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FILED
Hearing Date: No hearing scheduled 2/8/2024 3:38 PM
Location: <> IRIS Y. MARTINEZ
Judge: Calendar, 11 CIRCUIT CLERK
COOK COUNTY, IL
2023CH08004
Calendar, 11
IN THE CIRCUIT COURT OF COOK COUNTY
26335205
COUNTY DEPARTMENT CHANCERY DIVISION
FILED DATE: 2/8/2024 3:38 PM 2023CH08004
MULTIMEDIA SALES & MARKETING, INC., )
)
Plaintiff, )
)
vs. ) Case No. 23 CH 08004
ROBERT BURCHFIELD, STEVEN MARTIN, )
individually and doing business as MIDWEST )
RADIO ADVERTISING )
)
Defendants. )
PLAINTIFF’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS
MULTIMEDIA SALES & MARKETING, INC., plaintiff herein (“MSM”), by its attorney
Bradley H. Foreman of The Law Offices of Bradley H. Foreman, P.C., for its Response to
Defendants’ Section 2-619.1 Motion to Dismiss, states as follows:
I. INTRODUCTION. MSM employed defendants ROBERT BURCHFIELD
(”Burchfield”) and STEVEN MARTIN (“Martin”) for many years. Martin resigned in
February 2023 and then formed his own new company in Wisconsin to compete with MSM,
Midwest Radio Advertising (“MRA”). Burchfield resigned several months later and joined Martin
at MRA. Both of them then began soliciting MSM customers, and purposefully neglecting to tell
those customers that they no longer worked for MSM, in order to induce the customers to purchase
from them instead of from MSM. This lawsuit followed.
II. STATEMENT OF FACTS
The following facts are alleged in the Verified Complaint and are taken as true for purposes
of ruling on the Motion to Dismiss. Plaintiff MSM is based in Lincolnshire, Illinois. Defendants
Burchfield and Martin reside in Wisconsin. Both of the defendants entered into written contracts
with MSM in which they stipulated to venue and jurisdiction in this Court. Defendants are presently
engaged in business as an unincorporated entity known as “Midwest Radio Advertising” based in
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Lake Geneva, Wisconsin.
MSM hired defendant Burchfield on January 29, 2013. On or about January 25, 2017,
Burchfield and MSM entered into a signed Employee Confidentiality and Non-competition
Agreement, in consideration of further employment of Burchfield by MSM. On October 18, 2019,
MSM and Burchfield both executed an updated version of the Employee Confidentiality and
Non-competition Agreement, a copy of which is attached to the Verified Complaint as Exhibit A.
On or around July 28, 2021, MSM and Burchfield entered into a further agreement known as a
Multimedia Sales & Marketing Inc. Confidentiality and Non-Disclosure Agreement, in which
Burchfield agreed that all sales information and radio information was confidential. A true and
correct copy of this agreement is attached to the Verified Complaint as Exhibit B.
In both of the above-described agreements, Burchfield contracted to maintain the
confidentiality of MSM's sales information and to use it only for the purposes of his employment by
MSM; agreed that in the event of termination of Burchfield's employment from MSM that he would
be barred from soliciting MSM customers; and agreed that he would not engage in any business
which markets or sells community-oriented advertising or is otherwise in competition with MSM..
Burchfield further agreed that violation of any of these provisions would be injurious to MSM and
would be cause for immediate injunctive relief from a court of law, and that he would be responsible
for attorney's fees and costs incurred by MSM in enforcing its contractual rights.
Burchfield resigned from MSM on or about May 30, 2023. Following Burchfield's
resignation, MSM learned that Burchfield is now affiliated with an entity known as Midwest Radio
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Advertising, which appears to be an unincorporated and unregistered entity based in Lake Geneva,
Wisconsin ("MRA"). MRA appears to be a competitor of MSM in the same geographical area.
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Burchfield's employment by MRA is in breach of his MSM agreements, and subjects him to legal
action and damages. In addition, MSM has learned that both Burchfield and Martin have been
contacting MSM customers, and have in fact solicited and in fact sold advertising to one or more
MSM customers, with whom they had previously dealt as an employees of MSM.
On or around May 9, 2012, MSM hired defendant Martin. On or about January 25, 2017,
Martin and MSM entered into a signed Employee Confidentiality and Non-competition Agreement,
in consideration of further employment of Martin by MSM, a copy of which is attached to the
Verified Complaint as Exhibit C. On or around July 28, 2021, MSM and Martin entered into a
further agreement known as a Multimedia Sales & Marketing Inc. Confidentiality and
Non-Disclosure Agreement, in which Martin agreed that all sales information and radio information
was confidential. A true and correct copy of this agreement is attached to the Verified Complaint as
Exhibit D. In both of the above-described agreements, Martin contracted to maintain the
confidentiality of MSM's sales information and to use it only for the purposes of his employment by
MSM; agreed that in the event of termination of Martin's employment from MSM that he would be
barred from soliciting MSM customers; and agreed that he would not engage in any business which
markets or sells community-oriented advertising or is otherwise in competition with MSM. Martin
further agreed that violation of any of these provisions would be injurious to MSM and would be
cause for immediate injunctive relief from a court of law, and that he would be responsible for
attorney's fees and costs incurred by MSM in enforcing its contractual rights. Martin resigned from
MSM on or about February 7, 2023.
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Soon after resigning from MSM, defendants launched their plan to poach former customers
of MSM. They used deceptive tactics, such as misrepresenting to those customers that they were
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either still affiliated with MSM or by conveniently failing to disclose to these customers that they
had left MSM and formed their own business. Defendants purposely intended to mislead these
customers and to induce them to place their business with MRA instead of MSM. Because they
developed these relationships while working for MSM, defendants had the names, contact
information, buying history, and other confidential and/or trade secret information on these
customers to aid them in selling new orders to them. These customers thought they were buying from
MSM when defendants contacted them.
MSM is in a unique business. MSM provides sales assistance to radio stations throughout
the United States. MSM sells unused advertising inventory of radio air time to small and medium
sized businesses within the radio station's listening area. MSM promotes social impact marketing
programs to small and medium sized businesses throughout the United States. MSM creates,
produces, and sells a variety of community awareness campaigns addressing such topics as military
personnel and first responder appreciation, drunk driving prevention, drug abuse prevention, child
abduction prevention, blood donation and other related topics of community interest. MSM then
contracts with various radio stations. MSM has cultivated many enduring relationships with these
radio stations over many years, in order to conduct and to air announcements for these community
based public service programs. MSM also airs messages on Internet Podcasts, and has invested
considerable time, money and effort in the creation of two of its own Internet radio stations.
