In case you ever wondered, "What's the worst that can happen if the court finds that we violated our non-compete agreement?" a recent case out of Texas serves as an excellent example.
In this case, Plaintiff M-I LLC – an oil/gas drilling equipment producer - sued two of its former employees and their new employer, competitor Argus Green, for violating their non-compete agreements, misappropriating trade secrets, and tortious interference with prospective advantage.
The plaintiff won big at trial, securing a verdict awarding them not only compensatory damages, but punitive damages as well, and the court further entered an order barring the defendants from competing in certain areas, and directing the defendants to return plaintiff's intellectual property immediately.
That certainly sounds bad enough.
But it gets worse - at least for one of the defendants.
All of the defendants appealed the verdict, and while the appeals were pending, all but one settled out with the plaintiff. That lone wolf made some serious procedural blunders, like failing to post a bond to stay the judgment pending the appeal.
Plaintiff's counsel then filed a motion for contempt based upon this individual defendant's failure to abide by the court's ruling.
For the uninitiated, as a general rule, civil contempt requires three elements:
that a court order was in effect,
that the order required certain conduct by the respondent, and
that the respondent failed to comply with the court's order.
In this case, it was a no-brainer. As a result, the court had the U.S. Marshal take this defendant into custody for one day and every day continuously thereafter until this defendant fully and completely complies with the court's orders.
And that wasn't all.
The court also sanctioned this defendant $12,000, payable within 30 days, to recompense the plaintiff's reasonable attorney's fees incurred in bringing the contempt motion.
Does LinkedIn Posting Inherently Violate a Non-Compete?
One of the questions that is most frequently asked - or, more accurately, that should be asked - by an employee who is looking to make a move in the same industry is whether updating his social media profiles might violate his non-compete agreement with his former employer.
The truth is, there is scant case law on this subject, and, to date, no court, to my knowledge, has announced any bright line rule stating whether such activity is inherently permissible or not. The few opinions addressing this question head-on have come down on both sides of the issue, but were careful to do so on a limited, fact-specific basis, rather than making any broad statements of law.
Where Courts Have Cut Both Ways on the Issue
For example, in BTS USA v. Executive Perspectives, a decision that was handed down by the Connecticut Superior Court in October, 2014, the individual defendant was previously plaintiff's executive VP of sales, and, not only announced his new job on LinkedIn; he encouraged his contacts to check out the new web site he had designed for his new employer. In that case, the court found the defendant's activities did not violate his non-compete because
"BTS had no policies or procedures regarding employee use of social media; did not request or require ex-employees to delete BTS clients or customers from LinkedIn accounts; [and] did not discuss with Bergmann his LinkedIn account in any fashion…Thus, under the circumstances, Bergmann's use of his LinkedIn account after he left BTS did not breach his employment contract."
Other courts across the country have similarly held that "friending" former clients on Facebook, or lauding a new product line at a new job did not violate a non-compete (see, e.g., Enhanced Network Solutions Group v. Hypersonic Techs., 951 N.E.2d 265 (Ind. Ct. of App. 2011); Invidia v. DiFonzo, 2012 WL 5576406 (Mass. Super. 2012); Pre-Paid Legal Services v. Cahill, 924 F.Supp.2d 1281 (E.D. Okla. 2013).
Conversely, a Michigan court held that a former employee violated her non-compete by actively soliciting his former co-workers and clients via LinkedIn. However, it bears mention that this particular employee did a lot more than merely posting his new job listing; he stated, "If you knew what I know, you would do what I do," implying they would leave plaintiff. This, the Court held, constituted far more than passive, untargeted communications.
While it is hard - and inaccurate - to give a bright-line rule, the courts' holdings seem to suggest that absent a contrary provision in the employment contract, merely posting an upated profile to reflect a new job would not inherently violate a non-compete. However, that doesn't mean employees are necessarily in the clear on this.
Let me explain.
Since the courts have declined to set a clear rule on the subject, it is unlikely that a court would dismiss out of hand - and before costly document discovery and depositions - a former employer's claim that its employee violated a non-compete by updating his social media profile. This means that although the former employee may, in the end, prevail in defending this claim, he may bear a tremendous expense in doing so.