potential customers is a protectable trade secret); pricing,
distribution and marketing plans (PepsiCo, Inc. v. Redmond, 54
F.3d at 1269-70); and sales data and market analysis information
Barrier, Inc. v. Stanley Works, 79 F.3d 1112, 1117 (Fed. Cir.
1996) (applying ITSA).
65. Roll-Kraft's ACT, BAM and NPI data meet the "secrecy"
criteria under the ITSA. Such information includes: 1) names and
addresses of all customers and potential customers and contact
persons; 2) historical sales information; 3) details of pending
sales quotations; 4) year-to-date sales figures; and 5) shipping,
pricing, cost and profit margin information. Such information is
not readily ascertainable from any source of public information.
Indeed, the only source of this information is Roll-Kraft's
internal computer system. Furthermore, developing relationships
with its customers and documenting all customer contacts is
emphasized to Roll-Kraft's sales force and is a key part of their
66. The information contained in Roll-Kraft's ACT, BAM and NPI
systems is more extensive than the customer lists found to be
trade secrets in Stampede Tool; Gillis Associated Industries,
Inc. v. Cari-All, Inc., 206 Ill. App.3d 184, 151 Ill. Dec. 426,
564 N.E.2d 881, 885 (1st Dist. 1990) (finding customer list
"sufficiently secret" where list was not easily duplicated by
reference to trade journals or yellow pages because no one source
is sufficient and further refinement of list, such as target
mailings or telephone calls, is required); and Elmer Miller,
Inc. v. Landis, 253 Ill. App.3d 129, 192 Ill.Dec. 378,
625 N.E.2d 338, 342 (1st Dist. 1993) (concluding competitors cannot
duplicate customer list without a "significant expenditure of
time, effort and expense"). The information contained in ACT, BAM
and NPI meets the ITSA section 2(d)(1) test for information
sufficiently secret to derive economic value from not being
generally known to others who can obtain economic value from its
disclosure or use.
67. Roll-Kraft must also establish that it took reasonable
steps to safeguard its confidential information. ITSA § 2(d)(2).
Disclosure to only those who need the contents of a trade secret
is adequate protection under the ITSA. Service Centers of
Chicago, Inc. v. Minogue, 129 Ill.Dec. 367, 535 N.E.2d at 1136
(finding trade secret protection is maintained when the
information is used by a person in his business operations and is
known only by such person and such limited other persons to whom
it may be reasonably necessary to confide it); Elmer Miller,
Inc. v. Landis, 192 Ill.Dec. 378, 625 N.E.2d at 343 (finding
only the employees who needed to know the information had access
to it). Furthermore, the Stampede court held a customer list to
be a trade secret because Stampede used "reasonable efforts" to
maintain its secrecy and confidentiality. 209 Ill.Dec. 281, 651
N.E.2d at 216. In Stampede, the offices were locked, garbage
was checked daily, special computer access codes were used,
customer information was limited to persons on a need-to-know
basis, hard copies of customer lists were kept locked in the
office, salesmen's call books and customer cards were locked up
and could not be removed from the office, and security cameras
were used. Id. Moreover, employees signed employee
confidentiality agreements. Id.
68. Similarly, in this case access to the ACT, BAM and NPI
information is afforded to Roll-Kraft employees only on a
"need-to-know" basis. Roll-Kraft maintains the secrecy of this
information through such means as limited access and
password-protected computer databases. The information contained
in ACT, BAM and NPI therefore constitutes trade secrets within
the meaning of the ITSA.
Furthermore, Roll-Kraft employees sign employment agreements or
sign for the receipt of employee handbooks containing
69. The ITSA provides that "actual or threatened
misappropriation" of a trade secret may be enjoined. ITSA § 3(a).
"Misappropriation" means, in pertinent part:
(1) acquisition of a trade secret of a person by
another person who knows or has reason to know that
the trade secret was acquired by improper means; or
(2) disclosure or use of a trade secret of a person
without express or implied consent by another person
(A) used improper means to acquire knowledge of the
trade secret; or
(B) at the time of disclosure or use, knew or had
reason to know that knowledge of the trade secret
(I) derived from or through a person who utilized
improper means to acquire it;
(II) acquired under circumstances giving rise to a
duty to maintain its secrecy or limit its use; or
(III) derived from or through a person who owed a
duty to the person seeking relief to maintain its
secrecy or limit its use.