Defendants were entrusted with confidential details of MSM’s inner-workings while they
worked for MSM. After their hiring, defendants were provided by MSM management with
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confidential and proprietary information which has been compiled by MSM over the past two
decades at substantial cost, and with the unique and extensive expertise acquired by MSM induistry
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veterans. This included identification of lucrative marketing areas, the names, background
information and production requirements of specific radio stations, contact persons for both stations
and potential advertisers, the purchase history and preferences of advertisers, and extensive, often
very personal first party data about the customer that would not be available from any other source
other than through numerous conversations and purchases over many years.
Like all MSM salespersons, defendants were given individual confidentiality agreements.
Defendants signed these agreements, creating contracts of terminable at will employment.
Defendants were then provided with confidential MSM customer listings and other confidential and
trade secret information in order to assist them in servicing existing MSM customers and as an aid
in developing new accounts. MSM gave defendants the names and requirements of contact persons
for specific radio stations, the names of and potential advertisers, the history of advertisers and the
specific type of airtime needed, and marketing strategies. This information was provided to
defendants by MSM only after they signed their respective confidentiality agreements, and in specific
reliance by MSM on the protection provided by such agreements.
MSM guards its confidential customer information. MSM invests substantial resources in
personnel, third-party services, software development and maintenance to purchase, manage and
improve its sales leads. MSM invests heavily in managing and de-duplicating the radio station
protected accounts and current customers as well as updating its database with new information such
as wrong numbers, disconnected phone numbers, ensuring compliance with state and federal
telemarketing laws and in improving leads analytics to enable sales persons to increase their sales,
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increase their commissions, and generally make its sales process more efficient and profitable. MSM
takes every possible precaution to protect information about its new sales leads, current customer
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database, and marketing strategies and related data from unauthorized access or use. Access to
computer databases of customer lists is restricted to authorized personnel. MSM's Sales Department
operates a fully computerized and paperless environment. All customer information is contained in
MSM proprietary Customer Relationship Management (CRM) software, and only accounts under
each Representative's exclusive management are visible to that Representative. All other statistical
information and reports are available via online dashboards, each of which bears a confidentiality
statement. All resources are protected behind the company firewall. Sales representatives' computers
are restricted from printing. All employees are made aware of the need to act with the greatest care,
prudence and discretion in protecting MSM customer lists and related account information from
unauthorized use or disclosure. All MSM employees are required to complete and pass a quarterly
training course on computer and network safety protocols.
MSM sales representatives make contact by telephone with MSM customers who are, or may
be, interested in purchasing advertising for their businesses by sponsoring the above-described public
service announcements being aired on radio stations and other various media outlets. For most sales
made by MSM sales representatives, the MSM Customer Service Department verifies their order by
reviewing them closely or phoning back the customer. Once the orders are verified, they are
processed, scheduled for broadcast, produced, invoiced, and sent to the appropriate media outlet for
airing.
Since its inception, MSM has enjoyed substantial repeat business from advertisers. Over the
past two years, repeat customers have accounted for approximately 86% of MSM's annual sales.
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Many of MSM's customers have repeatedly purchased and paid for advertisements through MSM
for as far back as the 1990's. Defendants knew this and opted for a shortcut to build their own
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business by profiting off of the investment of time and money already expended by MSM.
III. GENERAL STANDARDS FOR MOTION TO DISMISS. Defendants have filed their
Section 2-619.1 Motion to Dismiss. The Motion to Dismiss is unsupported by any affidavits.
Defendant have not answered the allegations in the Complaint, nor has any discovery been
conducted. In general, an action should not be dismissed unless it clearly appears that the facts,
looked at in a light most favorable to the nonmoving party, do not support a cause of action. Samuels
v. Checker Taxi Co., Inc., 65 Ill.App.3d 63 (1st Dist. 1978). Moreover, a motion to dismiss admits
all facts well pleaded, together with all reasonable inferences which can be drawn from those facts
for purposes of such motion. Id. ; Lusher v. Becker Bros., Inc., 155 Ill.App.3d 866 (3d Dist. 1987).
IV. THE COMPLAINT PLEADS A CAUSE OF ACTION FOR BREACH OF TWO
SEPARATE WRITTEN CONTRACTS. MSM’s breach of contract actions are well-plead and
grounded in fact. In general, a complaint for breach of contract must allege: (1) the existence of a
contract; (2) plaintiff's performance of all contractual obligations required of him; (3) facts
constituting the alleged breach; and (4) the existence of damages resulting from the breach.. Finch
v. Illinois Community College Bd., 315 Ill.App.3d 831 (5th Dist. 2000).
Defendants argue generally that the Complaint does not specify the breaches. But it does.
Both contracts state that defendants agreed they would “ keep all Confidential Information and
Trade Secrets in strict confidence and will not use or disclose it for any purpose other than the
performance of Employee's duties at MSM.” The Complaint alleges that defendants did the opposite,
for their own benefit. They also agreed that they would not “directly or indirectly use Company
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Records (as defined herein) or Employee's memory to identify for the benefit of another party, create,
or attempt to reconstruct Confidential Information or Trade Secrets”. “Company Records” is defined
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in the contracts as “correspondence; notes; records; drawings; memoranda; files; specifications;
training and servicing manuals; customer lists; personnel lists or files; mailing or contract lists; notes
and records regarding MSM's inventions, copyrightable works, and other intellectual property;
computer software; computer programs and computer files; or other documents or programs that
were compiled by or available to Employee while employed at MSM or any copies or any other
documents that contain or otherwise reflect such information.” The Verified Complaint alleges facts
showing that defendants breached this paragraph of their contracts. In reliance on their contracts,
MSM gave Martin and Burchfield access to Confidential Information, defined in their Contracts as:
...any data or information, other than a Trade Secret, that is valuable to and
reasonably protected by MSM and not generally known to MSM competitors or
others outside MSM, regardless of whether the information is in print, written, or
electronic form, retained to memory, or has been compiled or created by MSM staff,
including, but not limited to, business records or plans, financial statements,
customer records, technical information, product information, and other similar
confidential and proprietary information.
