Colson Co. v. Wittel

569 N.E.2d 1082, 210 Ill. App. 3d 1030, 155 Ill. Dec. 471, 1991 Ill. App. LEXIS 410
CourtAppellate Court of Illinois
DecidedMarch 21, 1991
Docket4-90-0552
StatusPublished
Cited by9 cases

This text of 569 N.E.2d 1082 (Colson Co. v. Wittel) 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
Colson Co. v. Wittel, 569 N.E.2d 1082, 210 Ill. App. 3d 1030, 155 Ill. Dec. 471, 1991 Ill. App. LEXIS 410 (Ill. Ct. App. 1991).

Opinions

JUSTICE STEIGMANN

delivered the opinion of the court:

In July 1990, plaintiff, the Colson Company (Colson), obtained a preliminary injunction against defendant, Eric Frost Wittel, a former salesman for Colson. The principal thrust of the injunction was to prohibit Wittel from soliciting former customers of Colson and to require Wittel to turn various documents in his possession over to the trial court for examination. Wittel has appealed. We reverse.

Colson’s complaint, upon which relief was granted, was filed in June 1990 and requested compensatory damages and a preliminary and permanent injunction. In its complaint, Colson alleged that Wit-tel, upon leaving the employ of Colson, “took with him information, notes, copies, reports, and other documents, and various forms containing trade secrets.” (Emphasis added.) Colson further alleged that Wittel used the “trade secrets” to benefit himself and his new employer in selling products to Colson’s customers directly in competition with Colson. Colson sought injunctive relief and compensatory damages pursuant to the Illinois Trade Secrets Act (Act) (Ill. Rev. Stat. 1989, ch. 140, par. 351 et seq.). The court granted the injunction after an evidentiary hearing and before defendant had answered the amended complaint.

Most of the evidence presented at the evidentiary hearing was undisputed. It showed that Colson was engaged in the design, marketing, production, and sales of custom calendars, a product specially designed to serve a particular customer’s needs and business purposes by utilizing a design unique to that customer. Wittel was initially employed by Colson in July 1984 as a national account representative whose job was to solicit customer calendar business. While Wittel’s employment was terminated by Colson in February 1985 for economic reasons, he was rehired 10 months later.

Wittel left Colson on April 2, 1990, and one week later joined Corporate Promotions of America, a division of F.L. Companies. After leaving Colson, Wittel contacted five of his former Colson accounts and advised them that he was selling for a new company, which sold both calendars and other products, and that he was no longer affiliated with Colson. The defendant secured business from four of the five companies he contacted: TWA, Massey-Ferguson, Victory Gardens, and Liberty Life. John Jedd, Colson’s president, testified that losing these companies as customers represented a $275,000 loss to Colson.

Substantial testimony was introduced regarding the amount of time and money Colson spent to develop a relationship with a prospective customer. Jedd testified that the process of developing the initial program for a particular customer is long and laborious. As an initial step, the salesmen often must create in the potential customer a perception of need for a custom calendar program. Also, the interaction between the prospective customer and Colson during this period is quite extensive. Jedd stated that approximately three to five years are required before a sale can be made to a prospect. During this period, a substantial amount of information about the potential client is obtained.

Jedd further testified that making a sale to a prospect on a first call is almost impossible. He stated the average Colson salesperson spends $15,000 to $25,000 per year in travel and entertainment expenses, and the first year’s expenses associated with hiring a new salesperson usually exceed the income that salesperson generates. Jedd estimated the expense of obtaining a substantial customer ranged from $150,000 to $200,000 or higher.

Wittel testified, however, that acquiring new clients was not as time-consuming as Jedd indicated. According to Wittel, the process would begin by first identifying a prospective customer from either a newspaper or the “red book,” a list of approximately 17,000 companies that purchase advertising. From this lead, a salesperson would contact the main headquarters of a prospective customer and request to speak to the person in charge of advertising. Such a call would take 10 seconds to a minute to complete.

Wittel testified that he typically did not devote extensive time before the sale to personal contacts with prospective clients. After the first contact, the next contact would concern a yearly renewal. Wittel testified that when he was hired, Colson gave him sales leads and one existing client to service.

According to Jedd’s testimony, information regarding prospective customers was marked “confidential” and given to salespersons on a need-to-know basis because of the time-consuming and expensive nature of cultivating the prospect. Jedd also testified that when Wit-tel was hired, he was given access to any file pertaining to those prospective clients. Information concerning sales was kept within Col-son’s five-person sales department, and each salesperson was given little detail about customers other than his or her own. Jedd said Col-son kept a master list of customers, but Wittel was never given a copy of that list.

Wittel acknowledged that he was exposed to information marked confidential regarding companies he had solicited as well as customers and prospects solicited by others in the company. He also acknowledged that reports containing customer information were marked as “top secret proprietary information,” and some bore a legend that they had to be destroyed. However, Wittel testified that he did not learn the names and addresses of the customer’s sales representatives from these reports. Wittel testified that although he had been exposed to the names of Colson’s customers other than his own, he has never made use of that information.

Wittel conceded that Colson disapproved of Wittel’s use of his own computer in processing information regarding price and contracts with his customers. Nevertheless, he continued to put customer letters on that computer, as well as a list of his customers and prospects. Wittel admitted that in regard to some customers, this list included the place where the customer lived, the people to contact regarding that account, and the telephone numbers of those people.

The preliminary injunction restrained Wittel from “communication” or “contact” with “any person or entity who was or represented a client, customer,” or one identified to him “as a prospective customer *** of [Colson], as of April 2, 1990,” and ordered Wittel to withdraw all pending sales proposals to those persons and entities. The injunction order also required Wittel to (1) write a letter to all such persons or entities having his sales proposals, explaining the existence of the injunction; (2) not act adversely regarding Colson’s relations with any of its customers; (3) not make use of information gained by him while employed by Colson; and (4) advise the court within 10 days of any documents, records, or other things he had taken with him from Colson and his use of the information contained therein, with such items to be delivered to the court so they could be available for inspection by the parties.

In Lee/O’Keefe Insurance Agency, Inc. v. Ferega (1987), 163 Ill. App. 3d 997, 1002-03, 516 N.E.2d 1313, 1317, this court wrote the following:

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Colson Co. v. Wittel
569 N.E.2d 1082 (Appellate Court of Illinois, 1991)

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Bluebook (online)
569 N.E.2d 1082, 210 Ill. App. 3d 1030, 155 Ill. Dec. 471, 1991 Ill. App. LEXIS 410, Counsel Stack Legal Research, https://law.counselstack.com/opinion/colson-co-v-wittel-illappct-1991.