Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

CentiMark, a commercial roofer, hired Turnell as a laborer in 1978. In 1988 CentiMark promoted him to Chicago District Operations Manager. In his employment agreement, Turnell agreed to a non-disclosure provision and to restrictive covenants that prohibit “engag[ing] … in any Competing Business” during his employment and for two years afterward in any of the “regions and/or divisions and/or territories” in which he “operated” for CentiMark and “solicit[ing] the trade of, or trade with,” any of CentiMark’s “customers or suppliers, or prospective customers or suppliers” during his employment and for two years afterward. Turnell became Senior Vice President and Midwest Regional Manager. The company fired him in 2013, claiming that Turnell had misappropriated company resources and covered up fraudulent billing by his wife's company. Turnell claims the real reasons were his age, health issues, and high compensation. Turnell made little effort to find a job outside commercial roofing, but accepted an offer from Windward Roofing and contacted CentiMark customers. The court found Turnell’s covenants too broad, and entered a preliminary injunction, affirmed by the Seventh Circuit, that “Turnell shall not sell, attempt to sell, or help sell any products or services, or any combination thereof, related to commercial roofing to any person or entity who was a customer of Centimark Corporation as of January 8, 2013 and who is located in Illinois, Indiana, Michigan, Minnesota, North Dakota, South Dakota, or Wisconsin” and required CentiMark to post a $250,000 bond. View "Turnell v. Centimark Corp." on Justia Law

Northbound generates and sells life insurance leads, using the brand name “Leadbot,” but ran out of cash with a frozen line of credit and revenue that did not support its overhead. Norvax generates and sells health insurance leads. An asset purchase agreement was signed in 2009, “by and between” Northbound and Leadbot LLC, a subsidiary of Norvax that was formed to purchase the assets of Northbound. Under the agreement, Leadbot LLC was obligated to use the assets it acquired from Northbound in furtherance of the Leadbot brand. The purchase price was not paid in cash. Instead Northbound would receive an “earn-out” calculated as a percentage of the monthly net revenue of Leadbot LLC. The agreement also contained an Illinois choice-of-law clause. Northbound claims that Leadbot LLC and Norvax violated the agreement. The district court dismissed some claims and granted summary judgment for defendants on the remainder. The Seventh Circuit affirmed, reasoning that Norvax was not actually a party to the contract that was allegedly breached, nor is there any basis for holding Norvax liable for any breach by a subsidiary. View "Northbound Grp., Inc. v. Norvax, Inc." on Justia Law

Trovare sought to purchase an affiliated group of family-owned companies. The parties executed a Letter of Intent that included a provision requiring the companies, if they terminated negotiations in writing before a certain date, to pay Trovare a breakup fee of $200,000. Trovare demanded that fee more than a month before the termination date, claiming that the companies intentionally scuttled the deal before the termination date, and then engaged in sham “negotiations” to avoid paying the breakup fee. The companies never sent written notice of termination. Following a remand, the district court concluded and the Seventh Circuit affirmed that the companies had not terminated negotiations before the termination date, and that Trovare was therefore not entitled to the breakup fee. View "Trovare Capital Grp., LLC v. Simkins Indus., Inc." on Justia Law

Employees of Instant, an information-technology staffing firm sign agreements in which they promise not to solicit business from Instant’s clients, not to recruit Instant’s employees to other jobs, and not to disclose the firm’s sensitive information to outsiders. DeFazio was Instant’s Vice President until 2012, when she was fired. She was already cofounding Connect, a new tech-staffing firm, and began working there immediately, along with several coworkers she persuaded to leave Instant. Connect won business from several of Instant’s recent clients. Instant sued DeFazio and others for breaching the restrictive covenants and under the Computer Fraud and Abuse Act, 18 U.S.C. 1030. DeFazio counterclaimed, alleging that Instant shortchanged her on a bonus. The court concluded that no one is liable to anyone else. The Seventh Circuit affirmed, agreeing that defendants did not leak or otherwise misuse Instant’s proprietary data. Defendants admitted breaching the covenants not to solicit and not to recruit, but in Illinois a restrictive covenant in an employment agreement is valid only if it serves a “legitimate business interest.” The district court concluded that neither covenant did. Tech-staffing firms do not build relationships with clients that would justify restricting their employees from setting out on their own. View "Instant Tech. LLC v. DeFazio" on Justia Law

VDF has trademark and patent rights in “CoffeeBerry” extract and licensed J&J to make and sell CoffeeBerry-based skin-care products. VDF was entitled to “running royalties,” based on the number of sales by the licensee, or by sublicensees. The license permitted J&J to sublicense its rights and required J&J to pay a minimum quarterly royalty if running royalties fell below a specified level. The license could not be assigned without written permission, but it did not forbid a change of control of J&J. J&J sublicensed Stiefel, a manufacturer of dermatological products. Four years later, J&J’s owners sold their interests to Stiefel for $8.5 million. J&J became a Stiefel subsidiary. After buying J&J’s stock, Stiefel engineered amended the sublicence, reducing the alternative minimum royalties that Stiefel owed J&J and diverting part of the license-revenue stream from VDF and J&J to Stiefel. VDF filed suit, alleging de facto assignment and breach of contract. The Seventh Circuit affirmed summary judgment in favor of the defendants with respect to claims that they engineered an unauthorized assignment of the license and that the $8.5 million paid for J&J was really a purchase of J&J’s anticipated sales revenue, so that part of that revenue should have gone to VDF as advance royalties. View "VDF Futureceuticals, Inc. v. Stiefel Labs, Inc." on Justia Law