The Verified Complaint alleges that both defendants specifically breached their contracts
with MSM. They set out to poach former customers of MSM, by utilizing deceptive tactics such as
misrepresenting to customers that they were either still affiliated with MSM or by conveniently
failing to disclose to such customers that they had left MSM and formed their own business.
Defendants engaged in such misrepresentations and/or omissions with the intention of misleading
customers and inducing them to place their business with them at MRA instead of MSM, with whom
such customers had formerly done business.
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IV. THE COMPLAINT PLEADS A VALID CAUSE OF ACTION FOR TORTIOUS
FILED DATE: 2/8/2024 3:38 PM 2023CH08004
INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE. Tortious interference with
prospective economic advantage is a recognized cause of action that is also well-plead. Under
Illinois law, the elements are: (1) the existence of a valid business relationship or expectancy; (2)
knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference
inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant
damage to the party whose relationship or expectancy has been disrupted. Parkway Bank & Trust
Co. v. City of Darien, 43 Ill.App.3d 400 (2d Dist. 1976); Galinski v. Kessler, 134 Ill.App.3d 602
(1st Dist. 1985). A cause of action for tortious interference with a business relationship need not be
based upon an enforceable contract which is interfered with, but it is the interference with the
relationship which creates the actionable tort. LaRocco v. Bakwin, 108 Ill.App.3d 723, 731 (2d Dist.
1982). The tort does not require a defendant to interfere with plaintiff's contractual relations, but only
that defendant interfere with plaintiff's reasonable expectation of entering into a valid business
relationship. Miller v. Lockport Realty Group, Inc., 377 Ill.App.3d 369 (1st Dist. 2007).
Defendants’ sole argument is that they have a privilege to compete. This argument fails.
Defendants have not alleged privilege nor any other affirmative defense at this stage. They now
effectively admit that they contacted MSM’s customers and misrepresented with whom they were
now affiliated. Moreover, even if privilege is to be alleged, such a privilege does not protect them
from wrongful acts such as misrepresenting to customers who they work for and who is selling to
them.
Defendants' case law is unavailing. Soderlund illustrates the point. In Soderlund, the
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defendants did in fact plead privilege of competition. The case was decided on a motion for summary
judgment after facts were developed, not on a motion to dismiss directed solely at the complaint, as
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here. The court also explained that a privilege to compete has limits. The privilege to engage in
business and to compete allows one to divert business from one's competitors generally as well as
from one's particular competitors provided one's intent is, at least in part, to further one's business
and is not solely motivated by spite or ill will. See Candalaus Chicago, Inc. v. Evans Mill Supply
Co., 51 Ill.App.3d 38 (1st Dist. 1977). Restatement (Second) of Torts § 768(1)(d) & Comment b,
at 40 (1979).
Illinois case law, such as Miller v. Lockport, supra, holds that privilege involves a complex
factual analysis. Its application should not be decided on a Motion to Dismiss directed solely at the
pleadings. As discussed by the First District in Miller, the Restatement (Second) of Torts sets forth
the elements for the competition privilege as follows:
(1) One who intentionally causes a third person not to enter into a prospective
contractual relation with another does not interfere improperly with the other's
relation if (a) the relation concerns a matter involved in the competition between the
actor and the other; (b) the actor does not employ wrongful means; (c) his action does
not create or continue in an unlawful restraint of trade; and (d) his purpose is at least
in part to advance his interest in competing with the other.
Restatement (Second) of Torts § 768, at 39 (1979). Acts of competition which are never privileged,
include fraud, deceit, intimidation, or deliberate disparagement. Soderlund Bros., Inc. v. Carrier
Corp., 278 Ill.App.3d 606, 663 N.E.2d 1, 215 Ill.Dec. 251 (Ill. App. 1995). In this case, the Verified
Complaint–the only evidence before this Court– alleges that defendants exceeded any privilege by
their deceit.
Next, defendants rely on case law discussing restrictive covenants, but that is not what this
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case is about. Here, defendants signed written contracts and agreed to not misuse confidential
information. Defendants then, armed with the names and contact information, and other important
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data about the customers to whom they sold MSM specialized products and services, began soliciting
business from several of MSMs’ customers. If they wanted to honestly compete with their former
employer on a level field, they might have contacted these customers and explained that they had
started a new company that was in the same business as MSM. But that is not what they did.
Defendants contacted these MSM customers and solicited new orders, without announcing that they
had left MSM’s employ and were now working elsewhere. Defendants’ motives were clear. They
hoped that the customer would presume they were still dealing with MSM, and would place a repeat
order. While Martin and Burchfield were to some extent within their rights to set up a competing
company, they went too far and exceeded the limits of any privilege to compete. Not only was this
tortioius conduct, built on blatant misrepresentations, their actions also breached their employment
contracts with MSM.
V. MSM’S PRIOR LAWSUIT AGAINST OTHER FORMER EMPLOYEES IS NOT
RELEVANT TO THIS CASE.
Defendants’ reliance on a prior case involving MSM is misplaced. Marzullo dealt with a
number of issues that are not before this Court at this time. Principally, Marzullo was decided over
a decade ago, under different facts and circumstances, and was decided on a motion for summary
judgment. The Court then had a full set of facts to guide it, including depositions of the parties and
discovery. In this case, the Court has before it only a verified and uncontested complaint.
The facts in this Complaint are taken as true for purposes of this motion to dismiss. So it is
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arguendo true at this time that defendants took secret data, used it to contact MSM customers, and
also that they lied to those customers about who they were now working for. This case involves
FILED DATE: 2/8/2024 3:38 PM 2023CH08004
three initial counts: two for breach of contract and one for tortious interference with business
expectancy. MSM alleges that defendants in this case violated their duties of confidentiality by
misusing purloined data. Count III alleges that they interfered with business expectancies. The
fourth count is for injunctive relief. In Marzullo, the trial court judge, Judge Kennedy, did not
address the issues now before this Court
Another distinction is that in Marzullo Judge Kenney found that there was no cause of action
for interference with contracts, but that is not the cause of action alleged in Count III this case. Here,
MSM alleges that defendants interfered with their expectation of obtaining repeat orders from
several long-time customers. This is a separate and distinct tort from interference with an existing
contractual relationships. All of the elements of this tort are present here. (1) the existence of a
contract; (2) plaintiff's performance of all contractual obligations required of him; (3) facts
constituting the alleged breach; and (4) the existence of damages resulting from the breach.
