Arpac Corp. v. Murray

589 N.E.2d 640, 226 Ill. App. 3d 65, 168 Ill. Dec. 240
CourtAppellate Court of Illinois
DecidedFebruary 11, 1992
Docket1-91-2584
StatusPublished
Cited by40 cases

This text of 589 N.E.2d 640 (Arpac Corp. v. Murray) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arpac Corp. v. Murray, 589 N.E.2d 640, 226 Ill. App. 3d 65, 168 Ill. Dec. 240 (Ill. Ct. App. 1992).

Opinion

JUSTICE DiVITO

delivered the opinion of the court:

Plaintiff Arpac Corporation (Arpac) sought injunctive and other relief from its former employee, defendant Charles Murray, based upon Murray’s employment agreement containing a restrictive covenant. After an evidentiary hearing, the circuit court entered a preliminary injunction, enjoining Murray and Bundling Machines International, Inc. (BMI), his current employer, from soliciting any of Arpac’s customers of the previous five years for a period of 24 months. The court further enjoined Murray from influencing Arpac’s employees to leave the company and from working in Arpac’s area of business for two years. Murray appeals pursuant to Supreme Court Rule 307(aXl) (134 Ill. 2d R. 307(a)(1)), raising in issue (1) whether the circuit court’s grant of injunctive relief was against the manifest weight of the evidence because: (a) Arpac had no protectable proprietary interest in its customers and would suffer no irreparable harm; and (b) the order was overly broad due to the court’s determination that “end users” were Arpac’s customers; (2) whether the restrictions contained in Murray’s employment agreement were overly broad, thus rendering the restrictive covenant void; and (3) whether the circuit court erred in holding that Murray’s employment agreement was authorized by and binding upon Arpac.

Arpac, operating in the Chicago area since 1971, manufactures shrink-wrap packaging machinery, which is used to package products by surrounding them with a plastic film, heated until it contracts to tightly enclose the products. Shrink-wrap packaging machines are typically used at the end of a manufacturer’s assembly line for packaging multiple products, including foods, beverages, and pharmaceuticals. In addition to its nationwide sales, Arpac sells its shrink-wrap machines in foreign countries.

Arpac’s sales of its machinery are either to distributors, who then sell the machinery to others at a higher price, or “end users,” large companies who purchase either directly from Arpac or from the distributors for their own account. By 1990, Arpac’s sales to distributors comprised 80% to 85% of its total sales, with the balance of sales to end users. Of those distributors, the top 30 to 40 have had an association with Arpac from 3 years to 10 or more years, the average association being five years. Because of the complexity of choosing the proper machinery, it may take from six months to five years from the time a quote is first received until the machinery is installed at the customer’s work place. During that time, Arpac and its distributors determine, in cooperation with the customer, the type of features suitable to that customer’s uses. The shrink-wrap packaging business in the United States, in which Arpac competes, consists of Arpac and 8 to 10 other manufacturers of machinery, and comprises less than 1% of the total packaging industry.

In 1987, Murray, a South African national, met Michael Levy, also from South Africa, and advised him of his desire to leave South Africa and obtain employment in America, Australia, or Europe. Levy, who at the time had been in the shrink-wrap business since 1965, was considering purchasing Arpac. The two men discussed the possibility of Murray’s working for Arpac as its marketing vice-president.

At the time of their meeting, Murray held the equivalent of a college diploma in chemical technology from the Witwatersrand Technical College in Johannesburg, South Africa. Although he had extensive experience as a salesman in the packaging industry in South Africa and Europe, Murray was not in the business of manufacturing or selling shrink-wrap machinery nor was he familiar with shrink-wrap packaging machines or their operation.

While still in South Africa, during his acquisition of Arpac, Levy presented Murray with an employment agreement, offering him a position with Arpac. The agreement, which included a restrictive covenant, provided that Murray would work for Arpac for a three-year period; the agreement allowed Murray to terminate his employment without cause, but prohibited Arpac from terminating Murray’s employment, except for cause. Additionally, the agreement granted Murray an option to purchase Arpac’s common stock, an option Murray never exercised. During negotiations, Murray’s attorney reviewed the agreement and suggested to him that it was unenforceable according to South African law. Although Murray believed that the restrictive covenant was unenforceable, he never suggested that to Levy. Further, Murray, while negotiating the employment agreement, never attempted to modify or delete the restrictive covenant.

