Brunswick Corp. v. Jones

• Decision Date: 24 February 1986
• Docket Number: No. 85-2980,85-2980
• Parties: BRUNSWICK CORPORATION, Plaintiff-Appellee, v. David D. JONES, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 271

784 F.2d 271

54 USLW 2493

BRUNSWICK CORPORATION, Plaintiff-Appellee, v. David D. JONES, Jr., Defendant-Appellant.

No. 85-2980.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 13, 1986.

Decided Feb. 24, 1986. ^*

Joseph D. McDevitt, Borgelt, Powell, Peterson & Frauen, S.C., Milwaukee, Wis., for defendant-appellant.

Thomas L. Shriner, Jr., Foley & Lardner, Milwaukee, Wis., for plaintiff-appellee.

Before CUMMINGS, Chief Judge, RIPPLE, Circuit Judge, and ESCHBACH, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

Brunswick Corporation ("Brunswick") brought this diversity action, governed by Wisconsin law, against David D. Jones, Jr., seeking preliminary and permanent injunctions to enforce a covenant not to compete, and damages for losses allegedly incurred by Brunswick as a result of Jones's use of its confidential information. Jones appeals from a preliminary injunction that precludes him from working for U.S. Marine Corporation ("U.S. Marine") until May 31, 1986. He argues only that Brunswick did not demonstrate a substantial likelihood of success on the merits. For the reasons stated below, we will affirm.

I

Jones worked for Mercury Marine, one of Brunswick's eight divisions, from September 1975 through November 1984. Mercury Marine leads the boating industry in the stern-drive propulsion market in both sales and expenditures for research and development of new products.

Jones initially served as Director of Product Management for Mercury Marine's MerCruiser division, which carried a stern-drive product line. After a corporate reorganization, he assumed the title of Director of Product--MerCruiser. In this capacity, he had access to projects for new products in all of Mercury Marine's product lines. In particular, he was involved in the development of Mercury Marine's jet drive and was one of the leading proponents of developing a new stern drive.

While at Mercury Marine, Jones chaired a task force that was responsible for Mercury Marine's marketing strategy for all of its product lines. As task force chairman, he acquired confidential information concerning Mercury Marine's financial performance and projections, and marketing strategies. He attended strategic planning sessions at Mercabo, Florida in 1983 and 1984. In June 1984, he was a co-leader for the preparation of a three-year plan for Mercury Marine's product lines from 1985 to 1987.

As part of his employment contract with Brunswick, Jones signed a covenant not to compete, which provided in pertinent part that:

During the term of my employment with Brunswick and for a period immediately after termination of said employment equal to the number of months my employment shall have continued (but not less than six nor more than eighteen months after such termination), I will not directly or indirectly accept employment with or render services on behalf of a competitor of Brunswick, or any other third party in any capacity where the confidential information of Brunswick acquired by me during my employment with Brunswick would reasonably be considered to be useful to the competitor or to such other third party to become a competitor based in whole or in part on such information.

Jones resigned from Mercury Marine as of November 30, 1984, and accepted employment with the Homelite Division of Textron Corporation as Vice President of Engineering. He worked for Textron from December 1984 through May 1985. In June 1985, however, he started employment as General Manager of U.S. Marine.

U.S. Marine manufactures outboard motors. It sells them to Bayliner Marine Corporation ("Bayliner"), an affiliated corporation that builds boats; other boat manufacturers, and Montgomery Ward. U.S. Marine has over 1,000 dealers that sell and service its products. It competes with Mercury Marine in the outboard-motor market. U.S. Marine also is developing a stern-drive unit, scheduled for marketing in the fall of 1986, that will compete with Mercury Marine's stern-drive systems. During his first months with U.S. Marine, Jones participated in the development of U.S. Marine's long-term marketing approach, and its three-year products plan for outboard motors, stern-drive motors, and engine accessories. He also reviewed test reports and production schedules for U.S. Marine's stern-drive project.

On August 23, 1985, Brunswick, having learned that Jones was working for U.S. Marine, initiated this lawsuit. On October 31, 1985, the district court preliminarily enjoined Jones "from accepting or continuing direct or indirect employment with, or rendering services on behalf of, U.S. Marine Corporation or Bayliner Marine Corporation, or any other competitor of the Mercury Marine Division ... of Brunswick Corporation to whom the confidential information of Mercury Marine acquired by him during his employment by Mercury Marine would reasonably be considered to be useful" until May 31, 1986. It further enjoined Jones "from divulging to anyone or making use of information acquired by him during his employment by Mercury Marine relative to any of Mercury Marine's ... confidential information."

