UNITED STATES DISTRICT COURT

FOR THE

EASTERN DISTRICT OF WISCONSIN

CRAZYLEG, INC., )

)

Plaintiff, )

)

v. )

) CIVIL ACTION NO. 2517-010

)

TERRY COMISKEY, )

)

Defendant. )

)

)

MEMORANDUM IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS INTRODUCTION

This case arises from the Defendant’s new employment at The Red Badger, which is a dance hall located in Madison, Wisconsin, after the Defendant resigned from his former employment at Crazyleg Inc. Compl. 10.

Terry Comiskey is a twenty-four-year-old graduate student in Madison, Wisconsin, who worked long hours on a part-time basis as a disc jockey at Crazyleg, Inc. 5, 12. Prior to Comiskey’s employment at Crazyleg, he was already a self-employed disc jockey and his talent earned him performances at weddings, birthdays, and bat/bar mitzvahs as a master of ceremonies and entertainer. 5. During Comiskey’s employment, Crazyleg provided a regular sound system and lighting, which seemed normal in the disc jockey industry. 6. The restrictive covenant in Comiskey’s employment contract with Crazyleg states that, Comiskey will not work as a disc jockey for any competitor of Crazyleg, for a period of one year 1

after termination of Comiskey’s employment for any reason. Id. 11. Subsequently, Comiskey resigned his employment with Crazyleg in July 2019, and in order to provide for himself as a part-time graduate student, Comiskey took another job as a disc jockey with The Red Badger. 12. Comiskey has filed a motion to dismiss to dispute Crazyleg’s action for the alleged breach of an employment contract and an injunction against Comiskey, wherein Crazyleg is asking for damages in an amount excess of $75,000. 16.

For purposes of this Motion to Dismiss, both parties agree that the only factor in contention is whether the restrictive covenant in Comiskey’s employment contract with Crazyleg is unreasonable for the protection of Crazyleg’s interests. Def.’s Letter. Sept. 1, 2017. Because the restrictive covenant in Comiskey’s employment contract is unreasonable for the protection of Crazyleg’s interests, Comiskey respectfully requests this Court to grant his Motion to Dismiss the Plaintiff’s Complaint.

STATEMENT OF FACTS

Comiskey has been working as a disc jockey in Madison to support himself as a graduate student, and he is seeking to dismiss Crazyleg’s action against him regarding the enforcement of the restrictive covenant in the employment contract. Compl. 5,11. Crazyleg, Inc., is incorporated in Delaware, and is one of the six dance halls located in Madison, Wisconsin. Compl. 1. All six dance halls retain about twenty-five disc jockeys. 9. Comiskey is a graduate student in Madison, Wisconsin, who prior to his employment at Crazyleg, was an established self-employed disc jockey who performed as a disc jockey and master of ceremonies at weddings, birthdays, and bat/bar mitzvahs. 5. During Comiskey’s employment at Crazyleg, Comiskey was occasionally featured as a “star disc jockeys” on 2

Crazyleg’s printed posters, and on its social media page. 6. Furthermore, Crazyleg alleges that it provided Comiskey with the top sound system, lighting and memorabilia. Id. Comiskey worked as disc jockey and entertainer for Crazyleg for almost two years, and in July 2019, he resigned from his employment with Crazyleg. 10. Comiskey’s employment contract contained a restrictive covenant which provides that: The Employee agrees that in the event his or her employment is terminated for any cause or reason, he or she will not thereafter, either directly or indirectly, for a period of one year after leaving the Employer, work as a disc jockey, entertainer, host, or greeter for any competitor of Crazyleg, Inc.

