Monday, December 30, 2013

Triple Trouble: Conversion Claims in Trade Secrets Cases

What Is Conversion?

Conversion is the civil equivalent of theft.  It is useful in cases involving the taking of a tangible thing – equipment, machines, supplies, and the like.  I won a conversion claim on behalf of a medical device manufacturer who sued a sales representative when the rep didn’t return all of the products he’d taken as samples.  A case such as this is precisely the type for which conversion was created.

Some lawyers have also found conversion to be useful for raising the stakes in a garden-variety commercial dispute.  In Michigan (and in other states, too), there is a statute that provides for treble damages if liability is found.[1]  It is for this reason that Michigan has seen an uptick of cases in which clever plaintiffs’ lawyers bring conversion claims in basic breach of contract disputes. 

I’m not going to address the propriety of such claims here, although I think it’s an important topic and one that I intend to write about in a future post.  Instead, I want to talk about what happens when a plaintiff in a trade secrets case brings a conversion claim for the taking of the tangible thing where the trade secret is memorialized.   

 Conversion and Preemption.

Most practitioners in this field are well aware that if they practice in one of the 47 states that has adopted the Uniform Trade Secret Act, any tort claims they bring for misappropriation of trade secrets will be preempted by the Act.[2]  This means that the theft of trade secrets cannot give rise to claims for conversion. 

This puts plaintiffs’ lawyers in a quandary: how do they increase the amount in controversy in a case where a customer list or drawings were taken?  After all, if suit is filed quickly, the damages associated with lost profits will be (or at least should be) minimal.  The answer seems simple: since trade secrets are generally thought of as ideas, rather than as tangible things, clever attorneys plead that it is not the idea that was converted, but rather the medium upon which it was memorialized.  The measure of damages in a conversion claim is fair market value at the time the item at issue was converted.  So if a drawing for a million-dollar machine is at issue, that drawing suddenly because very valuable, even if the plaintiff can’t prove that it lost any profits as a result of its taking.     

I was peripherally involved in a case recently where the plaintiff pleaded just that: the defendants – engineers for a manufacturing company – left to go to work for a competitor and took some drawings and other ideas written on paper with them.  This, the plaintiff’s attorney pleaded, was the taking of tangible things – pieces of paper containing valuable ideas – and, therefore, constituted conversion. 

But this type of artful pleading doesn’t fly.  Similar arguments have been flat-out rejected by a number of courts.  The leading case is Thomas & Betts Corp v Panduit Corp, 108 F. Supp. 2d 968, 973 (N.D. Ill. 2000), in which a federal court sitting in Illinois held that the taking of the actual computer, disks, and paper belonging to the plaintiff was not actionable, since “these physical items have little value apart from the information contained therein ….”  A court in Michigan followed suit, as did one in a recent case in Indiana.[3] 

The Lesson:

It isn’t complicated: if you have a trade secret – a true, valid, actionable trade secret – you’re stuck in the framework provided in the Uniform Act (unless you practice in New York, North Carolina, or Massachusetts, where the Act has not been adopted).  Some would argue that the Uniform Act doesn’t have enough “teeth” to deter employees from taking trade secrets from their employers.  This is especially true since – as I pointed out in this post – it is the misappropriation of trade secrets that is illegal, not the possession of them.

So where does this leave practitioners, particularly those who represent plaintiffs in trade secrets cases?  It would be so easy for me to waive you dear readers off with a warning to craft your complaints carefully and leave it at that.  But what I really want to tell you is to manage your client’s expectations.  Clients need to understand that the Uniform Act limits their ability to bring shock and awe upon their opponents, even if their opponents are bad people who stole business information and ideas. 

This is probably not a popular point of view.  But in my opinion, lawyers serve their clients much better when they bring a narrow cause of action that’s simple and that works than when they employ the “throw the pasta at the wall” method of pleading.  Doing the latter causes plaintiffs’ lawyers to spend valuable time defending dispositive motions, rather than time preparing a winning case. 

