Many non-compete agreements are included in employment contracts merely as a precaution. While employers reserve the right to sue workers for violating any of the terms of their non-compete agreements, few companies actually follow through on the threat if/when an employee violates their contract.
But one fitness company did decide to exercise its right to sue a former employee who allegedly violated the terms of his employment contract by starting his own club within three miles of the fitness club location he had been managing for his former employer.
The former employee, Jason Voges, started a fitness club of his own, Island Life Fitness, LLC. Voges founded the new club with his wife, Crystal, a few months after his employment with Anytime Fitness ended. Anytime Fitness, a franchise of Fitness Group, LLC, sued Voges, pointing out his contract allows him to seek employment with a rival fitness club ten miles away from any one of Fitness Group’s locations.
Non-compete agreements are designed to prevent employees from taking trade secrets and/or clients away from their former employer to a competitor just down the street. Most employment agreements have a geographical limit (hence the 10-mile specification in Voges’s contract, which is pretty standard) and a time limit (usually six months to a year). Outside those specifications there’s not much a worker can do to harm their former employer’s business. But by starting his own fitness club not far from the gym where he used to work as an employee, Voges and his wife are becoming competitors of Fitness Group.
Island Life Fitness has not yet opened but is scheduled to do so later this month. As a result, Fitness Group cannot yet claim that Voges’s new fitness club has hurt their business, but they have reason to believe it will once it does open. According to the complaint, several current customers of Fitness Group have been interacting with Island Life Fitness on its business Facebook page. Fitness Group alleges such online activity is evidence that their former employee’s new gym will hurt their own business, and is in violation of his employment contract.
Of course, in order to successfully sue for breach of a non-compete agreement, the burden falls on the plaintiff to prove that the breach has caused, or will cause, financial harm. It’s going to be hard for Fitness Group to accomplish that since Island Life Fitness hasn’t actually started serving any clients yet. While the Facebook evidence is compelling, it’s not enough to prove that Fitness Group has actually suffered (or will suffer) any financial harm as a result of Voges’s new business venture.
However, Fitness Group should be able to fairly easily prove that the parameters of its non-compete agreement are just enough to protect the gym’s legitimate business interests and no more. If they can successfully show that and provide enough evidence that Voges was in violation of his contract by co-founding a new fitness club within three miles of the location he used to manage for Fitness Group, then the combination might be enough to sway the court in favor of his former employer.
Our Illinois non-compete agreement attorneys have defended high-level executives in a covenant not to compete and trade secret lawsuits. A case in which our firm defended a former Motorola executive was covered in Crain’s Chicago Business. You can view that article by clicking here.
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DiTommaso Lubin Austermuehle’s Oak Brook, Naperville and Palatine litigation attorneys have more than three decades of experience helping clients unravel the complexities of Illinois and out-of-state non-compete and trade secret theft laws. Our Chicago business dispute attorneys also represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners, shareholders, and LLC members as well as lawsuits between businesses and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Oak Brook, near Oak Park and River Forest, we serve clients throughout Illinois and the Midwest.