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relying on Arpac and Torrence v. Hewitt Assocs., 493 N.E.2d 74, 143 Ill. App. 3d 520, 97 Ill. Dec. 592 (Ill. App. Ct. 1986), to find a non-solicitation of employees covenant valid
Summary of this case from Integrated Genomics, Inc. v. KyrpidesOpinion
No. 02 C 1729
August 13, 2002
MEMORANDUM OPINION AND TEMPORARY RESTRAINING ORDER
Before me is the Emergency Motion for a Temporary Restraining Order of CORT Business Corporation, incorrectly sued as CORT Furniture Rental Corporation ("CORT") CORT seeks to enforce the restrictive covenant set forth in Paragraph 5(a) of its Employment Agreement with Michael J. Malone. Particularly at issue is the prospective enforcement of such restrictive covenant, as CORT's counsel represented in open court on August 9, 2002 that CORT did not seek to interfere with Mr. Malone's employment of Dale Johnson.
Due notice having been given, this Court having reviewed the written submissions of the parties and having heard oral argument of counsel, this Court finds and concludes that (1) CORT has demonstrated a more than negligible likelihood of success on the merits, (2) CORT does not have an adequate remedy at law and will suffer irreparable harm if a temporary restraining order does not issue to preserve the status quo ante and (3) the balance of harm favors CORT and the public interest will not be disserved by the issuance of a temporary restraining order.
Mr. Malone severed his employment with CORT on October 22, 2001. Paragraph 5(a) of the Employment Agreement provides for an 18-month prohibition of Mr. Malone's solicitation or hire of employees or former employees of CORT. In evaluating CORT's likelihood of success on the merits, I note that the enforceability of a restrictive covenant in an employment contract is dependant on whether, given the particular facts of the case, the restraints imposed are reasonably necessary for the protection of the employer's business. Arpac Corp. v. Murray, 226 Ill. App.3d 65, 75 (1992). CORT, as a small company where many of its employees perform key functions, has a legitimate business interest in maintaining a stable work force Id. at 78.
Case law suggests that a covenant such as the one at issue would likely be enforceable In Torrence v. Hewitt Associates, 143 Ill. App.3d 520, 493 (1986), a partnership sought to enforce against a former partner the partnership's restrictive covenant that, among other things, restricted the former partner from attempting to hire employees. Although not explicitly ruling on the portion of the covenant that restricted hiring, the court implicitly approved that portion of the covenant by finding the entire covenant valid and enforceable. In Arpac, the court enjoined an employee from violating an employment agreement that contained a covenant that prohibited the former employee from "induc[ing] or attempt[ing] to induce" employees to leave the company. 226 Ill. App.3d at 69.
Given that CORT has a protectable interest and that restrictive covenants with similar or broader restrictions have been enforced, I turn now to one of the keys to evaluating the reasonableness of a restrictive covenant — the time limitation that such a covenant imposes on the former employee's activities The restrictive covenant at issue is for 18 months, of which just under 10 months have already passed. Imposing a temporary restraining order for a period of 49 days will bring the duration of the time restrictions on Mr. Malone to just under one year. This time limitation is not unreasonable in light of the circumstances in which the balance of harms favors CORT.
For the foregoing reasons, for 49 days from the issuance of this Temporary Restraining Order, Mr. Malone, his agents, employees, attorneys and all persons in active concert or participation with him who receive actual notice of this order by personal service or otherwise, are restrained and enjoined from soliciting, employing, retaining as a consultant, interfering with or attempting to entice away from CORT or its affiliates, any individual who was an employee of CORT or its affiliates within one year of such solicitation, employment, retention, interference or enticement.
This Temporary Restraining Order shall issue upon the giving by CORT of security in the amount of $25,000.