Trust me on this one.  The idea of recovering treble damages is so enticing, I know.  But therein lies the “triple trouble” – treble damages are hard to recover in any case, but if conversion is the damages enhancing vehicle, such damages are barred in a trade secrets case.    

Liza Favaro
Non-Compete Counsel

* Disclaimer: The ideas and opinions shared on this site are my own and are not attributable to my employer. No amount of interaction on this site will create an attorney-client relationship. If you have a legal question and you ask it here, I will also answer it here (if I can), but such answers do not guarantee results and do not create an attorney-client relationship. If you wish to contact me directly, you may do so at

[1] MCL 600.2919a

[2] Michigan’s version of the Act provides that it “displaces all tort, restitutionary and other law … providing civil remedies for misappropriation of a trade secret.”  MCL 445.1908.
[3] Bliss Clearing Niagara, Inc. v. Midwest Brake Bond Co., 270 F. Supp. 2d 943, 950 (W.D. Mich. 2003); HDNet LLC v. North American Boxing Council, 972 N.E. 2d 920 (Ind. App. 2012).


Wednesday, December 25, 2013

Merry CHRISTmas!

I promised a more substantive post on trade secrets last Thursday (!!), but you know how this time of year is, right?  Wrapping paper and bows litter my family room.  Christmas tree ornaments are starting to fall and become lopsided from little hands that can’t resist “just one touch.”  I can’t get the latest version of “Little Drummer Boy” out of my head.  (Pentatonix’s version ROCKS, by the way!).  ABC Family’s “25 Days of Christmas” sends me a daily text detailing the holiday delights on tap for the day.  I’ve put on five pounds from eating Christmas cookies for my every meal.  It's the only time all year I am not a workaholic and I focus entirely on my family.   
This is also the time of year when I wear thin the pages in my Bible containing Luke 2.  You have likely heard this passage, at least once in your life: 
9 An angel of the Lord appeared to them, and the glory of the Lord shone around them, and they were terrified. 10 But the angel said to them, “Do not be afraid. I bring you good news that will cause great joy for all the people. 11 Today in the town of David a Savior has been born to you; he is the Messiah, the Lord. 12 This will be a sign to you: You will find a baby wrapped in cloths and lying in a manger.”  13 Suddenly a great company of the heavenly host appeared with the angel, praising God and saying, 14“Glory to God in the highest heaven, and on earth peace to those on whom his favor rests.”
Yep, there it is: I am a Christian.  A hard-core, bible thumping, card-carrying Christian.  And I am not ashamed. 
I don’t tell you this so you’ll congratulate me for my honesty.  I don’t tell you this because I think it might generate more hits for this blog (although if you like what you’re reading, tell your friends!).  I tell you this because this thing called “Christianity” is what Christmas is all about.  
Christianity is not a religion.  It is not a philosophy.  It is about a person named Jesus Christ and my relationship with Him.  And at this time of year, the time when we celebrate His birth, I feel that it is my obligation and my privilege – as one of His followers – to tell you about Him.
My Jesus knows that I yell at my kids.  And He loves me anyway.  My Jesus knows that I laugh at crude jokes.  He celebrates my laughter, then allows the Holy Spirit to bring Ephesians 5:4 to mind: “Let there be no filthiness nor foolish talk nor crude joking, which are out of place, but instead let there be thanksgiving.” 
My Jesus knows that I drink too much wine sometimes.  He knows I do it when I’m stressed out and He gives me comfort when I feel overwhelmed.  He knows I gossip, watch trashy reality TV, and don’t read my Bible as often as I should.  I am a sinner.  My Jesus knows this.    
But for every sin – big or small – He finds a multitude of ways to show his love for me.  He knows the number of hairs on my head. Luke 12:7.  He has a plan for my life.  Jeremiah 29:11. And He will give me the tools I need to fulfill that plan (He’s given me many of them already).  He knew that I would never find the right husband unless he literally dropped said husband in my lap.  He knew that despite all of my consternation about having children, children would keep me grounded and humble and so he gave me two incredible little boys.  He knew that I would become a lawyer someday and that this job would give me a platform from which to speak about Him.  
In these ways and more, Jesus shows me He loves me.  And here’s what He did to prove His love to me: death on a cross.  He did it not despite of my sin, but because of my sin.  He knew that I could not join Him in Heaven unless He gave this ultimate sacrifice, but He also knew that if He shed his innocent blood, I could enter his kingdom.  All I have to do is believe.  And believe I do.     
I’d like to think that this belief makes me different from some of the other business people and professionals whom you’ve encountered.  I’d like to think that this belief is borne out in my actions and my attitude.  I’d like to think that this belief gives me strength when others would crumble, patience when others would tantrum, and courage when others would be afraid. 
But here’s the thing: I am no different than you.  We are all sinners.  We all need a Savior. 
CHRISTmas is about my Savior.  It’s about celebrating His birth and the remarkable gift He gave to us.  We live in a dark world.  I don’t need to tell you that.  But what I do need to tell you is that in such a world, there is hope.  There is light.  Jesus is “the light of the world.  Whoever follows [Him] will never walk in darkness, but will have the light of life.”  John 8:12.
I hope wherever you are, whatever you believe, you find hope and light this Christmas.  You know where I find mine.  I invite you to do the same.
Merry CHRISTmas.
Liza Favaro
Non-Compete Counsel 
* Disclaimer: The ideas and opinions shared on this site are my own and are not attributable to my employer. No amount of interaction on this site will create an attorney-client relationship. If you have a legal question and you ask it here, I will also answer it here (if I can), but such answers do not guarantee results and do not create an attorney-client relationship. If you wish to contact me directly, you may do so at

