Illinois Court Affirms Decision Striking Down Noncompete Because of Inadequate Consideration

FIFIELD v. PREMIER DEALER SERVICES INC, No. 1–12–0327., June 24, 2013 - IL Court of Appeals | FindLaw:

This case deals with a noncompetition agreement between an employee and a company. The court held, consistent with long-standing Illinois precedent, that a noncompete is not binding unless the employee has been employed for at least two years.

In October 2009, Premier made an employment offer to plaintiff Fifield. The offer was conditioned upon his execution of a noncompetition agreement which provided:

“Employee agrees that for a period of two (2) years from the date Employee's employment terminates for any reason, Employee will not, directly or indirectly, within any of the 50 states of the United States, for the purposes of providing products or services in competition with the Company (i) solicit any customers, dealers, agents, reinsurers, PARCs, and/or producers to cease their relationship with the Company * * * or (ii) interfere with or damage any relationship between the Company and customers, dealers, agents, reinsurers, PARCs, and/or producers * * * or (iii) * * * accept business of any former customers, dealers, agents, reinsurers, PARCs, and/or producers with whom the Company had a business relationship within the previous twelve (12) months prior to Employee's termination.'



Fifield worked for three months and resigned. Premier sought to enforce the noncompetition agreement. The trial court ruled that the agreement was void for lack of consideration because Fifield had not worked for at least two years before he quit.


The appellate court agreed that three months employment was insufficient consideration to allow the noncompetition agreement to be enforceable.


Comment: this is a rare legal decision which announces a clear rule. Whether this is a good idea remains to be seen. Some employee may quit after 23 months to avoid the noncompetition agreement and force the court to reconsider this bright line rule.

Edward X. Clinton, Jr.

www.clintonlaw.net

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Illinois Appellate Court Affirms Enormous Award For Retaliatory Discharge

Holland v. SCHWAN'S HOME SERVICE INC., Ill: Appellate Court, 5th Dist. 2013 - Google Scholar:

This is a retaliatory discharge case in which the plaintiff claimed that he was fired for exercising his rights under the workers compensation act. After a trial, the jury awarded plaintiff about $600,000 in compensatory damages and $3.6 million in punitive damages.

The majority affirmed the jury verdict, concluding that the defendant worked an injured employee until he sustained further injuries. The court comments:

The evidence presented at the trial introduced the jury to an employer that intentionally worked an injured employee beyond his medical restrictions to the point that he suffered from severe pain from a work-related injury. When the employee's treating physician took him off work for recovery and treatment, it retaliated against the injured employee by terminating his employment. The need to deter employers from engaging in this type of reprehensible conduct is obvious and substantial. In light of the evidence considered and weighed by the jury, we will not overturn its assessment of punitive damages as being excessive or unconstitutional. 

There is also a strong dissent, filed by Justice Spomer, which argued that the employee was never fired at all, merely demoted. Thus, there was no retaliatory discharge.

In recent years, there has been much fuss over the Illinois Workers Compensation Act and some have argued that the Act is unfair to employers. This case is also controversial and, in my view, is a strong candidate to be reviewed by the Illinois Supreme Court.

Edward X. Clinton, Jr.

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National Football League's Efforts To Sue Insurers in California Are Rebuffed

National Football League v. FIREMAN'S FUND INSURANCE COMPANY, Cal: Court of Appeal, 2nd Appellate Dist., 5th Div. 2013 - Google Scholar:

The NFL has been sued by dozens of former players who allege that they were injured playing football in the 1950s, 60s and 70s. The NFL is defending the cases. As usual, the liability litigation against the league spawned an enormous cloud of coverage litigation.

The insurers sued in New York, where the league has its headquarters, for declaratory judgments that their policies do not cover the concussion lawsuits. The NFL tried to sue in California, but the California court held that the NFL is really a resident of New York and that the litigation to be fought out in the courts of New York. The order stays the California cases pending the results of the New York litigation.

Undoubtedly there was an advantage to litigating in California as opposed to New York.

Edward X. Clinton, Jr.

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