If knowledge is power then giving away knowledge is equivalent to giving away power…which people never want to do. In order to preserve control after revealing a business secret, employers and business partners often require their employees or coworkers to enter into nondisclosure agreements (NDAs).
A nondisclosure agreement is “a contract or contractual provision containing a person’s promise not to disclose any information shared by or discovered from a holder of confidential information, including all internal or proprietary matters.” Black’s Law Dictionary (11th ed. 2019)
Nondisclosure agreements are everywhere now. The signers to a nondisclosure agreement are bound by that agreement to not disclose to third-parties whatever particular information is covered by that agreement.
Sometimes, those signers get divorced and their spouses want to exactly what those valuable secrets are…because they might be entitled to half of those secrets value.
Nondisclosure Agreements And Discovery In An Illinois Divorce
In an Illinois divorce, divorcing spouses are entitled to ask for anything in the divorce litigation process.
“[A] party may obtain by discovery full disclosure regarding any matter relevant to the subject matter involved in the pending action… including the existence, description, nature, custody, condition, and location of any documents or tangible things, and the identity and location of persons having knowledge of relevant facts” Ill. S. Ct. R. 201(b)
“The purposes of litigation are best served when each party knows as much about the controversy as is reasonably practicable.” Mistler v. Mancini, 111 Ill. App. 3d 228, 231 (Ill. App. Ct. 1982)
The production of any information covered by the nondisclosure agreement will likely violate the nondisclosure agreement. Hopefully, the nondisclosure agreement includes a clause that governs what happens if non-disclosable information is revealed to a third party through litigation. If so, the party disclosing the information should follow that clause’s instructions.
Usually, a clause in an nondisclosure agreement that addresses litigation asks the parties to request a protective order from the court.
Protective Orders And Nondisclosure Agreements In An Illinois Divorce
“Protective Orders. The court may at any time on its own initiative, or on motion of any party or witness, make a protective order as justice requires, denying, limiting, conditioning, or regulating discovery to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or oppression.” Ill. S. Ct. R. 201(c)(1)
A protective order issued by a court will read “all information supplied during discovery in the lawsuit that shall be designated by the party or person producing it as `confidential.'” Access to “confidential” information was restricted to the court, the parties, their attorneys, and experts retained for litigation. Any party shall be allowed to seek relief from the court from any of the provisions or restrictions provided in the order, “upon good cause shown.”
When a nondisclosure agreement does not have a clause that addresses third-party litigation, the party to the nondisclosure agreement may be liable to their employer/business partner if they reveal information. For this reason, that party may continue to object to the production of the requested confidential discovery.
The spouse who is not bound by the nondisclosure agreement can say “Well, that’s between you and your employer/business partner. I want to see those documents” and then file a motion to compel discovery.
Compelling Discovery In An Illinois Divorce
Illinois courts have enormous powers to enforce discovery. Courts can order “if you don’t play by our rules, you can’t play the game at all. You are no longer allowed to present evidence”
“If a party, or any person at the instance of or in collusion with a party, unreasonably fails to comply with any provision…the rules of this court (Discovery, Requests for Admission, and Pretrial Procedure) or fails to comply with any order entered under these rules, the court, on motion, may enter, in addition to remedies elsewhere specifically provided, such orders as are just, including, among others, the following:
- That further proceedings be stayed until the order or rule is complied with;
- That the offending party be debarred from filing any other pleading relating to any issue to which the refusal or failure relates;
- That the offending party be debarred from maintaining any particular claim, counterclaim, third-party complaint, or defense relating to that issue;
- That a witness be barred from testifying concerning that issue;
- That, as to claims or defenses asserted in any pleading to which that issue is material, a judgment by default be entered against the offending party or that the offending party’s action be dismissed with or without prejudice;
- That any portion of the offending party’s pleadings relating to that issue be stricken and, if thereby made appropriate, judgment be entered as to that issue” Ill. Sup. Ct. R. 219(c)”
The divorcing party bound by the non-disclosure agreement can retort, “I’m not withholding this information unreasonably. I could get in big trouble if I share this information.”
Including The Other Party To the Nondisclosure Agreement In An Illinois Divorce
The court may order the production despite this objection or the court may recognize the employer/business partner’s rights under the nondisclosure agreement and include the employer/business partner in the divorce.
Illinois divorce courts have broad authority to include anyone in an existing Illinois divorce case.
“The court may join additional parties necessary and proper for the exercise of its authority under this Act.” 750 ILCS 5/403(d)
If you think the employer/business partner was mad that you would disclose business secrets to your spouse, wait until you see how they react when they are made a party to your divorce.
If an employer/business partner does get included in an Illinois divorce (they will almost certainly concede to a protective order in advance of this), the court can order a protective order that can adequately satisfy the employer/business partner’s concerns.
The spouse who entered into the nondisclosure agreement may not feel like being cooperative at all and may invoke the protected information as a “trade secret.”
Trade Secrets and Divorce In Illinois
“”Trade secret” means information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that:
(1) is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and
(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality.” 765 ILCS 1065/2
Trade secrets can be protected by law but they have to be established as a real and valuable secret.
“The focus of both the common law and the Act is on the secrecy of the information sought to be protected. Under ILG Industries, Inc. v. Scott (1971), 49 Ill.2d 88, 92, 273 N.E.2d 393, 395, the person claiming trade secret protection must establish that the information was known “only to him and such limited other persons to whom it may be necessary to confide it.” In the words of the Act, the information must be “sufficiently secret to derive economic value…from not being generally known to other persons who can obtain economic value from its disclosure or use.” The purpose of such wording is to preclude protection for information not generally known to the public but clearly understood in a particular industry.” Service Centers of Chicago, Inc. v. Minogue, 535 NE 2d 1132 – Ill: Appellate Court, 1st Dist. 1989
It is hard to imagine a divorce litigant explaining to a divorce judge how the requested discovery would reveal a legitimate trade secret to potential competitors…especially if a protective order was issued.
Nondisclosure agreements are just another piece of paper in an Illinois divorce. Nondisclosure agreements must be acknowledged and followed to a reasonable extent but the information they are protecting is going to be revealed to the parties and the court eventually.
To learn more about how to handle a nondisclosure agreement in an Illinois divorce, contact my Chicago, Illinois family law firm today to speak with an experienced Illinois divorce attorney.
