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Cumulus Radio Corp. v. Olson

United States District Court, C.D. Illinois, Peoria Division

February 13, 2015

CUMULUS RADIO CORPORATION f/k/a CITADEL BROADCASTING CO., Plaintiff,
v.
JOSEPH OLSON and ALPHA MEDIA LLC, Defendants

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[Copyrighted Material Omitted]

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For Cumulus Radio Corporation, f/k/a CITADEL BROADCASTING CO., Plaintiff: John P Heil, Jr, HEYL ROYSTER VOELKER & ALLEN, Peoria, IL; Susan M Benton, GREENSFELDER HEMKER & GALE, Chicago, IL.

For Joseph Olson, Alpha Media LLC, Defendants: Michael R Lied, LEAD ATTORNEY, HOWARD & HOWARD ATTORNEYS PC, Peoria, IL.

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ORDER & OPINION

JOE BILLY McDADE, United States Senior District Judge.

This matter is before the Court on Plaintiff's Motion for a Temporary Restraining Order (" TRO" ) (Doc. 3). Plaintiff filed a Verified Complaint and moved for a TRO on February 9, 2015. (Docs. 1, 3). The Court received written submissions from all parties and heard oral argument on February 12, 2015. For the reasons explained below, Plaintiff's Motion is granted in part and denied in part.

Background

Plaintiff Cumulus Radio Corporation owns and operates a number of radio stations in the Peoria, Illinois area. (Compl., Doc. 1, at ¶ 15). These stations generate revenue by selling advertising for radio time and advertising through online and social media. ( Id. at ¶ 16). Plaintiff offered to hire Defendant Joseph Olson as an account executive on March 23, 2013, effective April 1, 2013. ( Id. at ¶ 28). As an account executive, Olson was " expected to network to identify potential customers, service and maintain relationships with current customers, sell advertising time to local and national customers, and obtain sales quotas." ( Id. at ¶ 29). Olson received a number of benefits as part of his employment. These include a subsidized compensation plan; sales training; access to pre-existing customers to develop and maintain; networking opportunities with Business Networking International, the Senior Care Network, and the local Chamber of Commerce; funds for customer development; and access to a country club and local entertainment so he could host prospective customers. ( Id. at ¶ 30.)

As part of Olson's employment, he entered into an employment agreement that included a number of post-employment restrictions. ( Id. at ¶ 31; Doc. 1-2 at 1). In exchange for " consideration of Employee's employment by the Company, and other valuable consideration," Olson agreed to, among other things, not compete with Plaintiff, not solicit Plaintiff's customers, and not disclose Plaintiff's confidential information. (Doc. 1-2 at 1, 2-3).

Olson agreed not to compete with Plaintiff within a 60-mile radius of Plaintiff's Peoria sales office for six months following the termination of his employment (Compl. ¶ 31). The agreement defines competing as engaging " in any activities the same or essentially the same as Employee's Job Duties for any Competing Business." ( Id.). A Competing Business is " any person . . . or entity carrying on a business that is the same or essentially the same as" Plaintiff's. (Doc. 1-2 at 2). It includes " all commercial media outlets that sell advertising, such as radio stations, television stations, cable operators, newspapers, magazines, Internet radio, advertising and publications, outdoor advertising and billboards, and advertising agencies." ( Id.).

Olson also agreed to not solicit Plaintiff's customers for 12 months following the end of his employment. ( Id. at 3). The agreement prohibits him from soliciting any customer of Plaintiff's whom he " had Contact on the Company's behalf" during his employment.

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( Id.). Contact means any interaction that Olson had with a customer that " took place in an effort to establish or further the business relationship between" Plaintiff and the customer. ( Id.).

Finally, the agreement prohibited Olson from disclosing its confidential information for 12 months following the end of his employment. ( Id. at 2). It defines confidential information as all information that Plaintiff " endeavors to keep secret" and " has commercial value to" Plaintiff " or is of such a nature that its unauthorized disclosure would be detrimental to" Plaintiff's interests. ( Id.). Information that is otherwise in the public domain, or is known to employees from sources other than Plaintiff is not confidential under the agreement. ( Id.).

