On October 4, 2010, the Second District Illinois Appellate Court issued its ruling in Steam Sales Corp. v. Summers which upheld a preliminary injunction and enforced a two-year covenant not to compete in favor of an employer against one of its former salesmen.
The case is important because the Court discussed the recent Fourth District Appellate Court case in Sunbelt Rentals, Inc. v. Ehlers, 394 Ill. App. 3d 421 (2009), which had rejected the legitimate business interest test, thereby making it easier for employers to enforce a covenant not to compete against a former employer because the employer would only have to show the reasonableness of the covenant in terms of time (length of restriction) and territory (geographic area covered by the covenant).
The legitimate business interest test places a hurdle in front of employers seeking to enforce a covenant not to compete by requiring the employer to prove a “near permanent relationship” with its customers and/or that the defendant absconded with confidential information, in order for the employer to enforce the covenant.
Notably, the Court in Steam Sales declined to resolve the issue of whether the Sunbelt decision was correct in rejecting the legitimate business interest test because it found that the employer did in fact have a near permanent relationship with its customers in the case at hand.
DeBlasio Law Group, LLC has substantial experience in litigation matters involving the enforcement, or defense against, covenants not to compete.