Gastroentrology Consultants of the North Shore, S.C. v. Meiselman , 2013 IL App (1st) 123692 ( 2013 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
Gastroenterology Consultants of the North Shore, S.C. v. Meiselman,
2013 IL App (1st) 123692
Appellate Court GASTROENTEROLOGY CONSULTANTS OF THE NORTH SHORE,
Caption S.C., Plaintiff-Appellant, v. MICK S. MEISELMAN, J.D.,
NORTHSHORE UNIVERSITY HEALTHSYSTEM MEDICAL
GROUP, INC., and NORTHSHORE UNIVERSITY HEALTHSYSTEM,
Defendants-Appellees.
District & No. First District, First Division
Docket No. 1-12-3692
Filed April 15, 2013
Held Plaintiff medical group’s motion for a preliminary injunction against
(Note: This syllabus defendant’s solicitation or treatment of plaintiff’s former patients except
constitutes no part of in a medical emergency was properly denied, since plaintiff was not
the opinion of the court entitled to enforcement of the restrictive covenant in defendant’s
but has been prepared employment contract with plaintiff, especially when plaintiff failed to
by the Reporter of establish a legitimate business interest in need of protection after
Decisions for the defendant resigned from the group or that it had a near-permanent
convenience of the relationship with patients defendant treated.
reader.)
Decision Under Appeal from the Circuit Court of Cook County, No. 11-CH-31067; the
Review Hon. Lee Preston, Judge, presiding.
Judgment Affirmed and remanded.
Counsel on Dahl & Bonadies, LLC, of Chicago (James E. Dahl and Paul N.
Appeal Bonadies, of counsel), for appellant.
McGuire Woods, LLP, of Chicago (Jeffrey C. Clark and James J.
Schanaberger, of counsel), and Kamensky Rubinstein Hochman & Delott,
LLP, of Lincolnwood (Stuart Gimbel, of counsel), for appellees.
Panel PRESIDING JUSTICE HOFFMAN delivered the judgment of the court,
with opinion.
Justices Cunningham and Delort concurred in the judgment and the
opinion.
OPINION
¶1 The plaintiff, Gastroenterology Consultants of the North Shore, S.C., appeals from an
order of the circuit court of Cook County which denied its motion for a preliminary
injunction, restraining the defendant, Mick S. Meiselman, M.D., from soliciting its patients
and from treating its patients except in situations involving a genuine medical emergency.
For the reasons which follow, we affirm the judgment of the circuit court.
¶2 The evidentiary material in the record supports the following factual scenario. In 1996,
Meiselman, along with three other physicians, formed the plaintiff corporation. All of the
doctors associated with the plaintiff, including Meiselman, were required to enter into an
employment agreement containing a restrictive covenant which prohibited them, for a period
of 36 months following the termination of their employment, from soliciting patients of the
plaintiff or from treating any of the plaintiff’s patients directly or in connection with any
entity engaged in a competitive business and located within a 15-mile radius of each of the
plaintiff’s offices and the Evanston Hospital facilities.
¶3 On December 14, 2010, Meiselman notified the plaintiff that he was terminating his
employment, effective April 14, 2011, to accept a position with NorthShore University
HealthSystem Medical Group, Inc. (NorthShore). as its chief of advanced therapeutic
endoscopy. On April 20, 2011, Meiselman started work for NorthShore.
¶4 On June 9, 2011, the plaintiff sent a letter to Meiselman accusing him of breaching the
restrictive covenant in his employment agreement. Meiselman readily admits that, in July
2011, he began treating any patient who sought out his services, including patients he had
treated while in the employ of the plaintiff.
¶5 On September 1, 2011, the plaintiff filed the instant action seeking both preliminary and
permanent injunctive relief against Meiselman for breach of the restrictive covenant
contained within his employment agreement. In addition, the plaintiff sought a judgment
against NorthShore and NorthShore University HealthSystem for both compensatory and
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punitive damages predicated upon a theory of tortious interference with contract.
¶6 On October 13, 2011, the plaintiff filed a motion for a preliminary injunction against
Meiselman, seeking to restrain him from soliciting any of its patients and from treating its
patients except in situations involving a genuine medical emergency. The plaintiff alleged,
inter alia, that, in violation of the restrictive covenant contained within his employment
agreement, Meiselman began soliciting and treating its patients beginning at some time after
April 14, 2011.