In contrast to Marzullo, the Verified Complaint in this case alleges violations of disclosure
of confidential and trade secret information, and violations of non-solicitation. While the protective
covenants Burchfield and Martin signed in 2017, 2019, and 2021 happened to include sections on
non-competition, the Complaint filed in this case is limited to disclosure and tortious interference.
There is no remedy sought to restrain or interfere with competition. Contrary to defendants’
arguments, nothing about the potential damages sought in this case would in any way preclude the
defendants from engaging in any radio advertising work, or try to impose any geographical
restrictions on where they can operate. Plaintiff filed this case solely to redress the misinformation
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peddled by defendants to MSM customers. In this case, the Complaint alleges that defendants signed
disclosure agreements, had access to, information they wouldn’t have if not for employment at
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MSM, and that they understood these agreements entitled MSM to injunctive relief including
damages, legal fees and other costs.
Defendants also misapprehend the nature of the information purloined by them. While in
Marzullo, Judge Kennedy ruled that because customer names are broadcast over the airwaves, the
information is not protectable. However, there is no allegation here that MSM only sends customers’
names and their locations to the stations. The trade secret information which defendants had a duty
to not disclose includes that documentation of the MSM history of its relationship with its customers.
This detailed interpersonal information is not available from any other source. This information can
only be acquired through the sales and relationship building process and includes private information
about the customer’s personal history, the story of their business, their health, their kids and
grandkids, military service, and many other preferences and biases. This personal information creates
customer loyalty and fosters the long-standing business relations that are at issue in this case. Here,
defendants purposefully did not disclose to MSM customers that they had left MSM when selling
to their former MSM accounts. In this way, defendants could capitalize on this trust-building
process.
MSM operates differently now than it did 14 years ago. In the years leading up to the
Marzullo case, MSM operated in an open office environment and was paper-based. MSM is now
paper-free and has all information locked down and segregated. Sales reps have no access to other
sales reps files, and they are not even allowed to print anything to paper from their remote location.
All information is painstakingly protected.
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MSM appealed Judge Kennedy’s ruling in Marzullo. The First District appellate opinion is
attached hereto and actually supports MSM’s arguments in this case. The sole issue in the appeal
FILED DATE: 2/8/2024 3:38 PM 2023CH08004
was the applicability of the Illinois Trade Secretes Act. 765 ILCS 1065/4. This statute is not alleged
in ths case. The appellate court recognized that MSM’s customers data was in fact eligible for trade
secret protection (although it was decided that MSM had not done enough to protect it):
MSM’s renewal lead lists are eligible for protection under the Act. They
contained information regarding the customer’s name, telephone number, purchase
history, PSAs purchased, and pricing. Both the Act and case law recognize that
“customer lists” can constitute trade secrets as long as maintained in confidence. See
765 ILCS 1065/2(d) (West 2018) (including “list of actual or potential customers”
within the definition of trade secret); Allied Waste Services of North America, LLC
v. Tibble, 177 F. Supp. 3d 1103, 1112 (N.D. Ill. 2016) (“customer lists that are not
readily ascertainable” can constitute trade secrets (internal quotation marks omitted)).
The compilation here functions the same as the lists in Gillis Associated Industries,
Inc. v. Cari-All, Inc., 206 Ill. App. 3d 184, 190-91 (1990), where the
compilation contained the “names and telephone numbers of customers who
conduct business across the nation and who have been sold on their respective need
for wire shelving.
For these reasons, plaintiff MSM requests this Court to deny the defendants’ Motion to Dismiss.
MULTIMEDIA SALES & MARKETING, INC.
By:_/s/ Bradley H. Foreman
One of Its Attorneys
Bradley H. Foreman
The Law Offices of Bradley H. Foreman, P.C. 900 West Jackson Blvd.
Suite 7E
Chicago, IL 60607
(312) 948-8126
brad@foremanlawoffice.com
CERTIFICATE OF SERVICE
I, Bradley H. Foreman, the attorney, certify that on February 8, 2024, I served this
pleading by emailing a copy to the party listed below.
14
/s/ Bradley H. Foreman
FILED DATE: 2/8/2024 3:38 PM 2023CH08004
Sent to:
Scott Kogen
15
Multimedia Sales & Mktg. v. Marzullo, 2020 IL App (1st) 191790, No. 1-19-1790 (Ill. App.
Dec 21, 2020)
2020 IL App (1st) 191790 MSM's renewal lead lists and MSM failed to raise
a genuine issue of material fact that the lists
MULTIMEDIA SALES & MARKETING, qualified as a trade secret under the Act. After the
FILED DATE: 2/8/2024 3:38 PM 2023CH08004
INC., Plaintiff-Appellant, parties voluntary dismissed the remaining claims
v. and counterclaims, defendants filed a motion for
MARISOL MARZULLO, as Administrator attorney's fees under section 5 of the Act. Id. § 5.
for the Estate of William Marzullo, The trial court granted the motion, finding that
Deceased; RADIO ADVERTISING, INC.; MSM's trade secrets claims were made in bad
THOMAS GENOVESE; and TOM faith, and awarded $71,688 in attorney's fees.
O'CONNOR, Defendants-Appellees.
¶ 3 MSM contends the trial court erred by (i)
No. 1-19-1790 granting summary judgment on its trade secrets
claims and (ii) awarding defendants their
APPELLATE COURT OF ILLINOIS FIRST attorney's fees. While the appeal was pending,
DISTRICT First Division defendants filed a motion for attorney's fees
incurred in defending this appeal, which we
December 21, 2020 agreed to take with the case.
Appeal from the Circuit Court of Cook County. ¶ 4 The trial court did not err in finding that MSM
failed to raise a genuine issue of material fact that
No. 12 CH 24766
its renewal lead lists were trade secrets protected
by the Act because MSM provided the names of
Honorable Pamela McLean Myerson, Judge,
its customers to radio stations and other parties.
presiding.
