Hinchman v. Phebus

2021 IL App (1st) 200684-U
Appellate Court of Illinois·Decided March 26, 2021·No. 1-20-0684·Unpublished

Opinion

2021 IL App (1st) 200684-U No. 1-20-0684

Order filed March 26, 2021 Sixth Division

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).

IN THE

APPELLATE COURT OF ILLINOIS FIRST DISTRICT

TIM HINCHMAN, ) Appeal from the ) Circuit Court of

Plaintiff-Counter-Defendant-Appellee, ) Cook County.

)

v. ) No. 19 CH 12929 )

BRIAN PHEBUS, an Illinois Resident, and METRO ) Honorable EXHIBIT CORPORATION, an Illinois corporation, ) Pamela McLean Meyerson, ) Judge, Presiding.

Defendants-Counter-Plaintiffs-Appellants. )

JUSTICE SHARON ODEN JOHNSON delivered the judgment of the court.

Presiding Justice Mikva and Justice Connors concurred in the judgment.

ORDER

¶1 Held: The circuit court did not abuse its discretion in denying defendants’ motion for a preliminary injunction where they failed to establish protectable interests in their customer lists or any other alleged confidential information and where the restrictive covenant was overly broad.

¶2 Defendants/Counter-Plaintiffs Brian Phebus (Phebus) and Metro Exhibit Corporation (Metro) filed this interlocutory appeal pursuant to Illinois Supreme Court Rule 307(a)(1) (Ill. S. Ct. R. 307(a)(1) (eff. Nov. 1, 2017)) to appeal the denial of their motion for a preliminary

injunction against former employee, Plaintiff/Counter-Defendant Tim Hinchman (Hinchman), on March 11, 2020. On appeal, defendants contend that the circuit court erred when it incorrectly applied the standard from our supreme court’s decision in Reliable Fire Equipment Co. v. Arrendondo, 2011 IL 111871, by focusing solely on the existence of near permanent customer relationships rather than the totality of the circumstances to determine whether a legitimate protectable interest exists. For the reasons that follow, we affirm.

¶3 BACKGROUND

¶4 Metro is a trade show exhibit company and Hinchman was a former sales executive for the company. On November 7, 2019, Hinchman filed a verified complaint against Metro and its CEO, Phebus, in which he sought a declaration that the nondisclosure and noncompete agreement (agreement) had no valid and legal effect (count I) and damages for retaliatory discharge (count II).

¶5 On November 14, 2019, Metro filed a verified counter-complaint against Hinchman in which it sought a temporary restraining order (TRO), preliminary injunction and other relief for Hinchman’s alleged breach of the agreement (count I) and damages for Hinchman’s alleged breach of fiduciary duty to Metro (count II). Metro requested that the circuit court order Hinchman to refrain from soliciting current Metro clients and from directly competing with Metro. The circuit court denied the request for the TRO and the matter was set for hearing on the preliminary injunction motion on November 22, 2019. The parties later filed a joint statement of facts in the circuit court on February 3, 2020.

¶6 According to the joint statement of facts, Metro was a company that designed, fabricated, managed, constructed, assembled, stored, rented, and provided financing solutions to clients

nationwide for trade show exhibitions. Metro had been in business for over 30 years and Phebus was the CEO. Hinchman served as a sales executive for Metro from May 2008 until his termination on October 14, 2019. Hinchman’s previous employer was Design Agency, Inc., which also specialized in designing trade show exhibits, and where he received sales training from Tom Bacha (Bacha) during his employment. Hinchman brought no clients to Metro from Design Agency, Inc.

¶7 On or about February 1, 2013, the parties entered into an agreement that contained a restrictive covenant against solicitation of Metro’s customers. Hinchman was employed by Metro for another six years after the agreement was executed. The parties agreed that the portions of the agreement at issue were as follows:

“Paragraph 2. Employee and the Company further recognize, acknowledge, and agree, that by reason of this Agreement, the Company will:

A. Establish and help to promote contacts and working relationships between Employee and the Company’s clients, which is a position of trust and confidence;

B. Expend substantial time, money and effort to train and develop Employee’s professional skills and reputation so Employee can better serve the Company’s clients;

C. Provide (in confidence and trust) Employee with access to knowledge and confidential information about the Company’s and its client’s business and financial affairs in order that Employee can professionally serve the Company’s client.

