A threshold tactical decision in virtually every non-compete and trade secret case is where to file the suit. This decision is particularly important when a non-compete dispute has a California angle, because non-compete agreements are generally void as against public policy in California. Not surprisingly, employers seeking to enforce non-compete agreements try to stay away from the Golden State, while those seeking to avoid enforcement find it welcoming.
That scenario was recently faced by a federal judge in Chicago, where a California resident (Jon Thorsell) was sued by his former employer (Brunswick Corporation, which is headquartered in Illinois) for allegedly breaching his fiduciary duty, allegedly breaching his non-compete agreement, and allegedly violating the Illinois Trade Secrets Act.
Thorsell moved to dismiss the case for improper venue, but Judge Charles P. Kocoras denied the motion and in the process provided a primer on venue issues common to this type of litigation.
According to Judge Kocoras’ ruling, Thorsell’s final position with Brunswick was Vice-President of Sales-Western Region for Brunswick’s Life Fitness division. This region included Illinois. At Brunswick, Thorsell maintained an office out of his home in California, but regularly attended meetings in Illinois, participated in phone calls with Brunswick employees in Illinois, and serviced his Illinois sales territory. Because of these interactions with Illinois, Judge Kocoras held that Thorsell’s fiduciary duty of loyalty to Brunswick originated in Illinois. Accordingly, even though Thorsell’s alleged breaches of that duty (i.e., alleged interference with and usurpation of Brunswick’s business opportunities) may have taken place outside of Illinois, because the duty arose in Illinois, venue was proper in Illinois as to that claim.
As to venue with respect to the claim for alleged breach of Thorsell’s non-compete agreement, Judge Kocoras found that “the fact that Brunswick suffered its economic harm in Illinois, together with the other concrete connections that Brunswick provides, convinces this Court that Illinois is the appropriate venue in this case.” Those other “concrete” Illinois connections included the following: Thorsell travelled to Illinois to negotiate his non-compete; in the non-compete itself, Thorsell acknowledged that Brunswick’s headquarters and primary place of business are in Illinois; the non-compete contained an Illinois choice of law provision; and because Illinois was one of Thorsell’s sales territories, the non-compete was to be partially performed in Illinois.
As for the alleged violations of the Illinois Trade Secret Act (e.g., the alleged disclosure of trade secrets to Thorsell’s new employer), Judge Kocoras noted that Thorsell’s laptop was issued by an Illinois corporation and returned to Illinois after Thorsell was terminated, and that Brunswick suffered its economic harm in Illinois. Accordingly, while “recogniz[ing] that some of the alleged activity occurred in California and Hawaii, including the location where Thorsell primarily used his laptop,” Judge Kocoras nevertheless held that “Brunswick has satisfied its burden of demonstrating that venue is proper by setting forth facts which demonstrate a substantial connection to this district.”