This eighth article in “The Restricting Covenant” Series discusses some recent trends in the evolving area of restrictive covenant law, non-solicitation agreements, and Internet social media networking, including sales representatives’ use of LinkedIn to contact and communicate with customers and other business relationships.
A decade or so ago, social media networking platforms on the Internet were new to me. I had just heard of this thing called “LinkedIn” as a new way to connect with my former classmates and other acquaintances. It was touted as an easy, cost-free way to communicate with them about my professional accomplishments and career developments. In many ways, your LinkedIn profile is your virtual resume to the world. Therefore, like millions of others, I created a LinkedIn profile, sent and received connection requests, and made posts.
A few years later, I began counseling clients, with growing regularity, on employees’ use of social media networking sites in the restrictive covenant context. In addition to non-competes, non-solicitation provisions are used frequently in employment agreements to prevent former employees from contacting customers, clients or other employees to induce them to terminate their relationship with their former employer. Drafting non-solicitations provisions to address post-employment social media activity that affected an employer’s legitimate business interests became a hot topic. I then started to see this issue pop up more frequently in non-compete litigation and pre-litigation cease and desist notices.
In 2010, the same year in which LinkedIn reported that it had 225 million members and was growing at more than two members per second, I wrote about social media networking, restrictive covenants, and how LinkedIn now functions as a modern-day Rolodex. I also highlighted some difficulties employers might face when attempting to enforce non-competes and non-solicitations provisions based on a former employee’s contact with clients or customers using social media. See Social Networking and Restrictive Covenants.
A few years later, in 2015, I questioned whether social media is eroding the enforceability of non-solicitation agreements altogether, and explored the differences between “passive” social media activity and “active” use of social media in non-compete cases. See Is Social Media Eroding Nonsolicitation Agreements?
Top 3 Trends in Social Media Networking and Non-Solicitation Cases
Fast forward to present day, and we see that the legal landscape related to acceptable and illegal use of social media networking to solicit business continues to evolve and adapt to changing forms of electronic communication. Courts continue to grapple with these issues on a case-by-case, state-by-state basis, and I predict that they will continue to do so for many years to come. In the meantime, here are three noteworthy trends in this area of the law.
Trend #1: LinkedIn continues to be a challenge for employers and employees when navigating the muddy waters of post-employment social media communication with customers and other business contacts.
One prime example is highlighted in a recent decision from an appellate court in Illinois, Bankers Life & Casualty Co. v. American Senior Benefits, LLC (Ill. App. Ct. 6/26/2017). There, the court held that a former branch sales manager’s LinkedIn invitations to his former colleagues did not constitute “solicitation” in violation of his non-competition agreement. The plaintiff alleged that the defendant had used LinkedIn as a “recruiting tool” by identifying targets, asking them to connect to his professional LinkedIn network, and posting job openings on his LinkedIn profile page. After reviewing decisions from other jurisdictions that have considered whether an employee’s use of social media, such as Facebook or LinkedIn, violates a non-compete or non-solicitation agreement, the appellate court in Bankers held that the content and substance of the communications at issue were nothing more than “generic emails that invited recipients to form a professional connection.” These general posts did not contain any discussion of Bankers Life’s business, did not suggest that the recipient view specific job postings on the defendant’s LinkedIn profile page, and did not solicit the recipients to leave their employer and join the competitor. It made no difference to the court that the defendant had acknowledged that he used LinkedIn to evaluate potential recruits from other geographic areas. “To violate his contract, [the defendant] would have to actually, directly recruit individuals working in the Warwick, Rhode Island area.”
