Gary Van Zeeland Talent, Inc. v. Sandas, 76-029

• Decision Date: 30 June 1978
• Docket Number: No. 76-029,76-029
• Citation: 84 Wis.2d 202,267 N.W.2d 242
• Parties: GARY VAN ZEELAND TALENT, INC., Appellant, v. Edwin J. SANDAS, Respondent.
• Court: Wisconsin Supreme Court

Page 242

267 N.W.2d 242

84 Wis.2d 202

GARY VAN ZEELAND TALENT, INC., Appellant, v. Edwin J. SANDAS, Respondent.

No. 76-029.

Supreme Court of Wisconsin.

Submitted on Briefs May 3, 1978.

Decided June 30, 1978.

Andrew O. Riteris, K. Thor Lundgren, and Michael, Best & Friedrich, Milwaukee, on brief, for appellant; Irving G. Curry III, McCarty, Curry, Wydeven Peeters & Riester, Kaukauna, of counsel.

Thomas J. Janssen and Sigman, Shiff, Janssen & Zoesch, Appleton, on brief for respondent.

HEFFERNAN, Justice.

The appeal is from a summary judgment which dismissed the complaint of Gary Van Zeeland Talent, Inc., against its former employee, Edwin J. Sandas. Van Zeeland is a talent booking agency. Its principal business is placing musical groups in nightclubs and other places of entertainment.

Sandas, who had no previous experience in talent agency work, became an employee of Van Zeeland in 1972. Van Zeeland trained him in the methods of working with musical groups and clubs and the importance of matching musical talent to the needs of a club. Sandas was, however, a former band musician, and he was familiar with the procedures of booking bands through agents.

Sandas left the employment of Van Zeeland in 1975. Prior to the time he did so, he made copies of his employer's club or "customer" list. He admitted that he took the list because he was planning to start his own business in competition with Van Zeeland Talent, Inc. Shortly after termination of his employment, he commenced his own talent agency.

Van Zeeland commenced an action alleging that Sandas, through the use of the "private, secret and confidential customer lists, compilations and information . . . interfered with plaintiff's business . . . and has continuously solicited, invited and urged plaintiff's customers to cease doing business with the plaintiff and to become his customers . . . ."

The complaint demanded that the defendant surrender the customer list, account for any business and profits that he had derived from transactions with the customers on the plaintiff's customer list, and be restrained from any future disclosure of the list or information. The plaintiff also asks for an order enjoining any future solicitation of plaintiff's customers and for damages as the result of Sandas' use of the customer list.

The essential cause of action asserted by Van Zeeland is for the theft of a trade secret. It is argued that the customer list was a trade secret.

Following the answer denying the principal allegations of the complaint, Sandas moved for summary judgment and accompanied that motion with an affidavit which averred that the information in the customer list was obtainable from telephone directories, trade publications, newspaper advertisements, musician unions' records, and brochures and publicly distributed lists prepared by the Van Zeeland agency, in essence showing facts that tended to demonstrate that the information in the list was readily obtainable and, hence, not a trade secret.

Although the record contains no pleadings in opposition to the motion for summary judgment and no counter-affidavits, the trial judge's opinion reflects the fact that the plaintiff did not contest the facts set forth in the defendant's affidavit in support of summary judgment, but rather took the position that, under those facts, summary judgment in favor of the defendant should be denied as a matter of law. There is also evidence in the record and also in the opinion of the trial judge that the parties accepted as a verity testimony contained in various pre-trial depositions. In effect, then, the motion for summary judgment was decided as a matter of law on an agreed set of facts. Neither of the parties contend that any disputed facts need to be resolved by trial.

The trial judge ordered summary judgment for the defendant after concluding that the customer list did not constitute a trade secret. He also held that the portion of the complaint which, arguably at least, could be construed to state a cause of action for the misappropriation of the time and effort of Van Zeeland in preparing the customer list must also fail, because only a "trade secret" could be misappropriated.

