American Shippers Supply Co. v. Campbell, 2-883A274

• Decision Date: 07 December 1983
• Docket Number: No. 2-883A274,2-883A274
• Citation: 456 N.E.2d 1040
• Parties: AMERICAN SHIPPERS SUPPLY COMPANY, Plaintiff-Appellant, v. James CAMPBELL, Glenn Campbell, Bert Fazli and Indy Office and Shipping Supplies, Inc., Defendants-Appellees.
• Court: Indiana Appellate Court

Page 1040

456 N.E.2d 1040

AMERICAN SHIPPERS SUPPLY COMPANY, Plaintiff-Appellant, v. James CAMPBELL, Glenn Campbell, Bert Fazli and Indy Office and Shipping Supplies, Inc., Defendants-Appellees.

No. 2-883A274.

Court of Appeals of Indiana Second District.

Dec. 7, 1983.

Jerry Williams, John E. Taylor, Williams & Shoup, Indianapolis, for plaintiff-appellant.

Thomas Michael Quinn, Jr., John M. Moses, Clark, Clark, Pappas & Quinn, Timothy E. Hollingsworth, Indianapolis, for defendants-appellees.

ROBERTSON, Presiding Judge (Writing by Designation).

American Shippers Supply Co. (American Shippers) appeals the trial court's denial of its complaint for a preliminary and permanent injunction as well as money damages against two former employees, James and Glenn Campbell (Campbells). American Shippers alleges the trial court erred by not enforcing its covenant not to compete executed by the Campbells.

We affirm.

American Shippers is an Ohio corporation authorized to do business in Indiana. It has Ohio sales offices in Cincinnati, Columbus, and Dayton. Its only office in Indiana is located in Indianapolis. American Shippers engages in the sale of shipping room supplies and equipment. The business is highly competitive with approximately ten to twenty competitors in the Indianapolis market. The articles which it sells are not unique and approximately 90% of its business consists of repeat orders from established customers.

James Campbell began working for American Shippers in February, 1977, in the Cincinnati office as a tape specialist. Glenn Campbell also began working for it in 1977. On December 22, 1977, the Campbells executed ten year employment contracts with American Shippers which contained the following paragraphs:

(IX) NONDISCLOSURE OF INFORMATION CONCERNING BUSINESS

(a) Employee further specifically agrees that he will not at any time, in any fashion, form or manner, either directly or indirectly, divulge disclose or communicate to any person, firm or corporation in any manner whatsoever any information of any kind, nature or description concerning any matters affecting or relating to the business of Employer, including, without limiting the generality of the foregoing, the namrs [sic] of any of its customers, the prices it obtains or has obtained or at which it sells or has sold its products, or any other information of, about, ot [sic] concerning the business of Employer, its manner of operation, its plans, processes, or other date of any kind, nature, or description without regard to whether any or all of the foregoing matters would be deemed confidential, material or important, material and confidential and gravely affect the effective and successful conduct of the business of the Employer, and its goodwill, and that any breach of the terms of this paragraph is a material breach hereof.

(b) Employee agrees that he will not for a period of one (1) year after the termination of his employment by Employer with cause, or one (1) year after his own termination of his employment, and within the radius of sixty (60) miles of where Employee's had his place of business or center of operation in Indianapolis, Indiana, compete with said Employer in any fashion, form or manner, either directly or indirectly, including, without limiting the generality of the foregoing; selling of packaging and shipping supplies and equipment or act as principal, agent, employee, employer, stockholder, co-partner or in any other individual representative capacity, or engage in a like business, or solicit, serve, or cater to, or engage, assist, be interested in, or connected with any other person, firm or corporation so engaging with, or soliciting the customers served by him or any other employee of American Shippers Supply Company, or any of its branches, during his employment with the company. Any breach of the terms of this paragraph is a material breach hereof.

The Campbells were paid a base salary in addition to commissions with their sales. American Shippers opened its Indianapolis office in 1977 and the Campbells were transferred to it. The Campbells were responsible for soliciting sales for shipping room supplies and equipment throughout Indiana.

The Campbells offered to buy the Indianapolis operations of American Shippers in either October or November, 1982, but their offer was rejected. The Campbells mailed their resignations to American Shippers's headquarters in Cincinnati on April 1, 1983. The Campbells proposed April 15 as the date of their resignation. They met with Bruce Hummel, the president of American Shippers, on April 6, 1983, and he accepted their resignations effective on that date. Since April 6, 1983, the Campbells have been employed by Indy Office and Shipping Supplies, Inc., a competitor of American Shippers.

American Shippers offered proof that the Campbells may have misappropriated information contained on customer file cards. It also introduced evidence establishing the Campbells had contacted former customers of American Shippers indicating that they were now employed by Indy Office and were willing to serve them.

The trial court concluded that the names and addresses of American Shippers's customers could have been found in the telephone book, but the customer contact was not listed there. It also found that American Shippers had approximately 1350 customers during the time in question. The trial court reasoned that in determining whether a restraining order is necessary to protect an employer's business, it first must be found that the employer has a legitimate interest to protect. It concluded that American Shippers failed to prove that its customers' lists had attained the status of trade secrets or confidential information. The trial court also held that American Shippers failed to establish any special facts that gave the Campbells any competitive advantage, and therefore, denied American Shippers's request for an injunction.

American Shippers raises six issues upon appeal which have been consolidated into two issues pursuant to Ind.Rules of Procedure, Appellate Rule 8.3(A)(7). It argues that the trial court erred in concluding that it did not have a legitimate interest to protect by the covenants not to compete with the Campbells. American Shippers also argues that the covenants not to compete were reasonable.

It must be noted that American Shippers is appealing from a negative judgment. In reviewing a negative finding against the plaintiff, the judgment may be set aside only if the evidence is uncontroverted and will support no reasonable inference in favor of the finding. Chaney v. Tingley, (1977) 174 Ind.App. 191, 366 N.E.2d 707. It is with this standard that we analyze the law regarding covenants not to compete.

Covenants not to compete are in restraint of trade and are not favored by the law. They will be enforced only if they are reasonable with respect to the covenantee, the covenantor, and the public interests. The determination of reasonableness is made upon the basis of the facts and circumstances of each case. Licocci v. Cardinal Associates, Inc., (1983) Ind., 445 N.E.2d 556. In Slisz v. Munzenreider Corp., (1980) Ind.App., 411 N.E.2d 700, the...