February 8, 2023

Volume XIII, Number 39

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February 07, 2023

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February 06, 2023

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Another Illinois Appellate Decision Applies Fifield, But A Dissent Suggests That The Issue Of What Constitutes Adequate Consideration For A Restrictive Covenant In Illinois Remains Open For Judicial Discussion

Readers know that long settled understandings regarding what constitutes adequate consideration for a restrictive covenant in Illinois were turned upside down when the First District Appellate Court in Illinois held in Fifield v. Premier Dealer Services, 2013 IL App. (1st) 120327  that, absent other consideration, two years of employment are required for a restrictive covenant to be supported by adequate consideration, regardless of whether the covenant was signed at the outset of employment or after, and regardless of whether the employee quit or was fired.

The Illinois Supreme Court declined to hear Fifield, and three federal judges in Illinois have declined to apply it.  However, the only other Illinois appellate court decision to address Fifield applied it without dissent.

Last week, the First District Appellate Court issued another decision applying Fifield, holding in McInnis v. Oag Motorcycle Ventures, Inc., 2015 IL (1st) 13097 that, in the absence of other consideration, 18 months of employment was not sufficient consideration for a restrictive covenant.  By itself, this ruling was not particularly noteworthy, except to the extent that the court confirmed that other consideration, combined with employment of less than 24 months, can constitute adequate consideration for a restrictive covenant.

What is noteworthy about this ruling, however, is the dissenting opinion by Justice Ellis, in which he wrote as follows:

I do not believe that a per se rule exists in Illinois, requiring that an at-will employee remain employed for at least two years – not one day less – after signing a restrictive covenant before sufficient consideration is found to exist.  Nor do I believe that a bright-line, two-year rule is warranted.  I also believe that the circumstances under which plaintiff left employment – whether he left voluntarily or was fired – are relevant to the determination.  Cases like these are inherently fact-specific, and I do not believe that this area of the law is the place for bright-line rules that remove relevant facts from consideration.

While a dissent carries no weight by itself, it may foretell a continued judicial discussion on this issue, particularly given that three different federal judges in Illinois have declined to follow Fifield based on their prediction that the Illinois Supreme Court would likely disagree with it.

Given that state supreme courts in Wisconsin and Kentucky both recently weighed in on whether mere continued employment is sufficient consideration for a non-compete (“yes” in Wisconsin, “no” in Kentucky) and given that the Pennsylvania Supreme Court recently heard oral argument on this issue, the question of what is adequate consideration for a restrictive covenant is one of the hottest topics in non-compete law.   Employers should continue to monitor this issue.

©2023 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume V, Number 180
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About this Author

Peter Altieri, Epstein Becker Law Firm, New York, Labor and Employment LAw Attorney
Member

Peter Altieri is a Member of the Firm at Epstein Becker Green, in the Litigation and Labor and Employment practices. Based in the firm's New York office, where he serves as the Managing Shareholder, he concentrates on complex commercial litigation, antitrust/trade regulation, trade secrets, and employment-related litigation. Mr. Altieri represents clients in myriad industries, including financial services, managed care, trucking, and insurance. Routinely appearing before arbitrators, federal and state courts, and administrative agencies, he has handled mediations,...

212-351-4592
David J. Clark Attorney, Epstein Becker Green, Labor and Employment Law Attorney
Member of The Firm

David J. Clark is a Member of the Firm in the Litigation and Employment, Labor & Workforce Management practices in Epstein Becker Green’s New York office. His practice concentrates on litigating complex commercial and employment-related disputes before state and federal courts and arbitration tribunals. Mr. Clark represents clients in a wide range of industries, including financial services, advertising and media, accounting, banking, insurance, managed care, and retail brands.

212-351-3772
Peter Steinmeyer, Labor Attorney, Epstein Becker Law Firm
Member

PETER A. STEINMEYER is a Member of the Firm in the Labor and Employment practice of Epstein Becker Green and serves as the Chicago office Managing Shareholder. Practicing in all aspects of labor and employment law, he is also Co-Chair of the firm's Non-Competes, Unfair Competition and Trade Secrets Practice Group.

Mr. Steinmeyer advises clients on the enforcement and drafting of non-compete, non-solicitation, and employment agreements, litigates trade secret, non-compete, non-solicitation, raiding, and other restrictive covenant matters in...

312-499-1417
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