11. However, for Comiskey to earn income and sustain a living, he began working at The Red Badger in August, and The Red Badger is located in the 600 block of State Street, Madison, Wisconsin. 13, with six other disc jockeys under its employment. 12-14. The Red Badger and Crazyleg are both dance halls that offer similar dance hall experience. 9. Customers who patronize The Red Badger also patronize Crazyleg because both dance halls are located approximately 7.5 miles away from each other. Id. 9-13. Crazyleg had experienced a decrease of 3.2% in customer attendance since Comiskey began his employment at The Red Badger. Id. There are five other dance halls in Madison that share the same clientele with Crazyleg. Id. 9-15. Because Comiskey left the employment of Crazyleg, Crazyleg has sued Comiskey for breach of contract, claiming damages, and asking for an injunction that would prevent Comiskey from working. 16.

STANDARD OF REVIEW

Where the plaintiff’s complaint fails to state a claim upon which a relief can be granted, Federal Rule of Civil Procedure 12(b)(6) requires dismissal. Fed. R. Civ. P. 12(b)(6). For a complaint to survive a motion to dismiss plausible, factual allegations in the complaint must be 3

enough to raise a right to relief above the speculative level, assuming that all the allegations in the complaint are true even if doubtful in fact. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007). A plaintiff must provide grounds for his entitlement of relief, and if his claim does not nudge across the line from conceivable to plausible, the plaintiff’s complaint shall be dismissed. Id.

ARGUMENT

Rule 12(b)(6) compels the dismissal of the Complaint because the restrictive covenant in Comiskey’s employment contract is not reasonable for the protection of Crazyleg’s interests.

Comiskey is seeking to dismiss Crazyleg’s action regarding the alleged breach of the restrictive covenant in the Comiskey’s employment contract, and the alleged damages suffered by Crazyleg. Compl. 11-16. By enacting the statute on restrictive covenants in employment contracts, the legislature made a policy choice to place the burden of drafting a reasonable restrictive covenant on the employer, who often wields greater bargaining power and is generally in a better position to show that a restraint is no broader than is necessary to protect the employer’s business. Manitowoc Co. v. Lanning, 906 N.W.2d 130, 131 (Wis. 2018). Since the burden of drafting a reasonable restrictive covenant lies on the employer, the employer also has the burden of proving that a restriction is reasonably necessary for the protection of its interests. Geocaris v. Surgical Consultants, Ltd., 302 N.W.2d 76, 78 (Wis. Ct. App. 1981). An employer must establish five factors to demonstrate that a restraint on an employee is reasonable.Star Direct, Inc. v. Dal Pra, 767 N.W.2d 898, 905 (Wis. 2009). The factors are: (1) whether the restraint is necessary for to protect the legitimate interests of the employer; (2) whether it is reasonable as to duration; (3) whether it is reasonable as to geographical limits; (4) whether it is reasonable as to the employee; (5) whether the restriction is contrary to public policy. Wis. Stat. 4

§ 103.465; Star Direct, 767 N.W.2d at 905. For purposes of this Motion to Dismiss, both parties agree that the only factor in contention is whether the restrictive covenant in Comiskey’s employment contract with Crazyleg is reasonable for the protection of Crazyleg’s interests. See, Def.’s Letter. Thus, Rule 12(b)(6) compels the dismissal of the Complaint because the Complaint fails to demonstrate that Crazyleg has a protectable business interest. A. The restrictive covenant in Comiskey’s employment contract is not reasonably necessary for the protection of Crazyleg’s business interests because Comiskey did not acquire new skills or further training as a disc jockey during his employment with Crazyleg.

