Lifetec v. Edwards

NO. 4-07-0300 Filed 11/6/07

IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT

LIFETEC, INC., an Illinois Corporation, ) Appeal from
Plaintiff-Appellee, ) Circuit Court of
v. ) Macon County
PETER EDWARDS; CAROL EDWARDS; and ) No. 06CH20
PATTERSON MEDICAL PRODUCTS, INC., a )
Michigan Corporation, d/b/a SAMMONS )
PRESTON ROLYAN, )
Defendants, )
and )
PETER EDWARDS; and PATTERSON MEDICAL )
SUPPLY, INC., a Minnesota Corporation, ) Honorable
d/b/a SAMMONS PRESTON ROLYAN, ) Katherine M. McCarthy,
Defendants-Appellants. ) Judge Presiding.
_________________________________________________________________

JUSTICE KNECHT delivered the opinion of the court:

In January 2006 plaintiff, Lifetec, Inc. (Lifetec),

sued defendant, Peter Edwards, its former employee, for breach of

contract, specifically for breach of three restrictive covenants

contained in the contract. Lifetec also sued Carol Edwards,

Peter's wife, and Patterson Medical Supply, Inc. (Patterson),

Peter's new employer, for tortious interference with contract.

In March 2007, the trial court granted Lifetec's request for a

preliminary injunction, finding sufficient evidence Edwards had

knowledge of confidential client information and Lifetec provided

sufficient evidence presenting a fair question Edwards had

disclosed such confidential information to Patterson for his and

Patterson's benefit. Thus, Lifetec presented a fair question it

had a protectible business interest and, therefore, demonstrated
a likelihood of success on the merits. In this interlocutory

appeal, Edwards claims the trial court abused its discretion

because no protectible business interest was demonstrated by

Lifetec justifying a preliminary injunction. We affirm as

modified and remand with directions.

I. BACKGROUND

A. Uncontroverted Facts

On or before April 1, 1996, Edwards was offered and

accepted a position as a sales representative for Lifetec, a

dealer of medical devices and products in Illinois, Indiana, and

other neighboring states. On April 2, 1996, Edwards executed a

written employment agreement with Lifetec, which contained

several postemployment restrictive covenants. These covenants

were a "non[]competition" covenant, a "non[]solicitation" cove-

nant and a "non[]representation" covenant. They stated, respec-

tively, the following:

"6.02 Competition. Employee will not,

for a period of twenty-four (24) months after

the termination of this Agreement, directly

or indirectly, on Employee's own account or

in the service of others or through a spouse

or affiliate, compete with the Company or

engage in the sale and/or lease of the Prod-

uct or competitive medical devices and/or

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products in the Territory. For the purposes

of this provision, Product and Territory

includes only the Product and Territory as-

signed to the Employee during the most recent

eighteen [(18)] months prior to the termina-

tion of this Agreement."

"6.01 Solicitation. Employee will not,

for a period of twenty-four (24) months after

the termination of this Agreement, directly

or indirectly, on Employee's own account or

in the service of others or through an affil-

iate or spouse, engage in the solicitation of

purchase orders for, or assist in the sale

and/or lease of, the Product or competitive

medical devices and/or products in the Terri-

tory. For the purposes of this provision,

Product and Territory includes only the Prod-

uct and Territory assigned to the Employee

during the most recent eighteen [(18)] months

prior to the termination of this Agreement."

"8.01 Duty Not to Represent. Employee

agrees that during the period of this Agree-

ment and for twenty-four (24) months thereaf-

ter, he will not, either directly or indi-

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 rectly, become employed by or act as a dis-

tributor or sales representative for any

manufacturer for whom Employer acted as a

distributor or sales representative during

the prior twelve (12) months nor will Em-

ployee accept any employment with any dis-

tributor or sales representative that sells

medical and exercise products manufactured by

any manufacturer for whom Employer acted as a

distributor or sales representative within

the prior twelve (12) months."

"Product" was defined as "those medical devices and products

which the employee is authorized to sell in the Territory" and

"are listed in the Product Schedule" attached to the contract.

Edwards was employed with Lifetec for almost 10 years.

During this time, he was promoted and his compensation package

increased. Edwards never sought to renegotiate the employment

agreement to remove the covenants.

During the spring of 2005, while actively employed by

Lifetec, Edwards sought employment with Patterson, a competitor

of Lifetec with a nationwide business. Edwards knew when he

interviewed that the position with Patterson would involve

selling the same products as Lifetec to the same customers and in

the same territory. At Patterson's request, Edwards brought a

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copy of his employment agreement with Lifetec with him to the

interview with Patterson and left a copy there. Patterson's

representatives assured Edwards he would be taken care of if he

were sued by Lifetec.

In July 2005, Edwards was offered a position with

Patterson, which he quickly accepted. On July 18, 2005, Edwards

submitted his letter of resignation to Lifetec, which was ac-

cepted on July 22. In the letter he was not forthcoming about

his new employment with Patterson but instead stated he was

leaving due to personal problems and the desire to further

develop and market his own medical product. Edwards stated he

knew the real reason for his resignation would upset Lifetec's

representatives. Edwards started working for Patterson in August

2005. It was not until several months later Edwards admitted to

Michael Christoi, president of Lifetec, he was now working for

Patterson.

B. Lawsuit Initiated

On January 18, 2006, Lifetec sued Edwards for breach of

contract and on January 25, 2006, filed a motion for preliminary

injunction. At the time of the issuance of the preliminary

injunction, Edwards admits he was still selling products for

Patterson competitive with products he sold for Lifetec in the

territory he serviced for Lifetec and actually serviced the same

customers he served in the area subject to the restrictions in

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his employment agreement.

