Tie Systems, Inc. v. Telcom Midwest, Inc.

560 N.E.2d 1080, 203 Ill. App. 3d 142, 148 Ill. Dec. 483, 1990 Ill. App. LEXIS 1397
CourtAppellate Court of Illinois
DecidedSeptember 12, 1990
Docket1-89-2654
StatusPublished
Cited by7 cases

This text of 560 N.E.2d 1080 (Tie Systems, Inc. v. Telcom Midwest, Inc.) 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
Tie Systems, Inc. v. Telcom Midwest, Inc., 560 N.E.2d 1080, 203 Ill. App. 3d 142, 148 Ill. Dec. 483, 1990 Ill. App. LEXIS 1397 (Ill. Ct. App. 1990).

Opinion

JUSTICE WHITE

delivered the opinion of the court:

Defendants Telcom Midwest, Inc., Michael Fainman, James Van Wolvelear, Sandra Priola, Melissa Friedow, David Bandy, and Cyrel Scher have filed an interlocutory appeal from the circuit court’s grant of a temporary restraining order in favor of plaintiff Tie Systems, Inc. Defendants argue that the court’s order was against the manifest weight of the evidence and overly broad.

On November 29, 1987, TIE/Communications, plaintiff's parent company, purchased the assets of the Honeywell Communications Services Business. The purchase included Honeywell's contracts, its service and maintenance agreements with customers, and its customer lists and related data. On the same date, plaintiff was formed and the Honeywell customer lists and maintenance agreements were transferred to it. The individual defendants are former Honeywell employees who came to work for plaintiff after the acquisition.

In July 1989, plaintiff filed a five-count complaint for injunctive relief charging defendants with breach of contract, misappropriation of trade secrets, tortious interference with contractual relations, conspiracy, and violation of the Illinois Trade Secrets Act (111. Rev. Stat. 1987, ch. 140, pars. 351 through 359). Plaintiff alleged that the corporate defendant, Telcom, was formed by Michael Fainman in February 1989 and that the individual defendants left plaintiff’s employ for Telcom between February 1, 1989, and May 1, 1989. Plaintiff further alleged that the individual defendants acquired confidential and proprietary information while employed with plaintiff and were using that information for the benefit of Telcom.

In August 1989, plaintiff filed motions for a temporary restraining order and a preliminary injunction. In its motions, plaintiff alleged that it had near-permanent and ongoing relationships with its customers and that it maintained a confidential customer list, service and maintenance agreements, and other confidential and proprietary information. Plaintiff further alleged that defendants had obtained this information and were using it to solicit plaintiff’s customers and interfere with its customer relations. Plaintiff alleged that as a result of defendants’ activities plaintiff had sustained severe and irreparable injury to its long-standing customer accounts and an erosion of its business, including loss of customer accounts.

At a hearing on plaintiff’s motions, Raymond Baker testified that he became president of plaintiff nine months after the Honeywell acquisition, that approximately 1,100 of plaintiff’s 4,000 customers were obtained in the acquisition, and that plaintiff spent in excess of $1 million a year in maintaining its customers. Baker also testified that in recent months plaintiff had lost a number of customers to Telcom and that contract cancellations were occurring on a daily basis.

Baker testified that after he became president, he took steps to protect plaintiff’s customer lists and other proprietary information by developing a computerized customer list and eliminating the Honeywell practice of releasing complete customer lists to prospective customers. Another step taken was the removal of sales files from the salespersons’ desks to a central filing area. Baker testified that the sales files contained information about the customers’ phone systems, their maintenance contracts, work done subsequent to the installation of the systems, and customer cut-over dates.

Baker explained that cut-over dates were the dates on which customers would renew their contract with plaintiff or buy services or other materials based on the contract. According to Baker, the dates were important because other vendors might be able to persuade a customer to do business with them by contacting the customer at the cut-over date. Baker also stated that unlike the customer lists, renewal dates and cut-over dates were kept confidential and never disseminated to prospective customers.

Julie Koster and Margaret Stayart, employees in plaintiff’s customer service department, testified that during the last week of April 1989, they saw Cyrel Scher going through plaintiff’s filing cabinets and removing a large number of files. Koster stated that a salesperson usually would not need such a large amount of files. Koster also stated that the area in which the files were stored was open to all employees and that the file cabinets were not locked.

Bob Elstner, an installation supervisor, testified that near the end of April 1989, he observed Scher carrying an armload of files to her car. Elstner claimed it was unusual for a salesperson to remove such a large amount of files from the building.

Jeffrey Jolitz, purchasing manager for one of plaintiff’s customers testified that on May 10, 1989, one month before his cut-over date, he was contacted by Scher on behalf of Telcom. Jolitz testified that Scher offered to service his company at a percentage of the price charged by plaintiff.

Subsequently, Julie Koster was recalled to testify concerning newly discovered evidence. Koster testified that she had recently discovered that approximately 500 of plaintiff’s sales files were missing and that defendants had been responsible for the majority of the customers whose files were missing. A list of the names of the customers whose files were missing was admitted into evidence over defendants’ objection. The list included Jeffrey Jolitz’s company.

Michael Fainman was called as a witness on defendants’ behalf. He testified that he began working for Honeywell in 1983 and that it was Honeywell’s practice to distribute complete customer lists with every proposal. Fainman testified that this practice continued during the period immediately after the plaintiff corporation was formed but was discontinued in October 1988, when the information was stored on plaintiff’s computer system. Fainman stated that neither he nor the other individual defendants had access to plaintiff’s computer system.

Fainman testified that he resigned from plaintiff’s employ on February 1, 1989, and that Telcom was incorporated on February 24, 1989. Fainman stated that at the time of the hearing Telcom had approximately 150 customers and that 50% to 60% of them were formerly plaintiff’s customers. Fainman stated that Telcom obtained its customers by contacting those customers the individual defendants had formed relationships with while employed at Honeywell.

When questioned about cut-over dates, Fainman stated the dates were important because contracts were signed on those dates and because they provided a reference point for payments and warranties. However, Fainman testified that it was not necessary to have any particular documents to determine a cut-over date because the information could be obtained from the customer or Illinois Bell. On cross-examination, Fainman testified that it was not normal procedure to give out cut-over dates and that Illinois Bell would not release information about cut-over dates without the customer’s permission.

On September 5, 1989, the trial court entered a memorandum order granting plaintiff’s motion for a preliminary injunction.

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

Related

Jean-Baptiste v. Rockford Housing Authority
2025 IL App (4th) 251230-U (Appellate Court of Illinois, 2025)
Hutsonville Community Unit School District No. 1 v. Illinois High School Ass'n
2021 IL App (5th) 210308 (Appellate Court of Illinois, 2021)
In re: Estate of Weiland
338 Ill. App. 3d 585 (Appellate Court of Illinois, 2003)
In Re Estate Weiland
788 N.E.2d 811 (Appellate Court of Illinois, 2003)
Daniels v. Anderson
624 N.E.2d 1151 (Appellate Court of Illinois, 1993)
People v. Turner
599 N.E.2d 104 (Appellate Court of Illinois, 1992)
H C R Ltd. Partnership I v. Behrens
589 N.E.2d 1104 (Appellate Court of Illinois, 1992)

Cite This Page — Counsel Stack

Bluebook (online)
560 N.E.2d 1080, 203 Ill. App. 3d 142, 148 Ill. Dec. 483, 1990 Ill. App. LEXIS 1397, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tie-systems-inc-v-telcom-midwest-inc-illappct-1990.