Tradesmen International, Incor v. John Black

724 F.3d 1004, 2013 WL 3949020, 2013 U.S. App. LEXIS 16043
CourtCourt of Appeals for the Seventh Circuit
DecidedAugust 1, 2013
Docket11-3715, 12-2032
StatusPublished
Cited by41 cases

This text of 724 F.3d 1004 (Tradesmen International, Incor v. John Black) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tradesmen International, Incor v. John Black, 724 F.3d 1004, 2013 WL 3949020, 2013 U.S. App. LEXIS 16043 (7th Cir. 2013).

Opinions

TINDER, Circuit Judge.

John Black, Todd Walker, Ryan Ellis, and Ryan Boyer all held upper-level management positions at Tradesmen International, Inc., a construction staffing company, when they first began to discuss forming their own competing company in August 2009. Over the course of twelve years at Tradesmen, Ellis had risen from an entry-level field representative position to become the Area Manager of the Ohio Valley; Black, Walker, and Boyer had risen from entry-level field representative positions to become the General Managers of three Tradesmen Indiana field offices over the course of two, four, and eight years, respectively. When Black resigned from Tradesmen on October 5, 2009 after refusing to accept a demotion, the discussions among the four men became “more specific.” Soon after, their new company, Professional Labor Support (PLS), was born.

On May 5, 2010, Tradesmen filed suit against Black, Walker, Ellis, Boyer, and PLS alleging ten counts: breach of contract, misappropriation of trade secrets, misappropriation of confidential information, a declaratory judgment with respect to the enforceability of the defendants’ covenants not to compete (CNTCs) with Tradesmen, permanent injunctive relief, breach of the duty of loyalty, tortious interference with contractual relations, tor-tious interference with business expectancy, conversion, and civil conspiracy. Six months into the lawsuit, on November 11, 2010, defendant Ellis filed for Chapter 7 bankruptcy, and all proceedings against Ellis were stayed. The lawsuit continued on for the remaining defendants, however, and on November 7, 2011, the district court granted summary judgment to Black, Walker, Boyer, and PLS on all [1007]*1007counts except the declaratory judgment count. With respect to the declaratory judgment count, the district court found it moot since all of the defendants’ CNTCs had already expired. The district court also denied permanent injunctive relief to Tradesmen. The remaining defendants subsequently filed a motion for attorneys’ fees, which the district court denied on April 13, 2012.

Tradesmen filed a timely notice of appeal of the November 7, 2011 summary judgment order; however, Tradesmen never sought certification under Fed. R.Civ.P. 54(b), even though the November 7, 2011 order did not end the action as to all of the parties. (The claim against Ellis remains pending to this day.) Black, Walker, Boyer, and PLS filed a timely cross-appeal in return on the attorneys’ fees issue. Unlike Tradesmen, however, Black, Walker, Boyer, and PLS were concerned about whether the Seventh Circuit had jurisdiction to hear the appeal since the action was still pending against Ellis, and they successfully obtained Rule 54(b) certification for their cross-appeal. Because the November 7, 2011 summary judgment ruling is not a final decision under Kimbrell v. Brown, 651 F.3d 752, 758 (7th Cir.2011), we lack jurisdiction to hear Tradesmen’s appeal under 28 U.S.C. § 1291. We do, however, have jurisdiction to hear Tradesmen’s appeal with respect to the district court’s denial of injunctive relief (Count V of the complaint) under 28 U.S.C. § 1292(a)(1), which allows us to hear appeals from “[ijnterlocutory orders of the district courts ... refusing ... injunctions.” Therefore, Tradesmen must wait to appeal the other nine counts in its complaint until its claims against Ellis are resolved. With respect to the district court’s denial of injunctive relief — the only part of Tradesmen’s appeal that we have jurisdiction to hear — we affirm the district court because Tradesmen has failed to show that it suffered any harm at all, let alone irreparable harm, from the remaining defendants’ actions. With respect to the remaining defendants’ cross appeal on attorneys’ fees, we have jurisdiction to hear the appeal under McCarter v. Retirement Plan for District Managers of American Family Insurance Group, 540 F.3d 649, 654 (7th Cir.2008) (holding that an “appeal may be taken from an award of attorneys’ fees only after that award is independently final — which means, after the district judge had decided how much must be paid.”). We find that the district court used the incorrect standard in its decision to deny attorneys’ fees, so we reverse and remand the attorneys’ fees issue with instructions to the district court on the correct standard to apply.

I

After Black’s resignation from Tradesmen, the defendants moved quickly to establish their new company, PLS. On October 27, 2009, less than a month after his resignation from Tradesmen, Black organized PLS as an Illinois limited liability company. Only a few weeks afterward, on November 19, 2009, Black, Walker, and Boyer signed an office lease. By January 12, 2010, Black, Walker, Boyer, and Ellis had all left their jobs at Tradesmen, and by March 2010, PLS had made its first sale.

Despite their haste in establishing PLS, the defendants were generally “very careful” during the startup process, as their counsel pointed out in oral argument. Black, Walker, Boyer, and Ellis had all signed CNTCs during their employment with Tradesmen, and the defendants attempted to abide by their terms. Because the defendants had different jobs that serviced different areas, the geographic restrictions in each defendant’s CNTC were different. Black, Boyer, Walker, and Ellis were explicitly prohibited from interfering [1008]*1008with Tradesmen’s business in certain Indiana counties. Walker was also prohibited from interfering with Tradesmen’s business in three Ohio counties. All defendants were prohibited from soliciting construction staffing business within one hundred miles of a Tradesmen field office and within twenty-five miles of any location at which Tradesmen provided services. As a result, the defendants decided to establish PLS in Mahomet, Illinois because Tradesmen had no local presence there. Beginning in January 2010, the four men “lived several days a week in an apartment ... away from their wives and children in Indiana” as they endeavored “to start ... without soliciting business from its Members’ old Tradesmen accounts and contacts.”

The only exceptions to the general care that the defendants took when establishing PLS are the emails that Boyer and Walker sent during their last month of employment at Tradesmen. Between December 4, 2009 and January 4, 2009, these two defendants sent emails to their personal email accounts and to Black with attachments that included Tradesmen’s workers’ compensation rates, manager compensation rates, marketing materials, and potential customer reports purchased from Dun & Bradstreet. The defendants presented unrebutted evidence that they never used any of these email attachments in starting PLS; still, the defendants’ attorney admitted at oral argument that the email attachments “are the worst facts in the case for us.”

Otherwise, the defendants appeared to have tried to abide by the terms of the CNTCs throughout their durations. The duration of Black, Boyer, and Walker’s CNTC was eighteen months from the time that they left Tradesmen; the duration of Ellis’s CNTC was only twelve months.

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724 F.3d 1004, 2013 WL 3949020, 2013 U.S. App. LEXIS 16043, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tradesmen-international-incor-v-john-black-ca7-2013.