Thursday, March 6, 2014

Fifield, Federal Style

"The law is an ass. But it's not that big of an ass..."

U.S. District Court Judge - Northern District of Illinois on March 5, 2014, discussing holding of Fifield v. Premier Dealer Services.


In the past several weeks, two federal district court judges have declined to follow Fifield's bright-line, 2-year continued employment rule for enforcement of non-compete agreements. As readers of this blog know, Fifield generated enough controversy that - at least among lawyers in Illinois - it's now a noun ("I have a Fifield hearing at 2 pm"), a verb ("The judge just Fifield-ed me."), and an adjective ("That ruling had a crummy, Fifield-ish quality to it.").

Surprisingly, neither judge in the Northern District of Illinois cited my dissenting opinion in Fifield (available here). But the gist of both rulings is the same and, remarkably, somewhat similar to what I laid out last year in my beer-induced missiv:

(1) There has to be some latitude in the consideration rule for a particular employee's position within the company;

(2) The closer the employee bumps against the 2-year window, the less relevance the rule has;

(3) The method of termination - voluntary or involuntary - has to be relevant (if not dispositive).

The Fifield decision has caused a fairly wide rift. It's now a federalism issue. Federal courts, under the Erie doctrine, must determine how the Supreme Court of Illinois would look at the issue of consideration. The court yesterday in my case found that the Supreme Court would not adopt Fifield and that under Erie, the two-year rule was not in fact the law in Illinois.

We continue to see a proliferation of trade secrets and non-compete disputes make their way into federal court under diversity rules or as adjuncts to Computer Fraud and Abuse Act claims. This only will continue in light of recent rulings, and it may spur on plaintiffs to add CFAA claims where they otherwise wouldn't.

It's also only a matter of time until another district within the Appellate Court of Illinois (there are five) confronts a Fifield issue, which may give the Supreme Court a second chance to clarify this unacceptably confusing area of the law.

All the while, lawyers will continue hedging their advice with multiple disclaimers. Which, of course, clients love.

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