THIRD DIVISION February 24, 2010
No. 1-09-2828
CITADEL INVESTMENT GROUP, LLC, ) Appeal from the ) Circuit Court of Plaintiff - Appellant and Cross-Appellee, ) Cook County. ) v. ) 09 CH 22478 ) TEZA TECHNOLOGIES LLC, a Delaware ) Corporation, MIKHAIL MALYSHEV, and ) JACE KOHLMEIER, ) Honorable ) Mary K. Rochford, Defendants - Appellees and ) Judge Presiding. Cross-Appellants. )
JUSTICE STEELE delivered the opinion of the court:
Following an evidentiary hearing, plaintiff Citadel Investment Group, LLC (Citadel), filed
this interlocutory appeal pursuant to Illinois Supreme Court Rule 307(a)(1) (188 Ill. 2d R.
307(a)(1)), seeking reversal of the portion of the circuit court’s order which granted preliminary
injunctive relief lasting only through November 16, 2009, against defendant Mikhail Malyshev and
through November 17, 2009, against defendants Jace Kohlmeier and Teza Technologies, LLC
(Teza), and requesting a remand for the entry of an injunction of appropriate length. Defendants
cross-appealed, contending that the circuit court erred in failing to dismiss the case and in entering
a preliminary injunction because its ruling prevents the defendants from competing, and adopts an
interpretation of the noncompetition agreements that violates public policy. For the following
reasons, we affirm. 1-09-2828
BACKGROUND
Citadel
Citadel is a Chicago-based financial services firm founded in 1990 by Ken Griffin. Citadel
has approximately 1,300 employees across the world, with 1,000 in Chicago. Citadel is best
known for its alternative investment management products and manages approximately $14 billion
of aggregate capital on behalf of pensions, retirement funds, foundations, endowments, and
employees of Citadel. Citadel provides some traditional, fundamental investments through its
global equities strategies. Citadel is also involved in quantitative investment, including: options
market making, volatility arbitrage, statistical arbitrage and high frequency trading. Citadel was
one of the first investment firms to engage in high frequency trading, which grew out of Citadel’s
work in statistical arbitrage. Citadel had been working on statistical arbitrage strategies for seven
years at the time it started working on high frequency trading.
A high frequency business consists of several interrelated parts, each of which is
important: (a) recruiting and hiring high frequency talent; (2) building historical market data
systems and parsers; (c) developing trading signals; (d) testing those signals against the collected
historical market data; (e) creating realtime market data interfaces that permit the collection of
data and the operation of trading strategies; (f) locating servers in strategic “co-location”
exchanges; and (g) developing order entry and trading “engines.” Combined, these activities
include both developing the tools to trade and building the tools to identify appropriate trades.
Building a high frequency trading business requires finding the best personnel possible to
perform overlapping work in information technology and quantitative research (QR)
2 1-09-2828
infrastructure. Recruiting and retaining employees is a critical and competitive portion of
Citadel’s high frequency business.
High frequency trading also requires the development of a vast collection of historical
market data. Citadel has been gathering market data since it began the high frequency business,
which was built on the foundation of Citadel’s prior quantitative investment work. The data
system contains the rough equivalent of approximately 100 times the amount of data included in
the Library of Congress. In order to use the historical market data, codes and programs must be
written to translate, organize and replay it. This process involves writing code to review and
organize the data into a coherent and usable format. Market data replayers allow a particular
signal or “alpha”1 to be tested over historical market data. Citadel developed these tools in
building its high frequency business. A combination of signals or “alphas” may be used in a
trading strategy.
Moreover, Citadel built trading engines that read incoming real-time market data and,
when the opportunity arises, execute its trading strategies and alphas to buy and sell securities.
This is a critical piece of the infrastructure and of the entire interrelated network.
There is significant overlap and cooperation in Citadel’s high frequency group between
individuals working on development of alphas or signals and other quantitative research and those
working on information technology, trading engines, and other aspects of the infrastructure.
Citadel’s quantitative and infrastructure teams have worked together in a continuous, cooperative
1 Signals or “alphas” are mathematical price prediction algorithms or models developed and
tested by Citadel.
3 1-09-2828
process to develop the high frequency business over a period from 2004 through 2009.
