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PCM Sales Inc v. Vantage Point Corp.

United States District Court, E.D. Wisconsin

July 12, 2019

PCM SALES INC., Plaintiff,
v.
VANTAGE POINT CORPORATION, Defendant.

          ORDER

          J. P. STADTMUELLER, U.S. DISTRICT JUDGE

         1. INTRODUCTION

         The parties are competitors in the business of providing IT services to businesses. Plaintiff alleges that Defendant scalped one of its employees, Blake Reed (“Reed”). In a prior action filed in the Northern District of Illinois (“NDIL”), Plaintiff sued Reed and Defendant for breach of contract, breach of a duty of loyalty, and tortious interference with contract. Plaintiff was granted summary judgment against Reed, who was enjoined from continuing to work for Defendant, but avoided paying damages by declaring bankruptcy. Defendant was dismissed from the case for lack of personal jurisdiction. After the NDIL case concluded, Plaintiff came to Wisconsin-Defendant's home state-to continue its quest to punish Defendant's conduct. Plaintiff proceeds on one claim: tortious interference with contract. The parties have filed cross-motions for summary judgment. (Docket #13 and #30). For the reasons stated below, Defendant's motion must be denied, and Plaintiff's must be granted in part.

         2. STANDARD OF REVIEW

         Federal Rule of Civil Procedure 56 provides that the “court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Boss v. Castro, 816 F.3d 910, 916 (7th Cir. 2016). A “genuine” dispute of material fact is created when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court construes all facts and reasonable inferences in a light most favorable to the non-movant. Bridge v. New Holland Logansport, Inc., 815 F.3d 356, 360 (7th Cir. 2016).

         In assessing the parties' proposed facts, the Court must not weigh the evidence or determine witness credibility; the Seventh Circuit instructs that “we leave those tasks to factfinders.” Berry v. Chi. Transit Auth., 618 F.3d 688, 691 (7th Cir. 2010). Internal inconsistencies in a witness's testimony “‘create an issue of credibility as to which part of the testimony should be given the greatest weight if credited at all.'” Bank of Ill. v. Allied Signal Safety Restraint Sys., 75 F.3d 1162, 1170 (7th Cir. 1996) (quoting Tippens v. Celotex Corp., 805 F.2d 949, 953 (11th Cir. 1986)). The non-movant “need not match the movant witness for witness, nor persuade the court that [its] case is convincing, [it] need only come forward with appropriate evidence demonstrating that there is a pending dispute of material fact.” Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 921 (7th Cir. 1994).

         3. RELEVANT FACTS

         With the parties presenting dueling summary judgment motions, the Court's recitation of the facts will be largely neutral. The Court will only note the parties' disputes where they are particularly relevant. Plaintiff is a California corporation headquartered in that state. It also has a substantial presence in both Illinois and Ohio. Defendant is a Wisconsin corporation located in Kenosha. Both are in the business of selling IT products and services, and they are direct competitors.

         Reed began working for Plaintiff as a sales representative in 2013. Throughout his period of employment, Reed worked out of Plaintiff's Chicago office and lived in Illinois. His sales territory was initially nationwide, but later shifted to the upper Midwest region. Reed was nevertheless permitted to keep his national customers.

         Sales competition in this industry is intense and requires a great deal of time and effort to develop relationships and build brand loyalty. When Reed began with Plaintiff, it assigned him a number of existing customer accounts to get him started. Reed also generated his own leads and inputted confidential customer information into Plaintiff's database. Plaintiff trusted Reed with these customers and a great deal of confidential proprietary and customer information.

         These relationships and this confidential information would clearly be valuable to Plaintiff's competitors. Plaintiff therefore takes strides to keep the information secret. Its network is secured and segmented so that users can only see information relevant to their work. Of central importance to this case, Plaintiff also requires its employees to sign contracts with confidentiality and non-competition clauses to ensure that its competitors do not covertly gain access to sensitive information.

         Reed was required to sign such an agreement (the “Agreement”). The Agreement prohibited Reed from sharing Plaintiff's confidential business and customer information. If he left Plaintiff's employ, Reed was further barred from soliciting Plaintiff's customers or working for a competitor without Plaintiff's permission. These restrictive covenants applied across the country and were set to endure for a year after Reed's separation from Plaintiff, except for the confidentiality provision, which extended indefinitely. The Agreement included an Ohio choice-of-law provision.

         Reed performed excellently for Plaintiff and his sales skyrocketed from 2013 to 2015. In November 2015, however, Reed began looking for greener pastures. The parties dispute Reed's precise motivations for moving on. It seems to have been a combination of unhappiness with his work for Plaintiff, combined with a desire for career advancement and better compensation.

         Reed initially met with a company called Insight. In asking Plaintiff for relief from the non-competition clause of the Agreement, Reed stated that he “want[ed] to respect [Plaintiff's] employment agreement[.]” (Docket #37 at 1). However, in light of the competition in its industry, Plaintiff has a strong interest in enforcing its restrictive covenants and regularly does so. Plaintiff accordingly refused to release Reed from his restrictive covenants.

         At about the same time, Reed contacted Defendant, which was open to the prospect of hiring him. Reed then copied some of Plaintiff's confidential information and e-mailed it to himself, for the admitted purpose of contacting those customers once he started with Defendant. The employment discussions with Defendant continued. Defendant never asked Reed about whether he had signed an employment agreement with Plaintiff, though Defendant regularly enters such agreements with its own employees.

         Reed resigned his employment with Plaintiff at the end of November. He negotiated his position and compensation with Defendant on the basis of the “book of business” he was bringing with him. (Docket #24 at 21). Reed expressed related concerns about his non-compete agreement with Plaintiff. Plaintiff alleges that Defendant again did nothing to learn more about the Agreement and did not refuse to hire Reed. Defendant maintains that it in fact told Reed not to solicit Plaintiff's customers. However, during his deposition, Defendant's employee who allegedly did so was inconsistent in his memory of such a conversation. See (Docket #23-7 at 32-33).

         After he started with Defendant in January 2016, Reed immediately began soliciting his former customers to transfer their business from Plaintiff to Defendant. He utilized at least some of the information he stole from Plaintiff to contact these customers and finalize sales for Defendant. In his first year with Defendant, Reed contacted more than half of his former customers, including almost all of his best customers, and generated more than one million dollars in sales from them.

         Plaintiff learned of Reed's treachery almost immediately. It contacted Defendant and Reed, demanding that Reed stop using the confidential information and that he be terminated. Plaintiff provided Defendant a copy of the Agreement at that ...


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