Daniel Gilk and Samuel Gilk v. Mark L. Fisher

Background

Daniel and Samuel Gilk (the "Gilks") founded Fly Boatworks, LLC in 2012 to build and sell specialized shallow-water skiff boats. Beginning in 2019, they collaborated with Mark L. Fisher on a new model called the F2 Carbon. In 2021, Fisher, Errol Galt, and Mark Baker (the "Individual Defendants") invested in Fly Boatworks and all five owners signed an Operating Agreement. Under that agreement, Daniel Gilk, Samuel Gilk, and Fisher each held 22.22% ownership, and Galt and Baker each held 16.67%. The Operating Agreement required unanimous owner approval for all company actions and imposed a duty of loyalty.

The Gilks claim to be the primary inventors of several critical boat design innovations (the "Skiff Innovations"), including a novel jet pump integration method, a distinctive hull and stern design, an internally-actuated trim tab, and a unique deck assembly. By late 2022, the first F2 Carbon prototype had been built. By October 2024, Fly Boatworks began negotiating with Martac Corp. ("Martac") about integrating the F2 Carbon technology into Martac's M18 vessel, which would incorporate unmanned, artificial intelligence, and drone technology. Fisher, on behalf of Fly Boatworks, submitted a proposal to Martac in December 2024; projected profits from the partnership were estimated at $23 million annually.

The Gilks allege that once the M18 design was finalized, the Individual Defendants secretly formed Axocon Polymers, LLC (formerly Trident Polymers, LLC) and began negotiating with Martac on Axocon's behalf, cutting Fly Boatworks out entirely. The Gilks further allege that Fisher created another entity, Marine Aerospace Composites LLC ("MASC"), to secure a Martac manufacturing contract; that Fisher filed a patent application on behalf of Axocon naming himself, Galt, and Baker as inventors and incorporating the Gilks' innovations; and that the defendants coordinated to remove Fly Boatworks' branding from the Martac agreement. The Gilks also allege that the Individual Defendants attempted to force Fly Boatworks into dissolution by calling a member loan due, and that Fisher continued to request engineering services from the Gilks even while working with Martac on Axocon's behalf.

On May 20, 2025, the Gilks filed this action individually and derivatively on behalf of Fly Boatworks. On July 11, 2025, Judge Tunheim granted the Gilks' motion for a temporary restraining order (a court order blocking specified conduct while the case proceeds), preliminarily enjoining the defendants from misappropriating Fly Boatworks' trade secrets, entering into the Martac contract on Axocon's behalf, delivering prototypes, or sharing Fly Boatworks' designs without consent. Gilk v. Fisher, 2025 WL 1920496 (D. Minn. July 11, 2025).

Claims Asserted

Plaintiffs brought eleven counts in the First Amended Complaint: - Count 1: Misappropriation of trade secrets (federal Defend Trade Secrets Act, 18 U.S.C. § 1836 ("DTSA"), and Minnesota Uniform Trade Secrets Act, Minn. Stat. § 325C.01 ("MUTSA")) - Count 2: Breach of contract - Count 3: Breach of fiduciary duties - Count 4: Breach of the covenant of good faith and fair dealing - Count 5: Civil conspiracy - Count 6: Conversion/civil theft - Count 7: Unjust enrichment - Count 8: Accounting - Count 9: Tortious interference with prospective economic advantage and contract - Count 10: Fraud - Count 11: Injunctive relief

Defendants' Motion to Dismiss — Grounds and Rulings

Rule 8 — "Shotgun Pleading" Argument: DENIED

Defendants argued the complaint was an impermissible "shotgun" or "kitchen-sink" 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, read as a whole, adequately described each defendant's specific conduct. The complaint defined distinct groups ("Defendants" meaning all four; "Individual Defendants" meaning Fisher, Galt, and Baker) and attributed specific acts to specific individuals. The court also rejected the argument that incorporating earlier factual allegations by reference into each count created a pleading defect, noting each count still sufficiently stated its own basis for relief.

Rule 23.1 — Derivative Action Requirements: DENIED

Rule 23.1 of the Federal Rules of Civil Procedure governs lawsuits filed by a member of a company on the company's behalf (called a "derivative action"). It requires the plaintiff to either make a pre-suit demand on the other owners or explain why such a demand would be futile. Under Minnesota law (Minn. Stat. § 322C.0902), a member of a limited liability company may file a derivative action if demand on co-owners would be futile.

The court found the Gilks adequately alleged futility: the Individual Defendants own 55.6% of Fly Boatworks and would not vote to sue themselves or their own company Axocon. The court noted this was reinforced by the Operating Agreement's unanimous-vote requirement, making it effectively impossible for the Gilks to obtain any other owner's consent to pursue these claims. The court denied Defendants' request for additional briefing on this issue.

