Monday, March 1, 2010

Citadel's Appeal Proves Unsuccessful In Extending Non-Compete Period (Citadel Investment Group v. Teza Technologies)

As I wrote last year, the dispute between Citadel Investment Group and a cadre of ex-employees in its high-frequency trading unit provided one of the year's most high-profile and interesting non-compete disputes.

Though Citadel has a strong case factually, the scope of the remedy it sought presented it with more challenging issues of law. Specifically, Citadel argued at a preliminary injunction hearing for equitable extension of the defendants' non-compete period for the length of time correspondent to their respective breach. The trial court did enforce the non-compete, but because so much time had passed after the wrongful competition started, Citadel did not gain much in the way of a remedy. In fact, Citadel elected a nine-month non-compete, and ended up with about 1 month in the way of an injunction.

The appellate court ruled that the trial court properly refused to extend the non-compete period. As with other cases in Illinois that have addressed this issue, the key to obtaining and equitable tolling remedy is the presence of a clear contractual provision allowing for extension of the non-compete period. The court did not hold that implied equitable tolling could never be ordered, but it declined to elaborate on when this might be available.

Because the preliminary injunction expired in November, the court did not address the merits of the defendants' cross-appeal.


Court: Appellate Court of Illinois, First District
Opinion Date: 2/24/10
Cite: Citadel Investment Group, LLC v. Teza Technologies, LLC, 924 N.E.2d 95 (Ill. App. Ct. 1st Dist. 2010)
Favors: Employee
Law: Illinois

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