The motion for preliminary injunction sought a prelimi-

nary injunction barring Edwards from violating the covenants in

his employment agreement with Lifetec and specifically ordering

him to (1) cease working for Patterson and (2) cease competing

with Lifetec and engaging in the solicitation of purchase orders

in competition with Lifetec and cease acting as (a) a distributor

or sales representative for any manufacturer for which Lifetec

acted as a distributor or (b) a sales representative for any

manufacturer for which Lifetec acted as a distributor or sales

representative during the 12 months prior to Edwards' resigna-

tion, all in accord with the covenants in the employment agree-

ment.

C. Evidentiary Hearings

The trial court heard evidence for three days at trial

from September 2006 through November 2006. Christoi testified he

started Lifetec in 1983 and it is a small, family-run distributor

of medical products, specializing in physical and occupational

therapy, schools, long-term care, and orthopedics. Lifetec's

major customers are hospitals, nursing homes, private practice

clinicians, schools, retirement centers, and orthopedists and

podiatrists. Lifetec currently employed 13 employees and gener-

ally employed between 10 and 20. The bulk of Lifetec's sales

(85% to 95%) came from Illinois, Indiana, and Wisconsin. Christ-

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oi described Patterson as Lifetec's largest competitor and both

companies market to the same customers. Lifetec usually had

about three salespeople working for it at any one time.

Christoi testified that after Edwards left Lifetec,

Lifetec suffered a loss of sales in the territory previously

served by Edwards. Christoi admitted Edwards was not replaced by

a new salesperson but the territory was being served by Christoi

himself while he also continued to perform his duties as company

president. Lifetec does not have funds with which to participate

in marketing activities and so relies heavily on its sales

personnel to market its products by direct contact with potential

customers.

In his testimony, Edwards identified himself as a

rehabilitation sales consultant for Patterson. He is one of 13

salespersons reporting to the Midwest sales director, Angie

Cominsky-Wachs. Cominsky-Wachs testified Patterson seeks to

establish customer relationships through sales representatives

supported by an "extensive catalog"; Christoi also described the

catalog as extensive. Edwards testified that, while working for

Lifetec, customers would contact him with reference to Patterson-

's catalog to determine if Lifetec could supply a certain product

and at what price.

Much of Patterson's business came about through na-

tional account contracts with hospital-based and other buying

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consortiums where the customers were obligated to buy a certain

percentage of their product from Patterson and at a set price.

For products sold by Patterson through Edwards, Cominsky-Wachs

estimated these national contracts amount to 70% of his sales.

Christoi considered the identities of key customers,

listings, ordering patterns, and quote reports, as well as "open

quotes," to be "confidential information." Of these, the open

quotes were the most important type of information. "Open

quotes" consisted of bids provided to customers for purchases the

customers were considering making. When Edwards left Lifetec,

$1.3 million in open quotes were outstanding in Edwards' Lifetec

territory. Christoi admitted open quotes were followed with

orders less than half the time. By contrast, Edwards stated

while employed with Lifetec he considered himself fortunate to

"close" 15% of his open quotes.

Christoi testified only two individuals employed by

Lifetec had signed confidentiality agreements with the company.

He admitted not all persons acting as sales representatives of

Lifetec had executed confidentiality agreements. Lifetec's

president, secretary/treasurer, and sales administrator all had

access to open-quote reports and none executed a confidentiality

agreement. Of those who had not executed confidentiality agree-

ments, these persons were family members of the family that owned

Lifetec. Account managers (in-house office-support people)

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received open-quote information from sales representatives and

they never executed confidentiality agreements. Christoi admit-

ted that after Lifetec provided these quotes to customers, the

customers commonly provided Lifetec's quote to other suppliers.

Edwards also testified open quotes from other suppliers were

generally shared by customers.

Christoi testified Lifetec's pricing for medical

equipment is confidential. While Patterson has a published

catalog, Lifetec has only a small flyer in regard to basic

supplies. The prices for items other than basic supplies were

customized and tailored to individual customers and those re-

sulted in the open quotes. The information that went into

producing the open quotes was confidential and accessed through

password-secured company computer programs. The system was set

up with security codes and sales personnel could access only

their own accounts. The only persons with open access to the

computer systems were Christoi, his wife, and his sister-in-law,

each of whom has been a trusted and trustworthy employee of

Lifetec for over 20 years.

Edwards had access to this confidential information

while employed with Lifetec. He testified he brought no custom-

ers with him when he joined Patterson as all Lifetec customers

were also customers of Patterson. The industry was very price-

driven, and customers purchased from many suppliers depending

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upon which offered the lowest prices at any given time for a

given item. Edwards further testified contacting former custom-

ers would not have made sense once he moved to Patterson because

his business there came from Patterson client lists and the bulk

of that from national contracts with buying consortiums. Edwards

admitted he had some memory of Lifetec open quotes.

Several e-mails Edwards sent to other Patterson employ-

ees after he became employed by Patterson were introduced as

evidence at trial. Pertinent ones include one dated September 6,

2005, approximately one month after Edwards started employment

with Patterson, in which Edwards states "Right now I'm just

calling on people I already know and converting." Another, dated

that same day, states "It would be very helpful for me to be able

to ID these target accounts in case they are budgeting for

equipment with competitors." Finally, another e-mail, dated

January 23, 2006, from a different sales representative to

Cominsky-Wach, states the "Pricing is to keep LifeTec [sic] out."

A great deal of other evidence was presented by Lifetec

with the purpose of proving Lifetec had "near-permanent relation-

ships" with its customers. The trial court's finding on this

point is not before us in this appeal, and we need not detail it

here.

