No.

IN THE APPELLATE COURT OF ILLINOIS

THIRD JUDICIAL DISTRICT

)
PAMS ACADEMY OF DANCE/FORTE ARTS ) Appeal from the Circuit Court of the
CENTER, ) Thirteenth Judicial Circuit, Grundy
) County, Illinois
Plaintiff-Appellee, )
) Case No. 16-LM-155
v. )
) Circuit Judge: Sheldon Sobel
)
CALLIE MARIK, ) Appeal from Order dated June 28, 2017
) Certified Question granted November 8,
Defendant-Appellant. ) 2017
)

DEFENDANT-APPELLANTS APPLICATION FOR LEAVE TO APPEAL

UNDER SUPREME COURT RULE 308

Kenneth J. Vanko
Emily L. Langhenry
Clingen Callow & McLean, LLC
2300 Cabot Drive, Suite 500
Lisle, Illinois 60532
(630) 871-2600
vanko@ccmlawyer.com
langhenry@ccmlawyer.com

Counsel for Defendant-Appellant

 POINTS AND AUTHORITIES

I. Introduction .........................................................................................................................1
Steven Greenhouse, Noncompete Clauses Increasingly Pop Up in Array of Jobs
(June 8, 2014), THE NEW YORK TIMES ..........................................................................................1
BHB Investment Holdings, LLC v. Ogg, No. 330045, 2017 WL 723789
(Mich. Ct. App. Feb. 21, 2017) .....................................................................................................1
II. Statement of Facts ...............................................................................................................2
III. Statement of the Certified Questions .............................................................................4
Prairie Rheumatology Assocs., S.C. v. Francis, 2014 IL App (3d) 140338 ..................................4
Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871 ..........................................................4
IV. Statement of Reasons for Granting the Application ....................................................4
A. The proposed questions concerning post-employment restrictive covenants
are one of law, reviewable de novo. ..............................................................................4
De Bouse v. Bayer AG, 235 Ill. 2d 544 (1999) ...............................................................................4
Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871 ..........................................................5
Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52 (2006) .......................................................5
Prairie Rheumatology Assocs., S.C. v. Francis, 2014 IL App (3d) 140338. .................................5
Capstone Financial Advisors, Inc. v. Plywaczynski, 2015 IL App (2d) 150957 ...........................5
B. Substantial grounds for a difference of opinion exist on each proposed
question..............................................................................................................................5
Rozsavolgyi v. City of Aurora, 2017 IL 121048 .............................................................................5
Doe v. Sanchez, 2016 IL App (2d) 150554 ....................................................................................5
1. Illinois law requires temporal limits for any post-employment
restrictive covenant. .................................................................................................6
Prairie Rheumatology Assocs., S.C. v. Francis, 2014 IL App (3d) 140338 ..................................6
Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871 ..........................................................6
House of Vision, Inc. v. Hiyane, 37 Ill. 2d 32 (1967) .....................................................................6
Jefco Laboratories, Inc. v. Carroo, 136 Ill. App. 3d 793 (1st Dist. 1985) ......................................7
2. Governing contract construction rules suggest the need for certainty,
rather than malleability, of non-compete terms. ................................................7
Aqua-Aerobic Systems, Inc. v. Ravitts, 166 Ill. App. 3d 168 (2d Dist. 1988) .............................7

