Techworks, LLC v. Wille

• Decision Date: 31 March 2009
• Docket Number: No. 2008AP1702.,2008AP1702.
• Parties: TECHWORKS, LLC, Plaintiff-Appellant,<SMALL><SUP>&#x2020;</SUP></SMALL> v. David M. WILLE, Red Anvil, LLC and Patrick Dolan, Defendants-Respondents.<SMALL><SUP>&#x2020;</SUP></SMALL>
• Court: Wisconsin Court of Appeals

770 N.W.2d 727

2009 WI App 101

TECHWORKS, LLC, Plaintiff-Appellant,^† v. David M. WILLE, Red Anvil, LLC and Patrick Dolan, Defendants-Respondents.^†

No. 2008AP1702.

Court of Appeals of Wisconsin.

Oral Argument March 3, 2009.

Opinion Filed March 31, 2009.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Sean Lanphier of Mallery & Zimmerman, S.C., Milwaukee. There was oral argument by Sean Lanphier.

On behalf of defendant-respondent David M. Wille, the cause was submitted on the brief of Bradden C. Backer of Friebert, Finerty & St. John, S.C., Milwaukee. There was oral argument by Bradden C. Backer.

On behalf of the defendant-respondent Red Anvil, Inc., the cause was submitted on the brief of Randall L. Nash of O'Neil, Cannon, Hollman, DeJong S.C., Milwaukee. There was oral argument by Randall L. Nash.

On behalf of the defendant-respondent Patrick Dolan, the cause was submitted on the brief of Patrick J. Knight of Gimbel, Reilly, Guerin & Brown, Milwaukee. There was oral argument by Patrick J. Knight.

Before CURLEY, P.J., FINE and BRENNAN, JJ.

¶ 1 FINE, J

Techworks, LLC, appeals the circuit court's order dismissing on summary judgment Techworks's claims against David M. Wille, Red Anvil, LLC, and Patrick Dolan. Techworks's operative complaint asserted that: (1) Wille, a former Techworks employee, breached his non-compete agreement with Techworks by working for Red Anvil, Techworks's competitor; (2) Wille breached his agreement with Techworks not to solicit Techworks's customers; (3) Dolan, a former Techworks employee, breached his non-compete agreement with Techworks by trying to get Techworks's employees "to quit their jobs at Techworks and to join him in a move to Red Anvil"; (4) Wille breached his "duty of loyalty" to Techworks by allegedly "using Techworks' confidential information to compete with Techworks while employed by it"; (5) Dolan and Red Anvil conspired to take Techworks's confidential business information, in violation of WIS. STAT. § 134.01 and Wisconsin's common law; (6) Dolan and Red Anvil tortiously interfered with Techworks's contracts with its employees by trying to get some of those employees to leave Techworks and work for Red Anvil in violation of those employees' non-compete agreements with Techworks; and (7) Wille and Red Anvil tortiously interfered with Techworks's business relationships with its customers. The circuit court held that the non-compete agreement was invalid and that there were no genuine issues of material fact on the other issues so that the defendants were entitled to judgment dismissing Techworks's complaint. We affirm in part and reverse in part.

I.

¶ 2 A party is entitled to summary judgment if "there is no genuine issue as to any material fact" and that party "is entitled to a judgment as a matter of law," WIS. STAT. RULE 802.08(2), and may be entitled to summary judgment even though that party did not seek it, RULE 802.08(6) ("If it shall appear to the court that the party against whom a motion for summary judgment is asserted is entitled to a summary judgment, the summary judgment may be awarded to such party even though the party has not moved therefor."). We review de novo a circuit court's rulings on summary judgment, and apply the governing standards "just as the trial court applied those standards." Green Spring Farms v. Kersten, 136 Wis.2d 304, 315-317, 401 N.W.2d 816, 820-821 (1987). A party that has the burden of proof at trial in connection with a claim has the burden to show that there are genuine issues of material fact that require a trial on that claim. Transportation Ins. Co. v. Hunzinger Constr. Co., 179 Wis.2d 281, 290, 507 N.W.2d 136, 139 (Ct.App. 1993). That burden can be met by reasonable inferences drawn from circumstantial evidence, Belich v. Szymaszek, 224 Wis.2d 419, 424-425, 592 N.W.2d 254, 258 (Ct.App. 1999); see also H & R Block Eastern Enterprises, Inc. v. Swenson, 2008 WI App 3, ¶ 31, 307 Wis.2d 390, 407-408, 745 N.W.2d 421, 429-430, and we examine the parties' submissions in a light most favorable to the party against whom summary judgment is sought, Johnson v. Rogers Mem'l Hosp., Inc., 2005 WI 114, ¶ 30, 283 Wis.2d 384, 401, 700 N.W.2d 27, 35. We assess Techworks's claims in this light.

