In July 2017, a Federal court in Minnesota grappled with the in-vogue issue of whether a former employee violates post-employment nonsolicitation provisions by asking her network for business on LinkedIn.
The warring factions in Mobile Mini v. Vevea, (see here) are direct competitors in the portable storage business. Plaintiff sued when the defendant, a former sales representative for plaintiff, went to work for a competitor in violation of noncompete requirements in her employment agreement. After the defendant posted on LinkedIn where she was working and requested viewers to call her for quote, the Plaintiff sued.
Partially granting the request for an injunction, the Court examined the pleading and proof elements for injunctive relief and whether a social media post can support a nonsolicitation violation.
Rule 65 of the Federal Rules of Civil Procedure governs preliminary injunctions. The moving party must establish: (1) the likelihood of the moving party’s success on the merits; (2) the threat of irreparable harm to the moving party; (3) the state of balance between the alleged irreparable harm and the harm that granting the injunction would inflict on the other party; and (4) how the public interest is impacted if an injunction does/doesn’t issue. The critical question on a request for an injunction is whether a Court should “intervene to preserve the status quo” until it determines the merits of the case.
Likelihood of Success on the Merits
The Court found plaintiff’s prospects for winning on the merits were strong. To prevail on a non-compete claim in Delaware (Delaware law governed the parties’ agreement), a plaintiff must prove (1) the existence of a valid, enforceable contract; (2) breach of a contractual obligation by the defendant; and (3) damages.
A Delaware non-compete agreement is valid if it its duration and geographic reach are reasonably limited and the non-compete’s purpose and effect is to protect a legitimate employer interest. The Court found the subject agreement met these requirements
Next, the court turned to defendant’s LinkedIn activity and whether that amounted to a breach of the employment agreement. The Court found the plaintiff breached the contract by making “two blatant sales pitches” for her new employer before the noncompete lapsed.
The court viewed the defendant’s solicitations as going further than simple status updates. It held that had defendant simply posted her new position and contact information, it likely wouldn’t have run afoul of the defendant’s employment contract. For support, the Court pointed to an Ohio Federal court and a Mass. state court which held that a defendant’s social media postings did not rise to the level of an actionable noncompete claim. See Arthur J. Gallagher & Co. v. Anthony, 2016 WL 4523104, at *15 (N.D. Ohio 2016) (press release posted on LinkedIn and Twitter announcing that an employer had hired a new employee was not a solicitation); Invidia, LLC v. DiFonzo, 2012 WL 5576406, at *5 (Mass. Super. Ct. 2012) (hair stylist’s Facebook post announcing new job not a solicitation).
Since the defendant’s purpose in her LinkedIn postings was to entice business from her network and not simply announce a job change, the Court held that defendant likely violated the the employment contract.
Other Injunctive Relief Factors
The Court then found the plaintiff satisfied the irreparable harm element. It noted defendant’s past and threatened future noncompete violations and that they could imperil plaintiff’s future customers, goodwill and reputation.
On the noncompete’s start date (the plaintiff wanted the court to reset the time to the date of the court’s order on the plaintiff’s preliminary injunction motion – several months after suit was filed), the court sided with the defendant. The Court agreed that restarting the clock would give the plaintiff a windfall and impede defendant’s ability to earn a living.
This case is instructive on how the line between digital self-promotion and blatant sales pitches can blur. One of the case’s chief lessons is that while noncompetes are not favored, social media posts can still violate post-employment restrictions. Those who sign noncompetes should be careful whether their post-employment LinkedIn posts can objectively be viewed as a sales pitch.