SW Legal studies in Business

Restrictive Covenant Applies Only to Valuable Interests Developed During Employment
Description Appeals court held that an insurance agent who had a restrictive covenant with his former employer not to exploit contacts developed while working for that employer could not be constrained from later contacting people he had known prior to his working for that employer.

Topic Employment Law
Key Words Restrictive Covenants; Protectible Interests
C A S E   S U M M A R Y
Facts Abplanalp worked for Com-Co Insurance for five years. He signed an employment agreement that included a restrictive covenant stating that he agreed, for a period of three years after leaving Com-Co, not to solicit business from clients of Com-Co or to use any of its customer lists. After he moved to work for Service Insurance, he was sued by Com-Co for selling insurance to some of his relatives and friends. It was found at trial that he did not sell to any other persons he had come to know while working at Com-Co, so the issue was liability for selling to friends and relatives. The trial court held in Abplanalp's favor; Com-Co appealed.
Decision Affirmed. Com-Co had no protectible interest in clients who Abplanalp knew personally before he began to work for Com-Co. The covenant could not apply to those contacts, as they existed before his employment there; he was free to use those contacts in his work for his new employer. Com-Co could only claim an interest in customers Abplanalp came to know while working for it. Protectible interest in customers is not recognized when the customer list is not secret or where there is no specialized knowledge. The protectible interest is in the list of customers developed while in Com-Co's employment only.
Citation Com-Co Insurance Agency v. Service Insurance Agency, 748 N.E.2d 298 (App. Ct., Ill., 2001)

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