Illinois District Court Rules 15 Months of Employment Was Sufficient 'Consideration' to Support Noncompete Agreement

Author: Melissa A. Silver, XpertHR Legal Editor

February 13, 2014

The Northern District of Illinois has rejected the Illinois appellate court's holding in Fifield v. Premier Dealer Servs., 2013 IL App. (1st) 120327 (Ill. App. Ct. 1st Dist. 2013), appeal denied 2013 Ill. LEXIS 883 (Ill. Sept. 25, 2013), and ruled that an employee's15 months of employment was sufficient consideration to support a noncompete agreement. Since there is no bright line rule in Illinois regarding the length of employment sufficient to constitute adequate consideration, employers need to take into account both this ruling and the Fifield decision when drafting and enforcing noncompete agreements.

In Montel Aetnastak, Inc. v. Miessen, Case No. 1:13-cv-03801, an employee entered into an employment agreement with MAI, a subsidiary of Montel, as a regional sales manager. The employment agreement contained a noncompete clause that prohibited the employee "from engaging in any business substantially related to the business of MAI for two years after the termination of the agreement." During her employment with MAI, the employee was privy to and possessed confidential product and pricing information. Fifteen months later, she resigned from MAI and began working for its competitor, Bradford Systems Corporation.

Montel filed a complaint against the employee and Bradford alleging, among other things, that she breached the noncompete provisions of her employment agreement by accepting employment with Bradford. The employee and Bradford argued, relying on Fifield, that this claim should be dismissed because the employee's 15 months of employment was inadequate consideration in exchange for her agreement not to compete, which made the noncompete clause unenforceable. In other words, the employee's employment with MAI was not equal in value to her contractual promise to comply with the noncompete provisions. In Fifield, the appellate court held that restrictive covenants are enforceable in Illinois only if the employee was employed for at least two continuous years. The Illinois Supreme Court declined to review that case.

The district court was not persuaded by the employee's and Bradford's arguments due to contradictory holdings of the lower Illinois courts and the lack of direction from the Illinois Supreme Court. Consequently, the district court applied a fact-specific approach to determine whether 15 months of employment was sufficient consideration to support the employee's promise not to compete. It determined that the employee's length of employment, coupled with her voluntary resignation, was indeed adequate consideration to support the enforceability of the agreement.

Despite this determination, the district court held that the noncompete clause was unenforceable because it was overbroad; not only did it prevent the employee from working for any employer that could be considered a competitor, even if employed in a noncompetitive activity, but its geographic scope was almost limitless.