An employment contract places an unreasonable restraint on an employee’s subsequent employment where such employee has gained knowledge of the employer’s business methods and trade secrets while under the employer’s training and employment, but the employee did not appropriate such knowledge to the detriment of the employer and did not acquire any additional training or unique skills to enhance his reputation during his employment with an employer. Manitowoc, 906 N.W.2d at 136-37; Techworks, LLC v. Wille, 770 N.W.d 727, 743 (2009); Wausau Med. Ctr. v. Asplund, 514 N.W.2d 34, 37 (Wis. Ct. App. 1994) ; Star Direct, 767 N.W.2d at 905; Chuck Wagon Catering v. Raduege, 88 Wis. 2d 740, 752-54 (1979; Gary Van Zeelnad Talent Inc, v. Sandas, 84 Wis. 2d 202, 214-16 (1978); Zimmermann v. Brennan, 254 N.W.2d 719, 721 (Wis. 1977); Behnke v. Hertz Corp., 235 N.W.2d 690, 693 (Wis. 1975); Lakeside Oil Co. v. Slutsky, 98 N.W.2d 415, 416 (Wis. 1959). A restrictive covenant is enforceable against an employee when the employee has gained knowledge of the employer’s business and the employee poses a threat to the employer’s business due to the special relationships the employee has developed with the employer’s customers. Star Direct, 767 N.W.2d at 906. In Star Direct, the employee was a route salesperson in a very competitive business. Route salespeople generally pose an elevated threat to the 5

employer’s business due to the special relationships, rapport, and goodwill they develop with the employer’s customers while in the employer’s service. See, Chuck Wagon Catering v. Raduege, 88 Wis. 2d 740, 752-54 (1979); See also, Gary Van Zeelnad Talent Inc, v. Sandas, 84 Wis. 2d 202, 214-16 (1978) (describing the special relationship for protection from route salespeople, but concluding that the former employee was akin to a non-route salesperson). The court held that the employee would not simply engage in ordinary competition with the employer if permitted to interfere with the employer’s customers, but that the employee would have a competitive advantage, and such advantage would be detrimental to the employer. Star Direct 767 N.W.2d at 909. Therefore, the employer’s restrictive covenant against the employee was reasonable. Id. When an employee gains knowledge of the employer’s trade secrets through training and appropriates such knowledge or trade secrets to the detriment of the employer, a restrictive covenant is deemed enforceable against such an employee . Techworks, LLC v. Wille, 770 N.W.d 727, 743 (2009); Lakeside Oil, 98 N.W.2d at 416; Sandas, 84 Wis. 2d 202, 214-16; Behnke, 235 N.W.2d at 693. For instance, in Lakeside Oil, the employee received on-the-job training regarding the employer’s petroleum business and also had access to the employer’s sales and delivery records. Id at 417. The employee’s employment as a salesman gave him the opportunity to become acquainted with the employer’s customers. Id. Because the employee had acquired special knowledge of the source of supply, methods of distribution, and the special needs of the employer’s customers, the court held that these were enough skills and information that would enable the employee to start a competing business. 98 N.W.2d at 420. Therefore, such investment on an employee would justify the enforcement of the restrictive covenant against the employee. Id. Furthermore, in Behnke, the employee resigned her employment as a customer service personnel in a car rental company, and her employment contract contained a restrictive 6

covenant which prohibited the employee from working for another car rental company for a period of one year. Id at 692. The court held that the restrictive covenant was unreasonable because such restriction was not related to the employer’s trade secrets and appropriation of customers list which the employee could subsequently use to the employer’s detriment. Id. A restrictive covenant in an employment contract cannot be enforced against an employee where there is no proof that the employee’s reputation was enhanced during his employment, or that the employer’s interests would be jeopardized upon termination of the employee’s contract. Wausau Med., 514 N.W.2d at 37. Therefore, if there are no special circumstances between the employer and employee, the enforcement of the restrictive covenant may be unreasonable. Lakeside Oil, 98 N.W.2d at 419. For instance, in Wausau Medical, the employer’s concern in the suit against the employee was the employee’s reputation as a medical practitioner was enhanced due to the employee’s association with the employer’s clinic, and such association made the employee a competitor. Id. at 37. However, the court held that the restrictive covenant in the employee’s contract was unenforceable because the employee did not show any client referral at the termination of his employment, which he might have used to enhance the employee’s clientele and medical practice to the employer’s detriment. Id. Where an employee has not acquired unique skills under his employment, the employer does not acquire a protectable interest where such skills do not pose a threat to the employer’s business. Zimmermann, 254 N.W.2d at 721. In Zimmermann, the employee who was a commercial artist, resigned from his employment in an advertising firm and joined another public relations firm with limited commercial advertising services. Id. at 721 The employee brought an action against his former employer who sought to deny the employee’s entitlement claim under the employer’s profit share plan, on grounds that the employee was bound to forfeit 7

