Armour & Co. v. United American Food Processors, Inc., 62084

• Court: United States Appellate Court of Illinois
• Writing for the Court: JOHNSON
• Citation: 345 N.E.2d 795,37 Ill.App.3d 132
• Parties: , 200 U.S.P.Q. 385 ARMOUR AND COMPANY, Plaintiff-Appellant, v. UNITED AMERICAN FOOD PROCESSORS, INC., et al., Defendants-Appellees.
• Docket Number: No. 62084,62084
• Decision Date: 10 March 1976

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345 N.E.2d 795 37 Ill.App.3d 132, 200 U.S.P.Q. 385 ARMOUR AND COMPANY, Plaintiff-Appellant,
v.
UNITED AMERICAN FOOD PROCESSORS, INC., et al., Defendants-Appellees. No. 62084. Appellate Court of Illinois, First District, Fourth Division. March 10, 1976.
Rehearing Denied April 29, 1976.

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[37 Ill.App.3d 133] Charles J. Merriam, Allen H. Gerstein, Michael F. Borun, Chicago (Merriam, Marshall, Shapiro & Klose, Chicago, of counsel), for plaintiff-appellant.

Rudnick, Wolfe, Snyderman & Foreman, Chicago (Lester D. Foreman, Stephen A. Landsman, Joseph W. Sheyka, Chicago, of counsel), for defendants-appellees.

JOHNSON, Presiding Justice.

This is an appeal from an order denying the issuance of a preliminary injunction against defendants for allegedly participating in certain unfair methods of competition against plaintiff and its business.

Plaintiff, Armour and Company, through its wholly-owned division Pfaelzer Brothers (Pfaelzer hereinafter), is engaged in the mail order sale and distribution of meat products. Defendant United American Food Processors, Inc. (United), through its Gourmet Fare division, is also engaged in the sale and distribution of meat products by mail. Two former employees of plaintiff, Charles E. Hersheway and Patricia A. Linderoth, were joined as individual defendants to the action. Hersheway was employed by Armour in September 1964 and assigned to Pfaelzer. He executed Armour's 'Employee Patent and Trade Secret Agreement' approximately 1 year later. When Hersheway terminated his employment in September 1974, he was general manager and chief operating officer of Pfaelzer. He subsequently commenced employment with defendant United as president of its Gourmet Fare division. Defendant Linderoth was employed by Armour in November 1970, and [37 Ill.App.3d 134] executed the patent and trade secret

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agreement at that time. When she resigned in August 1974, she was director of special marketing at Pfaelzer. Linderoth also obtained a position with United's Gourmet Fare division.

Armour's 'Employee Patent and Trade Secret Agreement' provides in pertinent part:

'* * * (T)hat as a result of his employment by ARMOUR he has in the past or may in the future develop, obtain or learn about trade secrets or confidential information which is the property of ARMOUR, and EMPLOYEE agrees to use his best efforts and the utmost diligence to guard and protect said trade secrets and confidential information, and EMPLOYEE agrees that he will not during or after the period of his employment by ARMOUR, use for himself or others, or divulge to others any of ARMOUR'S trade secrets or confidential information which he may develop, obtain or learn about during or as a result of his employment by ARMOUR, unless authorized to do so by ARMOUR in writing. EMPLOYEE further agrees that if his employment by ARMOUR is terminated for any reason, he will not take with him but will leave with ARMOUR all records and papers and all matter of whatever nature which bears ARMOUR'S secret or confidential information.'

The contract further recites that:

'* * * '(T)rade secrets' and 'confidential information' may include . . . lists of customers or any information of whatever nature which gives to ARMOUR an opportunity to obtain an advantage over its competitors who do not know or use it, but it is understood that said terms do not include knowledge, skills or information which is common to the trade or profession of EMPLOYEE.'

Shortly after Hersheway joined United, he began to compile a list of former Pfaelzer customers whom he intended to contact to solicit business for Gourmet Fare. He hired his former secretary, Mrs. Lynn Hynes, who had been responsible for compiling and maintaining Pfaelzer's 'preferred customer list.' She was requested to identify any Pfaelzer customers that she could remember. Names were suggested by Hersheway and Linderoth as well as Hynes in meetings held at Linderoth's home until their offices were ready. Hynes provided at least 60 to 80 nemas of Pfaelzer customers. A 'prime list' of prospective customers was finally developed which included 198 names which, by comparison, were identical with customers on Pfaelzer's preferred list.

On December 23, 1974, Armour filed suit against United, Hersheway [37 Ill.App.3d 135] and Linderoth. The complaint sought various types of relief: the immediate return of all materials and copies allegedly misappropriated from plaintiff by Hersheway and preliminary and permanent injunctions against defendants, their agents and employees 1) preventing any personal, telephone, mail or other contact with any person, directly or indirectly, through use of the misappropriated material; 2) requiring them to refrain from filling any orders acquired through use of misappropriated material and to turn over such orders and all inquiries concerning them to plaintiff; 3) preventing the distribution of brochures or other promotional materials likely to cause confusion of the public between the goods and services offered by plaintiff and those offered by defendant; and 4) preventing further acts of unfair competition. In addition, plaintiff sought an accounting for all gains, profits and advantages derived as a result of the unfair competitive acts, damages sustained, costs of litigation and attorneys fees.

The trial court conducted a hearing on plaintiff's motion for a preliminary injunction. During the course of the proceedings, plaintiff admitted that its motion was unduly broad and stated that no relief with regard to the alleged physical taking would

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be requested. Consequently, plaintiff limited the interlocutory relief sought to an injunction against the use or disclosure of confidential information as to trade secrets, particularly with respect to Pfaelzer customers. At the close of plaintiff's case, defendants moved for a finding in their favor. On May 27, 1975, the trial court granted defendants' motion and denied plaintiff's motion for a preliminary injunction.

The sole issue before this court is whether the trial judge erred in refusing to grant a preliminary injunction under the circumstances of this case. While the grant or denial of an interlocutory injunction rests in the sound discretion of the trial court, the decision is subject to appellate...