In Hal Wagner Studios, Inc. v. Elliott, No. 3:09-CV-31-MJR, 2009 WL 424432 (S.D. Ill. Feb. 19, 2009), Judge Michael Reagan of the Southern District of Illinois entered a preliminary injunction against Kris Elliott (Wagner’s former general manager for its Edwardsville, Illinois office) and a number of former Wagner employees, including Elliott’s wife, Pam. The facts of the case are as follows:
Wagner is in the business of supplying photography services to local schools. In 1994, Wagner purchased the assets of Mr. Elliott’s business, Delmar Studios, for $245,000. As part of the sale, Mr. Elliott executed a non-compete provision, forbidding him from doing the following for 18 months after the end of his employment with Wagner: (1) soliciting or selling school photography accounts from Elliott’s territory, which was defined in the agreement; (2) disclosing a list of said accounts; or (3) otherwise competing for the accounts. Pam Elliott did not sign a non-compete agreement.
On December 31, 2008, Elliott and six co-workers (including his wife) mailed resignation letters to Wagner’s headquarters in St. Louis, Missouri. Defendants’ resignations left Wagner’s Edwardsville office bereft of personnel save for two short term employees. The Elliotts and at least one other Defendant then commenced employment with Herff Jones, Inc., a competitor of Wagner. On January 2, 2009, the Elliotts sent out a solicitation letter on behalf of Herff Jones to approximately 50 schools serviced by Wagner’s Edwardsville office. In that letter, the Elliotts referred to themselves collectively 16 times. Kris Elliott then had his wife, Pam, solicit those schools because she was not covered by a non-compete agreement. Pam Elliott obtained contracts from 21 of the schools.
Upon inspection of the Edwardsville office after Defendants’ resignations, Wagner determined that a number of business documents had been taken, printed, and/or deleted from the company’s office and computers. Specifically, Wagner could not locate its contracts with the vast majority of schools serviced by the Edwardsville office. Wagner further determined that the Elliotts had removed “The Bible,” a rolodex containing the contact information for Wagner customers serviced by the office.
Wagner filed an action against Defendants on January 9, 2009. The Court entered a temporary restraining order against Defendants on January 13, 2009. In that order, Judge Reagan ordered the Elliotts to return all Wagner property in their possession. Judge Reagan declined to enjoin Defendants on the basis of Kris Elliott’s non-compete provision because of a dispute regarding alleged modifications to the provision. Following a preliminary injunction hearing that took place from February 2-4, the Court entered an order granting a preliminary injunction on February 6 and codified that ruling in its decision published on February 19.
In the decision, the Court reiterated its finding that Defendants would have to return all Wagner property in their possession. Judge Reagan specifically noted that Defendants’ actions in taking Wagner property made it very difficult for Wagner to service its clients.