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Illinois Federal Court Questions Fifield

A recent Illinois federal court decision has called into question the much begrudged holding from the Illinois Appellate Court for the First District, First Division, Eric Fifield and Enterprise Financial Group,  inInc. v. Premier Dealer Services, Inc., 373 Ill. Dec. 379, 993 N.E. 2d 938 (Ill. App. Ct. June 24, 2013).

The Fifield Decision

 In Fifield, the Illinois Appellate Court heard an appeal from the Circuit Court of Cook County, which had granted a motion for declaratory relief filed by plaintiffs, an employee and current employer, against the defendant former employer. The Cook County Court held the nonsolicitation and noncompetition provisions of the employment agreement were unenforceable as a matter of law for lack of adequate consideration.  The Appellate Court, assessing the issue of consideration for post-employment restrictions, concluded, “there must be at least two years or more of continued employment to constitute adequate consideration in support of a restrictive covenant” – even in the case where the employee received an offer of employment, contingent on his agreement to the nonsolicitation and noncompetition provisions and the employee voluntarily resigned. Id. at 944.  As Plaintiff had worked for defendant Premier far less than the two-year threshold, the Appellate Court affirmed the judgment of the Cook County court.

This holding was somewhat radical given the employee had received a conditional offer of employment andvoluntary resignation, but the consideration was still insufficient to enforce the agreement.  Despite the stir caused by this decision, the Illinois Supreme Court declined to review it.

A Recent Federal Court Departure from Fifield

At least one federal judge does not agree with the Fifield decision.  Recently, the Northern District of Illinois decided Montel Aetnastak, Inc. and Montel Inc. v. Krstine Miessen a/k/a Kristine N. Schneider, Bradford Systems Corporation and Space Saver Corporation , No. 13 C 3801, 2014 U.S. Dist. LEXIS 11889 (N.D. Ill. Jan. 28, 2104), which is a departure from the holding in Fifield.  As to the issue of whether a fifteen month employment was sufficient consideration, Judge Ruben Castillo, stated that “Illinois law does not, however, provide a clear rule to apply in this instance.”  Judge Castillo cited to Fifield and agreed the former employee needed a “substantial period” of employment to generate consideration, but he also referenced other Illinois appellate court cases in which employment for a year was considered a “substantial period” of employment.  As such, Judge Castillo concluded, “Both the length of her term of employment, along with her voluntary resignation, led the Court to conclude that she was provided with a ‘substantial period’ of employment. Therefore, Miessen was provided adequate consideration to support the enforceability of the employment agreement.”  Id. at *46.

Lessons

The law in Illinois remains unsettled.  It is unclear if or when the Illinois Supreme Court will ever rule on this issue.  In the wake of these decisions, we are reminded that drafting a favorable forum provision and selecting the right courthouse venue may prove to be the critical difference until this issue is resolved.

Jackson Lewis P.C. © 2017

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About this Author

Conrad Shawn Kee, e-Discovery Attorney, Jackson Lewis Law Firm
Shareholder

Conrad Shawn Kee in the Denver and Stamford offices of Jackson Lewis P.C.  Mr. Kee is a member of the firm’s e-Discovery and Workplace Technology Practice Group, the co-chair of the firm’s Trade Secret Protection and Non-Competition Practice Group, the director of the Jackson Lewis E-Discovery U™ program, and a member of the firm’s International Employment Issues and Corporate Governance and Internal Investigations Practice Groups.  Shawn was selected by peers and in-house counsel to be listed in Chambers USA Guide to America’s Leading Business Lawyers for several years.

(203) 961-0404
A. Robert Fischer, Principal Office Litigation Manager, Unfair Competition Lawyer, Attorney
Principal and Office Litigation Manager

Rob Fischer is a Principal and the Office Litigation Manager in the Austin, Texas, office of Jackson Lewis P.C. He served for more than a decade as the national co-chair of the firm’s Non-Competes and Protection Against Unfair Competition Practice Group.

A significant part of Mr. Fischer’s practice focuses on drafting, and litigating claims regarding, contracts. That practice includes litigating claims on behalf of employers against former employees (and often their new employers) for breach of non-competition agreements, and also for related claims such as theft of trade secrets, breach of the duty of loyalty, and unfair competition. Mr. Fischer also advises departing employees (and their new employers) regarding contractual and other legal rights and obligations, and defends challenges to their new employment. He has litigated non-compete and trade secrets claims in Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Maryland, Massachusetts, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Texas and Washington, D.C.

512-362-7100
Peter R. Bulmer, Disability Attorney, Jackson Lewis Law Firm
Shareholder

Peter R. Bulmer is a Shareholder in the Chicago, Illinois office of Jackson Lewis P.C.

Mr. Bulmer represents management nationwide in all facets of employment and labor law.  He counsels management on employment matters and preventive measures to avoid litigation and, where litigation cannot be avoided, he defends employers before state and federal administrative agencies and courts.  He also represents employers in prosecuting and defending claims of unlawful competition.

312-787-4949