i
Jefco Laboratories, Inc. v. Carroo, 136 Ill. App. 3d 793 (1st Dist. 1985). .....................................7
Citadel Inv. Group, LLC v. Teza Techs., LLC, 398 Ill. App. 3d 724 (1st Dist. 2010). .................8
Long v. Tazewell/Pekin Consol. Communication Center, 215 Ill. App. 3d 134 (3d Dist. 1991). 8
ONeil and Santa Claus, Ltd. v. Xtra Value Imports, Inc., 51 Ill. App. 3d 11 (3d Dist. 1977). ..8
3. Appellate case law from other States demonstrates clear disagreement
over how to interpret the not less than language preceding a temporal
limit. ............................................................................................................................8
Robinwood, Inc. v. Baker, 425 S.E.2d 353 (Ga. Ct. App. 1992) ................................................8,9
4. The burgeoning public policy debate concerning employment-based,
non-compete agreements amplifies the importance of the certified
questions ....................................................................................................................9
Conor Dougherty, How Noncompete Clauses Keep Workers Locked In (May 13, 2017) THE
NEW YORK TIMES ............................................................................................................................9
820 ILCS 90/1 et seq.......................................................................................................................9
HAW. REV. STAT. 480-4 .............................................................................................................9
UTAH CODE ANN. 34-51-101 .......................................................................................................10
State Call to Action on Non-Compete Agreements .......................................................................10
Labor Market Monopony: Trends, Consequences, and Policy Responses (October 2016) ........110
Mark Garmaise, Ties That Truly Bind: Noncompetition Agreements, Executive
Compensation, and Firm Investment, J. OF LAW ECON. & ORG. 27, no. 2:376-425 ..............11
Tradesman Intl v. Black, 724 F.3d 1004 (7th Cir. 2013) ............................................................11
C. Resolution of the proposed questions will terminate the underlying action. ...11
Illinois Supreme Court Rule 308(a) .........................................................................................12
Weber v. St. Paul Fire & Marine Ins. Co, 251 Ill. App. 3d 371 (3d Dist. 1993)........................12
V. Conclusion ..........................................................................................................................12

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I. INTRODUCTION

This application for leave to appeal concerns a case-dispositive issue of law. The

Defendant-Appellant, Callie Marik, seeks an appellate determination of whether post-

employment restrictive covenants lasting for not less than a certain time period

contain an appropriate durational limit under Illinois law.

When the circuit court denied Mariks Section 2-615 motion to dismiss, it eliminated

the specific language that Mariks former employer used in crafting its restrictive

covenants. Those covenants, by their plain terms, last for not less than three years and

not less than five years from the date of Mariks termination. The circuit court held

that the covenants lasted for three and five years respectively. (C078).

This appeal presents questions that will resonate far beyond the specific context of

this action. The use of employee non-compete agreements has proliferated, extending

not just to young dance instructors like Marik, but to camp counselors and college

students teaching young tots how to swim. See Steven Greenhouse, Noncompete Clauses

Increasingly Pop Up in Array of Jobs (June 8, 2014), THE NEW YORK TIMES (reciting story of

19 year-old camp counselor bound to non-compete); BHB Investment Holdings, LLC v.

Ogg, No. 330045, 2017 WL 723789 (Mich. Ct. App. Feb. 21, 2017) (affirming order

dismissing complaint for breach of non-compete agreement brought against deck

supervisor at Goldfish Swim School who earned $12.50 per hour). Employees who sign

restrictive covenants have little to no bargaining power. And in an increasingly

specialized economy, the very presence of a disabling career restraint (even when not

litigated) can stifle innovation and wage growth.

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 To that end, Marik seeks a determination that post-employment restraints must have

definitive durational limits, not ones that are mere suggestions. The certified questions

involve the interplay of black-letter restrictive covenant law and crucial contract

interpretation principles. For the following reasons, the court should grant Mariks

application under Supreme Court Rule 308(a) over the legal questions certified by the

circuit court below.

II. STATEMENT OF FACTS

On October 14, 2016, Pams Academy of Dance/Forte Arts Center (Pams

Academy), sued its former employee, Marik, claiming she breached a Non-Disclosure

Agreement and Restrictive Covenant (the Agreement). (C001-5). Marik responded on

January 11, 2017 by filing a Section 2-615 Motion to Dismiss the Complaint. (C009-18).

Rather than brief that motion, Pams Academy filed a First Amended Complaint.

(C020-43). In that amendment, Pams Academy separated its original breach-of-contract

claim into Counts I and II and added a third cause of action for trade secrets

misappropriation. (C023-27). The First Amended Complaint also attached a different

form of the Agreement as an exhibit, which had an effective date earlier than the

version of the Agreement that Pams Academy attached to the initial Complaint. (C028).

