Articles Posted in Confidentiality Agreements

A new law in Illinois prohibits employers from entering into noncompete contracts with employees who earn $13 per hour or less. The Illinois Freedom to Work Act (Public Act 099-0860) became effective on Jan. 1, 2017. The law makes it illegal for an Illinois employer to enter into a “covenant not to compete” contract with any of its “low-wage employees.”

The term “covenant not to compete” is defined to extend to any agreement restricting a covered employee from the following:

  • Working for another employer for a specified period of time.
  • Working in a specified geographic area.
  • Performing other “similar” work for another employer.

Any contract with a “low-wage employee” who contains any covenant not to compete is “illegal and void.” The act is limited to agreements entered into after the effective date of Jan. 1, 2017. The act comes out of the movement to curb employers from locking lower-level employees into unfair noncompeting contracts.

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An industrial design firm, nClosures, produced metal cases for tablet computers, such as the iPad. Ian LeBlanc designed a case for nClosures in early 2011 called the Rhino Elite. In May 2011, the co-founders of nClosures attended a tradeshow in Chicago to showcase the Rhino Elite prototypes.

At the tradeshow, the co-founders Daniel Gorman and Daniel McKean met with Greg Carlson, CEO of Block and Co. Block manufactured metal cash drawers but was interested in entering into the tablet enclosure market. Carlson approached Gorman and McKean about a possible relationship. At a May 24, 2011 meeting, the two companies signed a confidentiality agreement regarding the potential deal between them.

After signing the agreement, nClosures gave Block the design files for the Rhino products. The parties then attempted to negotiate a written contract concerning the manufacture and sale of the tablet enclosures.

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In a case that involved thousands of toxic tort liability cases, the Illinois Appellate Court has ruled that an industrial manufacturer must turn over documents it alleged were privileged to a company indemnifying it.

In March 1999, automotive systems manufacturer BorgWarner Inc. acquired Kuhlman Corp. and its subsidiaries, including Kuhlman Electric Corp (KEC).

Since the 1950s, KEC has operated a facility in Mississippi that produces electrical transformers. As part of the Kuhlman Corp. sale, KEC represented that there was no soil contamination on its Mississippi property.

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In a variety of cases that end in settlement, the parties often agree to make the settlement agreement confidential. When the parties agree separately that the terms of the settlement remain confidential, it’s a different story than the one in which the court is required or asked to seal the settlement agreement.

In the case of Goesel v. Boley International, there were two court-sealed settlement agreements that were the subject of an appeal to the 7th Circuit U.S. Court of Appeals in Chicago. The appeal asked to keep the settlement agreements sealed. Judge Richard A. Posner ruled that a confidential agreement between the parties was an insufficient basis for the settlement documents to be sealed.

The Goesel case was a personal-injury lawsuit brought on behalf of a minor. Because of the status of the plaintiff, that being a minor, the plaintiff was required to obtain a district judge’s approval of the settlement. The trial judge reduced a portion of the settlement proceeds that were payable to the plaintiff’s law firm for attorney fees and costs and approved the settlement as then revised. The appeal in this case is by the law firm that challenged the judge’s modification of the settlement terms, which included attorney fees.

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