Further, the trial court did not abuse its discretion
in finding that MSM's trade secrets claims were
JUSTICE HYMAN delivered the judgment of the
made in bad faith and awarding attorney's fees to
court, with opinion.
defendants. As to attorney's fees for defending
Preview
FILED Hearing Date: No hearing scheduled 2/8/2024 3:38 PM Location: <> IRIS Y. MARTINEZ Judge: Calendar, 11 CIRCUIT CLERK COOK COUNTY, IL 2023CH08004 Calendar, 11 IN THE CIRCUIT COURT OF COOK COUNTY 26335205 COUNTY DEPARTMENT CHANCERY DIVISION FILED DATE: 2/8/2024 3:38 PM 2023CH08004 MULTIMEDIA SALES & MARKETING, INC., ) ) Plaintiff, ) ) vs. ) Case No. 23 CH 08004 ROBERT BURCHFIELD, STEVEN MARTIN, ) individually and doing business as MIDWEST ) RADIO ADVERTISING ) ) Defendants. ) PLAINTIFF’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS MULTIMEDIA SALES & MARKETING, INC., plaintiff herein (“MSM”), by its attorney Bradley H. Foreman of The Law Offices of Bradley H. Foreman, P.C., for its Response to Defendants’ Section 2-619.1 Motion to Dismiss, states as follows: I. INTRODUCTION. MSM employed defendants ROBERT BURCHFIELD (”Burchfield”) and STEVEN MARTIN (“Martin”) for many years. Martin resigned in February 2023 and then formed his own new company in Wisconsin to compete with MSM, Midwest Radio Advertising (“MRA”). Burchfield resigned several months later and joined Martin at MRA. Both of them then began soliciting MSM customers, and purposefully neglecting to tell those customers that they no longer worked for MSM, in order to induce the customers to purchase from them instead of from MSM. This lawsuit followed. II. STATEMENT OF FACTS The following facts are alleged in the Verified Complaint and are taken as true for purposes of ruling on the Motion to Dismiss. Plaintiff MSM is based in Lincolnshire, Illinois. Defendants Burchfield and Martin reside in Wisconsin. Both of the defendants entered into written contracts with MSM in which they stipulated to venue and jurisdiction in this Court. Defendants are presently engaged in business as an unincorporated entity known as “Midwest Radio Advertising” based in FILED DATE: 2/8/2024 3:38 PM 2023CH08004 Lake Geneva, Wisconsin. MSM hired defendant Burchfield on January 29, 2013. On or about January 25, 2017, Burchfield and MSM entered into a signed Employee Confidentiality and Non-competition Agreement, in consideration of further employment of Burchfield by MSM. On October 18, 2019, MSM and Burchfield both executed an updated version of the Employee Confidentiality and Non-competition Agreement, a copy of which is attached to the Verified Complaint as Exhibit A. On or around July 28, 2021, MSM and Burchfield entered into a further agreement known as a Multimedia Sales & Marketing Inc. Confidentiality and Non-Disclosure Agreement, in which Burchfield agreed that all sales information and radio information was confidential. A true and correct copy of this agreement is attached to the Verified Complaint as Exhibit B. In both of the above-described agreements, Burchfield contracted to maintain the confidentiality of MSM's sales information and to use it only for the purposes of his employment by MSM; agreed that in the event of termination of Burchfield's employment from MSM that he would be barred from soliciting MSM customers; and agreed that he would not engage in any business which markets or sells community-oriented advertising or is otherwise in competition with MSM.. Burchfield further agreed that violation of any of these provisions would be injurious to MSM and would be cause for immediate injunctive relief from a court of law, and that he would be responsible for attorney's fees and costs incurred by MSM in enforcing its contractual rights. Burchfield resigned from MSM on or about May 30, 2023. Following Burchfield's resignation, MSM learned that Burchfield is now affiliated with an entity known as Midwest Radio 2 Advertising, which appears to be an unincorporated and unregistered entity based in Lake Geneva, Wisconsin ("MRA"). MRA appears to be a competitor of MSM in the same geographical area. FILED DATE: 2/8/2024 3:38 PM 2023CH08004 Burchfield's employment by MRA is in breach of his MSM agreements, and subjects him to legal action and damages. In addition, MSM has learned that both Burchfield and Martin have been contacting MSM customers, and have in fact solicited and in fact sold advertising to one or more MSM customers, with whom they had previously dealt as an employees of MSM. On or around May 9, 2012, MSM hired defendant Martin. On or about January 25, 2017, Martin and MSM entered into a signed Employee Confidentiality and Non-competition Agreement, in consideration of further employment of Martin by MSM, a copy of which is attached to the Verified Complaint as Exhibit C. On or around July 28, 2021, MSM and Martin entered into a further agreement known as a Multimedia Sales & Marketing Inc. Confidentiality and Non-Disclosure Agreement, in which Martin agreed that all sales information and radio information was confidential. A true and correct copy of this agreement is attached to the Verified Complaint as Exhibit D. In both of the above-described agreements, Martin contracted to maintain the confidentiality of MSM's sales information and to use it only for the purposes of his employment by MSM; agreed that in the event of termination of Martin's employment from MSM that he would be barred from soliciting MSM customers; and agreed that he would not engage in any business which markets or sells community-oriented advertising or is otherwise in competition with MSM. Martin further agreed that violation of any of these provisions would be injurious to MSM and would be cause for immediate injunctive relief from a court of law, and that he would be responsible for attorney's fees and costs incurred by MSM in enforcing its contractual rights. Martin resigned from MSM on or about February 7, 2023. 3 Soon after resigning from MSM, defendants launched their plan to poach former customers of MSM. They used deceptive tactics, such as misrepresenting to those customers that they were FILED DATE: 2/8/2024 3:38 PM 2023CH08004 either still affiliated with MSM or by conveniently failing to disclose to these customers that they had left MSM and formed their own business. Defendants purposely intended to mislead these customers and to induce them to place their business with MRA instead of MSM. Because they developed these relationships while working for MSM, defendants had the names, contact information, buying history, and other confidential and/or trade secret information on these customers to aid them in selling new orders to them. These customers thought they were buying from MSM when defendants contacted them. MSM is in a unique business. MSM provides sales assistance to radio stations throughout the United States. MSM sells unused advertising inventory of radio air time to small and medium sized businesses within the radio station's listening area. MSM promotes social impact marketing programs to small and medium sized businesses throughout the United States. MSM creates, produces, and sells a variety of community awareness campaigns addressing such topics as military personnel and first responder appreciation, drunk driving prevention, drug abuse prevention, child abduction prevention, blood donation and other related topics of community interest. MSM then contracts with various radio stations. MSM has cultivated many enduring relationships with these