Originally published by Leiza Dolghih.
The growth of social media has been raising complex new issues for employers seeking to enforce their non-compete and non-solicitation agreements. For example, if a former employee connects with a company client or a former coworker on LinkedIn, can such connection result in a breach of the employee’s non-solicitation agreement? What if an employee announces on his LinkedIn profile that s/he has a joined a competitor and invites all the followers – many of whom are the former employer’s customers – to check out the new employer’s website? Could that be a violation of that employee’s customer non-solicitation agreement?
The courts around the country have been grappling with these issues in the recent years and are yet to come up with a bright line rule. However, they all seem to agree that the more “passive” the social media activity is, the less likely it is to constitute a prohibited solicitation of customers or employees, and the more “active” the posts are or the more akin they are to oral solicitations, the more likely they are to violate non-solicitation restrictions. In this post, I take a closer look at the various decisions from across the country and synthesize common themes.
1. Employees’ posts about starting a competing business or advertising job openings at their new place of employment on public social media pages.
In H&R Block Tax Servs., LLC v. Frias, a former H&R Block franchisee promoted his tax services business on a publicly available Facebook page. No. 4:18-00053-CV-RK, 2018 U.S. Dist. LEXIS 25667 (W.D. Mo. Feb. 16, 2018).
H&R Block argued that the Facebook posts were made with the intent of soliciting and influencing former H&R Block customers to visit Defendant’s new tax business. The vast majority of Defendant’s Facebook friends were his former H&R Block clients. Many of the people who “liked” the post and commented on it were H&R block clients from the Defendant’s client list. Thus, H&R Block argued that posting to friends, who were former clients, was akin to sending them a direct message about Defendant’s new business. Moreover, Defendant actively engaged with H&R clients who commented on his post by telling them to call him.
Defendant argued that his posts on Facebook were just an electronic version of an actual physical sign stating “tax preparation,” which H&R Block had admitted would not be a breach of the non-solicitation agreement.
The court did not buy H&R’s argument and denied the portion of the preliminary injunction application that sought to prohibit Defendant from posting on social media, requiring additional briefing from the parties on whether Facebook posts were “solicitations” under the Franchise Lease Agreement with H&R Block. The case was subsequently resolved without the briefing.
Similarly, in Enhanced Network Solutions Group, Inc. v. Hypersonic Technologies Corp., a subcontractor posted an open position for an outside sales representative on LinkedIn, which could be viewed by the members of a certain group, which included employees of a general contractor. 951 N.E.2d 265 (Ind. Ct. App. 2011). The general contractor argued that the subcontractor’s post of an open position in a public group within LinkedIn violated the sub’s non-solicitation clause with the general contractor. The court ruled that the post itself was not a solicitation even though it resulted in a particular employee contacting the subcontractor about the position:
“The record clearly supports that Dobson made the initial contact with Hypersonic after reading the job posting on a publicly available portal of LinkedIn. In other words, Dobson solicited Hypersonic . . . . Pursuant to the terms of the Agreement, Hypersonic cannot solicit applications but the language does not prohibit Hypersonic from receiving applications from [general contractor’s] employees.”
2. Employees’ announcements of open job positions or advertising of their competing services in private groups where customers or employees are likely to see them.
In Pre-Paid Legal Services, Inc. v. Cahill, the employer argued that a former employee’s posts providing general information about his new employer in several private Facebook groups that some of his former colleagues visited and posts about events related to his new employer on his personal Facebook page violated his non-solicitation agreement. 924 F. Supp. 2d 1281 (E.D. Okla. 2013). Specifically, the plaintiff argued that the defendant’s posts about his new employer were meant to solicit his former co-workers to work at the defendant’s new place of employment because the defendant knew that his Facebook “friends” would see his posts.
The court ruled in favor of the employee, finding that the posts on his publicly available page touting the benefits of his new employer’s products and his professional satisfaction with his new employer and postings in private groups which could be seen his former co-workers did not violate the employee non-solicitation agreement. The court noted that: “[t]here was no evidence presented that Defendant’s Facebook posts have resulted in the departure of a single PPLSI associate, nor was there any evidence indicating that Defendant is targeting PPLSI sales associates by posting directly on their walls or through private messaging.”
3. Employees’ announcements of open job positions or advertising of their competing services on their own social media pages which their former customers and co-workers are likely to see.
