What Does "Solicitation" Mean?
Texas non-compete agreements frequently contain non-solicitation provisions, i.e., provisions that prohibit the employee, both during employment, and for a period of time thereafter, from soliciting the employer’s clients, employees, or both. But whether a particular act or communication constitutes solicitation is not always clear.
A Massachusetts case decided a couple of years ago illustrates the difficulty in making this determination. In that case, the following provision was at issue:
Nonsolicitation Covenant. For a twelve (12) year period commencing on the date hereof, Seller shall not, directly or indirectly, (a) employ or contact any person who is employed or engaged by the Company or in any manner seek to induce any such person to leave his or her employment or engagement with the Company. (emphasis supplied)
The court summarized the pertinent facts in the case were as follows:
Since selling her stock in January of 2001, Deborah Halpin has not been employed by anyone else or anywhere else, as she has worked at home taking care of her three children. Subsequent to entering the covenant not to compete, Ms. Halpin has engaged in numerous instances of intentional social contact with several Quaboag employees with whom she is good friends. Ms. Halpin has known one such employee for over twenty (20) years since they worked together in a racquetball club in Charlton. The summary judgment record does not contain any evidence that Ms. Halpin's contact involved any business-related conduct or discussions. In her deposition, Ms. Halpin stated that her communications were strictly personal and social in nature. In response, the plaintiff points solely to the non-solicitation provision, arguing that it prohibits any and all contact, including social contact. (emphasis supplied)
The plaintiff contended that Halpin had violated the non-solicitation provision by having any contact, even though the contact was purely social in nature. The court disagreed:
The words "no contact" in the agreement in question were used in the context of a non-solicitation agreement. The term "solicit" denotes more than simple contact. It consists of "an attempt to obtain something by persuasion, or to ask for the purpose of receiving."
An examination of the heading, "Nonsolicitation Covenant," contained in the covenant suggests it was intended by the parties to bar only contact of this nature. The non-solicitation provision applies only to conduct of a competitive nature when it appears within the context of an agreement such as the "Covenant Not To Compete." There is no evidence that the conduct complained of has hampered Quaboag's stability or success in any manner.
If the contract language is read as the plaintiff suggests it means that the defendants were prohibited from engaging in any form of direct or indirect contact or communication, regardless of the nature of such exchanges, with any Quaboag employees for a period of twelve (12) years beginning on January 1, 2001. Not even in the context of civil restraining orders issued to protect people from domestic violence under G.L. c. 290A is the prohibition of "contact" understood in such a strictly formalistic manner.
Based on the above considerations, there are no facts indicating the Deborah Halpin breached the non-solicitation provision of the covenant not compete. She worked with Quaboag for approximately eighteen (18) years. As such, she likely established lasting professional and personal ties with employees in the Quaboag community. Ms. Halpin's deposition testimony indicates that as she understood the covenant, she could not contact employees or customers for the purpose of enticing them away from Quaboag or interfering with business operations. The fact that Ms. Halpin's continued friendships and frequent social encounters could give her a competitive advantage in the future if she engaged in any of solicitation (of which there is no evidence in the record before me) is not enough to demonstrate a breach by Ms. Halpin.
As this case illustrates, courts can be reluctant to forbid employees from engaging in social contact with their friends (some of whom can be former customers or employees) when the contact does not involve soliciting for business. Of course, social contact can involve solicitation for business—even if no business is actually discussed. The key for employers is, make it clear in the agreement that you not only want to prohibit business contact, but also social contact. And then be able to persuade a court that such a restriction has a legitimate business purpose.
Quaboag Transfer, Inc. v. Halpin, 2005 WL 937305 (Mass. Super. 2005).
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