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Court Analyzes Nonsolicitation Provisions of Agreement (Wednesday, December 13, 2017)

Quality Transportation Services, Inc. v. Thompson Trucking, Inc., 2017 IL App (3d) 160761 involved a contract dispute arising from the language of a transportation brokerage agreement.

The agreement contained a nonsolicitation provision in paragraph 19, which stated, in relevant part:

“CARRIER will not solicit traffic from any [s]hipper, consignor, consignee, or customer of Broker where (1) the availability of such traffic first become[s] known to CARRIER as a result of BROKER’S efforts, or (2) the traffic of the shipper, consignor, consignee or Customer of BROKER was first tendered to CARRIER by BROKER. If CARRIER breaches this Agreement and directly or indirectly solicits traffic from customers of BROKER and obtains traffic from such customer during the term of this Agreement or for twelve (12) months thereafter, CARRIER shall be obligated to pay BROKER, for a period of fifteen (15) months thereafter, commission in the amount of thirty-five percent (35%) of the transportation revenue resulting from traffic transported for the Customer, and CARRIER shall provide BROKER with all documentation requested by BROKER to verify such transportation revenue.”

Quality Transportation Services (QTS) filed an amended complaint alleging Mark Thompson Trucking, Inc. (MTT) solicited one of QTS’s customers, US Silica Company (USS) in violation of the nonsolicitation clause of the agreement between QTS and MTT.

MTT denied that it violated the nonsolicitation provision in the agreement and filed a motion for summary judgment, which was granted by the circuit court.

On appeal, QTS argued that a genuine issue of material fact existed as to whether MTT’s conduct violated the nonsolicitation provision of the contract QTS sought to enforce.

The term “solicit” was not defined in the agreement. However, both parties agreed that it was appropriate to use the definition of “solicitation” contained in Black’s Law Dictionary, which defines the term as “[t]he act or an instance of requesting or seeking to obtain something” and “[a]n attempt or effort to gain business. The parties further agreed that the mere passive acceptance of business would not violate the terms of the nonsolicitation provision because the term “solicitation” connoted taking some affirmative measures.

Illinois law provided some guidance on the type of conduct that constitutes solicitation. In Tomei v. Tomei, 235 Ill. App. 3d 166, 170 (1992), the appellate court stated that “[w]hether a particular client contact constitutes a solicitation, depends upon the method employed and the intent of the solicitor to target a specific client in need of his services.” There, the court held that “the direct solicitation of insurance customers, as opposed to a general advertisement, suggests a private communication directed at a person or persons, known by the solicitor to have an immediate or potential need for insurance.”

QTS argued that Tomei supported its argument that a proper analysis of whether a party has “solicited” business involves a fact-intensive inquiry of multiple considerations regarding the conduct of each party.

It was undisputed that Janice Casey, acting as an agent for USS, initiated the first phone call to Thompson in early 2015. However, following the first telephone call, there were additional communications arguably initiated by MTT after large gaps of time that followed Casey’s initial phone call. Based on a de novo standard of review, when viewing the evidence in the light most favorable to the nonmovant, reasonable minds could differ as to whether MTT’s multiple and arguably separate contacts with USS violated the nonsolicitation provision of the agreement between QTS and MTT.

While certain facts were not contested, these facts could logically support different conclusions regarding MTT’s intent to solicit business away from QTS for the same routes that MTT was covering for QTS as part of the agreement. The appeals court reversed the trial court’s grant of summary judgment in favor of MTT and remanded the matter for further proceedings to determine whether MTT’s conduct amounted to solicitation in violation of the agreement.

As a final matter, the appeals court addressed whether the nonsolicitation provision was unenforceable, as MTT contended. The trial court did not expressly address this issue. The question of whether a restrictive covenant is enforceable is a question of law, the determination of which is reviewed de novo on appeal. While a contract in total and general restraint of trade is void as against public policy, a restrictive covenant that imposes a partial restraint on trade will be upheld if the restraint is reasonable and the agreement is supported by consideration.

The court of appeals concluded that QTS had a legitimate interest in protecting its customer relationship with USS pertaining to a very finite number of routes MTT had driven on behalf of QTS. As QTS argued, invalidating the nonsolicitation provision at issue would completely undermine the business of brokers like QTS. Contrary to MTT’s contentions, there was also sufficient evidence in the record to show that QTS had a significant, longstanding business relationship with USS pertaining to the routes at issue. MTT also asserted that QTS did not have a “near-permanent relationship” with USS. However, whether QTS has a “near-permanent relationship” with USS is no longer outcome-determinative. See Reliable Fire Equipment Co., 2011 IL 111871, 43 (stating the previously accepted two-factor test, in which a near-permanent customer relationship and the employee’s acquisition of confidential information through his employment are determinative, is no longer valid). Instead, whether a legitimate business interest exists is based on the totality of the facts and circumstances of each case.

Here, the nonsolicitation provision was narrowly tailored to protect-- but not exceed-- QTS’s legitimate business interest. The restriction was limited to a one-year period after the termination of the agreement and only prohibited MTT from soliciting work directly from QTS’s customers for the particular traffic that MTT had either hauled or became aware of as a result of QTS’s efforts. The agreement allowed MTT to accept unsolicited business from USS. Given the very limited and reasonable restrictions of the provision, the court concluded the nonsolicitation requirement did not impose an undue hardship on MTT and was not injurious to the public.


· Michael R. Lied
· Howard & Howard Attorneys PLLC
· One Technology Plaza, 211 Fulton Street, Suite 600, Peoria, IL 61602
· (309) 999-6311
· MLied@howardandhoward.com

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