Tuesday, December 17, 2013

Off-Topic Tuesday: Link Love

'Tis the season ... for a very light workload.  If you find yourself needing some light reading this week, look no further!  Here's a round-up of articles from around the web - a little link love on this Tuesday:

1.  A frequent topic on this blog is the role of female attorneys in the legal profession.  Vivia Chen discusses some recent statistics over at The Careerist:  
2.  Speaking of women executives, Mary Barra's appointment as General Motors' new CEO is big news here in Michigan.  But is GM prepared for the Barra era?  Click here for the story.
3. On the non-compete front, this is an interesting article at The Economist about ways high tech employers are keeping people from changing jobs.
 4.  Social media continuies to be a hot topic in the world of employment law.  The latest news involves the impact posts made on Facebook can have on an employee's job.  Click here for the article.
5.  This one is purely for entertainment!  The Cyber Advocate offers 12 funny gift ideas for lawyers!  Click here for a little comic relief.  Number 8 is my personal favorite!
Happy reading!  I'll be back Thursday with a look at the Uniform Trade Secrets Acts' preemption over state-law claims (and why artful drafting to avoid preemption doesn't work).

Liza Favaro
Non-Compete Counsel

* Disclaimer: The ideas and opinions shared on this site are my own and are not attributable to my employer. No amount of interaction on this site will create an attorney-client relationship. If you have a legal question and you ask it here, I will also answer it here (if I can), but such answers do not guarantee results and do not create an attorney-client relationship. If you wish to contact me directly, you may do so at

Thursday, December 12, 2013

The Doctor Is In (or Out)? Physician Non-Compete Agreements

"Only those who regard healing as the ultimate goal of their efforts can, therefore, be designated as physicians.” — Rudolf Virchow

