Appeal from the Circuit Court for the 9th Judicial Circuit, Knox County, Illinois No. 96--CH--47 Honorable James B. Stewart Judge, Presiding
The opinion of the court was delivered by: Justice Breslin
IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS
JUSTICE BRESLIN delivered the opinion of the court:
Everen Securities, Inc., (Everen) filed suit against defendants A.G. Edwards & Sons, Inc. (A.G. Edwards), Sidney Carlson and Loren Wright, alleging damages for breach of contract and misappropriation of trade secrets when Carlson and Wright resigned from Everen and began employment with A.G. Edwards. Everen's claims were subsequently arbitrated. The defendants appeal from the trial court's decision to confirm the arbitration award of $1,131,000 plus fees in favor of Everen. We hold that: (1) the arbitration panel did not exceed its authority in considering the issue of trade secret; (2) the evidence does not show that a member of the panel was prejudiced against A.G. Edwards; and (3) the panel did not commit gross errors of law or fact in awarding damages. Accordingly, we find no grounds for vacating the arbitrators' award.
Carlson and Wright worked for Everen in its Galesburg office. Carlson was a senior vice-president for Everen and the Galesburg office manager. At early stages in their employment, both Carlson and Wright signed a training agreement through which they agreed not to solicit Everen customers for 30 days after leaving Everen employment. Sometime in 1996, Carlson and Wright decided to resign from Everen and work for A.G. Edwards. In November of 1996, Carlson and Wright made photocopies of documents containing customer account information. The defendants planned to use the information to create a database from which A.G. Edwards could generate letters notifying Carlson's and Wright's customers of their change in employment. While still employed by Everen, Carlson extended offers of employment on behalf of A.G. Edwards to Everen employees. On December 3, 1996, Carlson, Wright and two other office employees resigned and began working for A.G. Edwards. Upon their resignation, the defendants immediately began soliciting the business of their former Everen customers. That same day, an Everen officer searched the Galesburg office and recovered only 100 of Everen's 2,800 client files.
On December 4, 1996, Everen filed a complaint in state court alleging (1) breach of fiduciary duty by Carlson and Wright; (2) breach of contract by Carlson and Wright; (3) aiding and abetting breach of fiduciary duty by A.G. Edwards; (4) conspiracy by all three defendants; (5) misappropriation of trade secrets by the three defendants; and (6) unfair competition. The complaint requested compensatory damages and injunctive relief relating to the solicitation of customers and the alleged misappropriation of trade secrets.
A hearing for a temporary restraining order (TRO) was held on December 5, 1996, through which Everen sought to bar Carlson and Wright from soliciting Everen customers for 30 days in accordance with the training agreement. Carlson and Wright, however, had entered into the agreement with a predecessor of Everen (Blunt, Ellis & Loewi). Because the agreement made no mention of the rights of successors and assignees of the original company, the court denied the TRO as to customer solicitation. Through the TRO, Everen also sought the return of the customer information documents which Everen argued was a "trade secret." Although the court found that the information did not amount to a trade secret, the court partially granted the TRO, ordering the defendants to return all customer account information taken by Carlson and Wright until or unless the defendants received written authorization from the customers allowing the defendants to retain such information.
Preliminary injunction hearings were held. Because Carlson had not returned the customer account information, Everen renewed the arguments and requests for relief it made at the TRO hearing. Several witnesses testified. In particular, Carlson testified that upon receiving the complaint in this case he burned most of the 26 boxes of documents containing the customer account information that he copied.
With regard to the customer solicitation issue, the court found that the training agreement was valid and enforceable but refused to enjoin the defendants since the 30 day period had already passed. The court again held that the customer account information was not a trade secret, finding that the information had no real economic value standing alone and that Everen had not manifested a clear intent to keep such information secret. The court then renewed the conditions of the TRO requiring Carlson to return the customer information files.
Since the case involved registered securities brokers, the court ordered that all other claims and counter-claims be submitted for binding arbitration before the New York Stock Exchange (NYSE) pursuant to section 2 of the Uniform Arbitration Act (710 ILCS 5/2 (West 1996)). The trial court specifically reserved the issue of damages as a result of the defendants' breach of the non-solicitation agreement for the arbitration panel. The court stated that the order was entered without prejudice to the merits or claims that have been or may be asserted or to any counterclaims that may be raised in arbitration.
Everen renewed its state court complaint for purposes of the arbitration and the defendants counterclaimed, alleging malicious prosecution, abuse of process, slander and intentional infliction of emotional distress. During the hearings, Everen presented the expert testimony of Michael Graham on the issue of damages. Graham opined that Everen incurred $1.23 million in damages by the defendants' conduct. The defendants' presented no damages testimony. Everen also argued that the customer account information taken by the defendants was a trade secret. The arbitration panel allowed such argument over the defendants' objection.
At the close of evidence, the arbitration panel entered a unanimous decision: (1) dismissing all claims against Wright; (2) directing A.G. Edwards and Carlson to pay Everen $1,131,000 and forum fees in the amount of $33,000; and (3) dismissing the defendants' counterclaims. The arbitration panel made no specific findings of fact or Conclusions of law on the face of its award.
The defendants moved to vacate the award, and Everen moved to confirm the arbitration award in the circuit court. The court granted Everen's motion to confirm and denied the defendants' motion to vacate. In particular, the court found that the arbitration panel's award was within its discretion and supported by the record of the preliminary injunction hearings despite the fact that the award lacked specific findings. Other pertinent facts will be presented as they become relevant to the analysis.
On appeal, the defendants claim that the trial court erred in denying their motion to vacate the arbitration award and granting ...