Can the winner recover attorney fees on this Illinois contract claim?
Only if a statute or the contract says so. Illinois follows the American rule, which prohibits prevailing parties from recovering their attorney fees from the losing party absent express statutory or contractual provisions. Two Illinois statutes shift fees in only one direction in common contract fights: an employee who defeats an employer's claim to enforce a covenant not to compete or not to solicit 'shall recover from the employer all costs and all reasonable attorney's fees regarding such claim' (820 ILCS 90/25), and a borrower who establishes unlawful interest recovers twice all interest, discount and charges plus reasonable attorney's fees and costs (815 ILCS 205/6). Sandholm adds the corollary: fee statutes "must be strictly construed as they are in derogation of the common law", and shows what strict construction costs, because the Citizen Participation Act's own command that "[t]his Act shall be construed liberally to effectuate its purposes and intent fully" was held to reach the Act's substantive provisions "and not to the fee-shifting provision in section 25", so a prevailing movant recovered only the fees "which can specifically be delineated as incurred in connection with the motion to dismiss filed under the Act" and not the cost of the rest of the defence. Section 90/25 runs in an action or arbitration "filed by an employer (including, but not limited to, a complaint or counterclaim)", so an employer's counterclaim to enforce the covenant opens the same one-way fee door.
The trap
A symmetrical 'prevailing party' clause does not produce symmetry in the two fights Illinois has legislated. Section 90/25 gives the employee fees 'in addition to any remedies available under any agreement' and has no employer counterpart, so drafting mutual fees into a restrictive-covenant agreement adds nothing for the employer while leaving the employee's statutory claim intact, though the Act's defined covenants reach only agreements 'entered into after the effective date of this amendatory Act of the 102nd General Assembly' (820 ILCS 90/5; the sections' source line reads P.A. 102-358, eff. 1-1-22); the Interest Act's remedy runs the same way. Note also that under 820 ILCS 96/1-25 an employment clause that is a unilateral condition of employment or continued employment and diminishes a statutory remedy for an unlawful employment practice is void to that extent (a mutual condition satisfying § 1-25(c) is outside the void), which is how a unilateral fee-shifting term aimed at a discrimination claim fails. One thing about the Workplace Transparency Act is missing from every rule that cites it, and it is the drafting answer rather than a footnote: § 1-25 voids the clause as a UNILATERAL condition of employment, not outright. § 1-25(c) provides that “Any agreement, clause, covenant, or waiver that is a mutual condition of employment or continued employment may include provisions that would otherwise be against public policy as a unilateral condition of employment or continued employment, but only if the agreement, clause, covenant, or waiver is in writing, demonstrates actual, knowing, and bargained-for consideration from both parties, and acknowledges the right of the employee or prospective employee to:” and then lists six rights the writing must acknowledge, reporting a good-faith allegation of unlawful employment practices to a government agency, reporting criminal conduct, participating in a proceeding about unlawful employment practices, making truthful statements or disclosures required by law, requesting or receiving confidential legal advice, and engaging in concerted activity about work-related issues. § 1-25(d) then supplies the sanction: “Failure to comply with the provisions of subsection (c) shall establish a rebuttable presumption that the agreement, clause, covenant, or waiver is a unilateral condition of employment or continued employment that is governed by subsection (a) or (b).” And § 1-25(e) adds that nothing in the section prevents an employee or prospective employee and an employer from negotiating and bargaining over the terms, privileges and conditions of employment. So in Illinois the move is not to delete the clause but to make it mutual, written, supported by actual bargained-for consideration on both sides and carrying the six acknowledgments; miss any of that and subsection (d) puts it back under (a) or (b).
12 authorities
The words that state the rule
Illinois follows the "American rule," which prohibits prevailing parties from recovering their attorney fees from the losing party, absent express statutory or contractual provisions.
- statute815 ILCS 205/6enactment date not established
The words that state the rule
If any person or corporation knowingly contracts for or receives, directly or indirectly, by any device, subterfuge or other means, unlawful interest, discount or charges for or in connection with any loan of money, the obligor may, recover by means of an action or defense an amount equal to twice the total of all interest, discount and charges determined by the loan contract or paid by the obligor, whichever is greater, plus such reasonable attorney's fees and court costs as may be assessed by a court against the lender.