ITSA § 2(b). "Improper means" of acquiring a trade secret
includes "theft, . . . breach of a confidential relationship or
other duty to maintain secrecy or limit use, or espionage through
electronic or other means." ITSA § 2(a). ITSA Section 2(b)
provides that acquisition by improper means constitutes
misappropriation. Stampede Tool v. May, 209 Ill.Dec. 281, 651
N.E.2d at 217 ("a trade secret can be misappropriated by physical
copying or by memorization").
70. Grimes used "improper means" in misappropriating
Roll-Kraft's trade secrets. While employed by Roll-Kraft, Grimes
downloaded, copied or otherwise transmitted the ACT, BAM and NPI
data for purposes other than serving the interests of Roll-Kraft.
The Court reaches this conclusion based on direct and strong
circumstantial evidence. In addition, Defendants never placed any
witness on the stand to explain: 1) why Grimes accessed
Roll-Kraft's computers on October 16, 2001 after business hours
from his home computer, or 2) why 60 megabytes of information was
deleted from Grimes' home computer between November 15 and
December 8, 2001, or 3) why he defragmented his home computer
four times in ten days in November, 2001, when no mechanical or
engineering reason required it.
71. Chicago Roll also "misappropriated" Roll-Kraft's trade
secrets in that shortly after Grimes started working for Chicago
Roll, Grimes disclosed Roll-Kraft's trade secret information to
other Chicago Roll personnel. Mangren Research & Development v.
National Chemical Co., 87 F.3d 937, 944-45 (7th Cir. 1996)
(holding once former employee of plaintiff apprised his new
employer of plaintiff's trade secrets and his new employer made
use of such trade secrets, his new employer was liable for
misappropriation under the ITSA). In addition, since joining
Chicago Roll Grimes solicited business from customers of
Roll-Kraft whom he previously called on while working for
Roll-Kraft, all the while using Roll-Kraft's trade secret
72. Alternatively, Grimes and Roll-Kraft unlawfully
misappropriated Roll-Kraft's trade secret information because it
is inevitable Grimes will use the information he obtained through
improper means in his job with Roll-Kraft. This inevitable use of
Roll-Kraft's trade secret information will allow Chicago Roll to
gain a substantial unfair competitive advantage over Roll-Kraft.
PepsiCo v. Redmond, 1996 WL 3965 at *17-20 (N.D.Ill. 1996).
The factors to determine whether disclosure of trade secrets is
inevitable are: 1) the level of competition between the former
employer and the new employer; 2) whether the employee's position
with the new employer is comparable to the position he held with
the former employer; and 3) the actions the new employer has
taken to prevent the former employee from using or disclosing
trade secrets of the former employer. Id. at *20. In this case,
there is no dispute Roll-Kraft and Chicago Roll are direct
competitors. The Court also concludes Roll-Kraft has shown
Grimes' new position is sufficiently comparable to his former
position at Roll-Kraft to make disclosure of Roll-Kraft's trade
secrets inevitable in his new position. Grimes territory as a
salesmen with Chicago Roll is substantially similar to his
territory when he was at Roll-Kraft. As to the last element, "it
is only fair to shift the burden to defendants, to prove" that
Grimes will not use or disclose Roll-Kraft's confidential
information. Id. at *21. Defendants control the evidence as to
what duties Grimes will be assigned; however, Defendants have
failed to prove Grimes' former position is not comparable to his
new position and that it will not involve the use of Roll-Kraft's
confidential information. Id. at *22.
73. The facts in this case are similar to those in PepsiCo.
There, a high level employee of PepsiCo with access to sensitive
trade secret information went to work for a competitor, Quaker
Oats. PepsiCo and Quaker competed in the sports and new age drink
markets. Here, Grimes had access to Roll-Kraft's sensitive,
confidential information as contained within its ACT, BAM and NPI
computer systems. Here, also, Roll-Kraft and Chicago Roll
seriously compete in the tube, pipe and roll form industry. In
this case, as in PepsiCo, Chicago-Roll, like Quaker, recently
hired away other Roll-Kraft personnel before hiring away Grimes.
