Lakeview Technology, Inc. v. Robinson

• Decision Date: 01 May 2006
• Docket Number: No. 05-4433.,05-4433.
• Citation: 446 F.3d 655
• Parties: LAKEVIEW TECHNOLOGY, INC., Plaintiff-Appellant, v. Eric ROBINSON, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 655

446 F.3d 655

LAKEVIEW TECHNOLOGY, INC., Plaintiff-Appellant, v. Eric ROBINSON, Defendant-Appellee.

No. 05-4433.

United States Court of Appeals, Seventh Circuit.

Argued April 3, 2006.

Decided May 1, 2006.

Arthur J. Howe (argued), Schopf & Weiss, Chicago, IL, for Plaintiff-Appellant.

Daniel F. Lanciloti (argued), Seyfarth & Shaw, Chicago, IL, for Defendant-Appellee.

Before EASTERBROOK, ROVNER, and WILLIAMS, Circuit Judges.

EASTERBROOK, Circuit Judge.

Eric Robinson was a vice president of sales of Lakeview Technology, a vendor of software that enables users to access their data during system outages. Late in 2004 Robinson entered negotiations with Vision Solutions, Inc., one of Lakeview's competitors; he did not inform Lakeview about this step, nor did he inform his employer when he accepted Vision's offer of employment. He told Lakeview that he would be leaving but lied about the reason. Asked point-blank about rumors that he was going to Vision, Robinson told Lakeview that he was doing no such thing and would instead pursue real-estate interests after his departure. By deceiving his employer, Robinson not only extended the duration of his salary but also obtained commercially valuable information that he could take with him. During April and May 2005, Lakeview made its selling plans for the 2005-06 sales year; Robinson took this information with him to Vision in the middle of May 2005. When Lakeview learned that it had been gulled, it filed this suit under the diversity jurisdiction.

Robinson had promised Lakeview, through his employment contract, that for a year following his departure he would not compete with it by soliciting any of Lakeview's customers with which he had contact or any prospective customer to which Lakeview had attempted to sell software during the preceding 24 months. He also promised to hold in confidence all of Lakeview's trade secrets, including its plans, pricing, and customer lists. Lakeview asked for an injunction to ensure that Robinson kept these promises. After Robinson told the district judge that he would limit his efforts to places in which Lakeview had not been promoting its software and would not solicit his old customers or let Vision in on any of Lakeview's secrets, the court denied Lakeview's motion for a preliminary injunction — without holding an evidentiary hearing to explore the question whether Robinson is telling the truth. Lakeview took an interlocutory appeal under 28 U.S.C. § 1292(a)(1). Discovery continues in the district court, and the district judge has yet to set a schedule for dispositive motions. So preliminary relief may be the only kind available for some time to come. The dispute is not moot: the limit on using trade secrets is of indefinite duration, and the limit on solicitation is extended if not complied with during the year provided by the contract.

The district court gave three reasons for denying relief: (1) The absence of proof that Robinson had solicited Lakeview's customers or disclosed its secrets; (2) Robinson's pledge not to do so in the future; and (3) the prospect of hefty damages if he should act otherwise. The first of these is inadequate as a matter of Illinois law, which controls here. That subject is covered in Hess Newmark Owens Wolf, Inc. v. Owens, 415 F.3d 630 (7th Cir.2005), and the discussion need not be repeated. Injunctions issue to curtail palpable risks of future injury; it is not essential to establish that the worst has come to pass.

The second reason is weak given Robinson's history of deceit. Whether an ex-employee who concedes telling lies that serve his financial interest is continuing to dissemble, as Lakeview contends, is a question that a court may not resolve against the employer without a hearing. See, e.g., Ty, Inc. v. GMA Accessories, Inc., 132 F.3d 1167, 1171 (7th Cir.1997); Medeco Security Locks, Inc. v. Swiderek, 680 F.2d 37, 39 (7th Cir.1981). Especially when his lawyer contends (as Robinson's does) that he is entitled to ignore his commitments, which at oral argument counsel called onerous. This implies a strong temptation to disregard the contractual promises coupled with a belief that doing so would be justified. The risk that action will follow cannot be called insubstantial.

The court's final reason fails to take account of the limits on Robinson's wealth. The judge wrote that, if Robinson fails to honor his contractual obligations, "the damage could be very large, given the nature of the industry involved and the length of the revenue-generating relationship with customers" but could be calculated,...