Rule 9(b) — Heightened Fraud Pleading Standard: DENIED

Fraud claims must be pleaded with particularity — identifying the "who, what, where, when, and how" of the alleged fraud. The court found the complaint met this standard when read as a whole. The complaint identified specific dates of allegedly fraudulent statements, named the individuals who made them, and described the circumstances. The court rejected Defendants' narrow focus on only the nine-paragraph fraud count in isolation.

Independent Duty Rule (Applicable to Tort Claims)

The independent duty rule under Minnesota law bars a tort claim when the tort is based solely on the same conduct as a contract breach, unless the defendant owed a duty independent of the contract. Defendants argued this rule barred six of the Gilks' tort claims.

The court found the rule did not bar any of the challenged claims at this stage: - Breach of Fiduciary Duty (Count 3): Not barred because the claim rests on statutory duties under Minn. Stat. § 322C.0409 (LLC member duties of loyalty and care) and common law, not solely on the Operating Agreement. - Civil Conspiracy (Count 5): Not barred because the underlying tort (e.g., tortious interference) survives and defendants failed to show the rule applied. - Conversion/Civil Theft (Count 6): Not barred by the independent duty rule (though ultimately dismissed on other grounds). - Unjust Enrichment (Count 7): Not a tort claim; the independent duty rule does not apply. The court also noted unjust enrichment necessarily assumes the absence of a valid contract. - Tortious Interference (Count 9) and Fraud (Count 10): Not barred because defendants owed fiduciary duties arising independently of any contract.

MUTSA Displacement Analysis

MUTSA (the Minnesota trade secret statute) displaces — meaning it replaces and eliminates — conflicting tort and other civil claims based on misappropriation of a trade secret. However, MUTSA does not displace contractual remedies or claims with factual bases that go beyond mere trade secret theft.

The court analyzed each claim: - Breach of Contract (Count 2): Not displaced. MUTSA explicitly preserves contractual remedies, and the claim rests on conduct beyond trade secret misappropriation (usurping business opportunities, commingling property, 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; the remaining factual bases survive. - Breach of Good Faith and Fair Dealing (Count 4): Not displaced; grounded in the parties' contract. - Conversion/Civil Theft (Count 6): Displaced only to the extent based on trade secret theft, but dismissed entirely on separate grounds (see below). - Unjust Enrichment (Count 7): Displaced only to the extent based on trade secret misappropriation; the unjust enrichment count did not even reference trade secrets. - Tortious Interference (Count 9): Displaced only to the extent based on trade secret misappropriation; the broader allegations of business opportunity usurpation survive. - Fraud (Count 10): Displaced only to the extent based on trade secret misappropriation; the broader allegations about false profit-sharing representations and false statements about Martac negotiations survive.

Count 1 — Trade Secret Claims (DTSA and MUTSA): DENIED

To state a trade secret claim, plaintiffs must allege (1) the existence of a trade secret and (2) its misappropriation. Defendants challenged only the first element, arguing that plaintiffs failed to show reasonable steps to maintain secrecy and failed to distinguish their innovations from pre-existing technology.

On secrecy, the court found the Gilks plausibly alleged reasonable steps to maintain confidentiality. Disclosure to Martac did not destroy secrecy because it was made in confidence for the purpose of applying the trade secret to its intended use. Disclosure to industry expert Chris Morejohn also did not destroy secrecy because Morejohn explicitly stated in writing he would not share the information without permission. The court also noted that in a closely-held five-member company, reliance on fiduciary duties to preserve confidential information can be reasonable.

On description, the court found the complaint's four-innovation description in Paragraph 19, read with the rest of the complaint, was sufficient at the pleading stage. The court noted that requiring more detailed disclosure would paradoxically jeopardize the very trade secrets at issue, and that the exact contours of the trade secrets could be developed through discovery.

Count 6 — Conversion/Civil Theft: GRANTED (DISMISSED WITH PREJUDICE AS TO THIS COUNT)

Count 7 — Unjust Enrichment: DENIED (except as to trade secret portion)

Defendants argued this claim should be dismissed because an adequate legal remedy exists (breach of contract and trade secret claims). The court declined to dismiss, holding it was premature to do so where unjust enrichment is pleaded as an alternative theory. Federal Rule of Civil Procedure 8(d)(2) permits pleading alternative theories, and plaintiffs cannot be required to elect their remedy at the pleading stage. The unjust enrichment claim was trimmed only to remove the trade secret misappropriation component.

Counts 8 and 11 — Accounting and Injunctive Relief: GRANTED (as standalone claims)

The court agreed with defendants that accounting and injunctive relief are remedies, not independent causes of action. Both counts were dismissed as standalone claims. However, the court expressly stated that plaintiffs may pursue both remedies in connection with their surviving claims.

Damages for Tortious Interference (Count 9): Adequately Pled

Defendants argued the complaint failed to allege damages for tortious interference. The court disagreed, finding that Fisher's own estimates of $45.9 million in revenue and $23 million in profits annually from the Martac partnership, combined with the allegations that Fisher created MASC to cut Fly Boatworks out of that deal, sufficiently alleged damages at the pleading stage.

Summary of Rulings