Tag: LinkedIn

‘Salesy’ LinkedIn Posts Can Violate Ex-Employee’s Noncompete – Minn. Federal Court

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.

Take-aways:

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.

 

 

LinkedIn Connection Requests Don’t Violate Insurance Salesman’s Noncompete – IL Court

The First District recently considered whether an insurance salesman’s generic LinkedIn invites to some former co-workers violated non-compete provisions in his employment contract.

The plaintiff in Bankers Life v. American Senior Benefits employed the defendant for over a decade as a sales manager.  During his employment, plaintiff signed an employment agreement that contained a 24-month noncompete term that covered a specific geographic area (Rhode Island).  Plaintiff sued when it learned the defendant sent some LinkedIn connection requests to some former colleagues.

The court granted the defendant’s summary judgment motion on the basis that the plaintiff failed to offer any evidence that the defendant breached the noncompete by trying to induce three of plaintiff’s employees to join defendant’s new agency.  Plaintiff appealed.

Plaintiff argued that the LinkedIn requests were veiled, if not blatant, attempts to circumvent the noncompete by inviting former co-workers to join a competitor.

The First District affirmed summary judgment for the defendant.  For support, it looked to cases in other jurisdictions that considered if social media overtures can violate employee restrictive covenants.  The Court noted that a majority of these cases hold that passive social media postings (LinkedIn and Facebook, mainly) don’t go far enough to violate a noncompete.

The cases that have found that social media breached noncompete obligations involve clear statements of solicitation by the departed employee where he directly tries to sign up a former client or colleague. Since all the defendant did in this case was send generic LinkedIn messages, they didn’t rise to the level of an actionable solicitation.

The Court also rejected the plaintiff’s argument that summary judgment was premature and that the plaintiff should have the opportunity to take more discovery on this issue.  Illinois Rule 191 allows a summary judgment opponent to stave off judgment while it takes written and oral discovery to assemble evidence to oppose the motion.  But the plaintiff must show a “minimum level of information” showing a defendant is possibly liable before initiating a lawsuit or making a defendant submit to discovery requests.

Since the plaintiff failed to produce any evidence the defendant solicited any of plaintiff’s employees in the prohibited Rhode Island area, summary judgment for the defendant was proper.

Afterwords:

LinkedIn generic invites that don’t specifically ask someone to sever his/her relationship with current employer don’t go far enough to constitute improper solicitation;

Summary judgment is “put up or shut up moment;” the party opposing summary judgment must offer evidence that raises a question of material fact that can only be decided after a trial on the merits.

 

LinkedIn Page Doesn’t Get Into Evidence As a Rule 803(17) “Directory” or “Compilation” in Podcast Dispute

imagesA key issue in Personal Audio, LLC v. CBS Corporation, 2014 WL 1202698 (E.D. Tex. 2014) was whether a LinkedIn page, printed off the ‘Net by a testifying witness, was admissible at a motion to transfer venue hearing as a “compilation” or “directory” under Federal Evidence Rule 803(17).

A broadcast behemoth defendant (CBS) tried to transfer a podcast patent infringement case from Texas to New York on the basis that material witnesses to the dispute lived closer to New York than Texas (where plaintiff was based).  The plaintiff wanted to keep the case in Texas.  In support of its motion to transfer, CBS tried to offer into evidence a LinkedIn page of a third-party witness who apparently lived in New York.  CBS wanted the page into evidence to support its argument that New York was the more convenient forum for the case.

Held: The LinkedIn page was inadmissible hearsay since CBS failed to lay a foundation for the page’s authenticity. CBS’s motion to transfer venue is denied.

Federal Rule of Evidence 803(17)

The basis for the court’s ruling was Evidence Rule 803(17).  This rule provides for potential admission of “market quotations, lists, directories, or other compilations” generally relied on by the public or persons in particular occupations.

The twin purposes for streamlined admissibility under this rule are reliability and necessity.  Necessity exists because most commercial publications have multiple authors so it’s not logistically feasible to have all of them testify to a document’s contents.  Reliability lies in the fact that the documents are regularly consulted by third parties and that if the documents weren’t accurate, the public or a given industry would stop consulting them. (*5).

To support its argument that key third-party witnesses lived closer to New York than Texas, CBS offered a third-party witness’s LinkedIn page through a CBS employee.  CBS labelled the LinkedIn page as “compilation” evidence under Rule 803(17).  Testifying about the page, the CBS employee stated he was a journalist and that he regularly used online resources to locate individuals – including the witness whose LinkedIn page was involved in this case.

Rejecting CBS’ argument, the court found that the LinkedIn page failed both prongs of the 803(17) admissibility test: “This is clearly not the type of evidence contemplated by FRE 803(17)”, it said.  The LinkedIn page wasn’t reliable because CBS offered no evidence to show LinkedIn (the “compiler” under the Rule) makes any effort to verify the accuracy of its member’s profile pages.  The court also found that the page wasn’t necessary since CBS could have provided testimony or an affidavit of someone who had actual knowledge of the witness’s/LinkedIn member’s location.

Because the page failed both the necessity and reliability prongs of the 803(17) test, the court discredited CBS’ evidence and found that CBS failed to carry its burden of showing it was more convenient to have the case litigated in New York instead of Texas. (*5).

Take-away:

A LinkedIn page or other social media member page can likely be authenticated and admitted into evidence but not as a Rule 803(17) compilation or directory (at least in this District).  If documentary evidence that supposedly shows a witness’s location isn’t reliable or necessary, the proponent of the evidence will need to do more than simply offer hearsay evidence through a third-party.  Instead, the proponent should try to get the evidence in through live testimony or an affidavit of someone who has first-hand knowledge of a witness’s whereabouts.

Post-script: In September 2014, the Federal jury awarded the plaintiff over $1.3M in damages against CBS for infringing the plaintiff’s podcast distribution patent.