¶7 Following an evidentiary hearing, the trial court denied the plaintiff’s motion for a
preliminary injunction, finding, inter alia, that the plaintiff failed to prove that: it had any
legitimate protectable interest in the patients being treated by Meiselman; the restrictive
covenant in Meiselman’s employment agreement is reasonable in geographical scope; it has
suffered or will suffer irreparable harm if the restrictive covenant is not enforced; and it has
a reasonable likelihood of success on the merits. Thereafter, the plaintiff timely filed this
interlocutory appeal pursuant to Supreme Court Rule 307(a) (Ill. S. Ct. R. 307(a) (eff. Feb.
26, 2010)), contending that: (1) the trial court applied an incorrect standard in determining
the existence of a legitimate business interest in need of protection; (2) the trial court’s
findings that the restrictive covenant in Meiselman’s employment agreement is not
reasonable in geographical scope and that it had not suffered, and will not suffer, irreparable
harm if the restrictive covenant is not enforced are against the manifest weight of the
evidence; and (3) the trial court’s determination that it failed to show an extreme emergency
in need of redress is both against the manifest weight of the evidence and irrelevant.
¶8 In order to be entitled to the issuance of a preliminary injunction in this case, the plaintiff
was required to establish by a preponderance of the evidence that (1) it possesses a clear right
or interest needing protection, (2) no adequate remedy at law exists, (3) irreparable harm will
result if an injunction is not granted, and (4) there is a likelihood of success on the merits of
the case. Southern Illinois Medical Business Associates v. Camillo, 190 Ill. App. 3d 664, 671
(1989).
¶9 The decision to grant or deny a preliminary injunction is a matter committed to the sound
discretion of the trial court, and its decision will not be disturbed on appeal absent an abuse
of that discretion. Callis, Papa, Jackstadt & Halloran, P.C. v. Norfolk & Western Ry. Co.,
195 Ill. 2d 356, 366 (2001). When, however, the issue presented is whether the trial court
applied an incorrect legal test to the evidence, the question is one of law and our review is
de novo. In re A.H., 207 Ill. 2d 590, 593 (2003).
¶ 10 A contract in total and general restraint of trade is void as against public policy.
However, a restrictive covenant, ancillary to a valid employment relationship, will he upheld
if the restraint is reasonable. Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871,
¶ 16. A restrictive covenant is reasonable only if it: “(1) is no greater than is required for the
protection of a legitimate business interest of the employer-promisee; (2) does not impose
undue hardship on the employee-promisor, and (3) is not injurious to the public.” Reliable
Fire Equipment Co., 2011 IL 111871, ¶ 17. The protection of the employer’s legitimate
business interest is a long-established component in this three-prong rule of reason. Reliable
Fire Equipment Co., 2011 IL 111871, ¶ 30. Although the three-prong test is the standard for
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determining the reasonableness of a restrictive covenant, its application is unstructured; there
is no inflexible formula. Reasonableness must be decided on an ad hoc basis. Reliable Fire
Equipment Co., 2011 IL 111871, ¶ 33. Whether the employer has a legitimate business
interest in need of protection is based upon the totality of the circumstances of the individual
case. “Factors to be considered in this analysis include, but are not limited to, the near-
permanence of customer relationships, the employee’s acquisition of confidential
information through his employment, and the time and place restrictions.” Reliable Fire
Equipment Co., 2011 IL 111871, ¶ 43. The plaintiff argues that the circuit court applied an
incorrect test in determining whether it possessed a legitimate business interest in need of
protection. According to the plaintiff, the circuit court applied the “Near-Permanent
Customer Relationship Test” which was repudiated by the supreme court in Reliable Fire
Equipment Co., 2011 IL 111871, ¶¶ 37-40. We disagree.
¶ 11 Our reading of the circuit court’s memorandum opinion reflects that it analyzed the
question of whether the plaintiff has a legitimate business interest in need of protection based
upon the totality of the circumstances in this case. It is true that the circuit court considered
whether the plaintiff had a near-permanent relationship with the patients being treated by
Meiselman. It is also true, however, that the circuit court considered whether Meiselman
misappropriated any confidential information that he acquired while employed by the
plaintiff and, subsequent to the termination of his employment, used that information for his
own benefit; and the geographic restrictions contained in the employment agreement.
