Noncompete Agreements Cannot Include Potential Clients or an Entire Industry

Sometimes a stray email is all it takes to send things into a spiral.

In the case of Karen D’Onofrio and her former employer, Vacations to Go, such a stray email led D’Onofrio to sue her employer for allegedly violating her rights under the Family Medical Leave Act (FMLA). The cruise company responded by countersuing her for allegedly violating the non-compete clause of her employment contract.

The issues involved in the case go back to 2011, when D’Onofrio’s husband, Michael, was injured in a car accident. Three years later, he bought a franchise from a company that sells travel-related products and services, including cruises. As part of his application to buy the franchise, Michael included a screenshot of his wife’s sales records, although the picture in question did not include any client names.

A few months after Michael bought the franchise, D’Onofrio asked for leave from work under the FMLA so she could take care of her husband. She was given the option of taking unpaid leaving or working from home a few days out of each week and she decided to go with the latter. Then she allegedly attended a training session for her husband’s franchise while she was on leave and did not respond to messages from clients of Vacations to Go. When a manager sent an email incorrectly stating that D’Onofrio no longer worked for the cruise company, D’Onofrio assumed she had been fired. She was wrong, but she still sued Vacations to Go for violating her rights under the FMLA.

Vacations to Go responded with a lawsuit of their own, alleging D’Onofrio had violated their non-compete agreement by working in a sales and marketing capacity for her husband’s travel company. The non-compete agreement in question stated that D’Onofrio was not to work in a sales and marketing capacity for any other company selling cruises until 18 months after her employment at Vacations to Go had been terminated.

The case was filed in the U.S. District Court in Houston, Texas, and the district court sided with Vacations to Go by agreeing to dismiss all D’Onofrio’s claims.

D’Onofrio appealed the decision and the case went to the Fifth Circuit Court of Appeals, which agreed to dismiss D’Onofrio’s claims against her former employer, but it also partially dismissed the company’s claims against D’Onofrio. According to the three-judge panel (which was unanimous in its decision) the non-compete agreement D’Onofrio was made to sign was too broad to be enforced.

According to the ruling, Texas law prohibits non-compete agreements that extend beyond clients the employee has worked with during her employment with the company. Any non-compete agreement that prohibits the employee from working with anyone in the entire industry is also too broad to be considered enforceable. Since the non-compete agreement Vacations to Go had D’Onofrio sign went beyond both of these restrictions, the federal appeals court decided to dismiss the cruise company’s claims against D’Onofrio for violating her non-compete agreement.

The case was then sent back to the circuit court for further proceedings.

Our Chicago 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.

Lubin Austermuehle a firm of Chicago business dispute lawyers handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Our Chicago business lawyers with offices near Evanston and Winnetka have substantial experience in restrictive covenant and breach of contract cases, and we are proud of our record of strong results. We have successfully represented a number of doctors in non-compete, partnership, and other business disputes.  We understand the complexities of physician partnership and non-compete agreements.

Lubin Austermuehle a Chicago business litigation law firm represents both plaintiffs and defendants in such cases, and can also help stop litigation before it starts by reviewing contracts to look for covenants and clauses that could create problems later. Our firm has also handled many shareholders and LLC disputes between owners of closely held corporations, and LLCs.

Based in Oakbrook Terrace and downtown Chicago, our Joliet and Bollingbrook non-compete agreement and business dispute lawyers take cases from Glenview and Mt. Prospect and many other cities throughout Illinois, as well as in Indiana, Wisconsin and the entire United States. To learn more or set up a free consultation, please contact one of our Chicago business dispute lawyers through the Internet or call toll-free at 630-333-0333 today.

Lubin Austermuehle’s Aurora and Naperville non-compete agreement 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 Deerfield and Northbrook, we serve clients throughout Illinois and the Midwest.

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