Wallace Computer Services, Inc. v. Waite

Court of Appeals of North Carolina

Wallace Computer Services, Inc. v. Waite

382 S.E.2d 846, 95 N.C. App. 439, 1989 N.C. App. LEXIS 755

CourtCourt of Appeals of North Carolina

DecidedSeptember 5, 1989

Docket8826SC1253

StatusPublished

This text of 382 S.E.2d 846 (Wallace Computer Services, Inc. v. Waite) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Wallace Computer Services, Inc. v. Waite, 382 S.E.2d 846, 95 N.C. App. 439, 1989 N.C. App. LEXIS 755 (N.C. Ct. App. 1989).

Pincite

Opinion

PHILLIPS, Judge.

The only question raised by plaintiffs appeal is whether the non-competition agreement between plaintiff and defendant Waite is unenforceable as a matter of law under the law of Illinois; for all of plaintiffs actions are based upon the contract and the court dismissed them on the sole ground that the contract is not enforceable under the law of Illinois. The ruling is erroneous, and we vacate it.

While the general rule in Illinois is that an employer has no proprietary interest in its customers, The Packaging House, Inc. v. Hoffman, 114 Ill. App. 3d 284, 448 N.E.2d 947 (1983), it has been repeatedly held there, as stated in The Instrumentalist Co. v. Band, Inc., 134 Ill. App. 3d 884, 892, 480 N.E.2d 1273, 1279 (1985) and the many cases cited therein, that an employer can have a proprietary interest in its customers for the purpose of enforcing a covenant not to compete —

(1) where the former employee acquired confidential information through his employment and subsequently attempted to use it for his own benefit, and (2) where, by nature of the business, the customer relationship is near-permanent and, but for his association with plaintiff [the employee], would not have had contact with the customers in question.

Plaintiffs forecast of proof indicates that both of these situations exist in this case. The detailed customer information plaintiff recorded through the years, that its salesmen used in getting orders from the customers, and that Waite took to the competitor was clearly *442 confidential and of a type to give Willamette an advantage in seeking orders from plaintiff’s customers, many of whom had regularly bought supplies from plaintiff for many years and would not have been known to Waite except for his employment by plaintiff. Illinois permits employers to protect themselves against such tactics. Donald McElroy, Inc. v. Delaney, 72 Ill. App. 3d 285, 389 N.E.2d 1300 (1979).

And for that matter in United Laboratories, Inc. v. Kuykendall, 322 N.C. 643, 370 S.E.2d 375 (1988), our Supreme Court held that under Illinois law an employer can properly prevent a former employee from disclosing information of the type here involved to its competitors. This holding was enlarged upon in Whittaker General Medical Corp. v. Daniel, 324 N.C. 523, 526, 379 S.E.2d 824, 826 (1989), also involving Illinois law, where it was said, “customers developed by a salesperson are the property of the employer and may be protected by contract under which the salesperson is forbidden from soliciting those customers for a reasonable time after leaving his . . . employment.”

Vacated and remanded.

Judges BECTON and LEWIS concur.

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PHILLIPS, Judge.

The only question raised by plaintiffs appeal is whether the non-competition agreement between plaintiff and defendant Waite is unenforceable as a matter of law under the law of Illinois; for all of plaintiffs actions are based upon the contract and the court dismissed them on the sole ground that the contract is not enforceable under the law of Illinois. The ruling is erroneous, and we vacate it.

While the general rule in Illinois is that an employer has no proprietary interest in its customers, The Packaging House, Inc. v. Hoffman, 114 Ill. App. 3d 284, 448 N.E.2d 947 (1983), it has been repeatedly held there, as stated in The Instrumentalist Co. v. Band, Inc., 134 Ill. App. 3d 884, 892, 480 N.E.2d 1273, 1279 (1985) and the many cases cited therein, that an employer can have a proprietary interest in its customers for the purpose of enforcing a covenant not to compete —

(1) where the former employee acquired confidential information through his employment and subsequently attempted to use it for his own benefit, and (2) where, by nature of the business, the customer relationship is near-permanent and, but for his association with plaintiff [the employee], would not have had contact with the customers in question.

Plaintiffs forecast of proof indicates that both of these situations exist in this case. The detailed customer information plaintiff recorded through the years, that its salesmen used in getting orders from the customers, and that Waite took to the competitor was clearly *442 confidential and of a type to give Willamette an advantage in seeking orders from plaintiff’s customers, many of whom had regularly bought supplies from plaintiff for many years and would not have been known to Waite except for his employment by plaintiff. Illinois permits employers to protect themselves against such tactics. Donald McElroy, Inc. v. Delaney, 72 Ill. App. 3d 285, 389 N.E.2d 1300 (1979).

And for that matter in United Laboratories, Inc. v. Kuykendall, 322 N.C. 643, 370 S.E.2d 375 (1988), our Supreme Court held that under Illinois law an employer can properly prevent a former employee from disclosing information of the type here involved to its competitors. This holding was enlarged upon in Whittaker General Medical Corp. v. Daniel, 324 N.C. 523, 526, 379 S.E.2d 824, 826 (1989), also involving Illinois law, where it was said, “customers developed by a salesperson are the property of the employer and may be protected by contract under which the salesperson is forbidden from soliciting those customers for a reasonable time after leaving his . . . employment.”

Vacated and remanded.

Judges BECTON and LEWIS concur.

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Bluebook (online)

382 S.E.2d 846, 95 N.C. App. 439, 1989 N.C. App. LEXIS 755, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wallace-computer-services-inc-v-waite-ncctapp-1989.

Opinion

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