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Prentice Medical Corp. v. Todd

OPINION FILED JUNE 12, 1986.

PRENTICE MEDICAL CORPORATION ET AL., PLAINTIFFS-APPELLANTS,

v.

SUSAN TODD, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. George A. Higgins, Judge, presiding.

JUSTICE MCMORROW DELIVERED THE OPINION OF THE COURT:

Rehearing denied July 16, 1986.

Plaintiffs Prentice Medical Corporation and Albany Medical Corporation (collectively hereinafter the plaintiffs) appeal from the order of the circuit court of Cook County that denied plaintiffs' motion for a preliminary injunction pending disposition of the plaintiffs' three-count complaint against plaintiffs' former employee, Susan Todd (defendant). Plaintiffs' complaint alleged that defendant left plaintiffs' employ to establish and operate an independent medical clinic and that she solicited plaintiffs' clients to seek the services of defendant's clinic. The pleading alleged that defendant's actions violated an oral restrictive covenant in her employment agreement with plaintiffs (count I), constituted wrongful taking of plaintiffs' trade secrets (count II), and amounted to unfair trade practices (count III). In brief, the parties raise the question of whether the trial court erred in denying plaintiffs' motion for preliminary injunction.

For the reasons set forth more fully below, we affirm the order of the trial court with regard to counts I and III, reverse the order of the trial court with respect to count II, and remand the cause for further proceedings on plaintiffs' preliminary injunction motion with regard to count II.

BACKGROUND

Plaintiffs' complaint alleged in count I that Prentice Medical Corporation owned and operated Abbey Women's Health Center (Abbey), a gynecological clinic in Arlington Heights, and Albany Medical Corporation operated Albany Women's Medical Center (Albany), a gynecological clinic on the north side of Chicago. Pursuant to an oral agreement defendant, a registered nurse, was employed by Albany in April 1981, and by Abbey in July 1982, to act under the direction of a physician in performing gynecological services directly to patients on behalf of both corporations. The oral employment agreement allegedly contained terms that the medical records of patients and information contained therein were to be treated as confidential. The alleged oral agreement provided that upon defendant's termination of her employment, she agreed that for a period of four years and within a radius of 15 miles she was forbidden to solicit the performance of gynecological nursing and medical services for any patient whom she examined, treated or advised during her employment, or to use any information about a patient to solicit patients; she was also forbidden to examine, treat or advise any patient whom she examined, treated or advised during her employment at the clinics except under emergency circumstances; and she was forbidden to set up, either alone or with others, a nursing practice involving gynecology within a 10-mile radius of Abbey or Albany for a two-years period after she terminated her employment, unless the centers no longer continued in business.

Plaintiffs further alleged that they developed their patient clientele by advertising and by reputation built up over the years; that patients with repeat business were differentiated from one-time patients; that when defendant entered into plaintiff's employ, she did not know plaintiffs' patients and developed her knowledge of them and relationship with them as an employee of plaintiffs; and that on June 30, 1985, defendant terminated her employment relationship with plaintiffs. Plaintiffs alleged that, while defendant was in their employ and in violation of defendant's employment contract, she copied the names and addresses of plaintiffs' patients, and that she sent a letter to such patients soliciting them to her for a claimed private practice of gynecological medical and nursing services at offices opened by her on July 1, 1985, within the proscribed geographical limits.

In count II, plaintiffs alleged that defendant's wrongful taking and use of plaintiffs' confidential information, viz, the names and addresses of plaintiffs' patients, constituted the wrongful taking of trade secrets, which threatened plaintiffs with imminent and irreparable damage.

Count III alleged that defendant's use of confidential information obtained from plaintiffs' files and defendant's holding herself out as having the ability to perform services which constituted the practice of medicine, engaged in unfair trade practices.

In their prayer for relief, plaintiffs requested that (1) defendant be enjoined from using plaintiffs' records, including the names and addresses of plaintiffs' patients, for the purpose of soliciting business away from plaintiffs or for any other purposes; (2) defendant be prevented from any solicitation to perform gynecological nursing and gynecological medical services for any patient whom she examined, treated or advised during her employment by plaintiffs, and that she be prohibited from establishing a gynecology nursing practice alone or with others except in compliance with the time periods and geographical limitations to which defendant had allegedly agreed; and (3) defendant be enjoined from holding herself out as being able to practice medicine.

Defendant was called as an adverse witness by plaintiffs. She testified that she began her employment by Albany on April 7, 1981, and by Abbey when it opened in July 1982. She denied that she had a non-competition agreement with plaintiffs. She is a registered nurse and is certified by the American College of Nurse Midwives to practice nurse midwifery. She handled the family planning program for Abbey and Albany, but did not take part in the delivery of children. She ceased seeing patients for plaintiffs on June 30, 1985, and the next day opened two facilities where she personally would see patients; she prescribed birth control pills but only under standing orders of a physician. One of the offices she opened after the termination of her employment with plaintiffs was located in Arlington Heights approximately seven miles away from Abbey and her other office was located in Chicago approximately three to four miles from Albany. She identified a letter which she mailed at the end of June 1985 to patients she had treated at plaintiffs' facilities. The undated letter, sent by defendant to plaintiffs' patients and addressed to them as "Dear Patient," contained a photograph of defendant, stated that defendant would see patients at Albany Women's Medical Center and Abbey Women's Health Center until July 1, 1985, at which time she would be moving her practice to two indicated locations and that she would "continue to offer the same personal attention, quality medical care, and confidential services you have come to expect." The letter concluded by thanking the patients for their patience and support during this change and looking forward to seeing them again in her new facility.

Defendant further testified she had obtained the patients' names and addresses from the charts and confidential patient records of plaintiffs, and she identified a list of 3,000 patients which she began to compile in September 1984. She had recorded the names on pieces of paper and later transcribed them in two books at her home. She testified she had terminated her employment at the time of the mailing, but was not sure of the date of the mailing. She identified a list of patients she had seen at her Arlington Heights clinic, but she did not know how many were formerly patients at plaintiffs' clinics.

Jeanie Dragosz, the vice-president of Albany and manager and secretary of Abbey who hired defendant, testified that defendant was told at the time her employment began with plaintiffs that all patient information was confidential. According to Dragosz, defendant was also told and she agreed that upon termination of her employment with plaintiffs she was not to compete within two years and ten miles of Albany, and within four years and fifteen miles of Abbey, but, if the clinics were not in business, defendant would be free to do what she wanted. Dragosz testified that a patient told her that defendant told the patient that she would be leaving and moving her practice, but, when Dragosz discussed this with defendant, defendant said it was not true.

Dragosz testified that plaintiffs spent about $50,000 per year advertising, that the majority of plaintiffs' patients were repeat patients, and that some gynecology patients utilized plaintiffs' services for 20-30 years. She also explained that plaintiffs' employee manual states that a breach of patient confidentiality would be a primary reason for termination of employment. However, the employee manual did not contain any reference to restrictive covenants, even though, according to Dragosz, there was an ...


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