An employer can enforce a non-solicitation provision against a former salesman even where the clients initiated contact with the salesman, according to Judge Douglas P. Woodlock of the U.S. District Court for the District of Massachusetts
In Corporate Technologies, Inc. v. Harnett, et al., , a Massachusetts information technology company, sued its former salesman, Brian Hartnett, for allegedly violating his non-solicitation agreement. In October 2012, after working for CTI for over nine years, Harnett accepted a job offer from OnX Enterprise Solutions (OnX), a competitor of CTI.
On Harnett’s first day at his new job, OnX sent an announcement to over 100 potential clients notifying them of Harnett’s new position. The list included Harnett’s eight most active CTI clients in 2012. Four of the clients responded to OnX’s announcement, and Harnett allegedly met with them to discuss and encourage their business on behalf of OnX. One of these discussions ultimately ripened into a client relationship. CTI sued Harnett and OnX in the Massachusetts Superior Court in December 2012, and OnX and Hartnett removed the case to federal court and asserted counterclaims for intentional interference with business relations and unfair business practices. CTI moved for preliminary injunctive relief to enforce the non-solicitation provision.
Notably, Harnett did not dispute that he had been competing with CTI for the business of his former clients, but argued that such dealings did not violate his non-solicitation agreement because it was the clients, and not him, who made first contact. In a 33-page decision, Judge Woodlock explained that it is the nature of the communications, not who initiated them, that determines whether solicitation has occurred, and held that “the Agreement itself provides that Harnett may not ‘solicit … or entice away’” CTI’s clients, and “neither the plain meaning of the word solicit, nor the plain meaning of the word entice, requires some kind of first contact.”
Judge Woodlock was careful to note, however, that a non-solicitation agreement does not prevent a company from receiving business initiated by the client with no direct or indirect participation by the individual employee bound by the non-solicitation agreement. This narrow carve-out does not permit a salesman to actively persuade the client and actually solicit his business. “In this case,” however, Judge Woodlock ruled that “Harnett and OnX have done more than simply receive business.”
Judge Woodlock granted CTI’s request for a preliminary injunction, and enjoined Harnett from soliciting business from those companies within his territory for which he was responsible while employed at CTI. The injunction does not, however, bar OnX as an entity from doing business with those companies, so long as it does not involve Harnett in those efforts.