Both the covenant not to compete and the covenant not to solicit customers include language that tolls the non-compete and non-solicitation time periods during the pendency of litigation to enforce the provisions. (Compl. ¶ 31). There does not appear to be a similar tolling provision related to Olson's obligation to not disclose confidential information. ( See id.).

Olson voluntarily ended his employment on January 7, 2015, approximately 21 months after it began. (Compl. at ¶ 41). Olson began working with Defendant Alpha as an account executive two days later, on January 9, 2015. ( Id. at ¶ 44). Alpha owns and operates a number of radio stations in Peoria, which Plaintiff alleges directly compete with Plaintiff's stations. ( Id. at ¶ 45). Olson now works less than one mile away from Plaintiff's office. ( Id. at ¶ 46).

Alpha was aware of Olson's contract with Plaintiff, but hired him, anyway. ( Id. at ¶ 47). Once at Alpha, Olson allegedly began soliciting customers of Plaintiff's with whom he'd had contact. ( Id. at ¶ 48). This includes Taxes Now, a company that Olson had serviced while employed with Plaintiff, and Synergy Healthcare, one of Plaintiff's potential clients. ( Id. at ¶ ¶ 49-50).

Standard of Review

Federal Rule of Civil Procedure 65 permits a court to grant a temporary restraining order when a Plaintiff has demonstrated through specific facts in an affidavit or a verified complaint that they will suffer " immediate and irreparable injury, loss, or damage." Fed.R.Civ.P. 65(b)(1)(A). A party seeking to obtain a temporary restraining order must demonstrate (1) that its case has some likelihood of success on the merits; (2) that no adequate remedy at law exists; and (3) that it will suffer irreparable harm if the injunction is not granted. Caterpillar Inc. v. Walt Disney Co., 287 F.Supp.2d 913, 916 (C.D. Ill. 2003). If Plaintiff meets those first three requirements, the Court balances the relative harms of the parties and the public. Ty, Inc. v. Jones Group, 237 F.3d 891, 895 (7th Cir. 2001). The court weighs all factors using a sliding-scale approach. Abbott Labs v. Mead Johnson & Co., 971 F.2d 6, 12 (7th Cir. 1992).

Discussion

Plaintiff seeks a temporary restraining order that would grant four separate types of injunctive relief. First, it seeks to enjoin Defendant Olson from working, either directly or indirectly, in media sales for Defendant Alpha or any other direct competitor of Plaintiff, within a 60 mile area, for a period of 6 months following the entry of a TRO. Second, it seeks to enjoin Defendant Olson from soliciting, either directly or indirectly, any customers of Plaintiff's he contacted on behalf of Plaintiff during his employment at Plaintiff for a period of 12 months following the entry of a TRO. Third, it seeks to enjoy Defendant Olson from disclosing Plaintiff's confidential

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information for 12 months following the entry of a TRO. Fourth it seeks to enjoin both Defendants from using or disclosing Plaintiff's trade secret information.

In support of its motion, Plaintiff briefed its likelihood of success on the merits for each of the three counts alleged in the Complaint: breach of contract, tortious interference with a contract, and misappropriation of trade secrets. The Court need not consider Plaintiff's likelihood of success on its tortious interference claim at this stage, as it is not asking for any injunctive relief with respect to that claim and is only asking for relief with respect to its breach of contract claim against Olson and its misappropriation of trade secrets claim against Olson and Alpha. Therefore, the Court will consider whether Plaintiff has met its burden with respect to both of those claims.

I. Likelihood of Success on the Merit

a. Breach of Contract

The parties do not dispute that Olson has taken certain actions that are contrary to the agreement that he made. However, they dispute whether the contract was enforceable. " Under Illinois law, post-employment restrictive covenants are only enforceable if they are reasonable in geographic and temporal scope and necessary to protect an employer's legitimate business interest." Prairie Rheumatology Assocs. v. Francis, 2014 IL App. (3d) 140338, P12, 24 N.E.3d 58, 388 Ill.Dec. 150 (Ill.App.Ct. Dec. 11, 2014). However, courts must make two determinations before reviewing the reasonableness of a restrictive covenant: first, whether it is " ancillary to either a valid transaction or a valid relationship," and second, " whether there is adequate consideration to ...


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