Aside from the date, though, the Agreement was identical in substance to that

contained in the initial filing. (C005, C028).

Marik again moved to dismiss the entire action under Section 2-615. (C045-55). As

she did in her initial motion, Marik argued that the two restrictive covenants in the

Agreement, which formed the predicate for Counts I and II, contained indefinite

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durational limits. (C047-49). Marik advanced other arguments as to Counts I and II,

directed at the substantive overbreadth of the clauses rather than their indefiniteness.

(C049-52).

The Agreements restrictive covenants are contained in: (1) Paragraph 3, which

prohibits Marik from competing with Pams Academy for not less than five years

from her termination date; and (2) Paragraph 4, which prevents Marik from soliciting or

doing business with any teachers, students, and parents of Pams Academy for not less

than three years from the end of her employment. (C028). Opposing the Section 2-615

motion, Pams Academy disagreed with Mariks assertions that both Paragraphs 3 and

4 were indefinite and that they were unreasonable restraints under Illinois law. (C060-

65).

On June 28, the circuit court denied Mariks Section 2-615 motion as to Counts I and

II, finding the restrictive covenants lasted for periods of five and three years

respectively. (C078). The court also struck, as overbroad, Paragraph 7 of the Agreement,

which contained a separate non-competition covenant with no time limit whatsoever.

(C078). Finally, the court dismissed Count III without prejudice and gave Pams

Academy until July 26, 2017 to file an amended claim for trade secrets

misappropriation. (C078). Pams Academy did not do so, meaning only Counts I and II

remain pending in the circuit court.

On August 8, Marik filed her Motion to Certify for Interlocutory Appeal Questions

Arising from Denial of Motion to Dismiss. (C079-123). After full briefing, the circuit

3
court entered an Order on November 8 granting Mariks motion on each proposed

certified question. (C155-56).

III. STATEMENT OF THE CERTIFIED QUESTIONS

The circuit courts November 8 Order certified the following two questions for

appeal under Rule 308(a):

(1) Do employment-based restrictive covenants with time

periods lasting not less than five and not less than three
years contain an enforceable and reasonable temporal scope
under Prairie Rheumatology Assocs., S.C. v. Francis, 2014 IL
App (3d) 140338, and Reliable Fire Equipment Co. v. Arredondo,
2011 IL 111871?

(2) In the context of employment-based restrictive covenants,

do restrictions lasting not less than five and not less
than three years mean five and three years respectively?

(C155-56).

IV. STATEMENT OF REASONS FOR GRANTING THE APPLICATION

Marik has established each of the three conditions for a Rule 308(a) interlocutory

appeal. First, the certified questions embody pure issues of law, reviewable under a de

novo standard. Second, the questions engender substantial grounds for difference of

opinion concerning the appropriate certainty of time limits in post-employment

restrictive covenants. And third, a favorable resolution will end the action below, as no

extra-contractual claims are part of the case.

A. The proposed questions concerning post-employment restrictive covenants are

ones of law, reviewable de novo.

A certified question under Rule 308(a) must involve a question of law that enables de

novo appellate review. De Bouse v. Bayer AG, 235 Ill. 2d 544, 550 (1999). Illinois law is

4
clear. The validity of an employment-based restrictive covenant is a question of law.

Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871, 12; Mohanty v. St. John Heart

Clinic, S.C., 225 Ill. 2d 52, 62 (2006); Prairie Rheumatology, 2014 IL App (3d) 140338, 11.

To that end, Marik seeks review over the degree of certainty as to post-employment

durational limits, not the application of unique facts to an award of injunctive relief. See

Capstone Financial Advisors, Inc. v. Plywaczynski, 2015 IL App (2d) 150957, 7 (citing

Mohanty and explaining the difference in the de novo and abuse-of-discretion standards

of review in non-compete cases).

B. Substantial grounds for a difference of opinion exist on each proposed

question.

