LSBZ Inc. v. Brokis

• Decision Date: 17 November 1992
• Docket Number: No. 2-92-0310,2-92-0310
• Citation: LSBZ Inc. v. Brokis, 237 Ill.App.3d 415, 603 N.E.2d 1240, 177 Ill.Dec. 866 (Ill. App. 1992)
• Parties: , 177 Ill.Dec. 866 LSBZ INC., d/b/a Za Zu Designs and Sam Segretto, Plaintiffs-Appellees, v. Susan BROKIS, Defendant-Appellant.
• Court: Appellate Court of Illinois

Page 1240

603 N.E.2d 1240

237 Ill.App.3d 415, 177 Ill.Dec. 866

LSBZ INC., d/b/a Za Zu Designs and Sam Segretto, Plaintiffs-Appellees, v.Susan BROKIS, Defendant-Appellant.

No. 2-92-0310.

Appellate Court of Illinois Second District.

Nov. 17, 1992.

Donald J. Parker, Donald J. Parker, Ltd., Downers Grove, for Susan Brokis.

Robert V. Borla, John C. North, Borla, North & Associates, Downers Grove, for LSBZ Inc. dba ZA ZU Designs and Sam Segretto.

Presiding Justice INGLISdelivered the opinion of the court:

Defendant, Susan Brokis(the stylist), appeals from the trial court's grant of a preliminary injunction (see 134 Ill.2d R. 307(a)(1)) in favor of her former employer, LSBZ, Inc., doing business as Za Zu Designs, a hairstyling salon, and Sam Segretto, co-owner with Raymond "Butch" Koubek of Za Zu (the salon).The preliminary injunction restrains the stylist from violating a covenant against post-employment competition with the salon.The stylist argues that the trial court's order must be reversed because (1) the salon failed to show that the noncompetition covenant protects any of its legitimate business interests; and (2) the salon failed to show a likelihood of success on the merits, as the covenant is an unenforceable adhesion contract.We reverse and remand.

The salon is located in Hinsdale, Illinois.The stylist began working for the salon in June 1986.She had no written contract with the salon until October 14, 1989, when she and Segretto, on behalf of the salon, signed an "Employment Agreement"(the agreement) providing, in relevant part, that "[a]fter termination of employment the Employee agrees not to be employed by any salon, firm or company or to engage in any competing business for himself/herself or others for a period of three (3) years from the date of termination within a ten (10) mile radius of the Employer's location at the time of termination."

On January 21, 1992, the salon filed a three-count complaint alleging the following.On or about December 31, 1991, the stylist, without giving the salon notice, terminated her employment with the salon.She was currently working as a hair stylist for the Caryl Richard Hair Salon(Caryl Richard) in Oak Brook, within 10 miles of the salon's Hinsdale shop.The salon never approved the stylist's job change.By violating the agreement, the stylist was unjustly depriving the salon of business.

Count I of the complaint alleged breach of contract.Count II alleged that the stylist's solicitation of the salon's customers was a tortious interference with the salon's contractual relationships.These two counts prayed for money damages.Count III alleged that the stylist's competition with the salon and her solicitation of the salon's customers were causing the salon irreparable injury for which it had no adequate remedy at law.Count III prayed for an injunction against the stylist's violation of the agreement.

The salon petitioned for a preliminary injunction to enforce the agreement pending a trial on the merits.The stylist filed written answers to both the complaint and the petition for a preliminary injunction.

On February 25 and 26, 1992, the court heard evidence on the petition.The salon called the stylist as an adverse witness.She acknowledged that, since January 3, 1992, she had been working for Caryl Richard, about five miles from the salon.The stylist never talked with Segretto or Koubek about how the agreement would affect her departure.She did give the salon notice that she was leaving on December 28, 1991.Before leaving, she told only a few clients, who were also close friends, of her move.

When the stylist left the salon, she had a full schedule of bookings for New Year's eve.Over the New Year's holiday, she called her clients, including those scheduled to see her on January 3, 1992, and told them of her new location.On her first day at Caryl Richard, the stylist was almost fully booked; probably all the clients she saw that day were ones who originally were scheduled to see her at the salon that day.

