TAD, Inc. v. Siebert
| Decision Date | 24 August 1978 |
| Docket Number | No. 77-217,77-217 |
| Citation | 20 Ill.Dec. 754,380 N.E.2d 963,63 Ill.App.3d 1001 |
| Court | United States Appellate Court of Illinois |
| Parties | , 20 Ill.Dec. 754 TAD, INC., Plaintiff-Appellant and Cross-Appellee, v. John H. SIEBERT, Donald M. Halperin, and Halperin & Siebert, Inc., Defendants- Appellees and Cross-Appellants. |
George W. Hamman, Jill Nickerson, Chicago, for plaintiff-appellant.
J. William Holland, Holland & Holland, Chicago, J. Samuel Tenenbaum, Theodore M. Becker, Becker & Tenenbaum, Chicago, for defendants-appellees.
The plaintiff, TAD, Inc., brought this action to recover damages sustained due to the alleged tortious conduct of the defendants. Following a bench trial in the circuit court of Cook County, a verdict was entered in plaintiff's favor. Plaintiff appeals from that portion of the judgment order which provided for damages in the amount of $4206.45. The defendants cross-appeal.
The issues presented for review are (1) whether the trial court erred in holding that defendants' conduct constituted a tort entitling plaintiff to judgment, and (2) whether the trial court erred in its determination of plaintiff's damages.
The record reveals the facts to be as follows: The plaintiff, TAD, Inc. (hereinafter referred to as TAD), is engaged in the business of contract engineering services. On April 29, 1974, TAD purchased the assets of Alpha Technical Services, Inc. (hereinafter referred to as Alpha), including that portion of Alpha's business which consisted of providing the services of temporary technical personnel. Alpha would receive a request from a customer for a certain type of technical person needed by the customer to do a particular job for an indefinite period of time. Payment for the technician's services would be received by Alpha. Alpha, in turn, paid the technician a portion of that amount and used the balance to meet its operational costs and produce a profit. TAD purchased from Alpha the following:
" * * * accounts receivable, prepaid expenses, work in process, office furniture and fixtures, trademarks, trade names and copyrights, if any, the use of Seller's corporate name, computer software, existing contracts with, and any outstanding proposals to, customers, together with all historical files in Seller's various offices or in storage relating to such contracts and proposals, all professional resumes, and the right to possess and occupy the several offices of (Alpha)."
TAD operates the business acquired from Alpha under the name of Alpha Technical Services Division of TAD, Inc. (hereinafter referred to as Alpha-TAD).
Defendants Halperin and Siebert were employed by Alpha for several years prior to April 29, 1974. Siebert was vice president in charge of internal administration; Halperin was a sales representative. At the time of the acquisition, Alpha had a "pool" of personnel which it had developed over a number of years, from which it could draw to fill a customer's requirements. Although plaintiff argued that Alpha-TAD's "pool" of qualified personnel was a closely guarded business asset, the facts show that the technical services industry is highly competitive and engaged in by a number of companies, and that many of plaintiff's qualified personnel are "listed" with more than one company. Both defendants were offered continued employment with Alpha, but both declined and resigned. According to plaintiff, these defendants then immediately started competing with plaintiff for "employees" and customers in providing temporary technical personnel. Shortly after April 29, 1974, they formed the defendant corporation, Halperin & Siebert, Inc. In their effort to seek business, defendants ran newspaper advertisements and sent out announcements. Defendants contacted 18 Alpha-TAD "employees" and attempted to persuade them to leave Alpha-TAD by offering an increase in salary. Defendants also contacted Alpha-TAD's customers, and in several instances customers under contract to Alpha-TAD entered into contracts with the defendants. Defendants hired 11 of Alpha-TAD's personnel and were able to do business with Alpha-TAD's customers for whom these personnel were working. Defendants placed these people and others from Alpha-TAD's "pool" with a number of Alpha-TAD customers. Plaintiff, in response, made a reasonable effort to retain these employees and customers at a substantial expense.
The record also indicates that prior to leaving Alpha, defendants Halperin and Siebert took with them no customer lists or any other documentation, nor did they memorize any material or confidential information; they were searched and nothing was found on their persons or taken from them. Testimony was elicited that persons experienced in the field of contract engineering are generally well acquainted with both the customers in the market and the available talent. In fact, lists of the names of potential customers are published by contract engineering firms in their advertising material and are available to persons acquainted with "the business." Furthermore, plaintiff's "out-of-house" service, i. e., the placement of engineering personnel on jobs with various companies, is based upon contracts at will, terminable by either the plaintiff, the employee, or the employer (customer); there is generally no set duration for these jobs.
In its complaint, plaintiff charged that by their actions defendants had engaged in three types of tortious conduct:
(1) Interference with plaintiff's contracts with its customer;
(2) Inducing, or attempting to induce, plaintiff's employees to leave such employment and start work for defendants;
(3) The wrongful use of confidential business information belonging to plaintiff, i. e., the names, addresses, telephone numbers, and qualifications of qualified persons employed by plaintiff or available for employment.
Plaintiff prayed that defendants be temporarily and permanently restrained from their tortious conduct and for judgment against defendants, jointly and severally, in the amount of $100,000 plus costs and attorney's fees.
At trial, defendants admitted their conduct was substantially as alleged by plaintiff, but denied that such conduct was tortious. Following a bench trial, the trial court found as follows:
"This court finds that the defendants have interfered with the employees and customers of the plaintiff, in that they went to the employee on a job and asked him to work for them on the same job, and also asked the employer of that person to go along with them.
This is conduct that is contrary to the law.
The court further finds that there were nine such employees interfered with, and further finds as to all the other issues in favor of the defendants.
The court further finds that the damage to the plaintiff is in the sum of $4206.45, as was set out by Defendants' Exhibit No. 16, the court using the related costs submitted by the defendants in the amount of 14.96 per cent instead of 13.4 per cent submitted by the plaintiff.
Accordingly, there will be judgment in the amount of $4206.45 in favor of the plaintiff against the defendant(s)."
Plaintiff argues on appeal that the trial court erred in its determination of the amount in damages plaintiff is entitled to recover. According to plaintiff, a party is entitled to be compensated for all damages proximately caused by the commission of a tort (Bimba Mfg. Co. v. Starz Cylinder Co. (1969), 119 Ill.App.2d 251, 256 N.E.2d 357), and the purpose of awarding compensatory damages is to make the injured party whole. (Santiemmo v. Days Transfer, Inc. (1956), 9 Ill.App.2d 487, 133 N.E.2d 539.) Plaintiff claims that at trial evidence was introduced of damages totaling $56,659.47 which were proximately caused by defendants' tortious conduct. These included plaintiff's net loss of revenues as a result of defendants' interference with its employees and customers, expenses incurred by plaintiff in its effort to retain its employees and customers, and net revenue lost as a result of defendants' placement of plaintiff's former employees and other persons with plaintiff's customers. Plaintiff maintains that the trial court erroneously limited plaintiff's recovery to the net profits, as calculated by defendants, that it would have earned on the completion of contracts with customers for work done by nine of plaintiff's former employees.
The defendants cross-appeal and contend, as they did in the trial court, that their conduct did not constitute a tort entitling plaintiff to judgment. According to the defendants and based upon the finding of the trial court, the sole issue with respect to defendants' liability is whether as a matter of law specific acts of the defendants constituted a tortious interference with contract. We agree with the defendants; therefore, we reverse the judgment, and enter judgment and finding for the defendants....
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