The Supreme Court of Illinois recently has reaffirmed the proposition that

substantial grounds for difference of opinion exist under Rule 308(a) where reviewing

courts have not addressed particular questions of law. Rozsavolgyi v. City of Aurora, 2017

IL 121048, 32. So Marik need not establish a direct conflict among intermediate

appellate courts for the Court to grant this application. See Doe v. Sanchez, 2016 IL App

(2d) 150554, 20 (finding substantial grounds for difference of opinion where no

directly applicable case law answered the question). The certified questions in this

appeal concern legal issues that are likely to arise beyond the specific context of this

lawsuit. Indeed those questions, over which reasonable people may disagree, address

crucial elements of contract formation, contract construction principles, judicial

discretion, and public policy.

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 1. Illinois law requires temporal limits for any post-employment restrictive
covenant.

The Third District recently summarized the central rule of law that informs the

Courts analysis of the certified questions: Under Illinois law, a postemployment

restrictive covenant is enforceable only if it is reasonable in geographic and temporal scope

and it is necessary to protect an employers legitimate business interest. Prairie

Rheumatology, 2014 IL App (3d) 140338, 12 (emphasis added). This rule derives from

the well-established rule-of-reason test that courts use to assess the enforceability of

employment non-competition covenants. See Reliable Fire Equipment, 2011 IL 111871,

16-17 (identifying three-prong reasonableness framework).

In its June 28 Order, the circuit court found that the terms not less than five and

not less than three years meant five and three years. (C078). Put another way, it

interpreted both non-competition covenants in a way that established a firm time limit.

That was the case even though Pams Academy wrote the Agreement and chose specific

malleable terms concerning the restrictive covenants temporal scope. The circuit courts

ex post modification of the Agreementand decision to relax a basic tenet of non-

compete lawlies in direct tension with the applicable black-letter principles described

in Prairie Rheumatology.

To be sure, this tension illustrates the difference of opinion between Mariks legal

argument and the circuit courts ruling. But so does the Supreme Court of Illinois

decision in House of Vision, Inc. v. Hiyane, 37 Ill. 2d 32 (1967), in which the Court held

that an employer could not enforce a non-compete clause without any time restriction

since it imposed unrealistic boundaries in time and space. Id. at 39. And the Court

6
there would not sanction any equitable modification of the restraint, noting courts

always should consider the fairness of the restraint initially imposed. Id. Though

every non-compete case presents unique facts, the governing first principles matter.

They guide lower courts in resolving disputes. And just as critically, those principles

help lawyers advise their clients on what they can and cant do when evaluating new

career opportunities.

The certified questions address the need for clarity, certainty, and compliance with

black-letter rules. In future cases, the phrase not less than could be replaced by the

wording at least, or some other qualifier that reserves for the employer substantial

discretion in deciding for itself when the non-compete term ends. Can employers do

this consistent with the well-settled rule that a covenant must be reasonable as to

time, geographic scope, and activity? Jefco Laboratories, Inc. v. Carroo, 136 Ill. App. 3d

793, 799 (1st Dist. 1985). That is why Marik seeks leave to appeal. The Court should step

in and answer the certified questions.

2. Governing contract construction rules suggest the need for certainty, rather
than malleability, of non-compete terms.

In the main, the difference of opinion on the particular legal issue is clear enough.

But below the surface lie several rules of contract construction that further inform the

Courts need to address the certified questions:

Restrictive covenants have long been disfavored by the

courts. Aqua-Aerobic Systems, Inc. v. Ravitts, 166 Ill. App. 3d
168, 172 (2d Dist. 1988); Jefco Laboratories, 136 Ill. App. 3d at
797 (1st Dist. 1985).

7
 Courts strictly construe non-competition covenants. Citadel
Inv. Group, LLC v. Teza Techs., LLC, 398 Ill. App. 3d 724, 736
(1st Dist. 2010).

Courts construe ambiguous contract language against the

drafting partya rule known as contra proferentum. Long v.
Tazewell/Pekin Consol. Communication Center, 215 Ill. App. 3d
134, 140 (3d Dist. 1991).

