Restrictive Covenants

Why You Should Choose DiTommaso Lubin for Trade Secret Theft or Non-Compete Matters

March 9, 2024 | Peter S. Lubin and James V. DiTommaso

In the complex world of trade secret theft and non-compete litigation, having the right legal team on your side is critical. DiTommaso Lubin, with its strong online presence at www.thebusinesslitigators.com and www.l-a.law, stands out as a premier choice for handling these intricate legal matters. Here are compelling reasons why they should be your go-to firm:

1. Experience in Trade Secret and Non-Compete Litigation

DiTommaso Lubin has a proven track record in successfully handling trade secret theft and non-compete cases. Their deep understanding of the legal complexities in these areas ensures that they can provide effective strategies tailored to each unique case.

2. Dedicated and Experienced Legal Team

The team, including highly recognized attorneys like Peter Lubin and Patrick Austermuehle, brings a wealth of experience and accolades. Their expertise is not just in the courtroom; they understand the nuances of negotiating settlements and crafting agreements that protect their clients’ interests.

3. Commitment to Protecting Client Interests

The firm is committed to protecting the rights and interests of their clients. Whether you are defending against an accusation of trade secret theft or challenging an unfair non-compete agreement, DiTommaso Lubin works tirelessly to ensure the best possible outcome for their clients.

4. Client-Centric Approach

Understanding that every case is unique, DiTommaso Lubin prides itself on a client-centric approach. They listen to their clients, understand their specific needs, and develop strategies that are not just legally sound but also aligned with the clients’ business objectives. Continue reading ›

D.C. Council Passes Amendment to Scale Back Ban on Non-Compete Agreements

August 29, 2022 | Peter S. Lubin and James V. DiTommaso

After passing one of the strictest non-compete laws in the nation, the District of Columbia Council has responded to criticisms about the bill by passing the Non-Compete Clarification Amendment Act of 2022 which significantly scales back key aspects of the non-compete ban law enacted back in 2021 but which has not yet gone into effect after the Council has delayed its enactment several times in response to feedback from employer groups.

The non-compete ban, passed by the Council in 2020 and enacted in 2021, sought to impose a near-universal ban on simultaneous and post-termination employment restrictions for employees working in D.C. Since the inception of the ban, it has been subject to much criticism and numerous extensions of its effective date. However, the Clarification Amendment, which will take effect on October 1, 2022, changes the scope of the ban from nearly all non-compete agreements to only those whose total annual compensation is less than $150,000 ($250,000 for medical specialists). Compensation is defined to include more than just salary but accounts for bonuses, commissions, overtime premiums, and vested stock as well but does not include “fringe benefits other than those paid to the employee in cash or cash equivalents.”

The Clarification Amendment will now proceed to the desk of the Mayor, where it is expected to be signed, and then will be subject to a 30-day congressional review period which likely will expire in mid-to-late November. The amendment contains a number of significant “clarifications” to the non-compete ban law and gives D.C. employers options for utilizing non-compete agreements and other policies, such as conflict of interest policies, that were set to be prohibited. Continue reading ›

Legislators Respond to Economic Impact of Noncompete Agreements — Top Chicago Non-Compete Agreement Lawyers Near Naperville and Evanston

April 10, 2019 | Peter S. Lubin and James V. DiTommaso

Although non-compete agreements were originally invented to keep executives from running off to competitors with trade secrets and/or client relationships, many businesses have started taking advantage of noncompete agreements by including them in employment contracts with all their workers – even those at the bottom rung of the corporate ladder.

Workers earning minimum wage (or close to it) doing things like making sandwiches and entering data into a computer system are being made to sign employment agreements that prohibit them from working in any capacity for a similar company. Despite the fact that these are unskilled jobs (often held by people who don’t even have a high school diploma), and certainly don’t include access to any important trade secrets, workers are being made to sign such agreements as a condition of employment. And when agreeing to all the terms of the contract is the difference between getting the job and going without a paycheck, most workers don’t consider it much of a choice.

Although signing the employment contract might get them the job, it makes it much harder for them to move up the corporate ladder because the non-compete agreement often means they can’t leverage their experience to get a better paying position with another company. Their options are to try to move up the ladder in their own company or stay in their position where they’ll continue to earn the same low wage.

If employees try to take a new job in violation of the non-compete agreement, they can be prevented from doing so or even made to leave their new job after they’ve settled into it. In many cases, the clause prevents workers from even looking for new employment or asking for a raise for fear of retaliation from their employer. And when they’re not allowed to seek out a similar position with another company that pays better, they have no leverage to ask for a raise. Continue reading ›

Taylor Swift Groping Case Begins — Chicago Trade Secret Lawyers — Chicago Restrictive Covenant Lawyers

August 12, 2017 | Peter S. Lubin and James V. DiTommaso

It’s a case of he said/she said, in which the claim and counterclaim are nearly impossible to prove, and outcomes have been historically unfavorable to women, even when there is solid evidence to prove their side of the story.

