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Kohler Co. v. Kopietzki

United States District Court, E.D. Wisconsin

March 11, 2016

KOHLER CO., Plaintiff,
v.
OTTO R. KOPIETZKI and PACIFIC POWER SOLUTIONS PTE., LTD., Defendants.

DECISION AND ORDER

LYNN ADELMAN District Judge

Plaintiff Kohler Co. sues a former executive, defendant Otto R. Kopietzki, and his subsequent employer, Pacific Power Solutions Pte., Ltd. (“PPS”), [1] alleging that defendants tortiously interfered with a contract between plaintiff and a distributor and that defendant Kopietzki breached the nondisclosure provision of his employment contract. Defendant Kopietzki now moves for summary judgment.

I. Background

In 1988, Kopietzki began working for Kohler as vice president of its power systems division, which sells generators and related products. Kopietzki had previously worked with a Saudi Arabian distributor of generators, Sawary Trading and Contracting Co., Ltd., and in 1990, he brought Sawary to Kohler as an exclusive distributor of Kohler generators in Saudi Arabia. By 2012, Sawary was one of Kohler’s largest generator distributors, bringing Kohler $28 million in sales.

Kopietzki received numerous promotions at Kohler, eventually becoming president of the division. In conjunction with his promotion, he signed a document called a “conflict of interest corporate policy statement” which acknowledged that he had a legal obligation not to disclose confidential or trade secret information after leaving the company. Am. Compl. Ex. C (ECF No. 17-3). In 2005 and 2006, he also signed employment agreements which included nondisclosure provisions prohibiting him from disclosing “confidential information which would cause damage to Kohler if known to competitors.” Am. Compl. Exs. A, B (ECF Nos. 17-1, 17-2).

Kopietzki retired from Kohler in May 2011, and in August 2011, he became a consultant with defendant PPS, a Singapore-based consulting company. Through PPS, he consulted for another generator manufacturer and Kohler’s competitor, MTU Onsite Energy GmbH (“MTU”). In mid-2013, Kohler’s Saudi Arabian distributor Sawary signed a distributorship agreement with MTU and terminated its agreement with Kohler. The parties dispute how big a role Kopietzki played in causing Sawary to make the change.

II. Discussion

Summary judgment is required where there is not genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). On summary judgment, I view the evidence in the light most favorable to the non-moving party and may grant the motion only if no reasonable jury could find for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

A. Breach of Contract Claim

Plaintiff claims that, when he worked with MTU to secure Sawary as its generator distributor in Saudi Arabia, Kopietzki breached the nondisclosure provision of his employment agreement by disclosing confidential information. Kopietzki argues that the nondisclosure provision is unenforceable. The parties agree that Wisconsin law applies.

Under Wisconsin law, restrictive covenants which include a specified territory during a specified time are enforceable as long as the restrictions are reasonably necessary to protect the employer. Wis.Stat. § 103.465. Nondisclosure agreements which seek to shield categories of information broader than just trade secrets are covered by this statute because “[t]his is the essence of a trade restraint.” Tatge v. Chambers & Owen, Inc., 219 Wis.2d 99, 112 (1998). A covenant that contains no time limitation is unreasonable per se. Friemuth v. Fiskars Brands, Inc., 681 F.Supp.2d 985, 989 (W.D. Wis. 2010); see also Gary Van Zeeland Talent, Inc. v. Sandas, 84 Wis.2d 202, 218 (1978); Holsen v. Marshall & Ilsley Bank, 52 Wis.2d 281, 287 (1971); Nalco Chem. Co. v. Hydro Techs., Inc., 984 F.2d 801, 803 (7th Cir. 1993); Sysco Food Servs. of E. Wis., LLC v. Ziccarelli, 445 F.Supp.2d 1039, 1053 (E.D. Wis. 2006).

Wis. Stat. § 103.465 applies to the nondisclosure agreement at issue in the present case because the agreement seeks to protect more than just trade secrets[2] and because it seeks to shield such information from competitors, rendering it a restraint of trade. Further, the nondisclosure agreement is per se unreasonable because it does not include a time limitation. The agreement forbids Kopietzki from using or disclosing confidential information “unless and until such confidential information shall become public knowledge, . . . or until other legal disclosure of such confidential information shall be made, or until Kohler shall consent.” Am. Compl. Ex. B (ECF No. 17-2). Plaintiff argues that this language constitutes a time limitation, but I disagree. Saying the disclosure agreement applies until the information is no longer confidential is essentially saying that the agreement applies until it doesn’t apply, which is not a meaningful time limitation. Further, even if this did somehow constitute a time limitation, it is not a reasonable one because it offers Kopietzki no way to reasonably determine when the nondisclosure obligation ends. See H&R Block E. Enters., Inc. v. Swenson, 307 Wis.2d 390, 402 (Ct. App. 2007) (concluding that a purported time limitation was unreasonable because “[t]he effect of the . . . provision . . . makes the duration of the restraint not a fixed and definite time period but a time period that is contingent upon outcomes the employee cannot predict”). For these reasons, I conclude that plaintiff’s nondisclosure agreement is unenforceable and that its breach of contract claim fails.

B. Tortious Interference Claim

Plaintiff also alleges that Kopietzki and PPS tortiously interfered with plaintiff’s contract with Saudi distributor Sawary. The parties disagree on what law governs this claim. Kopietzki argues that Saudi Arabian law applies because Saudi Arabia has more significant contacts with the matters giving rise to the claim. Plaintiff argues that Wisconsin’s contacts are more significant, and that, therefore, Wisconsin law applies. This dispute is significant because according to ...


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