Additionally, the circuit court examined issues, such as: the level of the plaintiff’s investment
of time, effort or money in the development of Meiselman’s relationship with his patients,
Meiselman’s patient-referral sources, whether the plaintiff assisted Meiselman in the
development of his professional practice through advertising or marketing, Meiselman’s
maintenance of a separate office where he treated his patients, the fact that Meiselman, not
the plaintiff, billed for his services, and whether Meiselman would not have developed his
relationship with his patients and referral sources “but for” his affiliation with the plaintiff.
To us, it is clear from the the circuit court’s memorandum opinion that it made the
determination of whether the plaintiff established a legitimate business interest in need of
protection based upon the totality of the circumstances in this case.
¶ 12 Next, the plaintiff argues that the circuit court’s finding that it failed to establish that it
possessed a legitimate business interest in need of protection is against the manifest weight
of the evidence. Again we disagree.
¶ 13 Factual determinations made by a trial court sitting without a jury are entitled to great
deference and will be disturbed on review only when they are against the manifest weight of
the evidence. Bazydlo v. Volant, 164 Ill. 2d 207, 214-15 (1995). Factual findings are against
the manifest weight of the evidence only when an opposite conclusion is clearly apparent or
when they appear to be unreasonable or not based upon the evidence. Leonardi v. Loyola
University of Chicago, 168 Ill. 2d 83, 106 (1995).
¶ 14 The testimony at the evidentiary hearing conducted by the trial court prior to ruling on
the plaintiff’s motion for a preliminary injunction establishes that, prior to the formation of
the plaintiff corporation, Meiselman practiced gastroenterology for approximately 10 years
in the area later serviced by the plaintiff, treating thousands of patients. Meiselman, along
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with Drs. James Rosenberg, Tom Neumann and Tat Tsang, formed the plaintiff corporation
in 1996. Meiselman testified that, from the very beginning of his association with the
plaintiff, he continued treating patients, and accepting referrals from physicians, with whom
he had developed relationships prior to affiliating with the plaintiff. After the formation of
the plaintiff corporation, Meiselman preserved his independent relationship with his patients.
According to Meiselman, the plaintiff did not introduce him to either his patients or his
physician-referral sources. Rosenberg, the plaintiff’s president, admitted that physicians
would refer patients to Meiselman individually, not to the plaintiff. The plaintiff did not
advertise, promote or market Meiselman’s practice, and, with the exception of administrative
support, the plaintiff was not materially involved with his practice. Meiselman billed for his
services, not the plaintiff; and his compensation was based upon the revenue generated by
his independent practice. Meiselman maintained his own office and had his own telephone
number. Based upon the testimony at the hearing, the circuit court correctly concluded that
there was no evidence that the plaintiff ever established a near-permanent relationship with
the patients treated by Meiselman.
¶ 15 Following the hearing, the circuit court concluded that the plaintiff had failed to establish
that it had a legitimate business interest in need of protection. Since we cannot say that an
opposite conclusion than that reached by the trial court is clearly apparent, its conclusion in
this regard is not against the manifest weight of the evidence.
¶ 16 In the absence of a legitimate business interest in need of protection, the plaintiff cannot
satisfy the three-prong test of reasonableness necessary to entitle it to judicial enforcement
of the restrictive covenant contained in Meiselman’s employment agreement. Reliable Fire
Equipment Co., 2011 IL 111871, ¶¶ 17-34.
¶ 17 Therefore, we need not address the other issues raised by the plaintiff in its brief before
this court, relating to the propriety of the trial court’s findings relating to the geographical
scope of the restrictive covenant. Reliable Fire Equipment Co., 2011 IL 111871, ¶ 20; see
also House of Vision, Inc. v. Hiyane, 37 Ill. 2d 32, 38-39 (1967).
¶ 18 Based upon the foregoing analysis, it is clear to us that there is little likelihood of the
plaintiff’s success on the merits of this case (Southern Illinois Medical Business Associates,
190 Ill. App. 3d at 671) and, therefore, the trial court did not abuse its discretion (see
Lonergan v. Crucible Steel Co. of America, 37 Ill. 2d 599, 612 (1967)) when it denied the
plaintiff’s motion for a preliminary injunction to restrain Meiselman from soliciting the
plaintiff’s former patients and from treating its patients except in situations involving a
genuine medical emergency. Consequently, we affirm the judgment of the circuit court and
remand this matter for further proceedings consistent with this opinion.
¶ 19 Affirmed and remanded.
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