Non-Compete Agreement / Covenant Not to Compete

Covenant Not to Compete Unenforceable Because Contract Violated Illinois Law — Our Chicago Business Law Attorneys Defend and Prosecute Trade Secret Theft and Covenant Not Compete Lawsuits

May 27, 2010 | Peter S. Lubin and James V. DiTommaso

As Chicago business law attorneys, we were interested to see a recent appellate opinion reminding Illinois businesses that severability clauses won’t necessarily protect contract provisions from other clauses that have been voided. That was what happened in Kepple and Company, Inc. v. Cardiac, Thoracic and Endovasclar Therapies, S.C., No. 3-09-0033, Ill. 3rd. Dec. 16, 2009. In that case, the Third District Court of Appeal upheld a Peoria trial court’s ruling that an entire services contract between a medical biller and a medical corporation was void, because a fee-sharing provision violated the Medical Practice Act of 1987.

Kepple is a medical billing and collection services company. Cardiac, a medical corporation run by a single doctor, hired Kepple in 2003. Their services contract contained a fee-sharing clause allowing Kepple to retain 5% of all the money it collects for Cardiac. It also had non-compete, non-solicitation and no-hire clauses forbidding either company to solicit or hire away the other company’s employees without a release. And it had a severability clause specifying that if one part of the contract was found void, other parts should still be enforceable.

Cardiac became unhappy with Kepple’s services in mid-2006 and called a meeting on Aug. 3, 2006. Two days later, Kepple’s vice president, Debra Hawley, gave notice that she would leave on Nov. 3. Hawley was the sole person handling Cardiac’s work. Her employment contract had a non-compete clause preventing her from joining a company with 50% or more of its business from medical billing within one year of leaving Kepple. On Sept. 13, Cardiac gave notice that it was terminating its contract with Kepple as of Nov. 10. On Nov. 13, Hawley started working for Cardiac.

Kepple sued both of them when it found out and requested a preliminary injunction keeping Hawley from working at Cardiac. The trial court turned this down, finding that Hawley’s employment contract didn’t apply, since Cardiac is not a competitor to Kepple, and that the non-compete clause of the services contract was unenforceable because it had no time limit. It also found that Hawley was solicited, but not hired, while she was at Kepple, but that suing was an adequate remedy for this. An interlocutory appeal to the Third District upheld these findings.

On remand, the defendants promptly filed for summary judgment based on both courts’ findings. The trial court granted it, saying that the service contract’s fee-sharing clause violated the Act, which prohibits physicians from sharing fees with anyone other than physicians practicing in the same business. Thus, the court said, the contract was void in its entirety. And even if the contract was severable, the trial court had already found that Cardiac did not induce Hawley to leave her job at Kepple. Thus, there was no violation of the non-solicitation clause, the trial court found. Kepple appealed, arguing only the severability issue. It agreed that the Medical Practice Act banned the fee-sharing agreement, but said other provisions are severable and enforceable.

In its opinion, the Third District said that under the Second Restatement of Contracts, the essential issue was whether the voided part of the contract was an essential part of the contract. In this case, the court said “there can be no dispute” that it was. The fee-sharing clause is “the very essence” of the agreement, the court said, and thus the entire contract is void and unenforceable. That means the trial court was correct to grant summary judgment in Cardiac’s favor. With that settled, the appeals court noted that it did not have to consider the remainder of either side’s arguments. It also dismissed an argument by Kepple as waived on appeal because it was not raised in trial court.

Contract Enforceable Despite Unenforceable Covenant Not to Compete, Wisconsin Appeals Court Rules

April 29, 2010 | Peter S. Lubin and James V. DiTommaso

Our Chicago non-compete contract litigators also practice in Wisconsin, so we were interested in a decision from that state’s Court of Appeals on the severability of a covenant not to compete. In Frank D. Gillitzer Electric Co., Ltd. v. Marco Anderson et. al., 2010 WI App. 31 (Jan. 20, 2010), the court reversed a grant of summary judgment for five former employees of an electrical contractor in Milwaukee. All of them had enrolled in a training program to become licensed electricians, and signed an agreement with Gillitzer that they would reimburse the company for the cost of schooling if they failed to finish it, or left Gillitzer within four years of completing it. The same contract said they also agreed not to join a competing business in the counties where Gillitzer does business within four years of leaving the company.

