No. 02 4544 Page 4

ILDec. at 897-98; see also Smith-Shrader Co., Inc. v. Smith, 136 Il. App.3d 571, 483 N.E.2d 283,

91 W.Dec. 1 (IILApp. 1 Dist. 1985). The courts in H.Vincent Allen and Smith-Shrader

reasoned that solicitations — even post-departure — act to hinder the purpose for which the
corporation was developed. Other courts have curtailed this reasoning, determining that
liability will not attach where the former employee uses only general knowledge acquired
during the relationship. Dangeles v. Muhlenfeld, 191 I. App.3d 791, 548 N.E.2d 45, 138 Ill.Dec.
815 (IILApp. 2° Dist. 1990).

‘Whether Mangan’s activity and use of knowledge acquired while employed by Superior
rises to the level of a breach of fiduciary duty is unclear. Superior properly alleges, however,
that Mangan, as an officer of the corporation, owed a fiduciary duty and that by using
information gained during his employment and soliciting Superior’s clients, he breached that
duty. We cannot determine, as required by Rule 12(b)(6), that there is no set of facts that
plaintiff can prove, upon which it may prevail against Mangan at trial, and must therefore deny
the motion to dismiss as to count I of the complaint — the claim of breach of fiduciary duty.

Counts II and Il seek types of equitable relief: an injunction barring defendants from
soliciting plaintiff's former clients and the imposition of a constructive trust on the profits
gained by defendants from their solicitation of former clients. Plaintiff essentially alleges that
the alleged breach of duty by Mangan has resulted and will continue to result in the loss of
clients,and that this damage cannot be remedied by money damages alone. While these
remedies are extraordinary and imposed at the discretion of the court, a breach of duty as

alleged by plaintiff may call for an equitable remedy. See Cross Wood Products, Inc. v. Suter,

97 Il. App.3d 282, 422 N.E.2d 953, 52 IlDec. 744 (IILApp. 1* Dist. 1981) (holding that an


~

No, 02 C 4544 Page3

his position for his own benefit and from hindering the ability of a corporation to continue the
business for which it was developed. Id.

At this point we cannot determine whether Mangan was an officer of Superior. While
serving as vice-president of the Sycamore office, he was in charge of its day-to-day
management. How much guidance he followed from the corporation is unclear. Even if
Mangan was not a formally-elected corporate officer, he may be an officer for these purposes
if Superior proves that he exercised certain powers of an officer or agent with the approval and

recognition of the corporation. H & H Press, Inc. v. Axelrod, 265 Il.App.3d 670, 679, 638

N.E.2d 333, 339, 202 Ill. Dec. 687, 693 (IIlApp. 1" Dist. 1994); see also Everen Securities, Inc.

y. A.G. Edwards and Sons, Inc., 308 Ill. App.3d 268, 719 N.E.2d 312, 241 Ill.Dec. 451 (IILApp.
3* Dist. 1999) (determining that a “branch office manager” with “significant managerial and
supervisory responsibilities” was an officer for these purposes).

Assuming arguendo that Mangan was an officer of Superior and owed a fiduciary duty
to the corporation, we do not have sufficient information about the alleged breach to dismiss
the case at this point. A plaintiff may prove a breach of fiduciary duty by showing that a
defendant used information gained during employment with defendant for his own use, even
if this information does not rise to the level of trade secret protection. Comedy Cottage, Inc.

y. Berk, 145 IlApp.3d 355, 360-61, 495 N.E.2d 1006, 1011-12, 99 Ill.Dec. 271, 276-77 (IILApp.

1* Dist. 1986). Moreover, some courts have determined that even though former officers have
the right to legally compete, the solicitation of former clients — even after departure — may rise
to the level of breach of fiduciary duty if the employee uses confidential information acquired

during the relationship. H.Vincent Allen, 63 IlLApp.3d at 291-92, 379 N.E.2d at 769-70, 19


No, 02 C 4544 Page 5

injunction to prohibit employee from soliciting former employer’s customers was necessary
because harm to employer’s competitive advantage could not be measured in money damages
alone). We cannot determine, for the purposes of a motion to dismiss, that plaintiff cannot
prevail on these claims for equitable relief if it demonstrates a breach of fiduciary duty,
Finally, count IV ofthe complaint alleges tortious interference with prospective business
advantage. As stated in the order of October 3, 2002, granting the motion to dismiss, plaintiff
does not have a cause of action against a bona fide competitor absent a claim for unfair

competition. See A-Abart Elec. Supply, Inc. vy. Emerson Elec. Co., 956 F.2d 1399, 1404-05 (7"

Cir. 1992). Because plaintiff does not allege that any information used by Mangan and Marlin
to solicit customers was confidential or protected by contract, it does not have a claim for unfair
competition. Any breach of duty by Mangan, if proved by plaintiff, would exist as a result of
his relationship with Superior, rather than his use of confidential information. As such, Marlin
is protected by the conditional privilege and plaintiff cannot state a claim.
CONCLUSION

Plaintiffs motion to reconsider is granted and the order of October 3, 2002, is vacated.

Defendants’ motion to dismiss is granted as to count IV, and denied as to counts I, I, II and

Vv.