Malyshev and Kohlmeier
Malyshev joined Citadel’s high frequency group in the fall of 2003. Although he had no
training or professional trading experience or training, he had a Ph.D in plasma physics, had
previously worked as a management consultant, and had a quantitative background. Kohlmeier
was hired into Citadel’s finance technology associates program in the information technology (IT)
department in July 2002, directly out of graduate school. Kohlmeier joined the high frequency
group in January 2004. Prior to joining Citadel, Kohlmeier had no experience in algorithmic or
high frequency trading.
Malyshev oversaw every aspect of Citadel’s high frequency business, including the
building of the IT infrastructure for the high frequency business. Kohlmeier reported to Malyshev
from early 2004 until Malyshev resigned in February 2009. Additionally, Malyshev was
responsible for recruiting and hiring Citadel’s high frequency talent, interfacing with both internal
and external recruiters used by Citadel.
Malyshev also worked on Citadel’s alphas and was responsible for approving the trading
strategies used by Citadel’s high frequency group. Kohlmeier made sure the alphas “traded right”
and that trading was “robust.” While at Citadel, Kohlmeier would often make use of an “alpha”
that looked at a weighted midprice and had some predictive elements to it.
Joe Kelley, Richard May, and Brian Stube (as well as three others) reported directly to
Kohlmeier and also worked on Citadel’s alphas and signals. Kohlmeier conducted weekly
meetings with them which included technical discussions of the signals and strategies being
4 1-09-2828
worked on by individuals in the group.
Kohlmeier wrote the code for the Phase Zero HFE System at Citadel, which was the high
frequency group’s first order entry system and trading engine. The Phase Zero HFE System was
based on infrastructure previously used by Citadel to send orders back and forth to trade Korean
options. Kohlmeier made changes to that IT system so that it would allow the high frequency
group to trade on the National Association of Securities Dealers Automated Quotation System
(NASDAQ). The high frequency group made trades through Kohlmeier’s Phaze Zero HFE
System though, according to Kohlmeier, those trades lost a small amount of money and the
system was “turned off.”
Malyshev also played a crucial role in the construction of Citadel’s high frequency trading
platform infrastructure. He provided the requirements for the infrastructure rollout that was
completed by Citadel’s high frequency team. Malyshev was involved in frequent meetings and
was an important part of developing Citadel’s infrastructure.
Citadel’s Security Measures to Protect its High Frequency Business
In order to protect the confidential nature of its high frequency work, Citadel instituted a
number of physical and electronic security measures. The physical security measures included
limited identification card access to the building and certain floors, security cameras, and a
dedicated Citadel security team. The electronic security measures included password protection
and encryption of relevant computer systems, computer-access limitations, and a second level of
encryption for some of Citadel’s source code. Access to high frequency source code was given
out on a need-to-know basis only and was strictly limited.
5 1-09-2828
Citadel also used employment agreements as an additional tool in protecting its
confidential information related to high frequency trading. Every employee in the high frequency
group had to sign a noncompetition agreement at some point during their employment. Citadel
employees were also required to sign nonsolicitation and nondisclosure agreements to protect
Citadel’s business interests and its confidential information.
Because of their important roles at Citadel and their access to confidential information,
both Malyshev and Kohlmeier were required to execute noncompetition, nonsolicitation and
nondisclosure agreements with Citadel, and they entered into a partnership agreement. Malyshev
signed his noncompetition agreement on August 3, 2004, and Kohlmeier signed his
noncompetition agreement on April 13, 2005. Malyshev entered into his nondisclosure agreement
on January 21, 2004, and Kohlmeier entered into his on April 13, 2005. Malyshev executed the
“Citadel Partners Equity Participants, LP Limited Partnership Agreement” on July 21, 2008;
Kohlmeier executed the same agreement on July 23, 2008.
The noncompetition agreements signed by Malyshev and Kohlmeier provide in relevant
part as follows:
“1. Noncompetition. During my employment with Citadel, and during the
Restricted Period following the end of my employment, I agree not to, directly or
indirectly, engage in any Competitive Activity.
(a) ‘Restricted Period’ means the 0, 3, 6 or 9
month period following the end of my employment
with Citadel, as elected by Citadel within 10 days
6 1-09-2828
following the end of my employment.
(b) ‘Competitive Activity’ I will be engaging
in a Competitive Activity if:
(I) I become an employee of a
Competitive Enterprise in a capacity I
was in, or provide services that are
similar I provided, or with
responsibilities that are similar to the
responsibilities I had, in each case,
when I was employed by Citadel; or
***
(v) I directly or indirectly
become a partner or principal of a
Competitive Enterprise; or
(vii) I directly or indirectly form, or
acquire greater than a 5% equity, voting,
revenue, income, profit, loss or other
economic interest in a Competitive
Enterprise.
