Interpreting Non-Solicitation Agreements

Where there is a non-compete provision, it usually is accompanied by a restriction against solicitation. This generally arises in two contexts: employment and the sale of a business.
Non-solicitation clauses generally prohibit solicitation of two categories of individuals: customers or employees. In the sale of a business context, the non-solicitation clause is used to prevent the seller of the business from reentering the market, launching a new venture, soliciting his old customers and soliciting his former employees. In the employment context, a non-solicitation clause is used to bar a departing employee from taking customers and other employees with him to a competing company.

In many instances, non-solicitation clauses are broadly written: For example, a standard employee non-solicitation clause restricting customer solicitation will generally provide as follows:

For a period of two years following Employee’s separation from the Company, Employee will not:

  • Solicit any of the Company’s customers,
  • Interfere with the Company’s customer relationships
  • Engage in any communications with any of the Company’s customers intended to induce the Company’s customers to end or alter their relationship with the Company or to do business with a competing company or
  • Perform services for any of the Company’s customers.

As written, this provision basically prohibits the departing employee from engaging in any communications with customers whatsoever if those communications are related to the customers taking their business elsewhere.

There is a widespread misperception among the general public that such provisions are not enforced as written. Instead, many people assume that non-solicitation clauses – no matter how broadly written – are only used to bar affirmative solicitation. In other words: An individual subject to a non-solicitation clause cannot actively solicit customers. But he can generally communicate with customers. And if those customers choose to move their business, the non-solicitation clause cannot prevent that from happening.

This is entirely false. To the contrary, provided there is a legitimate business interest (i.e. protectable customer relationships), Florida courts would enforce the above non-solicitation clause as written. That means the employee is barred from any contact with customers that could remotely constitute solicitation, interference or encouraging the customers to jump ship. Even if the customer reaches out to the former employee and expresses a desire to follow him to the new company, that would still constitute a violation of the above non-solicitation clause as written.

Now for the kicker: The above example was a very broad non-solicitation clause. In some instances, the contract at issue will contain a non-solicitation clause that – on its face – appears to be less restrictive. For example:

Employee will not solicit any of the Company’s customers for a period of two years following Employee’s separation from the Company.

Many would interpret this clause as only barring affirmative solicitation. But once again, at least under Florida law, that interpretation would be wrong. Florida courts have repeatedly found that even a narrow non-solicitation clause can operate to bar conduct beyond affirmative solicitation. When faced with this issue, numerous Florida courts have held that even where a customer initiates contact with the former employee, the former employee can still violate a non-solicitation clause. After the customer initiates contact, if the former employee does anything to influence that customer to jump ship, that constitutes a potential violation.

The takeaway: In Florida, broad non-solicitation provisions are generally enforced as written provided there is an underlying legitimate business interest (e.g. customer relationships). Even narrowly drafted non-solicitation clauses can bar a wide range of conduct even if that conduct does not amount to affirmative solicitation.

Jonathan Pollard is a trial lawyer and business litigation attorney based on Fort Lauderdale, Florida.  He focuses his practice on competition law and has extensive experience litigating non-compete, trade secret and antitrust claims.  He is licensed in all Florida federal and state courts and routinely represents clients in Miami, Fort Lauderdale, West Palm Beach, Fort Myers, Tampa, Orlando and Jacksonville. His office can be reached at 954-332-2380.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s