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Syncreon Technology (USA), LLC v. CRST Specialized Transportation, Inc.

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

June 14, 2018




         I. BACKGROUND

         The facts of this case are simple: Plaintiff and Defendant are competitors in the supplying of specialized logistic services. Plaintiff subcontracted with Defendant to perform certain contractual work for one of Plaintiff's most important customers. As part of the subcontract, Defendant agreed not to solicit, directly or indirectly, any of Plaintiff's customers that were “introduce[d]” to Defendant as part of the subcontract work. However, during the term of the agreement, Defendant successfully solicited Plaintiff's biggest customer, and obtained the subcontracted work for itself. Plaintiff brought suit for violation of the agreement not to solicit. Defendant defends, contending that it was acquainted with Plaintiff's customer prior to entering into the subcontract and, because Defendant was not introduced by Plaintiff to the customer, it was fair game for it to solicit the contractual work.

         II. FACTS

         The Plaintiff and Defendant are specialized providers of integrated logistics services and customized supply-chain solutions to global industries. The general concept of these services is to relieve businesses, such as healthcare providers, telecom companies, and the like, from having to maintain, distribute, and keep track of inventories of materials used in their products.

         In 2009, Plaintiff purchased NAL WorldWide LLC (“NAL”), which was also a specialized provider of integrated logistics services. Under the purchase agreement, Plaintiff assumed NAL's business operations and contracts, including its contracts with a customer named Ericsson, a Norwegian firm that was engaged in the telecommunications industry. In 2004, NAL entered into a Service Provider Agreement (“SPA”) with Defendant's predecessor to provide logistic services to support NAL's work for Ericsson pursuant to a contract. As part of the agreement, Defendant, then under the name Specialized Transport, Inc., agreed to act as a vendor for NAL (Plaintiff's predecessor) for various customers, including Ericsson. There is no disputing that Plaintiff and Defendant were at all relevant times the legal parties to the SPA and subject to its respective terms.

         One of terms of the SPA is a non-solicitation agreement, which provides as follows:

NON-SOLICITATION COVENANT. SERVICE PROVIDER covenants, warrants, represents and agrees it shall support and protect NAL's efforts under this Agreement by refraining from any direct or indirect solicitation of NAL's shippers and/or customers which NAL introduces to Service Provider during the term of this Agreement and for a period of (1) year immediately following termination of this Agreement, except by express written permission of NAL; provided, however, it is understood that SERVICE PROVIDER shall be permitted phone contact with such shippers and customers for operational purposes only. In the event SERVICE PROVIDER violates this provision, SERVICE PROVIDER agrees to pay NAL a fifteen percent (15%) commission on all revenue generated from such shippers and/or customers. SERVICE PROVIDER further agrees that NAL shall be entitled to appropriate injunctive relief for violation of this provision, including the enjoining of SERVICE PROVIDER from the solicitation of freight, transportation or storage from such shippers and/or customers.

(Dkt. 55-4 ¶ 16.)

         In 2014, Defendant held meetings with Ericsson for the purpose of seeking to provide the same logistic services for Ericsson that it was performing on behalf of Plaintiff under the SPA. These meetings ultimately resulted in Defendant being awarded most of Plaintiff's business with Ericsson and further resulted in Ericsson terminating its relationship with Plaintiff. As a consequence, Plaintiff has filed a seven count Amended Complaint against Defendant sounding in Breach of Contract (Count I); Tortious Interference with the Ericsson Service Agreement (Count II); Tortious Interference with Syncreon's Prospective Economic Advantage with Ericsson (Count III); Tortious Interference with Syncreon's Vendor Contracts (Count IV); Defamation Per Se (Misnumbered Count IV); Violation of the Illinois Uniform Deceptive Trade Practices Act-Commercial Disparagement (Misnumbered Count V); and Injunctive Relief (Misnumbered Count VI). Plaintiff moves for partial summary judgment on Count I, Breach of Contract. Defendant cross-moves for summary judgment on all of Plaintiff's counts.

         III. THE ISSUE

         The issue in this case is rather simple: Whether Defendant's solicitation of Ericsson for the work that was performed under the contract between Plaintiff and Ericsson was a violation of the non-solicitation agreement contained in the SPA.


         Plaintiff bases its case on its acquisition of NAL which included the Ericsson relationship and contracts. But for the subcontract work Defendant received from Plaintiff under the SPA, Defendant had no other relationship with Ericsson. Plaintiff further relies upon the testimony of David Puzzo (“Puzzo”), an Ericsson employee who handled the logistic business on Ericsson's behalf. Puzzo gave the following testimony:

Q. Well, I guess my question is: Did you know if Ericsson had a business relationship with STI well before 2007?
A. No. We never had a business relationship directly with STI. That's probably why I took that off of there, because when you say a business relationship, it means you have ...

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