Recent Blog Posts
- The Emotional Component of Restrictive Covenant Litigation Zachary C. Jackson
The United States District Court for the Northern District of Indiana (Hammond Division) recently ruled on cross motions for summary judgment in the case of E.T. Products, LLC v. D.E. Miller Holdings, Inc. (Case No. 2:13cv424-PPS). The dispute in that case stemmed from the acquisition of a portion of a company. Essentially, the purchaser claimed that the seller was violating the restrictive covenant prohibiting him from soliciting the purchaser’s customers, and the seller countered that the purchaser violated the... More
- Staffing Industry Decision in Connecticut Zachary C. Jackson
At the end of January, the United States District Court for the District of Connecticut issued a decision in the matter of Roth Staffing Companies, L.P. v. Thomas Brown, OEM ProStaffing, Inc., OEM of CT, Inc., and David Fernandez (Case No. 3:13cv216). Much of that opinion is devoted to analyzing the parties’ arguments about whether piercing the corporate veil was appropriate under the circumstances. However, the opinion also addressed the plaintiff’s motion for summary judgment on its breach... More
- Is Fifield’s holding holding? A couple years ago, the Illinois First District Appellate Court decided the case of Fifield v. Premier Dealer Services, 2013 IL App. 120327. There, the Court held that, absent other consideration, two years of employment are required to constitute adequate consideration for a restrictive covenant, regardless of whether the covenant was signed at the outset of employment or after, and regardless of whether the employee quit or was fired. Since then, some Judges in the United States District Court for the... More
- A Dash of Certainty – Alabama’s New Restrictive Covenant Statute Alabama has a new restrictive covenant statute. A few weeks ago, Alabama Governor Bentley signed new legislation which will repeal the 1975 version of Alabama Code Section 8-1-1 titled “Contracts restraining business void; exceptions” and replace it with a new version effective January 1, 2016.
The new law stakes out the permissible scope and purpose of restrictive covenants such as non-compete and non-solicitation agreements. Unlike some other states with restrictive covenant statutes, Alabama’s new law codifies a middle-of-the-road approach to restrictive... More
- The Evolving Treatment of Fifield v. Premier Dealer Services, Inc. In Fifield v. Premier Dealer Services, Inc., an Illinois Appellate Court determined that, absent other consideration, at-will employment must continue for two years in order to constitute consideration for the enforcement of competition restrictions. Clients continue to ask how Fifield has been applied by subsequent courts. So far, the results have been mixed. This month, the United States District Court for the Northern District of Illinois rejected Fifield’s bright line test in the case of Bankers Life and Casualty Co.... More
- Guilty Plea Highlights Cost of Complicity in Trade Secrets Theft For some time, the media has covered the prosecution of a former Citadel, LLC employee, Yihao Pu, for allegedly stealing Citadel’s trade secrets. The recent guilty plea of another Citadel LLC employee, Sahil Uppal, highlights the potential consequences of complicity in trade secrets theft.
In his plea deal earlier this month, Uppal admitted that he transferred Citadel’s intellectual property (consisting of computer code) to Pu without Citadel’s authorization or approval. Additionally, Uppal admitted that, after he learned that Citadel representatives had... More
- A Mere Peppercorn Can Constitute Consideration? Not always. Most lawyers learn during their first year in law school that courts won’t inquire into the adequacy of consideration for a contract and that, as a result, a “mere peppercorn” can constitute consideration. It’s important to remember, though, that in many states, restrictive covenants are an exception to that rule.
The recent decision in the Pennsylvania Superior Court case of Socko v. Mid-Atlantic Systems of CPA, Inc. (2014 PA Super 103) illustrates this principle. The case involved a salesman in the... More
- A Reaffirmation of the Seventh Circuit’s Reluctance to Permit Filing Under Seal Courts in the Seventh Circuit don’t like to permit parties to file documents under seal. That philosophy is evident in many places, including Seventh Circuit precedent and the local rules for the United States District Court for the Northern District of Illinois. A new decision from the United States District Court for the Eastern District of Wisconsin reaffirms that the Circuit’s attitude against sealing is alive and well these days.
The case of Marine Travelift, Inc. v. Marine Lift Systems, Inc.... More
- Medical Device Manufacturer Bound By The Restrictive Covenants It Implemented Restrictive covenants can be valuable tools to protect your business. However, it is important to consider at the outset what interests you want and need to protect and what conduct would violate any restrictive covenant. If you don’t (or if you later decide that you want and need to prohibit additional or broader conduct), your restrictive covenants may not bar conduct that poses a competitive threat or triggers an emotional response. The recent federal case of Kissell, et al. v.... More
- Doctor Non-Solicitation Agreement Not Supported By Legitimate Business Interest Lawyers and clients alike often believe that it is easier to enforce a non-solicitation agreement than a non-competition agreement. Sometimes, that’s true. However, that does not mean that companies can do so without demonstrating a legitimate business interest in the enforcement of that non-solicitation agreement. The recent Illinois Appellate Court decision in Gastroenterology Consultants of the North Shore, S.C. v. Meiselman (2013 Il. App. 1st 123672) highlights this point.
In that case, a doctor named Meiselman left Gastroenterology Consultants (referred to... More