Court Opinion

ID: 9709648
Source: CourtListenerOpinion
Date Created: 2023-08-26 03:52:37.619065+00
Date Added: 2024-06-11T18:22:50.703216
License: Public Domain

JUSTICE WELCH, dissenting: I respectfully dissent. The majority found that plaintiff insurance agency had no proprietary interest in its clients for purposes of enforcing the covenant not to compete against defendant because it did not have a near-permanent relationship with its customers and because the information in the customer files taken by defendant did not contain trade secrets or confidential information. I believe that both such findings are against the manifest weight of the evidence. As the majority notes, an employer may be found to have a proprietary interest in its clients where, by the nature of the business, plaintiff has a near-permanent relationship with its customers and but for his or her employment, defendant would not have had contact with them. (Southern Illinois Medical Business Associates v. Camillo (1989), 190 Ill. App. 3d 664, 673, 546 N.E.2d 1059, 1065.) I would first note that the majority ignored the evidence that but for defendant’s employment with plaintiff agency, he would not have had contact with plaintiff’s clients. The evidence was clear that defendant had brought no accounts with him to the agency when he was first employed there; indeed, defendant had had no prior experience in the insurance industry. Plaintiff also incurred expenses of approximately $5,500 in sending defendant to licensing school to secure the necessary license to sell insurance in the State of Illinois and to a series of extended information classes. Moreover, it cannot be disputed that defendant was hired, at least with respect to the first three years of his employment, to secure customers for the agency, not for himself on a commission basis, and that, accordingly, defendant was paid on a salary basis. With regard to the near-permanent relationship factors, the majority makes a generalization with respect to the insurance industry, that because insurance policies are easily cancelled and depend on constant periodic renewal, the nature of most general insurance policies is transient. It is apparent that the majority based this determination upon an assumption that the only files defendant was copying before he left the agency were the accounts which he had developed in the three years he was with the agency. The evidence indicates, however, that other files had been tampered with and that the agency had some 600 outstanding customer files, creating the inference that defendant was also interested in pirating other customers for the new agency by which he was to become employed. Moreover, no one factor is to be given greater weight, and the factors enunciated in the Illinois cases cited by the majority must be balanced. (Camillo, 190 Ill. App. 3d at 674, 546 N.E.2d at 1065.) It is well established that the amount of time and money it takes for an employer to develop a clientele is an indicator of how long the firm and its clients intend to remain affiliated. (Millard Maintenance Service Co. v. Bernero (1990), 207 Ill. App. 3d 736, 747-48, 566 N.E.2d 379, 386.) The evidence at the hearing on the preliminary injunction indicated that plaintiff agency had been in existence since 1892 and that the agency had a retention rate of 75% to 80% on its customer policies. I also note that the new agency by which defendant had become employed was a competitor, located in the same town as plaintiff agency. In addition, the majority cites the Camillo case for the proposition that because the insurance contract is easily cancelled and depends on constant periodic renewal, the relationship between plaintiff and its customers is transient. I note, however, that in Camillo, plaintiff’s potential customers changed laboratory service providers constantly, that defendant was well-known in the industry as a skilled phlebotomist, and that the customers defendant was able to solicit during his employment were procured not because of defendant’s association with plaintiff but rather through defendant’s own efforts in association with plaintiff. In contrast, defendant in the instant case would not have had contact with plaintiff’s customers but for his education, training and association with plaintiff’s well-established insurance agency. I also disagree with the majority’s conclusion that the information in the customer files taken by defendant did not constitute a trade secret or confidential information. The majority again emphasizes that defendant only copied information from his own account files and could easily have duplicated this information by contacting the customer and asking for it. I do not believe that the evidence of the extent of defendant’s information gathering was as limited as the majority concludes. In any event, a restrictive covenant will be enforced where the former employee acquires confidential information while in plaintiff’s employ and subsequently attempts to use it for his or her own benefit. (A.B. Dick Co. v. American Pro-Tech (1987), 159 Ill. App. 3d 786, 792, 514 N.E.2d 45, 48.) The manager of plaintiff agency testified that the agency files are confidential because the information contained in the files would give the competitor the upper hand, i.e., they would know the pricing they had to beat to take the account away from plaintiff. The evidence also left no doubt, in my estimation, that defendant’s intent in copying the files was to use this information for his own benefit at his new employment. Although the majority also emphasized that plaintiff made little effort to guard the secrecy of the information located in the customer files, I would note that an employee breaches his confidential relationship with his employer where he acts in a manner inconsistent with his employer’s interest during his employment in that he surreptitiously copies or memorizes trade secret information for use after his termination in the solicitation of his employer’s customers or utilizes information in his possession to develop a product to compete with his employer’s product while still in his employ. (Lincoln Towers Insurance Agency v. Farrell (1981), 99 Ill. App. 3d 353, 358-59, 425 N.E.2d 1034, 1038.) The evidence was clear that defendant copied customer files which contained the agency’s “book of business,” including the name of the client, how much his premium was, when the coverage was due and other information necessary to write the coverage. The evidence was also clear that defendant intended to use this information in pursuit of his career in the insurance business. I believe a finding that the information taken by defendant from his employer was not confidential was clearly against the manifest weight of the evidence. A party who seeks a preliminary injunction must establish that a certain and clearly ascertained right needs protection, irreparable injury will occur without the injunction, no adequate remedy at law exists, and that there is a probability of success on the merits. (A.B. Dick, 159 Ill. App. 3d at 791, 514 N.E.2d at 48.) Further, to establish a probability of success on the merits, the petitioner need only raise a fair question as to the existence of the right claimed and show that he will probably be entitled to injunctive relief if he proves his allegations. (A.B. Dick, 159 Ill. App. 3d at 791, 514 N.E.2d at 48.) I believe plaintiff established a proprietary right that needs protection, that irreparable injury would occur without the injunction and that no adequate remedy at law exists. I also believe that plaintiff raised a fair question as to the existence of a right needing protection. I therefore would hold that plaintiff agency was entitled to a preliminary injunction.