He was a 19th century physician widely regarded as one of the most influential doctors of his time, but Rudolf Virchow clearly did not foresee that medicine would be big business one day.  It’s such big business that physician practices – and in some cases hospitals – work like crazy to make sure that patients don’t follow good doctors when those doctors seek employment elsewhere. 
But even if the profession is forgetting about patients, state laws are not.  Citing patient care and protection as the reason, some states prohibit physician non-compete agreements.  Colorado, Delaware and Massachusetts do so by statute.[1]  Pennsylvania hopes to follow suit with legislation sponsored by the Pennsylvania Medical Society, which would oppose the use of non-competes in physician employment contracts.
Other states have simply prohibited the use of non-competition agreements among professionals, a category in which physicians clearly fall.  Alabama is one example, which not only disallows non-competes for physicians,[2] but also for physical therapists.[3]       
But in the great State of Michigan, where I practice, non-competes are routinely enforced against physicians.  In the last year, I’ve handled three cases involving non-compete clauses in physician employment agreements – all of which were enforced.  In this post, I described the perilous hearing in which a court ordered my cardiologist clients to refrain from practicing at several different hospitals.  Six months ago, I obtained an order on behalf of a physician practice group against three doctors who violated their non-compete agreements.  Last spring, I settled a case in which my opponent represented a podiatry practice and sought patient records to support his non-compete claim.  The enforceability of the non-compete provision in that case was never at issue.
But does this mean that Michigan doesn't care about patients?  Hardly.  In the case I mentioned above involving patient records, Isidore Steiner, D.P.M. v. Bonanni,[4] the Michigan Court of Appeals upheld the sanctity of the Michigan physician-patient privilege and ruled that non-party patient records may not be disclosed in a business dispute involving physicians.
Unlike HIPAA, which allows for the disclosure of patient records in a lawsuit upon the entry of a qualified protective order,[5] Michigan’s physician-patient privilege provides greater protection of patient information, allowing for disclosure only with the patient's consent.[6]  In my case, this meant the only way the plaintiff could prove a violation by my client was if my client admitted it.  The only way the plaintiff could prove damages was through an affidavit by my client stating the amount of revenue he had earned as a result of any breach.    
Therein lies the rub: on the one hand, Michigan courts will enforce non-compete agreements against doctors.  Of course, there must be proof of a violation.  But if a main source of that proof cannot be disclosed by the physician accused of the violation, how do plaintiffs enforce their contractual rights? 
The court in the Steiner case recognized this problem, but instead of addressing it, punted:  
[W]e say that it is not our role to address either the wisdom of a physician's efforts to restrict with whom a patient may consult or the appropriate business or legal means by which a corporation can effectively protect its practice. Instead, our limited role is to decide whether the names, addresses, and telephone numbers of nonparty patients are protected from disclosure by law.[7]
It seems nearly all states – their courts and their lawmakers – have recognized the importance of the patients in the medical process (and thank goodness for that).  But it begs the question: what is the future of non-compete agreements in the medical profession?  How do we balance patient care and protection with the profession's business interests?  Is a uniform act the answer?  Or should the ad-hoc approach that being taken in each state the better way to go?
I’m interested in your feedback.  Sound off!  I’ll share your comments in a future post.
Liza Favaro
Non-Compete Counsel     

* Disclaimer: The ideas and opinions shared on this site are my own and are not attributable to my employer. No amount of interaction on this site will create an attorney-client relationship. If you have a legal question and you ask it here, I will also answer it here (if I can), but such answers do not guarantee results and do not create an attorney-client relationship. If you wish to contact me directly, you may do so at


[1] COLO. REV. STAT. § 8-2-113(3); DEL. CODE ANN. tit. 6, § 2707 (2005); MASS. ANN. LAWS. ch. 112 § 12X.
[2] Anniston Urologic Assocs., P.C. v. Kline, 689 So. 2d 54 (Ala. 1997).
[3] Benchmark Med. Holdings, Inc. v. Barnes, 328 F. Supp. 2d 1236 (M.D. Ala. 2004). 
[4]  807 N.W.2d 902 (Mich. Ct. App. 2011).   
[5] 45 CFR 164.512(e) (providing for disclosure of “protected health information in the course of any judicial or administrative proceeding” if it is subject to a “qualified protective order”).  A qualified protective order is one that prohibits the parties from “using or disclosing protected health information for any purpose other than the litigation or proceeding for which such information is requested” and “requires the return to the covered entity or destruction of the protected health information (including all copies made) at the end of the litigation or proceeding.”  45 CFR 164.512(e)(1)(v).
[6] Steiner, supra; Mich. Com. Laws 600.2157 (“[e]xcept as otherwise provided by law, a person duly authorized to practice medicine [8] or surgery shall not disclose any information that the person has acquired in attending a patient in a professional character, if the information was necessary to enable the person to prescribe for the patient as a physician, or to do any act for the patient as a surgeon”).
[7] Steiner, supra, at 276.

