Court Opinion

ID: 9534143
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:37:10.512764+00
Date Added: 2024-06-11T13:29:42.145320
License: Public Domain

JUSTICE SCHMIDT, dissenting: The majority claims that continued employment must be “for a substantial period of time beyond the threat of discharge” for it to be adequate consideration to support a covenant not to compete in an employment contract and that, as a general rule, two years or more of continued employment will suffice. 379 Ill. App. 3d at 728-29. Then, citing Mid-Town Petroleum as authority, the majority notes that the fact Gunderson resigned her position is irrelevant and does not change its analysis. 379 Ill. App. 3d at 729. The majority mischaracterizes the holding of Mid-Town. In Mid-Town, it is true that the employee (Gowen) resigned seven months after signing the covenant. Mid-Town, 243 Ill. App. 3d at 70. The Mid-Town court found the restrictive covenant to be unenforceable against Gowen, holding the agreement lacked adequate consideration. Mid-Town, 243 Ill. App. 3d at 71. However, to hold, as the majority does, that seven months of continued employment can never serve as adequate consideration for a restrictive covenant, even if the employee quits, is both wrong and unsupported by Mid-Town. Our supreme court has made it clear that continued employment is adequate consideration sufficient to make a restrictive covenant enforceable. See Melena v. Anheuser-Busch, Inc., 219 Ill. 2d 135, 847 N.E.2d 99 (2006); Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52, 866 N.E.2d 85 (2006). However, in Mid-Town the appellate court went to great lengths to explain that Gowan rejected terms of a proposed agreement for which mere continued employment would act as consideration. When faced with the “sign this or be fired” ultimatum, Gowen chose the latter on two separate occasions. Mid-Town, 243 Ill. App. 3d at 66. Gowen only agreed to sign the restrictive covenant after being offered a promotion to the position of sales manager, a position that would report directly to the chief executive officer (CEO). Several months later, Gowen’s employer advised him that he would no longer be sales manager and no longer report to the CEO. He immediately quit. The Mid-Town court went to great lengths to explain the failure of the consideration (the promotion) and yet the majority simply refuses to acknowledge it. To hold, as the majority does here, that an employee can void the consideration for any restrictive covenant by simply quitting for any reason renders all restrictive employment covenants illusory in this state. They would all be voidable at the whim of the employee. I find that Gunderson’s continued employment was adequate consideration. She simply quit. Unlike the employee in Mid-Town, the terms of her continued employment were not changed. The Mid-Town court made it clear that Gowen quit because the consideration failed. The majority here holds that the consideration failed because Gunderson quit. Big difference! Moreover, this is a suit at law for damages (quite simply: a breach of contract action) and not one in equity seeking an injunction. The Mid-Town court observed that even a peppercorn of consideration is sufficient to support a finding of adequate consideration when one seeks damages at law while more should be required when one seeks equitable relief. Mid-Town, 243 Ill. App. 3d at 71. Mid-Town was an action in equity, seeking a preliminary injunction. Even the correct holding in Mid-Town is inapposite to this breach of contract case. I also find that the temporal restrictions contained in the covenant are reasonable. The covenant required Gunderson to refrain from soliciting, diverting, accepting, or servicing Brown’s customers for a two-year period following her termination. This is not unreasonable in either time or territory. See Cockerill v. Wilson, 51 Ill. 2d 179, 281 N.E.2d 648 (1972); Canfield v. Spear, 44 Ill. 2d 49, 254 N.E.2d 433 (1969). Finally, Brown has raised a genuine issue of material fact as to whether Gunderson solicited or serviced its clients in violation of the agreement. Gunderson claims she merely performed administrative duties for her new employer. One of Brown’s clients, Riverton, provided testimony that Gunderson was at its facility once a month to make presentations and served as the sole contact regarding insurance issues for Riverton’s employees. Certainly, Brown has raised a genuine issue of material fact as to Gunderson’s involvement with its clients. Lastly, Gunderson maintains that even if adequate consideration existed to form a valid contract, this covenant not to compete must still fail as Brown cannot meet the “legitimate-business-interest” test. I contend that Brown does not have to satisfy the test. Justice Steigmann has recently pointed out that courts have created and hijacked the legitimate-business-interest test. Lifetec, Inc. v. Edwards, 377 Ill. App. 3d 260, 275 (2007) (Steigmann, J., specially concurring). I agree with Justice Steigmann’s analysis that the legitimate-business-interest test “is no longer valid, if it ever was.” Lifetec, Inc. v. Edwards, 377 Ill. App. 3d at 275 (Steigmann, J., specially concurring). However, even if the test applies, questions of fact remain. I would reverse the grant of summary judgment and remand for further proceedings.