Sysco Food Services of Eastern Wisconsin

• Decision Date: 28 August 2006
• Docket Number: No. 06-C-526.,06-C-526.
• Citation: Sysco Food Services of Eastern Wisconsin, 445 F.Supp.2d 1039 (E.D. Wis. 2006)
• Parties: SYSCO FOOD SERVICES OF EASTERN WISCONSIN, LLC, Plaintiff, v. Emilio ZICCARELLI and Anthony Debartolo, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

445 F.Supp.2d 1039

SYSCO FOOD SERVICES OF EASTERN WISCONSIN, LLC, Plaintiff, v. Emilio ZICCARELLI and Anthony Debartolo, Defendants.

No. 06-C-526.

United States District Court, E.D. Wisconsin.

August 28, 2006.

COPYRIGHT MATERIAL OMITTED

David M Lucey, Foley & Lardner LLP, Michael J Koehler, Foley & Lardner LLP, Milwaukee, for Plaintiff.

Jessica M Perez, Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, Peter B Jurgeleit, Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, Chicago, IL, Ronald S Stadler, Stadler Centofanti & Phillips SC, Mequon, W Scott Porterfield, Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP, Chicago, IL, for Defendants.

DECISION AND ORDER

CALLAHAN, United States Magistrate Judge.

I. BACKGROUND

This action was commenced on April 27, 2006, when the plaintiff, SYSCO Food Services of Eastern Wisconsin, LLC ("SYSCO"), filed a complaint naming Emilio Ziccarelli ("Ziccarelli") and Anthony DeBartolo ("DeBartolo") as defendants. SYSCO asserts four claims against the defendants: (1) breach of contract, (2) breach of the obligation of good faith and fair dealing, (3) conspiracy, and (4) tortious interference with contract and with prospective business or economic advantage. Although SYSCO asserts four claims, it is not unreasonable to state that at the heart of their complaint are employment agreements that were signed by each of the defendants at the time they were hired by SYSCO (or shortly thereafter).

More precisely, on October 28, 2002, Ziccarelli signed, and on January 22, 2001, DeBartolo signed identical "Sales Representative's Employment Agreement[s]" (the "Agreements"). Each of the Agreements includes the following provision number 2:

2. Covenants of Employee. Employee hereby agrees that:

a. During the period of employment hereunder, Employee shall faithfully devote his/her best efforts and entire time during usual business hours to advance the interests of the Company and shall not, directly or indirectly, on his/her own account, or as agent, employee, partner, major stockholder or otherwise, engage in the sale, or distribution of, or in the solicitation of orders for, any product or service, other than as a Sales Representative of the Company pursuant to this Agreement.

b. For the period of twelve (12) months following the termination or cessation of Employee's employment (for whatever reason or no reason and whether such termination or cessation occurs at Employee's instance or at the instance of the Company), Employee shall not, without prior written consent of the Company, directly or indirectly, on his/her own account, or as agent, employee, partner, major stockholder or otherwise, engage in any of the following activities with respect to any product or service sold by the Company or thereafter during the period of this covenant, or any product or service similar to, competitive with, or intended to compete with any such product or service:

1. In any area, solicit, sell to, or contact with a view to selling any such product or service, any person, firm, or company from whom Employee solicited any order or to whom Employee sold any product or service or otherwise dealt with on behalf of the Company at any time during the year preceding termination or cessation of Employee's employment with the Company.

c. During his/her employment and at all times thereafter, Employee shall treat as confidential any information obtained by him/her relating to the customers of the Company or its business, products, techniques, methods, price books, plans or policies; and shall not during his employment or at any time thereafter disclose such information in whole or in part to any person, firm or corporation for any reason or purpose whatsoever, or use such information in any way or in any capacity other than as an employee of the Company in furtherance of its interests. Upon the termination or cessation of employment hereunder, or sooner if so required by the Company, Employee shall return any and all literature, documents, data, information, order forms, memoranda, correspondence, customer and prospective customer lists, customer's orders, records and cards acquired, compiled, or coming to Employee's knowledge or custody in connection with his/her activities as such Employee, and all machines, parts, equipment and other materials received by Employee from the Company or from any of its customers in connection with such activities.