D. Trial Court Order

The trial court entered its order granting most of the

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relief sought by Lifetec while preliminarily enjoining Edwards

from competing directly with Lifetec in any territory he previ-

ously served in for Lifetec for the first 24 months after leaving

Lifetec's employ:

"A. Defendant Edwards is ORDERED not to

compete with Lifetec or engage in the sale

and/or lease of any product or competitive

medical device listed in Exhibit A to the

Agreement in the territory assigned to Ed-

wards during the eighteen (18) month period

of time prior to the termination of his

Agreement for a period of twenty-four (24)

months.

B. Defendant Edwards is ORDERED not to

engage in the solicitation of purchase orders

for or assist in the sale or lease of any of

the products or competitive medical devices

listed in Exhibit A of the Agreement within

the territory to which he was assigned with

Lifetec during the eighteen (18) month period

of time prior to the termination of his

Agreement.

C. Defendant Edwards is ORDERED not to

act as a distributor or sales representative

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 for any manufacturer for whom Plaintiff acted

as a distributor or sales representative

during the twelve (12) months prior to Defen-

dant Edwards' resignation with Lifetec."

The trial court specifically found the e-mail messages

presented a fair question that Edwards was using information he

gained from his employment at Lifetec to his advantage. The

court noted the most troubling piece of evidence was the e-mail

early on in his new job in which Edwards stated he was "calling

on people I already know and converting." Although Edwards

denied this was a reference to Lifetec and was meant to include

all competitors, the trial court found a fair question was

presented by Lifetec that Edwards was using confidential informa-

tion "for his own benefit with his new employer." Further,

Edwards stated "it would be very helpful for me to able to ID

these target accounts in case they are budgeting for equipment

with competitors." Edwards admitted he had some memory of

pending Lifetec "open quotes" and he would be able to give

Patterson a significant competitive advantage by using this

confidential information.

The trial court concluded Lifetec presented sufficient

evidence presenting a fair question Edwards has disclosed confi-

dential information to his present employer, Patterson, for his

own and Patterson's benefit.

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 This interlocutory appeal followed.

II. ANALYSIS

Defendants appeal pursuant to Supreme Court Rule

307(a)(1) (188 Ill. 2d R. 307(a)(1)). The only question before

us is whether a sufficient showing was made to the trial court to

sustain the order granting the relief sought. Postma v. Jack

Brown Buick, Inc., 157 Ill. 2d 391, 399, 626 N.E.2d 199, 203

(1993).

A. Standard of Review

Trial courts have substantial discretion in deciding

whether to grant a preliminary injunction (Danville Polyclinic,

Ltd. v. Dethmers, 260 Ill. App. 3d 108, 109, 631 N.E.2d 842, 843

(1994)), and the decision of the trial court will not be dis-

turbed on appeal absent an abuse of discretion (Mohanty v. St.

John Heart Clinic, S.C., 225 Ill. 2d 52, 63, 866 N.E.2d 85, 91

(2006)). On appeal, the court examines only whether the party

seeking the injunction has demonstrated a prima facie case that

there is a fair question concerning the existence of claimed

rights. Mohanty, 225 Ill. 2d at 62, 866 N.E.2d at 91.

B. Preliminary Injunction Requirements

The proof required for issuance of a preliminary

injunction requires a plaintiff to show a "fair question" exists

regarding his claimed right, and "the court should preserve the

status quo until the case can be decided on the merits." Buzz

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Barton & Associates, Inc. v. Giannone, 108 Ill. 2d 373, 382, 483

N.E.2d 1271, 1275 (1985). As a general rule, a preliminary

injunction requires a showing by a preponderance of the evidence

(Weitekamp v. Lane, 250 Ill. App. 3d 1017, 1022, 620 N.E.2d 454,

458 (1993)) the plaintiff (1) has a clearly ascertainable right

needing protection; (2) will suffer irreparable harm without

protection; (3) has no adequate remedy at law; and (4) is likely

to succeed on merits. Postma, 157 Ill. 2d at 399, 626 N.E.2d at

204. The trial court should also consider whether the benefits

of granting the preliminary injunction exceed the injury to the

defendant. Danville, 260 Ill. App. 3d at 111, 631 N.E.2d at 844.

C. Restrictive Covenants in Employment Contracts

Because restrictive covenants in employment agreements

are a form of restraint of trade, they are scrutinized carefully

to ensure their intended effect is not to prevent competition per

se. Gillespie v. Carbondale & Marion Eye Centers, Ltd., 251 Ill.

App. 3d 625, 626, 622 N.E.2d 1267, 1269 (1993). Where restric-

tive covenants are ancillary to valid contracts supported by

adequate consideration and are reasonable in their terms as to

time and territory, such covenants will be enforced by the courts

and relief by injunction is customary and proper. Center for

Sight of Central Illinois I, S.C. v. Deranian, 305 Ill. App. 3d

909, 915, 712 N.E.2d 417, 421 (1999).

In determining whether to grant an injunction enforcing

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a restrictive covenant, courts look to whether the covenant is

reasonable. Weitekamp, 250 Ill. App. 3d at 1023, 620 N.E.2d at

459. In determining whether a restrictive covenant is enforce-

able, courts must determine whether the terms of the agreement

are reasonable and necessary to protect a "legitimate business

interest" of the plaintiff. Label Printers v. Pflug, 206 Ill.

App. 3d 483, 491, 564 N.E.2d 1382, 1387 (1991).

The reasonableness of the terms of the covenants as to

time and territory is not in dispute. Nor are the facts (1) the

territories Edwards was working in for Patterson overlapped the

territories he worked in for Lifetec and (2) he worked for

Patterson within 24 months of leaving Lifetec.

