IT IS BECOMING EVER EASIER TO ENFORCE NON-COMPETE AGREEMENTS.

by David McCarthy

It has long been my position that an attorney preoccupied with his/ her win-loss record would rather oppose a non-competition agreement than attempt to enforce it. They have been difficult to enforce in Illinois, and for good reason: They are a restraint on trade.

But the worm is turning. First, the "blue pencil rule" has gained some traction in Illinois. There was a time when our courts would withhold enforcement of a non-competition agreement if they determined that it was unduly broad in time or area, even if the agreement included a "blue pencil" clause.

The "blue pencil" clause, a staple of non-competition agreements, authorizes a court-ordered narrowing of time and area limitations if those which the agreement recites are deemed too broad. Illinois was slow to accept the "blue pencil rule" on the theory that it amounted to re-making the agreement of the parties. And this spared employers from a sordid temptation to overreach on the front end. After all, why not shoot for the moon -- write in outrageous time and area restrictions -- if, worst case, the court can be counted on to apply the "blue pencil rule" and pare back the time and area restrictions? Nonetheless, over time, the "blue pencil rule" has gained some favor in Illinois.

In September of 2009 one of our Illinois Appellate Courts took an even more dramatic step in favor of the enforceability of non-competition agreements. The Fourth District Appellate Court (central Illinois, including Springfield) held that the "legitimate business interest" prong of the analysis was irrelevant. For ages, the proponent of a non-competition agreement was obliged to establish (i) the reasonableness of the time and area restrictions and (ii) that enforcement (an injunction) was necessary to protect a "legitimate business interest" of the employer (e.g., an interest in preserving confidential information or a "near-permanent" relationship with customers). In today's Fourth District, the proponent need only show that the time and area restrictions are reasonable (and the "blue pencil rule" is often available in aid of that showing).

Does this matter in the real world? You bet it does. Some time ago, we successfully opposed an action to enforce a non-competition agreement on the grounds that the former employer did not have the "legitimate business interest" that was necessary to obtain an injunction. Our client spent all his time at the office of the customer, and the only "confidential information" accessible to him was the customer's information, not the employer's information. Additionally, the customer relied on its own personnel and a number of other outside organizations for the same sorts of services which the employer provided. Finally, despite allegations that "vast sums" had been expended to cultivate the customer, the evidence was to the contrary: All advertising was generic. No advertising was customer-specific. And beyond that the "vast sums" spent to woo the customer consisted of $130.00 doled out to buy lunch on a number of occasions.

All that would be irrelevant in today's Fourth District. Whether the law of the Fourth District will become the law elsewhere in Illinois remains to be seen. There is now a conflict among the districts, and one of the chief functions of the Illinois Supreme Court is to resolve conflicts among the Appellate Courts. Stay tuned.

PAY ME NOW OR PAY ME LATER

By David McCarthy

You don't need a well-written contract when everyone is performing as agreed. You need it when things change for the worse. Everything is always changing, of course, and all too often changing for the worse.

A number of matters that have come into the office lately have driven those points home. In one case, a client dealing with a known rascal preferred to sign off on an agreement that was virtually drawn on a cocktail napkin than to pay an attorney a few bucks to "rascal-proof" the agreement. It was only a matter of time before the rascal did what rascals do. The client has paid far more to keep the rascal in check and the effectiveness of those efforts is much harder to measure than would be so had a well-written contract been drawn at the start of the relationship between rascal and client.


In another case a group of would-be partners had the good sense to commission a well-drawn contract on the front end. Their objective was to share gains and losses equally.

That seems simple enough, doesn't it?

Imagine several boys with paper routes who meet in their tree house and deposit their collections in a coffee can. At the end of the month, they count out the money in the can and divide it equally.

What could go wrong with that?

Not much if they are all delivering the same newspaper to the same number of customers, achieving the same rate of collection, depositing every dime they agreed to deposit; and if no third parties have any claim on the money in the coffee can (e. g., the Internal Revenue Service, the Illinois Department of Revenue, the Illinois Department of Employment Security, spouses, children, dependents, and all the rest of it).

Since the would-be partners are grown men with lives and obligations that are a bit more complicated than those of boys with paper routes in a tree house, putting down on paper an agreement that meets the needs of all is of utmost importance and demands care and attention.

SENIORITY OR DISABILITY: WHO GETS THE JOB?

by David McCarthy

Query: When an employee with seniority and an employee with a disability vie for the same job, who gets it?

Usually the employee with seniority, according to the U.S. Supreme Court.

In 1990 a man named Barnett injured his back while employed as a cargo handler by U. S. Airways Inc.. He invoked his own seniority rights to gain a less demanding position in the mail room. Two years later his position, among others, was opened to seniority-based employee bidding, and Mr. Barnett learned that two co-workers who were senior to him intended to bid for his positions.

Mr. Barnett proposed to U. S. Airways that it accommodate his disability by exempting his position from the seniority system. Ultimately the employer refused, Mr. Barnett lost his job, and he sued U. S. Airways on the grounds that it had discriminated against him in violation of the Americans With Disabilities Act ("ADA").

Summary judgment for the defendant-employer was reversed on appeal. Then the U. S. Supreme Court, in another 5-4 decision, reversed the Court of Appeals and remanded the case to the trial court.

The Court held that the accommodation requirements of the ADA do not oblige an employer to disregard its own seniority system unless the plaintiff-employee shows "special circumstances" warranting from the seniority system in that particular case.

What does a "special circumstance" look like?