In Banker’s Life & Cas. Co. v. Am. Senior Benefits LLC, a former employee posted on his own profile a job opening at his new company and then sent connection requests to several employees at his former company, who would be able to see the job posting on his profile page after they had accepted his connection request. 83 N.E.3d 1085 (Ill App. (1st) (2017). The court found that his activities did not violate the non-solicitation clause and explained it as follows:
“The generic e-mails [inviting connection from co-workers] did not contain any discussion of Bankers Life, no mention of ASB, no suggestion that the recipient view a job description on Gelineau’s profile page, and no solicitation to leave their place of employment and join ASB. Instead, the e-mails contained the request to form a professional networking connection. Upon receiving the e-mails, the Bankers Life employees had the option of responding to the LinkedIn requests to connect. If they did connect with Gelineau, the next steps, whether to click on Gelineau’s profile or to access a job posting on Gelineau’s LinkedIn page, were all actions for which Gelineau could not be held responsible. Furthermore, Gelineau’s post of a job opening with ASB on his public LinkedIn portal did not constitute an inducement or solicitation in violation of his noncompetition agreement.”
Similarly, in Eva Scrivo Fifth Ave., Inc. v. Rush, a hairstylist announced on her own Instagram page that she had joined a competing business. No. 656723/2016, 2017 N.Y. Misc. LEXIS 3075, 2017 NY Slip Op 31699(U), ¶ 12 (Sup. Ct., NY County Aug. 9, 2017) (Slip. Op.). The former employer argued that her post violated the customer non-solicitation clause because the hair stylist had 94 clients as her Instagram followers, and, therefore, her Instagram posts announcing her new salon were solicitations of such clients.
The hair stylist argued that her Instagram announcement was the “industry standard,” her profile was pubic so anyone could see or “like” her posts, and she did not solicit salon clients to follow or like her Instagram account. In her post, she made the following announcement:
HI ALL MY BEAUTIFUL PEOPLE! I’m proud to announce that I am officially opening my book at Marie Robinson this Tuesday NOV 1st! I’m so excited to be joining such a wonderful team and couldn’t be happier. I hope you will all join me at the new spot for a step up in luxury and al [sic] around cooler vibes! Thank you for the support! Inbox me or email … or call and book apt today with info in bio! CAN’T WAIT!
The court denied a preliminary injunction against the hair stylist and noted that “questions remain[ed] about whether [the hair stylist] engaged in any active solicitation” when she made the two Instagram posts in question and that this issue would have to be resolved at trial. In reaching that decision, the Court pointed to two factors: (1) that the hair stylist “advertised” her new job without referencing her old employer and (2) the only persons who received the information on Instagram were those who pro-actively and voluntarily followed the stylist’s personal Instagram site, only some of whom may have been her former clients.
However, a district court in Minnesota in Mobile Mini, Inc. v. Vevea reached a different conclusions when it reviewed similar posts by an employee announcing on his page that he had moved to a competitor and encouraging customers to contact him about the new products. No. 17-1684 (JRT/KMM), 2017 U.S. Dist. LEXIS 116235, at *13-14 (D. Minn. July 25, 2017).
In this case, a former employee – a sales representation for a portable storage company violated – posted the following messages on LinkedIn six months after she had left Plaintiff’s employment:
I’m excited to have joined the City-Cargo Sales Team! We lease and sell clean, safe, and solid storage containers and offices. We are locally owned and operated, with local live voice answer. We offer same day delivery to the Metro, and have consistent rental rates with true monthly billing. Give me a call today for a quote. 651-295-2982, and
Call me today for a storage container quote from the cleanest, newest, safest and best container fleet in the State of Minnesota. Let’s connect! 651-295-2982.
The former employer argued that the defendant’s LinkedIn posts were visible to her 500-plus connections, including one or more of the employer’s customers, and at least some, if not all, of these connections may have received an email notification about the new posts. The employer also pointed out to the court that when the defendant worked for the plaintiff, her branch manager specifically discussed using LinkedIn to advertise the company’s products and services.
The Court granted the plaintiff’s request for a preliminary injunction against the defendant explaining it decision as follows: “Instead of merely announcing a job change, the language of the posts here demonstrates that Vevea’s purpose was to entice members of Vevea’s network to call her for the purpose of making sales in her new position at Citi-Cargo.”
4. “Friending” of customers after leaving employment.
In Invidia, LLC v. DiFonzo, a hair salon owner argued that a hair stylist violated non-competition and customer non-solicitation covenants in her employment agreement when she made a “public announcement” on her Facebook page, noting her new employment and “friended” at least eight clients of Plaintiff after she began working at the new hair salon. No. MICV20123798H, 2012 Mass. Super. LEXIS 273, 2012 WL 5576406 (Mass. Super. Ct. Oct. 22, 2012). The defendant argued that being Facebook friends with customers did not qualify as a solicitation of such customers. The plaintiff argued that Facebook was a significant channel of communication between plaintiff and its customers and the defendant’s posts meant to reach those customers.