A "legitimate business interest" is found only where

(1) the employee acquired confidential information through his

employment with the plaintiff and later attempted to use it for

his own gains or (2) by the nature of the plaintiff's business,

its customer relationships are near permanent and the employee

would not have had contact with the customer absent his employ-

ment. A.J. Dralle, Inc. v. Air Technologies, Inc., 255 Ill. App.

3d 982, 991, 627 N.E.2d 690, 696-97 (1994). We need not address

the second of these, as Lifetec filed no cross-appeal taking

issue with the trial court's ruling on this point.

D. Employee Acquisition of and Later Attempt To Use
Confidential Information for His Own Gain

The issue on appeal is whether Lifetec had protectible

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confidential information that Edwards gained through his employ-

ment with the plaintiff and later attempted to use for his own

gains. "[C]ustomer information [may] constitute confidential

information only when the information has been developed by the

plaintiff over a number of years at great expense and kept under

tight security." A.J. Dralle, Inc., 255 Ill. App. 3d at 992, 627

N.E.2d at 697. Where such information is known by others in the

trade or could be duplicated easily by reference to industry

publications or the identity of customers is known because the

customers did business with more than one supplier, such informa-

tion is not protectible. A.J. Dralle, Inc., 255 Ill. App. 3d at

992, 627 N.E.2d at 697.

E. Sufficiency of Evidence To Meet Confidentiality
Prong of Business-Interest Test

Lifetec primarily contends information described as

"open quotes" warrants protection as confidential information.

When Edwards left Lifetec on July 18, 2005, Lifetec had outstand-

ing $1.3 million in open quotes in the territory serviced by

Edwards. Lifetec claims Edwards' access to the open quotes on

customized products may have allowed him to undercut those quotes

while employed at Patterson. Defendants argue Lifetec offered no

proof any of the open quotes outstanding when Edwards left

remained in existence as of the date of the order granting the

preliminary injunction or that any of the quotes required injunc-

tive relief for the protection of Lifetec.

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 The general rule in Illinois is as follows:

"[W]hile an employee, at the termination of

his employment, can take with him general

skills and knowledge acquired during the

course of his employment, he may not take

confidential particularized information dis-

closed to him during the time the employer-

employee relationship existed which are un-

known to others in the industry and which

give the employer advantage over his competi-

tors." Burt Dickens & Co. v. Bodi, 144 Ill.

App. 3d 875, 879, 494 N.E.2d 817, 819 (1986).

While defendants spend a great deal of time arguing the

open quotes are available to anyone in the industry once they are

given to customers and are, therefore, not confidential informa-

tion, no attention is paid to the information possessed by

Edwards as to how those open quotes are calculated before they

are given to the customers. That is where the obvious confiden-

tiality truly lies.

This information is akin to the information as to

"markups" which the court found to be confidential in The Agency,

Inc. v. Grove, 362 Ill. App. 3d 206, 217, 839 N.E.2d 606, 616

(2005) (markups were the difference between what the plaintiff, a

temporary employment agency, paid temporary workers and what was

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charged to its clients for the workers; such markups and the

reasons therefor would be of value to a competitor). Further,

the compilation, generation, and use of information and the

circumstances under which the information was maintained are also

important in determining confidentiality. "[W]hen individual

pieces of information are compiled and organized at a single

location as in this case, it is much more valuable and useful

than each piece of information individually." Lyle R. Jager

Agency, Inc. v. Steward, 253 Ill. App. 3d 631, 640, 625 N.E.2d

397, 402 (1993) (information in a compiled form is not easily

obtained or accessible to the public and worksheets on which a

client's premiums are calculated are not available to the pub-

lic). The court in The Agency, Inc. found despite the ease with

which the public may acquire information in the plaintiff's

client profiles through simple contact with workers placed or the

clients themselves, the advantage of the profiles, as in Lyle R.

Jager, is the information is gathered in one place. The Agency,

Inc., 362 Ill. App. 3d at 219, 839 N.E.2d at 617-18.

The trial court's order stated the "Court concludes

that [Edwards'] knowledge of [']open quotes['] pending at the

time of his termination from employment with Lifetec is confiden-

tial client information." As the trial court noted, not only was

Edwards aware of the open-quotes reports but he "would have the

necessary information to undercut a bid presented on behalf of

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Lifetec." This was the equivalent of information gathered in one

place prior to Lifetec making its bids. Edwards had been privy

to the information upon which Lifetec relied in making its bids

resulting in the open quotes and, thus, he would likely know

whether Lifetec would be able to adjust its bid if Patterson

underbid Lifetec. Because all of the evidence indicated the

medical sales industry was very competitive and the contracts

were usually awarded to the lowest bidder, Lifetec necessarily

wanted to keep this information confidential. Edward's knowledge

of this information could be very damaging to Lifetec if he

served the same territory for a competitor as he had for Lifetec.

The evidence was also sufficient to support the trial

court's conclusion Lifetec had presented a fair question that

Edwards disclosed the information he remembered from his employ-

ment to Patterson or used it to his and Patterson's advantage.

As the trial court noted, the e-mails were quite telling. Early

on in his new job, Edwards stated in an e-mail he was "calling on

people I already know and converting." (Emphasis added.)

Although Edwards denied this was a reference to Lifetec and was

meant to include all competitors, this presents a fair question

Edwards was using confidential information for his own benefit

with his new employer. Further, in another e-mail, Edwards

stated "it would be very helpful for me to able to ID these

target accounts in case they are budgeting for equipment with

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competitors." Edwards admitted he had some memory of pending

Lifetec "open quotes" and he would be able to give Patterson a

significant competitive advantage by using this confidential

information.