- statute820 ILCS 90/5enactment date not established
The words that state the rule
"Covenant not to compete" means an agreement between an employer and an employee that is entered into after the effective date of this amendatory Act of the 102nd General Assembly that restricts the employee from performing: (1) any work for another employer for a specified period of time; (2) any work in a specified geographical area; or (3) work for another employer that is similar to employee's work for the employer included as a party to the agreement. "Covenant not to compete" also means an agreement between an employer and an employee, entered into after the effective date of this amendatory Act of the 102nd General Assembly, that by its terms imposes adverse financial consequences on the former employee if the employee engages in competitive activities after the termination of the employee's employment with the employer.
- statute820 ILCS 96/1-25enactment date not established
The words that state the rule
Any agreement, clause, covenant, or waiver that is a unilateral condition of employment or continued employment and requires the employee or prospective employee to waive, arbitrate, or otherwise diminish any existing or future claim, right, or benefit related to an unlawful employment practice to which the employee or prospective employee would otherwise be entitled under any provision of State or federal law, is against public policy, void to the extent it denies an employee or prospective employee a substantive
- statute820 ILCS 96/1-25enactment date not established
The words that state the rule
Any agreement, clause, covenant, or waiver that is a mutual condition of employment or continued employment may include provisions that would otherwise be against public policy as a unilateral condition of employment or continued employment, but only if the agreement, clause, covenant, or waiver is in writing, demonstrates actual, knowing, and bargained-for consideration from both parties, and acknowledges the right of the employee or prospective employee to:
- statute820 ILCS 96/1-25enactment date not established
The words that state the rule
Failure to comply with the provisions of subsection (c) shall establish a rebuttable presumption that the agreement, clause, covenant, or waiver is a unilateral condition of employment or continued employment that is governed by subsection (a) or (b).
The words that state the rule
Accordingly, statutes which allow for such fees must be strictly construed as they are in derogation of the common law.
- statute820 ILCS 90/25enactment date not established
The words that state the rule
Sec. 25. Remedies. In addition to any remedies available under any agreement between an employer and an employee or under any other statute, in a civil action or arbitration filed by an employer (including, but not limited to, a complaint or counterclaim), if an employee prevails on a claim to enforce a covenant not to compete or a covenant not to solicit, the employee shall recover from the employer all costs and all reasonable attorney's fees regarding such claim to enforce a covenant not to compete or a covenant not to solicit, and the court or arbitrator may award appropriate relief.
- statute820 ILCS 96/1-25enactment date not established
The words that state the rule
(1) report any good faith allegation of unlawful employment practices to any appropriate federal, State, or local government agency enforcing discrimination laws; (2) report any good faith allegation of criminal conduct to any appropriate federal, State, or local official; (3) participate in a proceeding related to unlawful employment practices, including any litigation brought by any federal, State, or local government agency or any other person who alleges that the employer has violated any State, federal, or local law, regulation, or rule; (4) make any truthful statements or disclosures required by law, regulation, or legal process; (5) request or receive confidential legal advice; and (6) engage in concerted activity to address work-related issues.
The words that state the rule
Although the statute provides that "[t]his Act shall be construed liberally to effectuate its purposes and intent fully" (735 ILCS 110/30(b) (West 2008)), this statement of construction applies to the substantive provisions of the Act and not to the fee-shifting provision in section 25.
The words that state the rule
In our view, the language in section 25 is unambiguous and supports only one interpretation. Attorney fees "incurred in connection with the motion" include only those fees which can specifically be delineated as incurred in connection with the motion to dismiss filed under the Act.
The words that state the rule
For the foregoing reasons, the judgments of the appellate court and the circuit court are reversed, and the cause is *437 remanded to the circuit court for further proceedings consistent with this opinion. ¶ 70 Appellate court judgment reversed; ¶ 71 circuit court judgment reversed; ¶ 72 cause remanded.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.