Friday, September 7, 2012

Illinois' Rule 23 Problem

Some years back, our Supreme Court amended Rule 23 to allow for the appellate courts to publish non-precedential orders in an expanded class of cases. Rule 23 had long been part of the appellate equation, but the latest amendment gave courts greater authority to cut back on issuing formal opinions. This change was a direct response to the perceived deluge of appeals in the five appellate districts. Publishing opinions when the courts were under a crushing workload (apparently) was seen as unfair to the appellate justices and parties who would rely on opinions that were not (apparently) subject to intellectual rigor.

How does this impact non-compete law? So far this year, our appellate courts have issued four Rule 23 orders that should have been published opinions.

The first case, Hafferkamp v. Llorca, 2011 IL App (2d) 100353-U (actually filed in 2012) was handed down in February, and it handed down an important rule of law: the standards articulated in Reliable Fire Equipment Co. v. Arredondo are to be applied retroactively - meaning cases decided under the old law could be reversed for the circuit court to apply the correct test.

The second one was just as significant. Kairies v. All Line, Inc., 2012 IL App (2d) 111027-U, held that the Reliable Fire case did nothing to change the old case law on whether specific restraints were unreasonable. According to the court, Reliable Fire only dealt with determining the viability of a protectable interest. This holding was simply incorrect, as I have written before.

The third case, InvestRX Corp. v. DiGiovanni, 2012 IL App (1st) 120758-U, came from the First District in Chicago last month and held that the circuit court properly issued a preliminary injunction against former officers who breached non-competition restrictions entered into in connection with a sale of the business. Admittedly, the opinion does not break any new ground, but it does discuss the type of protectable interest an enforcing party can assert to obtain injunctive relief. For no other reason, it should have been published to serve as a useful guide for other courts to assess the grant or denial of injunctive relief post-Reliable Fire.

Finally, just this past week, the Second District again published a Rule 23 order holding that five months continued employment was not sufficient consideration for a non-compete agreement. The court's opinion in Gallagher Bassett Svcs., Inc. v. Vacala, 2012 IL App (2d) 111175-U, was lengthy and dealt with a consideration issue that has divided Illinois state and federal courts. If for no other reason, the Vacala case ought to serve as some kind of precedent on the consideration issue since the Second District had not previously adopted the test that other districts had. Additionally, the court discussed that a trade secrets misappropriation claim requires specific, non-conclusory factual allegations concerning how the alleged secrets were misappropriated. This may not be novel, but the case law on pleading standards in trade secrets actions is so sparse, courts could use more guidance.

In my mind, Rule 23 was not designed for this, and it has become overused. Lawyers who practice in this area need more precedent to go on. Not many cases in this field make it to the appellate courts, and the issues our courts are deciding are significant enough that they should be released in opinion form.

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