A warning to companies investigating former employees for violating noncompete clauses: Respect privacy, says the Supreme Court of Illinois.
On March 4, the state's high court ruled that North American Corp. intruded upon the privacy of former company saleswoman Kathleen Lawlor when it hired investigators to find out whether she had poached its clients after she switched jobs.
Evidence showed the company hired investigators who, in turn, hired a detective agency that obtained her phone records by pretending to be her—conduct known as ‘pretexting,' the court said.
The justices, affirming a lower court, held that North American was vicariously liable for the tort of "invasion upon seclusion" because of the pretexting. They also threw out the company's breach of fiduciary duty counterclaims against Lawlor. However, the court reduced $1.75 million in punitive damages originally awarded to Lawlorto just $65,000.
The attorney working with North American during the investigation of Lawlor was Reed Smith partner Lewis Greenblatt, who did not respond to a request for comment. Eric Macey, an attorney representing North American, said the company, "was pleased about the economics of the decision" but was troubled by its potential impact. Macey is with Novack & Macey.
"A concern that we have is the extent to which it creates a chill for an employer who hires a private investigator in that process," Macey said.
The court's decision is just one of many concerns employers should have when investigating breaches of noncompete clauses, said Zev Eigen, a professor at Northwestern University Law School. "Employers should already have sufficient ground for pause without this odd tort," he said.
Representing Lawlor were Katten & Temple attorneys Mitchell Katten and Nancy Temple.
Contact Leigh Jones at ljones@alm.com.
