The Instrumentalist Co. v. Band, Inc.

480 N.E.2d 1273, 134 Ill. App. 3d 884, 89 Ill. Dec. 530, 1985 Ill. App. LEXIS 2177
Appellate Court of Illinois·Decided June 28, 1985·No. 85-0638·Published·Cited by 42 cases

Opinion

JUSTICE SULLIVAN

delivered the opinion of the court:

Defendants, Band, Inc. (Band), and Kenneth L. Neidig (Neidig) bring this interlocutory appeal from the issuance of a preliminary injunction restraining them until further order of the court from competing with plaintiff in violation of a restrictive covenant in an employment agreement between plaintiff and defendant, Neidig.

As alleged in its amended complaint for injunctive relief, plaintiff is the publisher of The Instrumentalist, a monthly magazine directed toward school band and orchestra directors and music teachers. The Instrumentalist has been in publication continuously since 1946 and currently has more than 19,000 paid subscribers throughout the United States and in numerous foreign countries. Band, a Michigan corporation chartered in June 1984, is the publisher of Band Magazine, a bimonthly periodical distributed free of charge to essentially the same market as The Instrumentalist. Neidig was employed by plaintiff as editor and advertising manager of The Instrumentalist from June 1970 to June 1984, throughout which period the terms and conditions of his employment were governed by an employment contract which was renegotiated and renewed periodically. The agreement at issue in this case, executed in March 1981 but made retroactively effective as of July 1, 1979, contained inter alia, the following covenant:

“5. Neidig agrees that for a period of two years following the termination of his employment with Company, he will not be employed by, consult for, accept compensation for, own, operator, manage or in any other way work for any of the following listed publications or business entities: a) Music Educators National Conference; b) The School Musician Director and Teacher-, c) Woodwind World Brass and Percussion-, d) Music Journal, or e) any other business entity or person engaged in the business of publishing, selling, or distributing a magazine or other periodical directed to or primarily used by band or orchestra directors, piano or organ teachers or junior or senior high school instrumental musicians in the United States of America. During such two year period, Company shall have first right of refusal on any articles Neidig may prepare for publication in a national music magazine. Specifically excluded from the restrictions of this paragraph 5, and thereby available employment to Neidig after the term of his employment with Company, is employment related to the publication of a ‘house organ’ or any magazine published by a company in the music industry, provided that magazine is distributed without any charge to each subscriber.”

In June 1984, Neidig voluntarily terminated his employment with plaintiff, and became a principal shareholder in Band and editor of Band Magazine, the first issue of which was published in September of that year. Plaintiff thereafter filed a complaint for preliminary and permanent injunctive relief seeking to restrain Neidig from working for Band in violation of the terms of the restrictive covenant.

At the preliminary injunction hearing, James Rohner, plaintiff’s president and an attorney, testified that he had drafted each of the four employment contracts executed by plaintiff and Neidig over the course of the latter’s employment with The Instrumentalist. As originally submitted to Neidig, the contract at issue contained either a three-year or 30-month noncompetition clause, which Neidig rejected, counterproposing a 12-month restriction and voluntary relinquishment of the entire exclusionary clause allowing him to work for “house organs” or magazines published by companies in the music industry-described by Rohner as journals published by companies wishing to promote their own music-related products — in exchange for a clause permitting him to start a new magazine after that one-year period. Eventually, after nearly 21 months of periodic negotiations, Neidig agreed to a two-year restriction in return for various modifications of other terms, including elimination of some post-employment proscriptions contained in the three previous contracts and increased compensation.

Rohner further testified that throughout the 14 years of his employment with plaintiff, Neidig was both editor and advertising manager of The Instrumentalist. As editor, he was responsible for soliciting and editing articles submitted by music experts and educators and generally preparing the magazine for publication. Between 1970 and 1979, he also had near-exclusive responsibility for soliciting advertisements for The Instrumentalist, as well as for Clavier and Accent, two other music magazines published by plaintiff. Although Will Garvey was hired as assistant advertising manager in 1979, Neidig continued to exercise full decisional authority as to the division of responsibility for soliciting and contacting existing and potential advertisers. Neidig compiled a list entitled “KLN [Kenneth L. Neidig] Close Contacts” of the top 30 to 40 advertisers — most of whom had been advertising in The Instrumentalist for 15 to 30 years and together accounted for approximately one-half of its advertising volume and revenue — with directions to Garvey and the other staff members that the companies thereon were his exclusive accounts with whom no one else was allowed contact without his permission. In addition, Neidig had complete discrection to contact any of the more than 100 smaller advertisers, including those assigned to Garvey. Several times a year, Neidig travelled, at plaintiff’s expense and with its encouragement, to music conventions and to the offices of the firms which advertised in plaintiff’s magazines and thereby developed personal and, in some cases, social relationships with the persons in those firms responsible for making advertising purchases.

As presiding of The Instrumentalist, Rohner’s duties were primarily administrative, and while he sometimes made suggestions to Neidig concerning the servicing of their advertising customers, he rarely had personal contact therewith.

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The Instrumentalist Co. v. Band, Inc., 480 N.E.2d 1273, 134 Ill. App. 3d 884, 89 Ill. Dec. 530, 1985 Ill. App. LEXIS 2177 (Ill. Ct. App. 1985).

480 N.E.2d 1273 (The Instrumentalist Co. v. Band, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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