Procaccio purchased its workers' compensation insurance from West Bend. This litigation concerns three policy years: 2006, 2007, and 2010. Procaccio contends that West Bend’s offset procedure effectively nullified its Illinois Contracting Classification Premium Adjustment Program (ICC) credit for these policy years, resulting in substantial overcharges. The district court agreed and awarded a large sum in damages. The court concluded that the insurance policy contained no agreement to adjust the Schedule Modification credit after the ICC credit became due; West Bend needs parol evidence to prove its version of the parties’ agreement, but the insurance contract was fully integrated so any evidence of an oral understanding with Procaccio’s president is inadmissible; and while West Bend had the unilateral right to issue endorsements, that authority is cabined by contractual and statutory restrictions on its ability to alter its rates. The court further concluded that, even if the Schedule Modification credit was artificially inflated for these policy years, West Bend was not permitted to reduce it based on Procaccio’s ICC credit. Accordingly, the court affirmed the district court's judgment. View "West Bend Mut. Ins. Co. v. Procaccio Painting & Drywall" on Justia Law

This appeal concerns the District's construction of an ambitious project to impound water until it can be cleaned up and released safely: the Tunnel and Reservoir Plan (TARP). The United States and the State of Illinois jointly filed suit, under sections 301 and 309 of the Clean Water Act, 33 U.S.C. 1311, 1319, seeking an order that the District improve the TARP’s performance, accelerate its completion date, and do more to contain and mitigate overflows in the interim. The Alliance was permitted to intervene. The district court entered a proposed consent decree that accompanied the complaint and rejected the Alliance's protest of the proposal. The district judge also concluded that the settlement binds the Alliance. The Alliance appealed, arguing that it cannot be bound by the consent decree - essentially a contract - to which it did not agree. The court concluded that the consent decree that the district court has approved is reasonable in light of the current infrastructure, the costs of doing things differently (no one proposes to build a new sewer system or redo the Deep Tunnel project), and the limits of knowledge about what will happen when the system is completed. Because the decree is the outcome of diligent prosecution, it binds would-be private litigants such as the Alliance. Accordingly, the court affirmed the judgment. View "United States v. Metropolitan Water Reclamation" on Justia Law

Lawson sold computer maintenance and support services for StorageTek. He was paid a base salary and commissions on his sales under the company’s annual incentive plan. Sun Microsystems acquired StorageTek in 2005. At the time Lawson was working on a large sale to JPMorgan Chase, but the deal did not close until 2006. If StorageTek’s 2005 incentive plan applied, Lawson would earn a commission, as high as $1.8 million. If the sale fell under Sun’s 2006 incentive plan, his commission would be about $54,000. Sun determined that the 2006 plan applied. Lawson sued for breach of contract and violation of Indiana’s Wage Claim Statute. The district court rejected the statutory wage claim but submitted the contract claim to a jury, which awarded Lawson $1.5 million in damages. The Seventh Circuit reversed. The sale did not qualify for a commission under the terms of the 2005 plan. Although the original plan documents said the plan would remain in effect until superseded by a new one, a September 2005 amendment set a definite termination date for the plan year: December 25, 2005. To earn a commission under the 2005 plan, sales had to be final and invoiced by that date. View "Lawson v. Sun Microsystems, Inc." on Justia Law

Tilstra (an Ontario business) sued a Wisconsin manufacturer of dairy equipment, BouMatic. Tilstra had been a BouMatic dealer for about 20 years. Tilstra’s territory included “arguably the richest dairy county in Canada,” on which 55,000 dairy cows grazed. His dealership was making a profit of $400,000 a year. The dealership contract reserved to BouMatic “the right to change, at its sole discretion, the assigned territory,” but provided that “BouMatic shall not terminate this Agreement or effect a substantial change in the competitive circumstances of this Agreement without good cause and only upon at least ninety (90) days’ advance written notice …. The term ‘good cause’ means Dealer’s failure to comply substantially with essential and reasonable requirements imposed upon Dealer by BouMatic.” Tilstra claimed that by devious means, BouMatic forced him to sell his dealership to a neighboring BouMatic dealer at a below-market price. The jury awarded Tilstra $471,124 in damages. The Seventh Circuit affirmed, stating that BouMatic never gave Tilstra written notice of any alleged failure to comply. View "Tilstra v. BouMatic LLC" on Justia Law

Following a casino investment venture gone awry, Balagiannis and Mavrakis entered into a settlement agreement: Mavrakis would pay Balagiannis $1.225 million. Balagiannis would dismiss pending federal court litigation with prejudice and withdraw the complaint he had filed against Mavrakis in the Greek legal system no later than September 28, 2012. Mavrakis made three of five agreed payments. In March 2012, Balagiannis sent a letter to a district attorney in Athens. The letter did not reference withdrawal of the complaint against Mavrakis, but requested “completion of the ongoing preliminary investigation.” After Balagiannis refused to confirm that he had withdrawn the Greek complaint, Mavrakis declined to make the final two payments ($925,000). In October 2013, Balagiannis filed suit alleging that Mavrakis breached the settlement agreement. Three months later (19 months after September 28, 2012), Balagiannis filed a declaration with the district court (filed in Greece), which may (or may not) have withdrawn the complaint in Greece. The district court held that Balagiannis failed to allege plausibly his compliance with the settlement agreement, and dismissed the suit. The Seventh Circuit affirmed. View "Reserve Hotels PTY Ltd v. Mavrakis" on Justia Law