Although last year’s legislative efforts to ban—or limit further—non-competes in Massachusetts failed, proponents have vowed to revive the issue again in 2015-2016. Excluded from those proposed measures, however, has always been any restriction on employers’ use of customer non-solicitation clauses. Should the Legislature ever pass restrictions on non-competes, employers that have not already done so will flock in droves to the use of customer non-solicits, particularly with respect to sales-related employees. This makes the courts’ ongoing struggle to define customer “solicitation” in the digital age of paramount importance.
Thirty years ago, the definition of customer solicitation was quite easy—the former employee would either visit the customer in person or pick up the phone. But with email blasts and online networks, there are myriad forms of e-solicitation. Does a former employee breach a customer non-solicit when he updates his LinkedIn account, sends out an email blast to all his contacts informing them of a job change, or disseminates broadly promotional materials on behalf of his new employer? The answer, so far, appears to be that it depends both on the nature of the industry and on how targeted the customer messaging is.
Passive Solicitation May Be Fine. In late 2012, in Invidia, LLC v. DiFonzo, a Massachusetts Superior Court took a stab at defining the contours of customer solicitation in the modern electronic age. A hair stylist moved to a new salon, and after the salon updated its Facebook page to announce her hiring, the hair stylist became Facebook friends with at least eight clients of her former salon. The court found that these activities did not constitute solicitation prohibited by the hairstylist’s non-solicitation agreement. Significantly, the court drew a line between active and passive solicitation: “So long as [the customers] reached out to [the hairstylist] and not vice versa, there is no violation of the non-solicitation provision.” Similarly, in 2013, in KNF&T Staffing, Inc. v. Muller, another Massachusetts Superior Court held that a former employee who merely updated his LinkedIn profile to publicize his move to a competitor did not violate his customer non-solicit.
Active Solicitation Likely Crosses the Line. In contrast, in late 2013, the First Circuit Court of Appeals outlined what did constitute customer solicitation in the digital world. In Corporate Technologies, Inc. v. Hartnett, the court deemed an email announcement of an employee’s new position an improper “evasion” of the employee’s non-solicitation agreement by “piquing customers’ curiosity and inciting them to make the initial contact with the employee’s new firm.” Significant was that the email blast went to a targeted group of potential customers, 40 percent of whom were clients of the employee’s former employer. The court contrasted “public announcements of changes in employment,” such as LinkedIn updates.
Finally, in October 2014, a Connecticut Superior Court weighed in on LinkedIn updates as solicitation. There, the employee, who had former customers as his connections, updated his profile to account for his job move and posted a message for his connections to view his new employer’s website. The court concluded that this activity did not constitute solicitation under his restrictive covenant, as the activity was not sufficiently targeted and may not have resulted in any of his former customers actually viewing the website.
These recent decisions demonstrate that the line between solicitation and non-solicitation is blurred when it comes to professional networks and emails. A mere update to a LinkedIn profile may not be in violation, but any e-efforts appearing to target customers may cross the line. For example, mass emails may constitute solicitation where they are directed to a targeted group. Finally, establishing an online connection with former customers has not been held to be a per se solicitation, but perhaps it should be. In the end, it is likely the courts will be able to set down specific strictures as to online network solicitation as soon as the next great thing makes these applications moot.
In the rapidly changing business world, protecting a company's human capital and proprietary information is critical to maintaining a competitive edge. On this blog, Nutter's experienced Business Litigation and Labor, Employment & Benefits attorneys offer news and insights on all aspects of restrictive covenants and trade secrets—from analyzing a rapidly evolving body of case law, to summarizing new legislation and legislative efforts, to providing other need-to-know updates and more.