Tuesday, November 29, 2011

Supreme Court of Illinois To Rule in Reliable Fire Equipment on Thursday

The Supreme Court of Illinois will issue its ruling Thursday morning in the important case of Reliable Fire Equipment v. Arredondo.

Last year, I wrote extensively on the Second District's opinion in this case, which effectively caused a three-way split among the Appellate District courts in how employment non-competes are analyzed. Though I have not noticed any great controversies or debates in the non-compete cases I currently have, the fractured opinion in Reliable Fire Equipment highlighted a lingering issue over the scope of the legitimate business interests that can support non-compete agreements in Illinois.

My prediction is the Court will adopt (or reaffirm) a three-part test for assessing whether employment non-compete agreements are enforceable. That is, the covenant must: (1) be no greater than necessary to protect a legitimate business interest of the employer; (2) not impose an undue hardship on the employee; and (3) not harm the public interest.

The Court, in my judgment, will not adopt the categorical rule the appellate courts have long advocated for what types of protectable interests can support a non-compete. In other words, I expect the Court to vest trial courts with flexibility to assess whether an employer has articulated a protectable interest under the unique facts and circumstances of each case. I would be surprised if the Court holds that the only two protectable interests are near-permanent customer relationships and trade secret or confidential information.

This will be the Court's first ruling on a non-compete case since 2006. In that case, the Court offered little guidance on the issues in Reliable Fire Equipment and did not discuss the types of interests that can support a non-compete.

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