All five defendants dropped out or were kicked out of the apprenticeship program before finishing, but remained with Gillitzer until voluntarily resigning. After they left, Gillitzer sued them for the cost of the training. In trial court, the defendants moved for summary judgment. They argued that the non-compete portion of the agreement was unenforceably broad and inextricably linked to the repayment portion, making the entire agreement unenforceable. They also argued that the repayment provision was a restrictive covenant under Wisconsin law. The trial court granted the summary judgment and dismissed the case, triggering an appeal from Gillitzer.

On appeal, Gillitzer conceded that the non-compete part of the agreement was unenforceable. Wisconsin law favors former employees when examining the reasonableness of covenants not to compete. Streiff v. American Family Mutual Insurance Co., 118 Wis. 2d 602, 348 N.W.2d 505 (1984). Thus, the appeals court said, the issue was whether the training reimbursement part of the agreement was enforceable. The defendants argued that it was indivisible from the rest of the agreement, and thus, the entire agreement was indivisible under Wisconsin statutes sec. 103.465. Gillitzer argued that the two covenants are individual and divisible, and that the reimbursement portion is not a restrictive covenant under Wisconsin law.

The appeals court sided with Gillitzer. Using the divisibility test fashioned by the Wisconsin Supreme Court in Streiff, it looked at whether the reimbursement provision and the non-compete provision are interdependent and must be read together to be understood. In this case, they are not, the court said; they are “distinct, mutually exclusive [and] independent” under Streiff and can be separated with no loss of meaning. This would also be true under the more recent precedent set by Star Direct, Inc. v. Dal Pra, 2009 WI 76, 319 Wis. 2d 274, 767 N.W.2d 898, the court said, although it declined to reach the issue of whether Star Direct set a new divisibility test. Thus, it reversed the Milwaukee circuit court’s summary judgment order.

Federal District Court Rejects State Interpretation of Legitimate Business Interests Test

April 1, 2010 | Peter S. Lubin and James V. DiTommaso

Our Chicago covenant not to compete lawyers wrote a blog post last autumn about an interesting case from the Illinois Fourth District Court of Appeal. In Sunbelt Rentals v. Ehlers, No. 4-09-0290 (Ill. 4th Sept. 23, 2009), the appeals court rejected the “legitimate business interests” test used by Illinois courts to determine whether a contract’s non-compete clause is enforceable against a former employee. It said the test had never been valid, particularly in light of Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52, 866 N.E.2d 85 (2006). This was a departure from previous rulings and created a split with other state appeals courts, but has not yet been challenged in the Illinois Supreme Court. However, the U.S. District Court for the Northern District of Illinois rejected the Fourth District’s reasoning in a December decision.

In Aspen Marketing Services, Inc. v. Russell and Eventnext Marketing, Inc., 2009 WL 4674061 (N.D. Ill. Dec. 3, 2009), defendant Yvon Russell and his new business, Eventnext, were sued by Russell’s former employer, Aspen. Russell had formerly been Group President for Aspen, after it bought a previous marketing company of his. When that purchase took place, Russell signed a contract with non-compete, non-solicitation and non-disclosure covenants. It barred Russell from disclosing any non-public information about Aspen, ever; soliciting Aspen clients, former clients or prospects for a year and a half after leaving; and competing with the company in any business for six months after leaving.

Russell was terminated on June 27, 2007, and started Eventnext on November 27, 2007. Aspen sued, claiming Russell successfully solicited at least one Aspen client shortly afterward. In federal district court, Russell moved to dismiss all counts, saying the restrictive covenants were overly broad and thus unenforceable. In particular, he argued that the geographic limit of the non-compete clause was overbroad because it covered the entire United States. The court found that this was not unreasonable in scope, given the nationwide nature of Aspen’s business.

It went on to consider the second half of the Illinois test of enforceability of covenants not to compete: whether the restriction serves a legitimate business interest. In a footnote, the court acknowledged the Sunbelt ruling, but said it was not binding because it had not been taken up by the Illinois Supreme Court, the Seventh Circuit or the federal district court. Aspen alleged that Russell had “near exclusive” knowledge of its business, had confidential information and used it in Eventnext. Taking those assertions as true, the district court concluded that the geographic scope was reasonable. It also rejected an argument about scope of competition barred, noting that the clause barred all competition for only six months. For those reasons, Russell’s motion to dismiss on that count was denied. The court also rejected several other motions, though it granted one as to tortious interference. The case continues.

