Chicago Business Litigation Lawyer Blog

Trial Court Dismisses Many Claims When Employees Never Signed Non-Compete Agreements With Company That Purchased Their Employer

June 8, 2015 | Peter S. Lubin and Patrick Austermuehle

In the recent case of Cronimet Holdings, Inc. v. Keywell Metals, LLC, No. 14 C 3503, in the federal court for the Northern District of Illinois, the Court dismissed many of the employers’ claims regarding unfair competition by former employees of a company it purchased but who left before the purchase closed to take jobs at a competitor. The employees had never signed non-compete agreements with the company that purchased their former employer.

The facts of the case are as follows. After spirited bidding with Plaintiff Cronimet Holdings, Inc. (“Cronimet”), Defendant Keywell Metals, LLC (“Keywell Metals”) acquired the assets of Keywell, LLC (“Keywell”) in December 2013. Two of Keywell’s employees, Plaintiffs Edward J. Newman and John D. Joyce, decided not to join Keywell Metals, however, and instead were hired by Cronimet in May 2014, precipitating this lawsuit. Cronimet, Newman, and Joyce filed the suit seeking a declaration that Cronimet could employ Newman and Joyce regardless of a non-disclosure agreement between Cronimet and Keywell (the “Cronimet NDA”) and non-compete agreements Newman and Joyce had with Keywell. Continue reading ›

Illinois Appellate Court Affirms Trial Court’s Decision That Non-Compete Agreement is Unenforceable

June 5, 2015 | Peter S. Lubin and Patrick Austermuehle

In the recent case of Critical Care Systems, Inc. v. Heuer, the Illinois Appellate Court agreed that a non-compete agreement was too broad and thus unenforceable and affirmed the trial court’s refusal to enjoin the employee from joining a competitor of his former employer. The Appellate Court also refused the employer’s request to blue pencil and rewrite the agreement to make it narrower and thus enforceable holding Illinois law did not permit it to do that.

In November 2012, plaintiff, Critical Care Systems, Inc., filed a verified complaint against defendants, Dennis Heuer and IV Solutions, LLC, seeking injunctive relief barring its former employee Heuer under his non-compete agreement from taking a new job with IV Solutions. Critical Care also sought compensatory and punitive damages. Critical Care, the plaintiff thereafter petitioned the trial court to enter a preliminary injunction, which the trial court denied. The Appellate Court affirmed the trial court’s decision agreeing that Critical Care didn’t have unique information to protect and that its non-compete agreement was too broad. Continue reading ›

Court Finds Bankruptcy Protects GM for Class Claims Regarding Faulty Ignitions

June 1, 2015 | Peter S. Lubin and Patrick Austermuehle

Declaring bankruptcy can have a number of advantages for some companies. It doesn’t necessarily mean the end of the company, but it can be the beginning of a transition into another company, even if it continues in the same business.

For example, General Motors (G.M.) declared bankruptcy in 2009. It’s still doing business, but the company that made cars prior to the bankruptcy agreement is known as “Old G.M.”, while the company currently making cars is known as “New G.M.” It may not seem like much of a difference, and to many people it’s not, but at least in terms of liability, it can make all the difference in the world. Continue reading ›

Family Business Dispute About Alleged Trade Secrets of a Long Time Evanston Diner Erupts Into a Lawsuit — Our Chicago Family Business Dispute Lawyers Handle Many Types of Disputes for Closely Held Businesses

May 28, 2015 | Peter S. Lubin and Patrick Austermuehle

Familial relationships can be tough. When you combine them with the added stress of trying to run a family business together, sometimes it can be a recipe for disaster. Marla Cramin, the owner of Sarkis Cafe, a popular diner that has been business in Evanston for many years, has filed a second lawsuit against her brother, who also happens to be the former manager she had hired to run Sarkis Cafe for many years.

