HON. JORGE ALONSO, United States District Judge.
Aon Risk Services Companies, Inc., Aon PLC, and Aon Group, Inc. (collectively "Aon") move this Court to enter a temporary restraining order against the named Defendants, pursuant to Fed. R. Civ. P. 65(b). For the reasons stated below, the Court grants in part and denies in part Aon's motion.
Aon filed suit against Alliant Insurance Services, Inc. ("Alliant") and seven former Aon employees ("Defendant Employees")
Aon alleges Alliant poached the Defendant Employees from Aon, and that prior to leaving for Alliant in late October 2019, the Defendant Employees took certain confidential, proprietary, and trade secret information. Aon alleges the Defendant Employees are now poaching other Aon employees as well as Aon clients and are using Aon's confidential, proprietary, and trade secret information to do so. Aon's complaint alleges eight counts: (1) violation of the federal Defend Trade Secrets Act against all defendants; (2) violation of the Illinois Trade Secret Act against all defendants; (3) breach of contract against Defendants Walsh, Ross, Taylor, Brusek, Lubas, and Janic for their alleged breach of employment agreements; (4) breach of fiduciary duty against Defendants Walsh, Ross, and Taylor; (5) aiding and abetting breach of fiduciary duty against Defendants Walsh, Ross, Taylor, and Alliant; (6) tortious interference with contract against Alliant; (7) tortious interference with prospective economic advantage against Defendants Walsh, Ross, Taylor, and Alliant; and (8) declaratory judgment relating to all Defendant Employees' Aon employment agreements. (See generally ECF No. 1.)
Aon has moved this Court to issue a temporary restraining order ("TRO"). (See generally Mot. for Temp. Restraining Order and Memo in Support, ECF Nos. 9 and 10.) Aon highlights specific bad acts by Defendants (described below) that Aon claims show the type of irreparable harm Aon has suffered and will continue to suffer absent entry of a TRO. Aon's proposed TRO enjoins Defendants as follows:
(See ECF No. 9 at 6-7.) Aon requests the TRO stay in place through the preliminary injunction hearing.
Aon filed its complaint on November 5, 2019, and filed its TRO motion on November 18, 2019. Alliant filed a response opposing the TRO on November 20, 2019,
To obtain a TRO, a movant must demonstrate: (1) a likelihood of success on the merits; (2) that it has no adequate remedy at law; and (3) that it will suffer irreparable harm if the relief is not granted. Promatek Indus., Ltd. v. Equitrac Corp., 300 F.3d 808, 811 (7th Cir. 2002). If the movant makes such a showing, the Court then must consider the balance between the irreparable harm that the moving party will suffer if relief is denied and the harm that the nonmoving party will suffer if relief is improperly granted. Ty, Inc. v. Jones Grp., Inc., 237 F.3d 891, 895 (7th Cir. 2001). Finally, the Court must consider the interests of non-parties in granting or denying the requested relief. Id. The more likely a plaintiff's success on the merits, the less the balance of harms needs to favor its side to justify relief, while a greater showing that the balance of harms favors the plaintiff may offset a lower probability of success on the success. Abbot Labs. v. Mead Johnson & Co., 971 F.2d 6, 12 (7th Cir. 1992).
A movant "need not demonstrate a likelihood of absolute success on the merits. Instead, he must only show that his chances to succeed on his claims are `better than negligible.'" Whitaker By Whitaker v. Kenosha Unified Sch. Dist. No. 1 Bd. of Educ., 858 F.3d 1034, 1046 (7th Cir. 2017) (quoting Cooper v. Salazar, 196 F.3d 809, 813 (7th Cir. 1999)). "As the Seventh Circuit has explained, this is a relatively low bar." Vendavo, Inc. v. Long, 397 F.Supp.3d 1115, 1129 (N.D. Ill. 2019).
Although not entirely clear from the briefing, Aon appears to rely on four of its claims in arguing it is entitled to its proposed TRO: (1) its trade secrets claims (Counts I and II); (2) its breach of contract claim (Count III); (3) its tortious interference with contract claim (Count VI); and (4) its declaratory judgment claim (Count VIII). (See generally ECF No. 10.) For purposes of resolving the TRO, the Court need only address the likelihood of success on the trade secrets claims and the breach of contract claim.
