Partsmaster, Inc. v. Johnson

475 F. Supp. 417
CourtDistrict Court, D. Kansas
DecidedJuly 26, 1979
DocketCiv. A. No. 79-2067
StatusPublished

This text of 475 F. Supp. 417 (Partsmaster, Inc. v. Johnson) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Partsmaster, Inc. v. Johnson, 475 F. Supp. 417 (D. Kan. 1979).

Opinion

MEMORANDUM AND ORDER

O’CONNOR, District Judge.

This case is now before the Court upon plaintiff’s motion for a preliminary injunction. A hearing on the matter was held on July 20, 1979, at which time both sides presented evidence. Having carefully considered the testimony, exhibits, briefs and arguments of counsel the court makes the following findings and order.

We note initially the standards which govern requests for preliminary injunctions as they were recently set out by Judge Rogers in Hiett v. Brier, No. 78-4291 (D.Kan., November 7, 1978):

“In determining whether to grant a Rule 65 motion, this court has traditionally considered the four factors set forth in Wright & Miller’s FEDERAL PRACTICE AND PROCEDURE, § 2948, pp. 430-431 (1973):
(1) the significance of the threat of irreparable harm to the plaintiff if the injunction is not granted;
(2) the state of the balance between this harm and the injury that granting the injunction would inflict on defendant;
(3) the probability that plaintiff will succeed on the merits; and
(4) the public interest.
Of course, the weighing of these various factors in the process of determining whether injunctive relief should be granted is a matter that is within the district judge’s discretion. Penn v. San Juan Hospital, Inc., 528 F.2d 1181, 1185 (10th Cir. 1975).
In considering a motion such as the one before us, the court must keep in mind that preliminary injunctive relief is an ‘extraordinary’ and ‘drastic’ remedy. Checkers Motors Corp. v. Chrysler Corp., 405 F.2d 319, 323 (2d Cir. 1969), cert. denied 394 U.S. 999 [89 S.Ct. 1595, 22 L.Ed.2d 777] (1969); Holiday Inns of America, Inc. v. B & B Corporation, 409 F.2d 614, 618 (3d Cir. 1969). Further, the burden of persuasion in such a matter is upon the plaintiff. Automated Market[419]*419ing System, Inc. v. Mastin, 467 F.2d 1181, 1183 (10th Cir. 1972); Crowther v. Seaborg, 415 F.2d 437, 439 (10th Cir. 1969). Only a clear showing of entitlement to relief will be sufficient. Penn v. San Juan Hospital, Inc., supra, 528 F.2d at 1185; Garlock, Inc. v. United Seal, Inc., 404 F.2d 256 (6th Cir. 1968).”

Plaintiff, through its Dyna Systems Division, is engaged in the distribution and sale of maintenance products including industrial fasteners and related equipment. Defendant Repair and Maintenance Products Corporation (RAMPCO) is a distributor of similar products and is a competitor of plaintiff. Defendant Johnson was former Division Sales Manager of plaintiff. He has been employed by RAMPCO as manager of its sales department since January, 1979. Defendants Zoch and Richardson were formerly sales representatives of plaintiff and now sell similar products for RAMPCO.

Johnson, Zoch and Richardson all had contracts with plaintiff which contained certain post-employment restrictive covenants. Zoch and Richardson agreed not to solicit or sell products similar to those of Dyna Systems within their assigned territories for eighteen months after termination. Zoch was assigned to sell in Geary, Morris, Clay, Washington, Saline, Ottawa, Cloud, Republic Jewell, Mitchell, Lincoln, Ells-worth, Russell, Osborne, Smith, Ellis, Rooks, and Phillips counties in Kansas. Richardson was assigned Nemaha, Brown, Jackson, Atchison, Jefferson, Leavenworth, and Doniphan counties. Johnson agreed that he would not perform similar services within areas he served for plaintiff, for eighteen months after leaving plaintiff’s employ.

Nondisclosure covenants were included in the contracts whereby Johnson, Zoch and Richardson agreed not to disclose or use certain information deemed confidential by Dyna Systems. This confidential information includes plaintiff’s costs, lists of customers and customer information such as purchasing habits and idiosyncrasies, internal purchasing procedures, sales presentation books, customer route books, commission lists, names and locations of salesmen, sales sheets, and price lists.

Since their employment with RAMPCO, Zoch and Richardson have been soliciting and selling to those customers they sold to for Dyna in their previously assigned territories. Johnson has been performing services for RAMPCO similar to those he performed for Dyna Systems within the areas he covered for Dyna Systems.

RAMPCO and its president, Theodore Jarman, although aware of the above post-employment restrictions, induced Zoch, Richardson and Johnson to leave Dyna Systems, permitted them to work their former customers and former territories, and paid Richardson and Zoch “hassle” and “transition” bonuses.

RAMPCO now has information in its files and computer about Dyna Systems’ customers which came to RAMPCO by reason of sales by Richardson and Zoch to former Dyna Systems’ customers. Jarman, in his deposition, testified that RAMPCO planned to give this customer information, gleaned by employees in their prior employment, to any new salespersons assigned to the territories in which these customers are located.

It appears that sales representatives and sales supervisors in the fastener and related maintenance equipment business are the exclusive company contact with customers, and gain an intimate knowledge of customers’ needs and specialized requirements. They acquire a special influence over the customers they solicit, sell, and service. This is a type of relationship that can be exploited when sales representatives become employees of a competitor unless the former employer can protect its legitimate business interests. For example, while employed by plaintiff Richardson and Zoch had route books which contained names, buying habits, and needs of customers. They gained intimate knowledge of plaintiff’s customers, knowledge they are now exploiting for RAMPCO. Richardson and Zoch admitted that they did not return all their customer information after the termination of their employment with Dyna Systems, and were using this information in making [420]*420sales for RAMPCO. In businesses such as the fastener and related maintenance equipment business that depend on customer servicing, goodwill is paramount and it chiefly attaches to the salesperson rather than the company or the product.

Dyna Systems has made few sales within the territories formerly assigned to Richardson and Zoch and has had difficulty in hiring salespersons for these territories because of the presence of former Dyna Systems salespersons at work in the territories for RAMPCO.

We are satisfied that plaintiff has been and is being harmed by the activities of Johnson, Richardson, and Zoch in violation of their contracts with Dyna Systems, and that Jarman and RAMPCO have encouraged these violations and benefited from them.

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Related

Mabel Penn v. San Juan Hospital, Inc.
528 F.2d 1181 (Tenth Circuit, 1975)
Eastern Distributing Co., Inc. v. Flynn
567 P.2d 1371 (Supreme Court of Kansas, 1977)
H & R BLOCK, INC. v. Lovelace
493 P.2d 205 (Supreme Court of Kansas, 1972)
Foltz v. Struxness
215 P.2d 133 (Supreme Court of Kansas, 1950)
John Lucas & Co. v. Evans
40 P.2d 359 (Supreme Court of Kansas, 1935)
Atlantic Wool Combing Co. v. Fibre Corp.
306 F. Supp. 69 (D. Rhode Island, 1969)
Garlock, Inc. v. United Seal Inc.
404 F.2d 256 (Sixth Circuit, 1968)
Crowther v. Seaborg
415 F.2d 437 (Tenth Circuit, 1969)

Cite This Page — Counsel Stack

Bluebook (online)
475 F. Supp. 417, Counsel Stack Legal Research, https://law.counselstack.com/opinion/partsmaster-inc-v-johnson-ksd-1979.