My First Trial Under Reliable Fire

On Monday, I (successfully) conducted my first non-compete trial since the Supreme Court of Illinois' decision in Reliable Fire Equipment v. Arredondo.

As readers recall, that case affirmed the three-part reasonableness test used to determine the enforceability of employee non-compete agreements. It also reiterated the principle that an employer must demonstrate a legitimate business interest to support the covenant - a relatively uncontroversial maxim which our Appellate Courts made controversial for reasons that are still unknown to me.

I happen to think that Reliable Fire didn't do nearly as much to change the law as a lot of other commentators and attorneys do. With one exception.

TROs are going to be exceptionally difficult to obtain. Because the Court held that the "totality of the circumstances" must be considered, I think courts almost have to consider the evidence both sides present. Imposing a TRO in state courts is essentially a matter of initial pleading, and judges likely will shy away from that exceptional remedy in favor of a more balanced evidentiary hearing.

So, in terms of substance, I still don't see a major change in the way courts approach non-compete cases under Reliable Fire. My first trial since that decision didn't really result in any surprises. I prevailed on my counterclaim for declaratory judgment (as well as defeating a consolidated preliminary injunction motion), with the court rendering a final judgment that the employee's covenant was unenforceable and protected no legitimate business interest whatsoever.

My approach to trial didn't change. With such a poorly worded contract, I wanted the court to focus on the overbreadth and the terms themselves. My case also dealt with an industry which was, essentially, a retail business - with goods and products whose effectiveness were easily determined upon a simple inspection. My case did not concern an intangible, or some professional service - circumstances where courts are more likely to conclude that a departing employee can truly harm a protectable employer interest.

For employer's counsel, Reliable Fire no doubt allows for some creativity into establishing a legitimate business interest - highly specialized training, executive management, disintermediation come to mind. On the flip side, an employee has room to request the court to consider other circumstances bearing on reasonableness. In my case, I submitted evidence of Illinois' high unemployment rate and the fact my client's skills were not easily transferable outside the industry.

In Illinois, as in federal court, if an employee pursues a claim for declaratory relief, she is entitled an early hearing "as in the case of a motion." The employee can, effectively, set a claim for a quick evidentiary hearing, reduce cost, and obtain a declaration of rights - the procedure I used to obtain a final judgment in a matter of a few months. A court can (and should) still consider all the evidence and examine the "totality of the circumstances" in this short period of time. Very few courts want to try a case twice. Reliable Fire probably allows for some additional evidence, but in the vast majority of cases, I don't see the case having a great impact.