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Oce North America, Inc. v. Brazeau

March 18, 2010

OCÉ NORTH AMERICA, INC., PLAINTIFF,
v.
ANDRE BRAZEAU, DEFENDANTS.



The opinion of the court was delivered by: Judge Ronald A. Guzmán

MEMORANDUM OPINION AND ORDER

Plaintiff has sued defendant for breaching a non-competition agreement and using its confidential information in violation of the Illinois Trade Secrets Act ("ITSA"), 765 Ill. Comp. Stat. 1065/1 et seq. Plaintiff moved for a preliminary injunction on its claims, which the Court referred to Magistrate Judge Cox for a Report and Recommendation ("R&R"). Both parties filed objections to the R&R, all of which the Court overrules.

Background

Plaintiff, which sells printing equipment and services, has three business divisions: (1) Document Printing Systems ("DPS"), which markets standard printers and scanners; (2) Production Printing Systems ("PPS"), which markets high-volume printers; and (3) Wide Format Printing Systems ("WFPS"), which markets printers and scanners for over-sized documents. (First Am. Compl. ¶¶ 5-6.) Defendant was plaintiff's PPS Central Regional Sales Director from 1996 through 2001. (Id. ¶ 8; Def.'s App. Exs. Supp. Mem. Law Opp'n Mot. Prelim. Inj., Brazeau Aff. ["Brazeau Aff."] ¶ 2; Mot. Prelim. Inj., Sundberg Decl. ["Sundberg Decl."] ¶ 7.) In 2001, he became Central Regional Sales Manager for IBM Printing Systems, one of plaintiff's competitors in the PPS market. (First Am. Compl. ¶ 8; Brazeau Aff. ¶ 3.)

In 2005, defendant returned to work for plaintiff as Vice President of Sales for the WFPS unit. (First Am. Compl. ¶ 9; Brazeau Aff. ¶ 5; Sundberg Decl. ¶ 8.) In that role, he had access to confidential information about plaintiff's sales strategies and business development plans through its Oasis database and cross-division selling program. (Brazeau Aff. ¶¶ 13-27; Sundberg Dec. ¶ 12.)

On August 10, 2005, the parties entered into an agreement that requires defendant to maintain the confidentiality of plaintiff's information and not to compete with plaintiff for a year after his employment ends. (See First Am. Compl, Ex. A, 2005 Agreement ¶¶ 5, 10 .) In January 2007, the parties entered into a second agreement that does not specifically prohibit defendant from disclosing plaintiff's confidential information but contains a broad non-compete clause purportedly designed to protect plaintiff's confidential information, customer relationships and goodwill. (Id., Ex. B, 2007 Agreement ¶ 2.)

In February 2009, defendant left Océ to work for InfoPrint, a joint venture of IBM Printing Systems and Ricoh. (Answer First Am. Compl. ¶¶ 47-48; Brazeau Aff. ¶ 32.) Defendant's primary responsibility at InfoPrint, which sells PPS equipment and services, is to manage its sales strategy. (Id.) Plaintiff contends that defendant cannot work in this capacity for InfoPrint without violating the non-competition agreement or disclosing plaintiff's confidential information.

Discussion

The Court reviews de novo the portions of the R&R to which the parties object. 28 U.S.C. § 636(b)(1)(A). The first objection, lodged by plaintiff, is to Judge Cox's ruling that the 2007 agreement controls the parties' dispute. (See R&R at 13-14.) Judge Cox said the ruling was compelled by the record, which showed that plaintiff told defendant the 2007 agreement controlled, and the doctrine of unilateral mistake. (Id. at 14 (citing Restatement (Second) of Contracts § 153 (stating that a contract is voidable if one party causes the other to make a mistake about a basic assumption underlying it)).)

The Court agrees with that conclusion, for a different reason: merger. Under Illinois law, "[a] complete, valid, written contract merges and supersedes all prior and contemporaneous negotiations and agreements dealing with the same subject matter." Courtois v. Millard, 529 N.E.2d 77, 79 (Ill. App. Ct. 1988); see Ogle v. Hotto, 652 N.E.2d 815, 819 (Ill. App. Ct. 1995) (same). The 2005 and 2007 agreements both address defendant's post-employment obligations, but they do so differently. The 2005 agreement bars defendant from disclosing plaintiff's confidential information and from selling competitors' products in a specified area for a year after his employment with plaintiff ends. (First Am. Compl., Ex. A, 2005 Agreement ¶¶ 5, 10.) The 2007 agreement does not expressly require defendant to maintain the confidentiality of plaintiff's information but has an expansive non-competition clause, "to protect the confidentiality of [plaintiff's] Confidential Information, . . . valuable customer relationships and goodwill." (Id., Ex. B, 2007 Agreement ¶ 2.) Because the two agreements address the same subject matter, the 2007 agreement supersedes the 2005 agreement as a matter of law. Courtois, 529 N.E.2d at 79.

Judge Cox also ruled that paragraph 2(b), rather than 2(a), of the 2007 agreement applies, a conclusion to which defendant objects. In relevant part, that paragraph states:

. . . Employee covenants and promises that during his or her employment with the Company and for one (1) year after Employee's employment by the Company ends . . . , that:

(a) if Employee was employed in a sales capacity by Company, Employee shall not directly or indirectly become associated with, through ownership, employment, self-employment, consultancy, contract or otherwise, any "Competing Business" (which term shall mean any person, corporation, or other entity which designs, develops, manufactures, markets, sells or services any product or service which is the same as or similar to products or services which the Company designed, developed, manufactured, marketed, sold or serviced within the last twelve (12) months prior to the end of Employee's employment with the Company, including but not limited to, printing, copying, multifunctional and/or facsimile equipment and/or sales of related supplies) and approach, solicit or accept business from any of the Company's then-existing customers or identified prospective customers (i) within Employee's assigned area of responsibility, or (ii) within the area of responsibility of sales representatives for whom Employee had management responsibility or (iii) that Employee approached, solicited, or accepted business from on behalf of the Company. Furthermore, Employee shall not aid or assist any other person to do any of the above. The territory set forth in i, ii, and iii shall be determined by the then existing customers and identified prospective customers of the Company within the one year period preceding Employee's separation from the Company; and/or

(b) if Employee was employed by Company in a capacity other than sales or service, such as, but not limited to, an employee subject to the Company's incentive and/or bonus plan, Employee shall not directly or indirectly become associated with, through ownership, employment, self-employment, consultancy, contract or otherwise, any Competing Business. Employee recognizes that the geographic locations within which the Company does business, trades and/or markets its products and services is nationwide, that Employee's work for the Company is national in scope and agrees that it is reasonably necessary for the legitimate protection of the Company's customer relationships and goodwill and Company Confidential Information that the scope of this restriction be nationwide; . . . . (First Am. Compl., Ex. B, 2007 Agreement ΒΆ 2.) The plain language of subparagraph b defines employees "employed in a capacity other than sales or service" as, among others, those who are "subject to ...


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