What she says happened:

While posing for a photo with David Mueller and his girlfriend, Shannon Melcher, Taylor Swift alleges Mueller reached up her dress and grabbed her behind. Despite her attempts to shift position, Swift alleges his hand remained firmly on that private part of her body and she says she has no doubt it was Mueller who groped her and that the groping was intentional.

Rather than confront the 6’3” and 200+ pound man, Swift waited until he had left, then notified security and her tour manager that the man had touched her inappropriately. Members of her staff tracked down Mueller and Melcher and escorted them out of the building. Swift’s team, including Frank Bell, who handles radio relations for Swift, contacted KYGO, the radio station where Mueller worked as a radio host, to complain, and two days later Mueller was out of a job. Continue reading ›

Customer and Employee Non-Solicitation Agreements Are Not Uneforceable Federal Court Rules

February 15, 2015 | Peter S. Lubin and James V. DiTommaso

A non-solicitation covenant is extremely helpful when it comes to protecting valuable business information when a company has expended substantial amounts to build a stable work force and has invested in developing permanent relationships or very long term relationships with its customers with long term contracts. The Court in Instant Tech., LLC v. DeFazio, 12 C 491, 2014 WL 1759184 (N.D. Ill. May 2, 2014) recently addressed the enforceability of non-solicitation covenants of former employees of an information technology company. The non-solicitation agreements barred soliciting customers to go to a competitor as well as employees of the IT staffing company.

Not to be confused with a non-compete agreement, non-solicitation covenants do not put a restriction on one’s ability to practice their trade or prohibit them from pursuing their chosen profession, as a restrictive covenant would. In this case, the definition of a client versus a candidate is where the Court draws the line when determining whether a violation the non-solicitation covenant occurred. Continue reading ›

Non-Compete Agreements May Stifle Competition; Businesses Argue to the Contrary, They Protect Trade Secrets and Investment

July 10, 2014 | Peter S. Lubin and James V. DiTommaso

Non-compete clauses have been included in employee contracts for decades now. These provisions ensure that employees do not walk off with valuable trade secrets or client lists and take them to a competitor. Putting such a clause in employee contracts makes sense, but only up to a point. A standards noncompete contract will prohibit an employee from working for a competitor within a certain geographical radius for a specified period of time. Six months to a year is pretty standard, but that time limit has been growing lately.

Non-compete agreements were first used largely by technology companies who need to guard their developments very closely. If an employee left to work for a competitor and took everything they knew about their former employer with them, the new employer would have an unfair competitive advantage. It therefore makes sense that companies would try to protect their business interests by preventing employees from going directly to work for a competitor.

The problem that employees have been facing lately is that non-compete agreements have spread beyond just those working in tech and sales. Now, everyone from camp counselors to hair stylists are being required to sign non-compete clauses. Hourly workers in these kinds of positions cannot afford to give up a year or two of work to wait for their non-compete agreement to expire and they have started to speak out against the restrictions that their employers are placing on them.

California and North Dakota already ban non-compete agreements. Now it looks like Massachusetts may be joining their ranks. Governor Deval Patrick has proposed legislation banning noncompete agreements except in a few situations. A committee in the Massachusetts House has already passed a bill incorporating the governor’s proposals, but the new law isn’t in the clear yet and supports and opponents of the bill are fighting furiously over the new measures it would impose. Continue reading ›

Illinois Supreme Court Allows for More Type of Circumstances to Determine That Non-Compete Agreement is Enforceable in Reliable Fire Equipment Case — Our Chicago Business Lawyers Handle Non-Compete Lawsuits Throughout the Chicago Area

April 2, 2013 | Peter S. Lubin and James V. DiTommaso

When determining the legitimacy of restrictive covenants, it is important for judges to consider all requirements of legitimacy and to do so consistently.

In a recent case, two former employees of Reliable Fire Equipment, a company which sells, installs, and services portable fire extinguishers and fire suppression and alarm systems, allegedly violated the non-competition agreement they had signed with their employer. Rene Garcia had been hired by Reliable in 1992 as a systems technician and was later promoted to sales. In 1998, Arnold Arredondo was hired by Reliable as a salesperson. Both signed non-competition agreements in which they promised not to compete with Reliable, either during their employment or for one year after ceasing to be employed by Reliable.