The Court offered only one example, to wit, that of an employer who has so often exercised a unilateral right to make exceptions to its seniority system that one more exception will not matter. It is too soon to tell whether the seniority-is-trump rule will be swallowed up tby the "special circumstances" exception, but it is predictable

HOW DO YOU GET TENURE WHEN YOU HAVE NOT PUBLISHED? YOU SUE, OF COURSE.

by David McCarthy

There was a time when it was widely understood and accepted that tenure was conditioned on being published.

Interestingly, officials of the University of Wisconsin were sued for refusing (by a vote of 7 to 1) to grant tenure to an assistant professor of physical education who had published nothing. The contract of employment did not guarantee tenure, but only that plaintiff would be considered for tenure. The case was dismissed on dispositive pre-trial motions and the Seventh Circuit Court of Appeals affirmed the dismissal.

Plaintiff brought a claim under Title VII of the Civil Rights Act that alleged sexual discrimination in the form of "associational discrimination."

It contended, in gist, that tenure had been denied to plaintiff because of her association with a male employee of the university who had earlier filed a sex discrimination claim (and who also cast the only vote in favor of granting tenure to plaintiff). The Title VI claim was found to be time barred.

A claim predicated on denial of equal protection failed for want of evidence that plaintiff had been treated differently from similarly situated candiates for tenure and for want of evidence that the individual defendants were motivated by an intent to discriminate against persons such as plaintiff.

Plaintiff asserted that she was a class of one, a heterosexual female professor who befriended a heterosexual male professor who filed a sex discrimination complaint. However, she did not carry her burden of establishing that the defendant's justification for discriminating against her was irrational and arbitrary.

Finally, the Court rejected a claim that denial of tenure carried a stigma so great that at two different performance reviews prior to the time when plaintiff came up for tenure, the Dean had told her that publishing would be a "critical factor" in the tenure decision.

After the litigation commenced and after the defendants filed their motion for summary judgment, the response of plaintiff flagrantly disregarded local rules pertaining to statements of fact and citations of law. The trial judge therefore disregarded a large part of plaintiff's opposition. Plaintiff charged the trial judge with abuse of discretion. The Court of Appeals rejected that contention.

NIGHT-SHIFT DUTY IS NOT SEXUAL DISCRIMINATION

by David McCarthy

Being transferred from the day shift to the night shift does not constitute sexual discriminiation.

A woman grown accustomed to the day shift quit as soon as she had been transferred to the night shift and sued for "constructive" discharge on the grounds that any reasonable person would deem the change of shift unbearable.

The Seventh Circuit Court of Appeals affirmed summary judgement in favor of the defendant-employer on the grounds that transfer from day shift to night shift did not constitute an "adverse employment action."

The case is noteworthy for its rejection of the sexist position of the plaintiff.

She accused her boss of preying on her "wifely instincts": He knew she would resign rather than accept transfer to the night shift because she was a dutiful wife, caregiver in the home and not the principal breadwinner.

Or so the argument went.

The Appeals Court remarked that the plaintiff -- apart from having no evidence in support of her speculations -- was attempting to build a case on the very gender stereotyping which Title VII of the Civil Rights Act of 1964 was designed to eradicate from the workplace (Grube v. Lau Industries Inc. No. 00-4131, 7-19-01).

COMMON LAW, NOT STATUTE, GOVERNS CAT IN THE CONDO

We are in the pre-suit phase of an upstairs-downstairs dispute between neighbors that was touched off by a cat in the upstairs unit raising the lever-action faucet in the kitchen sink when no one was home. Water damage to the unit below was the result.

Getting to yes on a settlement has been a challenge because our opposing counsel and the occupants he represents appear to have an agenda. So when the facts and the law collide with his assumptions, he ignores the facts and the law and clings to assumptions.

His "proofs" of damage appear to have been "manufactured" to serve an agenda that preceded the proofs, and his assumption that the upstairs neighbor was negligent is contrary to law.

His error is obvious. He has forgotten the basic rule on this subject that is drilled into first-year law students: Every dog gets one bite. True, there is no dog in this fight, and no bite, for that matter. But there is a question of notice.

Under the common law, the owner or keeper of a dog was liable if the dog bit someone only if he was on notice that the dog was prone to bite people. So the first bite was "free," if you will. The first bite put the owner on notice of the dog's viciousness. A statute that has since been enacted imposes strict liability: If an unprovoked dog bites someone, the owner is liable, without regard to notice or carefulness.

Common law negligence governs the case at hand. Our opponents seem to know this but to have forgotten the notice element of the negligence case. They must plead and prove that the owner or keeper of the cat was on notice that the cat was capable of turning on the faucet.

DILETTANTE BUILDER FORCED TO BUY BACK HOUSE

We went to trial against a first-time homebuilder and got a judgment that required him to refund the full purchase price to our client ($280,000.00) and take back a deed to the house. The defendant asserted that he was a "casual seller" on the grounds that he had lived in the house after he built, and therefore he was liable, if at all, only for damages (e.g., costs of repair).

Cross examination of him at the end of trial showed that he was a "builder-vendor" and as such liable to take back the house and refund the purchase price. A snapshot of the house and its front lawn clearly showed a "for sale" sign from one of the national real estate agencies. Under it was a little white sign that could not be read with the naked eye. But a magnifying glass showed that the sign said the house had been built by the defendant's home-building company.

The snapshot was shown to the defendant, who said the white sign was too small to read. The magnifying glass was pulled out and handed to him. "Try this." The defendant pushed aside the glass and the photo, looked the judge in the eye, and told him the sign said the house had been built by his company.

Result: Instead of a judgment for damages, which would have meant that our client had to keep the house, there was a judgment for rescission: The defendant took back the house and refunded the purchase price.