For a contract to be binding and enforceable, its terms

must be definite or certain. ONeil and Santa Claus, Ltd. v.
Xtra Value Imports, Inc., 51 Ill. App. 3d 11, 14 (3d Dist. 1977).

Applying these rules to the certified questions will enable the Court to determine

whether employers may reserve flexibility for themselves in drafting non-compete time

limits. The circuit courts ruling on Mariks Section 2-615 motion illustrates a divergent

view of contact interpretation. On the one hand (one which Marik advocated), those

principles amplify the need for an objectively ascertainable duration. On the other hand

(one the circuit court embraced), courts may step in, modify contracts, and import a

degree of certainty to them when an employer failed to do so.

3. Appellate case law from other States demonstrates clear disagreement over
how to interpret the not less than language preceding a temporal limit.

In opposing Mariks Section 2-615 motion, Pams Academy identified one out-of-

state case that validates the substantial ground for difference of opinion over the

certified questions. Specifically, it pointed to a Georgia appellate case called Robinwood,

Inc. v. Baker, 425 S.E.2d 353 (Ga. Ct. App. 1992). There, the court adopted a variant of the

8
reasoning Pams Academy invoked, in essence holding that a non-compete term of not

less than two years meant two years. Id. at 356.1

Baker was a 4-3 decision. For its part in assessing the not less than two years

language, the dissent stated that the majority resort[ed] to a less than commonly

accepted vernacular phrase interpretation. Id. at 357. This is precisely the argument

Marik advanced: that reading terms out of the Agreement in favor of a more certain one

violates generally applicable contract construction rules. The circuit court disagreed,

showing how reasonable people may disagree over the application of those rules in

non-compete lawsuits.

4. The burgeoning public policy debate concerning employee non-compete

agreements amplifies the importance of the certified questions.

The certified questions before the Court are a symptom of a larger problem. Non-

compete abuse is on the rise, so much so that it has generated prominent coverage in a

variety of media outlets. See, e.g., Conor Dougherty, How Noncompete Clauses Keep

Workers Locked In (May 13, 2017), THE NEW YORK TIMES (documenting proliferation of

non-competes among various classes of lower-level employees). Legislative trends in

States across the political spectrum reflect policymaker concern over abuse. Illinois, for

its part, recently advanced incremental reform, banning non-compete contracts for low-

wage workers under the Freedom to Work Act. 820 ILCS 90/1 et seq. Hawaii now bans

non-compete agreements for technology employees. HAW. REV. STAT. 480-4. And last

year, Utah significantly curtailed the use of non-competes and allowed employees to

1In Baker, the defendant admitted in her answer that not less than two years meant two years. Id. at
355-56.

9
seek their legal fees if a firm tried to enforce an overbroad contract. UTAH CODE ANN.

34-51-101, et seq. As a reflection of these recent legislative changes, the White House

even issued its State Call to Action on Non-Compete Agreements, advocating for the States

to reform non-compete law in a number of substantive areas. Among those best

practices policy objectives was a call to prevent just what occurred below: the ex post

judicial modification of overbroad restraints.2

To be sure, the overuse and misuse of non-compete agreements has implications

beyond any one narrow dispute. Indiscriminate use of restrictive covenants raises

important questions of economic liberty, the freedom to compete, and wage stagnation.

Just last year, in fact, the Council of Economic Advisers cited prior studies of how firms

use non-compete agreements, suggesting a stark mismatch between the asserted

reasons to use a non-compete contract and the empirical data on their benefits:

This pattern of evidence casts doubt on the notion that non-

compete agreements serve mainly to protect employers
trade secrets and investments in employee training. Instead,
it suggests that many employers may use non-compete
agreements to solidify their bargaining power vis--vis their
workers. While further research is needed to fully
understand the impact of non-compete agreements on
wages, an analysis by the U.S. Department of Treasury
(2015) shows that stricter non-compete enforcement in a State is
associated with both lower wage growth and lower initial wages.

