Shamrock Chi. Corp. v. Wroblewski
| Decision Date | 31 December 2019 |
| Docket Number | No. 1-18-2354,1-18-2354 |
| Citation | 443 Ill.Dec. 652,2019 IL App (1st) 182354,162 N.E.3d 286 |
| Parties | SHAMROCK CHICAGO CORP., an Illinois Corporation, Plaintiff-Appellee, v. Steven M. WROBLEWSKI, David J. Wells, Christopher England, Donald Nowak, Skyline Industrial Corp., an Illinois Corporation, and Unknown Investors and Co-conspirators, Defendants (Skyline Industrial Corp., Defendant-Appellant). |
| Court | United States Appellate Court of Illinois |
William J. Didier, of Didier Law Office, LLC, of Chicago, for appellant.
Matthew M. Saffar and John S. Saletta, both of Palatine, for appellee.
¶ 1 Shamrock Chicago Corporation sells antifreeze, motor oil, and heat transfer fluids. After a failed negotiation to sell Shamrock to a small group of its employees, those employees, according to Shamrock's complaint, misappropriated and then destroyed large swaths of financial and client data from Shamrock's computers. Using that information, the then-former employees formed their own company, Skyline Industrial Corporation.
¶ 2 Shamrock sought ongoing disclosure of Skyline's bank statements and Quickbooks files. The trial court ordered Skyline to comply with Shamrock's request and appointed a facilitator in discovery to help enforce its order. Skyline, fearing interference with its new business if Shamrock became privy to its finances, refused to comply. The trial court found Skyline in "friendly contempt" and imposed a monetary penalty, vesting us with interlocutory jurisdiction. See Ill. S. Ct. R. 304(b)(5) (eff. Mar. 8, 2016).
¶ 3 Skyline argues that the ongoing production of its bank statements and Quickbooks files is overbroad and includes information irrelevant to Shamrock's claims. Skyline also disputes the propriety of appointing a facilitator in discovery to assist the trial court in the oversight of Skyline's discovery compliance. We find the information Shamrock requested both relevant and integral to proving its claims. We also find no impediment to the trial court's appointment of a facilitator in discovery under either the discovery rules or case law interpreting them. We affirm the discovery order, but since Skyline appealed in good faith, vacate the contempt order.
¶ 5 Shamrock has sold antifreeze, motor oil, and heat transfer fluids since 1974. John Dreamer, Sr. eventually became the sole shareholder. When John died, his wife, Annie Dreamer, became the sole shareholder. Annie, now incapacitated due to medical issues, is the sole beneficiary of a trust that holds all of Shamrock's stock.
¶ 6 At the time of the events giving rise to this litigation, Shamrock had five employees: John Dreamer, Jr., Les Kreifels, Steven Wroblewski (John Jr.'s nephew), David Wells, and Chris England. Wroblewski started working for Shamrock in 2006 and served as the vice president and secretary. Wells, a certified public accountant, started working for Shamrock in 2011, and served as Shamrock's chief financial officer. England also was an employee, though the record leaves his role vague.
¶ 7 The Dreamer family decided to sell Shamrock and offered Wroblewski and Wells the opportunity to make the first offer. Wroblewski and Wells submitted an offer that was financially acceptable but included "collateral terms" that the Dreamers would not accept. In "mid-August" 2017, Shamrock made a counteroffer, having revised some terms unrelated to the purchase price.
¶ 8 On September 1, 2017, Wroblewski and Wells "abruptly resigned." England resigned four days later. According to Shamrock's first amended complaint, the day before Wroblewski and Wells resigned, they "had Beaver Shredding, Inc., deliberately destroy three double file boxes and perform one cabinet destruction service at Shamrock's headquarters" without anyone else's knowledge. The complaint also alleged that Wroblewski and Wells "had deliberately altered the network of computers" and "deleted large amounts of data from Shamrock's computer system." Wells also had "copied Shamrock's Quickbooks files" and other data from Shamrock's computers. Wroblewski, for his part, uploaded data from Shamrock's computers to the digital storage site Dropbox in the days leading up to his resignation.
¶ 9 After the resignations, Skyline "went live" with its own website. Shamrock alleges that Skyline's business is "exactly the same" as its own, and Skyline has been representing itself as Shamrock's successor business to customers and vendors. The complaint attaches a series of e-mails initiated by Wroblewski to Shell Corporation, one of Shamrock's vendors, in which Wroblewski requests an application for credit. In the e-mail chain, one of the Shell employees says, Later that month, a logistics company that Shamrock used "insisted numerous times" that it was waiting on a shipment of 5000 gallons of propelyene glycol for one of Shamrock's customers. Shamrock did not know about the shipment. Later Shamrock learned Skyline had made the order.
