Reed v. Getco, LLC
65 N.E.3d 904
Ill. App. Ct.2017Background
- Reed was employed by Getco under a 2007 written employment agreement that included a six‑month post‑employment noncompete (Section 6), a $1,000,000 (or formula) payment tied to that Restricted Period (Section 6(b)), and a clause requiring any waiver/modification to be in a writing signed by the party against whom enforcement is sought (Section 13(j)).
- Section 6(d) created a procedure where an employee who believes a restriction will prevent new employment may notify Getco and "discuss" possible accommodations; it added that Getco "shall be under no obligation to modify the restrictions ... but may do so in its sole and absolute discretion."
- Reed resigned in July 2013. Getco emailed Reed that the Restricted Period was waived, that it would pay no noncompete sums, and that he could begin working immediately. Reed did not accept competitor offers until the six‑month period elapsed and later sued for breach of contract seeking the $1,000,000.
- Both parties moved for summary judgment; the trial court ruled for Reed, holding Getco did not validly waive or unilaterally modify Section 6 and Reed had no duty to mitigate by immediately taking competitor jobs.
- Getco appealed, arguing (1) it properly waived the noncompete (or could do so unilaterally because the restriction benefits only Getco), (2) Section 6(d) gave Getco sole and absolute discretion to modify Section 6 generally, and (3) Reed had a duty to mitigate damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Getco's purported waiver of the noncompete | Reed: Section 13(j) requires a writing signed by the party against whom enforcement is sought; no such signed writing exists, so no valid waiver occurred. | Getco: Noncompete is solely for employer's benefit and thus may be unilaterally waived; the July 19 email was a writing by the party against whom enforcement would be sought (Getco). | Court: Section 13(j) requires a writing signed by the party against whom the waiver is enforced (Reed). No signed writing by Reed exists; Getco did not validly waive the restriction. |
| Scope of Section 6(d) "sole and absolute discretion" language | Reed: 6(d) is a limited procedure allowing an employee to request an accommodation; the discretionary phrase applies only to responses to such requests, not a blanket unilateral power. | Getco: The quoted sentence gives Getco general, sole and absolute discretion to modify Section 6. | Court: Read in context, 6(d) is limited to employee‑initiated requests; it does not authorize Getco to unilaterally rewrite Section 6 after employment ends. |
| Whether payment under Section 6(b) was conditioned on Getco's enforcement decision | Reed: Section 6(b) creates an exchange—Reed's promise not to compete for six months in return for the payment; only two conditions stop payments (employee violation or a court finding unenforceable). | Getco: Payment depended on Getco choosing to enforce the restriction; without enforcement, no obligation to pay. | Court: 6(b) lists only two circumstances that stop payments; Getco's unilateral decision to waive/decline enforcement is not among them. Payment obligation stood. |
| Duty to mitigate by accepting competitor offers after Getco's email | Reed: Contract obligated Reed not to compete for six months in exchange for payment; mitigation doctrine does not override that bargained exchange and payment vested. | Getco: A nonbreaching party must mitigate; once employer breaches, employee may seek other employment and should have accepted offers after Getco's email. | Court: Mitigation doctrine inapplicable here because parties bargained for post‑employment noncompete in exchange for payment; Reed had no duty to seek work that would breach his contractual obligations and payment was not reduced for failure to mitigate. |
Key Cases Cited
- Williams v. Manchester, 228 Ill. 2d 404 (Ill. 2008) (summary judgment standard)
- Gallagher v. Lenart, 226 Ill. 2d 208 (Ill. 2007) (contracts construed to effect parties' intent; read as whole)
- Stichter v. Zuidema, 269 Ill. App. 3d 455 (Ill. App. Ct. 1995) (interpretation of contract language regarding waivers/modifications)
- Bartels v. Denler, 30 Ill. App. 3d 499 (Ill. App. Ct. 1975) (general rule that a party may waive contract provisions that benefit it)
- Gray v. Mundelein College, 296 Ill. App. 3d 795 (Ill. App. Ct. 1998) (employee mitigation duty when employer breaches)