Readers of this blog know that long settled understandings regarding what constitutes adequate consideration for a restrictive covenant in Illinois were turned upside down when the First District Appellate Court in Illinois held in Fifield v. Premier Dealer Services Inc., 2013 IL App. (1st) 120327 that, absent other consideration, two years of employment are required for a restrictive covenant to be supported by adequate consideration, regardless of whether the covenant was signed at the outset of employment or after, and regardless of whether the employee quit or was fired.
The Illinois Supreme Court declined to hear Fifield, but at least three federal district court judges in Illinois have refused to apply Fifield.
Just recently, another federal district court judge in Illinois also refused to apply Fifield. This time it was Judge Robert M. Dow, Jr., who held in Traffic Tech, Inc. v. Kreiter, Case No. 14-CV-7528 (N.D. Ill. Dec. 18, 2015), that the “Illinois Supreme Court is not likely to adopt a two-year, bright line rule in assessing whether an employee was employed for a ‘substantial period of time’ so as to establish adequate consideration to support a post-employment restrictive covenant.” The essence of Judge Dow’s ruling is that Fifield is a mis-reading of Illinois law, and that “Illinois law does not require a strict application of the two-year rule in assessing the enforceability of a non-solicitation clause (or any similar restrictive covenant).”
Because the case was before him on a motion to dismiss, Judge Dow did not ultimately rule on whether the defendant had received adequate consideration.
Given the split between the Illinois appellate court and at least four Illinois federal district court judges over the merits of Fifield, this will remain a hot issue for Illinois employers. Unless and until the Illinois Supreme Court weighs in, Illinois employers hoping to enforce a restrictive covenant within two years after the signing date should be prepared to distinguish Fifield factually or legally.
- Member of the Firm