George S. May International Co. v. International Profit Associates

628 N.E.2d 647, 256 Ill. App. 3d 779, 195 Ill. Dec. 183
CourtAppellate Court of Illinois
DecidedDecember 9, 1993
Docket1-92-1131
StatusPublished
Cited by22 cases

This text of 628 N.E.2d 647 (George S. May International Co. v. International Profit Associates) 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
George S. May International Co. v. International Profit Associates, 628 N.E.2d 647, 256 Ill. App. 3d 779, 195 Ill. Dec. 183 (Ill. Ct. App. 1993).

Opinion

JUSTICE HOFFMAN

delivered the opinion of the court:

This is an interlocutory appeal pursuant to Supreme Court Rule 307(a)(1) (134 HI. 2d R. 307(a)(1)) from an order denying preliminary injunctive relief. Plaintiff, George S. May International (May), sought to enjoin several of its former employees from using alleged trade secrets and confidential information in a newly formed competing business, International Profit Associates (IPA), in violation of restrictive covenants. On appeal, May contends that the trial court erred in (1) determining that May’s methods were not unique or sufficiently secret to warrant injunctive relief; (2) finding that defendants’ restrictive covenants were geographically overly broad; (3) ruling that it was a defense for defendants to claim they returned May’s allegedly stolen property; and (4) disallowing certain impeachment evidence. We affirm.

May’s initial verified complaint for injunctive relief was filed on October 24, 1991, along with an emergency motion for a temporary restraining order. Subsequent amendments were made, culminating in May’s second-amended complaint for preliminary injunction. In that complaint, May alleged that it was in the business of providing consulting services primarily to small and medium-sized companies. May had furnished such services throughout the United States and Canada. Defendants were former May employees who had resigned from the company between August and October of 1991 and formed IP A, a competing management consulting firm. Defendant Tulio was IPA’s president and defendants Burgess and Morton were IP A corporate officers.

May alleged that when it employed defendants, each had executed, as part of his or her employment contract, a restrictive covenant which included a confidentiality agreement. According to the complaint, each of the defendants’ confidentiality agreements was substantially identical and provided in relevant part that each employee

"will not, while this agreement remains in effect, or at any time after his/her termination of employment:
(a) Directly or indirectly disclose, or in any manner reveal to any person, firm, association or corporation, any of the data, information, trade secrets or methods of doing business used or possessed by Employer, or any of the information, data or records of any client, obtained by or disclosed to Employee as a result of his/her employment by Employer [within a certain identified territory];
(b) Use or appropriate to his/her own use, without the prior consent of Employer, the distinctive business forms, programs, or equipment of Employer, or a reasonable facsimile thereof, which because of similarity in language, appearance, contents or for any other reason, may result in unfair competition to Employer.”

The covenants also contained clauses barring former employees, for a period of six months from their date of termination, from directly or indirectly competing with May or directly or indirectly becoming employed by or rendering services to any entity that had been May’s client during the year preceding the employee’s termination. The agreements were restricted to certain geographic locations depending upon where the particular employee had worked.

May alleged that since September of 1991, when IPA commenced business, defendants had been misappropriating May’s trade secrets and confidential information that included "surveys, manuals, forms and [computer] programs.” According to May, these materials comprised a unique system it had developed and refined, by which it economically analyzed the operations and structure of businesses, ascertained strengths or weaknesses, and then recommended and provided appropriate remedial services. May sought in relevant part to enjoin defendants from using or disseminating its alleged confidential information and/or trade secrets and from competing with May or becoming employed by its competitors.

On October 28, 1991, the court commenced a hearing on May’s motion for a temporary restraining order, which it ultimately heard as a motion for preliminary injunction. The relevant evidence at the preliminary injunction hearing may be summarized as follows. May is comprised of three geographical divisions, one of which is the headquarters American division (HAM). HAM is based in Illinois and encompasses the area east of the Rocky Mountains, including Canadian provinces. All defendants worked in the HAM division in one of three departments: field services, survey services, and management services. Each of these departments performed one step of the three-tiered May "method” of providing consulting services.

Field services was essentially a sales division which conducted cold calls upon prospective clients within assigned territories and attempted to persuade them to undergo a diagnostic "survey” of their business at a cost of $350. Field service personnel were paid a commission for selling the survey service. During their employment with May, defendants Ferrell and Montross were in the field services department. Their restrictive covenants were limited to their respective territories, which in both Montross’ and Ferrell’s cases was the State of Michigan.

The survey was conducted by a member of the survey service department called an "executive analyst.” The survey was an on-site, general analysis of the business’ structure and financial operations, designed to determine which management services were necessary. The trial court observed that the survey was also essentially a promotional device intended to sell the customer on the need for May’s management consulting services, the crux of its business. Survey service analysts were basically in a sales capacity; although May provided expense money for travel, the analyst received commission only if the prospective client enlisted May’s management services. Prior to leaving May to join IPA, defendants Burgess, Morton and Tulio were executives in charge of the HAM survey service department. Although all three worked out of the HAM headquarters in Illinois, their restrictive covenants barred them from seeking employment in the States of California, Florida, Hlinois, New York and Texas. Several other defendants were survey service analysts, and their restrictive covenants encompassed the entire HAM division of 36 States, plus the Canadian provinces of Ontario and Quebec.

The third area of May’s structure was the management services department. Management services personnel, called "staff executives,” were dispatched to provide the client with corrective action based upon the information obtained by the executive analyst. Defendant Sharon Dunn was formerly in the management services department, and her restrictive covenant also encompassed the entire HAM district.

Edward Sielsky, managing director of HAM, testified extensively for May regarding what information and material it claimed to be proprietary. With regard to the field services department, Sielsky testified that all personnel underwent a three- to five-day training course in which they were taught May’s particular sales presentation, including unique "hedging” techniques tailored to typical May prospects. These techniques were described in detail in May’s "Field Service Manual of Policies and Procedures” (field manual).

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Bluebook (online)
628 N.E.2d 647, 256 Ill. App. 3d 779, 195 Ill. Dec. 183, Counsel Stack Legal Research, https://law.counselstack.com/opinion/george-s-may-international-co-v-international-profit-associates-illappct-1993.