direct salesmen and non-compete

[EAS4]

Jurisdiction

Illinois

I worked for a privately held mfg company for 12 yrs. as the VP of sales. Last July , a private equity company purchased my company. After working with this new leadership, I decided the route the business was going was not for me, and I resigned. I had a "contract" that had a vague compete verbiage with the old private owner. I had never signed any contract or agreement with the new ownership, and in fact, on the day I resigned, I found a no compete packet on my desk which I did not sign.
I have moved on to another company that is in the same business with similar customers that are existing. I received a letter from the new ownership attorney regarding my non compete with the old owner.
How enforceable is this ? This business is very competitive and my selling is a service not a product with no trade secrets. There are hundreds of exact companies within a few miles of each other.
Thanks

 

[army judge]

You might wish to discuss this with an attorney.

To answer you properly, a person would have to read both contracts.

Don't post them here, however.

Your matter is far too complex and important to trust to strangers on the Internet.

 

[EAS4]

Thank you very much. No I would never post personal information. Is there a way to DM you ?

 

[army judge]

Thank you very much. No I would never post personal information. Is there a way to DM you ?

No, you can consult a licensed attorney USUALLY at no charge for the initial consultation.

I suggest you talk to two or three lawyers, and then you'll have a better understanding of how best to proceed.

Generally speaking, courts have held non-compete contracts to be burdensome and illegal.

As you suggested, that could be different if proprietary information or trade secrets were involved.

If, as you suggest, you're simply selling wonderful whatchamacallits; a non-compete would seem burdensome and restrictive.

Again, don't proceed on my speculation, seek a real consultation and then you'll know.

Once you have retained a lawyer, have your lawyer respond in writing to the lawyer who sent you the letter.

 

[zddoodah]

How enforceable is this ?

You're asking whether an agreement we've never read and which you didn't even quote is enforceable? How could we possibly know? All you've told us about your contract is that, in your opinion, it's "vague." You also didn't tell us anything about what the letter you received says.

 

[adjusterjack]

How enforceable is this ?

No way to tell. Illinois is very strict about non-competes. Read the following article:

Illinois Limits Non-Compete Agreements Yet Again | Labor & Employment Law Blog

You can read the Fifield decision at:

Google Scholar

It doesn't appear to apply to you since you were with the company more than 2 years so you can read other non-compete decisions at:

Google Scholar

The Reliable Fire Equipment co v. Arredondo starts off with a summary of the court's position on non-competes.

Bottom line, though, it would be a good idea to have a lawyer respond to the lawyer's letter.

 

[EAS4]

The verbage on an old agreement with the FORMER owner stated that " during employment and for a period of one year following, either individually or through any company controlled by you or not, and either on your own behalf or on behalf of any other person competing or endeavoring to compete with Company X , directly or indirectly solicit, endeavor to solicit or gain the customer of, canvass or interfere with any person who is the customer of Company X or use your personal knowledge of or influence over any such customer to or for your own benefit to that of any other person or company competing with the employer" .
This is a company that does not have a product, but rather sells a service of producing others parts or products. Many of Company X's customers are also customers of virtually every competitor of Company X. Doesn't this violate right to work and free trade?

 

[army judge]

The verbage on an old agreement with the FORMER owner stated that " during employment and for a period of one year following, either individually or through any company controlled by you or not, and either on your own behalf or on behalf of any other person competing or endeavoring to compete with Company X , directly or indirectly solicit, endeavor to solicit or gain the customer of, canvass or interfere with any person who is the customer of Company X or use your personal knowledge of or influence over any such customer to or for your own benefit to that of any other person or company competing with the employer" .
This is a company that does not have a product, but rather sells a service of producing others parts or products. Many of Company X's customers are also customers of virtually every competitor of Company X. Doesn't this violate right to work and free trade?

Your state, is one of several that takes a hard view on "non-compete" contracts as used to inhibit a person from plying his or her trade with a new employer.

Again, if you're serious about where you stand, see a licensed lawyer in Illinois for complete evaluation of your legal position.

Absent a letter written by a licensed IL attorney, nothing you say will dissuade or disabuse the former employer from their position about the "non-compete" and its ability to inhibit or limit your employment.

 

[EAS4]

Your state, is one of several that takes a hard view on "non-compete" contracts as used to inhibit a person from plying his or her trade with a new employer.

Again, if you're serious about where you stand, see a licensed lawyer in Illinois for complete evaluation of your legal position.

Absent a letter written by a licensed IL attorney, nothing you say will dissuade or disabuse the former employer from their position about the "non-compete" and its ability to inhibit or limit your employment.

Thank you

 

[adjusterjack]

This is a company that does not have a product, but rather sells a service of producing others parts or products. Many of Company X's customers are also customers of virtually every competitor of Company X. Doesn't this violate right to work and free trade?

Not necessarily. That it's a service, not a product, is irrelevant. That the customers of Company X are customers of other companies in the same business is also irrelevant.

What is relevant is that YOU have promised, in writing, not to solicit, directly or indirectly, Company X's customers for a period of one year.

Illinois courts do hold that restrictive covenants are valid if they pass a three pronged test:

(1) the restraint was necessary to protect the legitimate interest of the promisee;
(2) the restraint did not impose a hardship on the promisor or the public; and
(3) the extent or scope of the restraint was otherwise reasonable.

I suggest, again, that you read the Reliable Fire Equipment Co decision as the court provides a thorough historical analysis of decisions regarding restrictive covenants.

Reliable Fire Equipment Co. v. Arredondo, 965 NE 2d 393 - Ill: Supreme Court 2011 - Google Scholar

You might think that your agreement has some weaknesses and so might I but unless you relish the idea of spending 10s of thousands on prolonged litigation you would be wise to have an attorney analyze it based on case law and have him respond to the former employer's attorney in an attempt to get them to back off.

Just so you know, I speak from experience. A long time ago I was a victim of a non-compete that I foolishly signed to get a job. I ended up getting sued for it and it cost me a bunch to get out from under it along with an additional agreement to not solicit the company's customers.

The cost of a lawsuit will break you, even if you are in the right.