Here, as in PepsiCo, it is Grimes' intention to work for a
competitor and here, like there, it is apparent that he intends
to use Roll-Kraft's trade secret information and will inevitably
disclose it to Chicago-Roll personnel.
74. The facts in this case compel the issuance of an injunction
alternatively under the doctrine of inevitable disclosure because
in PepsiCo, there was no physical taking of trade secret
materials. Rather, the employee just had the information in his
head as a result of doing his job. Here, on the other hand,
Grimes copied Roll-Kraft's ACT, BAM and NPI data so that he could
use it while working for Chicago-Roll. Therefore, Roll-Kraft has
rights under the ITSA that are entitled to protection, and Grimes
and Chicago Roll have violated or inevitably will violate those
75. Because direct evidence of theft and use of trade secrets
is often not available, the plaintiff can rely on circumstantial
evidence to prove misappropriation by drawing inferences from
perhaps ambiguous circumstantial evidence. PepsiCo, Inc. v.
Redmond, 1996 W.L. 3965, *15 (N.D.Ill. 1996). In PepsiCo, the
It is frequently true in trade secret cases that
"[m]isappropriation and misuse can rarely be proved
by convincing direct evidence. In most cases,
plaintiffs [like PepsiCo] must construct a web of
perhaps ambiguous circumstantial evidence from which
the trier of fact may draw inferences which convince
him that it is more probable than not that what
plaintiffs allege happened did in fact take place.
Against this often delicate construct of
circumstantial evidence there frequently must be
balanced defendants and defendants' witnesses who
directly deny everything."
Id., quoting SI Handling Systems, Inc. v. Heisley,
753 F.2d 1244, 1261 (3rd Cir.
1985). In addition, the ITSA permits an injunction to issue to
prevent even threatened use or disclosure of trade secrets. ITSA
§ 3. Moreover, the defendants' spoliation of evidence on their
computer supports a negative inference that defendants destroyed
evidence of misappropriation. Minnesota Mining & Mfg. Co. v.
Pribyl, 259 F.3d 587, 606 n. 5 (7th Cir. 2001) (spoilation of
computer data). Therefore, the Court could find misappropriation
even without the direct evidence supplied by Tracy and
Saperstein. The Court concludes that with or without such direct
evidence, Roll-Kraft has proven by a preponderance of the
evidence that Grimes and Chicago Roll misappropriated its trade
D. GRIMES CONVERTED ROLL-KRAFT'S PROPERTY
76. The elements of conversion under Illinois law are: 1)
plaintiff has a right to the property; 2) plaintiff has an
absolute and unconditional right to the immediate possession of
the property; 3) plaintiff made a demand for possession; and 4)
the defendant wrongfully and without authorization assumed
control, dominion, or ownership over the property. Johnson v.
Grossinger Motorcorp, Inc., 324 Ill. App.3d 354, 257 Ill.Dec.
236, 753 N.E.2d 431 (1st Dist. 2001).
77. In this action, Roll-Kraft is the lawful owner of the ACT,
BAM and NPI information and is entitled to possession of such
information. The day after Grimes' resignation from Roll-Kraft,
Roll-Kraft via its attorneys sent Grimes a letter demanding he
return any and all Roll-Kraft information in his possession.
Grimes' continued possession of the data constitutes exercise of
control over property inconsistent with Roll-Kraft's right to
possession thereof, and therefore constitutes conversion by
E. GRIMES BREACHED HIS DUTY OF LOYALTY TO ROLL-KRAFT
78. During the course of employment, an employee owes an
undivided duty of fidelity and loyalty to his employer. Dames &
Moore v. Baxter & Woodman, Inc., 21 F. Supp.2d 817 (N.D.Ill.
1998). This duty of loyalty includes acting solely in the
interest of the employer. ABC Trans Nat'l Transport, Inc. v.
Aeronautics Forwarders, Inc., 62 Ill. App.3d 671, 20 Ill. Dec.
160, 379 N.E.2d 1228, 1237 (1st Dist. 1978).