This evidence is sufficient to present a fair question

Lifetec has a protectible business interest in confidential

information. The trial court did not abuse its discretion in

granting Lifetec's motion for preliminary injunction and preserv-

ing the status quo until the case could be decided on its merits.

F. Sufficiency of Evidence to Otherwise Merit
Preliminary Injunction Issuance

The other criteria for issuing a preliminary injunction

are also satisfied. Defendants argue Lifetec made no effort to

establish the existence of any emergency necessary to warrant

issuance of preliminary injunction because the business would

suffer irreparable harm. On the effective date of the order,

Edwards had been without access to Lifetec information for a

period of time in excess of 20 months. Lifetec offered no

evidence any open quote, on which Edwards might have possessed

knowledge when he worked for Lifetec, remained open on March 21,

2007.

When the preliminary injunction was entered, Edwards

was servicing customers on behalf of Patterson in the area

subject to the covenants. Competition was clearly occurring.

Edwards sought employment, marketed products, and represented

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Patterson in violation of the covenants. Lifetec presented

sufficient evidence indicating a fair question Edwards disclosed

confidential information to Patterson for his own benefit.

Christoi testified it lost significant business in the territory

previously served by Edwards since he began working for Patterso-

n.

"[A] legal rule that irreparable injury

can be established only by a concrete demon-

stration *** would make injunctions useless

as a practical matter. If proof of particu-

lar injuries could be supplied, then the

injury would be reparable by damages; it is

precisely the difficulty of pinning down what

business has been or will be lost that makes

an injury 'irreparable.' See Hilton v.

Braunskill, 481 U.S. 770, 776, 107 S. Ct.

2113, 95 L. Ed. 2d 724 (1987). Competition

changes probabilities ***. ***

Illinois recognizes this. *** It treats

ongoing competition itself as a sufficient

basis for relief. See, e.g., Gold v. Ziff

Communications Co., 196 Ill. App. 3d 425,

434, 142 Ill. Dec. 890, 553 N.E.2d 404, 410

(Ill. App. 1 Dist. 1989)('The failure of

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 plaintiff to show an actual loss is not

dispositive'); U-Haul Co. v. Hindahl, 90 Ill.

App. 3d 572, 577, 45 Ill. Dec. 854, 413 N.E.-

2d 187, 192 (Ill. App. 3 Dist. 1980) ('It is

not necessary that a party seeking an injunc-

tion show an actual loss of sales before

relief will be granted')." Hess Newmark

Owens Wolf, Inc. v. Owens, 415 F.3d 630, 632-

33 (7th Cir. 2005).

As for an inadequate remedy at law, the harm to

Lifetec's ongoing business caused by Edwards's ongoing breaches

of the covenants would be difficult, if not impossible, to

measure. The only way to minimize the seemingly increasing

damages was to require Edwards to comply with the covenants under

his employment agreement.

In regard to the element of a likelihood of success on

the merits, as noted previously, defendants never argue Edwards

was not engaged in actions in violation of the covenants as

worded. Rather, their contentions have been the covenants are

not enforceable due to lack of a protectible business interest.

As we have already noted, where postemployment restrictive

covenants are ancillary to valid contracts supported by adequate

consideration, and are reasonable in their terms, such covenants

will be enforced. Center for Sight of Central Illinois I, S.C.,

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305 Ill. App. 3d at 915, 712 N.E.2d at 421. The covenants in

this case are ancillary to an employment agreement, a valid

contract supported by consideration. See Abel v. Fox, 274 Ill.

App. 3d 811, 814, 654 N.E.2d 591, 593 (1995) (continued employ-

ment is generally sufficient consideration for execution of

nonsolicitation covenant). No one is contesting whether the

terms of the agreements are reasonable and necessary to protect a

legitimate business interest of the plaintiff, and the trial

court has already determined a legitimate business interest

exists. Therefore, the trial court correctly determined plain-

tiff showed a likelihood of success on the merits, i.e., enforc-

ing the restrictive covenants.

Finally, the trial court balanced the hardships to the

parties in granting the preliminary injunction and found no

evidence Edwards could not continue to work for Patterson outside

of the competing territory. In fact, the court specifically

found the order did not require Edwards to cease employment with

Patterson. He simply could not work in any capacity violating

the restrictive covenants. In addition, no evidence showed

Edwards could not work for any other noncompeting company or that

he even tried to find a job not violating the restrictive cove-

nants. Edwards actively sought employment with Patterson while

employed by Lifetec in spite of knowledge Patterson sold the same

products as Lifetec to the same customers and in the same terri-

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tory. On balance, the evidence is sufficient to support the

trial court's finding the benefits to Lifetec exceeded any injury

to Edwards.

G. Further Challenge to Validity of Preliminary Injunction

1. Alleged Defectiveness for Lack of Detail Required by Section
11-101 Is a Matter for Clarification, Not Requiring Reversal

Defendants make two final arguments in regard to the

legal validity of the preliminary injunction order. First,

defendants contend the order runs afoul of section 11-101 of the

Code of Civil Procedure (Code) (735 ILCS 5/11-101 (West 2006)),

which requires:

"Every order granting an injunction and

every restraining order shall set forth the

reasons for its entry; shall be specific in

terms; shall describe in reasonable detail,

and not by reference to the complaint or

other document, the act or acts sought to be

restrained ***." (Emphasis added.)