Tuesday, December 10, 2013

Off-Topic Tuesday: The Disappearing Female Attorney (Part II)

In last Tuesday's post, I talked about female lawyers and their tendency to exit private practice early on in their careers.  My how things can change in just one week. 
When I wrote last week's post, I framed this issue as a "problem."  In my typical overly dramatic fashion, I focused on the statistics surrounding women in private practice both inside my firm and nationwide and posed the question: where are the female lawyers going?
I wasn't alone in my view that this phenomenon is troubling.  I found this article, published in the New York Times in 2006, fascinating.  In it, the author details the various barriers women face in reaching "the top" of big law firms.  Everything from poor mentoring to limited networking opportunities to low-grade assignments to male control of the workplace is blamed.  And, of course, children have long been thought to be a big factor too.   
But what I hadn't considered is that many women are simply choosing to do something different than practice law in a traditional setting.  After all, we know that a law degree does not automatically require one to join a law firm.  With a law degree, one can run a corporation, advise a corporation, become a politician, teach at a university .... the possibilities are endless. 
And this seems to be where many women have gone.  They've gone into government, they've joined universities, they've gone in-house.  Two of the women who have left my firm in the last year have taken in-house positions with large companies.  One of them told me that an in-house job eliminates the pressure and time associated with generating business, leaving more time for family and hobbies.  I imagine the same is true in many of the alternative careers available to lawyers.    
But according to this article, there is another reason many female attorneys go in-house.  The behaviors and personalities unique to women are well-suited for a corporate environment, where there is only one client and everyone with whom they come into contact is pursuing the same goals on behalf of that client.  I truly had never thought of this before.   
But this begs the question: where does that leave someone like me?  I am a bit of an anomaly in that I actually enjoy law firm life.  Sure, I'm surrounded by old, white, men who get apoplectic every time I display a female character trait.  But overall, I have it pretty good.  I'm treated well and I'm compensated well.  Most of all, I like the work I do.  
Still, it would be dishonest of me to say that in a different setting, I wouldn't have made the same choice as my female predecessors.  But that's the beauty of this profession, isn't it?  There truly is something for everyone.  We lawyers don't all have to do the same thing and there is such opportunity for well-educated, ambitious women.  Whether in private practice or elsewhere, if professional excellence is the goal, I applaud the women who have found it.        
Liza Favaro
Non-Compete Counsel
* Disclaimer: The ideas and opinions shared on this site are my own and are not attributable to my employer. No amount of interaction on this site will create an attorney-client relationship. If you have a legal question and you ask it here, I will also answer it here (if I can), but such answers do not guarantee results and do not create an attorney-client relationship. If you wish to contact me directly, you may do so at

Monday, December 9, 2013

War Stories: My First Loss

This story has nothing to do with whether the non-compete agreement at issue was enforceable.  But it was a humbling experience with a happy ending, and since it's Christmas time, I figured a warm-and-fuzzy story was in order!
It was the dead of winter and I was bored out of my mind at work.  After two years of trying cases all over the State of Michigan (very successfully, I might add), I was itching for a good, juicy trial. 
In walks two cardiologists who had a falling out with the practice they joined immediately after they became doctors.  They came to my office on a Wednesday morning after being sued for breach of the non-competition provision in their employment agreements.  There was no question they had breached and I was ready to advise these clients to stipulate to an injunction and call it a day.  But my clients had a pretty good story as to why they were practicing at the hospitals referenced in their non-compete clause: their boss - in an effort to keep them when they expressed a desire to leave the practice - promised not to enforce the non-compete against them, if only they'd stay a bit longer.  Hmmmm.  That was an interesting twist and with a little discovery, this made the case defensible!  Folks, this is the stuff lawyer dreams are made of. 
The hearing was two days after this initial client meeting.  In typical fashion, his honor declared that since my clients asserted that their boss had waived the non-compete provision, there existed a question of fact that necessitated an evidentiary hearing.  Hooooray!    As a defendant in a motion for preliminary injunction, this is precisely the result the lawyer wants.  It usually buys some time while the parties talk and often can lead to settlement.  At a minimum, I figured an evidentiary hearing would at least delay the entry of an injunction against my clients.  And it held the promise of a trial-like experience.  I was giddy. 
But my excitement turned to terror when the judge rejected my request for discovery on this issue and instead ordered that the evidentiary hearing take place in two hours.  TWO HOURS.  No one can get ready for an evidentiary hearing that quickly, could they?  I had known my clients for all of 48 hours.  I didn't know all of the facts.  The issues related to the treatment of cardiology patients and hospital administration.  This was complex stuff.  But the judge had a good reason to expedite the process: patient care was at issue and so was my clients' ability to make a living.  In his mind, these issues needed to be decided here and now. 