The court ruled in favor of the hairstylist and explained its reasoning as follows: “[O]ne can be Facebook friends with other without soliciting those friends to change hair salons, and Invidia presented no evidence of any communications, through Facebook or otherwise, through which Ms. DiFonzo has suggested to these Facebook friends that they should take their business to her [new place of employment].”
5. Social media posts inviting the readers to check out the new employer’s website.
In BTS USA, Inc. v. Executive Perspectives, LLC, a webpage designer, updated his LinkedIn account to reflect his new job after he had joined a competitor and authored a post encouraging his contacts to “check out” his new employer’s website. No. X10CV116010685, 2014 Conn. Super. LEXIS 2644, 2014 WL 6804545 (Conn. Super. Ct. Oct. 16, 2014) (unpublished order). His former employer filed a lawsuit alleging that the defendant’s LinkedIn activities violated the non-solicitation clause in his employment agreement.
The court rejected the employer’s argument nothing in the employee’s employment agreement with his former employer prohibited him from using social media and that “[i]t would be difficult indeed to find liability for such incidental contacts, when the parties to whom they are directed can choose to receive them or not.” The court further emphasized the importance of addressing social-media solicitation prohibitions in employment agreements:
The court notes that the use of social media, whether it is Facebook, LinkedIn, Twitter, or some other forum, has become embedded in our social fabric. Absent an explicit provision in an employment contract which governs, restricts or addresses an ex-employee’s use of such media, the court would be hard pressed to read the types of restrictions urged here, under these circumstances, into the agreement. Indeed, such an expansive interpretation of the employment contract would likely render it unenforceable as overly broad.
6. Announcements by sellers of their companies about their new competing businesses.
As a general rule, the courts are more inclined to enforce non-compete and non-solicitation restraints that accompany a sale of a business (as opposed to an employment agreement). In Coface Collections N. Am. Inc. v. Newton,the court entered a preliminary injunction enforcing non-compete and non-solicitation clauses in the asset purchase agreement and prohibiting the seller of the business from posting on LinkedIn about a competing business he formed subsequent to the sale. 430 F. App’x 162, 164-5 (3d Cir. 2011)
In this case, the seller of the company agreed to a non-compete and non-solicit covenants with the buyer, but formed and began operating a new company prior to the covenants’ expiration. He updated his LinkedIn profile with his position at a newly-formed competing business, and posted on Facebook to announce that his “non-compete ends on 12/31/2010″ and “I have decided that the USA needs another excellent, employee oriented Commercial Collection Agency,” and invited “experienced professionals” to apply for a job. He also sent friend requests on Facebook to current employees of the new owner of the company, asking to view the posted notice of job openings at his competing business. The court found that such activities violated his restrictive covenants with the buyer of his previous company.
Similarly, in Joseph v. O’Laughlin, after defendant sold his veterinary clinic to plaintiff and agreed to a non-competition and non-solicitation covenants, he formed a limited liability company with named “O’Laughlin Veterinary Services,” created a Facebook page, and posted a link that advised followers that the clinic was “coming soon” and, when activated, directed users to the business’s location on a map. 175 A.3d 1105, 2017 Pa. Super. Unpub. LEXIS 3191 (Pa. Super. Ct. 2017). Although the defendant argued that his Facebook post about the clinic “coming soon” and announcement of its location was merely “preparatory,” the court entered a permanent injunction prohibiting him from operating a veterinary clinic within the non-compete radius and engaging in any activity that would violate the asset purchase agreement. Notably, the Court explained its ruling as follows:
“Upon review of the [fifty-six page exhibit that memorialized the three-month of entries on the Facebook page], it is obvious that, collectively, the posts, “coming soon” announcement, and map directions, are tantamount to a solicitation of [] clients in contravention of the non-compete clause. . . . There is but one reason for O’Laughlin to create the O’Laughlin Veterinary Services Facebook page and maintain contact with former clients: to solicit their business.”3
BOTTOM LINE: Employers who are concerned about their employees’ ability to solicit customers or employees on social media after they leave should write express prohibitions on such activities into their non-compete and non-solicitation agreements and explain and define how and when the restraints will apply. Absent such express language, the courts are not likely to enforce non-solicit or non-compete clauses absent aggravating circumstances such as repeated and aggressive client solicitation, social media posts aimed solely at the customers of the business, or a combination of social media posts with other evidence of direct and in-person customer or employee solicitation.
Leiza Dolghih is a partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice. Her practice includes commercial, intellectual property and employment litigation. You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.
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