The order here provided Edwards was not to "engage in

the sale and/or lease" or "in the solicitation of purchase orders

for or assist in the sale or lease of any product or competitive

medical device listed in Exhibit A to the Agreement" nor "act as

a distributor or sales representative for any manufacturer for

whom Plaintiff acted as a distributor or sales representative

during the twelve (12) months prior to Defendant Edwards' resig-

- 24 -
nation." Thus, the order requires, by its terms, a review of an

exhibit to the Agreement, a product schedule, setting forth the

products from which Edwards' sales efforts are banned. Further,

it requires reference to other sources for determining those

entities for whom Edwards is barred from acting as sales repre-

sentative as they are not listed in the order.

While it appears the order does not comply with section

11-101 of the Code, this does not render the order invalid or

require reversal. A simple motion for clarification based on the

requirements of section 11-101 would have sufficed to correct the

deficiencies in the order; this could have been done prior to

appeal. While we affirm the trial court's order in granting the

preliminary injunction, we remand for the trial court to make

these clarifications now.

2. Failure To Plead Alleged Misappropriation of Confidential
Information No Bar to Relief Granted

Defendants also maintain Lifetec made no assertion in

its complaint or in its motion for preliminary injunction any

purportedly confidential information was misappropriated warrant-

ing injunctive relief. They argue a party is not permitted to

state one claim in its complaint and establish a different case

by evidence. However, Lifetec never stated a different com-

plaint. Lifetec has consistently sought enforcement of the

restrictive covenants in its employment agreement with Edwards.

Lifetec properly pled (1) the covenants are valid and enforceable

- 25 -
and (2) Edwards breached them. Evidence of confidentiality of

information establishes Lifetec had a legitimate business inter-

est to protect, i.e., it is one type of significant matter

supporting enforceability of the restrictive covenants. While

actual misappropriation and misuse of confidential information is

part of the court's analysis of the imminent threat to Lifetec

under preliminary injunction calculus, these facts need not be

pled to state a claim for enforcement of the restrictive cove-

nants.

The special concurrence posits the interesting proposi-

tion that the "legitimate-business-interest test" is not valid.

It also notes our analysis should have ended once we determined

the terms of the restrictive covenant were reasonable. The

special concurrence is persuasive, but no advocate made the

arguments or presented the analysis found in the special concur-

rence. In short, the issue was not presented. While we may

affirm for any reason in the record, if we are to reject three

decades of precedent based on an argument never made, perhaps we

should wait for the dog to bark.

III. CONCLUSION

For the foregoing reasons, we affirm the trial court's

judgment but remand for clarification of the order granting

preliminary injunction in accordance with section 11-101 of the

Code (735 ILCS 5/11-101 (West 2006)). In so concluding, we

- 26 -
acknowledge the trial judge's detailed six-page single-spaced

memorandum order, which we found most helpful.

Affirmed as modified and cause remanded with direc-

tions.

TURNER, J., concurs.

STEIGMANN, P.J., specially concurs.

- 27 -
 PRESIDING JUSTICE STEIGMANN, specially concurring:

Although I agree with the result in this case, I

specially concur because the majority opinion, in determining the

enforceability of this restrictive covenant, uses the

"legitimate-business-interest" test that I believe is no longer

valid, if it ever was.

I. THE "LEGITIMATE-BUSINESS-INTEREST" TEST

For over three decades, the Illinois Appellate Court

has held that courts will not enforce a restrictive covenant that

bars a former employee from competing with his former employer,

unless the terms "are reasonable and necessary to protect an

employer's legitimate business interests." Hanchett Paper Co. v.

Melchiorre, 341 Ill. App. 3d 345, 351, 792 N.E.2d 395, 400

(2003). In Hanchett, the Second District Appellate Court ex-

plained this rule as follows:

"A legitimate business interest exists where:

(1) because of the nature of the business,

the customers' relationships with the em-

ployer are near permanent and the employee

would not have had contact with the customers

absent the employee's employment; and (2) the

employee gained confidential information

through his employment that he attempted to

use for his own benefit." Hanchett, 341 Ill.

- 28 -
 App. 3d at 351, 792 N.E.2d at 400.

Every district of the appellate court, including this one, has

used similar language in restrictive-covenant cases. See Office

Mates 5, North Shore, Inc. v. Hazen, 234 Ill. App. 3d 557, 569,

599 N.E.2d 1072, 1080 (1992) (First District); Dam, Snell &

Taveirne, Ltd. v. Verchota, 324 Ill. App. 3d 146, 151-52, 754

N.E.2d 464, 468-69 (2001) (Second District); Lyle R. Jager

Agency, Inc. v. Steward, 253 Ill. App. 3d 631, 636, 625 N.E.2d

397, 400 (1993) (Third District); Springfield Rare Coin Galler-

ies, Inc. v. Mileham, 250 Ill. App. 3d 922, 929-30, 620 N.E.2d

479, 485 (1993) (Fourth District); Carter-Shields v. Alton Health

Institute, 317 Ill. App. 3d 260, 268, 739 N.E.2d 569, 575-76

(2000) (Fifth District). However, the Supreme Court of Illinois

has never embraced this test, and its application is inconsistent

with recent supreme court decisions concerning restrictive

covenants. Accordingly, the test should be abandoned.

II. THE ORIGIN OF THE "LEGITIMATE-BUSINESS-INTEREST" TEST

The "legitimate-business-interest" test (although not

identified by that name) first appeared in the First District

Appellate Court's decision in Nationwide Advertising Service,

Inc. v. Kolar, 28 Ill. App. 3d 671, 673, 329 N.E.2d 300, 301-02

(1975). In that case, an advertising agency sought to enforce a

restrictive covenant against its former employee and appealed

denial of enforcement, arguing that "under Illinois law an

employer such as it had a legitimate business interest in its

- 29 -
customers which was subject to protection through enforcement of

an employee's covenant not to compete." (Emphasis added.)