Cramin and her husband, Jeff Cramin, bought the diner in 2000 from its original owner, Sarkis Tashjian. When Jeff died in an accident in 2002, Marla hired her brother, Scott Jaffe, to manage the diner for her. Cramin fired her brother in 2012 and he went on to start his own restaurant in Highland Park, which just opened in April. It was originally called the Order Up Diner, but after he settled a lawsuit with his sister, he changed the name to the Uptown Diner. Continue reading ›

Appeals Court Affirms Holister Gift Card Class Action Brought By Our Chicago Class Action Attorneys — Our Chicago Class Action Attorneys Fight on Behalf of Consumers Across the Country

May 27, 2015 | Peter S. Lubin and Patrick Austermuehle

The promise of awarding gift cards is just one method retailers sometimes use to lure shoppers into their stores. For example Hollister Co., a clothing retailer, promised consumers who spent $75 or more a $25 gift card in December 2009. The cards themselves allegedly stated they had “no expiration date”, but the retailer allegedly voided all outstanding cards on January 30, 2010.

Our client, Vincent Daniels, one of the owners of an expired gift card, filed a lawsuit against Hollister for the lost value of the gift card. Because $25 is a negligible amount, Daniels sought to represent an entire class of plaintiffs consisting of everyone still in possession of a gift card, or who threw their gift card away because they were told it had expired. Taken together, the value of all the voided gift cards amounts to more than $3 million. Continue reading ›

REI Overtime Class Action Lawsuit Settles for $2.5 Million

May 26, 2015 | Peter S. Lubin and Patrick Austermuehle

Large corporations have developed a reputation for cutting costs by cheating their employees out of wages. Everything from forcing employees to work off the clock to misclassifying them as exempt from overtime has become common practice in corporate America.

Despite the fact these practices are against the law, companies often get away with treating their employees this way because many employees simply don’t know their rights under the law. Others don’t want to get in trouble with their employer. This is why wage and hour lawsuits are often filed by former employees, despite the fact the law prohibits retaliation from employers.

The federal Fair Labor Standards Act (FLSA) requires employers conducting business in the United States to pay all their hourly workers no less than $7.25 per hour. It also mandates that employees be paid one and one-half times their normal hourly rate for all overtime. Overtime is defined as any time spent working after eight hours a day or forty hours a week.

In addition to the FLSA, each state has their own laws regulating things like minimum wage, overtime, and break time. In California, the minimum wage is set at $9.00 per hour, and employers are required to provide hourly workers with breaks throughout the day. Continue reading ›

Jimmy John’s Doesn’t Enforce Non-Compete Agreement So Judge Tosses Lawsuit — Our Chicago Non-Compete Agreement Lawyers Prosecute Non-Compete Lawsuits for Companies and Defend Employees in Non-Compete Agreement Lawsuits

May 20, 2015 | Peter S. Lubin and Patrick Austermuehle

Non-compete agreements were initially intended to keep trade secrets safe. They originated in the tech industry where certain employees have the potential to take highly sensitive information with them when they leave the company. This could be disastrous to the company if employees decide to leave to work for a competitor and take all the confidential information they’ve been working with.

In order to prevent this from happening, companies had employees sign noncompete agreements (often as part of their employment agreement) stating they would not work for a direct competitor within a certain radius of the employer and a certain time frame (usually six months to a year).

Despite these sensible beginnings, employers of all industries have incorporated noncompete agreements into the employment contracts of just about all their workers. Even minimum wage employees on the bottom of the corporate ladder have been forbidden from working for a competitor. Continue reading ›

Arkansas By Way of Statute Joins the Growing Number of States Allowing Courts to “Blue Pencil” Covenants Not to Compete — Our Chicago Non-Compete Agreement Lawyers Litigate Covenant Not to Compete Cases throughout the Chicago Area

May 18, 2015 | Peter S. Lubin and Patrick Austermuehle

Arkansas has now become a state that permits a court to “blue-penciling” of a non-compete agreement.

Governor Asa Hutchinson signed a statute (S.B. 998 or Act 921) permitting courts the flexibility to enforce those portions of a non-competition agreement that are reasonable and to delete overbroad, unenforceable provisions. Arkansas courts no longer have to strike down the entire covenant not to compete simply because one portion is unreasonable.