radio stations over many years, in order to conduct and to air announcements for these community based public service programs. MSM also airs messages on Internet Podcasts, and has invested considerable time, money and effort in the creation of two of its own Internet radio stations. Defendants were entrusted with confidential details of MSM’s inner-workings while they worked for MSM. After their hiring, defendants were provided by MSM management with 4 confidential and proprietary information which has been compiled by MSM over the past two decades at substantial cost, and with the unique and extensive expertise acquired by MSM induistry FILED DATE: 2/8/2024 3:38 PM 2023CH08004 veterans. This included identification of lucrative marketing areas, the names, background information and production requirements of specific radio stations, contact persons for both stations and potential advertisers, the purchase history and preferences of advertisers, and extensive, often very personal first party data about the customer that would not be available from any other source other than through numerous conversations and purchases over many years. Like all MSM salespersons, defendants were given individual confidentiality agreements. Defendants signed these agreements, creating contracts of terminable at will employment. Defendants were then provided with confidential MSM customer listings and other confidential and trade secret information in order to assist them in servicing existing MSM customers and as an aid in developing new accounts. MSM gave defendants the names and requirements of contact persons for specific radio stations, the names of and potential advertisers, the history of advertisers and the specific type of airtime needed, and marketing strategies. This information was provided to defendants by MSM only after they signed their respective confidentiality agreements, and in specific reliance by MSM on the protection provided by such agreements. MSM guards its confidential customer information. MSM invests substantial resources in personnel, third-party services, software development and maintenance to purchase, manage and improve its sales leads. MSM invests heavily in managing and de-duplicating the radio station protected accounts and current customers as well as updating its database with new information such as wrong numbers, disconnected phone numbers, ensuring compliance with state and federal telemarketing laws and in improving leads analytics to enable sales persons to increase their sales, 5 increase their commissions, and generally make its sales process more efficient and profitable. MSM takes every possible precaution to protect information about its new sales leads, current customer FILED DATE: 2/8/2024 3:38 PM 2023CH08004 database, and marketing strategies and related data from unauthorized access or use. Access to computer databases of customer lists is restricted to authorized personnel. MSM's Sales Department operates a fully computerized and paperless environment. All customer information is contained in MSM proprietary Customer Relationship Management (CRM) software, and only accounts under each Representative's exclusive management are visible to that Representative. All other statistical information and reports are available via online dashboards, each of which bears a confidentiality statement. All resources are protected behind the company firewall. Sales representatives' computers are restricted from printing. All employees are made aware of the need to act with the greatest care, prudence and discretion in protecting MSM customer lists and related account information from unauthorized use or disclosure. All MSM employees are required to complete and pass a quarterly training course on computer and network safety protocols. MSM sales representatives make contact by telephone with MSM customers who are, or may be, interested in purchasing advertising for their businesses by sponsoring the above-described public service announcements being aired on radio stations and other various media outlets. For most sales made by MSM sales representatives, the MSM Customer Service Department verifies their order by reviewing them closely or phoning back the customer. Once the orders are verified, they are processed, scheduled for broadcast, produced, invoiced, and sent to the appropriate media outlet for airing. Since its inception, MSM has enjoyed substantial repeat business from advertisers. Over the past two years, repeat customers have accounted for approximately 86% of MSM's annual sales. 6 Many of MSM's customers have repeatedly purchased and paid for advertisements through MSM for as far back as the 1990's. Defendants knew this and opted for a shortcut to build their own FILED DATE: 2/8/2024 3:38 PM 2023CH08004 business by profiting off of the investment of time and money already expended by MSM. III. GENERAL STANDARDS FOR MOTION TO DISMISS. Defendants have filed their Section 2-619.1 Motion to Dismiss. The Motion to Dismiss is unsupported by any affidavits. Defendant have not answered the allegations in the Complaint, nor has any discovery been conducted. In general, an action should not be dismissed unless it clearly appears that the facts, looked at in a light most favorable to the nonmoving party, do not support a cause of action. Samuels v. Checker Taxi Co., Inc., 65 Ill.App.3d 63 (1st Dist. 1978). Moreover, a motion to dismiss admits all facts well pleaded, together with all reasonable inferences which can be drawn from those facts for purposes of such motion. Id. ; Lusher v. Becker Bros., Inc., 155 Ill.App.3d 866 (3d Dist. 1987). IV. THE COMPLAINT PLEADS A CAUSE OF ACTION FOR BREACH OF TWO SEPARATE WRITTEN CONTRACTS. MSM’s breach of contract actions are well-plead and grounded in fact. In general, a complaint for breach of contract must allege: (1) the existence of a contract; (2) plaintiff's performance of all contractual obligations required of him; (3) facts constituting the alleged breach; and (4) the existence of damages resulting from the breach.. Finch v. Illinois Community College Bd., 315 Ill.App.3d 831 (5th Dist. 2000). Defendants argue generally that the Complaint does not specify the breaches. But it does. Both contracts state that defendants agreed they would “ keep all Confidential Information and Trade Secrets in strict confidence and will not use or disclose it for any purpose other than the performance of Employee's duties at MSM.” The Complaint alleges that defendants did the opposite, for their own benefit. They also agreed that they would not “directly or indirectly use Company 7 Records (as defined herein) or Employee's memory to identify for the benefit of another party, create, or attempt to reconstruct Confidential Information or Trade Secrets”. “Company Records” is defined FILED DATE: 2/8/2024 3:38 PM 2023CH08004 in the contracts as “correspondence; notes; records; drawings; memoranda; files; specifications; training and servicing manuals; customer lists; personnel lists or files; mailing or contract lists; notes and records regarding MSM's inventions, copyrightable works, and other intellectual property; computer software; computer programs and computer files; or other documents or programs that were compiled by or available to Employee while employed at MSM or any copies or any other documents that contain or otherwise reflect such information.” The Verified Complaint alleges facts showing that defendants breached this