FRIEMUTH v. FISKARS BRANDS, INC.

• Decision Date: 03 February 2010
• Docket Number: No. 09-cv-494-vis.,09-cv-494-vis.
• Citation: 681 F. Supp.2d 985
• Parties: William G. FRIEMUTH, Plaintiff, v. FISKARS BRANDS, INC., Defendant.
• Court: U.S. District Court — Western District of Wisconsin

681 F. Supp.2d 985

William G. FRIEMUTH, Plaintiff, v. FISKARS BRANDS, INC., Defendant.

No. 09-cv-494-vis.¹

United States District Court, W.D. Wisconsin.

February 3, 2010.

Randall B. Gold, Fox & Fox, S.C., Monona, WI, Clayton Kawski, Farrah N.W. Rifelj, John Scheller, Michael Best & Friedrich LLP, Madison, WI, for Plaintiff.

Bernard J. Bobber, Carmen N. Couden, Jason N.W. Plowman, Foley & Lardner LLP, Milwaukee, WI, Kevin Keegan, Fiskars Brands, Inc., Madison, WI, for Defendant.

OPINION and ORDER

BARBARA B. CRABB, District Judge.

Plaintiff William G. Friemuth filed this civil action against defendant Fiskars Brands, asserting claims arising under the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. § 621-634, and the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, 1132(a)(3)(ERISA). Defendant Fiskars Brands, Inc. has filed counterclaims for breach of contract, breach of duty of loyalty, conspiracy to injure another in trade or business and fraud.

Now before the court are plaintiff's motions to dismiss three of defendant's counterclaims and to amend his complaint to add a claim for retaliation. I will grant plaintiff's motion to dismiss the counterclaims. Defendant's breach of contract claim fails because there is no factual basis for inferring that plaintiff agreed to the terms of defendant's Conflict of Interest policy and the nondisclosure provisions of defendant's Employment Agreement and Patent Secrecy Agreement are unenforceable because they do not include a time limit as required under Wis. Stat. § 103.465. As for defendant's claims for conspiracy and fraud, defendant has failed to meet the pleading requirements for either claim. Because pleading deficiencies may be repaired, defendant may have until February 25, 2010 in which to file an amended answer and counterclaims addressing the problems discussed below.

I will deny plaintiff's motion to amend. I am not persuaded that "justice requires" allowing this amendment, particularly in light of (a) the remedies already available in the present suit; (b) the inefficiency of bringing a retaliation claim in the context of the allegedly retaliatory suit; and (c) the fact that the allegations supporting the claim for retaliation fail to satisfy Fed. R.Civ.P. 8.

OPINION

A. Motion to Dismiss Counterclaims

1. Count I: breach of contract

Defendant contends that plaintiff breached both a conflict of interest provision in its Conflict of Interest policy and two nondisclosure agreements in its Employment Agreement and its Patent Secrecy Agreement.

a. Conflict of interest provision

Plaintiff contends that defendant's claim for breach of the terms of defendant's Conflict of Interest policy must be dismissed because there is no basis for inferring that plaintiff ever agreed to the terms of the policy. Defendant has not responded to that argument, which operates as waiver. Wojtas v. Capital Guardian Trust Co., 477 F.3d 924, 926 (7th Cir. 2007). Therefore, I will grant plaintiff's motion to dismiss with respect to defendant's claim that plaintiff breached defendant's Conflict of Interest policy.

b. Nondisclosure agreement

Defendant contends that plaintiff breached provisions in defendant's Employment Agreement and Patent Secrecy Agreement prohibiting plaintiff from disclosing certain confidential and business information of defendant. Plaintiff contends that these nondisclosure provisions are unenforceable under Wis. Stat. § 103.465, which makes "illegal, void and unenforceable" any provision in an employment contract that constitutes an unreasonable restraint on trade.

The first question is whether the nondisclosure agreements would be considered a restraint on trade at all under § 103.465. The agreements at issue prohibit disclosure of "information ... relating to the design, manufacturing processing of defendant's products ..., the distribution and marketing of defendant's products,... the pricing, credit and general sales policies of defendant, ... any trade secrets... and any other information pertinent to the products or operations of Fiskars" and disclosure and use of "any secret or confidential information, drawings, specifications, processes, computer programs, or other trade secrets or business confidences" of defendant's.

