The Seventh Circuit Court of Appeals recently decided a preliminary injunction matter in a case brought by a former employer against its former sales executive who left to go work for one of the employer's competitors. The employer, Lakeview Technology, Inc., sued its former vice president, Eric Robinson, to enforce an employment contract precluding him from soliciting its customers for one year and requiring him to hold its trade secrets in confidence.
In vacating the district court's denial of Lakeview's request for a preliminary injunction, the Seventh Circuit held that an employer need not show that its former employee had solicited its customers or disclosed its trade secrets in order to obtain a preliminary injunction. Such relief is issued "to curtail palpable risks of future injury." This is especially true when, as in this case, the employee had accepted a position with his employer's competitor before leaving his employment and lied about it.
The Court also took issue with the district court's reasoning that the prospect of considerable monetary damages against Robinson - should he breach his contractual obligations - would be an adequate remedy. The Court concluded that the "[a]bility to calculate damages does not make that remedy adequate . . . if the plaintiff cannot collect the award. A judgment proof defendant is not deterred by the threat of money damages." The Court focused on the third preliminary injunction factor regarding irreparable harm and the balance of equities. It reasoned that if Robinson plans to abide by his obligations, he will lose nothing as he will still be allowed to remain on his new employer's payroll. However, the injunction will protect Lakeview from the possibility of considerable injury should Robinson "yield to temptation." In remanding the case, the Court left it up to the district court to determine whether or not a bond or other surety would be a sufficient reason to withhold injunctive relief.
Lakeview Technology, Inc. v. Robinson, 2006 WL 1133147 (7th Cir., May 1, 2006).