such profit share if the employee terminates his employment, and subsequently works for another competitor. Id. The court stressed that the such requirement against the employee was a restraint on employment, and also that neither the employer’s business nor the employee’s services in his subsequent employment are unique to adjudge the employer’s interest as protectable. Id; 3M v. Pribyl, 259 F.3d 587, 602 (7th Cir. 2001) (stating that evidence that an advertising art firm confined its enterprise solely to commercial art, design and graphics and that public relations firm, which commercial artist joined after leaving the advertising art firm, performed only limited services in commercial art and graphics field as a side line and accommodation to its public relations customers sustained determination that the firms were not competitive within advertising art firm's profit sharing plan provision for forfeiture of rights of any employee who, after termination, became employed in a competitive business). In Comiskey’s case, the Plaintiff’s Complaint does not sufficiently justify the reasons for enforcing the restrictive covenant against Comiskey. First, the restrictive covenant in Comiskey’s employment contract with Crazyleg is unreasonable because it restricts Comiskey’s access to labor and future employment. Compl. 11.Furthermore, the Complaint does not allege enough facts to show that Crazyleg has sufficient interests to justify the restrictions against Comiskey because Comiskey did not acquire any additional training or skills to enhance his reputation during his employment with Crazyleg. Comiskey was already a self-employed disc jockey, master of ceremonies, and entertainer who performed at several social events, weddings, and bat/bar mitzvahs before his employment at Crazleg. 5.In contrast to the employee who received on the job-training regarding his employer’s business in Lakeside Oil, Comiskey did not receive any special training nor did he acquire new skills to enhance his reputation as disc jockey while employed at Crazyleg. Id. Also, the Complaint alleges that Crazyleg promoted Comiskey 8

as a “star disc jockey” on at least two occasions, by featuring Comiskey’s image on its posters and Instagram account, and providing Comiskey with top sound system, lighting, and memorabilia to enhance his reputation. Compl. 5. However, these alleged promotions were done on Crazyleg’s general social media pages, and these alleged promotions were directly beneficial to Crazyleg as business because it increased Crazyleg’s popularity and patronage. 2, 7-9. In addition, the alleged top sound system, lighting, and memorabilia are items that are provided by similar dance halls that offer similar experience as Crazyleg because such items are practicable in the disc jockey industry. 6.

The Complaint does not sufficiently allege that Crazyleg’s interest were jeopardized due to Comiskey’s resignation from Crazyleg. The 3.2% decrease in customer attendance at Crazyleg since Comiskey’s resignation was because of six similar dance halls in Madison, all of roughly the same size and offering similar dance hall experiences to customers. 9 &15. Similar to Wausau Medical, there is no evidence suggesting that Comiskey might have referred Crazyleg’s customers to The Red Badger which will justify the decline in customer attendance. 15. Therefore, Crazyleg’s interests are not jeopardized because of Comiskey’s employment at The Red Badger. Id.

The Complaint fails to allege sufficient facts to show that Comiskey’s services as a disc jockey at Crazyleg were unique enough to protect Crazyleg’s interests and restrict Comiskey from gaining subsequent employment. According to the Complaint, there are six similar dance halls in Madison, all of roughly the same size and offering similar dance hall experiences to customers. 9. Also, these dance halls retain about twenty-five disc jockeys and Crazyleg can easily hire a replacement for Comiskey among the pool of disc jockeys. Id. 9

Furthermore, the Complaint fails to show that Comiskey appropriated the Crazyleg’s business methods or trade secrets to the detriment of Crazyleg, which will justify an alleged protectable interest. Similar to Behnke, the purported enforcement of the restrictive covenant against Comiskey is not related to Crazyleg’s business secrets and appropriation of customers list which resulted in the decline and adjusted attendance at Crazyleg. 15. Crazyleg’s seasonal adjusted attendance is as a result of other similar dance halls located in Madison, Wisconsin, which offer similar dance hall experiences to customers. 9. Finally, where the restrictive covenant in Comiskey’s employment contract is not reasonably necessary for the protection of Crazyleg’s business interests, this Court will take a comprehensive approach to draw inferences and determine whether the Plaintiff’s Complaint demonstrates sufficient facts to enforce the restrictive covenant against Defendant.