(c) ‘Competitive Enterprise’ means any business that
7 1-09-2828
(I) engages in any of the investment
strategies, trading strategies or any
other business activities identical or
similar to any of those engaged in by
Citadel, or (ii) owns or controls a
significant interest in any entity that
engages in any of the investment
Citadel.
3. Reasonableness of Restrictions. I understand the global
nature of Citadel’s businesses and the effort Citadel undertakes to
develop, preserve and protect its business and competitive
advantage. Accordingly, I agree that the scope and duration of the
restrictions and limitations described in this Agreement are
reasonable and necessary to protect the legitimate business interests
of Citadel, even if any provision of Section 1 may limit my ability to
earn a livelihood in a business that is identical or similar to the
businesses in which Citadel is engaged for some period of time. ”
8 1-09-2828
Malyshev and Kohlmeier also signed nonsolicitation agreements in which they agreed not
to “directly or indirectly” solicit or induce any “Citadel Employee” to cease employment with
Citadel “during [his] employment with Citadel, and during the 12-month period following the end
of [his] employment with Citadel.” A “Citadel Employee” includes a person who was employed
at Citadel at the time of the contact or at any time within the 30-day period “immediately
preceding such contact, solicitation, or inducement.” The nonsolicitation agreements also
prohibited making “any oral or written statement to any third party that disparages, defames, or
reflects adversely upon Citadel, or any of its principals, officers, employees or services.”
Additionally, Malyshev and Kohlmeier each executed a nondisclosure agreement with
Citadel in which they acknowledged that Citadel had “devoted considerable resources in
developing its proprietary trade secrets and know-how,” and recognized that “such proprietary
trade secrets and know-how, as well as all other information relating to Citadel’s activities that is
not generally known outside of Citadel,” is the “key to Citadel’s competitive advantage and
business.” Malyshev and Kohlmeier also acknowledged that “any loss or erosion of Citadel’s
competitive advantage through the disclosure or improper use” of its trade secrets could have
“severe repercussions on Citadel’s business.” Further, Malyshev and Kohlmeier both agreed that
they would “use Confidential Information only as required to perform [their] duties for Citadel
(and not for [their] personal benefit or the benefit of any other individual or entity).”
Section 3.1(d) of the partnership agreement executed by Malyshev and Kohlmeier
required each partner to “inform the General Partner of all business activities in which he engages
at any time prior to eighteen months following such Covered Person’s Termination.”
9 1-09-2828
Further, Citadel’s employee handbook specifies that employees are “strongly discouraged
from using any Citadel Communication System to access [their] personal e-Mail account held on
third-party e-Mail systems such as Hotmail, private ISP mail servers, etc.” Employees with
remote access are discouraged from “using non-Citadel e-Mail accounts (i.e., Hotmail, Yahoo,
AOL) or other external resources to conduct Citadel business, thereby ensuring that official
business is never confused with personal business.” The employee handbook demands that former
employees protect Citadel’s information: “If you leave Citadel, you may not in any way use
confidential or proprietary information obtained while working here.”
Malyshev’s Plans to Leave Citadel
According to Malyshev, he thought about having his own high frequency trading company
frequently while he was employed by Citadel and began informing others of his desire as early as
2007. Malyshev consulted with attorneys in 2007 concerning his Citadel employment agreements
and he spoke with Kohlmeier as early as 2007 about his future ambitions, specifically stating that
he wanted to run his own company. By the end of 2007, Malyshev had specifically discussed
starting his own trading firm with an attorney. Malyshev continued to think about leaving Citadel
and forming his own business throughout 2008. In the first quarter of 2008, Malyshev again
discussed the Citadel agreements with attorneys. In February 2008, Kohlmeier informed
Malyshev of a conversation that he had with James Yeh, Malyshev’s boss and the manager of the
high frequency trading business, in which he expressed his desire to work with Malyshev in the
future, even if it was outside of Citadel. In 2008, Malyshev had discussions with other Citadel
employees about forming his own company, including Kelley, May, and Benjamin Blander. From
10 1-09-2828
mid to late 2008 until his resignation, Malyshev told May that his “dream scenario” was to run his
own company. Malyshev told Kelley and May that if he were to start his own business, he would
structure it like Jump, a competitor of Citadel’s that uses a model called a “bucket shop.” In a
bucket shop model, the company builds a trading platform and then allows third parties to trade
their strategies on it in return for a percentage of their profits.
