Not So Freak[in] Fast—Court Dismisses Challenge to Jimmy John’s Non-Compete Agreements

jimmy-johns

Jimmy John’s received less than favorable publicity in the fall of 2013 when published reports described the sandwich chain’s requirement that its sandwich-makers sign Confidentiality and Non-Competition Agreements before they could prepare your turkey sub. The agreement prohibited, in part, employees from working at food service venues which derive 10% or more of their sales from the sale of sandwiches, submarines, or wraps within a three-mile radius of any Jimmy John’s for two years after the Jimmy John’s employment ends. 

A current and a former Jimmy John’s employee filed a class action in the federal district court in Chicago seeking, in part, a class-wide declaration that the Confidentiality and Non-Competition Agreements were unenforceable. On April 8, 2015, Judge Kocoras dismissed the employees’ request for a declaration and determined that neither plaintiff had alleged a legal injury that would permit the suit to proceed with respect to this claim.

Judge Kocoras begins his analysis by noting that the 7th Circuit Court of Appeals has not addressed the issue of whether a claim for declaratory relief can be considered in the context of non-compete provisions, but he concluded, based on an earlier appellate decision seeking a declaration as to whether a patent was infringed, that the employees would need to demonstrate 1) a “reasonable apprehension” that Jimmy John’s would file a lawsuit against them for violating the Non-Competition Agreements and 2) that the former employees had either engaged in conduct or were preparing to engage in conduct that would compete with Jimmy John’s.

Judge Kocoras concluded that the employees’ allegations were too vague and too tenuous to satisfy either of these prongs. In concluding that the Complaint did not allege a reasonable apprehension that Jimmy John’s would file litigation against them, Judge Kocoras observed that there was no allegation that the Agreements were enforced against these employees in the past. Moreover, Judge Kocoras reasoned that the affidavits filed by Jimmy John’s that it did not intent to enforce any breach of the Confidentiality and Non-Compete Agreements in the future as to these employees made it too speculative and remote that the employees might face litigation down the road.

Left unanswered in the opinion is why Jimmy John’s believed that it had an enforceable interest that warranted the broad non-compete provision it required its employees to sign.

 

Michael Braun concentrates his practice in labor & employment, civil litigation, and financial services. He is a seasoned litigator both in court and in arbitrations providing litigation and counseling in the areas of employment, restrictive covenants and trade secrets, and business disputes.

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