Kolar, 28 Ill. App. 3d at 673, 329 N.E.2d at 301. In summarizing

the principles that underpinned the appellate court's earlier

analysis in the same case (Nationwide Advertising Service, Inc.

v. Kolar, 14 Ill. App. 3d 522, 302 N.E.2d 734 (1973)), the

Kolar court wrote as follows:

"[A]n employer's business interest in

customers is not always subject to protection

through enforcement of an employee's covenant

not to compete. Such interest is deemed

proprietary and protectable only if certain

factors are shown. A covenant not to compete

will be enforced if [(1)] the employee ac-

quired confidential information through his

employment and subsequently attempted to use

it for his own benefit. [Citation.] An

employer's interest in its customers also is

deemed proprietary if, [(2)] by the nature of

the business, the customer relationship is

near-permanent and but for his association

with plaintiff, defendant would never have

had contact with the clients in question.

(Cockerill v. Wilson (1972), 51 Ill. 2d 179,

- 30 -
 281 N.E.2d 648; Canfield v. Spear (1969), 44

Ill. 2d 49, 254 N.E.2d 433.)" Kolar, 28 Ill.

App. 3d at 673, 329 N.E.2d at 301-02.

Although the Kolar court cites the supreme court's decisions in

Cockerill and Canfield as authority for the "legitimate-business-

interest" test, neither of those cases used that test in the

restrictive-covenant analyses they contained. See Canfield, 44

Ill. 2d at 51, 254 N.E.2d at 434 (stating that in restrictive-

covenant cases "where the limitation as to time and territory is

not unreasonable, the agreement is valid and enforceable, and

relief by injunction is customary and proper"); Cockerill, 51

Ill. 2d at 183-84, 281 N.E.2d at 650-51 ("[c]ovenants *** involv-

ing performances of professional services have been held valid

and enforceable when the limitations as to time and territory are

not unreasonable"). Instead, it appears that the Kolar court's

analysis has devolved into the "legitimate-business-interests"

test, which the appellate courts have created "out of whole

cloth."

For the last 32 years, the "legitimate-business-inter-

est" test has been cited in one form or another by all of the

districts of the Illinois Appellate Court when deciding

restrictive-covenant cases. Due to the sheer volume of cases

appellate courts handle, they are often required to address cases

of first impression and must develop the common law and nuanced

- 31 -
analysis. We appellate judges often endeavor to develop bright-

line rules or tests, both to inform our analysis and to assist

the bench and bar in future cases. Nonetheless, good practice

requires us from time to time look back to what our supreme court

has said, earlier and most recently, to make sure our analyses

remain consistent with supreme court doctrine.

III. SUPREME COURT OF ILLINOIS DOCTRINE REGARDING
ENFORCEABILITY OF RESTRICTIVE COVENANTS

A. Early Cases

The earliest supreme court case dealing with restric-

tive covenants is Hursen v. Gavin, 162 Ill. 377, 44 N.E. 735

(1896), in which the plaintiff, who had been engaged in the

livery and undertaking business in Chicago, sued to enforce a

restrictive covenant restraining the defendant, his former

partner, from engaging in the same business in Chicago for five

years. The supreme court affirmed the trial court's grant of the

injunction restraining the defendant and explained as follows:

"A contract in restraint of trade is ***

total and general, when by it a party binds

himself not to carry on his trade or business

at all, or not to pursue it within the limits

of a particular country or State. Such a

general contract in restraint of trade neces-

sarily works an injury to the public at large

and to the party himself in the respects

- 32 -
indicated, and is, therefore, against public

policy.

But a contract, which is only in partial

restraint of trade, is valid, provided it is

reasonable and has a consideration to support

it. [Citations.] The restraint is reason-

able, when it is such only as to afford a

fair protection to the interests of the part-

y, in whose favor it is imposed. *** A

contract in restraint of trade, to be valid,

must show that the restraint imposed is par-

tial, reasonable[,] and founded upon a con-

sideration capable of enforcing the agree-

ment. *** Where the restriction embraces too

large a territory, it will be unreasonable

and void ***. [Citations.]

* * *

***[The contract in this case was valid

and enforceable because it] was only in par-

tial restraint of trade. It was limited in

time to the period of five years, and in

space to the city of Chicago." Hursen, 162

Ill. at 379-82, 44 N.E. 735-36.

In Ryan v. Hamilton, 205 Ill. 191, 197, 68 N.E. 781,

- 33 -
783 (1903), the supreme court reversed the appellate court and

upheld the trial court's grant of an injunction restraining the

defendant from practicing general medicine "in or within" eight

miles of the village of Viola in Mercer County, explaining as

follows:

"Contracts of this class, where the limita-

tion as to territory is reasonable and there

exists a legal consideration for the

restraint, are valid and enforceable in eq-

uity, and in such cases relief by injunction

is customary and proper."

In Bauer v. Sawyer, 8 Ill. 2d 351, 354, 134 N.E.2d 329,

331 (1956), the supreme court upheld enforcement of another

restrictive covenant regarding a former partner who was enjoined

from practicing medicine and noted that "[t]he principles govern-

ing cases of this kind were stated in Ryan v. Hamilton." The

Bauer court added the following: "In determining whether a

restraint is reasonable[,] it is necessary to consider whether

enforcement will be injurious to the public or cause undue

hardship to the promisor, and whether the restraint imposed is

greater than is necessary to protect the promisee." Bauer, 8

Ill. 2d at 355, 134 N.E.2d at 331. In making these observations,

the supreme court cited its earlier decision in Hursen.