In mid-2008, Malyshev told Kelley that he planned to leave Citadel and discussed his
future plans, including options at other firms and opportunities to build a team. Also in 2008,
Malyshev began communicating with recruiters, some of whom recruited for Citadel, in order to
build his team for the new venture. By December 2008, Malyshev was 80% certain that he was
leaving Citadel in February 2009. He reached out to former Citadel in-house counsel Matthew
Hinerfeld to discuss leaving Citadel and forming his own business, and entered into an attorney-
client relationship with Hinerfeld on December 6, 2008. Their discussions included Malyshev’s
employment agreements with Citadel and the possibility of Malyshev leaving Citadel and starting
his own business. Specifically, they discussed the possibility of Malyshev starting an independent
trading firm and Hinerfeld serving as the general counsel of the firm. Additionally, Malyshev
continued to discuss his desire to leave Citadel and form his own business with Citadel employees
Kelley, May and Stube.
Malyshev and Kohlmeier Resign: the Birth of Teza
Malyshev resigned from Citadel on February 16, 2009, and Kohlmeier resigned the
following day. On February 19, 2009, James Thomas, Kelley, May and Stube approached Yeh
about resigning. On February 22, 2009, Yeh called Malyshev and informed him that if he had
11 1-09-2828
solicited Thomas, Kelley, May and Stube, Citadel would pursue legal action. Additionally, Yeh
asked Malyshev to help persuade them to stay at Citadel, and Malyshev spoke with them. Shortly
thereafter, May, Kelley and Stube returned to Citadel.
After his resignation, Malyshev received a letter from Citadel’s general counsel, reminding
him of his obligation to return all Citadel documents, electronic information and data from his
home or personal computers, and then to delete any copies. However, Malyshev failed to return
any documents or information to Citadel and retained one of Citadel’s confidential profit and loss
statements, which contained detailed profit and loss information broken down by high frequency
strategy. Yeh testified that this statement would provide a roadmap for people aware of Citadel’s
trading strategies to compete against Citadel by knowing when, where and how Citadel makes its
money in the high frequency business.
Citadel elected a nine-month restricted period following the resignations of Malyshev and
Kohlmeier pursuant to the noncompetition agreements. Under those agreements, Malyshev was
entitled to a restricted period payment of $30,000 per month and Kohlmeier was entitled to a
restricted period payment of $21,000 per month.
During the week that they resigned and during their 30-day nonsolicitation period,
Malyshev and Kohlmeier met once at Malyshev’s home. They testified that they did not discuss
any future business that day, but on March 23, 2009, they again met at Malyshev’s home, at
which time they discussed a new high frequency business and agreed to go into business together.
Three days later, Malyshev, Kohlmeier and Hinerfeld incorporated Pelagicus Group LLC
(Pelagicus) in Delaware. Pelagicus is the entity that later became Teza. On April 28, 2009,
12 1-09-2828
Malyshev, Kohlmeier and Hinerfeld formed more entities, including Teza IP, LLC; Teza
Technologies, LLC; and Teza Trading LLC.
Citadel learned of Teza’s formation on July 6, 2009, and filed an emergency motion for
preliminary injunction on July 9, 2009. Additionally, Citadel sought sanctions against Malyshev
and Teza upon learning that Malyshev ran commercial scrubbing software on his personal
computers and destroyed evidence during the pendency of the instant lawsuit and after the trial
court entered an order for the preservation of evidence.
The Evidentiary Hearing and Trial Court’s Findings
An evidentiary hearing was held over several days beginning on September 28, 2009, and
the trial court subsequently issued a written memorandum opinion detailing its findings. With
respect to Citadel’s motion for sanctions, the trial court found that: although Malyshev was a
principal and an owner of Teza, the evidence showed that he acted on his own without Teza’s
approval or authority in scrubbing his computers. As such, the court found that sanctions could
not be imposed against Teza for Malyshev’s misconduct. The court did, however, find that
sanctions were warranted against Malyshev.
Regarding Citadel’s motion for a preliminary injunction, the trial court noted that Citadel
sought, without prejudice, injunctive relief on counts I, II and V of its first amended complaint.