According to SYSCO's complaint, Ziccarelli and DeBartolo have both left the employ of SYSCO and are currently working for Roma of Minnesota, a division of VISTAR Corporation ("Roma"). Roma is one of SYSCO's competitors. More significantly, however, SYSCO alleges that Ziccarelli and DeBartolo "following their resignations from SYSCO and upon information and belief, devised and implemented an `account swapping' scheme under which Defendant DeBartolo contacted Defendant Ziccarelli's former SYSCO customer accounts and under which Defendant Ziccarelli contacted Defendant DeBartolo's former SYSCO customer accounts." (Compl. at ¶ 23.) According to SYSCO, such conduct violates section 2(b)(1) of their respective Employment Agreements. Consequently, SYSCO seeks a preliminary injunction precluding each of the defendants and all those acting in concert or participation with them,

from directly or indirectly, on his/her own account, or as agent, employee, partner, major stockholder or otherwise, engaging in the following conduct with respect to any product or service sold by SYSCO or any product or service similar to, competitive with, or intended to compete with any such product or service:

In any area, solicit, sell to, or contact with a view to selling any such product or service, any person, firm, or company from whom Defendants solicited any order or to whom Defendants sold any product or service or otherwise dealt with on behalf of SYSCO at any time during the period from March 11, 2005 through March 10, 2006 [for DeBartolo and from March 25, 2005 through March 24, 2006 for Ziccarelli].

(Compl. at ¶ 51 A and B.)

On June 2, 2006, the court conducted a scheduling conference with the parties. At that time, inter alia, the court granted in part and denied in part as moot the plaintiff's Rule 7.4 motion for accelerated discovery and to schedule a hearing on its motion for preliminary injunction. The court granted in part and denied in part the defendants' Rule 7.4 motion to stay briefing on the plaintiffs motion for preliminary injunction or for an extension of time to respond; the defendants were ordered to file their response on or before June 9, 2006 and the plaintiff was ordered to file its reply on or before June 23, 2006. The court ordered that briefing on the defendants' motion to dismiss proceed according to the local rules. The court also ordered that a hearing on the plaintiffs motion for preliminary injunction would be conducted on July 10, 2006.

Since the June 2, 2006, scheduling conference, the parties have submitted their respective briefs on the plaintiffs motion for preliminary injunction and on the defendants' motion to dismiss. After due consideration of the parties' respective positions as set forth in their written submissions, and for the reasons which follow, the defendants' motion to dismiss will be granted in part and denied in part. The plaintiffs motion for preliminary injunction will be denied.

II. DISCUSSION

A motion pursuant to Rule 12(b)(6), Fed. R.Civ.P., requires the court to decide whether the plaintiffs pleadings actually state a claim upon which relief can be granted. For the purposes of a motion to dismiss, all factual allegations of the complaint are taken as true. Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993); Eison v. McCoy, 146 F.3d 468, 470 (7th Cir.1998). Such allegations must be viewed liberally and in the light most favorable to the plaintiff. Harrell v. Cook, 169 F.3d 428, 431 (7th Cir.1999). "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Ogden Martin Systems of Indianapolis, Inc. v. Whiting Corp., 179 F.3d 523, 526 (7th Cir.1999) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). However, the court is not required to ignore any facts alleged in the complaint that undermine the plaintiffs claim or to assign weight to unsupported conclusions of law. Gray v. County of Dane, 854 F.2d 179, 182 (7th Cir.1988).

A. Enforceability of the Non-Solicitation Covenant

The defendants' motion to dismiss is predicated on the proposition that section 2(b)(1) of the Agreements (the non-solicitation covenant) is unenforceable under Wisconsin law. Indeed, the parties agree that Wisconsin law is to be applied in assessing the reasonableness, and thus the enforceability, of the non-solicitation covenant. In that connection, Wis. Stat. § 103.465 reads as follows:

A covenant by an assistant, servant or agent not to compete with his or her employer or principal during the term of the employment or agency, or after the termination of that employment or agency, 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. Any covenant, described in this subsection, imposing an unreasonable restraint is illegal, void and unenforceable even as to any part of the covenant or performance that would be a reasonable restraint.

"[C]ovenants not to compete are generally disfavored in the law." Equity Enterprises, Inc. v. Milosch, 247 Wis.2d 172, 183, 633 N.W.2d 662, 668 (Wis.Ct.App. 2001). "Wisconsin law favors the mobility of workers; therefore, a contract that operates to restrict trade or competition is prima facie suspect and will be...