Chicago Business Litigation Lawyer Blog
When a high-level employee left Archer Daniels Midland (ADM) to start his own consultancy company, ADM filed suit against the former employee alleging that his new business violated the non-disclosure agreement he signed. A trial court sided with ADM and enjoined the former employee from engaging in consultancy activities. In a case recently added to the official reports, an Illinois appellate court reversed finding that ADM failed to establish a likelihood of success on its claim that the former employee’s activities would violate the NDA he signed.
Lane Sinele worked at ADM for 28 years. At the time he left, he was the manager of national accounts for ADM’s sweetener division. In that position, he represented ADM soliciting, procuring, and servicing buyers of sweeteners. While employed by ADM, Sinele had access to ADM’s Tableau database, a customer profitability database, which contained information about freight systems, manufacturing costs by facility, individual customers’ procurements of corn, manufacturing costs of the corn products, customers’ margins, and margins by location. ADM considered the information contained in its Tableau database to be trade secrets. To maintain their secrecy, ADM limited access to the database to salespeople, like Sinele, and then only for those customers for which that salesperson had responsibility.
In 2018, Sinele left ADM and formed his own consultancy business in which he planned to act as an agent of sweetener buyers in their negotiations with the five major sweetener manufacturers, of whom ADM is one. Shortly after leaving ADM, Sinele sent an email to his former boss requesting a meeting with ADM to negotiate on behalf of two of Sinele’s clients who happened to be ADM customers whose accounts Sinele handled while at ADM. ADM responded by filing suit against Sinele shortly thereafter.
ADM moved for entry of a preliminary injunction to stop Sinele from representing sweetener buyers. ADM argued that Sinele’s new consultancy business would inevitably entail disclosure of ADM’s trade secrets. It argued that Sinele had information that a normal customer in an arms-length negotiation would not have. ADM argued that Sinele would use this information concerning ADM’s costs, standard contract terms and policies, and profit margins to gain a negotiating advantage. This would compel ADM to either offer discounts to retain these customers or risk losing them to competitors, which in either event would impact ADM’s bottom line the company alleged. The trial court agreed with ADM and enjoined Sinele or his new business from representing any customer whose account Sinele handled at ADM during his last two years with the company.
The appellate court found that ADM had not shown a likelihood of success on the merits of its claim and reversed. In explaining its decision, the appellate court found that ADM overstated the importance of the information in its Tableau database and the edge in negotiations that knowing this information would provide. First, the Court noted that the information was always changing so even assuming that Sinele had memorized all the information in the database on his last day at ADM, that information would have changed by the time Sinele started negotiations on behalf of a client. For instance, ADM argued that Sinele had access to the price that ADM paid for corn and that he would use this information to tell clients what they should pay for sweetener. The Court pointed out, however, that the price of corn was constantly fluctuating so the historic price of corn would not help in a future negotiation.
The Court also discounted the extent of any commercial advantage from knowing the price that ADM paid for corn. All it would reveal is a minimum price above which ADM would have to charge to make a profit. ADM argued this provided a significant advantage because Sinele also knew ADM’s profit margins. The Court rejected this argument though. The testimony elicited at the preliminary injunction hearing revealed that ADM managers could choose to approve or deny any proposed sale, meaning profit margin was not a static number. Thus, the Court concluded that Sinele would not know the absolute lowest price ADM would be willing to sell its sweetener. The Court also determined that ADM failed to show that Sinele had or would inevitably use any ADM trade secrets in his new business. He could gather competing bids and then use those bids to negotiate the best possible price for his clients. This did not require use of any trade secrets.
The Courts full opinion is available 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 Wheaton and Naperville 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 litigating complex non-compete, non-solicitation, nondisclosure, and restrictive covenant cases involving emergency litigation seeking or opposing TROs and preliminary injunctions. We also assist Chicago and Oak Brook area businesses and business owners who are victims of fraud. You can contact us by calling (630) 333-0333. You can also contact us online here.