Count I alleged that Malyshev and Kohlmeier violated their noncompetition agreements; count II
alleged that Malyshev and Kohlmeier violated their nonsolicitation agreements; and count V
alleged breach of fiduciary duty against Malyshev and Kohlmeier. Specifically, Citadel sought the
following relief against Malyshev, Kohlmeier and Teza:
13 1-09-2828
“(1) an order enjoining Malyshev and Kohlmeier from any
involvement with, or any work for, Teza for a period of nine
months following the date the court enters its injunction order, plus
any additional period of time for which the court finds that they
competed with or breached fiduciary duties to Citadel during their
employment;
(2) an order enjoining Teza from doing any work
whatsoever for a period of nine months from the date the court enters the
injunction order, and directing that all work done to date be destroyed; and
(3) an order enjoining all defendants from soliciting any
Citadel employees for twelve months from the date the Court enters
the injunction order.”
The trial court further found that Malyshev and Kohlmeier, by forming, working for and
owning Teza, engaged in competitive activities as defined in the noncompetition agreements.
Additionally, the court found that Malyshev and Kohlmeier violated the nonsolicitation
agreements in that Malyshev induced Kohlmeier to leave Citadel or that they solicited each other
to form Teza prior to the expiration of the nonsolicitation period. The trial court did not make a
finding on the merits of Citadel’s breach of fiduciary duties claims.
As a result of its findings, the trial court partially granted Citadel’s motion for preliminary
injunction against the defendants as follows: (1) Malyshev, Kohlmeier and Teza were enjoined
from engaging in any competitive activity as defined by the noncompetition agreements beginning
14 1-09-2828
with the date of the order (October 16, 2009) and ending at the termination of Malyshev’s and
Kohlmeier’s restricted periods as set forth in the noncompetition agreements and Teza was
enjoined for the longer of the two periods; and (2) Malyshev and Kohlmeier were enjoined from
directly or indirectly hiring, soliciting, or inducing any Citadel employee, as defined in the
nonsolicitation agreements, to leave Citadel for the 12-month period as set forth in the
agreements. In so finding, the trial court noted that neither the noncompetition nor the
nonsolicitation agreements contained provisions for an extension of the restriction period based
on a violation of their terms. This interlocutory appeal and cross-appeal followed.
DISCUSSION
On appeal, Citadel contends that the trial court erred in granting preliminary injunctive
relief lasting only through November 16, 2009, against defendants. Citadel seeks an injunction
that ensures compliance with the full nine-month, noncompetition period and argues that the relief
sought: (1) is consistent with Illinois law; (2) is consistent with the rule in the majority of other
jurisdictions; and (3) is consistent with common sense, logic, and public policy. Additionally,
Citadel contends that the facts of this case illustrate why courts of equity must have the power to
enforce the entire agreed-upon noncompetition period.
In their cross-appeal, defendants contend that the trial court erred by issuing an injunction
based on violations of the noncompetition agreements for the following reasons: (1) the court’s
interpretation of the agreements improperly restricts defendants’ postemployment activities; (2)
the court’s ruling ignores the plain language of the agreements, violates the law and leads to
absurd results; (3) the court’s interpretation of the agreements violate public policy; and (4) Teza
15 1-09-2828
is not a competitive enterprise. Additionally, defendants contend that the court erred when it
entered a preliminary injunction based on the nonsolicitation agreements.
A preliminary injunction is a provisional remedy granted to preserve the status quo
pending a hearing on the merits of a case. See Stenstrom Petroleum Services Group, Inc. v.
Mesch, 375 Ill. App. 3d 1077, 1089 (2007). It is an “ ‘extraordinary remedy used only in
situations where an extreme emergency exists and serious harm would result in the absence of an
injunction.’ ” Stenstrom Petroleum, 375 Ill. App. 3d at 1089, quoting Audio Properties, Inc. v.
Kovach, 275 Ill. App. 3d 145, 147 (1995). The party seeking a preliminary injunction is required
to demonstrate (1) a clearly ascertained right in need of protection, (2) irreparable injury in the
absence of an injunction, (3) no adequate remedy at law, and (4) a likelihood of success on the
merits of the case. Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52, 62 (2006). A decision
to grant or deny a preliminary injunction is generally reviewed for an abuse of discretion.
Mohanty, 225 Ill. 2d at 62-63. However, whether injunctive relief should issue to enforce a
restrictive covenant not to compete in an employment contract depends upon the validity of the
covenant, which is a question of law. Mohanty, 225 Ill. 2d at 63.
