The opinion of the court was delivered by: McDADE, District Judge.
Before the Court is Defendant's Second Motion for Summary
Judgment on Count IV of Plaintiff's Complaint [Doc. # 49].
Plaintiff, Jostens, Inc., is a corporation involved in the
preparation and sale of school yearbooks. Defendant, Jon
Kauffman, was a sales representative for Jostens from December,
1982 to December 31, 1990. Following the Court's August 5, 1993
Order granting Defendant's Motion for Summary Judgment to all
Counts except Count IV, the Court granted Defendant's request to
file an additional motion for summary judgment directed to the
issue of post-employment fiduciary duties of an employee as
contained in Count IV. Defendant subsequently filed the present
motion. Plaintiff has responded to Defendant's motion, and
Defendant replied thereto. The Court has diversity jurisdiction
over this action pursuant to 28 U.S.C. § 1332.
"A motion for summary judgment is not an appropriate occasion
for weighing the evidence; rather, the inquiry is limited to
determining if there is genuine issue for trial." Lohorn v.
Michal, 913 F.2d 327, 331 (7th Cir. 1990); See Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91
L.Ed.2d 202 (1986). This Court must "view the record and all
inferences drawn from it in the light most favorable to the party
opposing the motion." Holland v. Jefferson National Life
Insurance Co., 883 F.2d 1307, 1312 (7th Cir. 1989). When faced
with a motion for summary judgment, the non-moving party may not
rest on its pleadings. Rather, it is necessary for the non-moving
party to demonstrate, through specific evidence, that there
remains a genuine issue of triable fact. See Celotex Corp. v.
Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265
(1986); Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236
(7th Cir. 1991).
On January 1, 1991, Defendant left Plaintiff and entered into
an agreement to become a sales representative for Walsworth
Publishing Company ("Walsworth"). Walsworth is involved in the
preparation, publication, and sale of yearbook products and is a
direct competitor of Plaintiff. Thereafter, it is alleged,
Defendant began to solicit and service the schools/accounts which
he had serviced while under Plaintiff's employ. Id. at 5.
On May 16, 1991, Plaintiff filed this suit against Defendant
alleging in five counts: tortious interference with contracts;
tortious interference with business relationships; defamation;
breach of fiduciary duty; and violation of the Illinois Consumer
Fraud and Deceptive Business Practices Act. Defendant filed a
Motion for Summary Judgment on all five Counts of the Complaint
on February 26, 1993. The Court in its August 5, 1993 Order
granted Defendant's motion as to Counts I, II, III, and V, but
denied the motion as to Count IV. On September 7, 1993, Defendant
filed a Motion to Reconsider the August 5, 1993 Order. In an
Order dated September 29, 1993, the Court denied Defendant's
motion. However, the Court granted Defendant leave to file an
additional motion for summary judgment on Count IV addressing the
issue of post-employment fiduciary duties in the context of the
present case. Subsequently, Defendant filed the present Motion
for Summary Judgment.
In Count IV of its Complaint, Plaintiff alleges that Defendant
breached his fiduciary duty to Plaintiff both while employed by
Plaintiff and during the one year period following the
termination of Defendant's employment with Plaintiff. As for the
alleged breach of fiduciary duty by Defendant while in the employ
of Plaintiff, Plaintiff alleges that Defendant entered into an
employment contract with one of Plaintiff's competitors and
engaged in the solicitation and sale of that competitor's
yearbook products to Plaintiff's customers while employed by
Plaintiff. As for the alleged breach of fiduciary duty by
Defendant following the termination of his employment with
Plaintiff, Plaintiff alleges that Defendant owed Plaintiff a
fiduciary duty not to compete with it for one year following
termination of his employment by virtue of a restrictive covenant
contained in the Agreement signed by Defendant and that Defendant
breached this duty by competing with Plaintiff. The Court shall
address each of these time periods in turn.
Defendant owed Plaintiff, his employer, a fiduciary duty not to
solicit customers away from Plaintiff while still in its employ.
Prudential Insurance Co. v. Van Matre, 158 Ill. App.3d 298, 110
Ill.Dec. 563, 571, 511 N.E.2d 740, 748 (5 Dist. 1987). Defendant,
in his memorandum in support of his Motion for Summary Judgment,
concedes that he owed Plaintiff a fiduciary duty while employed
by Plaintiff. Defendant, however, maintains that he did not
violate this duty and has submitted numerous affidavits and
deposition transcripts supporting his position from the
administrators of the schools named by Plaintiff in its Complaint
and in discovery. Plaintiff in his response to Defendant's Motion
for Summary Judgment also submitted affidavits in support of its
position. The Court's August 5, 1993 Order stated that
Defendant's affidavits have not been refuted by the affidavits
submitted by Plaintiff, and that Defendant had, therefore, "shown
that he did not solicit in violation of the Agreement prior to
January 1, 1991." (Order dated August 5, 1993 at 7 and 14). By
the earlier Order, the Court has found that Defendant did not
violate his fiduciary duty to
Plaintiff prior to the termination of his employment. This aspect
of Count IV is, therefore, no longer in controversy.
What still is in controversy is whether or not Defendant owed
Plaintiff a fiduciary duty following the termination of his
employment with Plaintiff, and if he did, whether or not this
duty was violated. Defendant, in his Motion for Summary Judgment,
maintains that once he left the employ of Plaintiff, he owed no
fiduciary duty to Plaintiff. In support of his position,
Defendant cites to cases which have held that, generally, once an
employee leaves the service of an employer, he no longer owes a
fiduciary duty to his former employer. As for the covenant
restricting Defendant from competing with Plaintiff for one year
following his departure, Defendant maintains that such a covenant
cannot be a basis for a continuing common law fiduciary duty by
an ex-employee. Defendant's argument is unpersuasive.
Illinois law holds, generally, that once an employee leaves the
service of an employer, he ceases to owe that employer a
fiduciary duty and is free to compete with his former employer.
Prudential Insurance Co. v. Sempetrean, 171 Ill. App.3d 810, 121
Ill. Dec. 709, 713, 525 N.E.2d 1016, 1020 (1 Dist. 1988);
Prudential Insurance Co. v. Van Matre, 158 Ill. App.3d 298, 110
Ill.Dec. 563, 571-572, 511 N.E.2d 740, 748-749 (5 Dist. 1987).
Defendant relies heavily upon Sempetrean and Van Matre for
support for the proposition that he owed no fiduciary duty to
Plaintiff despite the presence of the restrictive covenant in the
Agreement. While as a general proposition it is true that no
fiduciary duty is owed an employer by an ex-employee, these two
cases make it clear that the existence of an express restrictive
covenant presents an exception to the general rule.
In Sempetrean, the court, when considering a claim by a
corporation that an ex-employee violated his fiduciary duty to
the corporation through his activities following the termination
of his employment, stated:
Here, the "Agency Agreement" entered into between
Prudential and Sempetrean contained no provision
which circumscribed Sempetrean's post employment
duties. The Agency Agreement that Prudential refers
to is a standardized employment contract. Prudential,
in drafting this agreement, did not have the
foresight to include such a restrictive covenant and
we will not imply one. Therefore, the trial court
properly dismissed this count in finding that as a