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Coady v. Harpo

September 30, 1999

ELIZABETH COADY, PLAINTIFF-APPELLANT,
V.
HARPO, INC., DEFENDANT-APPELLEE



The opinion of the court was delivered by: Justice Greiman

Appeal from the Circuit Court of Cook County Honorable Thomas A. Hett, Judge Presiding

Plaintiff Elizabeth Coady appeals the dismissal of her cause of action seeking a declaratory judgment that a confidentiality policy established by defendant Harpo, Inc., was unenforceable against plaintiff, a former employee of defendant.

This appeal raises three issues as to whether (1) the proper forum to consider the dispute is the court or an arbitration panel; (2) plaintiff waived any challenge to the validity of a confidentiality agreement executed in 1995, as distinguished from the confidentiality agreement which is included in defendant's 1996 employee manual; and (3) the confidentiality agreement is an enforceable restrictive covenant. We find that the court is the proper forum to consider the validity of the contested agreement, that waiver does not apply, and that the confidentiality agreement is enforceable. Accordingly, we affirm the trial court's decision to dismiss plaintiff's cause of action and to compel arbitration as to the operation of the agreement.

1 On July 2, 1998, plaintiff filed a two-count complaint against defendant. Count I, the only count on appeal, sought a declaratory judgment that a restrictive covenant is unenforceable against plaintiff. Count II alleged a breach of contract claim, which subsequently was voluntarily dismissed by the trial court's order dated February 1, 1999.

In her complaint, plaintiff stated that from November 1993 to March 1998 she was employed by defendant in a number of positions, most recently as a "senior associate producer" for defendant's television series, "The Oprah Winfrey Show." Plaintiff alleged that for some time prior to March 26, 1998, defendant engaged in a course of conduct designed to force plaintiff from her employment and defendant's treatment of plaintiff became so intolerable as to amount to constructive termination. On March 26, 1998, plaintiff notified defendant by letter from her attorney that she resigned effectively immediately.

Paragraph 16 of plaintiff's complaint states that she, "a trained journalist, intends to write or otherwise report about her experiences as an employee of defendant, matters of legitimate public interest and concern." Plaintiff further alleged that her intention to exercise her rights of free speech and free press was not prohibited by a confidentiality policy, which was entitled "Business Ethics, Objectivity, and Confidentiality Policy" and contained in defendant's September 1996 employee manual. Plaintiff maintained that the purported restrictions of the confidentiality policy, as stated in the employee manual, were unenforceable for one or more of eight enumerated reasons.

In a letter dated April 24, 1998, and attached to plaintiff's complaint, defendant "reminded" plaintiff that she had signed a document entitled "Business Ethics, Objectivity and Confidentiality Policy" on March 12, 1995, and provided her a copy of the agreement in the letter. Defendant's letter further stated that in the March 12, 1995, agreement, plaintiff "agreed (among other things) to keep confidential, during her employment and thereafter, all information about the Company, Ms. Winfrey, her private life, and Harpo's business activities which she acquired during or by virtue of her employment with Harpo." Defendant further stated that it intended to enforce and ensure compliance with the confidentiality agreement.

On September 10, 1998, defendant filed a motion to dismiss the complaint pursuant to sections 2-615 and 2-619(a)(9) of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619(a)(9) (West 1998)), for failing to state a claim upon which relief might be granted because the confidentiality agreement is valid and enforceable. To its motion to dismiss, defendant attached both (1) the 1996 employee manual, which includes the section entitled "Business Ethics, Objectivity and Confidentiality Policy," and (2) the separate, free-standing confidentiality agreement, with the identical title and language as stated in the employee manual, signed by plaintiff on March 12, 1995. Defendant submits that the stand-alone, independent confidentiality policy (as signed by plaintiff in 1995) subsequently was incorporated into defendant's employee manual for 1996. The record reveals that the previous employee manual was effective in April 1993 and did not contain such a confidentiality policy.

Both the independent document entitled "Business Ethics, Objectivity and Confidentiality Policy" (hereinafter the 1995 agreement) and the portion of the employee manual with the same title (hereinafter the 1996 employee manual) include a section entitled "Confidentiality Assurances," which provides in pertinent part as follows:

"1. During your employment or business relationship with Harpo, and thereafter, to the fullest extent permitted by law, you are obligated to keep confidential and never disclose, use, misappropriate, or confirm or deny the veracity of, any statement or comment concerning Oprah Winfrey, Harpo (which, as used herein, included all entities related to Harpo, Inc., including Harpo Productions, Inc., Harpo Films, Inc.) or any of her/its Confidential Information. The phrase 'Confidential Information' as used in this policy, includes but is not limited to, any and all information which is not generally known to the public, related to or concerning: (a) Ms. Winfrey and/or her business or private life; (b) the business activities, dealings or interests of Harpo and/or its officers, directors, affiliates, employees or contractors; and/or (c) Harpo's employment practices or policies applicable to its employees and/or contractors. 2. During your employment or business relationship with Harpo, and thereafter, you are obligated to refrain from giving or participating in any interview(s) regarding or related to Ms. Winfrey, Harpo, your employment or business relationship with Harpo and/or amy [sic] matter which concerns, relates to or involves any Confidential Information."

Both documents also include a section entitled "Resolving Disputes and Controversies Concerning this Policy," providing that the parties agree to settle any disputes through binding arbitration:

"If a dispute or controversy arises out of or relates to this policy, or the actual or threatened breach thereof, and if said dispute or controversy cannot first be settled through informal Discussions between Harpo and the employee(s) or contractor(s) involved, the parties agree to submit the dispute or controversy to binding arbitration which will be administered in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association ('AAA'). Said arbitration shall be the exclusive method of resolving such disputes or controversies unless the alleged violation of this policy also involves an actual or potential violation of some other statue [sic] or legal doctrine including, the Illinois Trade Secrets Act, invasion of privacy, defamation, etc."

The relevant documents also provide that commitment to the stated policies is required as a condition of employment: "Your commitment to the guidelines set forth in this policy is a condition of your employment or business relationship with Harpo."

In addition, defendant's motion to dismiss attached a copy of plaintiff's acknowledgment of the employee manual, which she signed upon the commencement of her employment at defendant in 1993. The ...


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