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09/26/97 LAWRENCE AND ALLEN v. CAMBRIDGE HUMAN

September 26, 1997

LAWRENCE AND ALLEN, INC., PLAINTIFF-APPELLANT,
v.
CAMBRIDGE HUMAN RESOURCE GROUP, INC., DEFENDANT-APPELLEE (JOHN J. SHEETS, DEFENDANT).



Appeal from the Circuit Court of Du Page County. No. 92--CH--479. Honorable Robert E. Byrne, Judge, Presiding.

Released for Publication October 24, 1997.

The Honorable Justice Colwell delivered the opinion of the court. Doyle and Rathje, JJ., concur.

The opinion of the court was delivered by: Colwell

The Honorable Justice COLWELL delivered the opinion of the court:

Plaintiff, Lawrence & Allen, Inc., appeals from an order of the circuit court of Du Page County granting summary judgment in favor of defendant, Cambridge Human Resource Group, Inc., on plaintiff's claim for tortious interference with contract. Defendant, plaintiff's competitor in the corporate employee outplacement industry, hired defendant John J. Sheets (Sheets), plaintiff's former at-will employee, despite Sheets' postemployment restrictive covenant with plaintiff. Sheets is not a party to this appeal. We affirm.

Plaintiff contends on appeal that the trial court improperly granted summary judgment because questions of material fact exist. Defendant argues on appeal, as it did in the trial court, that plaintiff is unable to establish each of the elements of its claim.

The elements of tortious interference with contract are (1) the existence of a valid and enforceable contract between the plaintiff and another; (2) the defendant's awareness of this contractual relation; (3) the defendant's intentional and unjustified inducement of a breach of the contract; (4) a subsequent breach by the other, caused by the defendant's wrongful conduct; and (5) damages. HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill. 2d 145, 154-55, 137 Ill. Dec. 19, 545 N.E.2d 672 (1989). We resolve this matter based on the lack of a valid and enforceable contract.

The record on appeal reveals the following undisputed material facts. Plaintiff and defendant were competitors in the highly competitive corporate employee outplacement industry. In the corporate employee outplacement industry, businesses, usually large corporations, retain outplacement firms on a project basis to assist displaced, or soon to be displaced, employees find new employment.

Generally, a business solicits proposals from multiple outplacement firms for the contract on a project, and the outplacement firms submit bids. This general procedure, however, may vary according to individual preferences. For instance, Raymond Vogt, a former director of human resources at Food Machinery Group, Inc., of FMC (FMC), allowed displaced employees to choose from two or three recommended outplacement firms.

The decision of which outplacement firm to hire depends on a variety of factors: the nature and size of the project, the location of the project, the types of employees involved, and the expertise or experience of the outplacement firm. For example, FMC used defendant's services for individual outplacement but not for group outplacement. Similarly, Nichols-Homeshield used a national outplacement firm rather than a local outplacement firm when it needed outplacement services for several employees in different parts of the country. In addition, since most outplacement firms are competitive in price, price is typically a secondary factor.

Regardless of prior success in obtaining a contract for a project, outplacement firms are not assured of any future success with a business. In fact, a business may retain different outplacement firms simultaneously on separate concurrent projects and even on the same project when different types of employees, such as, senior executives, middle management, and hourly employees are involved. While adding that some businesses desire to retain the same outplacement firm on separate concurrent projects for reasons of continuity, Lawrence Stuenkel, plaintiff's senior partner and president, admitted a business may retain different outplacement firms on separate projects and on the same project.

Consequently, a business typically uses the services of several outplacement firms. For instance, FMC used eight or nine different outplacement firms between 1988 and 1995. PCA used nine different firms, some national and some local, during 1990 alone. Deloitte & Touche used four or five different outplacement firms in 1990 and 1991. Ameritech used six to eight different outplacement firms during any given year.

In addition, outplacement firms and businesses in need of outplacement services are well known to each other in the industry. As a result, competing outplacement firms frequently solicit the same businesses, and businesses freely contact competing outplacement firms. Moreover, the names of human resource directors are common knowledge among outplacement firms and are easily ascertainable from standard business directories and from professional organization directories.

Sheets' at-will employment with plaintiff began on January 4, 1988. On June 27, 1989, Sheets signed a postemployment restrictive covenant under the threat of termination and without any change to his job title, responsibilities, or salary. The restrictive covenant contained a covenant not to compete that precluded Sheets from "directly or indirectly competing with plaintiff within the territorial United States" for two years after his voluntary termination of employment with plaintiff. In addition, the restrictive covenant contained a covenant not to solicit that precluded Sheets from "directly or indirectly performing similar services for or soliciting any client of [plaintiff]" for the same two-year time period. There was no written employment contract other than the restrictive covenant. Sheets' employment with plaintiff ended on November 12, 1991, and he subsequently began working for defendant.

On May 15, 1992, plaintiff filed a complaint seeking injunctive relief against Sheets and damages for tortious interference with contract against defendant. Plaintiff's amended complaint was identical, except plaintiff substituted a claim for breach of contract against Sheets for its claim for injunctive relief.

Sheets and plaintiff thereafter sought summary judgment. Sheets argued the restrictive covenant was unenforceable. Plaintiff's motion was based on Sheets' alleged failure to answer the amended complaint. The trial court denied both motions.

Defendant subsequently brought its first motion for summary judgment. Relying on Creative Entertainment, Inc. v. Lorenz, 265 Ill. App. 3d 343, 202 Ill. Dec. 571, 638 N.E.2d 217 (1994), defendant argued that the restrictive covenant was unenforceable because it was not ancillary to an employment contract and was not supported by consideration. The trial court denied the motion.

During the course of discovery, plaintiff identified nine businesses as the only businesses at issue between the parties: FMC, PCA, ACCO, Deloitte & Touche, Comdisco, Nichols-Homeshield, Ameritech, Rush-Presbyterian-St. Lukes Hospital, and Northern Telecom, Inc. Each of the nine businesses had been ...


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