Non-Solicitation Agreement Not Violated by Former Employee’s Facebook Posts, Court Rules

Multi-level_marketing_tree_diagram.pngA federal court ruled in favor of a former employee in a key portion of the former employer’s request for a preliminary injunction. Pre-Paid Legal Services, Inc. v. Cahill, No. 12-cv-346, order affirming magistrate’s report (D. Okla., Feb. 12, 2013). The decision is one of the first to address employees’ use of social media versus their contractual obligations to a former employer. The employer alleged that social media activity by the former employee, such as posts to his Facebook page, breached a non-solicitation agreement. The court disagreed, finding that his activities on Facebook and Twitter were not expressly targeted to employees of the former employer, and as such did not violate the specific terms of his non-solicitation agreement.

The defendant, Todd Cahill, worked for Pre-Paid Legal Services, Inc. (PPLSI) in San Diego from 2004 until August 2012. PPLSI sells legal service plans, using a multi-level marketing model that allows sales associates to recruit additional sales associates to work “downline” from them. A sales associate receives commissions for their own sales and those of downline associates. Cahill began as a sales associate, and received a promotion to regional manager in 2008. He signed an “Associate Agreement” when he began working for PPLSI, which included a clause prohibiting him from “proselytiz[ing], recruit[ing], or solicit[ing]” other associates while employed by PPLSI and for two years after termination or departure. Cahill, magistrate’s report at 3 (Jan. 22, 2013).

Cahill reportedly created several programs to encourage productivity among his downline associates and others in the company. This included an “Elite Leaders Program” (ELP) to recognize “outstanding” associates. Id. at 5. He also created several pages on Facebook for sales associates, including a page for ELP and a page entitled “NewFreedom Champions” (NFC). Id. at 8.

In August 2012, Cahill allegedly told several ELP members at a meeting that he intended to leave PPLSI and join another multi-level marketing company. After notifying PPLSI of his resignation, he allegedly posted information about his new position on the ELP and NFC Facebook pages. He continued to post on his personal Facebook page regarding his new employer. He also allegedly sent requests to PPLSI sales associates to follow him on Twitter.

PPLSI sued Cahill for violation of the non-solicitation agreement and other claims. It alleged that Cahill violated the agreement by directly soliciting one sales associate and by repeatedly posting information about his new position on Facebook and Twitter. It sought a preliminary injunction to prevent Cahill from contacting PPLSI associates and posting job information on Facebook or Twitter.

An applicant for a preliminary injunction must prove four elements: that it is likely to prevail on the merits of its claim, that it will suffer “irreparable harm” without an injunction, that the injury it seeks to avoid outweighs the burden of an injunction, and that an injunction will not harm the public interest. Id. at 9. The court rejected the plaintiff’s application regarding social media activity. Cahill’s Facebook posts and tweets were general announcements of job opportunities, not direct solicitations to former coworkers. The mere fact that PPLSI sales associates could see the announcements did not breach the non-solicitation agreement, unless PPLSI could prove that he directly targeted the announcements. The court refused to grant an injunction against the defendant’s social media activity.

If you need to speak to an employment attorney in New Jersey or New York, contact the Resnick Law Group at 973-781-1204 or 646-867-7997.

More Blog Posts:

NLRB Rules that Facebook Posts Regarding Coworkers Were Protected Concerted Activity, The New Jersey Employment Law Firm Blog, February 7, 2013
A Resnick Law Group Victory: Last Minute Arbitration Will Not Be Upheld in New Jersey, The New Jersey Employment Law Firm Blog, April 5, 2012
New Jersey Cuts Benefits to Union Workers, Other States Follow, The New Jersey Employment Law Firm Blog, July 31, 2011
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