Mickey's Linen v. Fischer
| Decision Date | 08 September 2017 |
| Docket Number | Case No. 17 C 2154 |
| Parties | MICKEY'S LINEN Plaintiff, v. DONALD FISCHER, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiff Mickey's Linen ("Mickey's") brings this four-count action against its former employee, Defendant Donald Fischer, for breach of an employment agreement (Count I), misappropriation of trade secrets under the Defend Trade Secrets Act 18 U.S.C. § 1836, et seq. ("DTSA") and Illinois Trade Secrets Act, 765 ILCS 1065/1 et seq. ("ITSA") (Count's II and III), and breach of duty of loyalty (Count IV). (Doc. 24). Mickey's originally filed this action in March 2017 (Doc. 1), and then sought a temporary restraining order and preliminary injunction. (Doc. 5). The parties thereafter agreed to a standstill (obviating any need for a TRO) and expedited discovery (Docs. 19, 22), and consented to this Court's jurisdiction to rule on Mickey's motion for preliminary injunction. (Docs. 31-32). The Court held an evidentiary hearing on Mickey's preliminary injunction motion on June 7, 2017, after which the parties filed their respective briefs. (Docs. 42, 46, 48, 50-51). Having considered those briefs and the evidence presented at the June 7 hearing, for the reasons explained below, the Court now grants in part and denies in part Mickey's motion for preliminary injunction (Doc. 6). The parties are directed to submit a proposed injunction order consistent with this Opinion within ten days of its issuance.
Mickey's is in the business of leasing and laundering various linens (such as mats, table cloths, napkins, and similar products) for hospitality providers and food service establishments (such as restaurants, country clubs, banquet halls, and similar businesses). (Doc. 50, 6/7/2017 Preliminary Injunction Hearing Transcript ("Tr."), at 18-19). Mickey's also has a division known as "Medclean," which provides similar services to the retail medical industry, although its primary business is in the hospitality and food service area. (Tr. at 186, 210). One of Mickey's direct competitors in the hospitality and food service area is Fischer's new employer, Alsco, Inc. ("Alsco"). (Tr. at 19).
Among other locations, Mickey's has long had facilities in Chicago and Villa Park, Illinois and Milwaukee, Wisconsin. (Tr. at 109-10). In October 1997, Mickey's hired Fischer as a "route representative" (which Fischer described as a "delivery driver") in Mickey's Chicago facility, which then serviced its customers in Cook, Lake, and DuPage counties. (Tr. at 19-21). At the time of his hiring, Fischer signed an Employment Agreement which defined Mickey's "Business" for purposes of that agreement as "uniform and linen rentals, the sale of restroom supplies, paper products and similar items." (Doc. 54, at 11; see also Doc. 24-1 for a clearer copy). This agreement included, among other provisions, a Non-Competition provision (Paragraph No. 6), a Non-Solicitation of Customer and Prospects provision (Paragraph No. 7), and a Confidentiality provision (Paragraph No. 5). (Id. at 11-12). The Non-Competition provision prohibited Fischer from engaging in the same "Business" as Mickey's in the counties then serviced by Mickey's Chicago facility (Cook, Lake, and DuPage) for eighteen months after the termination of Fischer's employment, as follows:
NON-COMPETITION. For a period of eighteen months after the effective date of the termination of Employee's employment, Employee shall not, directly or indirectly, engage in any business, enterprise or employment located in the geographic areas designated below [Cook, Lake, and DuPage Counties], whether as owner, partner, officer, director, shareholder, independent contractor, consultant, employee, agent, advisor, investor or otherwise (collectively "Participant"), which directly or indirectly engages in the same or a similar business to the Business or any other activity in which the Company is engaged or which otherwise competes with the Company.
(Doc. 54, at 11, ¶ 6). The Non-Solicitation provision similarly recited an 18-month term:
NON-SOLICITATION OF CUSTOMERS AND PROSPECTS. For a period of eighteen months after the effective date of the termination of Employee's employment, Employee shall not, directly or indirectly, individually or as a Participant with any Person, solicit or accept business from any Customer or Prospect; for the purposes of this Employment-Agreement, a "Customer" is any Person for whom the Company provided any service within eighteen months prior to the effective date of the termination of Employee's employment with the Company, and a "Prospect" is any Person whom Employee contacted or solicited to do business with the Company within six months prior to the effective date of the termination of Employee's employment with the Company as evidenced by Employee's "diary", "call sheets" or sales activity reports.