Motorola Sues Former Executive for Moving to Competitor Nokia — Our Chicago Covenant Not to Compete Lawyers Defend and Prosecute Non-Compete and Trade Secret Lawsuits Throughout Illinois

March 4, 2010 | Peter S. Lubin and James V. DiTommaso

Our Oak Brook covenant not to compete attorneys were interested to see a major non-compete lawsuit happening right here in Chicago. FierceWireless.com reported Jan. 19 that wireless telephone giant Motorola sued former executive David Hartsfield in federal court, claiming he will inevitably disclose Motorola’s confidential business information if he is allowed to take a new job at Finnish wireless phone company Nokia. Motorola is seeking a restraining order to prevent Hartsfield from taking the job.

Hartsfield resigned in December from a job developing CDMA technology at Motorola to take the position of vice president of CDMA at Nokia. In its lawsuit, Motorola claims that the non-disclosure agreement in Hartsfield’s employment contract will be violated if he takes the job. In particular, Motorola claims that it needs to protect product and pricing strategies. Hartsfield has filed a motion to dismiss the suit, arguing that it unreasonably interferes with his ability to make a living, and that Motorola has not identified any wrongdoing on his part. He also plans to argue that the non-disclosure agreements common in the wireless industry are not legitimate. Motorola has aggressively pursued non-compete and non-disclosure lawsuits in the past, including a 2008 non-compete lawsuit against an executive who left for Apple’s iPhone sales business. That case was dismissed in 2009.

DiTommaso Lubin is not involved in this case. However, our Northbrook, Evanston, Waukegan, Joliet, Lisle, Downers Grove, Wheaton, Naperville, Aurora, Elgin, and Chicago non-compete contract attorneys believe Hartsfield could build a strong defense, if his claims are true. Although the federal court has diversity jurisdiction, it must apply Illinois law, which requires it to identify a legitimate business interest behind non-disclosure and non-compete agreements. If there is none, the law says Motorola may not restrain the otherwise legal business activity of Hartsfield moving to a competitor. Hartsfield claims CDMA is an industry-wide standard, not a technology proprietary to Motorola. Similarly, at least some of Motorola’s pricing information must be public knowledge. That means the company may have an uphill battle proving that this knowledge, at least, is a trade secret worthy of protection.

A Video Summarizing Some Legal Issues Relating to Non-Compete Agreements — Our Chicago Attorneys Prosecute and Defend Covenant Not to Compete Lawsuits

January 24, 2010 | Peter S. Lubin and James V. DiTommaso

DiTommaso Lubin prosecutes and defends cases involving controversies over a covenant not to compete, or other restrictive covenants. Our Illinois restrictive covenant attorneys represent clients in active litigation over the validity and enforcement of these covenants, as well as helping to evaluate whether litigation may arise over such a contract. With more than 25 years of experience, we have handled these claims for businesses of every size, from large corporations to family-owned businesses, as well as individual employees. Based near Naperville, Aurora, Geneva, Lisle, Warrenville, Downers Grove, Wheaton, Wilmette, Evanston, Ill., and downtown Chicago, we represent clients throughout the state of Illinois, as well as in Indiana and Wisconsin. To learn more about how our Illinois covenant not to compete lawyers can help you, please do not hesitate to contact us through our Web site or call toll-free at 630-333-0333.

Scope of Injunctions Enforcing Restrictive Employment Covenants Must Be Clear, Fourth District Decides

November 13, 2009 | Peter S. Lubin and James V. DiTommaso

Our Illinois noncompete clause attorneys recently noted an important case addressing the standards for a preliminary injunction in Illinois lawsuits over covenants not to compete. In Lifetec, Inc. v. Edwards, No. 4-07-0300 (Ill. 4th Nov. 6, 2007), Lifetec sued former salesman Peter Edwards for breach of three restrictive covenants in his employment contract. It also sued his wife, Carol Edwards, and new employer, Patterson Medical Supply Inc., for tortious interference with the contract. Trial court granted Lifetec a preliminary injunction, and Edwards filed the instant appeal.

Lifetec sells medical devices and products. When Edwards began working there as a salesman, he signed a contract agreeing not to:

Compete with Lifetec, or sell or lease the products he had been assigned during the last 18 months of his employment, or competing products, within the territory assigned to him in the last 18 months of his employment.
Directly or indirectly solicit purchase or lease of the product or competing products within the same territory.
Work as a distributor or sales representative for any manufacturer that was a client of Lifetec, or for a competitor that also handles the client’s products, within the last 12 months.