Council of Economic Advisers Issue Brief, Labor Market Monopsony: Trends, Consequences,

and Policy Responses (October 2016), at p. 9 (emphasis added). To that end, peer-

reviewed research undermines the claim that non-competes are necessary for firms to

2 A copy of the 2016 Call to Action is available at

https://obamawhitehouse.archives.gov/sites/default/files/competition/noncompetes-calltoaction-
final.pdf.

10
invest in employees and grow their businesses. See Mark Garmaise, Ties That Truly Bind:

Noncompetition Agreements, Executive Compensation, and Firm Investment, J. OF LAW ECON.

& ORG. 27, no. 2:376-425 (concluding that research-and-development investment within

publicly-traded firms was lower, not higher, in areas where non-competes were

enforceable).

Unchecked, non-compete agreements operate as deterrents in the free market,

perhaps most impacting cases that never even get litigated. See Tradesman Intl v. Black,

724 F.3d 1004, 1018 (7th Cir. 2013) (Hamilton, J., concurring) (stating that [i]n the many

cases that will never get to court, or where employees will be deterred even from trying

to leave, the employer benefits from the in terrorem effects of the oppressive and overly

broad covenants.). The relatively few cases like this case with a shifting, malleable

durational guidepost does not suggest that this action is an outlier; it only suggests that

people like Marik lack resources to fight oppressive contracts in court.

All of these developments that have generated research, public-policy discussion,

and actual legislative reform demonstrate the need for this Court to intervene. Non-

compete law still stems largely from judicial decisions. The core legal principles that

form the certified questions, to a great extent, lie in tension with one another. A

resolution of those questions will guide future litigants and judges in evaluating

durational limits in the overall rule-of-reason analysis.

C. Resolution of the proposed questions will terminate the underlying action.

A favorable appellate disposition, holding that the restrictive covenants fail to

articulate any ascertainable durational limit, will render the operative provisions of the

11
Agreement unenforceable. Although Pams Academy filed a separate cause of action in

the First Amended Complaint for trade secrets misappropriation, the circuit court

dismissed that claim. (C078). Pams Academy chose not to amend its pleading.

Therefore, if this Court answers either or both certified questions in the negative, the

disposition will materially advance the ultimate termination of the litigation in its

entirety. Ill. S. Ct. R. 308(a).

Even though Marik filed a Counterclaim for Declaratory Judgment, that cause of

action only sought a determination that the non-competition covenants were invalid

and unenforceable. (C136-40). A favorable resolution of the certified questions will moot

that counterclaim entirely and leave nothing for the circuit court to do but dismiss the

entire action. See Weber v. St. Paul Fire & Marine Ins. Co, 251 Ill. App. 3d 371, 372 (3d Dist.

1993) (stating that to maintain a declaratory judgment claim, the court must have an

actual controversy between the parties capable of being affected by a determination of

the case.).

V. CONCLUSION

For the foregoing reasons, Marik requests that this Court grant her leave to appeal

under Supreme Court Rule 308(a).

Respectfully submitted,

Clingen, Callow & McLean, LLC

By: /s/ Kenneth J. Vanko

Kenneth J. Vanko

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Kenneth J. Vanko
Emily L. Langhenry
Clingen Callow & McLean, LLC
2300 Cabot Drive, Suite 500
Lisle, Illinois 60532
(630) 871-2600
vanko@ccmlawyer.com
langhenry@ccmlawyer.com
Counsel for Defendant-Appellant

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 PROOF OF SERVICE

The undersigned, being duly sworn on oath, states that she served this Application
for Leave to Appeal on the following:

Zachary B. Pollack
Sabuco, Beck, Hansen, Massino & Pollack, P.C.
950 Essington Road, Suite B
Joliet, Illinois 60435

via e-mail and by depositing the same in the United States mail on December 6, 2017
with proper postage prepaid.

By: /s/Nikki Matthiscyk

Nikki Matthiscyk

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