Totality of Circumstances

Totality of Circumstances in Enforcement of Non-Competition Agreements

As we said in our discussion of “legitimate business interests” when analyzing whether a non-competition agreement can be enforced in Illinois here, business people and companies that find themselves threatened with or actually in litigation to enforce post-employment non-competition agreements, and their close cousins, non-solicitation agreements, should make every possible effort to settle matters before litigation ensues or progresses.

Once litigation ensues, the temptation will be strong for a plaintiff to attempt to establish early on in a case that a particular post-employment restriction is per se reasonable, rather than per se unreasonable. The scenario of this tempting opportunity can arise in the context of a motion to dismiss by a defendant seeking to avoid enforcement of the post-employment restraint.

Taking the extreme trade secret misappropriation scenario we present in our discussion of “legitimate business interest” here, an employer-plaintiff might be tempted to advance various appealing arguments in response to a defendants’ motion to dismiss, with the strategic goal of obtaining a ruling by the court that post-employment restraint is reasonable as a matter of law.

For example, it might be intuitively appealing for the plaintiff to argue that even if the post-employment restraint lacks facts like geographic or time limitations, despite those shortcomings, the court should find the provision reasonable as a matter of law, because (1) plaintiff has a legitimate business interest in enforcing a non-solicitation clause against a former employee who acquired trade secrets and subsequently tried to use them for his own benefit; (2) the provision does not present an undue hardship to the defendant guilty of misappropriation of a trade secret, because it expressly allows him to compete with the employer for business anywhere in the world, except for the employers’s existing customers for a period 1 year, and (3) the clause is not injurious to the public because it does not restrain competition because it only seeks to maintain the employer’s hard-earned customer base.

Even against the foregoing backdrop, while an Illinois court may well deny a defendant’s motion to dismiss, an Illinois court will also be duty bound by Illinois law on the enforceability of post-employment restraints. Illinois law makes it extremely difficult if not impossible not only for a defendant to prevail on a motion to dismiss at an early stage in the case, but equally impossible for a plaintiff to obtain a ruling in the denial of a defendant’s moisten to dismiss that finds the restraint provision to be reasonable.

It is almost impossible to prove at an early stage in a such a case that a post-employment restraint is categorically (per se) reasonable (or per se unreasonable) as a matter of law. Applicable Illinois law says that resolving whether a post-employment restraint is reasonable and thus enforceable, depends on the totality of the circumstance, which necessarily require development of the specific facts of each individual case, which in turn almost always must be developed in pre-trial discovery, which requires time and money.

The attorneys at Lubin Austermuehle have over thirty years of experience defending and prosecuting non-compete, trade secret and restrictive covenant lawsuits. We are committed to fighting for our clients’ rights in the courtroom and at the negotiating table. Conveniently located in Chicago and Elmhurst, Illinois, we have successfully litigated non-compete and trade secret and covenant not to compete cases for clients all over the Chicago area. To schedule a consultation with one of our skilled attorneys, you can contact us online or give us a call at 630-333-0333.