## Facts

- Elizabeth Coady worked for Harpo, Inc. from November 1993 to March 1998, most recently as a senior associate producer for *The Oprah Winfrey Show*.
- In March 1995, Coady signed a “Business Ethics, Objectivity and Confidentiality Policy” requiring her to keep confidential statements and information about Oprah Winfrey, Harpo, and defined “confidential information,” including Winfrey’s business and personal life and Harpo’s business affairs.
- Coady alleged Harpo made her working conditions intolerable, leading to a resignation effective immediately on March 26, 1998.
- In April 1998, Harpo reminded Coady of the confidentiality policy and stated it intended to enforce her ongoing compliance.
- Coady alleged she was a trained journalist who intended to write or report about her experiences and matters of public concern, and contended the policy unlawfully restrained her speech.
- Coady challenged the policy as an overbroad restrictive covenant, arguing it lacked time and geographic limits and covered subject matter beyond legitimate business interests.
- Coady filed suit seeking a declaratory judgment that the confidentiality policy was unenforceable; the trial court dismissed and compelled arbitration.

## Issues

1. Whether a court or an arbitrator should decide the validity of the confidentiality agreement.
2. Whether Coady waived any challenge to the 1995 confidentiality agreement (as distinct from a similar policy in a 1996 employee manual).
3. Whether the confidentiality agreement was an enforceable restrictive covenant under Illinois law given its scope, duration, and subject matter.

## Decision

- The appellate court held that the validity of the contested confidentiality agreement was for the court to decide.
- The court rejected Harpo’s waiver argument and held Coady did not waive a challenge to the 1995 agreement.
- The court held the confidentiality agreement was an enforceable restrictive covenant.
- The court affirmed dismissal of the declaratory-judgment action and compelled arbitration as to the agreement’s operation (its application/performance in particular circumstances).

## Legal Principles

- Courts decide threshold questions concerning the existence or validity of a contract, while arbitrators decide disputes concerning the contract’s operation or performance when a valid arbitration provision applies.
- Under Illinois law, a confidentiality covenant may be enforceable as a restrictive covenant if it protects a legitimate employer interest and is reasonable in scope in light of the employment relationship and the information at issue.
- A confidentiality-only restriction is generally less burdensome than a noncompetition restraint and may be upheld even without geographic limits when tailored to confidential information.
- Lack of an express time limit does not necessarily invalidate a confidentiality covenant where the restraint is directed at genuinely confidential information whose disclosure would permanently destroy secrecy.
- Contractual confidentiality obligations may lawfully restrict disclosure of private or proprietary information obtained through employment, notwithstanding a former employee’s intent to publish, with application-specific disputes addressed through agreed dispute-resolution procedures.

## Conclusion

The court upheld Harpo’s employee confidentiality policy as a valid restrictive covenant, ruled that the court (not the arbitrator) should decide the agreement’s validity, and affirmed an order compelling arbitration over how the agreement applies to Coady’s proposed disclosures.


Coady v. Harpo, Inc., 719 N.E.2d 244 (Ill. App. Ct. 1999)