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Peckham v. Metal Management

May 5, 2010

ROBERT TODD PECKHAM, PLAINTIFF/COUNTERCLAIM-DEFENDANT,
v.
METAL MANAGEMENT, INC., D/B/A SIMS METAL MANAGEMENT, A DELAWARE CORPORATION ("SMM") (INCORRECTLY SUED AS SIMS METAL MANAGEMENT, INC.), DEFENDANT/COUNTERCLAIM-PLAINTIFF.
v.
TWIN RIVERS TRUCKING, INC. AND MIGHTY RIVER RECYCLING, LLC, THIRD PARTY DEFENDANTS,



The opinion of the court was delivered by: Herndon, Chief Judge

MEMORANDUM AND ORDER

I. Introduction

This matter is before the Court on Defendant's Motion for Preliminary Injunction (Doc. 12). Specifically, Defendant sought a preliminary injunction to enforce the terms of the covenant not to compete found in Plaintiff's contract and prevent Plaintiff Peckham from breaching his fiduciary duties as to confidential information, including pricing information, which he obtained during his employment with Metal Management, Inc.

Plaintiff Peckham filed a three count Complaint in Madison County on February 22, 2010 against Sims Metal Management, Inc. (Metal Management, Inc.).

Specifically, Peckham alleged that the restrictive covenant in his employment agreement with Metal Management, Inc. was unenforceable, that Defendant was estopped from enforcing the provisions of the covenant, and that Metal Management had breached its contract with Peckham by wrongfully terminating him (Doc. 2 Ex. 2). Defendant removed the matter to this Court on March 5, 2010 on the basis of diversity (Doc. 2). Defendant also filed a counterclaim against Peckham seeking injunctive relief for breach of the restrictive covenant, breach of fiduciary duty, and fraud, as well as a third party complaint against Peckham's two businesses, Mighty River Recycling, LLC and Twin River Trucking, LLC for tortious interference.

Subsequently, on March 11, 2010 Defendant filed the instant motion for preliminary injunction (Doc. 12). On April 8, 2010, the Court held a hearing on Defendant's motion (Doc. 30). After first determining that the Court had subject matter jurisdiction to hear the matter, the Court heard evidence. After hearing the evidence, the Court DENIED Defendant's motion for preliminary injunction (Doc. 12). The Court now formalizes and memorializes the findings it made at the April 8, 2010 hearing in denying Defendant's motion.

II. Findings of Fact

1. Plaintiff Robert Todd Peckham entered into a contract with Metal Management, Inc. on August 17, 2009. Peckham worked for Metal Management, Inc. beginning in mid-August as a senior trader who bought and sold scrap metal. He worked for approximately six months before being fired by Metal Management, Inc.

2. Despite the written agreement between Robert Todd Peckham and Metal Management, Inc., there was not a complete and final agreement between the parties regarding what to do with the plaintiff's outside business interests. There simply was no meeting of the minds on that aspect of the transaction.

3. It is clear from the credible testimony in the case that the Plaintiff had the Defendant's interest in mind throughout his employment. While it is equally clear that there was dealing between the Plaintiff's outside business interests and the Defendant and Defendant's customers, the Court finds that those transactions were conducted with the knowledge and consent of the Defendant. The Court further finds that Plaintiff fully believed and was confident that such transactions were consistent with prudent business practices and consistent with the desires of the Defendant. Plaintiff did not believe the dealings to be in conflict nor did he try to cause a conflict in his employment or fiduciary obligations and those dealings.

4. Plaintiff's failure to disclose his company, Mighty River Recycling, LLC, was of no material importance. The Court finds that it was the alter ego of Twin Rivers Trucking, Inc., and was engaged in the exact same business.

5. Both parties testified to negotiations surrounding the Plaintiff's employment with Defendant. There was absolutely no separate consideration provided to Plaintiff for him to sign the restrictive covenant. The Regional President Robert Kellman testified at length, in narrative form, about the importance of the restrictive covenant and the contract, but did not offer any evidence whatsoever about any compensation offered or paid for such a restraint of trade. The Court finds that the only consideration for the restrictive covenant was the Plaintiff's employment and both parties agree that it lasted six months.

6. The Defendant is a global corporation that does billions of dollars of business, employing thousands of persons. The Plaintiff's contract with Defendant as just one employee in an office in Alton, Illinois was for a quarter million dollar salary a year. The Plaintiff and his two small businesses employed less than a half dozen people and the total income of the companies is but a small multiple of Plaintiff's salary with the Defendant. Defendant has a huge volume of businesses, while the ...


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