Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

R.R. DONNELLEY & SONS CO. v. FAGAN

June 27, 1991

R.R. DONNELLEY & SONS COMPANY, PLAINTIFF,
v.
JAMES E. FAGAN, JR., BOWNE OF NEW YORK CITY, INC. AND BOWNE & COMPANY, INC., DEFENDANTS.



The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge.

  OPINION AND ORDER

Plaintiff R.R. Donnelley & Sons Company ("Donnelley") seeks injunctive relief pursuant to Rule 65 of the Federal Rules of Civil Procedure, enjoining defendant James E. Fagan, Jr. ("Fagan"), a former employee of Donnelley, "from working, nationwide, for any competitor of Donnelley's in the financial and legal printing business," for the period of six months from the issuance of this Opinion and Order, Plaintiff's Post-Hearing Memorandum at 16, n. 7, and from revealing confidential Donnelley information. In particular, Donnelley seeks to enjoin Fagan from working during such period for defendants Bowne of New York City, Inc. and Bowne & Company, Inc. (collectively "Bowne") and from soliciting or assisting in the solicitation of 29 specific purchasers of printing services and from revealing any confidential information of Donnelley as Donnelley defines it.

The underlying action is Donnelley's complaint against Fagan and Bowne alleging breach of contract, breach of fiduciary duty, tortious interference with contract and unfair competition. At issue is the enforceability of a non-compete agreement and a confidentiality agreement signed by Fagan while an employee of Donnelley, and whether Donnelley is entitled to the equitable relief it seeks. Donnelley submitted an order to show cause why a preliminary injunction should not be issued and requested a temporary restraining order pending a hearing and the Court's decision on the preliminary injunction. The Court declined to issue a temporary restraining order. Pursuant to Rule 65(a)(2) of the Federal Rules of Civil Procedure, the Court consolidated the evidentiary hearing on the preliminary injunction with a prompt hearing on the permanent injunction. That hearing was held shortly thereafter, from February 19-22, 1991.*fn1 At the close of the hearing, defendants jointly moved, without presenting any evidence, for a directed verdict on all claims against them, on the ground that Donnelley's entire case is insufficient as a matter of law and fails to make a prima facie showing that it is entitled to any of the relief requested.

For the reasons stated below, the Court finds that the non-compete agreement at issue is unenforceable and that Donnelley has failed to show Fagan possesses confidential information as to which Donnelley is entitled to the injunctive protection requested. Accordingly, the injunctive relief is denied. The defendants' motion for a directed verdict on all claims is granted.

BACKGROUND

Donnelley is a printing services company, with headquarters in Chicago, Illinois, offices around the country and a nationwide clientele. Bowne is also a printing services company with nationwide offices and clientele. Bowne competes with Donnelley in the financial and legal printing business and both companies earn substantial revenues from the specific area of printing legal and financial documents. Richard Thursby, Senior Vice-President of Donnelley's financial and legal services group ("Thursby"), testified that, in the financial and legal area of the printing industry, "[f]or all practical purposes, we have two national competitors, and principal among them is Bowne." Tr. 29.*fn2

The Non-Compete Agreement contains restrictive covenants regarding employment and solicitation of customers. Upon Fagan's objections in 1988 to the Non-Compete Agreement in its original form, Donnelley and Fagan negotiated a clause which provides that, if Donnelley chose to enforce the Non-Compete Agreement, it would pay Fagan his base salary for up to twelve months following the end of his employment with Donnelley, which would be $9000 per month, minus the appropriate deductions.*fn3 After it was amended, Fagan signed the Non-Compete Agreement.

Primarily at issue are paragraphs 1-4 of the Non-Compete Agreement, which read as follows:

  1. If you choose to leave Donnelley or if your
  employment with Donnelley is terminated for any
  reason, you will not for a period of one (1) year
  following your termination, directly or
  indirectly, either as an employee, employer,
  consultant, agent, principal, partner,
  stockholder, corporate officer, director or in any
  other individual or representative capacity,
  nation-wide, engage in any business which is
  competitive with the Financial and Legal printing
  business of Donnelley; and
  2. In addition, for a period of one (1) year
  following the termination of your employment with
  Donnelley for any reason, you will not directly or
  indirectly, either as an employee, employer,
  consultant, agent, principal, partner,
  stockholder, corporate officer, director or in any
  other individual or representative capacity,
  solicit, assist in the solicitation of, accept any
  business from, or do any work relating to any
  customer or customers who, during the two (2)
  years immediately preceding your termination, had
  been assigned to you by Donnelley or any customer
  or customers which you had contacted on behalf of
  Donnelley while an employee of Donnelley or
  relating to which you or any of those employees
  who directly or indirectly reported to you did any
  work; or disclose to any person, firm,
  association, corporation or business entity of any
  kind the names or addresses of any such customer
  or customers; or directly or indirectly in any way
  request, suggest or advise any such customer or
  customers to withdraw or cancel any of their
  business or refuse to continue to do business with
  Donnelley. This paragraph shall apply only where
  the customer is solicited to purchase a service or
  product that competes with the or [sic] the
  Financial and Legal printing service or products
  offered by Donnelley.
  3. Donnelley in its sole discretion may, in
  writing, release you from the obligations under
  Paragraph 1 and/or 2 above. If Donnelley does not,
  within 30 days from receiving a request for such
  release in writing from you, release you from the
  obligations under Paragraph 1 and/or 2 above, then
  Donnelley shall pay you your base salary only per
  month (less appropriate deductions), excluding any
  incentive compensation, bonuses, options, stock
  purchase plan participation, stock awards, or
  payments under any similar plan, for each month
  Donnelley does not so release you, up to a maximum
  of twelve (12) months following your termination.
  This amount shall be payable only if all
  outstanding charges, reimbursed business expenses,
  advances, spoilages or other related matters are
  fully accounted for and resolved to Donnelley's
  satisfaction, and all Donnelley documents have
  been returned to Donnelley by you.

Exhibit 3, ¶¶ 1-4.

The Non-Compete Agreement also provides that if any part of it is held to be invalid, a court construing it may modify the Agreement to make it enforceable. Id., ¶ 8-9.

Also at issue is the Confidentiality Agreement which, among other things, offers a sweeping definition of what Donnelley considers to be "confidential information" and Fagan's obligations not to disclose it. It also provides in part that:

  Confidential Information includes, but is not
  limited to, "Trade Secrets" to the full extent of
  the definition of that term under Illinois law. It
  does not include "general skills, knowledge and
  experience" as those terms are defined under
  Illinois law.

Exhibit 2, ΒΆ 2. Examples of "Confidential Information" are included in paragraph 3 of the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.