Noncompetition agreements frequently contain what are known as “nonsolicitation” clauses. A question that sometimes arises is whether a former employee violates a nonsolicitation clause if a customer contacts him. Unfortunately, in Missouri, there is little guidance on the subject. However, in a case originating in a Jackson County trial court, the Missouri Court of Appeals for the Western District shed some light on the issue, at least in the context of contract language used in a nonsolicitation agreement. Read on to learn why the employee’s contact with his former employer’s customers didn’t violate the nonsolicitation provisions of his noncompete.
Facts
Major Hammett, II, a former owner of Major Saver Holdings, Inc., parted ways with Major Saver in late 2007 and began working for a competitor — Education Funding Group, LLC. Both companies were in the business of managing fundraising campaigns for education foundations, school districts, and parent-teacher associations. When Hammett left Major Saver, there was a lawsuit between Major Saver and Education Funding. The parties reached a settlement in their first lawsuit.
The settlement agreements that resolved the lawsuit contained a provision stating (in relevant part): “[Hammett and Education Funding] agree that they will not solicit the school districts listed below, meaning [they] will not directly or indirectly initiate contact with these schools. [They] may provide proposals or bids, but only if requested by these schools.” The agreement went on to define “school districts” as “the individual or individuals who are charged with making fundraising decisions (i.e., those who would make the decision to contract with [Hammett, Education Funding,] or Major Saver)” for specific schools.
The alleged solicitation
The main issue before the trial judge (there was no jury) was whether Education Funding violated the nonsolicitation clause with respect to Republic School District. Republic had a previous relationship with both Hammett and Major Saver. Between 2004 and 2007, while working for Major Saver, Hammett worked with Republic on fundraising services. In 2008, Republic again used Major Saver’s services for fundraising, but Hammett wasn’t involved in the campaign. Major Saver raised less money for Republic in 2008 than it did in 2007. In December 2008, Republic and Major Saver discussed preliminary dates for the upcoming 2009 fundraising drive.
Tracy Hankins is a school principal for Republic and was previously involved in fundraising programs on Republic’s behalf. In March 2009, she saw Hammett at an educational conference they were both attending and told him that the 2008 fundraising numbers were down. Hammett told her he was no longer associated with Major Saver and had “split to a new company.” She then asked him what he could do to get the numbers back up. Hammett responded that any services he provided would have to be with his new company. Hankins asked him how Education Funding would raise funds if it undertook the program.
Read more...Missouri Employment Law Letter (PDF)