Reed v. Getco, LLC
2016 IL App (1st) 151801
Ill. App. Ct.2016Background
- Reed (employee) and Getco signed an employment agreement (Jan 19, 2007) containing a six‑month post‑employment noncompete (Sec. 6(a)) and a special pay provision (Sec. 6(b)) promising $1,000,000 (or formula amount) in exchange for compliance.
- Sec. 6(d) created a process for an employee to request accommodations for a proposed new job and stated Getco “may” modify restrictions “in its sole and absolute discretion.”
- Sec. 13(j) required any waiver or modification of the agreement to be in a writing signed by the party against whom enforcement is sought.
- Reed resigned July 11, 2013. On July 19, 2013 Getco emailed Reed that the Restricted Period was zero and he could work immediately; Reed nevertheless waited and did not take competitor employment until March 31, 2014.
- Reed sued for breach of contract seeking the $1,000,000 payment; Getco defended that it had validly waived/modified the noncompete, and alternatively Reed failed to mitigate. Trial court granted Reed summary judgment for $1 million; appellate court affirms.
Issues
| Issue | Reed's Argument | Getco's Argument | Held |
|---|---|---|---|
| Whether Getco validly waived the noncompete and avoided payment | Waiver invalid because Sec. 13(j) requires a signed writing by the party against whom enforcement is sought (Reed) and Reed never signed away rights | Noncompete is for employer’s sole benefit and thus Getco could unilaterally waive; July 19 email sufficed under Sec. 13(j) | Waiver invalid — Sec. 13(j) requires a writing signed by the party against whom enforcement is sought (Reed), and no such writing exists; noncompete not unilaterally waivable here |
| Scope of Sec. 6(d) — did it give Getco blanket, unilateral power to modify noncompete | 6(d) is a limited accommodation procedure: employee may request modification for a specific job and Getco may accept or deny; it does not authorize unilateral post‑termination rewrites | The sentence “may do so in its sole and absolute discretion” grants Getco broad authority to modify restrictions generally | 6(d) construed in context — it provides a limited mechanism for employee‑initiated requests; it does not authorize unilateral modification of Sec. 6 after resignation |
| Whether payment under Sec. 6(b) required Getco’s decision to enforce the noncompete (i.e., was payment conditioned on Getco’s action) | Payment was an independent promise in exchange for Reed’s covenant not to compete — not conditioned on Getco’s decision to enforce | Payment contingent on Getco’s election to enforce; Getco’s nonenforcement negated Reed’s entitlement | Payment obligation not conditioned on Getco’s decision; only two conditions to stop payments are (1) Getco determines Reed violated the agreement, or (2) a court finds Sec. 6 unenforceable; thus Getco’s email did not negate payment obligation |
| Duty to mitigate — must Reed seek alternate employment and reduce damages? | No duty to mitigate here because parties bargained: Reed promised not to compete for six months and Getco promised the payment; Reed’s right vested and was not displaced by any breach theory | Reed should have mitigated by accepting offers after Getco’s email waiving restrictions; damages should be reduced by earnings Reed could have obtained | No duty to mitigate in these circumstances: the contract created an independent payment obligation for Reed’s post‑employment covenant; cited mitigation authorities distinguishable and inapplicable |
Key Cases Cited
- Williams v. Manchester, 228 Ill.2d 404 (standard of review for summary judgment)
- Gallagher v. Lenart, 226 Ill.2d 208 (contract construed to give effect to parties’ intent; read as whole)
- Thompson v. Gordon, 241 Ill.2d 428 (cannot interpret a clause in isolation; view provisions together)
- Board of Trade of the City of Chicago v. Dow Jones & Co., 98 Ill.2d 109 (words derive meaning from context)
- Sheehy v. Sheehy, 299 Ill. App.3d 996 (clear and unambiguous contract language controls)
- Bartels v. Denler, 30 Ill. App.3d 499 (general rule: party may waive contract provisions benefiting it)