Knowledge Center

Friday, July 17, 2015

HMB Obtains Victory at the Seventh Circuit Court of Appeals in Important Restrictive Covenant Case





CHICAGO (July 17, 2015) - HMB attorneys Hal Wood and Rich Wolf obtained a significant victory last week in the U.S. Court of Appeals for the Seventh Circuit in a case involving restrictive covenants. HMB represented five staffing company employees (and their new employer) who were accused by their former employer of violating restrictive covenants, stealing confidential and trade secret information, and deleting electronic documents in violation of the Computer Fraud and Abuse Act.

After a six-day trial in April 2014, the case was decided in favor of HMB's clients on each of the plaintiff's claims. At the trial, HMB presented evidence that demonstrated that the restrictive covenants at issue were not necessary to protect a legitimate business interest of the former employer. HMB also succeeded in convincing the trial court that the recent case of Fifield v. Premier Dealer Services, Inc. that requires two years of employment for a restrictive covenant to be enforceable (absent additional consideration) against an at-will employee prevented the enforcement of certain of the restrictive covenants at issue, despite the fact that every other Illinois federal court that has considered the issue has declined to apply Fifield in such a manner.

The plaintiff appealed the trial court's decision to the Seventh Circuit. Last week, the Seventh Circuit affirmed the trial court's decision, stating that the trial court correctly determined that the restrictive covenants at issue were not enforceable because they were not necessary to protect the plaintiff's legitimate business interests based on the totality of the circumstances presented at trial. The Seventh Circuit specifically noted that HMB attorneys presented "heaps of contradictory testimony" at trial to dispute the plaintiff's contention that the covenants were enforceable.

To discuss the specifics of this case or what it could mean for you, please contact Hal Wood at (312) 606-3219 or Rich Wolf at (312) 606-3248 or your HMB attorney. 

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