First Circuit Upholds Preliminary Injunction Enforcing 12 Month Non-Solicitation Clause

by Lee Gesmer on September 24, 2013

In Corporate Technologies v. Harnett, decided by the First Circuit on August 23, 2013, the court upheld the Massachusetts U.S. District Court’s enforcement of a 12-month employee non-solicitation clause. The court rejected Harnett’s (the former employee) argument that he did not solicit Corporate Technologies’ customers, particularly given evidence that the new employer sent a “blast email” to a group that included many of Corporate Technologies’ customers.

The opinion contains an extensive discussion of the “metaphysical” distinction between “soliciting” and “merely accepting” business, an issue I discussed in another post this summer (Nudge, Nudge, Wink, Wink – Are You “Soliciting” in Violation of an Employee Non-Solicitation Agreement?).

The First Circuit rejected a “bright-line” rule in determining who made initial contact in a non-solicitation case (the former employee or a customer), stating that –

we believe that the better view holds that the identity of the party making initial contact is just one factor among many that the trial court should consider in drawing the line between solicitation and acceptance in a given case. This flexible formulation not only reflects sound policy but also comports with well-reasoned case law from other jurisdictions.

Of interest is the First Circuit’s rejection of Massachusetts Superior Court cases as precedent on this issue: “these trial court decisions have no precedential force … Where, as here, the highest court of a state has not spoken to a question of state law, our precedents teach that we should look, among other things, to ‘persuasive adjudications by courts of sister states’ and ‘public policy considerations.'”

This decision is bad news for employees who hope to do an end-run around a non-solicitation clause, since the absence of a bright-line test makes it more difficult to predict how a court will handle a particular set of facts.

Non-solicitation cases are infrequent visitors to the First Circuit. While federal court cases are not binding on the state courts, they are  highly persuasive, and I expect this case to be an important precedent in the law of non-solicitation agreements in Massachusetts.

Corporate Technologies, Inc. v. Harnett (1st Cir., August 23, 2013)

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