LKQ Corporation v. Rutledge

Court of Appeals certified questions to Supreme Court of Delaware regarding viability of forfeiture-for-competition provisions contained in defendant-former employee’s employment agreement with plaintiff-former employer, where defendant agreed to forfeit sales proceeds of stock that plaintiff awarded over nine-year period that sold for hundreds of thousands of dollars if defendant worked with competitor within nine months of defendant’s departure from plaintiff. The agreement also contained anti-competition agreement, and record showed that defendant began working for competitor within five days of leaving defendant. Ct. of Appeals found under Illinois law that anti-competition clause, which precluded defendant from working with competitor within nine months and within 75-mile geographic territory was unenforceable as being overly broad. Ct. of Appeals, in finding that forfeiture-for-competition provision was subject to Delaware law, certified questions as to whether review for reasonableness of said provision was limited to only limited partnership agreements, how far back any claw back applied, and whether said provision applied when employees quit or are terminated.