James Turnell v. Centimark Corporation
796 F.3d 656
| 7th Cir. | 2015Background
- James Turnell, long-time CentiMark regional manager with access to confidential customer, pricing, and proposal information, was fired in 2013 and soon began working for competitor Windward, soliciting CentiMark customers and winning work.
- Turnell’s 1988 employment agreement with CentiMark included: a non-disclosure clause, a non-compete forbidding engagement in competing businesses for two years in regions where he “operated,” and a non-solicitation clause forbidding solicitation of customers and prospective customers for two years.
- CentiMark sued to enforce the restrictive covenants and moved for a preliminary injunction; Turnell and Windward sought a declaratory judgment that the covenants were unenforceable. The cases were consolidated in federal court.
- The district court granted a blue‑penciled preliminary injunction: Turnell may not sell commercial roofing to CentiMark customers as of his termination located in seven Midwestern states for up to two years; he may otherwise remain employed by Windward.
- The court found the original covenants overbroad but not oppressively so and enforced only the portions reasonably necessary to protect CentiMark; Turnell appealed the partial enforcement.
Issues
| Issue | Plaintiff's Argument (Turnell) | Defendant's Argument (CentiMark) | Held |
|---|---|---|---|
| Whether restrictive covenants are enforceable at all | Covenants are overbroad and oppressive (citing Reading) and thus unenforceable in any form | Covenants are incident to employment, protect legitimate business interests, and should be enforced at least in narrowed form | Covenants are enforceable when blue‑penciled; Turnell’s overbreadth did not render them wholly unenforceable |
| Proper scope of preliminary injunction (activity/geography/customers) | District court should not enforce even narrowed restraints; injunction still too broad | Court may tailor injunction to “reasonably necessary” protection of CentiMark | District court appropriately narrowed covenants; injunction limiting sales to CentiMark’s actual customers in specified Midwestern states upheld |
| Whether plaintiff faces irreparable harm warranting denial | Monetary harm to Turnell is substantial and compensable; injunction would burden his livelihood | CentiMark faces incalculable, hard‑to‑prove harm to goodwill and proprietary information without injunction | Balance of harms favors CentiMark given difficulty of proving/quantifying employer’s injury; injunction proper under sliding‑scale test |
| Availability of blue‑penciling under Pennsylvania law | Overbreadth reflects oppressive intent so covenant should be void | If not oppressive, courts should reform covenants to the extent reasonably necessary | Pennsylvania law permits blue‑penciling absent oppressive intent; district court did not abuse discretion |
Key Cases Cited
- Hess v. Gebhard & Co., 808 A.2d 912 (Pa. 2002) (Pennsylvania standards for enforceability and blue‑penciling of restrictive covenants)
- Sidco Paper Co. v. Aaron, 351 A.2d 250 (Pa. 1976) (equitable discretion to limit covenants to protect employer goodwill)
- Reading Aviation Serv., Inc. v. Bertolet, 311 A.2d 628 (Pa. 1973) (overbroad, open‑ended covenant may be unenforceable as oppressive)
- CertainTeed Corp. v. Williams, 481 F.3d 528 (7th Cir. 2007) (recognizing employer’s protectable interest in preventing executives from taking equivalent positions at rivals)
- Girl Scouts of Manitou Council, Inc. v. Girl Scouts of USA, Inc., 549 F.3d 1079 (7th Cir. 2008) (two‑step preliminary injunction framework and sliding‑scale likelihood of success analysis)
- Roland Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380 (7th Cir. 1984) (irreparable harm and balancing test for preliminary injunctions)
- Cooper v. Salazar, 196 F.3d 809 (7th Cir. 1999) (standard of appellate review for preliminary injunctions)
- Goodman v. Illinois Dep’t of Fin. & Prof’l Regulation, 430 F.3d 432 (7th Cir. 2005) (preliminary injunction as extraordinary equitable relief)