As mentioned above, Aon brings claims under both the federal Defend Trade Secrets Act and the Illinois Trade Secrets Act. Because "the pertinent definitions of the two acts overlap," the Court analyzes the likelihood of success of the two claims together. See Vendavo, Inc., 397 F. Supp. 3d at 1129 (analyzing claims
At this stage, Aon has put forth a sufficient showing that the information at issue here constitutes trade secrets. Aon alleges that, prior to leaving for Alliant, Defendant Employees took data compilations, proprietary tools, client information, client lists, intellectual property, and "insurance company intelligence." (ECF No. 10 at 5.) Courts have recognized information of this sort can constitute trade secrets. See e.g., id. ("Trade secrets can include customer lists that are not readily ascertainable, pricing, distribution, and marketing plans, and sales data and market analysis information.") (quotations omitted); see also Vendavo, Inc., 397 F. Supp. 3d at 1131-36. Further, Aon has shown that it took reasonable steps to maintain the secrecy of this information, through the use of things like confidentiality agreements and password-protected networks and devices. (ECF No. 10 at 6.); see also Vendavo, Inc., 397 F. Supp. 3d at 1136.
Aon has also made a sufficient showing that certain Defendant Employees have misappropriated Aon's trade secrets. It is undisputed that certain Defendant Employees took sensitive information prior to leaving for Alliant. Defendants Lubas and Brusek downloaded large amounts of documents to USB drives in October 2019 prior to their departure (ECF No. 1 at ¶¶ 130-131); Defendant Walsh sought access to "detailed client specific premium data" for all Aon CSG clients just two weeks before he resigned. (Id. at ¶ 132.) And Aon claims Janic improperly downloaded his outlook contacts that contained confidential client contacts. (Id. at ¶ 129.) In further support of its position, Aon offers circumstantial evidence like the fact that Lubas and Brusek had no reason to download sensitive documents to USB drives when they could have accessed them through Aon's VPN network or that Janic downloaded the contact list only after meeting with Alliant. The Court notes that Aon "can rely on circumstantial evidence to prove misappropriation" because "direct evidence of theft and use of trade secrets is often not available." Mickey's Linen v. Fischer, No. 17 C 2154, 2017 WL 3970593, at *11 (N.D. Ill. Sept. 8, 2017). To be sure, Aon's claim is far from a slam dunk, but again, "the threshold for demonstrating a likelihood of success on the merits is low." D.U. v. Rhoades, 825 F.3d 331, 338 (7th Cir. 2016) (noting that district court "may have overstated [movant's] burden" by requiring it to show "more than a negligible chance" of prevailing on the merits of its claim).
In its proposed TRO, Aon seeks to enforce three restrictive covenants found in the Defendant Employees' employment agreements with Aon, which include (1) a covenant not to solicit Aon's clients; (2) a covenant not to solicit Aon employees to leave Aon; and (3) a covenant not to disclose or use Aon's trade secrets or confidential information. (See ECF No. 1 at ¶¶ 85-86, 89; Exs. A-G.) Again, at a hearing on November 25, 2019, Alliant notified the Court that, for purposes of the TRO, all Defendants agree to be bound by the second covenant and the Defendant Employees agree to be bound by the third covenant. Thus, the Court will only assess the likelihood of success on Aon's breach of contract claim premised on its non-solicitation of Aon clients covenant.
(See ECF No. 1 at ¶ 85; see also Section 9(b) of Exs. A-G.)
As a preliminary note, the Court finds that Illinois law likely governs the employment agreements for Defendants Ross and Taylor. The parties agree that Illinois' choice-of-law principles apply to this issue. It is undisputed that the contracts at issue contain a choice-of-law provision selecting Illinois, and Illinois courts generally defer to such provisions. See e.g., Prospect Funding Holdings, LLC v. Saulter, 2018 IL App (1st) 171277, ¶ 27, 422 Ill.Dec. 72, 102 N.E.3d 741 (applying purchase agreement's choice-of-law provision without further analysis); see also IFC Credit Corp. v. Rieker Shoe Corp., 378 Ill.App.3d 77, 94, 317 Ill.Dec. 214, 881 N.E.2d 382 (1st Dist. 2007) (rejecting argument that Illinois' choice-of-law rules require another state's laws to apply because contract had clear provision selecting Illinois law). As the parties spent considerable time discussing, a court will only overrule the parties' choice-of-law provision if (1) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or (2) its application would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state. Old Republic Ins. Co. v. Ace Prop. & Cas. Ins. Co., 389 Ill.App.3d 356, 363, 329 Ill.Dec. 432, 906 N.E.2d 630 (1st Dist. 2009). The Court notes that Aon Group, Inc., which has its principal place of business in Illinois, is a party to each of the employment agreements at issue, and thus Illinois has a substantial relationship to the parties. Based on the foregoing reasons, at this juncture, Aon has certainly made a sufficient showing in support of its argument that Illinois law applies. See Aon PLC, et al. v. Heffernan, et al., No. 16-cv-1924, Dkt. No. 28 (N.D. Ill. Feb. 10, 2016) (noting same as to choice-of-law issue at TRO stage).
