Violations of non-solicitation agreements are not limited to situations where the former employee who signed an agreement reaches out to the other party first. In Corporate Techs., Inc. v. Harnett, the First Circuit affirmed the district court’s ruling that the issue is not who made the first call, but whether the employee was involved in helping his new employer entice his previous clients.
In Corporate Technologies, the non-solicitation agreement prevented the defendant salesperson from soliciting, diverting, or enticing away his old clients from his previous employer. The agreement was to last for one-year post-employment.
Subsequently, the salesman accepted a job with a new employer, who sent out announcements to more than 100 potential clients. 4 of the salesman’s previous clients responded to the announcement, and soon thereafter, one of the clients signed a contract with the new company.
The former employer, Corporate Technologies, successfully sued for a preliminary injunction because the district court was not convinced by the “first-to-contact” defense raised by the salesman and his new employer. See Corporate Techs., Inc. v. Harnett. “Neither the plain meaning of the word, “solicit,” nor the plain meaning of the word, “entice,” requires some kind of first contact.” The agreement “does not allow a salesman to take active steps to persuade the client and actually solicit business.”
The First Circuit affirmed, where a former employee began working for a former employer's competitor, the former employer was properly granted a preliminary injunction as to its claims for breach of a non-solicitation agreement and tortious interference because a per se rule regarding initial contact by a customer was not appropriate under Massachusetts law, the identity of the party making initial contact was just one factor among many, and the former employee's persistent pattern of pursuing patronage permitted a plausible inference that he was urging customers to do business with the competitor rather than the former employer.
Care should always be exercised when hiring a competitor’s former employee. While the injunction did not prevent the new company from doing business with market segments so long as the salesperson was not involved in the initiative, the cost of working through potential issues can be expensive.
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