Label Printers v. Pflug

564 N.E.2d 1382, 206 Ill. App. 3d 483, 151 Ill. Dec. 720, 6 I.E.R. Cas. (BNA) 214, 1991 Ill. App. LEXIS 45
CourtAppellate Court of Illinois
DecidedJanuary 15, 1991
Docket2-90-0700
StatusPublished
Cited by29 cases

This text of 564 N.E.2d 1382 (Label Printers v. Pflug) 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
Label Printers v. Pflug, 564 N.E.2d 1382, 206 Ill. App. 3d 483, 151 Ill. Dec. 720, 6 I.E.R. Cas. (BNA) 214, 1991 Ill. App. LEXIS 45 (Ill. Ct. App. 1991).

Opinion

PRESIDING JUSTICE UNVERZAGT

delivered the opinion of the court:

Plaintiff, The Label Printers, sought a preliminary injunction in the circuit court of Kane County against defendant, John Pflug, seeking to prohibit him from violating the terms of a noncompetition and nondisclosure agreement which defendant signed when he began working as a salesman for plaintiff. Following a hearing, the trial court granted the preliminary injunction, enjoining defendant from future solicitation of businesses to which he had made sales while employed by defendant, which had been assigned by plaintiff during his tenure with the company or which were prior clients of plaintiff.

On appeal, defendant argues that the noncompetition and nondisclosure agreement is unenforceable. We agree and reverse the judgment entered below.

The evidence as adduced at the preliminary injunction hearing was as follows. On February 24, 1987, plaintiff, a manufacturer and seller of customized pressure sensitive labels, hired defendant as a salesman. On his first day of work, defendant was taken through the plaintiff’s manufacturing plant and shown the different manufacturing machines. Also, plaintiff was shown how to prepare the paper work involved in orders. On the second day, defendant accompanied an experienced sales representative on her calls. On the third day, defendant began making calls of his own.

The testimony showed that defendant was able to walk through the manufacturing plant at any time. Defendant knew the basics regarding how certain labels were manufactured and the materials used in making them. On one occasion defendant came into the plant on a Saturday to learn a particular printing process, flexography.

In the beginning of his employ with plaintiff, defendant was assigned a particular area of concentration bounded on the east by Lake Michigan, on the west by route 294, on the south by the Kennedy Expressway, and on the north by the Illinois/Wisconsin border. Both defendant and William Kane, partner, vice-president, and general manager of plaintiff, stated that, even though defendant was assigned a particular area, his territory was unlimited. Defendant said that he was able to go anywhere in the State as long as no other sales representative had “a card” on a prospective business, i.e., had previously called on the customer. According to defendant, there was no way to know if another salesman had called on a business until he received his end-of-the-month report reflecting the calls he had made. That report would show which customers had been previously called on by someone else.

When defendant first started working for plaintiff, plaintiff gave him certain existing accounts. Later, when defendant’s sales were faltering, plaintiff gave him some more accounts, specifically outside of defendant’s original assigned area of concentration as well as out of State.

Defendant was to call on existing customers assigned to him and to make “cold calls” to pick up new business. When making calls, defendant tried to get a sample of the label which a prospective customer wanted to order. Defendant would then measure it, describe it, and turn in a quote for the prospective order to plaintiff. In a day or two, plaintiff would return defendant’s quote to him with a price to be quoted to the customer. Defendant would then contact the prospective customer with the price. Sometimes a prospective- customer would tell defendant the price offered by a competitor and who the competitor was.

During his employ with plaintiff, defendant’s total sales equalled $26,000 for 1987, $69,000 for 1988, and $117,000 for 1989. The total annual sales of the plaintiff was between $6 million and $7 million. Due to his low sales, defendant learned that plaintiff was going to let him go. Defendant resigned March 23, 1990, and went to work three days later for National Data Label (NDL), a company which also manufactures pressure sensitive labels and which solicits and sells labels in the area in which defendant sold labels on behalf of plaintiff. With NDL, defendant’s sales territory rotates. Of the five territories in the rotation scheme, only one of the territories actually encompassed any of the territory which was defendant’s original assigned area of concentration when he worked for plaintiff.

Following his departure from plaintiff, defendant contacted 40 to 50 potential customers in his former area of concentration. Of the 57 accounts defendant maintained he had when he left plaintiff, defendant admitted having contacted 85% of them on behalf of NDL. Of these accounts, some were already customers of NDL prior to defendant’s accepting employment with NDL. Of those who became customers of NDL since defendant’s employment, the majority were customers defendant had secured on his own while working for plaintiff. Additionally, defendant related that the items purchased by these businesses from NDL were items that the customers had not previously purchased from plaintiff when he was working for plaintiff.

Defendant stated that during his two months with NDL, he had made approximately 700 personal calls on businesses. Of these, about 45 businesses were customers that he had done business with while employed by plaintiff. Defendant maintained that only 19 of the 57 accounts he had at the time he left plaintiff were “house accounts” given to him by plaintiff and that the rest of the accounts were obtained by him through “cold” calls. Plaintiff maintained that at the time of his resignation defendant had 76 accounts of which 35 were house accounts. Of these 76 accounts, plaintiff was the exclusive supplier for only two or three of them. The other customers purchased labels from other suppliers besides plaintiff.

At the time defendant began working for plaintiff, he had signed a noncompetition and nondisclosure agreement. That agreement prohibited defendant from soliciting or selling pressure sensitive labels to any former customers of plaintiff for a period of 18 months after defendant left plaintiff’s employment. Specifically, the agreement provided:

“During his employment with the Partnership and any successor entity thereto, and for a period of eighteen (18) months after the termination of such employment, he will not for himself or for any other person, firm, corporation, partnership, association or other entity, sell or offer for sale, canvass, solicit or deliver, any products which are then sold by the Partnership to any person, firm, corporation, partnership, association or other entity, who is, or has been within the period ending on the date of such termination, a customer of the Partnership.”

Additionally, the agreement prohibited defendant from engaging in any business competition with plaintiff within the geographic area in which he had represented plaintiff. Paragraph 2 of the agreement provided:

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Bluebook (online)
564 N.E.2d 1382, 206 Ill. App. 3d 483, 151 Ill. Dec. 720, 6 I.E.R. Cas. (BNA) 214, 1991 Ill. App. LEXIS 45, Counsel Stack Legal Research, https://law.counselstack.com/opinion/label-printers-v-pflug-illappct-1991.