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Rule307dpetition 201124135418

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Rule307dpetition 201124135418

  1. 1. No. _____ ______________________________________________________________________________ IN THE APPELLATE COURT OF ILLINOIS, FIRST DISTRICT ______________________________________________________________________________ ZEKELMAN INDUSTRIES, INC., Z-MODULAR LLC, and Z-MODULAR CANADA, INC. f/k/a VECTORBLOC CORP., Plaintiffs-Appellees, v. JULIAN BOWRON and VECTORMINIMA, INC., Defendants-Appellants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Rule 307(d) Appeal from the Circuit Court of Cook County, Illinois, County Department, Chancery Division, No. 20 CH 06539. The Honorable Eve M. Reilly, Judge Presiding. APPELLANTS’ RULE 307(d)(1) PETITION FOR REVIEW OF ORDER GRANTING MOTION FOR TEMPORARY RESTRAINING ORDER Pursuant to Illinois Supreme Court Rule 307(d)(1), Defendants-Appellants Julian Bowron (“Bowron”) and VectorMinima, Inc. (“VectorMinima”) (together, “Defendants”) respectfully petition this Court to reverse the trial court’s order of November 20, 2020 (the “November 20 Order”) granting the Motion for Temporary Restraining Order and Preliminary Injunction (the “TRO Motion”) filed by Plaintiffs Zekelman Industries, Inc. (“Zekelman”), Z-Modular LLC, and Z-Modular Canada, Inc. f/k/a VectorBloc Corp. (collectively, “Plaintiffs”). The trial court has issued a TRO on an unenforceable employment agreement and on an absence of evidence that would prevent the Defendants from participating, in any fashion, within an entire industry, regardless of whether that conduct is potentially competitive with the Plaintiffs. It precludes Bowron from using the name of an entirely separate entity that has not
  2. 2. 2 only existed since 2011, but that also serves as the current landlord of one of the plaintiffs, has not been alleged to violate any trademark or trade secret law, and is wholly unrelated to the Plaintiffs’ claims. The TRO, in short, effectively freezes the ability of the Defendants to earn a living in any way on the cusp of the holiday season—based on nothing more than conclusory statements and innuendo unsupported by any well-pleaded facts. The nature of the TRO, and the unfounded basis for its issuance, calls for this emergency appeal and the urgent attention of this Court. In support of this petition, Defendants also submit their accompanying memorandum of law and Supporting Record, and state as follows: The Parties and Nature of the Case 1. This case arises from a lawsuit that the Plaintiffs filed seeking emergency relief over matters they had known about for over eight (8) months. (C 265; C 311, Ex. C) 2. Bowron is a Canadian citizen and resident who founded a company called Vector Praxis in 2011. (C 281) Bowron has operated Vector Praxis continuously since that time. In 2014, Bowron started VectorBloc, which was purchased by Atlas Tube Canada (a subsidiary of Zekelman) in two phases, with the final phase occurring in May 2017. (C 266, C 281) 3. In May 2017, Bowron entered into an employment agreement (the “Agreement”) with Zekelman. (C 288) The Agreement included a non-competition covenant that Bowron would not compete with Zekelman in a “Covered Business” as follows: The Executive shall not, at any time during the Term or during the twenty four (24) month period following the later of the expiration of the Term or the Date of Termination: (i) directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) engaged in any Covered Business or (ii) otherwise participate in any Covered Business.