B. The Most Recent Supreme Court Decision

- 34 -
 The supreme court's most recent decision on the

enforceability of a restrictive covenant was Mohanty, 225 Ill. 2d

52, 866 N.E.2d 85. In Mohanty, a group of physicians filed a

declaratory judgment action against their employer, alleging that

the restrictive covenants in their employment contracts were void

as against public policy and unenforceable. The employer coun-

terclaimed for declaratory judgment and injunctive relief, and

the supreme court ultimately held that the employer was entitled

to a preliminary injunction to enforce the restrictive covenants.

Mohanty, 225 Ill. 2d at 78, 866 N.E.2d at 100. Notably, in

reaching its decision, the supreme court made no mention of the

"legitimate-business-interest" test, despite over three decades

of its use by the appellate court.

Initially, the Mohanty court rejected the physicians'

contention that restrictive covenants in physician employment

contracts should be held void as against public policy in Illi-

nois. The supreme court explained as follows:

"[W]e note that this court has a long tradi-

tion of upholding the right of parties to

freely contract. [Citation.] Consequently,

our decisions have held that a private con-

tract, or provision therein, will not be

declared void as contrary to public policy

unless it is '"clearly contrary to what the

- 35 -
 constitution, the statutes or the decisions

of the courts have declared to be the public

policy"' or it is clearly shown that the

contract is '"manifestly injurious to the

public welfare."' [Citations.] *** As a

result, plaintiffs carry a heavy burden of

showing that restrictive covenants in physi-

cian employment contracts are against the

public policy of this state." Mohanty, 225

Ill. 2d at 64-65, 866 N.E.2d at 92-93.

The supreme court later repeated these same criteria when it

concluded that "plaintiffs have failed to show that physician

restrictive covenants are contrary to the constitution, statutes

or judicial decisions of this state. Nor have they shown that

these covenants are manifestly injurious to the public welfare."

Mohanty, 225 Ill. 2d at 69, 866 N.E.2d at 95.

The physicians also challenged the restrictive cove-

nants in their employment contracts as unenforceable "because

they [were] unreasonably overbroad in their temporal and activity

restrictions." Mohanty, 225 Ill. 2d at 75, 866 N.E.2d at 98.

The supreme court rejected this claim, explaining as follows:

"As noted earlier in this opinion, this

court has a long tradition of upholding cove-

nants not to compete in employment contracts

- 36 -
 involving the performance of professional

services when the limitations as to time and

territory are not unreasonable. Cockerill v.

Wilson, 51 Ill. 2d 179, 183-84

[, 281 N.E.2d 648] (1972); Canfield v. Spear,

44 Ill. 2d 49[, 254 N.E.2d 433] (1969); Bauer

v. Sawyer, 8 Ill. 2d 351[, 134 N.E.2d 329]

(1956). '"In determining whether a restraint

is reasonable it is necessary to consider

whether enforcement will be injurious to the

public or cause undue hardship to the

promisor, and whether the restraint imposed

is greater than is necessary to protect the

promisee."' [Citations.]" Mohanty, 225 Ill.

2d at 76, 866 N.E.2d at 98-99.

Consistent with the above criteria, the supreme court

considered the parties' evidence to determine whether the limita-

tions set as to time (three years) and territory (a five-mile

radius) were unreasonable and concluded that they were not.

Thus, the supreme court determined that a restrictive

covenant that restrained cardiologists from practicing medicine

was enforceable, and the supreme court reached this conclusion

without relying upon--or even mentioning--the "legitimate-

business-interest" test. As Sherlock Holmes would observe, this

- 37 -
is the case of the dog that did not bark.

IV. EPILOGUE

In this case, the parties argue--and the majority

opinion discusses--the need for the employer, Lifetec, to over-

come the "legitimate-business-interest" test to prevail in its

effort to enforce a restrictive covenant against one of its

salesmen. Yet, the supreme court in Mohanty enforced a restric-

tive covenant that undermined the physician/patient relationship

without even acknowledging the existence of the "legitimate-

business-interest" test. It makes no sense to place a greater

burden on employers of salespeople than on employers of physi-

cians when the enforceability of noncompete covenants is at

issue. Surely the physician-patient relationship and access to

medical care are more societally significant concerns than any

concerns related to the relationship between a retailer of

medical products and its sales force. I find support for this

view in Justice Freeman's partial concurrence in Mohanty, where

he wrote, "a strong case exists for abolishing all physician

restrictive covenants as being against public policy. However, I

agree that this decision is for the General Assembly to make."

Mohanty, 225 Ill. 2d at 86, 866 N.E.2d at 104 (Freeman, J.,

concurring in part and dissenting in part).

The lesson of Mohanty is that courts at any level, when

presented with the issue of whether a restrictive covenant should

- 38 -
be enforced, should evaluate only the time and territory restric-

tions contained therein. If the court determines that they are

not unreasonable, then the restrictive covenant should be en-

forced.

In this case, the majority opinion notes that "[t]he

reasonableness of the terms of the covenants as to time and

territory are not in dispute." Slip op. at 14. At oral argu-

ment, defendants’ counsel conceded that the terms of the restric-

tive covenant were reasonable. The majority's observation that

the reasonableness of the terms of the covenants as to time and

territory are not in dispute should have ended our analysis. The

employer has no additional burden to prove a "protectible" or

"legitimate" business interest to support enforcement. This

court need not engage in an additional discussion regarding the

application of the "legitimate-business-interest" test because

that test constitutes nothing more than a judicial gloss incor-

rectly applied to this area of law by the appellate court. We

need not await the supreme court's explicit and emphatic rejec-

tion of that test before rejecting it ourselves, especially when,

as here, continued fealty to it runs counter to Supreme Court of

Illinois doctrine.

- 39 -