CONCLUSION

The Complaint still fails to demonstrate that Comiskey’s reputation was enhanced during his employment at Crazyleg, and thus Crazyleg’s interests are not reasonable to justify the enforcement of the restrictive covenant against Comiskey. Given that Crazyleg cannot establish all five elements of reasonableness, the Defendant respectfully requests this Court to grant his Motion to Dismiss the Plaintiff’s Complaint under Rule 12(b)(6). Respectfully submitted,

Ikenna Uhuegbu

DATED: February 6, 2020 Attorney for the Defendant 10

CERTIFICATE OF SERVICE

I, Ikenna Uhuegbu, attorney for the Defendant, certify that on February 6, 2020, I served upon the Plaintiff a complete and accurate copy of this Memorandum in Support of the Defendant’s Motion to Dismiss by placing a copy in the United States Mail, sufficient postage affixed and addressed as follows:

Jon Wright, Esq.

Wynn & Wright, P.C.

100 N. 4th Street, Suite C1313

Madison, WI 53203

414-***-****

DATED: February 6, 2020 Attorney for the Defendant: Ikenna Uhuegbu

550 14th Rd. S

Apt. 1515

Arlington, VA 22202

202-***-****

11

LEONARD I. UHUEGBU

550 14th Rd S

Apt. 1515

Arlington, VA 22202.

(p) 202 378- 4700 (e) adkbmv@r.postjobfree.com

PROFESSIONAL EXPERIENCE

Diamond Bank Plc,Lagos, Nigeria Oct. 2010 – July 2018 Legal Officer/In-House-Counsel

● Provided in-house compliance services that reasonably supported business teams of the bank, including reviewing and approving transactions that complied with relevant laws, policy regulations, and transaction approval conditions.

● Drafted and reviewed agreements for collateralized credit facilities granted to high net-worth customers of the bank.

● Provided legal counsel to the bank’s credit management and analysis team regarding collateral proposition by customers prior to consummation of loan facilities. This included making recommendations for policy change in the bank concerning the practicability of realizing certain collaterals and liaising with various stakeholders to identify the legal risks that the bank faced and advising on possible solutions in compliance with internal and external regulatory policies.

● Managed registration of properties or assets pledged by customers as collateral for credit facilities, at the appropriate registry.

● Managed trustees in charge of shared collateral between the bank and other consortium of lenders.

Diamond Mortgages Limited (subsidiary company) Sept. 2009 - Oct. 2010 Legal Intern

● Provided administrative support as a legal intern by reviewing legal mortgage documents and supervising external solicitors on registration of mortgage deeds on behalf of the bank.

EDUCATION

Washington College of Law J.D. Candidate, May 2021 American University, Washington DC

Nigerian Law School, Abuja, Nigeria Barrister at Law, Sept. 2009

Abia State University, Uturu, Nigeria Bachelor of Laws, Aug. 2007

PROFESSIONAL DEVELOPMENT

● Member, Nigerian Bar Association

● Restral Consulting Limited: Effective Business Writing Skills

● Norton Rose Fulbright LLP, Public-Private-Partnership and Concession Agreements

● Jackson Etti & Edu LP, Intellectual Property Survey, Nov. 2013 12

SKILLS AND INTERESTS

● Legal writing and research: Proficient on the use of LexisNexis and Westlaw

● Provided pro bono services to small businesses by registering new businesses with the Corporate Affairs Commission in Nigeria.

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