Where an employee was free to take the knowledge he had accumulated over his nearly 30-year long career into his next job as a consultant, representing buyers of the products of his former employer.
Archer Daniels Midland is one of the largest manufacturers of corn-based sweeteners in the United States. In its most recent fiscal year, the sweeteners division of ADM realized a profit of $600 million. ADM sells its sweeteners to a few hundred buyers in the United States, including Sensory Effects, Inc. and PMP, Inc.
ADM categorizes buyers in one of two categories: toll contract or flat rate. Toll contract buyers contract to buy a fixed quantity of sweetener from ADM during a year, with the price fluctuating in response to the price of corn. Toll contracts may be entered into at any time of the year. Flat rate contracts can be entered into only during ADM’s annual contracting season, which lasts 30 to 60 days, beginning in the late summer. Under a flat rate agreement, the buyer agrees to pay a fixed price for a full year’s supply of sweetener.
Lane Sinele worked for ADM from January 1990 until his retirement in August 2018. At his retirement, Sinele was the manager of national accounts for ADM’s sweetener division. Sinele represented ADM, soliciting, procuring, and servicing buyers of sweeteners. Sinele handled the accounts for both Sensory Effects and PMP. As part of his employment, Sinele signed two non-disclosure agreements, though he did not sign either non-compete or non-solicitation agreements. During his career, Sinele had access to ADM’s Tableau system, which contained proprietary information about freight systems, factories, customer orders, manufacturing costs, and margins.
After leaving ADM, Sinele formed a consulting business, LS Ag, in which he planned to be an agent of buyers in their negotiations with the various manufacturers of sweeteners. In September 2018, ADM filed a complaint for an injunction against LS Ag and Sinele in the Circuit Court of Cook County. The complaint contained counts under the Illinois Trade Secrets Act and the non-disclosure agreements signed by Sinele. The complaint requested an injunction preventing Sinele and LS Ag from threatening to disclose or actually disclosing trade secrets of ADM. In October 2018, after hearing evidence, the trial court entered a preliminary injunction. Sinele appealed the injunction.
The appellate panel began by stating that ADM argued that Sinele’s new profession would necessarily entail the disclosure of ADM trade secrets, and, therefore, ADM was likely to succeed on the merits of its case. The panel rejected this argument. The panel stated that even if Sinele had a detailed memory of the information in the Tableau system, it changes frequently enough that his knowledge would not provide much of an edge in negotiations. The panel found that it was possible for Sinele to represent buyers in negotiations for the purchase of sweeteners without disclosing or using any confidential information he might remember from ADM’s database.
Finally, the panel stated that even though the knowledge Sinele gained on the job would undoubtedly help him in future negotiations with sweetener manufacturers, including ADM, such knowledge is one of the things employees are free to take and use in later pursuits, especially if they do not take the form of written records, compilations, or analyses. The panel determined that ADM’s litigation was an attempt to re-write the parties’ employment agreement under the rubric of inevitable disclosure. Therefore, the panel found that ADM was not likely to succeed on the merits, and thus the preliminary injunction was an abuse of discretion. The panel, therefore, reversed the decision of the circuit court.
You can view the full decision here.
Our St. Charles and Elgin non-compete agreement attorneys have defended high-level executives in a covenant not to compete and trade secret lawsuits. A case in which our firm defended a former Motorola executive was covered in Crain’s Chicago Business. You can view that article by clicking here.
If you are an employer seeking to protect your confidential or proprietary information or you are an employee being asked to sign a non-compete agreement, it is always advisable to seek the assistance of an experienced non-compete attorney. Lubin Austermuehle a firm of Chicago business dispute attorneys handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex class action, copyright, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Elmhurst and Hinsdale business dispute and restrictive covenant lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist Chicago and Oak Brook area businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333. You can also contact us online here.