The restrictive covenant applied for 24 months after the employment agreement was terminated.

Edwards left Lifetec for Patterson, a larger competitor, after 10 years. According to the opinion, he knew the move could cause Lifetec to sue and gave Patterson a copy of the agreement, but Patterson said it would take care of him in any lawsuit. Several months later, he admitted to a former colleague that he was working for Patterson. Months later, Lifetec sued him for breach of contract and requested a preliminary injunction. At an evidentiary hearing, evidence was introduced that Edwards had solicited Lifetec customers, but he said all Lifetec customers were also Patterson customers because the bulk of Patterson’s business was from national contracts. On the basis of the evidence at this hearing, the trial court granted a preliminary injunction stopping Edwards from violating the contract.

Edwards appealed, asking only for a decision on whether there was enough evidence to support the granting of the injunction. The appeals court said there was. The question, the court wrote, was whether Edwards had used protectable confidential information gained at Lifetec for his own gain. Lifetec contended that its “open quotes” to buyers constituted protectable information, although not all open quotes necessarily resulted in sales. The court took it one step further, saying the way those quotes were calculated was the real confidential information, as the quotes themselves were not secret once submitted to customers. Edwards’ knowledge of the reasoning behind the bids could give Patterson an advantage in the competitive medical supply industry. The defendants’ arguments that Lifetec should have alleged that Edwards misappropriated its trade secrets also fail, the court wrote, since Lifetec is making no such claim. All of this is sufficient to raise fair questions of fact, the court said, so an injunction was proper until the merits of the case could be decided.

A special concurrence filed by Presiding Justice Robert Steigmann agreed with the outcome, but said the court was incorrect to use the “legitimate business interests” test. This test is three decades old, the justice wrote, but the Illinois Supreme Court had never embraced it and in fact failed to use it at all in its 2006 decision in Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52, 866 N.E.2d 85 (2006). Because of this, he wrote, the court should have stopped its analysis after finding that the time and territory restraints in the covenant were reasonable. The majority noted, however, that the parties made no argument on this basis.

First District Rules Plaintiff Not Entitled to Punitives in Noncompete Clause Lawsuit

November 6, 2009 | Peter S. Lubin and James V. DiTommaso

An interesting case involving enforcement of an employment contract’s restrictive covenant was recently noted by our Illinois covenant not to compete attorneys. Cambridge Engineering Inc. v. Mercury Partners 90 BI, Inc., No. 1-06-0798 (Ill. 1st Dec. 7, 2007). The suit stems from an earlier lawsuit concluded in Missouri in 2001, in which Cambridge Engineering Inc. successfully sued former employee Gregory Degar and his new employer, Brucker Company (legally Mercury Partners 90 BI), to enforce a covenant not to compete signed by Degar. Cambridge then filed this suit against Brucker to recover punitive damages and attorney fees. Cambridge and Brucker compete in the residential and business heating market in the Midwest.

Degar worked at Cambridge as a sales representative starting in 1996, and signed a contract including noncompete and nonsolicitation covenants. The contract restricted him from competing in any way with Cambridge, or soliciting its employees or customers, anywhere in the United States or Canada, for 24 months after leaving. He was terminated in 2001 and was hired by Brucker about a month later as an inside support person rather than a salesperson. Nonetheless, he admitted to using customer contacts developed at Cambridge. Cambridge sued Deger, but not Brucker, in St. Louis and was granted a permanent injunction enforcing the noncompete clause. (At that time, Brucker fired Degar.)

Cambridge then sued Brucker in Illinois for compensatory and punitive damages, for tortious interference with contract. The parties stipulated to limit compensatory damages to attorney fees but said nothing about the punitive damages. The trial court directed a verdict against Cambridge on punitive damages, saying Cambridge hadn’t proven that Brucker’s actions were so outrageous that punitive damages were appropriate. At trial, the president of Cambridge testified that the company believed the contract would prevent Degar from holding any job, even a janitorial position, with any competitor, including in areas where Cambridge does not do business. The jury found for Cambridge on compensatory damages in the amount of $50,000, but Brucker successfully moved for judgment notwithstanding the verdict on the basis that the noncompetition clause was overly broad and unenforceable. Cambridge appealed both judgments against it.

