and, thus, did not violate the Covenant Not to Compete.
On August 30, 1996, plaintiff filed an amended complaint requesting specific performance of the Covenant Not to Compete until September 22, 1998. Plaintiff requests preliminary and permanent injunctive relief, as well as damages, costs of suit, attorney's fees, and "other and further relief as is just and proper." Defendant brings the instant motion to dismiss for failure to state a claim and improper venue or, in the alternative, for transfer of venue.
I. Motion to Dismiss
A. Failure to State a Claim
Defendant argues that plaintiff has failed to state a claim upon which relief can be granted and, therefore, the amended complaint should be dismissed under Rule 12(b)(6). Specifically, defendant contends that, based on the allegations in the amended complaint, plaintiff is not entitled to either a preliminary or permanent injunction because there is not a reasonable probability that a real injury, for which there is no adequate remedy at law, will occur. According to defendant, plaintiff simply contends that defendant has intentions to manufacture and distribute products which, allegedly, would violate the Covenant. This court disagrees.
A court decides a Rule 12(b)(6) motion on the sufficiency of the complaint, not the merits of the case. Triad Assocs., Inc. v. Chicago Housing Authority, 892 F.2d 583, 586 (7th Cir. 1989), cert. denied, 498 U.S. 845, 112 L. Ed. 2d 97, 111 S. Ct. 129 (1990). All well-pleaded facts will be taken as true, and all inferences are made in favor of the plaintiff. Montgomery Ward v. Warehouse Mail Order, Office, Technical and Professional Employees Union, 911 F. Supp. 1094, 1099 (N.D. Ill. 1995). Dismissal is proper only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957).
Here, the amended complaint alleges that the parties entered into the Covenant Not to Compete and that, based on representations made to plaintiff by defendant and defendant's counsel, defendant intends to take action that will violate the Covenant. Accordingly, plaintiff has requested preliminary and permanent injunctive relief, as well as any other available and appropriate relief. Under Illinois law, a party seeking preliminary injunctive relief must demonstrate by a preponderance of the evidence that: (1) the party has a clear right in need of protection; (2) no adequate remedy at law exists; (3) irreparable harm will result if the preliminary injunction in not granted; and (4) there is a likelihood of success on the merits. Service Systems Corp. v. Van Bortel, 174 Ill. App. 3d 412, 419-20, 123 Ill. Dec. 833, 528 N.E.2d 378 (1st Dist. 1988). The standards for granting a permanent injunction are substantially similar to those for granting a preliminary injunction. Spiers Graff Spiers v. Menako, 190 Bankr. 1001, 1013 (Bankr. N.D. Ill. 1996). Yet, a preliminary injunction preserves the status quo pending resolution of a case, while a permanent injunction maintains the status quo indefinitely when the plaintiff has shown both irreparable harm and that no adequate remedy at law exists. Butler v. USA Volleyball, 285 Ill. App. 3d 578, 673 N.E.2d 1063, 220 Ill. Dec. 642, 1996 WL 676582,*2 (Ill. App. Ct. 1st Dist. 1996).
A preliminary injunction will be granted sparingly for a covenant not to compete. Peterson-Jorwic Group, Inc. v. Pecora, 224 Ill. App. 3d 460, 586 N.E.2d 676, 677, 166 Ill. Dec. 718 (Ill. App. 1st Dist. 1991) (preliminary injunction to enjoin violation of restrictive covenant granted only in extreme emergency situations where serious harm would otherwise result). Permanent injunctive relief, in contrast, depends on the disposition of the merits of the case. Butler, 285 Ill. App. 3d 578, 673 N.E.2d 1063, 220 Ill. Dec. 642, 1996 WL 676582, at *2. In the instant case, defendant contends that plaintiff's claim for injunctive relief and a potential declaratory judgment should be denied because it is not ripe for adjudication. In deciding ripeness issues, a court must first weigh the fitness of the relevant issues for judicial resolution without further factual development. Hinrichs v. Whitburn, 975 F.2d 1329, 1333 (7th Cir. 1992) (citing Abbott Laboratories v. Gardner, 387 U.S. 136, 148, 18 L. Ed. 2d 681, 87 S. Ct. 1507 (1967)). Second, the court must evaluate the hardship to the parties should the court chose to withhold consideration of the matters before it. Id.
Here, defendant argues that plaintiff's perceived conflict is only speculative. Defendant, however, has represented to plaintiff that he intends to engage in a business venture that plaintiff contends will directly compete with its product line. Plaintiff need not wait until defendant acts on his intention to bring an action to prevent what might well be irreparable harm. See Blum v. Yaretsky, 457 U.S. 991, 1000, 73 L. Ed. 2d 534, 102 S. Ct. 2777 (1982) (citing Pennsylvania v. West Virginia, 262 U.S. 553, 67 L. Ed. 1117, 43 S. Ct. 658 (1923)). Moreover, defendant has filed an action for declaratory judgment in the Eastern District of Missouri seeking a declaration that the Covenant Not to Compete is unenforceable. The district court in Missouri has recently ordered the action to be transferred to this district, where it will be consolidated with the instant case.
These facts establish the ripeness of this case, with the exception of plaintiff's claim for a preliminary injunction. That claim is dismissed without prejudice because there is no threat of immediate irreparable harm. However, plaintiff's claim for permanent injunctive relief and its potential declaratory judgment claim are ripe because of defendant's alleged threat to "test" the Covenant Not to Compete, defendant's stated intention to participate in activities that would allegedly compete with plaintiff and violate the Covenant, and defendant's rejection of plaintiff's interpretation of the Covenant. Additionally, the denial of defendant's 12(b)(6) motion would, pursuant to Fed.R.Civ.P. 13(a), force defendant to seek a declaratory judgment as a compulsory counter-claim, because in his Missouri suit, defendant claims continuing irreparable harm by the enforcement of the Covenant.
Accordingly, defendant's motion to dismiss plaintiff's claim for permanent injunctive or other appropriate relief is denied.
B. Improper Venue
Defendant also brings a motion to dismiss for improper venue pursuant to Rule 12(b)(3). Under 28 U.S.C. section 1391(a), venue is proper in a civil case based on diversity only in:
(1) a judicial district where any defendant resides (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.