Wessel Co., Inc. v. Busa

• Decision Date: 23 April 1975
• Docket Number: No. 60832,60832
• Citation: 329 N.E.2d 414,28 Ill.App.3d 686
• Parties: The WESSEL COMPANY, INC., Plaintiff-Appellant, v. John BUSA, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 414

329 N.E.2d 414

28 Ill.App.3d 686

The WESSEL COMPANY, INC., Plaintiff-Appellant, v. John BUSA, Defendant-Appellee.

No. 60832.

Appellate Court of Illinois, First District, Fourth Division.

April 23, 1975.

Rehearing Denied June 12, 1975.

Sherwin J. Stone, David C. Roston, Chicago, for plaintiff-appellant (Lieberman, Levy, Baron & Stone, Ltd., Chicago, of counsel).

Daniel Nagle, Chicago, for defendant-appellee.

BURMAN, Justice.

Plaintiff, The Wessel Company, Inc., filed an action for injunctive relief against defendant, John Busa, seeking to enforce a postemployment restrictive covenant. On July 30, 1974, the court entered an interlocutory order denying plaintiff's amended motion for a temporary injunction. Plaintiff appeals from the denial of that motion.

As alleged in its complaint, plaintiff is an Illinois corporation engaged in the business of printing and having a principal place of business in Chicago, Illinois. On July 24, 1972, plaintiff and defendant entered into a written contract whereby plaintiff employed defendant to solicit, procure, and administer its printing business. The case at bar arises out of the following restrictive covenant contained in the contract:

'6. RESTRICTIVE COVENANT. For a period of three years after the termination of this agreement, irrespective of the time, manner or cause of termination, employee covenants and agrees that he will not directly or indirectly, either as principal, agent, employee, employer, stockholder, co-partner or any other individual or representative capacity whatsoever

(a) solicit, serve or cater to, or

(b) engage in, assist, be interested in or connected with any other person, form (sic) or corporation or other entity soliciting, serving or catering to, any person, firm, corporation or other entity with whom or which The Wessel Company has done or sought to do business within the area encompassed by a radius of 250 miles from the Metropolitan area of New York City, during the two years immediately prior to the date of termination of this agreement.

The Wessel Company and employee agree that, in the event of a breach of the covenants contained in this Paragraph 6, the remedy at law would be inadequate and The Wessel Company may obtain injunctive or any other equitable relief to prevent such breach.'

The complaint further alleges that on December 31, 1973, defendant's employment was terminated and that defendant thereafter solicited and sold printing services to plaintiff's customers in violation of the restrictive covenant.

On July 26, 1974, plaintiff filed an amended motion for a temporary injunction seeking to enjoin defendant from soliciting or serving four named customers doing business in the metropolitan area of New York. In support of its motion plaintiff alleged that defendant continued to violate the restrictive covenant by soliciting plaintiff's customers and using confidential information he acquired during the course of his employment, and that unless a temporary injunction was issued, plaintiff would suffer irreparable injury.

On July 30, 1974, a hearing was conducted on plaintiff's amended motion for a temporary injunction. The sole witness at the hearing was Robert Newton, executive vice-president of The Wessel Company. Newton described the company as commercial printers solely employing the web offset press. Their specialty products are those that are utilized in large quantities and typically include such items as gasoline credit cards, subscription postcards, and retail store credit inserts.

Newton explained that this type of business is highly competitive, and that what distinguishes one company from another is its ability to price and service effectively. Accordingly, the company created files containing confidential pricing information and customer requirements accumulated over its 15 year history. More specifically, the files contained information concerning the uses of plaintiff's products, the products customers were using, the prices they were paying, and the particular customer's product requirements. The files also contained detailed information on those purchasing agents who had dealt with the company including their particular needs and past history with the company. Newton stated that in his opinion such information was essential to the establishment of customers. During his employment with plaintiff, defendant was granted full access to the files. In view of its confidential nature this information was not made available to plaintiff's competitors. Defendant was also given a list of plaintiff's customers to assist him in his solicitation of business, which list was subsequently introduced into evidence.

At the hearing Newton remarked that defendant was hired in the capacity of a salesman, but emphasized that the position denoted more than just order taking. It encompassed a determination of customer requirements, the initial solicitation of customers, the follow up of an order into actual production of the product, and the continued service of a customer with the goal of making him a long time purchaser. During his tenure with the company, defendant worked out of New York and serviced customers in Massachusetts, New York, New Jersey, Pennsylvania and Indiana. On December 3, 1973, defendant's employment was terminated by mutual agreement.

As stated by Newton, defendant became an employee of Continental Web Offset shortly after leaving plaintiff company. During his employment with Continental Web Offset, defendant sold printing services to several of plaintiff's customers, namely, Penthouse International Limited, Times Mirror Publishing Company, Fawcett Publications, and Rap, Collins, Stone & Adler, Inc. Newton further stated that since December 3, 1973, plaintiff has failed to secure any business from the above firms, and that plaintiff therefore was requesting a temporary injunction to restrain defendant from soliciting business and selling services to those four firms.

On cross-examination Newton testified that plaintiff learned of defendant's employment with Continental Web Offset from one of its customers. That same company further informed plaintiff that its business had been solicited by defendant. Newton stated that if defendant were not enjoined from further solicitation of the four named companies, it would be very difficult to ascertain plaintiff's loss of profits.

From the outset we must stress that this appeal is from the denial of a temporary injunction. The substantive issues of the instant case have not been decided. The sole role of an appellate court in addressing the grant or refusal of an interlocutory decree is restricted to a determination of whether the trial judge correctly exercised his broad discretionary powers. (Grillo v. Wanzer, Ill.App., 326 N.E.2d 180 (1975)). Therefore, each substantive issue will be considered only so far as is necessary to determine whether the judge abused his discretion.

In order for a preliminary injunction to issue, the movant must establish both irreparable injury and likelihood of success on the merits. (Grillo v. Wanzer, Ill.App., 326 N.E.2d 180 (1975)). It must be noted, however, that in order to show a likelihood of success on the merits, a party is not required to make out a case which in all events will warrant relief at the final hearing. All that is necessary is that the petitioning party raise a fair question as to the existence of the right claimed, lead the court to believe that he probably will be entitled to the relief prayed for if the proof should sustain his allegations, and make it appear advisable that the positions of the parties should stay as they are until the court has had an opportunity to consider the case on the merits. (Frederick Chusid & Co. v. Collins Tuttle & Co., 10 Ill.App.3d 818, 295 N.E.2d 74). Clearly, in the case at bar such a showing is dependent upon the enforceability of the restrictive covenant in question.

Unquestionably, postemployment restrictive covenants infringes upon the economic mobility of employees as well as their freedom to follow personal interests, and must be regarded at least to some extent as a restraint of trade. For these reasons such covenants are carefully scrutinized by the courts. It is equally clear, however, that restrictive covenants do serve a real and measurable social utility in that they protect the employer...