An injunction will not be set aside on review unless the trial court abuses its discretion and
holds contrary to the manifest weight of the evidence. Prairie Eye Center, Ltd. v. Butler, 329 Ill.
App. 3d 293, 299 (2002), citing R.L. Polk & Co. v. Ryan, 296 Ill. App. 3d 132, 142 (1998).
Additionally, courts strictly construe and interpret covenants not to compete, and any doubts or
ambiguities must be resolved against the restrictions. Marwaha v. Woodridge Clinic, S.C., 339
Ill. App. 3d 291, 293 (2003); Bloomington Urological Associates v. Scaglia, 292 Ill. App. 3d 793,
16 1-09-2828
798 (1997).
Citadel contends that the trial court should have extended the restriction period in the
noncompetition agreements so that it would have received a full nine months as contemplated
under the agreement. Citadel argues that the trial court’s refusal to enjoin the defendants for the
full nine months was inconsistent with this court’s decision in Electronic Support Systems, Inc. v.
Schattke, 70 Ill. App. 3d 469 (1979), and is inconsistent with “equity, common sense and good
public policy.” We disagree.
In Electronic Systems, the employer sought preliminary injunctive relief to enforce the
restrictive covenant in an employment contract. Electronic Systems, 70 Ill. App. 3d at 469-70.
On November 9, 1976, the parties entered into an employment contract, which contained a
restrictive covenant not to compete for 18 months after termination of employment. Electronic
Systems, 70 Ill. App. 3d at 470. On December 10, 1976, defendant’s employment was
terminated, and the 18-month restriction began that day. Electronic Systems, 70 Ill. App. 3d at
470. Defendant subsequently engaged in conduct that violated the restrictive covenant during the
18-month restriction period. Electronic Systems, 70 Ill. App. 3d at 470. Plaintiff filed its
complaint on August 29, 1978, more than 20 months after defendant’s employment terminated,
contending that defendant violated the noncompetition agreement within the 18 months following
his termination, and seeking injunctive relief. Electronic Systems, 70 Ill. App. 3d at 470. As part
of its evidence, plaintiff introduced a letter written to defendant in January 1978, advising him of
his violation of the restrictive covenant. Electronic Systems, 70 Ill. App. 3d at 470. The court
declined to extend the effect of the contract period, even though defendant allegedly breached his
17 1-09-2828
covenant not to compete within the 18-month period restriction period. Electronic Systems, 70
Ill. App. 3d at 471. In so holding, the court noted that in certain instances, injunctive relief might
be appropriate even after the expiration of the contractual period, but found that, under the
circumstances presented, the grant of a preliminary injunction after the expiration of the restrictive
covenant would have been an unreasonable restriction of trade. Electronic Systems, 70 Ill. App.
3d at 471.2
We find that the trial court’s decision was not contrary to the decision of this court in
Electronic Systems, and despite Citadel’s contention to the contrary, it is factually similar to
Stenstrom. The trial court, while finding that defendants breached their noncompetition
agreements, noted that the agreements did not provide for any extension of the restrictive period
beyond that which was bargained for. In so doing, the trial court cited the Second District’s
opinion in Stenstrom as support for its finding.
In Stenstrom, the trial court enjoined the defendant for six months after he left the
plaintiff’s employment under the terms of their restrictive covenant. Stenstrom, 375 Ill. App. 3d
at 1087. On appeal, Stenstrom contended, as does Citadel in the instant case, that the six months
should have commenced as of the date the preliminary injunction was entered because otherwise,
the injunction would apply to conduct that had already occurred, and it was entitled to the full six-
month period of noncompetition for which it bargained. Stenstrom, 375 Ill. App. 3d at 1087-88.
In so arguing, Stenstrom relied upon the Fourth District’s opinion in Prairie Eye Center,
2 Of note, the Electronic Systems court did not specify what instances would justify an
extension of the contractual restrictive period in a noncompetition agreement.
18 1-09-2828
Ltd. v. Butler, 329 Ill. App. 3d 293 (2002). In that case, the defendant entered into a two-year
covenant not to compete. Prairie Eye Center, 329 Ill. App. 3d at 295. The trial court, after
finding the covenant valid and enforceable, entered a preliminary injunction in 1999, finding that
the defendant repeatedly violated his covenant not to compete. Prairie Eye Center, 329 Ill. App.
