Federal district judges in Chicago are now split over whether to follow the Illinois appellate court’s landmark non-compete decision, Fifield v. Premier Dealer Services, Inc., 373 Ill. Dec. 379, 993 N.E. 2d 938 (Ill. App. 1st Dist. 2013).
In the summer of 2013, long held beliefs about the required consideration for a restrictive covenant under Illinois law were thrown a curve when the Illinois Appellate Court for the First District (i.e., Cook County) held in Fifield that, absent other consideration, two years of employment is required for a restrictive covenant to be deemed supported by adequate consideration—even where the employee signed the restrictive covenant as a condition to his employment offer and even where the employee voluntarily resigned.
Earlier this year, in Montel Aetnastak, Inc. and Montel Inc. v. Kristine Miessen et al., No 13 C 3801, 2014 U.S. Dist. LEXIS 11889 (N.D. Ill. Jan. 28, 2014), Judge Ruben Castillo, the Chief Judge for the United States District Court for the Northern District of Illinois, declined to follow Fifield, holding that “[g]iven the contradictory holdings of the lower Illinois courts and the lack of a clear direction from the Illinois Supreme Court, this Court does not find it appropriate to apply a bright line rule” regarding what constitutes sufficient consideration for a non-compete. Instead, Judge Castillo chose to employ “the fact-specific approach employed by some Illinois courts.”
Judge Castillo’s immediate predecessor as Chief Judge for the United States District Court for the Northern District of Illinois, James F. Holderman, has now come down exactly the opposite way on this issue, and specifically applied Fifield and specifically rejected Judge Castillo’s holding in Montel. Instant Technology, LLC v. DeFazio et al., No. 12 C 491, 2014 U.S. Dist. LEXIS 61232 (N.D. Ill. May 2, 2014). We are not aware of any other published federal court decisions or any published Illinois appellate court decisions to address this issue. However, at least two Cook County, Illinois judges have acknowledged and applied Fifield.
We will continue to monitor developments regarding Fifield. In the meantime, Illinois employers hoping to enforce restrictive covenants within two years after the signing date should be prepared to distinguish Fifield factually or legally.