## Facts

- Outsource International, Inc. provided temporary industrial staffing services and maintained computerized records on workers and related pricing and compensation information.
- George Barton worked as a labor-staffing consultant and, as a condition of employment, signed an agreement containing confidentiality and non-compete covenants.
- The agreement restricted Barton for one year after termination from (1) soliciting the employer’s customers, (2) disclosing customer information or business practices, and (3) owning, operating, or working for a competing staffing business within 25 miles.
- A predecessor entity was acquired by Outsource; Barton continued in a similar role under Outsource and managed or serviced multiple offices in the Chicago area.
- After resigning, Barton formed Barton’s Staffing Solutions, Inc. about 12 miles from an Outsource office and hired former Outsource employees.
- Soon after Barton began operating the new firm, multiple Outsource customers that had worked with him shifted their business to his new company.
- Outsource asserted Barton used confidential information and customer relationships developed during employment to compete directly against Outsource.

## Issues

1. Whether the confidentiality and non-compete covenants were enforceable (including whether they were reasonable in scope under applicable law).
2. Whether the district court abused its discretion by granting a modified preliminary injunction enforcing those restrictions.

## Decision

- The Seventh Circuit affirmed the district court’s modified preliminary injunction.
- The court held Outsource showed a sufficient likelihood of success on the merits that Barton violated enforceable restrictive covenants.
- The court agreed Outsource faced irreparable harm absent injunctive relief, including loss of customers and misuse of confidential information and goodwill.
- The court upheld the district court’s tailoring of relief after an evidentiary hearing and found no abuse of discretion in the injunction’s scope.
- Chief Judge Posner concurred in part and dissented in part, expressing concern about aspects of the injunction’s breadth and the use of non-competes.

## Legal Principles

- An employer may have a protectable interest in confidential business information (including worker, pricing, and related operational data) and in customer relationships developed through the employer’s efforts.
- A non-compete and confidentiality covenant may be enforced when the restrictions are reasonable in duration and geographic scope and are tied to protecting the employer’s legitimate interests.
- On appeal, a preliminary injunction is reviewed for abuse of discretion; a district court may enforce restrictive covenants through a narrowed, fact-specific injunction.
- Loss of customer goodwill and threatened misuse of confidential information can support a finding of irreparable harm for preliminary injunctive relief.

## Conclusion

The court upheld a tailored preliminary injunction restricting a former staffing consultant’s competitive activities and disclosure of information, concluding the employer demonstrated protectable interests, likely breach, and irreparable harm, and that the district court reasonably narrowed the relief to fit the circumstances.


Outsource Int'l, Inc. v. Barton, 192 F.3d 662 (7th Cir. 1999)