United States District Court, Eastern District of Pennsylvania
April 18, 2001
SIEMENS BUILDING TECHNOLOGIES, INC.
EFRAIN F. CAMACHO.
The opinion of the court was delivered by: Jay C. Waldman, Judge.
This is a breach of contract action. Plaintiff designs, installs and
services building automation and facility management systems including
high technology security devices. Defendant was employed as a technician
and then senior security installer by plaintiff and its predecessor from
February 7, 2000 to February 9, 2001 when he accepted employment with a
competitor. Plaintiff alleges that defendant is breaching a restrictive
covenant in his employment agreement with plaintiff to refrain from
certain customer contact for two years after leaving its employ for any
With its complaint, plaintiff filed a motion for a temporary retraining
order which was served on defendant. By order of April 9, 2001, the court
gave defendant a week to respond to the motion if he wished and scheduled
a hearing for April 16, 2001. Defendant has not responded to the motion
and failed, without explanation, to appear for the hearing. Plaintiff's
factual averments are thus uncontroverted for purposes of the instant
motion. The pertinent facts of record are as follow.
As a condition of employment, defendant executed an agreement
containing a post-employment restrictive covenant. He promised that for a
period of two years after leaving his employment with plaintiff for any
reason, he would not participate in the solicitation or servicing of
entities which were customers of the branch office at which he was
employed during the two years preceding the termination of employment
with plaintiff. The agreement contains an Illinois choice of law
provision. Plaintiff's principal place of business is in Illinois.
Barely a month after leaving plaintiff to work for a competitor,
defendant was providing the same on-site services on behalf of the
competitor for at least two companies which he had been similarly
servicing as customers of plaintiff. Plaintiff had spent a decade
developing and maintaining its relationship with one of these customers,
Merck & Co. Plaintiff provided extensive specialized training to
defendant, and introduced him to many of plaintiff's established
customers for whom he served as an on-site contact.
Plaintiff has asked defendant to cease servicing its customers for its
competitor and to honor the restrictive covenant. He has declined.
In assessing a motion for preliminary injunctive relief, courts
consider whether the movant has shown a reasonable likelihood of success
on the merits, whether the movant will be irreparably harmed if relief is
denied, whether granting relief will result in greater harm to the
nonmovant and whether granting relief would be in the public interest.
See Allegheny Energy, Inc. v. DOE, Inc., 171 F.3d 153, 158 (3d Cir.
On the record presented, plaintiff is likely to prevail on the merits.
A covenant restricting competitive activity which is ancillary to an
employment contract and supported by consideration is valid under
Illinois law insofar as it is reasonably necessary to protect the
employer's interests. See Advent Elec. Inc. v. Buckman, 112 F.3d 267, 274
(7th Cir. 1997); Millard
Maintenance Service Co. v. Bernero,
566 N.E.2d 379, 384 (Ill. App.Ct. 1990). "In Illinois, continued
employment constitutes adequate consideration for a post-employment
covenant not to compete." Id. An employer has a legitimate interest in
protecting its relationships with customers. See McRand, Inc. v. Beelen,
486 N.E.2d 1306, 1315 (Ill. App.Ct. 1985). A two year restriction on the
solicitation or servicing of the former employer's clients with whom the
employee had contact is reasonable. See Bernero, 566 N.E.2d at 388;
McRand, 486 N.E.2d at 1316. Where a covenant encompasses all of the
employer's customers, a court may tailor relief to activity involving
those with whom the former employee was involved during the employment.
See Bernero, 566 N.E.2d at 1315-16. See also Weitekamp v. Lane,
620 N.E.2d 454, 461 (Ill. App.Ct. 1993) (upholding modification by court
of scope and duration of covenant).
Plaintiff faces irreparable harm. It is faced with the imminent loss of
a long standing customer relationship which it spent considerable time
cultivating. It appears that defendant's new employer is targeting
plaintiff's customers and that defendant is now providing to at least two
of them the same services he had provided just weeks earlier on behalf of
plaintiff. The amount of future lost revenue from the diversion of
plaintiff's customers is not easily ascertainable. In such circumstances,
irreparable harm has been presumed. See A.B. Dick Co. v. American
Pro-Tech, 514 N.E.2d 45, 50 (Ill. App.Ct. 1987); McRand, 486 N.E.2d at
Defendant does not face comparable harm if temporary relief is
afforded. He may freely engage in his chosen field and solicit or
service an array of clients. Unless defendant was hired solely or
principally to assist in the diversion of clients with whom he was
involved at the behest of plaintiff, his current employment should
not be appreciably affected.
The public interest will not be directly or adversely affected by
the granting of a restraining order. As a general matter, it is in
the public interest to enforce valid contractual obligations and
to protect legitimate business interests.
ACCORDINGLY, this day of April, 2001, IT IS HEREBY ORDERED that
plaintiff's Motion for Temporary Restraining Order (Doc. #3) is GRANTED
and an appropriate restraining order will be entered herewith.
AND NOW, this day of April, 2001, consistent with the accompanying
memorandum order granting plaintiff's motion for a temporary restraining
order, IT IS HEREBY ORDERED that defendant Efrain Camacho shall not
directly or indirectly solicit, offer, sell or service building
management systems or related products or services to any entity which
has been a customer of plaintiff's Blue Bell, Pennsylvania office during
the period of February 7, 2001 through February 9, 2001 with whom
defendant had contact during that period, or assist any other entity in
IT IS FURTHER ORDERED that consistent with Fed.R.Civ.P. 65(c), this
restraining order shall take effect upon the posting by plaintiff of a
bond in the amount of $20,000 and shall remain in effect through April
27, 2001; a hearing will be held at 2:00 p.m. on April 27, 2001 on
plaintiff's motion for a preliminary injunction; the parties shall have
until April 26, 2001 to conduct expedited discovery; and, the parties
shall submit proposed
findings of fact and conclusions of law by noon on April 27, 2001.
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