  3. 3. 3 (C 266, C 295 §7(a)) 4. The Agreement defines “Covered Business” as follows: “Covered Business” shall mean any business, other than the Company or its subsidiaries, directly engaged in, or with significant shareholding in operations that are engaged in, the manufacture of welded or seamless steel tubular or pipe products with substantial manufacturing operations in North America or steel framed modular systems, steel framed modular fabrication or steel framed modular construction. (C 289 §1(k)) 5. The Agreement also included a non-solicitation provision with a 12-month duration as follows: The Executive shall not, and shall not permit any of his affiliates to, at any time during the Term or during the twelve month period following the later of the expiration of the Term or the Date of Termination, directly or indirectly, recruit or otherwise solicit or induce any employee, customer, subscriber or supplier of the Company to terminate its employment or arrangement with the Company, otherwise change its relationship with the Company, or establish any relationship with the Executive or any of his affiliates for any business purpose reasonably deemed competitive with the business of the Company. The parties hereto agree that Executive will not violate this Section 7(b) by engaging, directly or indirectly, on his own behalf or on behalf of any other person, (A) in any general help wanted or similar advertising or (B) any recruiting or placement agency or similar firm to recruit any employee, representative or consultant in a manner that is not targeted at any employee of the Company. (C 295 §7(b)) 6. For purposes of the non-solicitation provision, “the term ‘Company’ shall include the Company, its parent, related entities, and any of its direct or indirect subsidiaries.” (C 295 §7(d))
  4. 4. 4 7. For both the non-competition and non-competition covenants, the term “Term” is defined as follows: Term of Employment. The term of employment under this Agreement (the “Term”) shall be for the period beginning on the Effective Date and ending on the fifth anniversary thereof (the “End Date”). (C 291 §2(b)) 8. As used in the Agreement, the term “Term” refers just to Bowron’s actual period of employment with Zekelman: a. “During the Term, the Executive: (A) shall serve as he [sic] Vice President, Design and Engineering of the Z-Modular division of the Company . . . .” (C 291 §2(c)); b. “During the Term, the Executive shall receive a base salary at a rate . . . .”) (C 291 §3(a)); c. “During the Term, the Executive shall be entitled to paid vacation in accordance with the Company’s vacation policies applicable to executives of the Company.” (C 291 §3(d)); and d. Describing the Company’s obligation to provide tail insurance for Bowron for the period of “during the Term and for the five (5) year period thereafter.” (C 292 §3(f)). 9. At all times during and after his employment with Zekelman, Bowron continued to own and operate Vector Praxis with Zekelman’s knowledge and consent, with Vector Praxis serving as Z-Modular’s landlord and receiving rent from Z-Modular. (C 281, C 304 (Ex. B)) Vector Praxis continues to receive rent from Z-Modular. (Id.)
  5. 5. 5 10. In the fall of 2017, Bowron began suffering a series of personal hardships, including the failing health, and subsequent passing, of both of his parents, and a divorce with his then-spouse. (C 266-267, C 282 ¶¶ 3-6) As a result of needing to act as caretaker for his ill parents and unable to simultaneously handle his family matters while working the 60 hours per week that would have been required for his job, on December 21, 2017, Bowron wrote Mickey McNamara, Zekelman’s Executive Vice President and Z-Modular’s President, and requested to switch to a part-time consultant position effective January 31, 2018. (Id.) 11. Although Zekelman initially responded to Bowron’s request by saying they could “work things out,” it subsequently stopped communicating with Bowron about his request. (C 282-283, ¶¶ 7-8) On January 31, 2018, Bowron learned that Zekelman had terminated his employment when a colleague sent him a copy of an internal announcement stating he was no longer with the company. (C282-283, ¶ 8) Bowron had never resigned and considered himself to have been fired. (Id.) 12. Bowron spent 2018 and most of 2019 handling personal matters, including the death of his mother, the completion of his divorce, and starting a new household. (C 267, C 283, ¶ 9) In 2019, Bowron began developing Metaloq and, in December 2019, founded VectorMinima. (C 267, C 283 ¶ 10) 13. VectorMinima is not a manufacturer. Rather, it operates solely as a research and development company. (C 284 ¶ 12) 14. The Metaloq system developed by Bowron does not rely on any proprietary technology or information. Rather, it is a novel combination of basic, commonly held processes from structural engineering, drilling, welding, and other practices. (C 283-284 ¶ 11)