***

Paragraph 5. The Company and Employee recognize, acknowledge, and agree that Employee’s services to the Company are special and unique by reason of Employee’s access to confidential information belonging to the Company. IN CONSIDERATION OF THE FOREGOING, OF CONTINUED EMPLOYMENT AND PROFESSIONAL ADVANCEMENT WITH THE COMPANY, AS WELL AS OTHER GOOD AND VALUABLE CONSIDERATION, THE SUFFICIENCY OF WHICH CONSIDERATION IS HEREBY ACKNOWLEDGED BY THE PARTIES HERETO, THE EMPLOYEE, IN THE INTERESTS OF EMPLOYER, THE COMPANY AND ITS CLIENTS, SHAREHOLDERS AND OTHER EMPLOYEES, AGREES AS FOLLOWS:

Paragraph 6: During Employee’s employment with the Company, Employee shall loyally serve its interests of the Company, and the Employee shall under no circumstances:

A. Provide service to sell or work for anyone except the Company without fully and completely disclosing the same to the Company without fully and completely disclosing the same to the Company and obtaining the Company’s prior written approval and consent;

B. Provide service to sell or work for any client of the Company’s for Employee’s own benefit or the benefit of anyone except the Company;

C. Divert, take away or attempt to divert or take away any client, customer or account of the Company or the business of any client, customer, or account of the Company.

Paragraph 7. Nondisclosure of Information A. Employee shall hold in confidence and trust for the sole benefit of the Company all knowledge; information and data which Employee obtains or has access to during the course of employment with the Company relating to the business and financial affairs, services, activities and products of the Company or of any person or firm doing business with the Company, such as, but not limited to, master customer lists, client data bases, vendors lists, product specification descriptions, finances, earning, sales volume, sales histories of individual customers, outlets prices, methods, systems, practices, plans, processes and procedures owned, developed or used in the course of business by the Company, all of which, the Employee acknowledges, constitute the valuable property and confidential information of the Company.

B. Employee shall not disclose, divulge, publish, copy, or reproduce for the benefit of anyone except the Company (without the Company’s prior written consent and approval) any of the knowledge, confidential information and data described [i]n Paragraph 7.A above.

C. Upon termination of employment with the Company (for any reason, and regardless who, initiates such termination), Employee shall not take any original or duplicate books, papers, records, documents, or any other information whatsoever, whether originals or reproductions, made or acquired by Employee or others, which the Employee may obtain during the course of

employment, nor shall the Employee take any knowledge, data and confidential information described in Paragraph 7.A above.

Paragraph 8. Noncompetition Agreement:

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

Hinchman v. Phebus, 2021 IL App (1st) 200684-U (Ill. Ct. App. 2021).

2021 IL App (1st) 200684-U (Hinchman v. Phebus) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Yellow Cab Co. v. PRODUCTION WORKERS UNION
416 N.E.2d 48 (Appellate Court of Illinois, 1980)
Health Professionals, Ltd. v. Johnson
791 N.E.2d 1179 (Appellate Court of Illinois, 2003)
Terry v. State Farm Mutual Automobile Insurance
677 N.E.2d 1019 (Appellate Court of Illinois, 1997)
Arpac Corp. v. Murray
589 N.E.2d 640 (Appellate Court of Illinois, 1992)
Clinton Landfill, Inc. v. Mahomet Valley Water Authority
943 N.E.2d 725 (Appellate Court of Illinois, 2010)
Roxana Community Unit School District No. 1 v. WRB Refining
2012 IL App (4th) 120331 (Appellate Court of Illinois, 2012)
Cambridge Engineering, Inc. v. Mercury Partners 90 BI, Inc.
879 N.E.2d 512 (Appellate Court of Illinois, 2007)
Gastroentrology Consultants of the North Shore, S.C. v. Meiselman
2013 IL App (1st) 123692 (Appellate Court of Illinois, 2013)