The Slippery Slope of “Solicitation” in Non-Solicitation Agreements

Although non-solicitation agreements are routinely used to protect trade secrets and prevent unfair competition, in practice these agreements can be challenging to draft and enforce. A recent Texas case addressed what it means to “solicit” in an employment agreement for an employee that went to work for a competitor. A company sought a preliminary injunction against its former employee (a salesperson) to stop him from soliciting the company’s customers on behalf a competitor. The parties disagreed over the type of conduct that constituted “solicitation” under the employment agreement – the employee argued that solicitation required some sort of “active conduct,” while the company argued that the term covered a broader range of conduct, such as contacting former customers to inform them of his departure.
The court explained that an employee’s post-employment contact with former clients falls on a spectrum, ranging from “active communication directed by the employee and designed to culminate in new business at one end, to requests instigated entirely at the will of the former client at the other.” The court noted that conduct falling in between these two ends may constitute solicitation, depending on the specific facts. Although a close call, the court declined to enter a preliminary injunction against the employee in light of the following evidence:

• the employee waited until after resigning to contact former clients on his personal cell phone;
• when making contact the employee provided the contact information of his replacement at his former employer;
• the employee denied telling former clients the name of his new employer;
• the employee shared long term personal relationships with several former clients such that he did not need to solicit them.

It is worth noting that even though the employer was not successful in getting a preliminary injunction, it may still yet win when the case goes to trial on the merits. This is because preliminary injunctions are typically decided early in a case, before each side has fully developed all the evidence through discovery.

Ag’s Growing Great Divide & The Movement for Cage-Free Sausage

Carl Ichan, the billionaire activist investor, recently nominated two directors to McDonald’s Board of Directors as part of a campaign to force McDonald’s to stop using sow gestation crates in pork production. The nominations set the stage for a proxy fight to elect Directors to McDonald’s Board that will support Ichan’s animal welfare initiatives. According to Ichan, McDonald’s has failed to live up to its promise to end the use of pork from pigs raised in gestation crates. The crates are used to confine pregnant sows during the gestation period, increasing efficiency in feeding and management of the pigs. Ichan’s move to influence McDonald’s Board room is one of the latest examples of consumers’ growing negative perception of agricultural production practices, especially larger-scale operations.
The use of confinement in livestock operations, especially in the pork and poultry sectors, has come under intense fire in recent years, as evidenced by California’s Prop 12 which mandated minimum space requirements for egg-laying hens, breeding pigs, and calves raised for veal. The National Pork Producer’s Council and other Ag groups have challenged Prop 12 as being unconstitutional, and the U.S. Supreme Court recently agreed to take the case up.
The divide between public and consumer opinions about agriculture’s production activities versus producer’s opinions of themselves has been growing for several years, and is resulting in more scrutiny and regulation of ag practices. No doubt, our modern ag system provides the most abundant, safest, and cheapest food supply in the world. But customers (at least some of them) are viewing the methods for making food abundant and cheap to be rather distasteful (e.g., animal confinement, synthetic chemicals, conventional tillage, subsidies, etc., etc., etc.). As the divide grows, so does the amount of regulation. And when regulation grows, so does the burden on smaller-scale producers – in other words, we’re encouraging a system where only the biggest can survive. Which sort of takes us right back to the initial problem, i.e., consumers’ negative perception of “industrial” agriculture. Leaders in Ag’s various fields would do well to consider how to make cheap, abundant food in ways that consumers can appreciate, and maybe even feel good about. And everyone would do well to spend some time on a farm – there’s nothing like lingering under blue skies in wide open spaces for nurturing an appreciation of the land and what comes from it.

Ag Cooperatives Targeted by Ransomware

​The FBI recently issued an alert for agricultural cooperatives to be vigilant about protecting computer systems and data, especially during critical planting and harvest seasons. The FBI indicated that ransomware hackers may attack during these important time periods because victims are more likely to pay a ransom during time-sensitive operations. The alert provided several recommendations and resources for mitigating these threats.
Many thanks to Dara Bigger from the Arkansas Seed Dealers Association for sending out this important alert.