paragraph of their contracts. In reliance on their contracts, MSM gave Martin and Burchfield access to Confidential Information, defined in their Contracts as: ...any data or information, other than a Trade Secret, that is valuable to and reasonably protected by MSM and not generally known to MSM competitors or others outside MSM, regardless of whether the information is in print, written, or electronic form, retained to memory, or has been compiled or created by MSM staff, including, but not limited to, business records or plans, financial statements, customer records, technical information, product information, and other similar confidential and proprietary information. The Verified Complaint alleges that both defendants specifically breached their contracts with MSM. They set out to poach former customers of MSM, by utilizing deceptive tactics such as misrepresenting to customers that they were either still affiliated with MSM or by conveniently failing to disclose to such customers that they had left MSM and formed their own business. Defendants engaged in such misrepresentations and/or omissions with the intention of misleading customers and inducing them to place their business with them at MRA instead of MSM, with whom such customers had formerly done business. 8 IV. THE COMPLAINT PLEADS A VALID CAUSE OF ACTION FOR TORTIOUS FILED DATE: 2/8/2024 3:38 PM 2023CH08004 INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE. Tortious interference with prospective economic advantage is a recognized cause of action that is also well-plead. Under Illinois law, the elements are: (1) the existence of a valid business relationship or expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted. Parkway Bank & Trust Co. v. City of Darien, 43 Ill.App.3d 400 (2d Dist. 1976); Galinski v. Kessler, 134 Ill.App.3d 602 (1st Dist. 1985). A cause of action for tortious interference with a business relationship need not be based upon an enforceable contract which is interfered with, but it is the interference with the relationship which creates the actionable tort. LaRocco v. Bakwin, 108 Ill.App.3d 723, 731 (2d Dist. 1982). The tort does not require a defendant to interfere with plaintiff's contractual relations, but only that defendant interfere with plaintiff's reasonable expectation of entering into a valid business relationship. Miller v. Lockport Realty Group, Inc., 377 Ill.App.3d 369 (1st Dist. 2007). Defendants’ sole argument is that they have a privilege to compete. This argument fails. Defendants have not alleged privilege nor any other affirmative defense at this stage. They now effectively admit that they contacted MSM’s customers and misrepresented with whom they were now affiliated. Moreover, even if privilege is to be alleged, such a privilege does not protect them from wrongful acts such as misrepresenting to customers who they work for and who is selling to them. Defendants' case law is unavailing. Soderlund illustrates the point. In Soderlund, the 9 defendants did in fact plead privilege of competition. The case was decided on a motion for summary judgment after facts were developed, not on a motion to dismiss directed solely at the complaint, as FILED DATE: 2/8/2024 3:38 PM 2023CH08004 here. The court also explained that a privilege to compete has limits. The privilege to engage in business and to compete allows one to divert business from one's competitors generally as well as from one's particular competitors provided one's intent is, at least in part, to further one's business and is not solely motivated by spite or ill will. See Candalaus Chicago, Inc. v. Evans Mill Supply Co., 51 Ill.App.3d 38 (1st Dist. 1977). Restatement (Second) of Torts § 768(1)(d) & Comment b, at 40 (1979). Illinois case law, such as Miller v. Lockport, supra, holds that privilege involves a complex factual analysis. Its application should not be decided on a Motion to Dismiss directed solely at the pleadings. As discussed by the First District in Miller, the Restatement (Second) of Torts sets forth the elements for the competition privilege as follows: (1) One who intentionally causes a third person not to enter into a prospective contractual relation with another does not interfere improperly with the other's relation if (a) the relation concerns a matter involved in the competition between the actor and the other; (b) the actor does not employ wrongful means; (c) his action does not create or continue in an unlawful restraint of trade; and (d) his purpose is at least in part to advance his interest in competing with the other. Restatement (Second) of Torts § 768, at 39 (1979). Acts of competition which are never privileged, include fraud, deceit, intimidation, or deliberate disparagement. Soderlund Bros., Inc. v. Carrier Corp., 278 Ill.App.3d 606, 663 N.E.2d 1, 215 Ill.Dec. 251 (Ill. App. 1995). In this case, the Verified Complaint–the only evidence before this Court– alleges that defendants exceeded any privilege by their deceit. Next, defendants rely on case law discussing restrictive covenants, but that is not what this 10 case is about. Here, defendants signed written contracts and agreed to not misuse confidential information. Defendants then, armed with the names and contact information, and other important FILED DATE: 2/8/2024 3:38 PM 2023CH08004 data about the customers to whom they sold MSM specialized products and services, began soliciting business from several of MSMs’ customers. If they wanted to honestly compete with their former employer on a level field, they might have contacted these customers and explained that they had started a new company that was in the same business as MSM. But that is not what they did. Defendants contacted these MSM customers and solicited new orders, without announcing that they had left MSM’s employ and were now working elsewhere. Defendants’ motives were clear. They hoped that the customer would presume they were still dealing with MSM, and would place a repeat order. While Martin and Burchfield were to some extent within their rights to set up a competing company, they went too far and exceeded the limits of any privilege to compete. Not only was this tortioius conduct, built on blatant misrepresentations, their actions also breached their employment contracts with MSM. V. MSM’S PRIOR LAWSUIT AGAINST OTHER FORMER EMPLOYEES IS NOT RELEVANT TO THIS CASE. Defendants’ reliance on a prior case involving MSM is misplaced. Marzullo dealt with a number of issues that are not before this Court at this time. Principally, Marzullo was decided over a decade ago, under different facts and circumstances, and was decided on a motion for summary judgment. The Court then had a full set of facts to guide it, including depositions of the parties and discovery. In this case, the Court has before it only a verified and uncontested complaint. The facts in this Complaint are taken as true for purposes of this motion to dismiss. So it is 11 arguendo true at this time that defendants took secret data, used it to contact MSM customers, and also that they lied to those customers about who they were now working for. This case involves FILED DATE: 2/8/2024 3:38 PM 2023CH08004 three initial counts: two for breach of contract and one for tortious interference with business expectancy. MSM alleges that defendants in this case violated their duties of confidentiality by misusing purloined data. Count III alleges that they interfered with business expectancies. The fourth count