Employment Non-Compete and Non-Solicitation Agreements: Fifield Is Still The Law In Illinois-For Now

Employment Non-Compete and Non-Solicitation Agreements: Fifield Is Still The Law In Illinois-For Now

By: Mitchell S. Chaban

In 2013, the Illinois Appellate Court held in Fifield v. Premier Dealer Servs., Inc., that under Illinois law the promise of continued employment was insufficient consideration to support an otherwise enforceable non-compete/non-solicitation agreement law unless the at-will employee worked a full two years after entering into the non-compete/non-solicitation agreement.  The holding in Fifield represented a significant change to Illinois law, which many in the legal community criticized and expected the Illinois Supreme Court to reverse.  The Illinois Supreme Court, however, declined to hear the case.

In December 2014, the Illinois Third District Appellate Court, in Prairie v. Francis, strictly applied Fifield’s holding and ruled that 19 months of continued employment, even when the employee voluntarily resigned and then began to compete with her former employer, was not sufficient consideration to support her post-employment non-compete restrictions.  There are a growing number of courts, however, that have refused to follow the bright line consideration rule announced in Fifield.

Two federal district court judges in Illinois recently predicted that the Illinois Supreme Court would not follow Fifield.  In the first case, Bankers Life v Miller, Bankers Life sued seven former employees for allegedly violating the restrictive covenants in their contracts. Federal District Judge Manish Shah of the United States District Court for the Northern District of Illinois denied the employees’ motion to dismiss, which was based upon the consideration rule in Fifield, and opined that the Illinois Supreme Court would reject the Fifield consideration rule in favor of a more flexible approach.

In the second case, Cumulus v Olson,  Federal District Judge Billy McDade of the United States District Court for the Central District of Illinois granted a motion for a temporary restraining order against a former employee of a radio station who had signed an agreement containing non-compete and non-solicitation provisions and quit his employment after working twenty-one months and began working for a competitor.  Judge McDade harshly criticized the logic of the decision in Fifield and opined that the Illinois Supreme Court would not accept the two-year bright line consideration rule.

These two decisions follow a 2013 opinion by yet another federal district judge in Illinois, now Chief Judge Ruben Castillo of the U.S. District Court for the Northern District of Illinois, in Montel Aetnastak, Inc. and Montel Inc. v. Krstine Miessen a/k/a Kristine N. Schneider, Bradford Systems Corporation and Space Saver Corporation, who called into question the consideration rule espoused in Fifield.

Federal district court decisions, however, are not binding on Illinois courts. For this reason, Fifield remains the law in Illinois despite the willingness of some federal district judges in Illinois to reject it. This issue will not be settled until the Illinois Supreme Court decides the legal question, which is not likely to happen until at least one Illinois Appellate Court, as opposed to federal district courts, rejects Fifield, thereby creating a split of opinions among Illinois Appellate Courts. The two-year consideration rule in Fifield, at least for now, remains the law in Illinois.

If you have any questions regarding restrictive covenants in employment agreements, please contact:

Mitchell S. Chaban at:

mchaban@lgattorneys.com or 312-368-0100.

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