In contrast to the general posts found in the Bankers Life case, a district court in Minnesota recently found that a former sales representative’s use of LinkedIn to solicit business likely violated her non-solicitation agreement under Delaware law (per the agreement’s choice of law provision). Her LinkedIn activity “posed a danger of irreparable harm to her former employer in the form of lost future customers and loss of goodwill and reputation.” Specifically, in Mobile Mini, Inc. v. Vevea (D. Minn. 7/25/2017), Ms. Vevea found herself in court opposing a motion for a preliminary injunction after she had made two posts on her LinkedIn account approximately six months after resigning from her position as a sales representative for Mobile Mini and joining Citi-Cargo, a direct competitor in the portable storage business. The court found that Ms. Vevea’s LinkedIn posts were not “mere status updates” announcing her new position and contact information. If that were the extent of the posts, the court stated that it would not have found a likely breach of the non-solicitation. Instead, the posts demonstrated to the court that Ms. Vevea’s motive was to entice members of her network to call her for the purpose of making sales for Citi-Cargo. The court called the two posts “blatant sales pitches.” It found particularly significant a declaration from Mobile Mini’s Branch Manager, which stated that he and Ms. Vevea had discussed using LinkedIn as a marketing tool and that she had used LinkedIn for that purpose during her employment at Mobile Mini. The court therefore enjoined Ms. Vevea as follows:
Any posts on Vevea’s LinkedIn account that advertise Citi-Cargo’s products or services or request viewers to contact Vevea for the purpose of providing such products or services (including the provision of a quote) shall be removed. Vevea is enjoined from creating any similar posts advertising Citi-Cargo’s products or services on LinkedIn until the expiration of the non-solicitation provision in the Agreement, on November 8, 2017. This restriction applies with equal force to any other social media sites other than LinkedIn to the extent that Vevea’s friend list or network on such a site includes at least one Company Customer or their representative. This restriction does not limit Vevea’s ability to post mere “status updates” listing her place of work and contact information.
Trend #2: New mobile app services such as Snapchat could present even more challenges to employers and employees because these apps are inherently designed to quickly delete communications.
I recently heard about a non-compete dispute involving a former employee who had used the mobile app Snapchat to communicate with her network about her new job with a competitor. One of the recipients (a former co-worker) took a screenshot of the message before it was automatically deleted and gave it to his employer, who in turn gave it to its attorneys, who in turn attached the message as exhibit A to a cease and desist letter. Since I had never used Snapchat, I did not know that one of the inherent design functions of the app is to delete messages automatically within a few seconds. Poof – the message is gone from the reader’s phone.
The inherent deletion function of the Snapchat app got me to think about issues of spoliation in non-compete cases. Often a court sitting in equity must evaluate the employee’s motives and weigh various public and private interests. Spoliation of evidence is a very hot issue in restrictive covenant cases. If an employer can present evidence to a judge that its former employee intentionally destroyed evidence, it usually means game over for that employee’s case. Snapchat presents an interesting twist in the spoliation analysis. If a Snapchat message is not retrievable by forensic review or screenshotting, could a former employee’s use of Snapchat to communicate with former customers create an inference of bad faith for purposes of showing a breach of a non-solicitation agreement? No court has addressed this issue yet, but I predict that with the growing popularity of Snapchat and other similar social media networking platforms, this issue will come up in restrictive covenant cases. Stay tuned on this one.
Trend #3: Courts continue to look at the substance and purpose of the communications regardless of the medium through which it is transmitted.
One of the key questions the courts ask in social media solicitation cases is: From an objectively reasonable viewpoint is the content and purpose of the communication designed or intended to solicit a customer to make a sale? In considering whether an employee’s use of his LinkedIn account violated a non-solicitation agreement, a federal district court in Michigan observed that, “[I]t is the substance of the message conveyed, and not the medium through which it is transmitted, that determines whether a communication is a solicitation.” Communications that qualify as unlawful solicitations do not lose this character simply by virtue of being posted on the Internet.
The two cases discussed above applied this same analysis. The Illinois appellate court in Bankers, for example, found that the content and purpose of a sales manager’s communication on LinkedIn did not violate the non-competition agreement because it was a generic post with no direct solicitation in its content. It was an update to his virtual resume and not a targeted solicitation to a particular individual in order to make a sale. However, in Vevea, because the content and purpose of the sales representative’s posts were geared toward enticing members of her network to call her to do business with her new employer, the court found the non-solicitation agreement was likely violated and ordered her to remove the LinkedIn posts.
The bottom line is that courts will continue to draw parallels between social media networking activities and more traditional forms of communication, like the telephone and letters. In many cases, the medium through which an employee chooses to solicit should not make a difference – it is the content and purpose of the communication, viewed from an objectively reasonable person standard, which will tip the scales of justice one way or the other.
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The goal of this Series is to provide a brief overview and some interesting insights and practical pointers when dealing with unique issues that might arise in the context of restrictive covenants. It is not intended to provide and should not be construed as providing legal advice. Each situation is different, and if legal advice is needed, you should seek the services of a qualified attorney who is knowledgeable and experienced in this area of the law to address your specific issues or needs. Stay tuned for articles in this Series, which will discuss the restrictive covenant landscape for many other issues, occupations and industries, including healthcare, hospitals, hair stylists, and more.
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