July 03, 2011
Job Posting to LinkedIn Group Doesn't Violate Non-Solicitation Clause -- Enhanced Network Solutions v. Hypersonic Technologies
[Post by Venkat Balasubramani]
Enhanced Network Solutions Group v. Hypersonic Technologies Corp., 2011 WL 2582870 (Ind. Ct. App. June 30, 2011)
Enhanced developed software, and had a relationship with Hypersonic, which modified existing software. The two companies often jointly bid on projects together. They were parties to an agreement which contained the following non-solicitation clause:
Employee Protection. During the term of this Agreement and for a period of twelve (12) months from the date of effective date of its termination, unless mutually agreed to in writing otherwise the Parties . . . shall refrain from soliciting or inducing, or attempting to solicit or induce, any employee of the other Party in any manner that may reasonably be expected to bring about the termination of said employee toward that end . . . .
Some time after Enhanced and Hypersonic unsuccessfully bid on a project, Hypersonic posted an open position for an outside sales representative to "its LinkedIn webportal" (which the court describes as "a social internet site that connects businesses and people"). As the court describes it:
The LinkedIn job posting was available for viewing by the people who belonged to a certain public group within LinkedIn.
An Enhanced employee saw the posting and informed the President of Hypersonic that he was interested. After this, the employee met with Hypersonic's owner and hammered out a deal. Hypersonic then filed a complaint for declaratory relief regarding the enforceability of the agreement between Hypersonic and Enhanced. (There must have been some sabre-rattling obviously that prompted the filing of the complaint by Hypersonic.) The trial court concludes that Hypersonic did not violate the non-solicitation clause by posting the opening on LinkedIn. The appeals court affirms.
The court looks to the dictionary definitions of the relevant terms ("solicit" and "induce") and concludes that Hypersonic did not solicit or induce the Enhanced employee to terminate his relationship with Enhanced:
[t]he record clearly supports that [the employee] made the initial contact with Hypersonic after reading the job posting on a publicly available portal of LinkedIn. In other words, [the employee] solicited Hypersonic.
The court notes that the agreement precludes Hypersonic from soliciting applications, but nothing prevents Hypersonic from talking to Enhanced employees if they reach out to Hypersonic. The court concluded that this is what occurred here. In a footnote, the court also notes that the agreement could have been drafted more broadly to prevent Hypersonic from considering applications regardless of who initially solicited the contact.
This case raises the interesting question of when an online communication is one-to-one communication as opposed to a posting that is directed to the world at-large. It reminds me of the lawyer ethics question of whether a keyword targeted advertisement (in response to a catastrophic occurrence) can be a "solicitation" to a prospective client. (See Erik Turkewitz's post which discusses this issue in the context of New York's anti-solicitation rule: "New York’s Anti-Solicitation Rule Allows For Ethics Laundering and Must Be Modified.") Posts to social networking sites can fall into either category, but with increasing personalization, it's become more difficult to slot them in the appropriate box.
The court doesn't dig deep into the issue of whether the post was made in a way that it would be restricted to a small group or whether the sender would know in advance who the post was initially sent to. The court sates that the post was made to a "publicly available portal of LinkedIn," but also mentions that the post was for viewing by people "who belonged to a certain public group." My understanding is that LinkedIn group owners have to approve membership in the group. If the court determined that Hypersonic approved membership in the group, and knew in advance that Enhanced employees were a part of this group, I wonder if this would have changed the court's thinking. The court also doesn't discuss whether the post was made in a manner that Hypersonic would have "reasonably . . . expected" to bring about the termination of the employee's relationship with Enhanced.
I'm sure we will see many more courts address this type of a non-solicitation question over time. As far as I know, this is the first ruling that deals with this question. A previous case addressing the question of whether recruiters violated their non-compete clause by "connecting" (on LinkedIn) with candidates who were in discussions with their previous employer settled quietly. Here's Evan Brown's initial post on the case: "Nefarious LinkedIn use finally makes it to the courts." Here is a copy of the stipulated permanent injunction, which imposes broad restrictions on the defendants' solicitation of certain customers, but interestingly does not mention LinkedIn.
UPDATE: Ken Adams' thoughts on the case.