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Tradesmen International, Inc v. Professional Labor Support

June 7, 2011

TRADESMEN INTERNATIONAL, INC., PLAINTIFF,
v.
PROFESSIONAL LABOR SUPPORT, LLC, ET AL., DEFENDANTS.



The opinion of the court was delivered by: David G. Bernthal U.S. Magistrate Judge

E-FILED

Tuesday, 07 June, 2011 11:37:52 AM

Clerk, U.S. District Court, ILCD

ORDER

In September 2010, Plaintiff Tradesmen International, Inc. (hereinafter "Tradesmen") filed a First Amended Complaint (#35) against Defendants Professional Labor Support, LLC, John Black, Todd Walker, Ryan Ellis, and Ryan Boyer. Among other claims, Tradesmen alleged that each of the individual defendants had violated his covenant not to compete with Tradesmen. In the complaint, Tradesmen requests declaratory judgment concerning the construction, validity, and enforceability of the agreements (hereinafter the "Non-Compete Agreements"). Federal jurisdiction is based on diversity pursuant to 28 U.S.C. §1332. The parties have consented to the exercise of jurisdiction by a United States Magistrate Judge. The parties agree that the Non-Compete Agreements are governed by Ohio law due to the presence of a forum selection clause in the contracts.

In February 2011, Defendants filed Defendants' Motion for Partial Summary Judgment (#49), seeking partial summary judgment on Plaintiff's request for declaratory judgment concerning the construction, validity, and enforceability of the Non-Compete Agreements.*fn1 At the time, parties had completed written discovery, but had not completed necessary depositions or other discovery. Tradesmen made a Motion for Extension of Time to Respond to Defendants' Motion for Partial Summary Judgment (#51) until further discovery could be completed. In order to possibly streamline discovery by resolving this issue, the Court denied Tradesmen's motion for extension (#53). In so doing, the Court noted it would only consider the facial validity of the "Non-Compete Agreements," and that Tradesmen at this time need not address Defendants' purported "undisputed material facts" that do not bear directly on this issue. Accordingly, Tradesmen filed Plaintiff's Response in Opposition to Defendants' Motion for Partial Summary Judgment (#54). Defendants subsequently filed Defendants' Reply in Support of Motion for Partial Summary Judgment (#55). After reviewing the parties' pleadings and memoranda, this Court hereby DENIES Defendants' Motion for Partial Summary Judgment (#49).

I. Background

Given the procedural posture of this case, the Court relies only on the Non-Compete Agreements themselves and on undisputed material facts.*fn2 Tradesmen is a construction labor support company with a corporate office in Macedonia, Ohio. It hires and directly employs field employees in a complete range of manual and mechanical skilled trades, leasing its employees to clients in various construction, maritime, commercial, and industrial enterprises in the private and public sectors. Tradesmen's clients submit work orders to Tradesmen as needed, and the clients retain Tradesmen field employees to work on assignments for as long as their services are required. Tradesmen maintains 86 offices in 34 states.

Professional Labor Support, LLC is an entity formed by former Tradesmen employees, Defendants Black, Boyer, Walker, and Ellis. Tradesmen has alleged that, in operating this entity, the individual defendants have violated their Non-Compete Agreements. Each of the individual Defendants signed a non-competition agreement with Tradesmen at or near the time they started working with Tradesmen.*fn3

The Non-Compete Agreements contain geographic, temporal, and other restrictions on Defendants' ability to compete with Tradesmen after termination of their employment. The Non-Compete Agreements restrict the Defendants' competitive activities in three geographic spheres: (a) certain identified counties in Indiana and Ohio, which are different in each Defendant's contract, (b) within 100 miles of any field office of Tradesmen, and (c) within 25 miles of any location where Tradesmen is providing its services outside of the 100-mile field office restriction. The Non-Compete Agreements apply for 18-months after employees' termination. The Non-Compete Agreements also provide for non-piracy of customers or prospective customers, and protection of trade secrets, among other restrictions.

II. Standard

The Court will grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to summary judgment as a matter of law." FED. R. CIV. P. 56(a). In ruling on a motion for summary judgment, the Court must decide, based on admissible evidence, whether any material factual dispute exists that requires a trial. Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994). The party seeking summary judgment bears the initial burden of showing that no such issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The Court must draw all inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, the nonmoving party may not rest upon mere allegations in the pleadings or upon conclusory statements in affidavits; rather, he must go beyond the pleadings and support his contentions with proper documentary evidence. Celotex, 477 U.S. at 322-23.

III. Discussion

Defendants argue that they are entitled to summary judgment in their favor for two reasons: (1) the Non-Compete Agreements are not enforceable because they were made in consideration of the Defendants' employment with Tradesmen as "Field Representatives," but none of the Defendants still worked as a Field Representative at the time of their termination; and (2) the Non-Compete Agreements fail to meet the Raimonde standard of reasonableness.

1. Binding Effect of Non-Compete Agreements

Defendants argue that, by the clear and unambiguous terms of the Non-Compete Agreements, they were made in consideration of Defendants' employment as Field Representatives. Defendants argue that the Non-Compete Agreements are thus unenforceable, because all of the Defendants transferred to positions within the company prior to termination of their employment. Defendants submit:

None of the Non-Compete Agreements purport to apply to other job positions that the Defendants held at Tradesmen, and none contains any provision that would allow the same restrictions to apply once the employee is promoted, transferred, or ...


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