The opinion of the court was delivered by: LASKER
This case concerns the enforcement of a non-solicitation clause in a salesman-employment contract between plaintiff Griffith Laboratories, Inc. ("Griffith") and defendant Richard Pomper. Griffith is a manufacturer of food ingredient formulae with sales of approximately $100 million in fiscal year 1982. It markets its products to food processing companies throughout the United States. From mid-1965 until 1983, Pomper was Griffith's salesman for the northeastern region of the country. In 1972 he entered into a salesman-employment contract with Griffith which prevented him from selling "any products competitive with those manufactured by [Griffith] to any customer to whom he sold [Griffith] products while an employee of [Griffith], for a period of two years after the termination of his employment."
In a letter to William Cox, a Griffith official, dated February 14, 1983, Pomper notified Griffith of his intention to resign effective February 26, 1983. At or about the same time, Pomper started work as the New England salesman for defendant Presco Food Products, Inc. ("Presco"), a Griffith competitor.
In July 1983, Griffith moved for a preliminary injunction to restrain Pomper from selling Presco products to 96 customers to whom Pomper had sold Griffith products when he was a Griffith salesman. The motion was denied on the grounds that Griffith had not shown that its food ingredient formulae were protectible "confidential" material; that a substantial question existed whether the nature of Griffith's relationship with its customers was "near-permanent;" that a question existed as to whether Pomper signed the non-solicitation agreement under duress; and that Griffith had not shown that the balance of hardship tipped decidedly in its favor.
The case proceeded to trial beginning in early October, 1983.
Griffith introduced evidence showing the near-permanency of many of its customers. Edward Davidheiser, Griffith's Director of Marketing Services, testified that Griffith has been in the food seasoning business for 65 years, and that it has developed a long-term business relationship with some of its customers spanning 30 to 40 years. In addition, plaintiff's exhibit 19 revealed that of the customers serviced by Pomper as a Griffith salesman in fiscal year 1982, 71% had purchased Griffith products for 6 consecutive years, and 62% had purchased from Griffith for 8 consecutive years.
While not of great significance in affecting the outcome of the case, Griffith introduced evidence showing the kind of support it provided to Pomper. William Cox, Griffith's Director for Eastern Regional Sales, testified that Griffith seeks to make its salesmen experts within the food processing industry. To this end, he stated that Griffith provides staff and service support to its salesmen, and that Pomper presumably received such support as a Griffith salesman. For instance, Griffith has set up regional and headquarters kitchens for the purpose of duplicating competitors' products and in order to improve upon existing food seasoning formulae. Cox also testified that Pomper was provided with an annual expense account of approximately $25,000 for customer development and that he attended sales meetings where he received updates on products and company developments. Cox further testified that it takes a salesman about two years to develop fully a customer account.
Griffith also introduced into evidence exhibits showing the breakdown in Pomper's sales as a Presco salesman between his former Griffith customers and his non-Griffith customers. Between March and August 1983, plaintiff's exhibit 11 shows that, as a Presco salesman, Pomper sold $77,000 worth of Presco products to former Griffith customers, while he made sales of only $19,000 to new customers during the same period.
Evidence was further presented by Griffith pertaining to the employment contract which Griffith seeks to enforce here. Albert Henderson, Griffith's Vice President for Personnel, testified that salesmen contracts were initiated in 1972 in order to limit the disclosure of confidential customer information. Henderson stated that while Pomper hesitated in signing the contract for several weeks, he never complained about the non-solicitation or the confidentiality provisions found in the employment contract, and that between 30 and 35 Griffith salesmen signed this kind of contract.
On the other hand, in order to show that the customer information relating to lists of customers and to food seasoning formulae was not confidential and hence not a protectible business interest, Pomper called Joel Krumel, Production Manager for Jordon's Meats, who testified that he often provided samples of his company's food seasonings to salesmen representing competing suppliers in order to give them the opportunity to duplicate an existing formula. In addition, Mr. Davidheiser's testimony supports a finding that the list of customers developed and solicited by Pomper was not confidential inasmuch as it could be obtained through the use of government, business, industry and telephone directories. Mr. Pomper also testified that before he joined Griffith as a salesman, he worked for other firms where he sold food seasonings or equipment to as many as 20 companies who later were Griffith customers.
At the outset, Illinois law governs the resolution of the issues presented here and both parties have couched their arguments in terms of the law of that state.
Under Illinois law, a restrictive covenant in an employment contract is enforceable where the employer demonstrates the existence of (1) a valid, binding contract; (2) a protectible business interest which justifies enforcement of the covenant; and (3) reasonable limitations on the scope of the covenant.
In this case, Pomper's salesman contract with Griffith was not a product of duress exerted on Pomper and was therefore valid and binding, Griffith's long-standing relationship with its customers in the northeastern United States establishes a protectible business interest, and the non-solicitation clause in issue was reasonable as to its geographical and temporal scope.
1. The Validity of the Salesman Contract Between Griffith and Pomper
Pomper asserts that he was forced to sign his employment contract with Griffith and that the threat of discharge rose to a level of economic duress which makes the agreement void. In opposition, Albert Henderson, Griffith's Vice President for Personnel, testified that salesman contracts were first introduced in 1972 to protect the seasoning formulations of Griffith customers so that they could not be taken into the marketplace. As discussed above, he stated that Pomper never complained about the non-solicitation of confidentiality clauses found in the contract. Because we find his testimony credible, and in light ...