United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, DISTRICT JUDGE
Industries Inc. (Empire) contends that Winslyn Industries,
LLC (Winslyn) tortiously interfered in a contract between
Empire and The Fireclay Factory LLC and Niko (INT) Ltd.
(collectively, Fireclay) to produce sinks. Empire urges the
Court to issue a preliminary injunction to prevent Winslyn
from benefitting from its interference.
a case about fireclay sinks, which are formed from clay fired
at very high temperatures. They have existed for many years
but are newly popular among homeowners. This suit arises from
Empire's allegation that Fireclay, a sink manufacturer,
promised it would manufacture certain sink designs
exclusively for Empire but then produced sinks with an
indistinguishable design for Winslyn, another distributor, in
breach of this promise.
Fireclay agrees to manufacture Empire's sinks
manufactures and distributes countertops, sinks, and other
kitchen and bathroom accessories. Jacob Goren is the chief
executive of Empire. Goren began designing a farmhouse-style
fireclay sink in 2013 that he believed differed from others
offered in the market. The sink was rectangular in design and
featured thin walls, narrow-radius curves, and
"contemporary styling." D.E. 74 ¶ 17
(Empire's Direct Examination Stmt. for Goren).
2016, Fireclay and Empire began to discuss the prospect of
Fireclay manufacturing products for Empire. Fireclay produces
products made of fireclay for customers around the world.
Peter Shilling is its managing director; Tony Wood and
Charles Woodhead are employed by Niko, an affiliated
entity. Goren began sending sink designs to
Shilling so that Fireclay could create molds for the design.
The record indicates that Fireclay produced at least two
models for Empire. Both models-the Olde London and the Sutton
Place-featured the same underlying design. The bottom and
side panels were identical; only the decorative front panel
differed. The Olde London sink featured a decorative stripe
known as a "rebate" that ran parallel to the edges
of the front panel; the Sutton Place sink featured vertical
bands along the front panel.
March 21, 2017, Goren e-mailed Shilling to express concern
that he had spent significant time developing the molds with
Fireclay and was now "realizing that I may have done all
this for my competition as our agreement is really one
sided[.]" PX 17 at EMPIRE0000590-91. Goren expressed
concern that his efforts were "helping to build a
factory for the competition." Id. Goren offered
to commit to continue purchasing approximately 1000 sinks per
month from Fireclay; in exchange, Fireclay would not sell any
sinks in the United States. In response, Wood said "I do
understand your concerns, " and he offered Goren two
options for an agreement. Id. at EMPIRE0000589-90.
The first consisted of two terms: "[Fireclay] will
supply exclusive products to your designs to your company
only" and "OEM products for other possible
customers could then be sold under a different design."
Id. at EMPIRE0000589. Wood also stated "you can
trust that we would not sell anyone else design as all I see
that doing is undermining the market and chasing prices to
the bottom." Id. at EMPIRE0000590. Goren agreed
to this option. Then, on May 15, Goren e-mailed Wood to ask
for "a simple gentleman agreement" that "the
products there [sic] were designed for us we only be sold to
us, and that you will not put newer customer orders ahead of
ours." PX 19 at EMPIRE0000865. Wood stated, "you do
have my word and Peter [Shilling] will back me up the same
that we would not sell your products to and one [sic]
Fireclay contacts Winslyn; they contract to produce
Fireclay exchanged e-mails with Empire, it was also
communicating with Winslyn, another seller and distributor of
kitchen products. William Stuebner is the president, founder,
and part owner of Winslyn. In March 2017, Stuebner asked
Fireclay which farmhouse-style sinks were available for sale.
Fireclay provided a list of available sinks, and Winslyn
relied upon this list to solicit potential customers. On June
2, Menard's, a major retailer, selected several sinks
offered by Winslyn. But the sinks that Menard's selected
were the sinks that Goren had designed for Fireclay to make
exclusively for Empire.
19, Woodhead e-mailed Stuebner to inform him that the sink
that Menard's wanted was not available because it
belonged to another customer of Fireclay; he sent Stuebner
pictures of an alternative design. PX 40 at WINSLYN00000897
(June 19, 2017 Woodhead e-mail to Stuebner) ("there is a
owner ship issue now as the customer has paid for the mould
so we have amended to what we have sent on the image").
Wood also told Stuebner that "design rights"
prevented Winslyn from obtaining the sinks that Fireclay
produced for Empire. Id. at WINSLYN000000896.
However, Stuebner found the alternative sinks
"significantly different." Id. He did not
accept the alternative and insisted on acquiring the original
model that his customers ordered:
Q. And you're telling [Wood, ] I imagine, "We've
got millions of dollars on the line. You're going to damn
well send me that sink"?