(Id. at 12, ¶ 7). The Confidentiality provision, however, included no geographic or temporal limitation, providing in relevant part, as follows:
CONFIDENTIALITY. Except in the performance of Employee's employment duties, Employee shall not at any time, both while employed by the Company and thereafter, use or divulge to any Person any information received by Employee during the course of Employee's employment with regard to the Business, the Company's Customers, "Prospects" (hereinafter defined), employees and agents . . . (collectively the "Confidential Information"). Employee acknowledges that the Confidential Information is not generally available in the Company's industry or to the Company's competitors, are assets of the Company, has independent economic value to the Company and must be kept strictly confidential in order to preserve and enhance the Business and the Company's productivity, profitability and good will. . . .
In addition to the foregoing, Fischer's Employment Agreement also included a Severability provision, providing as follows:
SEVERABILITY. Whenever possible, each provision of this Employment Agreement shall be interpreted in such manner as to be valid and enforceable under applicable law, but if any provision of this Employment Agreement shall be held to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be deemed severed herefrom and such invalidity or unenforceability will not affect any other provision of this Employment Agreement, the balance of which will remain in and have its intended full force and effect; provided, however, if such invalid or unenforceable provision, including, without limitation, the geographic scope described in Section 6 or the time periods described in Sections 5, 6, 7 or 8, may be modified so as to be valid and enforceable as a matter of law, such provision will be deemed to have been modified so as to be valid and enforceable to the maximum extent permitted by law.
(Id. at 12, ¶ 13). Also relevant is the Employment Agreement's Remedies provision:
REMEDIES. Employee acknowledges and agrees that the Company's remedies at law may be inadequate to redress a default in the performance of Employee's employment duties or Employee's covenants, agreements or obligations contained in this Employment Agreement, and therefore, the Company shall be entitled to equitable relief, including, without limitation, temporary, preliminary and permanent injunctive relief, specific performance or other equitable remedies, in addition to any and all other remedies available to the Company pursuant to this Employment Agreement, at law or in equity. . . .
Fischer admitted at the June 7 hearing that his entry position as a route representative for Mickey's was "very customer-focused." (Tr. at 21). He was "the face of the company" to the customers he serviced and responsible for their contract renewals and any other issues they might have. (Id. at 21-22). In that role, Fischer had access to the contact information, contracts and expiration dates, and pricing for the customershe serviced. (Id. at 22-24). Fischer remained a route representative for about two years until 2000, when he was promoted to the position of route supervisor. (Id. at 24). In this position, Fischer was responsible for supervising three or four route representatives and coaching them to engage their customers for contract renewals, but spent the bulk of his time meeting with customers himself, addressing their issues, handling contract renewals, and selling Mickey's services. (Id. at 26-27).
By 2003, Fischer was promoted to District Manager, which was the next upward position within Mickey's Service Department. (Tr. 29, 178). As District Manager, Fischer was responsible for supervising both route representatives and route supervisors. (Id. at 27-30, 178). But again, Fischer spent the majority of his time as District Manager meeting with customers and addressing their issues, soliciting contract renewals, selling services to new and existing clients, and handling any other aspects of customer relationships. (Id. at 28-30). And again, Fischer had access to substantial customer information in this role, including the products and services they purchased and the pricing at which they did so, and their contract expiration dates. (Id.).
Fischer was next promoted to Service Manager for Mickey's entire Chicago facility in 2012 or 2013. (Tr. at 32-33). As Service Manager, Fischer was responsible for all functions of Mickey's Service Department, the focus of which was customer service, customer retention, and growing Mickey's customer base. (Id. at 32-37). Fischer was responsible for all route supervisors (two to four) and route representatives (about eighteen) in the Service Department and any significant customer service issues they...
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