On May 10, 2019, the Illinois Appellate Court, First District, reversed the trial court's dismissal of an employer's two-count complaint for breach of fiduciary duty and tortious interference with prospective economic advantage. Advantage Marketing Group, Inc. v. Keane, 2019 IL App (1st) 181126 (First District May 10, 2019). The First District held that the employer's complaint stated causes of action against the employee for breach of fiduciary duty and tortious interference, even though the employee was not an officer or director of the company. The employer alleged that the employee breached his fiduciary duty to the employer when he allegedly failed to disclose and misappropriated a corporate opportunity to purchase a competing business. Under Illinois law, an employee owes fiduciary duties to his or her employer, which arise from the employment relationship. These include the duties of loyalty and fidelity as well as the duty to avoid self-dealing at the expense of the employer.
Illinois Appellate Court
On April 2, 2019, the Illinois Appellate Court, Second District, reversed the trial court's order of summary judgment in favor of the defendant-employer in an employment discrimination lawsuit under the Illinois Human Rights Act ("IHRA"), in which the plaintiff-employee claimed that her employer unlawfully discriminated against her because of her sex, race, national origin, and age, and unlawfully retaliated against her for complaining about it. Lau v. Abbott Laboratories, 2019 IL App (2d) 180456 (Second Dist. April 2, 2019). The IHRA is an Illinois anti-discrimination statute that contains the same employee protections as the federal anti-discrimination statutes (as well as some additional protected classifications that are not covered by the federal laws). Illinois courts interpreting the IHRA are guided by federal case law interpreting the federal anti-discrimination laws. The same legal standards and proof paradigms apply.
On March 29, 2019, the Illinois Appellate Court, First District, upheld the rule that continued employment for less than two years does not constitute adequate consideration to support noncompetition or nonsolicitation provisions contained in Illinois at-will employment contracts. Axion RMS, Ltd. v. Booth, 2019 IL App (1st) 180724 (First Dist. March 29, 2019). This is the so-called "two-year rule," established by the Illinois Appellate Court, First District, in its decision in Fifield v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327, which remains fluid and controversial, because the Illinois Supreme Court has not decided the issue. Consequently, federal district court judges may, but are not required to follow the "two-year" rule when determining the enforceability of noncompetition or nonsolicitation agreements under Illinois law. Federal judges in the U.S. District Court for the Northern District of Illinois have split on the issue--some follow the bright-line "two-year rule," while others determine the enforceability of employment restrictive covenants based upon the totality of the circumstances.
On March 11, 2019, the Illinois Appellate Court, First District, held that under Illinois law, a successor business entity may be liable for an employment discrimination claim against an employer that transferred its assets to the successor in order to avoid liability for the employment discrimination claim. Illinois Department of Human Rights v. Oakridge Nursing & Rehab Center, et al., 2019 IL App (1st) 170806, March 11, 2019. The employee filed an age and disability discrimination charge (the "Charge") against his employer under the Illinois Human Rights Act ("IHRA"). After the employer received notice of the Charge, it transferred substantially all of its assets to a related but separate business entity. Subsequently, a judgment in the amount of $30,000 was awarded by the Illinois Human Rights Commission to the employee and against the employer, which the employer failed to pay.
On December 11, 2018, the Illinois Appellate Court, Third District, declined to establish a per se standard of reasonableness for the temporal scope of employment-based restrictive covenants, indicating that reasonableness must be determined based upon the totality of the facts and circumstances of each individual case. Pam's Academy of Dance/Forte Arts Center v. Marik, 2018 IL App (3d) 170803 (12/11/2018). In this case, the plaintiff alleged two counts of breach of an employment contract and a third count for breach of the Illinois Trade Secrets Act. The plaintiff alleged that the defendant, a former employee, breached their employment non-disclosure and restrictive covenant agreement by opening a dance studio within 25 miles of the plaintiff's studio and soliciting students and teachers through an improperly-obtained customer list.
