Fifield v. Premier Dealer Services, Inc.
993 N.E.2d 938
Ill. App. Ct.2013Background
- Fifield, formerly employed by Great American, was assigned to Premier Dealership Services (PDS) which Premier later purchased in October 2009.
- As a condition of Premier employment, Fifield signed an Employee Confidentiality and Inventions Agreement containing nonsolicitation and noncompetition provisions, with a first-year provision relaxing these terms if terminated for cause within the first year.
- Fifield began work for Premier on November 1, 2009, but resigned on February 12, 2010, effective two weeks later, and soon began employment with Enterprise Financial Group (EFG).
- Fifield and EFG sought declaratory relief that the restrictive covenants were unenforceable due to lack of adequate consideration.
- Premier counterclaimed to enforce the covenants; in December 2010 the trial court held the covenants unenforceable for lack of adequate consideration; an agreed order in 2012 dismissed related claims, and Premier appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there adequate consideration to support the covenants? | Fifield/EFG argue two years of continued employment is required; three months is insufficient. | Premier contends Fifield’s employment (and first-year promise) provides adequate consideration; preemployment signing is postemployment covenants. | No; two years’ continued employment required; three months is inadequate. |
| Are the nonsolicitation/noncompetition provisions postemployment covenants? | Agree they are postemployment covenants and thus subject to strict scrutiny for consideration. | Covenants are not postemployment because signed before employment. | They are postemployment covenants. |
| Does the first-year provision救 cure illusory at-will employment? | First-year clause does not cure two-year requirement. | First-year provision nullifies illusory at-will benefit by offering a meaningful time-limited protection. | First-year provision does not alter two-year consideration standard; still inadequate. |
| Application of the two-year consideration standard when employee resigns after short employment | Resignation does not negate adequate consideration if a two-year term is contemplated. | Short employment cannot supply two years of consideration. | Two years of continued employment required; ~three months insufficient. |
Key Cases Cited
- Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724 (2008) (two-year rule for adequate consideration)
- Diederich Insurance Agency, LLC v. Smith, 2011 IL App (5th) 100048 (2011) (two years often required for restrictive covenants)
- Lawrence & Allen, Inc. v. Cambridge Human Resource Group, Inc., 292 Ill. App. 3d 131 (1997) (ancillary contract and adequate consideration prerequisites)
- Cambridge Engineering, Inc. v. Mercury Partners 90 BI, Inc., 378 Ill. App. 3d 437 (2007) (reasonableness and ancillary requirements for covenants)
- Lifetec, Inc. v. Edwards, 377 Ill. App. 3d 260 (2007) (pre-employment covenants treated as postemployment covenants)
- Sunbelt Rentals, Inc. v. Elhers, 394 Ill. App. 3d 421 (2009) (cited and later superseded by Arredondo; discussed covenants)
- Arredondo v. City of Chicago, 2011 IL 111871 (2011) (supreme court on restrictive covenants and consideration)
- Curtis 1000, Inc. v. Suess, 24 F.3d 941 (7th Cir. 1994) (pre/post-hire covenants distinction rejected by Seventh Circuit)
- Bires v. WalTom, LLC, 662 F. Supp. 2d 1019 (2009) (pre- vs post-employment covenants distinction rejected in federal court)