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Medix Staffing Solutions, Inc. v. Dumrauf

United States District Court, N.D. Illinois, Eastern Division

April 17, 2018



          SARA L.ELLIS United States District Judge.

         Plaintiff Medix Staffing Solutions, Inc. (“Medix”) is committed to ensuring that Defendant Daniel Dumrauf (“Dumrauf”) does not do any work for his new employer, non-party ProLink Staffing (“ProLink”), within 50 miles of Medix's Scottsdale, Arizona, office pursuant to a covenant not to compete (the “Covenant”) Dumrauf signed while working for Medix. Dumrauf has provided a sworn statement that he has relocated to Ohio and that he does not work in Arizona, with the exception of a few instances while he was relocating to Ohio, but not performing any Arizona-related work. Medix is not satisfied with these assurances and believes that Dumrauf violated and continues to violate the Covenant. So this case goes on, and Dumrauf now moves to dismiss it [26]. Because the Covenant, on its face, restricts Dumrauf from taking any position with another company that engages in the same business as Medix, without regard to whether that position is similar to a position Dumrauf held at Medix or otherwise competes with Medix, the Covenant is unenforceable and the Court grants the motion to dismiss.


         Dumrauf began working at Medix in Scottsdale, Arizona, on March 7, 2011 as Director of Business Operations. In January 2012, Medix promoted him to West Coast Regional Director. In January 2013, Dumrauf became the Director of Medix Scientific. As Director of Medix Scientific, Dumrauf was responsible for Medix's sales and recruiting strategy within the pharmaceutical, biotechnology, and medical device industries.

         Dumrauf and Medix entered into an Employment At-Will, Confidentiality, and Non-Compete Agreement on March 7, 2011. On December 11, 2012, in consideration of his continued employment, Dumrauf executed an Employee Confidentiality/Non-Compete Agreement (the “Agreement”). The Agreement included the following Covenant Not to Compete:

2.3 Covenant Not to Compete. Medix and Employee agree that the nature of Employee's employment with Medix will place Employee in a close business and personal relationship with the Customers of Medix. Therefore, both during Employee's employment with Medix and for a period of eighteen (18) months following the termination of Employee's employment with Medix for any reason, Employee shall not, within a radius of 50 miles from any Medix office(s) where the Employee performed services as an employee of Medix, directly or indirectly, own, manage, operate, control, be employed by, participate in or be connected in any manner with the ownership, management, operation or control of, any business that either: (1) offers a product or services in actual competition with Medix; or (ii) which may be engaged directly or indirectly in the Business of Medix.

Doc. 23, Ex. A.

         On August 10, 2017, Dumrauf resigned from his position with Medix. The same day, he sent an email to Medix V.P. of Sales Jared Jarecki and Medix Director of People and Performance Michael Ceretto informing them of his departure and his acceptance of a position with ProLink overseeing its Healthcare Division's operations. He stated that his new role will involve some client interaction, though minimal. Dumrauf noted in the email that ProLink is based in Cincinnati, Ohio, and that 90% of his activity would be in Ohio and Kentucky. He also noted that he would be relocating away from the Scottsdale area by the end of 2017.

         ProLink, a direct competitor of Medix, has an office in Phoenix, Arizona, which is less than fifty miles from Medix's Scottsdale, Arizona, office. Since leaving Medix, Dumrauf has periodically worked out of ProLink's Arizona office.


         A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed.R.Civ.P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.


         I. Enforceability of Covenant Not to Compete

         Dumrauf moves to dismiss the complaint arguing that the Covenant is overbroad and unenforceable. Dumrauf argues that the Covenant is unenforceable because it is a blanket prohibition on engaging in any activity for a competitor. He also argues that the Covenant would result in an undue hardship on him and that Medix has not shown a sufficient legitimate business interest in enforcing the Covenant. Medix argues that the Court cannot decide reasonableness of a covenant ...

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