Non-Solicitation Provisions Alive and Well in Massachusetts


In a world in which restrictive covenants are being openly flouted more than not, the First Circuit Court of Appeals dealt a blow to renegade employees and the employers who encourage them, siding with a former employer and finding that non-solicitation agreements could be enforced, regardless of whether the employee in question initiated the contact with the client in question.
In Corporate Technologies Inc, v. Harnett, the First Circuit Court of Appeals affirmed the lower court ruling granting a preliminary injunction order and allowed the former employer to step in and stop the former employee from closing deals with its former customers, even though the customers at issue had contacted the former employee.
The agreement in question prohibited Harnett from "solicit[ing], divert[ing] or entic[ing] away existing [former employer's] customers or business" for a period of twelve months following the cessation of his employment. Harnett argued that he did not "solicit" the business, but rather accepted the business once the former customers in question contacted him. However, the evidence showed that Harnett sent a targeted email announcing his new employment to a wide group, 40% of whom were former clients. The clients in question allegedly reached out to him after having their interest piqued by that email. Although no clear rule was drawn, the Court found that relying exclusively on technical definitions of "solicitation" and "initial contact" in cases in which products are non-fungible and complex was not appropriate and instead put in place a rule which considered it only as one factor in determining liability. The extent of dealings between Harnett and the former clients led the First Circuit to determine that the Non-Solicitation provision was breached.
Unlike non-compete provisions generally, courts are routinely willing to enforce non-solicitation agreements against employees who play fast and loose with their obligations. Employers hiring employees with such agreements in place with competitive companies should be careful to understand the limits of those employees. Considering the case of a newly hired employee who solicits and gets her former clients' prohibited business only to be thwarted by court action and forced to drop the client - demonstrates the rare 4-way loss: both former(1) and current(2) employers; misbehaving employee (3); and client (4) lose. Best to avoid it altogether.
Reader Comments