Illinois is one of several jurisdictions that recognizes the authority of courts to blue pencil or judicially modify otherwise unenforceable restrictive covenants to be enforceable. See, e.g. Weitekamp v. Lane, 250 Ill. App. 3d 1017, 1028, 620 N.E.2d 454, 462 (4th Dist. 1993) (affirming judicial modification of 300-mile non-compete to specific county); Arpac Corp. v. Murray, 226 Ill. App. 3d 65, 80, 589 N.E.2d 640, 652 (1st Dist. 1992) (affirming the circuit court’s modification of restrictive covenant when it was modified “only slightly” and holding that the balance of the restrictions were reasonable and necessary to protect Arpac’s legitimate business interests).

Recent reported decisions, however, cast doubt on the availability of judicial modification in all but exceedingly limited circumstances. In the past three years, only a handful of cases even mentioned judicial modification and, of those cases, not one actually modified, or affirmed the modification of, an otherwise unenforceable covenant. See AssuredPartners, Inc. v. Schmitt, 2015 IL App (1st) 141863, ¶ 52 (2015) (refusing to modify restrictive covenants because “deficiencies too great to permit modification”); Bankers Life & Cas. Co. v. Miller, No. 14 CV 3165, 2015 WL 515965, at *3 (N.D. Ill. Feb. 6, 2015) (deciding choice of law, noting that “Illinois courts are circumspect in their modification” and that “Illinois courts look skeptically at modifications, and may modify covenants only after ensuring that fairness is not harmed”); Fleetwood Packaging v. Hein, No. 14 C 9670, 2014 WL 7146439, at *9 n.7 (N.D. Ill. Dec. 15, 2014) (rejecting a proposed modification that would a create a durational limitation where none existed before, noting that “[e]ven when courts have found judicial reformation to be warranted, the challenged restrictive covenants needed only slight modification to become reasonable”). 
Continue Reading Illinois Employers Should Not Depend on Blue Penciling to Enforce Restrictive Covenants

shutterstock_303993722In a recent opinion, the Supreme Court of Nevada refused to adopt the “blue pencil” doctrine when it ruled that an unreasonable provision in a non-compete agreement rendered the entire agreement unenforceable. “Blue penciling” refers to a court’s willingness to strike unreasonable clauses from a non-compete agreement, leaving the rest of the agreement to be enforced; or to modify the
Continue Reading All or Nothing: Nevada Supreme Court Refuses to Adopt “Blue Pencil” Doctrine for Non-Compete Agreements

The First District of the Illinois Appellate Court, in the case of Northwest Podiatry Center, Ltd., et al. v. Ochwat, et al., recently found that a trial court improperly enjoined physician-defendants in a few key respects. The decision serves as a reminder of how courts will closely scrutinize restrictive covenants in Illinois.

The case was filed after two longtime
Continue Reading Illinois Appellate Court Partially Reverses Broad Non-Compete Injunction Against Physicians

By Rebecca Woods

The Oklahoma Supreme Court recenty held that noncompete agreements are reviewable by a court, even if the agreement contains an arbitration clause and there is no claim as to the validity or enforceability of the arbitration clause. The Howard ruling is consistent with prior rulings by the court that evidence a hostility to the U.S. Supreme Court’s
Continue Reading Oklahoma Supreme Court Nixes Overly Broad Non-Compete Agreement

By Molly Joyce

The Idaho Supreme Court, in the case of T.J.T., Inc. v. Mori, 2011 WL 5966870, No. 37805 (Id. Nov. 30, 2011), recently found that a two-year non-compete agreement executed in connection with the sale of a business was enforceable under California law, despite the fact that the seller also became an employee of the purchasing

Continue Reading Can The Seller Of A Business Who Also Becomes Employed By Purchaser Be Held To Non-Compete Agreement Under California Law? The Idaho Supreme Court Says Yes

By Bob Stevensand Daniel Hart

As we have discussed on this blog before, on May 11, 2011, Georgia reissued its new Restrictive Covenant Act (the “New Act”). The New Act reflected a fundamental change in Georgia’s law regarding restrictive covenants because it permitted Georgia courts to “blue pencil” (i.e., partially enforce) restrictive covenants that otherwise would be overbroad and

Continue Reading Georgia Court Blue Pencils / Rewrites Overbroad Restrictive Covenant

By Dan Hart, Atlanta

Following Georgia Governor Nathan Deal’s signing of House Bill 30 (“H.B. 30”) on May 11, Georgia’s Restrictive Covenant Act is now law, effective immediately. The Governor’s signing of the bill caps months of debate and speculation about the effective date of a nearly identical bill that the Legislature enacted in 2009. That legislation, H.B. 173,
Continue Reading What Georgia’s Restrictive Covenant Act Means – and Doesn’t Mean – for Employers

A recent Indiana Court of Appeals opinion, designated as non-precedential, discussed that state’s law concerning non-competition agreements. Most significant, the court upheld a commitment not to solicit the employer’s current or recent customers for two years even though the covenant contains no geographical limitation. However, provisions precluding any “contact with” such customers, and forbidding acceptance of “referrals of” them, were “blue penciled.” The

Continue Reading Indiana Court Upholds A Covenant Not To Solicit Recent Customers, But Prohibitions Against Contact or Accepting Referrals With Such Customers Are Stricken

           Delaware Court of Chancery Vice Chancellor J. Travis Laster, faced with an unreasonable non-compete/non-solicitation agreement, indicated that he would have preferred to hold it invalid but said that he had no choice other than to modify its terms because its Maryland choice-of-law provision requires judicial “blue penciling.” He did enjoin the ex-employee from using his ex-employer’s customer list, a trade secret

Continue Reading Delaware Court Enjoins Use of Ex-Employers Trade Secrets

Can a California corporation with virtually no ties to Rhode Island nonetheless be sued in Rhode Island federal court for misappropriation of a Rhode Island company’s trade secrets because the California corporation lured away a Florida employee who had a confidentiality agreement with the Rhode Island company?   Yes, according to the United States Court of Appeals for the First Circuit.  

Continue Reading First Circuit Court of Appeals Liberally Construes Personal Jurisdiction, Leading to 1.16 Million Dollar Verdict