For the first time since I was a baby lawyer, I was afraid.  I'm good at trial work because I know how to properly prepare a case.  I work and re-work the story, organize and re-organize the trial structure, and shape and re-shape the legal arguments to the point where by the time the trial arrives (which is usually a good 12-18 months after a case is filed), I can try the case in my sleep.  I have never been a "trial by fire" kind of attorney and this situation took me way outside my comfort zone. 

I had a serious talk with my clients about the risks of proceeding with the hearing.  The judge might not buy the waiver argument.  Even if he bought it, since waiver was an affirmative defense, we had the burden of proof and we had no independent evidence to corroborate my clients' story.  And there was no way we would get any evidence in the two hours before the hearing.  Despite the risks, the clients were on board.  And I'm always up for a challenge.  So we went for it.
I spent my limited prep time shaping my clients' story: I knew the Plaintiff's principal  would never concede that he waived the non-compete.  But I knew that if I told a great story, the judge might see things my way.  

That prep session was the fastest two hours of my life.  I ran into the courtroom just as the judge was taking the bench, took my seat, and listened as the Plaintiff spent the next hour bashing my clients.  It was uncomfortable.  It was painful.  It was not at all uncommon in my experience, but my clients were mortified.  One of them had sweat dripping down his face.  The other couldn't look me in the eye.  Their ability to work rested on this hearing.  Their future was literally in my hands. 
We told a pretty darn good story.  These were two young doctors with families to feed.    Both were foreign and came to this country in search of the American dream.  They were genuine, articulate and convincing.  Each of them testified in a manner that was consistent with the other.  I was so, so proud of both of them.

At the end of the hearing, it was the word of the Plaintiff against the word of my clients.  And this was precisely the problem: in a he said/she said scenario, the party with the burden of proof loses.  And it was for this reason that I lost this hearing.   
This one hurt.  I would have looked like such a hero had I brought home a win for these clients!  But alas, this is not the movies, the good guys didn't win, and I was disappointed.  And it was the first time I had lost a hearing where evidence was taken.   

So why do I say that this story has a happy ending?  Because of the clients.  They took the loss like the wonderful men they are.  They didn't blame me.  They didn't blame the system.  They immediately re-grouped, came up with a plan B, and are practicing medicine in other hospitals today.  It's not often that I get to know clients as intimately as I got to know these guys in such a short period of time.  And it's also unusual for clients to handle a loss with such grace and dignity.  On that day, I learned from those clients how to handle losing a case.  

Nearly a year has passed, and I've suffered more losses.  But my reaction to those losses is a testament to what these clients taught me.  This isn't personal.  This is business.  A good business person picks herself up when she falls down and she moves on.  And a good business person isn't afraid of losing because she's lost before.  My first loss has made me a better lawyer and, I'd like to think, a better person.  In this business, there can be no happier ending. 