In early 2004, while still employed by Reliable, Arredondo began forming a company which would supply engineered fire alarm and related auxiliary systems throughout the Chicago area. The new company was christened High Rise Security Systems, LLC and Arredondo and Garcia signed an operating agreement for the company in August of that year.

That same month, Reliable’s founder and chairman heard of the two employees’ movements and confronted them. They both denied it. Arredondo resigned in September and, on October 1, Garcia was fired on suspicion of competition. In December, Reliable filed a complaint against Arredondo, Garcia, and High Rise, alleging that they had violated their non-competition agreements.

Arredondo and Garcia filed a counterclaim, alleging that the restrictive covenant was unenforceable. The court ruled that Reliable had failed to prove the existence of a legitimate business interest to justify the enforcement of the non-competition agreements and therefore ruled for Arredondo and Garcia on their counterclaim. The appellate court upheld that decision and Reliable appealed, sending the case to the Illinois Supreme Court.

The Illinois Supreme Court has said that non-competition clauses in employment contracts are enforceable so long as consideration supports the agreements and the restraints are reasonable. To determine whether the restraints are reasonable, the court uses a three-pronged test: the restraint must be necessary to protect the legitimate business interest of the promisee; it must not impose undue hardship on the promisor or the public; and the scope of the restraint must be otherwise reasonable.

In putting forth this opinion, the Court corrected two recent opinions of the appellate court which did not require a test for legitimate business interest. In Sunbelt Rentals, Inc v. Ehlers, the 4th District Court of Appeals claimed that a court needed only to consider time and territory restrictions when determining for reasonableness in a restrictive covenant. It claimed that the Illinois Supreme Court had never accepted the legitimate business interest test but the Supreme Court said that was a mistaken assumption and that the appellate court had misinterpreted the Supreme Court’s opinion in Mohanty v. St. John Heart Clinic as well as other cases.

Having rejected the reasoning in Sunbelt, the Court clarified the proper standard for conducting the legitimate business interest test. According to the Court in Nationwide Advertising Service Inc v. Kolar, an employer will be considered to have a legitimate business interest subject to protection through non-competition employment agreements if two factors are present: the employees must have gained confidential information through their employment; and customer relationships must be near permanent as a result of the nature of the business.

The Illinois Supreme Court though, overturned the Kolar decision and instead put forth that, while those, as well as other factors might be helpful in determining the question of reasonableness and enforceability, any attempt to file a complete list of factors would be futile or would immediately become obsolete. Rather, the court maintained that determining the existence of a legitimate business interest will depend upon the totality of the circumstances of the individual case.

An employment attorney who represents management, said the decision is good for employers because it actually broadened the enforceability of non-competition agreements. Under the broader standard of considering “the totality of the facts and circumstances of the individual case”, employers could argue that the company’s reputation or goodwill are worth protecting with restrictive covenants.

Court Enforces Covenant Not to Compete Against Former Franchisee of Pizza Restaurant – Singas Famous Pizza Brands v. New York Advertising

December 13, 2012 | Peter S. Lubin and James V. DiTommaso

A former franchisee of a regional pizza restaurant chain were barred from operating pizza restaurants within certain geographic areas, according to the Second Circuit Court of Appeals in New York City. In Singas Famous Pizza Brands Corp., et al v. New York Advertising, the plaintiffs sought to enjoin the defendant from opening two new pizza restaurants shortly after the termination of the defendant’s franchise agreement with the plaintiffs. The franchise agreement included a covenant not to compete, stating that the franchisee could not operate similar pizza restaurants within a specified geographic area. The defendant challenged the enforceability of the geographic restriction. The district court ruled for the plaintiffs, and the appeals court affirmed the ruling.

The plaintiffs, Singas Famous Pizza Brand Corp. and Singas Famous Pizza & Restaurant Corp., collectively referred to as “Singas,” operate or franchise multiple pizza restaurants in the New York City metropolitan area. Each restaurant uses Singas’ unique branding and menu. The defendants operated two pizza restaurants, a former Singas franchise in the East Village, Manhattan, and a new restaurant in Jackson Heights, Queens. Singas obtained a preliminary injunction that barred the defendant from operating both restaurants. The defendant appealed only as to the Jackson Heights restaurant, arguing that the ten-mile geographic restriction was unduly broad.

Illinois Court Shoots Down Unreasonable Noncompete Agreement – Peerless Industries, Inc. v. Crimson AV, LLC.

March 22, 2012 | Peter S. Lubin and James V. DiTommaso

In Peerless Industries, Inc. v. Crimson AV, Llc., the Northern District of Illinois makes clear that while noncompete agreements may be valid and enforceable in Illinois, the terms of an agreement must nevertheless be reasonable.