The stylist started her work for the salon after becoming a licensed cosmetologist and working at another salon in Chicago.She signed no employment agreements of any kind until the October 3, 1989, agreement.In accord with company policy, the stylist began as an apprentice; she received an hourly wage and was not allowed to work as a stylist with clients of her own until the salon promoted her in April 1987.Thereafter, the salon paid her the standard 44% commission.

The stylist brought no clients with her.Thus, her first client was someone who called the salon and whom the salon's management referred to her under its "random referral" policy.Management encouraged the stylist to build up a loyal clientele.Eventually, she built up her clientele to the point where she could afford an apartment and thus no longer needed to live with her parents.

The stylist customarily obtained new clients by word-of-mouth from established clients.Relatively few of her new clients were women who called the shop and were referred to her under management's referral policy.These referrals occurred mainly during the Christmas season.The stylist could not have made a living solely from the clients that management referred to her.The stylist also sought clients by passing out business cards at social occasions.She did not say how many, if any, new clients she obtained this way.As a rule, clients scheduled appointments by calling the shop's reception desk, but occasionally the stylist's clients would call her directly to set up an appointment.

The stylist explained that, in her experience in the hairstyling trade, the customer's loyalty is generally to the individual hairdresser, not to the shop.A woman will stay with a particular hairdresser as long as that hairdresser does satisfactory work.Generally, a client who is not a first-time customer asks the shop for an appointment with a specific hairdresser.The stylist had developed a group of loyal clients who regarded her as their hairdresser.She worked hard at maintaining personal friendships with her clients and regularly sent them Christmas cards.The stylist never had a general list of the salon's clients but kept an appointment book with her particular clients' names and phone numbers.

The stylist acknowledged that, when a client pays for services, the client makes the check out to the salon, which then distributes 44% of the proceeds to the individual hairdresser.The salon also pays for heat, rent and facilities and equipment other than the hairdresser's scissors.

Segretto and Koubek called a meeting of the salon's employees early in October 1989 and asked all their hairdressers to sign the agreement.The stylist did not remember if a copy of the agreement was available at the meeting.She did recall that Segretto and Koubek stated at the meeting that hairdressers who did not sign the agreement would not be considered loyal workers and would not get any new business directed their way.Segretto and Koubek did not promise any specific new benefit to hairdressers who did sign the agreement.However, the purpose of the agreement was to give signers preference over nonsigners in the referral of new clients.

The stylist explained that she signed the agreement because she felt under "duress"; if she did not sign, she would be out of favor with Segretto and Koubek and would be jeopardizing the clientele she was building.At the time she signed the agreement, the stylist had not considered working elsewhere.She acknowledged that, had she not signed the agreement, she could have switched employers or opened a new shop and taken all her customers with her.

Two of the hairdressers who worked for the salon at the time of the meeting did not sign the agreement.The salon did not fire either.One had since left the salon because, as a result of her not signing the agreement, management had stopped referring new clients to her.The other, Noreen Guy, was still working at the salon; Guy had long had the highest income of any hairdresser in the shop.

The stylist testified that she received random referrals at no greater rate after she signed the agreement than before.She acknowledged that her 1990 income was about $25,000, roughly a 20% increase over her 1989 income of about $20,500, but she attributed this increase to a normal growth in her business, not to management's directing extra first-time clients her way.

Shortly before she left the salon, the stylist had a "tearful conversation" with Segretto, explaining that she was going to work for Caryl Richard in violation of the agreement.Before leaving the salon, the stylist told a few close friends, who were also among her clients, that she would be changing employers.She also made a list of clients with whom she had appointments scheduled for January 3, 1992.After she quit the salon, she called these clients to tell them of her new location.She did not try to attract any of the salon's customers with whom she had not worked previously.The stylist never disparaged the salon.Clients who followed her to Caryl Richard did so by choice.

The stylist testified that, judging by the experiences of hairdressers who formerly worked for the salon, the majority of her clients would not patronize the salon if she left.However, most of her clients were housewives with small children and would not follow the stylist if they had to travel more than 10 miles.The stylist could not go on making her living as she had were she required to wait three years before working at a shop within 10 miles of the Hinsdale salon.

The salon next called Michael Gilberto, who had worked for the salon since 1980.Gilberto owned no share in the salon's Hinsdale shop, but he was a part owner of its Naperville location.

Gilberto recalled that the stylist attended at least part of the October 3, 1989, meeting where Segretto and Koubek told their ...