Under the wording of the Act, a covenant not to compete will be enforced if the agreement is ancillary to an employment relationship or part of an otherwise enforceable employment agreement or contract to the extent that:

the employer has a protectable business interest (such as trade secrets, customer lists, confidential information, intellectual property, customer lists, goodwill with customers, knowledge of business practices, methods, profit margins, costs, and other confidential information that increases in value by not being known to a competitor, training, and “other valuable employer data that the employer has provided to an employee that an employer would reasonably seek to protect or safeguard from a competitor”); and

the non-compete agreement is limited with respect to time and scope in a manner that is not greater than necessary to defend the protectable business interest.

Further, Act 921 states that the absence of a specific or defined geographic descriptive restriction in a non-compete agreement does not make the agreement overly broad if the agreement is limited with respect to time and scope in a manner that is not greater than necessary to defend the protectable business interest of the employer.

Moreover, under the new law, courts are given the authority to determine the reasonableness of the agreement and “shall” reform overly broad covenants. Prior to enactment of this statute, Arkansas did not allow blue-penciling, and a non-compete agreement had to be valid as written — the court could not narrow the overbroad provision. Employers doing business in Arkansas now have some statutory guidance, whereas before, it was “your guess is as good as mine.

Large Domino’s Franchisee in California Sued in Class Action for Allegedly Failing to Reimburse Drivers for Full Mileage Expense

May 13, 2015 | Peter S. Lubin and Patrick Austermuehle

Employers are responsible for any and all business expenses. In the event a worker has to cover expenses for the employer, the employer is required to properly reimburse the worker in a timely manner. But problems can arise in situations where it’s difficult to determine the exact amount of the expense incurred by the employee.

For example, drivers who use their own vehicles when performing deliveries for their employer incur expenses for gas, insurance, and maintenance for wear and tear on their vehicle, but it’s not always easy or possible to determine the exact amount of expenses incurred for each trip.

Hishmeh Enterprises Inc., a franchise owner of 70 different Domino’s locations in California, allegedly failed to properly compensate its delivery drivers by reimbursing them only $1 per delivery. If a delivery was between 15 and 20 miles away, the drivers were reimbursed $2. Continue reading ›

8th Circuit Upholds Trial Court Finding that Non-Compete Agreement is too Broad and thus Enforceable due to Lack of Geographic Region and no Definition as to Capacity Employee is Barred From Competing

May 11, 2015 | Peter S. Lubin and Patrick Austermuehle

The Federal Court of Appeals for 8th Circuit —the appeals court for federal district courts in South Dakota, Minnesota, Missouri, Nebraska, North Dakota, Iowa, and Arkansas —refused to enforce a corporate employer’s non-compete contract.

The Parties’ Dispute.

The case arose out of the following facts.NanoMech, a Delaware corporation with its principal place of business in Arkansas, researches and develops nanotechnologies. The company specializes in creating nanotechnology products for nanomachining, manufacturing, lubrication, energy, biomedical coatings, and strategic military applications.

NanoMech hired Arunya Suresh in March of 2010. NanoMech required Suresh to sign a confidentiality/nondisclosure agreement before hiring her. In that agreement she agreed to protect NanoMech’s interest in any information that was disclosed to her for the purpose of evaluating a potential employment relationship. As a condition of her employment, she later signed an employment agreement which she agreed would be governed by Arkansas law.

The contract’s non-compete clause stated:

COVENANT NOT TO COMPETE: The Employee agrees that during the term of this Agreement, and for two (2) years following termination of this Agreement by the Company, with or without cause, or, for a period of two (2) years following a termination of this Agreement by the Employee, the Employee will not directly or indirectly enter into, be employed by or consult in any business which competes with the Company.

During her employment with NanoMech, Suresh participated in projects involving use of nanointegrated materials and in manufacturing processes for nanoparticle-based products. She researched and helped develop one of NanoMech’s multi-component lubrication products called nGlide.

On May 2, 2012, Suresh gave notice stating that she intended to pursue her doctorate full-time. Later, in March 2013, NanoMech discovered that Suresh had in fact taken a job as an application chemist with BASF, a worldwide chemical company that develops engine lubricants. Continue reading ›