Plaintiff Peerless Industries Inc. is an audio-visual mount equipment manufacturer that does business around the world. The plaintiff sells its products to distributors who then install them in stadiums, schools and airports, among other structures. In 2007, The plaintiff entered into a supply contract with Chinese manufacturer Sycamore Manufacturing Co., Ltd. The agreement included a noncompete provision, which provided that Sycamore would not make or distribute “Peerless Products”: those designed by the plaintiff or normally sold by the plaintiff under any of its trademarks. The agreement further prohibited Sycamore from selling a “similar product” – one that “in [the plaintiff’s] reasonable judgment, has substantially the same appearance as or reflects or contains any part of the design of any Peerless Product” – for the length of the agreement and one year thereafter.

The agreement terminated in March, 2010. The following May, Defendant Crimson AV, LLC incorporated in Illinois. According to the court, Sycamore pays the salaries of the defendant’s executives as well as their expenses. Defendant Vladimir Gleyzer, Crimson’s managing director, is a former Peerless employee. Later that summer, the plaintiff filed the present action, alleging that the defendants tortuously interfered with the plaintiff’s contract with Sycamore by purchasing “similar products” from Sycamore and offering them for sale on Crimson’s website. Plaintiff sought a preliminary injunction to enjoin the defendants from selling or offering to sell products received in breach of the supply agreement.

Following a hearing on the matter, the court denied the plaintiff’s injunction request, finding that the “similar products” provision of the supply agreement with Sycamore was overly broad and beyond that necessary to protect the plaintiff’s legitimate business interests. In Illinois, the court noted, a noncompete agreement is valid only to the extent that is reasonable. That is, the agreement’s terms must not: (1) be greater than necessary to protect the business; (2) be oppressive to the entity restricted; nor (3) injure the general public.

In this case, however, the agreement at issue barred Sycamore from selling certain equipment, even if the feature of the plaintiff’s product that appears in the similar product is not aesthetically or functionally significant to either the plaintiff’s product or the similar product. The agreement also applies even where it is unlikely that one product could not be distinguished from the other in the marketplace.

Business Owners Beware, Make Sure Your Employment Agreements are Clearly Written and Reasonable

February 2, 2012 | Peter S. Lubin and James V. DiTommaso

Every business has employees, and as business litigators, the attorneys at DiTommaso Lubin pride ourselves on being knowledgeable about all the areas of law that affect our clients, including employment laws. Our Orland Park business attorneys recently discovered a case that has an impact on companies who utilize employment non-competition agreements with their employees.

Reliable Fire Equipment Company v. Arredondo pits an employer against two former employees, Defendants Arredondo and Garcia, who worked as fire alarm system salesmen for Plaintiff. Each Defendant signed an employment agreement where Defendant’s would allegedly earn commissions of varying percentages of the gross profits on items or systems sold. After working for Plaintiff for several years, Defendants created Defendant High Rise Security Systems, LLC., which was allegedly a competitor to Plaintiff’s business. Plaintiff eventually became aware that Defendants were starting an alleged competitor company, and asked Defendants if in fact they had created a fire alarm business. Defendant Arredondo allegedly denied that he was starting such a business, and resigned shortly afterward, with Defendant Garcia tendering his resignation two weeks after Arredondo.

Plaintiff then filed suit alleging breach of the duty of fidelity and loyalty, conspiracy to compete against Plaintiff and misappropriation of confidential information, tortious interference of prospective economic advantage, breach of the employment agreements, and unjust enrichment. The trial court held that the employment agreements were unenforceable because of unreasonable geographic and solicitation restrictions and the fact that language of the agreements was unclear. A trial on the issues unrelated to the employment agreement ensued, and Defendants successfully moved for a directed verdict because there was insufficient evidence that Defendants competed with Plaintiffs prior to Arredondo’s resignation.

Plaintiff then appealed the trial court’s ruling that the employment agreements in question were unenforceable and the directed jury verdict. The Appellate Court affirmed the trial court’s directed verdict, stating that the lower court had properly weighed the evidence in finding a total lack of competent evidence. The Court then analyzed the restrictive covenants under the legitimate business interest test and found that the geographic restrictions were not reasonable and therefore the trial court did not err in ruling that the restrictive covenants were unenforceable.

Reliable Fire Equipment Company v. Arredondo illustrates why it is so important for business owners to keep an eye on their employees, and serves as a warning for companies wanting to sue former employees based upon non-competition agreements. Furthermore, the case shows that courts frown upon the use of vague language in such agreements, and it is always in your best interests to keep the terms of employment agreements reasonable.