II.

A. Wille's non-compete agreement.

¶ 3 A non-compete agreement that restricts the post-employment activities of an employee is governed by WIS. STAT. § 103.465. Section 103.465 provides:

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.

Under this section, a non-compete agreement is not enforceable unless it satisfies five elements. It "must: (1) be necessary for the protection of the employer or principal; (2) provide a reasonable time restriction; (3) provide a reasonable territorial limit; (4) not be harsh or oppressive to the employee; and (5) not be contrary to public policy." General Medical Corp. v. Kobs, 179 Wis.2d 422, 429, 507 N.W.2d 381, 384 (Ct.App.1993). The absence of a geographic "territorial limit" does not for that reason alone invalidate a non-compete agreement. Rollins Burdick Hunter of Wisconsin, Inc. v. Hamilton, 101 Wis.2d 460, 464, 467, 304 N.W.2d 752, 754, 755 (1981). Further, a two-year non-compete limitation is within the ambit of reasonableness. Id., 101 Wis.2d at 462, 471, 304 N.W.2d at 753, 757 (two-year restriction not per se invalid); Lakeside Oil Co. v. Slutsky, 8 Wis.2d 157, 165, 98 N.W.2d 415, 420 (1959) ("Two years under the facts of this case cannot be held to be an unreasonable length of time in which to allow the plaintiff to protect his business from the defendant.").

¶ 4 Whether a non-compete agreement is reasonable depends on "`the totality of the facts and circumstances.'" General Medical Corp., 179 Wis.2d at 434, 507 N.W.2d at 386 (quoted source omitted). This presents "a question of law to be resolved on the basis of factual findings," NBZ, Inc. v. Pilarski, 185 Wis.2d 827, 840, 520 N.W.2d 93, 97 (Ct.App.1994), subject to our de novo review, Streiff v. American Family Mut. Ins. Co., 118 Wis.2d 602, 603-604 & n. 1, 348 N.W.2d 505, 507 & n. 1 (1984); Fields Foundation, Ltd. v. Christensen, 103 Wis.2d 465, 473, 309 N.W.2d 125, 130 (Ct.App.1981). Further, the employer has the burden to prove that a non-compete agreement is reasonable, NBZ, Inc., 185 Wis.2d at 840, 520 N.W.2d at 97, and the agreement's restrictions "must withstand close scrutiny to pass legal muster as being reasonable; they will not be construed to extend beyond their proper import or further than the language of the contract absolutely requires; [and] they are to be construed in favor of the employee," Streiff, 118 Wis.2d at 611, 348 N.W.2d at 510.

¶ 5 Techworks and Red Anvil both provide information-technology support services for other businesses. Wille worked for Techworks as an information-technology engineer until he resigned effective February 27, 2007, via a notice dated February 19, 2007. He started to work for Red Anvil as an information-technology engineer on February 28, 2007. He left Red Anvil's employ in August of 2007 and now lives in Florida.

¶ 6 Wille's job with both Techworks and Red Anvil was to help their respective customers with their information-technology and computer-related problems. In October of 2005, he signed an "Employee Agreement Regarding Confidentiality, Non-solicitation, Noncompetition and Intellectual Property" in connection with his employment with Techworks. (Uppercasing omitted.) As material, the non-compete clause reads:

So long as the Employee is employed by Employer and continuing thereafter until ... the second (2nd) anniversary subsequent to the date of the termination of his/her employment with Employer (the "Restricted Period"), Employee will not engage directly or indirectly (as an owner, joint venture, partner, member, shareholder, consultant, employee, independent contractor or otherwise): (i) in any activity with a Restricted Customer located within the Restricted Territory that competes with the then-existing Business of Employer, or (ii) in any activity with a Restricted Customer wherever located that competes with the then-existing Business of Employer, but only to the extent that Employee has engaged in such activities with the Restricted Customer on behalf of Employer. "Restricted Customer" means a person or entity with whom Employer conducted its Business within two (2) years prior to the termination of Employee's employment with Employer. "Conducted its Business" means Employer's provision to a person or entity of its information technology products or services, including the previous provision thereof which Employer continues to support or is reasonably expected to support. "Restricted Territory" means a geographic area comprising a radius of 100 miles from each existing office location of Employer in any direction. "Within" the restricted Territory includes providing services from any location for Restricted Customers within the Restricted Territory.

(Bolding and capitalization in original; italics in subparts i and ii added.) Techworks's only office is in Wauwatosa, Wisconsin.

¶ 7 Broken down, the non-compete clause governs the two-year period starting when the employee leaves Techworks, and prevents the former employee during those two years from:

(1) working for a Techworks competitor "in any activity ... that competes" with Techworks's information-technology business for (a) any customer with...