The analysis by the First started by noting that the dispute centered around whether the covenant not to compete was unenforceable under Illinois law. Cambridge argued that the covenant was reasonable on both geographic and activity (despite testimony disputing this), and that the trial court improperly excluded testimony that would show this reasonableness. The court disagreed on all counts. The geographic scope was unreasonable, the court wrote, because it restricted Degar from taking a job with a competitor anywhere in Canada even though Cambridge only had a small amount of business in Canada. This restriction did nothing to protect Cambridge from competitors gaining unfair advantage at its expense, the court wrote. And the evidence Cambridge said was incorrectly excluded would not have changed the court’s decision. Thus, the scope of the covenant was indeed unreasonable.

It next examined the question of the activities prohibited by the noncompete clause, which turned on the interpretation of the contract. However, the court found that the plain language of the contract supports Brucker’s assertion that the contract was overly broad: that Degar may not “engage in any activity for or on behalf of Employer’s competitors,” a phrase that could theoretically bar Degar from taking a job filing papers for a competitor. Furthermore, testimony from Cambridge’s president at trial confirmed this interpretation; he “agreed with counsel’s contention that the St. Louis action was brought to prevent Degar from working for a competitor in any capacity.” Thus, the clause was overly broad and not reasonable, and the trial court’s decision on that issue was also correct.

Hardship to Former Employee Should Be Considered Outside Motion to Dismiss, First District Rules

October 30, 2009 | Peter S. Lubin and James V. DiTommaso

A First District Court of Appeal ruling had an interesting lesson for our Chicago noncompete clause attorneys. In Baird and Warner Residential Sales Inc. v. Mazzone, No. 1-07-2179 (Aug. 15, 2008), the First ruled that a trial court needed more evidence in a dispute about a covenant not to compete before it could correctly grant a motion to dismiss. The case arose when Baird & Warner Residential Sales sued former employee Patricia Mazzone and her new employer, Midwest Realty Ventures (doing business as Prudential Preferred Properties). Both real estate companies have multiple branches and more than 1,000 employees in the Chicagoland area.

Mazzone was office manager for B&W’s Lincoln Park office for about 11 years before leaving for Prudential. During that time, she signed a contract that included a covenant not to solicit services from any B&W employees or independent contractors, or people who had left those jobs within the last six months, for up to a year after leaving. This contract contained a severability clause, and the “preface” to the contract specified that it applied “regarding the Lincoln Park office,” although the restrictive covenant referred to “Company.” In 2007, Mazzone resigned from her job and took another running Prudential’s Michigan Avenue office. About a month later, B&W sued for a temporary restraining order and injunction seeking to enforce the covenant and keep Mazzone and Prudential from soliciting B&W employees, alleging breach of contract by Mazzone, tortious interference with contract by Prudential, and tortious interference with prospective economic advantage by both parties.

After an injunction and expedited discovery, defendants moved to dismiss because the covenant was overly broad, alleging that it would keep any Prudential employee from soliciting any B&W employee or contractor from any office. B&W contended that the preface restricted the covenant to the Lincoln Park office and affirmatively stated that it did not seek to enforce it beyond that office. In the alternative, they argued that the severability clause should allow that portion to be separated from the rest of the agreement. The trial court granted the motion to dismiss, saying the contract’s plain language related to all of B&W’s offices. Plaintiffs appealed this ruling.

The appeals court started its opinion by considering B&W’s claim that the nonsolicitation contract was not improper under the law. It noted that motions to dismiss are not necessarily appropriate in fact-intensive situations like this one, since the rules limit courts to consideration of facts in the complaint. It then turned to the controversy over whether the contract applied to all offices or just the Lincoln Park office and found that there was insufficient evidence. The record does not show enough evidence to determine whether the contract, as written, is overly broad and poses an undue hardship on Mazzone, the court wrote, or negative effects on the public from the restraint of trade. It also disagreed that enforcing the contract would “render Mazzone unemployable,” since she would be free to solicit employees of non-B&W brokers, even within the limited one-year period specified. Thus, the trial court should not have dismissed it without hearing more evidence, the court wrote. It reversed and remanded the case for more proceedings.

Appeals Court Upholds Injunction Enforcing Salesman’s Covenant Not to Compete

October 16, 2009 | Peter S. Lubin and James V. DiTommaso

A recent decision by the Fourth District Court of Appeal caught the eyes of our Illinois non-compete agreement attorneys because it created a split with other Courts of Appeal that only the Illinois Supreme Court can resolve. In September, the Fourth ruled that a trial court was correct to grant a preliminary injunction to a company suing over a covenant not to compete. Sunbelt Rentals Inc. v. Neil N. Ehlers III and Midwest Aerials & Equipment, Inc., No. 4-09-0290 (Ill. 4th Sept. 23, 2009). Sunbelt sued former sales employee Neil Ehlers and his new employer, Midwest, alleging Ehlers violated restrictive covenants when he took the new job, and Midwest tortiously interfered with the agreement when it hired him.