  6. 6. 6 15. In February 2020, Bowron informed Plaintiffs that he had founded VectorMinima, that it was an R&D company, and that he had developed Metaloq. (C 267-268, C 284 ¶ 13) He even sent Plaintiffs a PowerPoint presentation on Metaloq and VectorMinima. (Id.) In response, Plaintiffs sent Bowron a cease and desist latter accusing Bowron of trademark infringement, misappropriation of trade secrets, and breaching the Agreement’s restrictive covenants. (C 311 (Ex. C)) Bowron’s attorney responded to the cease and desist letter, and neither Bowron nor VectorMinima heard anything more from Plaintiffs until the filing of the present lawsuit. (C 317 (Ex. D)) 16. In March 2020, Bowron attended the 2020 World of Modular convention and tradeshow in Orlando, Florida. (C 285 ¶ 15) The convention is an annual show hosted by the Modular Building Institute, a trade organization. Any member of the public can attend the convention. (Id.) The convention provides a list of all convention attendees to each person attending the event. (Id.) Bowron received such a list of industry attendees when he attended the 2020 convention. (Id.) 17. In October 2020, Defendants advertised a public demonstration of the Metaloq system to be held from October 28th until November 3rd. To advertise the demonstration, VectorMinima put information on its publicly available website. In addition, Bowron posted an announcement about the demonstration through his LinkedIn page. (C 269, C 285 ¶ 14) 18. Late afternoon on Friday, October 30, 2020, Plaintiffs filed the underlying lawsuit, seeking emergency relief. (C 115, C 261) The TRO Motion 19. On Friday, October 30, 2020, Plaintiffs filed an action against Defendants in the Circuit Court of Cook County, Chancery Division, Zekelman Industries, Inc., et al. v. Bowron, et
  7. 7. 7 al., No. 20 CH 06539. (C 5) Along with a Verified Complaint, Plaintiffs filed a Motion for Temporary Restraining Order and Preliminary Injunction (the “TRO Motion”). (C 115, C 118) The TRO Motion was noticed for hearing three days later, on Monday, November 2, 2020. (C 261) 20. In the TRO Motion, Plaintiffs alleged that Bowron was in violation of the non- competition and non-solicitation covenants of his Agreement, that Defendants had misappropriated Plaintiffs’ trade secrets, and that Defendants were infringing on Plaintiffs’ “Vector” trademark. (C 115) 21. In response, Defendants showed that Plaintiffs failed to adequately allege any imminent and irreparable harm. (C 268-269) In particular, Defendants showed that Plaintiffs failed to adequately explain their failure of waiting eight months to file a motion seeking emergency relief in October 2020 based on factual allegations they had known about since February 2020. (Id.) Further, the putative basis of the emergency motion, which was the demonstration Defendants held from October 28 – November 3, 2020, was already over. (Id.) Additionally, at no point in their TRO Motion or other supporting materials did Plaintiffs show that they had lost any actual customers or were in imminent danger of losing any actual customers. (Id.) 22. Defendants also showed that Plaintiffs had not demonstrated any likelihood of success on the merits of their claims. (C 269-278) With respect to their misappropriation claim, Plaintiffs never identified what alleged trade secrets were misappropriated or when, and they failed to include any well-pleaded facts alleging that Defendants used any allegedly misappropriated trade secrets. (C 269-271) Instead, Plaintiffs relied upon broad, conclusory statements lacking any meaningful fact or detail that are insufficient to support the extraordinary
  8. 8. 8 remedy of granting injunctive relief. (Id.) Plaintiffs also failed to adequately demonstrate how it Bowron would inevitably disclose any of their alleged trade secrets. (Id.) 23. Defendants also showed that Bowron was not in violation of the non-competition covenant of his Agreement. (C 271-273) As an initial matter, as interpreted by Plaintiffs, the Agreement is so vague and ambiguous that it is unenforceable, as Bowron would not be able to determine how long the restrictions remain in effect or whether his actions violate the Agreement. (C 272-273) The non-competition covenant runs for the two-year period following the “later of the expiration of the Term or the Date of Termination.” (Id., C 295 §7(a)) However, as used elsewhere in context of the Agreement, “Term” is used unambiguously with reference to the actual duration of Bowron’s employment, which all parties do not dispute ended on January 31, 2018. (C 272) Plaintiffs argue that “Term” also means a static, five-year term ending in May 2022. (C 333) But Plaintiffs’ reading would render the Agreement internally conflicted and unenforceable. Moreover, the narrow