Gilks plausibly alleged damages for tortious interference — a required element — by pointing to Fisher's estimates of $45.9 million in revenue and $23 million in annual profits from the Martac partnership, as well as allegations that Fisher created a separate entity (MASC) to secure the manufacturing contract and cut Fly Boatworks out. The claim survives except to the extent based on trade secret misappropriation.

Disposition

The court granted in part and denied in part defendants' motion to dismiss: