A three-judge panel serving in Illinois’ Second District Appellate Court has ruled unanimously against Mazzetta Co.’s claim that a former employee violated a non-compete agreement.
The Mazzetta Company, a Highland Park, Illinois, U.S.A.-based a wholesale seafood company, sued former sales associate Stephen Felsenthal after he resigned to work as a business development manager for Bensenville, Illinois-headquartered Fortune Fish and Gourmet in October 2017. Mazzetta claimed Felsenthal violated several clauses in a so-called “noncompetition, confidentiality, and proprietary rights agreement” he signed when he began working for Mazzetta in June 2013.
Specifically, Mazzetta’s non-compete agreement included language that prohibited Felsenthal from working anywhere in North America where Mazzetta had conducted business dating back to 2013. Additionally, it forbid Felsenthal from making business solicitations to any potential customers that he had any contact with during his time with Mazzetta.
In a decision issued 17 June, the appellate panel backed an earlier ruling that found the agreement as “overbroad and unenforceable,” and dismissed Mazzetta’s case. It ruled the contract was overly restrictive in prohibiting Felsenthal engaging in practically any seafood-related business activity anywhere on the North American continent.
“In prohibiting Felsenthal from engaging in any type of employment activity in a substantially similar business, namely the business of importing frozen seafood, the covenant does not specify the restriction to ‘sales,’ the position Felsenthal held at Mazzetta for over four years. This means that Felsenthal could not take any position – whether that be in marketing, research, IT, or any other non-sales capacity – in a seafood business, which severely limits the Felsenthal’s employment ability in the seafood industry. Although Mazzetta argues that it has a legitimate business interest in restricting Felsenthal’s employment, restricting him from working in any capacity in the seafood industry is over broad,” the panel wrote in its decision. “The geographic limitations at issue here span from the southernmost province of Panama to the northernmost province of Canada and include any place Mazzetta did business from June 2013 onwards, regardless if Mazzetta still did business there, as well as any potential place in which Mazzetta planned to do business in when Felsenthal left. We cannot hold that such a widespread geographic limitation, with potentially limitless restrictions, is necessary to protect the employer’s legitimate business interests, as it would require Felsenthal to move to a new continent in order to pursue any career in the seafood industry.
The judge who issued the initial ruling on the case included harsh words regarding Mazzetta’s contract.
“In my 30 years on the bench, I don’t think I’ve ever seen an employment covenant that was more draconian than this,” the judge wrote.
The appellate panel said it had authority to arbitrate the contract as “it has been long established that the reasonableness of a postemployment restrictive covenant is a matter of law to be decided by the court” and that “a restrictive covenant is not valid if it is broader than necessary to protect the employer’s legitimate business interests..”
A spokesperson for Mazzetta said the company had no comment on the judgment.
In a sworn affidavit, Mazzetta Co. President Tom Mazzetta said Felsenthal played a “substantive” role in interacting with both customers and suppliers, and that he had access confidential and proprietary information including lists of customers, suppliers, and vendors; information regarding sourcing, harvesting, and processing of products; information on shipping and distribution of products; and details on costs, margins, and pricing of seafood products.
Mazzetta said the non-compete’s restrictive covenants were necessary because Mazzetta “had an open floor plan and computer software which allowed all sales associates to access information accounting for Mazzetta’s sales history,” as well as inventory reports, suppliers’ reports, orders, costs, and contracts between Mazzetta and its vendors, suppliers, and customers.
“When Thomas learned that Felsenthal would be working for Fortune, he asked Felsenthal to immediately turn in his cell phone, laptop, key-fob, and to leave the office,” the panel’s overview of the affidavit said.
Mazzetta called Fortune a direct competitor in the frozen seafood imports sector and said Felsenthal joined Fortune “for the purpose of competing with Mazzetta.”
In his own sworn affidavit, Felsenthal claimed he he did not have access to confidential information, that many of Mazzetta’s suppliers are publicly available, and that he found customers through internet searches.
“Any confidential information relating to the pricing of products was stale, as prices for seafood changed frequently, often daily,” the panel quoted from the affidavit. “After he provided three-weeks’ notice of his intention to leave, he was never restricted from accessing any information. Finally, Felsenthal averred that when he left work at Mazzetta, he returned or left all information he had relating to Mazzetta and did not take any information or property with him.”
Mazzetta filed a complaint against Felsenthal and Fortune Fish on 17 January, 2018, alleging that Felsenthal had violated his contract in several ways, most notably by going to work for a competitor, and that Fortune “tortiously interfered with the contract between Felsenthal and Mazzetta.” The company demanded monetary damages for the violations.
However, during oral arguments in front of the appellate panel, Mazzetta’s attorney seemed to change course.
“Counsel for Mazzetta seemingly requested that we interpret the noncompete and nonsolicitation provisions of the agreement narrowly and rewrite the terms of the restrictive covenants to limit Felsenthal’s postemployment restrictions to not using Mazzetta’s confidential information or soliciting sales from its costumers that he worked with for 18 months,” the panel wrote. “Counsel argued that the trial court did not analyze the terms of the restrictive covenants in the way it intended them to be read, and, if the restrictions were to be so tailored, that it would satisfy the first element of its breach-of-contract claims. Counsel requested that we read the terms not as they appear in the four corners of the document, but rather under its more tailored understanding.”
But the panel rejected Mazzetta’s request.
“It is not the job of this court to rewrite the contract for Mazzetta, and we will not do so on its behalf,” it said.