Under Illinois law, a restrictive covenant will be upheld only if it is a "reasonable restraint." A restrictive covenant "is reasonable only if the covenant: (1) is no greater than is required for the protection of a legitimate business interest of the employer-promisee; (2) does not impose undue hardship on the employee-promisor, and (3) is not injurious to the public." Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871, ¶¶ 16-17, 358 Ill.Dec. 322, 965 N.E.2d 393, 396. In determining whether the former employer has a "legitimate business interest" (i.e., the first prong of the test), courts consider "the totality of the facts and circumstances of the individual case ... includ[ing] the near-permanence of customer relationships, the employee's acquisition of confidential information through his employment, and time and place restrictions. No factor carries any more weight than any other, but rather its importance will depend on the specific
Aon argues that its non-solicitation clause is subject to lower scrutiny because it prohibits certain specific activities, i.e., it prohibits only soliciting, accepting or engaging in business from former clients or servicing former clients for two years as opposed to a general non-competition agreement that totally bars competing with Aon. See Abbott-Interfast Corp. v. Harkabus, 250 Ill.App.3d 13, 18, 189 Ill.Dec. 288, 619 N.E.2d 1337 (2d Dist. 1993) ("A noncompetition agreement which restricts a specific activity, such as soliciting particular clients, is subject to a lower degree of scrutiny than an agreement which prohibits the employee from engaging in any type of competition with the employer."). Aon also argues courts have upheld similar or identical covenants as reasonable under Illinois law. See Aon Risk Servs. v. Cusack, 34 Misc.3d 1205(A), 2011 WL 6955890 (N.Y. Sup. Ct. Dec. 20, 2011) (granting preliminary injunction and finding covenants enforceable under Illinois law); see also Heffernan, et al., No. 16-cv-1924, Dkt. No. 28 (granting TRO enforcing non-solicitation covenant).
Alliant argues that the covenant is unreasonable because it is overbroad; Alliant takes particular issue with the fact that the covenant bars Defendant Employees from merely accepting business from former clients, even if those clients chose to come to the Defendant Employees unprompted. See Abbott-Interfast Corp., 250 Ill. App. 3d at 17-19, 189 Ill.Dec. 288, 619 N.E.2d 1337 (noting "it is more difficult for an employer to justify prohibiting its former employees from accepting orders from the employer's clients than merely prohibiting its employee from soliciting such clients").
The Court notes that Alliant may be correct that, as written, the covenant is impermissibly overbroad. Despite claiming the law is clear, the parties have not produced any controlling case on the issue. The cases Aon relies upon to argue that a covenant barring merely accepting business is enforceable are either easily distinguishable or unpersuasive. See Howard Johnson & Co. v. Feinstein, 241 Ill.App.3d 828, 835, 182 Ill.Dec. 396, 609 N.E.2d 930 (1st Dist. 1993) (noting different considerations where covenant arose in the sale of business as opposed to regular employer-employee agreement); Abbott-Interfast Corp., 250 Ill. App. 3d at 17-19, 189 Ill.Dec. 288, 619 N.E.2d 1337 (ultimately remanding issue of enforceability of non-solicitation covenant); Mickey's Linen, No. 17 C 2154, 2017 WL 3970593, at *16-17 (enforcing non-solicitation clause that encompassed accepting business but parties did not dispute the provision); Heffernan, et al., No. 16-cv-1924, Dkt. No. 28 (not providing any analysis on issue); Cusack, 34 Misc.3d 1205(A), 2011 WL 6955890 (N.Y. Sup. Ct. Dec. 20, 2011) (citing only Feinstein and Abbott-Interfast Corp. and concluding it is "clear" under Illinois law that such covenants are enforceable).
Likewise, the cases Alliant cites are not dispositive. See Hay Group, Inc. v. Bassick, 2005 WL 2420415, at *6 (N.D. Ill. Set. 29, 2005) (stating in dicta that noncompete would be unenforceable because it prohibits former employee from working for any client of former employer, regardless of whether former employee worked on the client's account); SKF USA, Inc. v. Bjerkness, 636 F.Supp.2d 696, 716 (N.D. Ill. 2009) (stating in dicta that it would be unjust to enjoin a former employee from working on a client's account after the client had already switched over); Christian v. Veritiv Corp., No. 3:14-CV-00858-DRHSCW, 2014 WL 6657700, at *3 (S.D. Ill. Nov. 24, 2014) (applying Missouri law); Bayly, Martin & Fay, Inc. v. Pickard, 1989 OK 122, 780 P.2d 1168, 1170 (Okla.
But based on the foregoing cases, while it is unclear whether a non-acceptance covenant would be enforceable, a non-solicitation covenant is. Moreover, Aon provides sufficient allegations and evidence that Defendant Employees breached this covenant. Aon points to five Aon clients contacted by the Defendant Employees, at least three of which have left Aon for Alliant. Each of these instances involved the Defendant Employees actively soliciting former clients. Despite Alliant's attempts to explain away all of Defendant Employees' encounters and communications with these Aon clients, at this stage, Aon has "at least a negligible chance of success of the merits." Carlson Grp., Inc. v. Davenport, No. 16-cv-10520, 2016 WL 7212522, at *2 (N.D. Ill. Dec. 13, 2016) (quoting D.U., 825 F.3d at 338).