definition of “Covered Business” in the non- competition provision only applies to direct manufacturing. Plaintiffs, for the first time in their reply materials in the trial court, argued that it was also a violation of the non-competition covenant to be “greatly interested in” the modular industry (C 331-332), which would expand the non-competition covenant beyond any legitimate protectable business interest and prohibit Bowron from teaching to blogging to meeting and to planning. The only reasonable interpretation of the non-competition covenant is that it expired on January 31, 2020, and thus any alleged actions after that date cannot form the basis of a breach of contract. (C 273) 24. With respect to the non-solicitation covenant, Defendants showed that Plaintiffs were not likely to succeed on the merits of their claim because the non-solicitation covenant’s duration was as vague and ambiguous as duration of the non-competition covenant, as they used
  9. 9. 9 identical language. (C 273-275) Further, Defendants showed that the non-solicitation covenant was overbroad, vague, and unenforceable for two additional reasons. First, it applies not only to customers and employees of Bowron’s former employer (Zekelman), but also to Zekelman’s “parents, related entities, and any of its direct or indirect subsidiaries.” (Id.) Second, it covers customers and employees of these numerous, unrelated entities irrespective of whether Bowron actually had any personal contact with them, or even whether they were customers or employees of Zekelman during Bowron’s employment. (Id.) Additionally, the prohibitions in the non- solicitation covenant prohibit Bowron and his “affiliates” from entering into any “business relationship reasonably deemed competitive” with the business of Zekelman or its parents, related entities, or direct and indirect subsidiaries. (Id.) However, Bowron has no way of knowing who his “affiliates” are or which “business relationship” he or his “affiliates” enter into may be “reasonably deemed competitive” with one of the many covered entities, or who would deem it to be so. (Id.) 25. With respect to the trademark infringement claim, Defendants showed that Plaintiffs did not demonstrate any likelihood of confusion between the two names used: VectorBloc and VectorMinima. (C 275 – 278) Defendants showed that the two names were not similar in appearance or suggestion; that the degree of care to be exercised by consumers is high; that the Plaintiffs’ mark is weak as it entered a crowded field of other trademark owners using the word “vector”; that Plaintiffs provided no evidence of actual confusion among the relevant consuming public, other than a self-serving affidavit from the Plaintiffs themselves; and that Defendants had no intent to palm off their product as that of the Plaintiffs. (Id.)
  10. 10. 10 26. Finally, Defendants demonstrated that the balance of harms weighed heavily in their favor, as the entry of a TRO would be severely detrimental to Bowron and his family. (C 278-279) 27. Plaintiffs filed their reply materials in support of the TRO Motion on November 10, 2020 (C 328), and the Court held a hearing via Zoom on the TRO Motion on November 16, 2020. (R 1) At the hearing, Plaintiffs stated that for purposes of the hearing, they were only seeking a TRO and not a preliminary injunction. (R 16:6-24) 28. On November 20, 2020, the Court issued the November 20 Order, finding that Plaintiffs had shown a “fair question” on the elements of their claims. (C 379) 29. Defendants timely filed a notice of interlocutory appeal pursuant to Supreme Court Rule 307(d) on November 23, 2020. (C 390-392) Need for Relief 30. Defendants respectfully submit that the trial court erred in granting the TRO Motion. Plaintiffs failed to demonstrate, on the manifest weight of the evidence provided, that they satisfied any of the elements needed to obtain a temporary restraining order. Accordingly, Defendants respectfully submit that the November 20 Order should be reversed. 31. In support of this Petition, Defendants refer the Court to their accompanying memorandum of law and the Supporting Record. WHEREFORE, Defendants respectfully request that this Court reverse the trial court’s November 20 Order and remand this matter for further proceedings consistent with the decision and directions of the Appellate Court, and for such other and further relief as the Appellate Court may deem proper.
  11. 11. 11 Dated: November 23, 2020. Respectfully submitted, /s/ James L. Wideikis James L. Wideikis (#6278707) Matthew J. Feery (#6296353) Much Shelist, P.C. 191 N. Wacker Drive, Suite 1800 Chicago, IL 60606 Firm I.D. No. 48345 Telephone: 312-521-2000 Facsimile: 312-521-2100 jwideikis@muchlaw.com mfeery@muchlaw.com Counsel for Defendants Julian Bowron and VectorMinima, Inc.

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