¶ 10 Shamrock's complaint sets out 11 counts against various combinations of Wroblewski, Wells, England, Skyline, yet-unknown investors, and David Nowak, an accountant Shamrock employed for tax purposes. Many counts allege that the defendants "destroy[ed] electronic data, including but not limited to: Emails; Quickbook[s] files; Accounts Receivable; Accounts Payable; Client lists; Supplier invoices and pricing; Formula lists, and client histories." Before allegedly destroying those files, Shamrock alleges that defendants uploaded them to Dropbox.
¶ 11 Shortly after filing its complaint, Shamrock moved for a temporary restraining order (TRO). The motion for a TRO asked, among other things, that the court appoint "a receiver to monitor any substantial transactions engaged in by the defendants and in particular Skyline, Wroblewski, Wells, and England pursuant to 740 ILCS 160/8(3)(B)." The trial court granted Shamrock's motion and entered a TRO "[a]ppointing a receiver at Plaintiff's expense to monitor any substantial (i.e. , $20,000 or more) transactions engaged in by the defendants Skyline, Wroblewski, and England." The defendants petitioned this court's review of the TRO (see Ill. S. Ct. R. 307(d) (eff. Nov. 1, 2017)). We denied the petition.
¶ 12 Thereafter, the trial court entered an order appointing James Venetos, a certified public accountant, "to monitor Skyline's transactions." The court ordered Skyline to keep its "books and records current * * * in the ordinary course of business" and to make its monthly bank statements available to Venetos within three days of their availability. The court's order also required Skyline to keep its Quickbooks current and provide Venetos a copy of its Quickbooks files every other week. The order permitted Skyline to password protect or encrypt its files and documents, as long as Venetos had access. The information turned over to Venetos remains subject to a protective order, which limits viewing to "attorney's eyes only."
¶ 13 Skyline filed a motion to vacate or modify the order appointing Venetos. The trial court denied the order and set a date by which Skyline had to turn over its Quickbooks files. After that date passed, Shamrock filed a petition for rule to show cause, alleging that Skyline "refus[ed] to provide the Quickbook[s] files and bank records to [the] monitor." In response, Skyline argued that the court's order was too broad and harmed Skyline by revealing its financial information to Shamrock. Alternatively, Skyline asked to be held in "friendly contempt" to test the order's validity. The trial court granted Shamrock's petition for rule to show cause, found Skyline in indirect civil contempt, and imposed a $10 per day fine for continued noncompliance.
¶ 15 Skyline breaks its arguments into several discrete sections, but its contentions essentially challenge (i) the trial court's order for discovery of all of Skyline's financial and business records as overbroad and (ii) the trial court's appointment of Venetos to facilitate Skyline's production of bank transactions and Quickbooks files. Skyline also argues that we should vacate the contempt order, regardless of our conclusions.
¶ 17 Shamrock argues that we cannot review the underlying discovery order, partly because the order holding Skyline in contempt constitutes the only order subject to review. Shamrock believes the orders are not discovery orders. Skyline asks us to review all the trial court's underlying orders back to the TRO entered in 2017.
We disagree with both parties on the scope of the issues.
¶ 18 We reject Shamrock's argument. The law is well settled that when a contempt order based on a discovery violation is appealed, the underlying discovery order is also subject to review. Norskog v. Pfiel , 197 Ill. 2d 60, 69, 257 Ill.Dec. 899, 755 N.E.2d 1 (2001). We need to look at the contempt order to define the parameters of our analysis: "Defendant Skyline is found to be in indirect civil contempt and ordered to comply with the order dated May 22, 2018." The May 22 order required Skyline to comply with the April 18, 2018, discovery order. That order described Skyline's discovery obligations and Venetos's duties. Our review concerns only the contempt order and the trial court's April 18 order.
¶ 19 For much of the same reason, we reject the arguments Skyline makes attacking the TRO. Skyline's appeal, according to its briefs, relies on Rule 304(b)(5), which allows an interlocutory appeal of an order finding a person or entity in contempt and imposing a monetary penalty. Ill. S. Ct. R. 304(b)(5) (eff. Mar. 8, 2016). Rule 304(b)(5) provides limited jurisdiction that, as we said, involves just the contempt order and the underlying order on which it is based. See Norskog , 197 Ill. 2d at 69, 257 Ill.Dec. 899, 755 N.E.2d 1.
¶ 20 In addition,...
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...relevant to the subject matter involved in the pending action. Ill. S. Ct. R. 201(b)(1) (eff. July 1, 2014); Shamrock Chicago Corp. v. Wroblewski , 2019 IL App (1st) 182354, ¶ 40, 443 Ill.Dec. 652, 162 N.E.3d 286. The purpose of the discovery rules is "to be flexible and adaptable to the in......
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