Employment-First Circuit Upholds Preliminary Injunction To Enforce A Non-Solicitation Agreement, Where Former Employee Took Actions To Solicit Business From Former Employer’s Customers

In Corporate Technologies, Inc. v. Brian Harnett, No. 13-1706 (1st Cir. 2013), the district court had granted the plaintiff, Corporate Technologies, Inc. (“CTI”), a preliminary injunction that, among other things, restrained the defendant, Brian Harnett (“Harnett”), a former employee of CTI, from doing business with certain customers to whom he had sold products and services while in CTI’s employ. Harnett appeals the grant of this injunction.

In this case, for nearly a decade, Harnett had worked as an account executive/salesman at CTI, a provider of customized information technology solutions to sophisticated customers. Because CTI regards many of the details of its business operations as proprietary, it insisted that Harnett sign an agreement (the “Agreement”) that contained non-solicitation and non-disclosure provisions when he came on board. Harnett obliged. In October of 2012, Harnett jumped ship to work for OnX. Following his departure from CTI, Harnett participated in sales-related communications and activities with certain of his former CTI customers on behalf of OnX. CTI brought this suit against Harnett, alleging breach of the Agreement and seeking both money damages and injunctive relief.

In analyzing the case, the First Circuit Court of Appeals (the “Court”) noted that the non-solicitation provision contained in the Agreement prohibits Harnett from “solicit[ing], divert[ing] or entic[ing] away existing [CTI] customers or business” for a period of twelve months following the cessation of his employment. The Court said that the issue here is whether Harnett actually solicited, as opposed to merely accepting, the business. The answer does not depend, per se, on who initiated the contact. Rather, the identity of the party making initial contact is just one factor. The district court is best suited to answer this question.

The Court concluded that the record is adequate to support the district court’s determination that Harnett solicited the CTI customers, so that granting the preliminary injunction is justified. The record evidenced the following: Harnett’s calendar, email, and testimony show significant business communications with at least 4 of his former CTI customers on behalf of OnX. Further, Harnett organized several meetings with CTI customers designed to facilitate future sales and admitted in his deposition that he had transmitted product pricing information to them. Additionally, he actively sought exclusive discounts for future sales proposals to CTI customers. To the foregoing, the court said that the employer ordinarily has the right to enforce a non-solicitation covenant according to its tenor. That right cannot be thwarted by easy evasions, such as piquing customers’ curiosity and inciting them to make the initial contact with the employee’s new firm.