Background - Doug and his son Tracy sold E.T. Products in January 2011 and signed broad five-year noncompetition agreements prohibiting direct or indirect assistance to anyone engaged in the same industry anywhere in North America. - Doug retained Petroleum Solutions and sold it to John Kuhns in January 2012, then provided financing, training, consulting, and a lease to Kuhns while Petroleum Solutions initially continued as an E.T. Products distributor. - In late 2012 E.T. Products severed its distributor relationship with Petroleum Solutions after alleged competitive conduct by a former E.T. salesperson hired by Kuhns; thereafter Petroleum Solutions began blending its own additives and obtaining other suppliers. - Upon learning of the severance, Doug told Kuhns he could no longer assist and ceased training and advising; the lease to Kuhns remained in effect. - E.T. Products sued the Millers for breach of the noncompete; the district court found the noncompete enforceable but held the Millers did not breach it; the Millers appealed and the Seventh Circuit affirmed. ### Issues | Issue | Plaintiff's Argument | Defendant's Argument | Held | |---|---:|---:|---| | Enforceability of broad geographic and activity restrictions in noncompete after business sale | Noncompete is reasonable and necessary to protect buyer's goodwill and planned continental expansion | Millers contend restrictions are overbroad and unenforceable | Enforceable: business-sale noncompetes are liberally enforced; factors (type of business, expansion plans, scope, duration) support reasonableness | | Whether assistance to Petroleum Solutions while it acted as E.T. Products’ distributor breached the noncompete | Any assistance to an entity "indirectly" engaged in the industry violates the noncompete | Assistance while Petroleum Solutions was E.T. Products’ distributor did not constitute competition and thus did not breach | No breach: distributor status is not competition; assistance while distributor permitted | | Whether Millers breached by assisting after Petroleum Solutions became a competitor | Noncompete prohibits indirect assistance once the transferee competes; Millers remained bound | Millers stopped assistance once competition began; only continuing lease payments remained | After Petroleum Solutions became a competitor, further training/advice had ceased; continuing rent on a preexisting lease is not the kind of "assistance" the contract reasonably proscribes | | Whether failure to break Kuhns’ lease constituted prohibited indirect assistance | Plaintiff argues continuing the lease aided the competitor and violated the noncompete | Defendants argue honoring a preexisting lease is reasonable and not affirmative assistance; forcing lease-breaking would be absurd | Held for defendants: requiring breaking an existing lease would be an unreasonable/absurd construction; collecting rent on a preexisting lease did not breach | ### Key Cases Cited Dicen v. New Sesco, Inc., 839 N.E.2d 684 (Ind. 2005) (business-sale noncompetes evaluated more liberally; five-year restraint reasonable) Kuntz v. EVI, LLC, 999 N.E.2d 425 (Ind. Ct. App. 2013) (upheld broad prohibition on indirect assistance in business-sale noncompete) Fogle v. Shah, 539 N.E.2d 500 (Ind. Ct. App. 1989) (three-part balancing test for reasonableness of geographic restraints) Beanstalk Grp. v. AM Gen. Corp., 283 F.3d 856 (7th Cir. 2002) (courts must avoid constructions producing absurd results) City of Chicago v. StubHub!, Inc., 624 F.3d 363 (7th Cir. 2010) (follow intermediate state appellate court decisions absent convincing contrary data) Cincinnati Ins. Co. v. H.D. Smith, L.L.C., 829 F.3d 771 (7th Cir. 2016) (de novo review of contract interpretation from summary judgment) Quality Oil, Inc. v. Kelley Partners, Inc., 657 F.3d 609 (7th Cir. 2011) (contract interpretation principles on appeal) Doermer v. Callen, 847 F.3d 522 (7th Cir. 2017) (predicting state supreme court law in diversity cases) Wellpoint, Inc. v. Comm’r, 599 F.3d 641 (7th Cir. 2010) (when cross-appeal is unnecessary to preserve an argument) Torry v. Northrop Grumman Corp., 399 F.3d 876 (7th Cir. 2005) (arguments not developed below may be forfeited)