Liza Favaro 
Non-Compete Counsel 

* Disclaimer: The ideas and opinions shared on this site are my own and are not attributable to my employer. No amount of interaction on this site will create an attorney-client relationship. If you have a legal question and you ask it here, I will also answer it here (if I can), but such answers do not guarantee results and do not create an attorney-client relationship. If you wish to contact me directly, you may do so at



Thursday, December 5, 2013

Non-Solicitation Agreements In The Internet Age

We haven't talked a lot about non-solicitation agreements, but they are every bit as prevalent as non-compete agreements. Non-solicitation agreements prevent former employees from targeting clients and employees of their former employer. I would argue that a properly crafted solicitation agreement provides far greater protection than a non-compete agreement because solicitation agreements are capable of being narrowly tailored. All of those picky little rules about reasonableness that we discussed in this post don't generally apply to a well thought out non-solicitation agreement.
What Is Solicitation?  A General Definition.

The biggest issue in non-solicitation cases is defining whether the complained-of conduct actually constitutes solicitation.  Black's Law Dictionary defines "solicit" as: "To ask for the earnestness, to make petition to, to endeavor to obtain, to awake or excite to action, to appeal to, or to invite." (Black's Law Dictionary, 3d ed., p. 1639).
Say what?  Perhaps the Illinois Court of Appeals explained it better when it stated that: “Whether a particular client contact constitutes a solicitation, depends upon the method employed and the intent of the solicitor to target a specific client in need of his services.”[1] 

Many courts have found it easier to define solicitation by describing what it is not. Solicitation is not simply announcing your switch from one job to another.[2]  Nor is it simply discussing business with a client who initiates the conversation.[3] The reason is because the intent was not to "target a specific client in need of his services."  It is for this reason that general advertisements are not solicitation,[4] but specific, targeted advertisements can be considered solicitation.[5] 
Solicitation in the Internet Age
These rules worked well until the internet, and particularly social media, changed the way people communicate.  Gone are the days of cold calling and traditional advertising - clients and referral sources communicate with vendors via Facebook, LinkedIn, Twitter and a host of other social media outlets. 
Earlier this year, I handled a case on behalf of three hairstylists with non-solicitation clauses in their employment agreements.  They left the salon where they had been employed for many years to join another one.  These clients were active on Facebook and LinkedIn and they were concerned about how much interaction they could have with customers who became Facebook friends or LinkedIn connections as a result of their employment with their first salon.  
My advice to these clients was to treat Facebook and LinkedIn like you would treat any "in-person" situation.  General discussion - initiated by their customers - was fine.  Specific discussions about where my clients went and why they left - if truthful - was also fine.  But communications directed at customers for the purpose of obtaining their business was not fine.
In Michigan, where I practice, there was no law on this issue.  But my advice to my clients turned out to be correct.  In a recent case decided by a court in Massachusetts, a general announcement on a LinkedIn profile by a departing employee, even though it resulted in notification to contacts established while that employee was with her former employer, was held not to be solicitation.  I'm not surprised.  And it's good to see that courts are remaining consistent in their view of a communication directed at a general audience, regardless of the medium.  

The problem with this decision is that it is very narrow.  What happens when you invite a Facebook friend and client you serviced while working for your former employee to a social event and the invitation triggers a discussion about your departure?  What happens when clients of your former employer "friend" you or seek to connect with you after you've left your employer?  The law is slow to catch up to technology, so it will be months, if not years before the answers to these and other questions become apparent.  In the meantime, the rules above are a good starting point.  And when in doubt, call a Non-Compete Counsel! 

Liza Favaro 
Non-Compete Counsel  

* Disclaimer: The ideas and opinions shared on this site are my own and are not attributable to my employer. No amount of interaction on this site will create an attorney-client relationship. If you have a legal question and you ask it here, I will also answer it here (if I can), but such answers do not guarantee results and do not create an attorney-client relationship. If you wish to contact me directly, you may do so at efavaro@gmhlaw.


[1] Tomei v. Tomei, 235 Ill. App. 3d 166, 170 (Ill. App. Ct. 1992). 
[2] Aetna Bldg. Maintenance Co. v. West, 39 Cal. 2d 198 (Cal. 1952).  
[3] Id.
[4] Smith, Waters, Kuehn, Burnett & Hughest, Ltd. v. Burnett, 192 Ill. App. 3d 693, 703 (Ill. App. Ct. 1989). 
[5] Tomei, supra.