Disclosure Of Confidential Information Can Result In Liability, Even If It Is All In The Family
If a former employee (one residing in Illinois) discloses confidential information to his or her spouse, that employee can still be required to defend himself or herself against a lawsuit brought by his/her former employer. The Court so held in Cornerstone Assurance Group, Inc. v. Harrison, Case No. 17 CV 4718 (N.D.Ill. Oct. 5, 2017).
Judge Norgle rejected the argument of defendant – a former sales representative for the plaintiff-insurance company – that because plaintiff’s Complaint alleged she had disclosed confidential information to her husband, the Illinois marital privilege would operate to preclude any recovery by plaintiff, and consequently, plaintiff’s claims against her should be dismissed. The marital privilege protects against disclosure of communications exchanged between spouses. However, the Court reasoned that the impact of the marital privilege on plaintiff’s claims was “best addressed after discovery.” Because the Complaint alleged that confidential information had been disclosed to defendant’s husband and to his limited liability company, the Court determined that it was plausible that disclosure had been made to employees of that company other than defendant’s husband. If so, such communications would not be insulated by the marital privilege, because the privilege is waived when an otherwise privileged communication is repeated to a third party. Also, if discovery revealed the limited liability company had used plaintiff’s confidential information to solicit policyholders, that would provide circumstantial evidence of an improper disclosure and use of the confidential information.
Solicitation Can Occur Even If The Customer Makes The First Move (At Least, It Can In Central Illinois)
You (or your client) has signed a contract prohibiting solicitation of customers of the other party to the contract. One of those customers contacts you (or your client), and asks you/the client to business. You are in the clear with respect to the non-solicitation agreement, right? As ESPN College Football Analyst Lee Corso would say, “Not so fast, my friend.”
The Illinois Appellate Court for the Third District (the appellate district that covers Central Illinois) recently decided a case in which a transportation broker had entered into a contract with a trucker which contained a non-solicitation clause. The clause precluded the trucker from soliciting “traffic from any [s]hipper, consignor, consignee, or customer of Broker where (1) the availability of such traffic first become[s] known to CARRIER as a result of BROKER’s efforts, or (2) the traffic of the shipper, consignor, consignee or Customer of BROKER was first tendered to CARRIER by BROKER.” If the trucking company breached this provision, it would then be obligated to pay the broker a commission of 35% of the amount of the transportation revenue resulting from traffic transported for the customer. Quality Transportation Services, Inc. v. Mark Thompson Trucking, Inc., 2017 IL App (3d) 160761 (October 24, 2017).
Using LinkedIn As A Recruiting Tool – It’s OK As Long As You Don’t Go Too Far
If an employment agreement prohibits an ex-employee from recruiting personnel from his or her former employer, can that employee invite his or her former colleagues to connect via LinkedIn? In a recent decision, an Illinois court held that sending invitations for LinkedIn connections did not violate a contractual prohibition against soliciting employees away from a former employer. Bankers Life & Casualty Co. v. American Senior Benefits LLC, 2017 IL App (1st) 160687 (August 7, 2017).
The case involved the departure of defendant Gregory P. Gelineau from his position as the branch sales manager of the Warwick, Rhode Island office of plaintiff Bankers Life. Gelineau joined defendant American Senior Benefits LLC (“ASB”) a Bankers Life competitor. Gelineau’s employment contract with Bankers Life specified, among other things, that for the two years following his employment, and within the territory serviced by the branch office he managed, Gelineau would not “personally or through the efforts of others, induce or attempt to induce: (a) any agent, branch sales manager, field vice president, employee, consultant, or other similar representative of the Company [Bankers Life] to curtail, resign, or sever a relationship with the company;…”. According to Bankers Life’s complaint, Gelineau violated this provision by sending invitations via LinkedIn to three employees of the Bankers Life Warwick branch office, inviting them to “connect” with him. Gelineau’s LinkedIn profile contained a link to an ASB job posting.
The Illinois AG’s Suit Against Jimmy John’s On Non-Competes – What It Means For Employers
The Illinois Attorney General filed suit last week against Jimmy John’s for its use of non-competes with low-wage workers. This suit – which appears to be the first of its kind – alleges Jimmy John’s use of non-competes violates Illinois law and hurts Illinois residents and businesses by limiting the pool of available workers and artificially suppressing wages.
The Jimmy John’s non-compete made headlines last year after a current employee and a former employee together filed a class action seeking to invalidate that provision. Their case was dismissed on standing grounds. The court did not reach the question of whether the non-compete was valid under Illinois law.
Federal Trade Secret Protection Has Now Become Reality
Today, President Obama signed the Defend Trade Secrets Act of 2016 (“DTSA”) into law, bringing trade secrets alongside trademarks, copyrights and patents as intellectual property rights protected under federal law.
Every employer and owner of trade secrets seeking to protect their rights needs to become versed in this new enforcement scheme. While the DTSA does not displace state trade secrets laws, the DTSA permits an employer to bring claims asserting trade secret misappropriation in federal court where the alleged trade secret is used in or intended for use in interstate or international commerce.
White House Report On Non-Competes – Are The Feds Taking Over Employee Competition Law?
What is up with the federal government’s new-found interest in non-competes and other legal issues that arise when employees move between competitors?
First the Treasury Department issued a report on the impact of non-compete agreements on the economy. Then Congress passed the Defense of Trade Secrets Act. And now, just last week, the White House issued its own report on non-compete agreements.
What do these federal initiatives mean? And how do these changes effect employers and employees?
Non-Compete + Breach Does Not Always = TRO
The newly decided Bridgeview Bank Group v. Meyer reminds businesses and their attorneys that there is never a guarantee of getting a TRO, even where your former employee has a non-compete and you have evidence of breach.
The bank must have felt well positioned. Defendant worked for the bank for 2 years as SVP for Small Business Association lending. Upon his exit from the bank, he signed a severance agreement reaffirming a 1-year no-solicit and a non-disclosure of confidential information provision.
The Uncertainty In Illinois Continues
The battle over what constitutes adequate consideration to support a post-employment non-solicit or non-compete continues unabated in Illinois. On one side are the First and Second District Illinois Appellate Courts that have staked out the position that such restrictions must be supported by at least two years of employment. On the other side, as previously discussed (see our February 2015 and August 2014 posts), are the judges of the Federal District Court for the Northern District of Illinois, who have strongly disagreed. The newest chapter in this saga was authored by Judge Dow—another federal court judge–lining up against the state appellate court decisions.