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Turnell v. CentiMark Corp.

United States Court of Appeals, Seventh Circuit

July 29, 2015

JAMES TURNELL, Plaintiff-Appellant,
v.
CENTIMARK CORPORATION, Defendant-Appellee

Argued January 23, 2015

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 C 2660 -- Virginia M. Kendall, Judge.

For James Turnell, Plaintiff - Appellant: James E. Dahl, Attorney, Dahl & Bonadies, LLC, Chicago, IL.

For Centimark Corporation, Defendant - Appellee: Anthony Hopp, Attorney, Steptoe & Johnson LLP, Chicago, IL; David T. Van Der Laan, Attorney, Locke Lord Edwards LLP, Chicago, IL.

Before WOOD, Chief Judge, and KANNE and TINDER, Circuit Judges.

OPINION

Kanne, Circuit Judge.

After losing his job at CentiMark Corporation, Appellant James Turnell went to work for one of its competitors. That created a problem, as Turnell's employment contract contained restrictive covenants barring him from competing with CentiMark or soliciting its customers for two years after termination. The district court issued a preliminary injunction partially enforcing the restrictive covenants, but only to the extent the court deemed necessary to protect CentiMark's legitimate interests. Turnell challenges the preliminary injunction on appeal. We affirm.

I. Background

CentiMark is a large, nationwide roofing company that primarily sells and installs flat, single-ply roofing for commercial and industrial customers. CentiMark hired Turnell as a laborer in its Chicago office in 1978, when he was eighteen years old. Over the course of thirty-five years with the company, Turnell worked his way up the ranks. In 1988 CentiMark promoted him to Chicago District Operations Manager and increased his salary from $45,000 to $50,000 per year. In return, CentiMark required him to sign an employment agreement (the " Agreement" ).

Turnell's new role would give him access to CentiMark's proprietary information and trade secrets, including sales methods and materials, customer accounts, and pricing data. So, in return for his promotion and salary increase, Turnell agreed to a non-disclosure provision (§ 4.01 of the Agreement) requiring him to maintain the confidentiality of CentiMark's information.

He also agreed to two restrictive covenants that CentiMark regularly requires its management-level employees to execute. The first is a non-compete clause (§ 4.05) prohibiting Turnell from " engag[ing] ... in any Competing Business" during the period of his employment and for two years afterward in any of the " regions and/or divisions and/or territories" in which he " operated" as a CentiMark employee. " Competing Business" includes any company that " sells or attempts to sell any products or services" that are " the same as, or similar to," CentiMark's.

The second restrictive covenant is a non-solicitation provision (§ 4.06) providing that Turnell " shall not ... solicit the trade of, or trade with," any of CentiMark's " customers or suppliers, or prospective customers or suppliers" during his employment and for two years afterward. " Prospective customer" is defined broadly to include anyone " contacted by [CentiMark] during the restrictive periods mentioned in this Agreement." But the Agreement does not prohibit all contact with customers or prospective customers--only those that " would constitute [Turnell's] engaging in a competitive business, as described in [the non-compete clause]."

After his promotion in 1988, Turnell's ascent within the company continued. He rose from operations manager to branch manager to regional manager and, finally, to Senior Vice President and Regional Manager for the Midwest Region, which encompasses western Michigan, northwest Indiana, central and northern Illinois, Wisconsin, Minnesota, and North and South Dakota. This region is one of CentiMark's largest and most productive, generating over $25 million in annual revenue. Turnell was responsible for all regional sales (including pricing, marketing, and customer relationships) and operations (including staffing, personnel, and financial performance). He had regular contact with customers, reviewed all major proposals, and had access to a password-protected intranet portal containing information on proposals, leads, quotes, financial performance, and other data. He also participated in monthly conference calls with senior executives on company-wide financial projections and strategy. As regional manager, Turnell earned over $250,000 per year in base salary and bonuses; in addition, CentiMark compensated him with shares in the company worth more than $3 million.

The relationship between Turnell and CentiMark came to an end when the company fired him on January 8, 2013. The reason, according to CentiMark, is that Turnell had misappropriated company resources and covered up fraudulent billing by Vacuum Resources, a subcontracting company owned by his wife. According to Turnell, this was a pretext; the real reason for his termination had to do with his age, his health (he has diabetes and high blood pressure), and his high level of compensation.

Within a week after being fired, Turnell interviewed with Windward Roofing and Construction, Inc., a smaller, more local roofing company in Chicago. Commercial roofing accounts for about half of Windward's business and makes it a competitor of CentiMark. But Windward also does other work that CentiMark does not, such as shingled residential roofing and masonry. CentiMark caught wind of Turnell's discussions with Windward and demanded that he cut them off. Turnell testified that he was aware of his contractual obligations but did not care whether he was competing with CentiMark because he " needed a job." Turnell made little effort to find a job outside commercial roofing.

Instead, he accepted an offer from Windward and began selling commercial roofing for his new employer on or about March 1, 2013. He was hired not to service existing accounts but to develop new business. To that end, Turnell contacted numerous customers or former customers of CentiMark, some of whom he had personally worked with during his tenure there. He sold services to at least one of those customers. And he submitted two bids in head-to-head competition with CentiMark, winning one of those jobs for Windward.

CentiMark demanded that Turnell stop working for its competitor. After an unfruitful exchange of letters, the parties took their dispute to court. Turnell and Windward sued first, on March 11, 2013, seeking a declaration from the Circuit Court of Cook County, Illinois that the Agreement's restrictive covenants were unenforceable. CentiMark removed that lawsuit to the federal district court for the Northern District of Illinois on April 9. The following day, CentiMark filed its own separate action in the Northern District of Illinois against Turnell, Windward, and Vacuum Resources to enforce the restrictive covenants and to obtain other relief. The district court consolidated the two actions.

CentiMark moved for a preliminary injunction against Turnell under Fed.R.Civ.P. 65. After expedited discovery and an evidentiary hearing, the district court granted CentiMark's motion on July 10, 2014. But the court found Turnell's restrictive covenants too broad, so it enforced them only to the extent it judged " reasonably ...


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