The covenant provided, in pertinent part, that:

“Murray acknowledges that Arpac’s relationships with its customers, their affiliates and related entities, and their employees and former persons, hereinafter referred to as prohibited persons, are special and unique, and that Arpac’s relationship with the prohibited persons may not be able to be replaced by Arpac. Murray further acknowledges that the protection of Arpac’s customers and business is essential. Therefore, Murray expressly covenants and agrees that during the term of his employment by Arpac and for a period of twenty-four (24) months immediately following the expiration or termination of such employment for any reason *** he will not at any time for himself or on behalf of any other person, firm, partnership or corporation engage in the business (or any part thereof) of manufacturing, producing, marketing or selling shrink-packaging machinery in the United States, (other than the states of Wyoming, Montana, Hawaii and Alaska). Further, Murray expressly covenants and agrees that during the term of his employment by Arpac and for a period of twenty-four (24) months immediately following the expiration or termination of such employment for any reason *** he will not at any time induce, or attempt to induce, any customer of Arpac to whom goods have been sold in the preceding five (5) years to refrain from purchasing the same or similar goods from Arpac or to cancel or fail to renew any contract with Arpac; or solicit the business of such customers directly or indirectly for his own account or for the account of any other person, firm, partnership or corporation; or induce, or attempt to induce, any employees, agents or sales personnel of Arpac to terminate any relationship with Arpac.”

Thus, at the end of the three-year term of employment or whenever Murray left Arpac, he would become bound for a period of two years thereafter not to engage in any way in the shrink-wrap business in any States other than Montana, Wyoming, Alaska, and Hawaii; to refrain from soliciting any customer who had purchased shrink-wrap equipment from Arpac in the five-year period preceding the date of termination of employment; and to refrain from inducing any employee of Arpac to leave employment with Arpac.

On November 23, 1987, Murray signed the employment agreement, which provided that Murray’s employment would begin on such date as Murray submitted to Arpac competent evidence that he was authorized by the United States Immigration and Naturalization Service to be employed in the United States.

After Murray obtained his visa, he moved to the United States and began working for Arpac. For approximately the first three months of his employment, he was the chief executive officer of Arpac in Levy’s absence.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Footlick v. Topstep LLC
N.D. Illinois, 2025
Bain v. Airoom, LLC
2022 IL App (1st) 211001 (Appellate Court of Illinois, 2022)
Prudential Locations, LLC v. Gagnon.
506 P.3d 134 (Hawaii Supreme Court, 2022)
Hinchman v. Phebus
2021 IL App (1st) 200684-U (Appellate Court of Illinois, 2021)
Giambruno v. Tribune Media Co.
2020 IL App (1st) 190859-U (Appellate Court of Illinois, 2020)
Garlock Chicago v. Maher
N.D. Illinois, 2018
Montel Aetnastak, Inc. v. Miessen
998 F. Supp. 2d 694 (N.D. Illinois, 2014)
Nissan Motor Acceptance Corp. v. Abbas Holding I
2012 IL App (1st) 111296 (Appellate Court of Illinois, 2012)
Pampered Chef v. Alexanian
804 F. Supp. 2d 765 (N.D. Illinois, 2011)
Steam Sales Corporation v. Summers
Appellate Court of Illinois, 2010
Brown & Brown, Inc. v. Ali
592 F. Supp. 2d 1009 (N.D. Illinois, 2009)
Baird and Warner Residential Sales v. Mazzone
Appellate Court of Illinois, 2008
Baird & Warner Residential Sales, Inc. v. Mazzone
893 N.E.2d 1010 (Appellate Court of Illinois, 2008)
Cambridge Engineering, Inc. v. Mercury Partners 90 BI, Inc.
879 N.E.2d 512 (Appellate Court of Illinois, 2007)
The Agency, Inc. v. Grove
839 N.E.2d 606 (Appellate Court of Illinois, 2005)
Pactiv Corp. v. Menasha Corp.
261 F. Supp. 2d 1009 (N.D. Illinois, 2003)

Cite This Page — Counsel Stack

Bluebook (online)
589 N.E.2d 640, 226 Ill. App. 3d 65, 168 Ill. Dec. 240, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arpac-corp-v-murray-illappct-1992.