"Plaintiffs seeking preliminary relief must demonstrate that irreparable injury is likely in the absence of an injunction." Pampered Chef, 804 F. Supp. 2d at 803 (citing Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008)) (emphasis in original). A plaintiff does not meet this standard where "money damages could make [it] whole again" should it prevail at trial. See D.U., 825 at 338-39, ("the possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm") (citation omitted); see also Kraft Foods Grp. Brands LLC v. Cracker Barrel Old Country Store, Inc., 735 F.3d 735, 740 (7th Cir. 2013) ("the harm to the plaintiff also must be judged irreparable—meaning not fully compensable or avoidable by the issuance of a final judgment ... For if the harm can be fully repaired in the final judgment, there is no reason to hurry the adjudicative process"). "A plaintiff may suffer irreparable harm if the nature of the loss makes monetary damages difficult to calculate." E. St. Louis Laborers' Local 100 v. Bellon Wrecking & Salvage Co., 414 F.3d 700, 705-06 (7th Cir. 2005). A plaintiff may not, however, "obtain a preliminary injunction by speculating about hypothetical future injuries." Id.
Regarding its trade secrets claims, Aon correctly points out that there is a "presumption of irreparable harm to the plaintiff in cases of trade secret misappropriation." Jano Justice Sys., Inc. v. Burton, 636 F.Supp.2d 763, 767 (C.D. Ill. 209). That presumption can be rebutted by the defendant. Computer Assocs. Int'l v. Quest Software, Inc., 333 F.Supp.2d 688, 700 (N.D. Ill. June 28, 2004). Here, Alliant relies on its "onboarding process" to argue that all possible confidential and trade secret information has been taken from the Defendant Employees and that the Defendant Employees cannot access it. (See ECF No. 17 at 8-12.) Aon responds that it should not be forced to accept Alliant's assurances under the circumstances, and the Court agrees. Considering the type and amount of materials that the Defendant Employees have admitted to taking, and because "it would be essentially impossible to determine the costs" of Alliant employees using any of these materials in direct competition with Aon, the Court finds there is a real risk of irreparable injury to Aon in the absence of a TRO. Vendavo, 397 F. Supp. 3d at 1144.
Regarding its breach of contract claim, the Court finds irreparable harm is likely if the Court does not enforce the non-solicitation covenant. Again, Aon can point
Having found a sufficient likelihood of success and risk of irreparable harm in connection with Aon's trade secrets claims and breach of non-solicitation covenant claim, the Court turns now to balancing between the irreparable harm that Aon will suffer if relief is denied and the harm that Alliant will suffer if relief is improperly granted. Regarding Aon's trade secrets claims, the Court notes Alliant does not explain how it will suffer harm if the Court orders Alliant to return all of Aon's Confidential Information. Alliant claims that no one at Alliant—including the Defendant Employees—has access to the information that Aon wants returned, and to the extent such information has not been destroyed, the Court does not see any harm to Alliant in being ordered to return it.
Finally, regarding the non-solicitation of Aon clients covenant, Alliant argues that if the Court enters Aon's proposed TRO, Defendant Employees will suffer irreparable harm because they will wrongly be prohibited from working with their clients; Alliant adds that enforcing the covenant is also against the public interest because it denies such clients their free choice of who to work with and as such, is an overly burdensome restraint on trade. (ECF No. 17 at 7.) Alliant has a point, and the Court notes that this harm flows mostly from the covenant's language barring the Defendant Employees from merely "accepting" and "servicing" former clients, even where those clients choose on their own to take their business to the Defendant Employees. As noted above, it is unclear whether this portion of the covenant is enforceable under Illinois law.
Given Alliant's concerns—and the fact that the instances where Defendants have allegedly breached this covenant all involve Defendant Employees actively soliciting business from their former clients (as opposed to merely accepting business) —the Court will enter a TRO that bars soliciting business but does not bar merely accepting or servicing former clients. Illinois law generally allows for modification of restrictive covenants. See e.g., Nw. Podiatry Ctr., Ltd. v. Ochwat, 2013 IL App (1st) 120458, ¶ 56, 371 Ill.Dec. 447, 990 N.E.2d 347, 361 ("We recognize a court may modify a restrictive covenant that is overly broad to make it narrower.") Further, the employment agreements at issue contemplate and allow for such modification. (See ECF No. 1 at ¶ 89; see also Section 10(i) of Exs. A-G.) The Court does not take a position at this time whether
Based on the foregoing, Aon's motion for a temporary restraining order [9] is granted in part and denied in part. Defendants are hereby enjoined as set forth in the accompanying temporary restraining order [31].