79. By downloading or copying the ACT, BAM and NPI data during
the course of his employment in order to use it to compete with
Roll-Kraft thereafter, Grimes breached his duty of loyalty and
fidelity to Roll-Kraft. Hill v. Names & Addresses, Inc.,
212 Ill. App.3d 1065, 157 Ill.Dec. 66, 571 N.E.2d 1085, 1091 (1st
F. BREACH OF NONDISCLOSURE AND NON-SOLICITATION COVENANTS
80. The basic test applied by Illinois courts in determining
the enforceability of restrictive covenants is "whether the terms
of the agreement are reasonable and necessary to protect a
legitimate business interest of the employer." Office Mates 5,
North Shore, Inc. v. Hazen, 234 Ill. App.3d 557, 175 Ill.Dec. 58,
599 N.E.2d 1072, 1080 (1st Dist. 1992).
81. Illinois courts have long recognized two situations in
which an employer has a legitimate business interest to justify
enforcement of a covenant not to compete: 1) where the former
employee acquired trade secret or other confidential information
through his employment and subsequently tried to use it for his
own benefit; and 2) where the customer relationships are
near-permanent and but for the employee's association with the
the employee would not have had contact with the customers.
Outsource International, Inc. v. Barton, 192 F.3d 662, 666 (7th
Cir. 1999). Roll-Kraft has met both tests as alternative grounds
for enforcing its non-compete covenant.
82. Grimes' Employment Agreement with Roll-Kraft contains a
valid nondisclosure and non-compete covenant. As referred to
above in connection with the ITSA claim, Grimes used or tried to
use the confidential information for his own benefit. Therefore,
he breached the covenant of nondisclosure. PepsiCo, Inc.,
supra, 54 F.3d at 1271-72 (injunction warranted for breach of
nondisclosure agreement signed by former employee).
83. A restrictive covenant may be enforced if the employee
learned trade secrets or other confidential information while in
the plaintiff's employ and subsequently attempted to use it for
his own benefit. Springfield Rare Coin Galleries, Inc. v.
Mileham, 250 Ill. App.3d 922, 189 Ill.Dec. 511, 620 N.E.2d 479,
485 (4th Dist. 1993). That is the case here. Grimes breached his
covenant not to compete.
84. A covenant not to solicit customers is also enforceable if
the employer has a near-permanent relationship with its customers
or clients. Outsource International, Inc. v. Barton, 192 F.3d
at 667. Roll-Kraft has a near-permanent relationship with many of
its customers. Roll-Kraft is a job shop that provides design,
manufacturing, service and training in connection with its
products and services. Roll-Kraft has invested substantial time
and effort in qualifying, developing and maintaining customers;
training and providing sales-people, engineers, technical support
people, service personnel, trainers and other personnel and
facilities; its products are distinguished by higher quality and
price; it has long-standing relationships with many of its
customers, including major customers; and it supplies a
substantial portion of the requirements of its customers for high
quality products and after market services. Roll-Kraft supplies a
differentiated product and service that are not fungible and
enjoys a near-permanent relationship with its customers.
Outsource International, Inc. v. Barton, 192 F.3d at 667-68.
Further, Grimes had no background in the tube pipe and roll form
industry before he went to work for Roll-Kraft, which provided
him with extensive training, introductions to customers, lists of
qualified and existing customers, and extensive sales, marketing,
engineering, technical and service support. Grimes did not bring
any customers with him when he joined Roll-Kraft. But for Grimes'
association with Roll-Kraft, he would not have had contact with
the customers in question.
85. The geographic and time limitations imposed by the
restrictive covenant is reasonable because Grimes was given
access to all of Roll-Kraft's confidential customer information
and the limitation does not prevent Grimes from competing in a
large part of the United States. The three year restriction is
reasonable because of the extensive efforts Roll-Kraft has made
to develop its customer database and the fact that Grimes had no
experience in this industry when he joined Roll-Kraft. Gene A.
Peterson, Understanding Illinois Noncompetition Agreements and
Restrictive Covenants, Illinois Bar Journal, Sept. 2001, at 476.
G. CHICAGO ROLL TORTIOUSLY INTERFERED WITH THE ROLL-KRAFT/GRIMES
86. The elements of tortious interference with contract are:
(1) the existence of a contract to which the plaintiff is a
party; (2) knowledge by the defendant of the existence of the
contract; (3) intentional