On April 16, 2018, the Illinois Appellate Court, First District, reversed the dismissal of an Illinois common law retaliatory discharge claim. Roberts v. Board of Trustees Community College, 2018 IL App (1st) 170067 (4/16/2018). The plaintiff filed a lawsuit against his former employer alleging claims for common law retaliatory discharge, violation of the Illinois Whistleblower Act, and wrongful termination. The circuit court dismissed the retaliatory discharge claim and whistleblower claim. The First District reversed the dismissal of the plaintiff's retaliatory discharge claim, but affirmed the dismissal of his claim under the Whistleblower Act. Illinois follows the employment at-will rule, which means that an employee who does not have a specified term of employment under an employment contract is subject to termination by the employer at any time for any or no reason, with or without notice. However, Illinois recognizes an exception to the general employment at-will rule when the discharge violates a clear mandate of public policy.
On December 13, 2017, the Illinois Appellate Court, Second District, reversed the circuit court's dismissal of a workplace discrimination and wrongful termination lawsuit on procedural grounds. Metzler v. Katherine Shaw Bethea Hospital, 2017 IL App (2d) 170001 (12/13/2017). The plaintiff, who was employed by the defendant for 24 years, most recently as a chemistry supervisor, alleged that he was harassed by a female supervisor, given a negative performance review, suspended, and terminated because of his sex, male, in violation of the Illinois Human Rights Act (the "Act"). After his termination, he filed a Charge of Discrimination with the Illinois Department of Human Rights (the "Department") alleging unlawful sex discrimination in violation of the Act, which prohibits various types of employment discrimination.
On October 20, 2017, a federal district court judge for the Northern District of Illinois held that a non-solicitation restrictive covenant contained in an employment contract was not unenforceable for lack of adequate consideration, even though the defendants were employed for fewer than two (2) years. Stericycle, Inc. v. Simota, et al., No. 16 C 4782 (N.D.Ill. 10/20/2017). In so holding, the court rejected the Illinois Appellate Court's ruling in Fifield v. Premier Dealer Servs., 2013 IL App (1st) 120327, which held that a non-competition or non-solicitation restrictive covenant contained in an employment at-will employment agreement is unenforceable for lack of adequate consideration when the employee was employed for fewer than two (2) years. Several other Illinois Appellate Court decisions have followed Fifield and adopted the so-called "two-year rule," but the Illinois Supreme Court has not reached the issue. Accordingly, federal court judges are not bound to follow Fifield, and instead must make a predictive judgment on how the Illinois Supreme Court would decide the issue.
On September 26, 2017 (in an unpublished Rule 23 opinion), the Illinois Appellate Court, First District, ruled that a 2.5 Million Dollar punitive damages award in an Illinois workers' compensation retaliatory discharge lawsuit was unconstitutional under federal due process standards, and reduced the punitive damages award to $1,406,839.50 based on a 9:1 ratio of punitive damages to compensatory damages. Francek v. Dominick's Finer Foods, LLC, et al., 2017 IL App (1st) 162574-U. Following a jury trial in a retaliatory discharge case, the circuit court entered judgment on the jury verdict in favor of the plaintiff and against his former employer in the total amount of $2,656,315.50. The plaintiff claimed that he was discharged in retaliation for filing claims under the Illinois Workers' Compensation Act. The jury returned a verdict in the amount of $156,315.50 in compensatory damages, $2,500,000 in punitive damages, plus court costs. The compensatory damages were itemized as follows: (1) $31,315.50 for psychological treatment and counseling; (2) $75,000 for emotional and/or psychological damages; and (3) $50,000 for emotional and/or psychological damages reasonably certain to be experienced.
On August 7, 2017, the Illinois Appellate Court, First District, held that a former branch sales manager did not violate the noncompetition covenants contained in his employment contract with his former employer when he transmitted LinkedIn invitations to its employees. Bankers Life and Casualty Company v. American Senior Benefits, LLC, et al., 2017 IL App (1st) 160687 (8/7/2017). The former employer sued for breach of the noncompetition agreement. It alleged that the former employee breached the agreement by attempting to solicit and recruit its employees for his new employer, a competitor, through LinkedIn requests to induce them to sever their employment with the plaintiff and join the competitor. The noncompetition provision stated that during the term of his employment contract and for 24 months thereafter, he was prohibited from inducing or attempting to induce any employee to sever his or her employment relationship or sell insurance for any competitor.