Sunbelt sells and rents industrial equipment for business and individual use. Ehlers was a salesman there responsible for maintaining a customer base and relationships. When he took the job in 2003, he signed a contract agreeing that he would not, for a year after leaving the job, provide services or solicit business from customers that had used Sunbelt in the preceding 12 months, or customers with whom he had had “contact, responsibility or access to confidential information.” It also forbade him from joining or starting a business “substantially similar” to Sunbelt’s. Both clauses were restricted to designated geographic areas. The contract specifically said Sunbelt would be entitled to an injunction against any breach or threatened breach of the restrictive covenants.

Ehlers quit at Sunbelt in January of 2009 to join Midwest, which rents and sells aerial platforms to construction and industry. Four days after Ehlers left, Sunbelt sent him and Midwest a “cease and desist” letter alleging that Ehlers had breached his agreement. The next month, Sunbelt sued for breach of the covenant and tortuous interference and asked for a preliminary injunction to keep Ehlers from working for Midwest. Finding that the time and geographic scope of the agreement was reasonable, the trial court granted the injunction. Ehlers and Midwest appealed, arguing that Sunbelt had not shown that it had a legitimate business interest test first set forth in Nationwide Advertising Service, Inc. v. Kolar, 28 Ill. App. 3d 671, 673, 329 N.E.2d 300, 301-02 (1975), and thus failed to follow precedent.

The Fourth District disagreed. It started by examining the question of whether the “legitimate business interests” test was valid under Illinois Supreme Court precedent, particularly the recent Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52, 866 N.E.2d 85 (2006). Although every Illinois appellate court has embraced the test, the Fourth District wrote, its analysis was flawed and the Illinois Supreme Court had never embraced it. In fact, in Mohanty and several other decisions, that court never actually used the test. Instead, the Fourth said, precedent says the validity of a covenant not to compete should be based only on time and territory restrictions in the contract.

The court next took up the argument by Ehlers that the restrictive covenant should be declared invalid because it is overly broad. Ehlers argued that the restrictions were so broad that he is precluded from working for any competitor in a Midwestern city, causing him undue hardship. The court interpreted the language of the contract differently; it said the restriction meant Ehlers could not work for a competitor within 50 miles of a branch of Sunbelt where Ehlers had worked, for a year after leaving. This is consistent with previous time-and-territory decisions on restrictive covenants, the court said. Thus, the contract was valid, meaning that the trial court’s decision to issue an injunction was not unreasonable.

Continued Employment for a Short Time Is Not Adequate Consideration for Post-Employment Restrictive Covenant, Appeals Court Decides

July 29, 2009 | Peter S. Lubin and James V. DiTommaso

DiTommaso Lubin’s Illinois breach of contract litigation attorneys were pleased to see a split Illinois Third District Court of Appeal decision clarifying the circumstances under which a post-employment restrictive covenant is valid. The decision came in Brown & Brown v. Patrick Mudron, No. 03-CH-1363 (Ill. 3rd March 11, 2008), in which a Florida insurance company sued a former employee for breaching a restrictive covenant in her employment agreement.

Diane Gunderson, the employee, worked for a Joilet, Ill. company that was taken over by Brown & Brown. Brown asked Gunderson to sign a new employment agreement with them, and in fact, fired an employee who refused to do so. The agreement said Gunderson’s employment could be terminated any time for any reason and prohibited her from soliciting or servicing any of Brown’s employees for two years after ending her employment with the company. She signed the agreement, but resigned seven months later and went to work for a competitor. Brown sued, alleging that Gunderson had breached the restrictive covenant at her new job. The trial court granted summary judgment in favor of Gunderson because it couldn’t find any evidence that she had breached the covenant, and Brown appealed.

The majority started by disposing of a “choice of law” provision in the contract requiring all disputes to be resolved in Brown’s home state of Florida. Illinois law applies anyway, the court wrote, because Illinois has a greater interest in the case and moving it to Florida would be against Illinois public policy interests. International Surplus Lines Insurance Co. v. Pioneer Life Insurance Co. of Illinois , 209 Ill. App. 3d (1990).