3d at 296. Following trial, the court entered a permanent injunction in 2000, in which it extended
the restrictive covenant by two years. Prairie Eye Center, 329 Ill. App. 3d at 298. On appeal, the
appellate court affirmed the trial court’s judgment, additionally finding that the language of the
covenant provided for an extension of the restriction upon proof of its breach. Prairie Eye Center,
329 Ill. App. 3d at 304-05.
The court in Stenstrom specifically found Prairie Eye Center to be distinguishable because
the language within the restrictive covenant at issue in Prairie Eye Center provided for extension
of its terms. See Prairie Eye Center, 329 Ill. App. 3d at 304-05. Stenstrom’s noncompetition
agreement with Mesch only provided for a six-month restrictive agreement beginning on the
termination of employment date and contained no provision for any extension of that restrictive
period or modification of the commencement date. Stenstrom, 375 Ill. App. 3d at 1088.
Turning to the case at bar, a similar conclusion is apparent from the evidence as presented
in this case. Here, Citadel’s noncompetition agreements allowed it to opt for a restrictive period
of zero, three, six or nine months after an employee ceased working for Citadel. Citadel opted for
a nine-month restrictive period for both Malyshev and Kohlmeier, commencing on February 16,
2009, and February 17, 2009, respectively. Under the plain language of the restrictive covenants,
they each terminated, by their own terms, nine months after termination of employment, or
19 1-09-2828
November 16, 2009, for Malyshev, and November 17, 2009, for Kohlmeier. The agreements
contained no provision allowing for an extension of time or modification of the commencement
date. Accordingly, the trial court granted the parties the benefit of their bargain, a restrictive
covenant that would end nine months after the termination of employment. This conclusion is
reinforced by the rule that restrictive covenants are to be strictly construed. See Marwaha, 339
Ill. App. 3d at 294. Thus, we conclude that the trial court’s ruling was not against the manifest
weight of the evidence and that no extension of the injunction period was warranted.
We need not address the merits of defendants’ cross-appeal as they have conceded that
our disposition of Citadel’s appeal renders their issues moot as the preliminary injunction has now
expired on its own terms. See Multiut Corp. v. Draiman, 359 Ill. App. 3d 527, 543 (2005).
CONCLUSION
For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.
Affirmed.
QUINN and COLEMAN, JJ., concur.
20 1-09-2828
Plea se Use REPORTER OF DECISIONS – ILLINOIS APPELLATE COURT Following (Front Sheet to be Attached to Each Case) Form:
CITADEL INVESTMENT GROUP, LLC, Complete TITLE of Case Plaintiff-Appellant and Cross-Appellee, v.
TEZA TECHNOLOGIES LLC, a Delaware Corporation, MIKHAIL MALYSHEV, and JACE KOHLMEIER,
Defendants-Appellees and Cross-Appellants.
Docket No. No. 1-09-2828 Appellate Court of Illinois COURT First District, THIRD Division
February 24 , 2010 Opinion (Give month, day and year) Filed
JUSTICE STEELE delivered the opinion of the court: JUSTICES Quinn and Coleman, JJ., concur
dissent[s]
Lower Court and Trial Judge(s) in form indicated in the margin: APPEAL from Circuit Court of Cook County, Chancery Division the Circuit Ct. of The Honorable Mary K. Rochford , Judge Presiding. Cook County, Chancery Div.
Indicate if attorney represents APPELLANTS or APPELLEES and include attorneys of counsel. Indicate the word NONE if not represented. Attorney for Plaintiff-Appellant KIRKLAND & ELLIS LLP, of Chicago, IL For and Cross-Appellee: Michael P. Foradas, P.C., Brian D. Sieve, P.C., APPELLANTS, Mark J. Nomellini, and Michael B. Slade (of Counsel) John Doe, of WILLIAMS MONTGOMERY & JOHN, LTD., of Chicago, IL Chicago. C. Barry Montgomery, Alyssa M. Reiter, and Steven J. Roeder (of Counsel) For APPELLEES, Smith and Smith of Chicago, Attorneys for Defendants-Appellees JENNER & BLOCK LLP, of Chicago, IL Joseph Brown, and Cross-Appellants: Chris C. Gair, Michael T. Brody, Gregory M. Boyle, and (of Counsel) Seth A. Travis (of Counsel) Also add attorneys for third-party appellants or appellees.