A. You could imagine that.
Q. Correct. Is that basically how it happened?
A. Yeah. "I need my sink. I've got business
2018 Hr'g Tr. at 137-38. In response, Fireclay told
Winslyn it would "need to amend the mould[.]" PX 42
at WINSLYN00000905. When Stuebner again asked why Winslyn
could not obtain the original design, Wood told Stuebner that
Fireclay had another customer and "I had to agree we
would only sell them that product." Id. Wood
then proposed a new sink design for Winslyn. But he also
assured Winslyn that, based upon a comparison between an
image of Empire's original design and Winslyn's new
design, "You won't tell any difference of the photo
shop." PX 43 at WINSLYN00001027 (July 3, 2017 Wood
e-mail to Wang). Fireclay ended up producing sinks for
Winslyn containing a very minor, arguably inconsequential,
alteration to the front panel of the Olde London sink: it
adjusted the rebate by less than two centimeters. By July
2017, Winslyn's customers placed orders for these new
sinks, which Fireclay fulfilled.
Empire learns of Fireclay's sales to Winslyn
Fireclay was working with Winslyn to produce sinks, it
continued to work alongside Empire as well. Goren had grown
concerned that Fireclay was delivering its sinks at a slow
pace, so he visited Fireclay's factory, located in the
United Arab Emirates, in November 2017. Goren toured the
factory and saw hundreds of sinks in production; he thought
that Fireclay was finally producing sinks at the capacity it
promised. But, after returning from lunch, he noticed sinks
that contained only slight variations from the sinks he
designed. When confronted, Fireclay told Goren that the sinks
were for an Australian customer and would not be sold in the
United States. Nonetheless, Goren was frustrated: he believed
Fireclay used his design to make these sinks and had delayed
shipments to Empire to produce sinks for another customer.
Yet Empire later learned that Fireclay was selling these
sinks to Winslyn in the United States.
November 28, Goren e-mailed Wood, Shilling, and the Winslyn
customer support e-mail address. Goren offered to forego
litigation if Fireclay honored its agreement not to sell what
he believed to be Empire's sink design. Goren also
contacted a representative of Ferguson Enterprises, another
retailer he believed was receiving the sinks, to warn of
Fireclay's obligation to Empire.
e-mailed several Fireclay employees on November 30 to inquire
about Goren's e-mail. In response, Wood said there was
"no issue" and that the sinks about which Goren was
e-mailing "ha[d] been in the market for many
years." DX 36 at WINSLYN0001765 (Nov. 30, 2017 Wood
e-mail to Stuebner).
contacted Fireclay to urge it to uphold the exclusivity
agreement. Fireclay denied that there was a binding
exclusivity agreement and said that the sinks produced for
Winslyn were not the same as Empire's sinks. On December
29, Fireclay notified Empire it terminated any contractual
relationship they had.
Empire files suit
January 30, 2018, Empire filed a complaint against Winslyn,
alleging tortious interference with contractual relations and
tortious interference with prospective economic advantage. On
March 28, Empire moved for a temporary restraining order and
a preliminary injunction. On March 29, Empire amended its
complaint to specifically request the Court to enjoin Winslyn
from receiving additional Fireclay sinks. The Court denied
Empire's motion for a temporary restraining order on
April 6. On May 23, Empire filed a second amended complaint.
This complaint named Winslyn, Fireclay, and
Niko. Though the complaint removed the claim of
tortious interference with prospective economic advantage, it
added claims for unjust enrichment, breach of contract,
fraud, and civil conspiracy. Empire seeks an injunction to
preclude Winslyn from continuing to market sinks from
Fireclay using Empire's designs.
30, the Court held an evidentiary hearing on Empire's
motion for a preliminary injunction. The parties then filed
has moved for a preliminary injunction. To obtain a
preliminary injunction, Empire must first show it has
"some likelihood of success on the merits, " no
adequate remedy at law, and will suffer irreparable harm if
the injunction is denied. Ty, Inc. v. Jones Grp.,
Inc., 237 F.3d 891, 895 (7th Cir. 2001). If Empire can
meet these requirements, the Court then balances the harm
Empire would suffer if the injunction is denied against the
harm Winslyn would suffer if the injunction is granted.
proceeding to the merits of Empire's preliminary
injunction motion, the Court must address two points at the
onset to clarify the decision that follows. First, Empire
peppers its briefs with terms like "proprietary design,
" suggesting a claim based on, perhaps, trade dress. But
it does not actually assert a claim on that basis. Rather,
Empire has argued, and the Court restricts its analysis to,
Empire's likelihood of success on a claim that it entered
into an enforceable contract restricting Fireclay's
ability to sell Empire's sink design to others and
whether Winslyn intentionally interfered with that contract.
In its briefs, Winslyn addresses what ...