Van Zeeland has appealed from the judgment dismissing its complaint, and on this appeal again asserts that the customer list was a trade secret. Alternatively, if it is not a trade secret, it argues the misappropriation of its time and effort by the taking of the customer list.

We conclude that, under the undisputed facts relied upon by the trial court, summary judgment was appropriately granted as a matter of law. We affirm.

We conclude that the customer list was not a trade secret. The list which Sandas took was prepared for the sole purpose of assuring that Christmas cards were sent to all Van Zeeland's customers. Because it did not contain street addresses, it was not used for actual mailing purposes, but only for the purpose of determining that Christmas cards had been sent to the customers on the list. It contained no street addresses, no telephone numbers, no business information in respect to the type of music preferred by the customer, no names of managers or owners, and no other information of any kind other than the club name, the city, and the state.

Van Zeeland kept far more extensive information about its customers than was contained in the list taken by Sandas. It kept billing records, the names of bands placed with various clubs, the dates of engagements, the individuals with whom the placements were made, the club name, the prices, the commissions, and credit information.

The defendant's affidavit in support of the motion for summary judgment established that it would be possible to compile or prepare a list like the one taken by Sandas from other sources. It was equally undisputed that it would take time and effort to prepare such a list.

Van Zeeland acknowledged that it would be relatively simple to prepare a customer list the names of the clubs in comparison to the more difficult task of matching appropriate talent with those clubs. There is no assertion that any list which matched bands with customers was taken. Van Zeeland admitted that a list of customers without detailed information about club preferences would be relatively useless.

Immediately after Sandas left Van Zeeland, he commenced a competing talent agency business. It is undisputed that, during the second month following the commencement of his own businesses, 80 percent of the telephone calls made by Sandas in placing bands were to clubs listed on the document taken from Van Zeeland.

Additionally, it is undisputed that, at the time that Sandas joined Van Zeeland, he signed an employment agreement which, among other provisions, contained the following:

"7. Disclosure of information. The Employee recognizes and acknowledges that the list of the Employer's customers, as it may exist from time to time, is a valuable, special, and unique asset of the Employer's business. The Employee will not, during or after the term of his employment, disclose the list of the Employer's customers or any part thereof to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever. In the event of a breach or threatened breach by the Employee of the provisions of this paragraph, the Employer shall be entitled to an injunction restraining the Employee from disclosing, in whole or in part, the list of the Employer's customers, or from rendering any services to any person, firm, corporation, association, or other entity to whom such list, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein shall be construed as prohibiting the Employer from pursuing any other remedies available to the Employer for such breach or threatened breach, including the recovery of damages from the Employee."

Under these undisputed facts, then, the initial question is whether the customer list taken by Sandas was a trade secret entitled to legal protection.

Customer lists, in some circumstances, may be protected as trade secrets. Restatement of Torts, sec. 757, comment b at 5 (1939), defines a trade secret:

"A trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it."

The comment goes on to state that a trade secret generally relates to the production of goods, such as a machine or a formula for the production of an article. A trade secret is not always so restricted; and, as the comment states, it may include "a list of specialized customers."

It is apparent, therefore, that a customer list per se does not fall squarely within the category of trade secrets. It is impossible to say generically that all customer lists are so protected. Rather, it is apparent that the general rule is that customer lists are not protected, and it is in the unusual case that such lists will be afforded the status of a trade secret. The difficulty in making this determination is capsulized in Alexander, Commercial Torts, sec. 3.4, p. 216 (1973), when he states:

"Perhaps more than any other area of trade-secret law, customer lists present problems of extreme commercial importance and of a close balancing of the interest of the employer and employee."

The balancing of interests is dependent, to a large degree, upon the philosophical approach of a court to the concept of restraint of trade. The enforcement of a concept that one may not use trade secrets can only be justified as an unusual exception to the common law policy against restraint of trade.

It is apparent that what Van Zeeland seeks in this action is the restraint of competition, and it seeks to prevent Sandas from offering similar services to customers on the list which have previously been afforded musical booking services by Van Zeeland. The question...