JAMES B. MORAN

Sehior Judge, U. S. District Court

Qo. 3B} _, 2002.



1, Minute Order Egrmn (06/97)

United States District Court, Northern District of Illinois

(9)

Name of Assigned Judge , Sitting Judge if Other
or Magistrate Judge James B. Moran than Assigned Judge
CASE NUMBER 02 C 4544 DATE 12/31/2002
CASE Superior Environmental Corp. Vs. Thomas Mangan et al.
TITLE :
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
Memorandum Opinion and Order
DOCKET ENTRY: =
() Qo Filed motion of [ use listing in “Motion” box above.)
(2) Q Brief in support of motion due
(3) oO Answer brief to motion due, . Reply to answer brief due.
(4) Q Ruling/Hearing on set for at
(5) im] Status hearing[held/continued to] {set for/re-set for] on set for at
(6) oO Pretrial conference[held/continued to] [set for/re-set for]on__—_set for _ at
(7) Qo Trial{set for/re-set for] on at
@) a [Bench/Jury trial] [Hearing] held/continued to at
0) Oa This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) OLocal Rule 41.1 COFRCP41(a)(1) CI FRCP41(a)(2).

ao) ff [Other docket entry] | Enter Memorandum Opinion and Order. Plaintiff’s motion to reconsider is

granted and the order of October 3, 2002, is vacated. Defendants’ motion to dismiss is granted as to count

TV, and denied as to counts I, I, {Il and V. Status hearing set for February 11, 2003 at 9:15am.
al wf {For further detail see order attached to the original minute order.}

No notices requited, advised in open court.
No notices required.

Notices mailed by judge's staff.

Notified counsel by telephone,

Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge.

courtroom

WAH deputy’s

Lundy 59!

nereild Ve gue

chad

a

number of notices

initials

S Batétine recived;
atc/lime received in
central Clerk's Office

JAN 02,2005

Ne docketed.

JAN O 2 2003

date mailed notice



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

SUPERIOR ENVIRONMENTAL CORP.,
a Michigan corporation,

Plaintiff,

vs. No. 02 C 4544

THOMAS MANGAN and MARLIN
ENVIRONMENTAL INCORPORATED,
an Illinois corporation,

weeny www

Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiff Superior Environmental Corp. (Superior) filed suit against defendants
Thomas Mangan (Mangan) and Marlin Environmental Incorporated (Marlin) arising out of
Mangan’s departure from and subsequent competition with Superior. Defendants filed a
motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that plaintiff
failed to state a claim, which motion was granted in part and denied in part. Plaintiff now files
a motion to reconsider the order dismissing portions of the complaint, which motion is

granted in part.

BACKGROUND JA 83 2094
From 1999 to April 30, 2002, Mangan served as vice-president of Superior’s Sycamore,
Illinois, office. On April 17, 2002, he notified Superior that he would be leaving Superior on
April 30, 2002, Immediately upon departure, Mangan began working for defendant Marlin,
acompetitor of Superior’s. Superior filed this suit consisting of five counts against defendants,

alleging breach of fiduciary duties and intentional interference with prospective business

|


No. 02 C 4544 Page 2

advantage and contractual relations. Defendants filed a motion to dismiss, arguing that once
Mangan had left Superior he no longer had a fiduciary duty. On October 3, 2002, we granted
that motion as to counts IJ, III and IV of plaintiff's complaint, granted it as to count I, to the
extent that the complaint was based on Mangan’s activities after departure from Superior, and
denied the motion as to count V.
DISCUSSION
A motion for reconsideration is only appropriate to correct manifest errors of law or

fact, or to present newly discovered evidence. Rothwell Cotton Co. v. Rosenthal & Co., 827

F.2d 246, 251 (7" Cir. 1987). Reconsideration is not an appropriate forum for rehashing

previously rejected arguments. In re Oil Spill by “Amoco Cadiz” Off Coast of France on

March 16, 1978, 794 F.Supp. 261, 267 (N.D.II. 1992), aff'd 4 F.3d 997 (7" Cir. 1993). Upon
reconsideration of the Illinois law in this area, we find that plaintiff's allegations state a claim
for breach of fiduciary duty so as to survive a motion to dismiss.

Illinois law involving fiduciary duties of corporate officers following their departure
from a corporation is, at best, confusing. In order to prevail at trial, it is clear that a plaintiff
must prove that a fiduciary duty exists and that defendant has breached that duty in some
manner, See e.g., H.Vincent Allen & Associates, Inc, v. Weis, 63 Ill.App.3d 285, 290-91, 379
N.E.2d 765, 769, 19 Il.Dec. 893, 897 (II.App. 1% Dist. 1978). Illinois courts vary greatly,
however, in determining who owes a fiduciary duty and in defining the scope of this duty.

While both employees and officers owe a duty to a corporation, officers “stand on a
different footing.” Veco Corp. v. Babcock, 243 IM.App.3d 153, 160, 611 N.E.2d 1054, 1059, 183

I.Dec. 406, 411 (HIApp. 1* Dist. 1993). This duty forbids an officer from actively exploiting