By its terms, § 103.465 is silent as to nondisclosure agreements; it places limitations only on "covenants ... not to compete." However, as the Wisconsin Supreme Court has explained, what matters is whether a provision "seeks to restrain competition." Tatge v. Chambers & Owen, Inc., 219 Wis.2d 99, ¶¶ 28-29, 579 N.W.2d 217 (1998) (citing Gary Van Zeeland Talent, Inc. v. Sandas, 84 Wis.2d 202, 218, 267 N.W.2d 242, 250 (1978)). In Tatge and Gary Van Zeeland, the court applied § 103.465 to nondisclosure provisions. Tatge, 219 Wis.2d 99, ¶¶ 28-29, 579 N.W.2d 217 (provision prohibiting disclosure of customer data, programs and business practices); Gary Van Zeeland, 84 Wis.2d at 218, 267 N.W.2d at 250 (disclosure of customer list).

Defendant suggests that the nondisclosure agreements at issue in this case are not covered by § 103.465, citing Genzyme Corp. v. Bishop, 460 F.Supp.2d 939 (W.D.Wis.2006), in which Judge Shabaz concluded that the court could not determine as a matter of law whether a nondisclosure provision was subject to § 103.465 because the determination required a "showing as to how such a provision affects the individual defendants' mobility." Following Tatge, however, it is difficult to see how any nondisclosure agreement could be viewed as falling outside § 103.465. In Tatge, the court relied on the terms of the nondisclosure provision alone to reach its conclusion, which simply prohibited disclosure of the company's "information to any person, firm, corporation, association, or other entity for any reason or purpose whatever." Tatge, 219 Wis.2d 99, ¶¶ 28, 579 N.W.2d 217 (noting that provision contained "virtually the same language as" nondisclosure agreement in Van Zeeland). The court concluded that the nondisclosure provision represented the employer's attempt to "shield its customer data, programs, and business practices from competitors' eyes" which the employer believed was "of substantial value." Tatge, 219 Wis.2d 99, ¶¶ 28-29, 579 N.W.2d 217. According to the court in Tatge, "this is the essence of a trade restraint." Id., ¶ 29.

As in Tatge, the nondisclosure agreement in this case represents defendant's attempt to shield its valuable information from competitors. The agreements block disclosure of information related to the details of defendant's products, processes and business strategy. One of the nondisclosure agreements in this case goes even farther, blocking both disclosure and "use" of certain secret or confidential information. I am persuaded that defendant's Employment Agreement and Patent Secrecy Agreement are restraints of trade subject to § 103.465.

The next question is whether the nondisclosure provisions are "unreasonable" and therefore unenforceable under § 103.465, which provides that such a provision "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." Plaintiff contends that the nondisclosure provisions at issue in this case are unreasonable because neither provision has any time limitation. The Employment Agreement prohibits disclosure "during the term of this Agreement and following its termination" and the Patent Secrecy Agreement prevents "disclosure or use, either during or after said employment, of any secret or confidential information ..." of defendant's.

The Wisconsin Supreme Court has indicated that the lack of any time limitation renders a restrictive covenant unreasonable per se. Gary Van Zeeland, 84 Wis.2d at 218, 267 N.W.2d at 250 (noting that nondisclosure provision "constitutes an unreasonable restraint of trade" because it sets no limits on geographic area and time); Holsen v. Marshall & Ilsley Bank, 52 Wis.2d 281, 287, 190 N.W.2d 189 (1971) ("an entire absence of limitations as to time and place is fatal to a claim"); see also Nalco Chemical Co. v. Hydro Technologies, Inc., 984 F.2d 801, 803-04 (7th Cir.1993) (nondisclosure provision with no time limitation found void and unenforceable) (citing Gary Van Zeeland, 84 Wis.2d at 218, 267 N.W.2d at 250); Sysco Food Services of Eastern Wisconsin, LLC v. Ziccarelli, 445 F.Supp.2d 1039, 1052-53 (E.D.Wis.2006) (same).

Defendant contends that it is necessary to develop the factual record before deciding whether a restrictive covenant is enforceable under § 103.465 and points out that only one of the cases plaintiff cites, Sysco, found a nondisclosure provision unenforceable before the record had been developed. But why does that matter? Even in the cases decided in the context of a motion for a preliminary injunction, Nalco, 984 F.2d at 803-04, or at summary judgment, Gary Van Zeeland, 84 Wis.2d at 218, 267 N.W.2d at 250, the courts declared the provision unreasonable on the lack of time limitation alone, never suggesting that other facts in the record influenced that decision. Moreover, the language of the statute supports the rationale that some time limit is always required under § 103.465. Rather than simply state that any restrictive covenant is lawful and enforceable so long as its restrictions are "reasonably necessary," the statute states that restrictive covenants "within a specified territory and during a specified time" are lawful and enforceable if their restrictions are reasonably necessary. The added language suggests that some time limitation is necessary, supporting the view that a restrictive covenant lacking any time limitation is per se unreasonable. Holsen, 52 Wis.2d at 287, 190 N.W.2d at 192 ("The statutory reference to covenants not to compete `within a specified territory and during a specified time' ... does more than describe a...