I. Summary Judgment Standard
Under the Federal Rules of Civil Procedure, summary judgment is appropriate if "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P.56(c). This standard places the initial burden on the moving party to identify "those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986) (quoting Rule 56(c)). Once the moving party has done this, the non-moving party "must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e).
The non-moving party's burden at that stage entails more than the mere raising of "'some metaphysical doubt as to the material facts.'" Beard v. Whitley County REMC, 840 F.2d 405, 410 (7th Cir. 1988) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986) (footnote omitted)). A genuine issue is created for trial only when the non-moving party presents sufficient factual allegations to enable a rational trier of fact to find in its favor. If it fails to shoulder this burden, summary judgment should be granted. Id. ; see also Holland v. Jefferson Nat'l Life Ins. Co., 883 F.2d 1307, 1312 (7th Cir. 1989).
II. Factual Background
Except as noted, the following facts are undisputed. Prior to July 12, 1989, David Frary owned a fifty percent interest in Frary Paper. On July 12, 1989, he transferred his ownership interest to Frary Paper, and also entered into a consulting agreement with the company. The agreement provided that David Frary would act as a consultant to Frary Paper until June 30, 1990. It also contained a noncompetition provision, in effect until January 1, 1991, by which David Frary promised not to solicit certain identified customers to buy certain listed products.
Neither Trish Frary nor Phoenix Paper were a party to the consulting agreement - indeed, Trish Frary did not incorporate Phoenix Paper until January 23, 1990. Trish Frary has never held an ownership interest in Frary Paper, nor has she ever been employed by Frary Paper. She has never entered into any contract with Frary Paper not to solicit Frary Paper's customers. She has never received any money or other consideration from Frary Paper as an inducement for her not to solicit Frary Paper's customers.
When David Frary signed the consulting agreement, he and Trish Frary were married and living together. Shortly thereafter, they moved to Ashville, North Carolina. The Frarys separated on November 1, 1989, and were legally divorced on January 10, 1991.
David Frary set up a new paper and packaging business in North Carolina called FPQ Packaging ("FPQ"). Trish Frary worked at FPQ until sometime in the first quarter of 1990 (even after her separation from her husband). When she quit, she began operating Phoenix Paper, and has been the president and sole shareholder of, and sole salesperson for, that business ever since.
As the salesperson for Phoenix Paper, Trish Frary solicited customers upon whom she had called when she worked for FPQ. She also began calling on potential customers in the Chicago area. She had learned the names of at least some of these customers because she had accompanied her husband when he had entertained them for Frary Paper. Frary Paper contends that, in fact, the only customers in the Chicago area that Trish Frary called were customers David Frary was prohibited from contacting. Be that as it may, all contact by Trish Frary beginning in the Spring of 1990 with the customers identified as off-limits to David Frary in the latter's consulting agreement was on behalf of Phoenix Paper.
The key to the instant motion for summary judgment is in the next few assertions. Trish Frary and Phoenix Paper maintain that:
At no time did Trish Frary request any advice from David Frary concerning the solicitation of these customers. [Citation.] Neither Trish Frary nor Phoenix Paper has requested David Frary to solicit any business from these customers for Phoenix Paper. [Citation.] David Frary is not, and has never been, a proprietor, employee, agent, consultant, partner, director, officer or stockholder of Phoenix Paper. [Citation.]
Rule 12(m) Statement PP29-31.
Frary Paper denies these assertions. As support, it cites to the depositions of two customers contacted by Trish Frary. Dennis Butzow of Capco Lettering testified that in March or April 1990, David Frary introduced him to Trish Frary and told him that Trish Frary "could service our account through Phoenix Paper. . . ." Butzow Deposition at 11. Butzow also recalled that David Frary told him that the products he was buying from Frary Paper could be purchased from Phoenix Paper. Id.
The second customer, Edward Hotujec of Swift-Echrich Meats, testified that David Frary introduced him to Trish Frary, perhaps in August 1990, and asked if he would mind if his wife started calling on him. Hotujec Deposition at 13. Hotujec also remembered that one of the Frarys told him that he could get from Phoenix Paper the same products he was buying from Frary Paper. Id. at 14.
Finally, Trish Frary claims that she had no specific knowledge of the noncompetition provision in David Frary's consulting agreement with Frary Paper. Citing essentially the same portions of Trish Frary's deposition, Frary Paper disputes that claim. The relevant excerpts from that deposition are as follows:
Q: [Prior to your moving to North Carolina,] did you have any knowledge of what [your husband's] arrangement was with Mr. Rabjohns?