II

Brunswick bears the burden of establishing the five elements necessary for the issuance of a preliminary injunction: (1) that it has no adequate remedy at law; (2) that it will suffer irreparable harm if the preliminary injunction is not issued; (3) that the irreparable harm it will suffer if the preliminary injunction is not granted is greater than the irreparable harm the defendant will suffer if the injunction is granted; (4) that it has a reasonable likelihood of prevailing on the merits; and (5) that the injunction will not harm the public interest. See Lawson Products, Inc. v. Avnet, Inc., 782 F.2d 1429, 1432 (7th Cir.1986); Roland Machinery Co. v. Dresser Industries, 749 F.2d 380, 382-88 (7th Cir.1984). ¹ The district court found that Brunswick had satisfied each factor, and granted the injunction. On appeal, Jones challenges only the district court's finding that Brunswick has a reasonable likelihood of prevailing on the merits. ²

Although the plaintiff must demonstrate some probability of success on the merits, "the threshold is low. It is enough that 'the plaintiff's chances are better than negligible....' " Id. at 387 (quoting Omega Satellite Products Co. v. City of Indianapolis, 694 F.2d 119, 123 (7th Cir.1982)). As we observed in Roland Machinery, 749 F.2d at 387-88, the degree of likelihood of prevailing on the merits that the plaintiff must demonstrate decreases the more heavily the balance of harms weighs in its favor.

In this case, the balance of irreparable harms weighs heavily in Brunswick's favor. Jones possesses confidential information concerning Brunswick's engineering failures and successes, financial performance and projections, and marketing plans. Access to such information could enable a competitor to cut the time and costs required to develop a new product by avoiding engineering blind alleys. It would permit a competitor to preempt Brunswick's new products before they reached the market. It would allow a competitor to determine how aggressively it should price its products. For these reasons, the district court concluded that Jones's employment with U.S. Marine likely would cause Brunswick irreparable losses.

With respect to Jones, the preliminary injunction would bar him from working for U.S. Marine or another competitor to whom Brunswick's confidential information would be useful until May 31, 1986. Jones, however, is very employable, as his resume and his position with Textron Corporation demonstrate. Brunswick also posted bond in the amount of $200,000 in the event the preliminary injunction was issued erroneously. Thus, it is unlikely that the preliminary injunction will cause Jones irreparable harm. Because the balance of irreparable harms weighs heavily in Brunswick's favor, Brunswick need establish only a modest likelihood of success on the merits. See Roland Machinery, 749 F.2d at 387.

Wisconsin law governs the merits of this diversity action. ³ Wis.Stat. Sec. 103.465 provides:

A covenant by an assistant, servant or agent not to compete with his employer or principal during the term of the employment or agency, or thereafter, within a specified territory and during a specified time is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any such restrictive covenant imposing an unreasonable restraint is illegal, void and unenforceable even as to so much of the covenant or performance as would be a reasonable restraint.

Jones does not challenge the duration or the geographic scope of the covenant. He argues only that it is overbroad, and, therefore, not reasonably necessary to protect Brunswick.

Again, the covenant not to compete prohibits employment with "a competitor of Brunswick, or any other third party in any capacity where the confidential information of Brunswick acquired by ... [Jones] during ... [his] employment with Brunswick would reasonably be considered to be useful to the competitor or to such other third party to become a competitor based in whole or in part on such information." Jones notes that the phrase "a competitor of Brunswick" is followed by a comma, which is "a mark of separation within the sentence generally indicating a slight pause," Webster's Third New International Dictionary 455 (1976), and the word "or," which is a "disjunctive particle used to express an alternative," Black's Law Dictionary 987 (5th ed.1979). From this reading, he argues that the qualifier "where the confidential information acquired by ... [Jones] during ... [his] employment with Brunswick would reasonably be considered to be useful" applies only to "any other third party," and not to "a competitor of Brunswick." He asserts, therefore, that the covenant bars "employment either with 'a competitor of Brunswick' or with 'any other third party in...