is for injunctive relief. In Marzullo, the trial court judge, Judge Kennedy, did not address the issues now before this Court Another distinction is that in Marzullo Judge Kenney found that there was no cause of action for interference with contracts, but that is not the cause of action alleged in Count III this case. Here, MSM alleges that defendants interfered with their expectation of obtaining repeat orders from several long-time customers. This is a separate and distinct tort from interference with an existing contractual relationships. All of the elements of this tort are present here. (1) the existence of a contract; (2) plaintiff's performance of all contractual obligations required of him; (3) facts constituting the alleged breach; and (4) the existence of damages resulting from the breach. In contrast to Marzullo, the Verified Complaint in this case alleges violations of disclosure of confidential and trade secret information, and violations of non-solicitation. While the protective covenants Burchfield and Martin signed in 2017, 2019, and 2021 happened to include sections on non-competition, the Complaint filed in this case is limited to disclosure and tortious interference. There is no remedy sought to restrain or interfere with competition. Contrary to defendants’ arguments, nothing about the potential damages sought in this case would in any way preclude the defendants from engaging in any radio advertising work, or try to impose any geographical restrictions on where they can operate. Plaintiff filed this case solely to redress the misinformation 12 peddled by defendants to MSM customers. In this case, the Complaint alleges that defendants signed disclosure agreements, had access to, information they wouldn’t have if not for employment at FILED DATE: 2/8/2024 3:38 PM 2023CH08004 MSM, and that they understood these agreements entitled MSM to injunctive relief including damages, legal fees and other costs. Defendants also misapprehend the nature of the information purloined by them. While in Marzullo, Judge Kennedy ruled that because customer names are broadcast over the airwaves, the information is not protectable. However, there is no allegation here that MSM only sends customers’ names and their locations to the stations. The trade secret information which defendants had a duty to not disclose includes that documentation of the MSM history of its relationship with its customers. This detailed interpersonal information is not available from any other source. This information can only be acquired through the sales and relationship building process and includes private information about the customer’s personal history, the story of their business, their health, their kids and grandkids, military service, and many other preferences and biases. This personal information creates customer loyalty and fosters the long-standing business relations that are at issue in this case. Here, defendants purposefully did not disclose to MSM customers that they had left MSM when selling to their former MSM accounts. In this way, defendants could capitalize on this trust-building process. MSM operates differently now than it did 14 years ago. In the years leading up to the Marzullo case, MSM operated in an open office environment and was paper-based. MSM is now paper-free and has all information locked down and segregated. Sales reps have no access to other sales reps files, and they are not even allowed to print anything to paper from their remote location. All information is painstakingly protected. 13 MSM appealed Judge Kennedy’s ruling in Marzullo. The First District appellate opinion is attached hereto and actually supports MSM’s arguments in this case. The sole issue in the appeal FILED DATE: 2/8/2024 3:38 PM 2023CH08004 was the applicability of the Illinois Trade Secretes Act. 765 ILCS 1065/4. This statute is not alleged in ths case. The appellate court recognized that MSM’s customers data was in fact eligible for trade secret protection (although it was decided that MSM had not done enough to protect it): MSM’s renewal lead lists are eligible for protection under the Act. They contained information regarding the customer’s name, telephone number, purchase history, PSAs purchased, and pricing. Both the Act and case law recognize that “customer lists” can constitute trade secrets as long as maintained in confidence. See 765 ILCS 1065/2(d) (West 2018) (including “list of actual or potential customers” within the definition of trade secret); Allied Waste Services of North America, LLC v. Tibble, 177 F. Supp. 3d 1103, 1112 (N.D. Ill. 2016) (“customer lists that are not readily ascertainable” can constitute trade secrets (internal quotation marks omitted)). The compilation here functions the same as the lists in Gillis Associated Industries, Inc. v. Cari-All, Inc., 206 Ill. App. 3d 184, 190-91 (1990), where the compilation contained the “names and telephone numbers of customers who conduct business across the nation and who have been sold on their respective need for wire shelving. For these reasons, plaintiff MSM requests this Court to deny the defendants’ Motion to Dismiss. MULTIMEDIA SALES & MARKETING, INC. By:_/s/ Bradley H. Foreman One of Its Attorneys Bradley H. Foreman The Law Offices of Bradley H. Foreman, P.C. 900 West Jackson Blvd. Suite 7E Chicago, IL 60607 (312) 948-8126 brad@foremanlawoffice.com CERTIFICATE OF SERVICE I, Bradley H. Foreman, the attorney, certify that on February 8, 2024, I served this pleading by emailing a copy to the party listed below. 14 /s/ Bradley H. Foreman FILED DATE: 2/8/2024 3:38 PM 2023CH08004 Sent to: Scott Kogen 15 Multimedia Sales & Mktg. v. Marzullo, 2020 IL App (1st) 191790, No. 1-19-1790 (Ill. App. Dec 21, 2020) 2020 IL App (1st) 191790 MSM's renewal lead lists and MSM failed to raise a genuine issue of material fact that the lists MULTIMEDIA SALES & MARKETING, qualified as a trade secret under the Act. After the FILED DATE: 2/8/2024 3:38 PM 2023CH08004 INC., Plaintiff-Appellant, parties voluntary dismissed the remaining claims v. and counterclaims, defendants filed a motion for MARISOL MARZULLO, as Administrator attorney's fees under section 5 of the Act. Id. § 5. for the Estate of William Marzullo, The trial court granted the motion, finding that Deceased; RADIO ADVERTISING, INC.; MSM's trade secrets claims were made in bad THOMAS GENOVESE; and TOM faith, and awarded $71,688 in attorney's fees. O'CONNOR, Defendants-Appellees. ¶ 3 MSM contends the trial court erred by (i) No. 1-19-1790 granting summary judgment on its trade secrets claims and (ii) awarding defendants their APPELLATE COURT OF ILLINOIS FIRST attorney's fees. While the appeal was pending, DISTRICT First Division defendants filed a motion for attorney's fees incurred in defending this appeal, which we December 21, 2020 agreed to take with the case. Appeal from the Circuit Court of Cook County. ¶ 4 The trial court did not err in finding that MSM failed to raise a genuine issue of material fact that No. 12 CH 24766 its renewal lead lists were trade secrets protected by the Act because MSM provided the names of Honorable Pamela McLean Myerson, Judge, its customers to radio stations and other parties. presiding. Further, the trial court did not abuse its discretion in finding that MSM's trade secrets claims were JUSTICE HYMAN delivered the judgment of the made in bad faith and awarding attorney's fees to court, with opinion. defendants. As to attorney's fees for defending