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LinkedIn Messages Did Not Violate Employment Agreement (Thursday, August 31, 2017)

Bankers Life sells insurance and financial products, such as long-term care insurance life annuities and Medicare supplement insurance, primarily to seniors.

In 2004, Bankers Life hired Gelineau as the branch sales manager responsible for its Warwick, Rhode Island office. In 2006, Gelineau signed an employment agreement with Bankers Life that contained certain non-competition provisions, stating in relevant part:

During the term of this Contract and for 24 months thereafter, within the territory regularly serviced by the Manager’s branch sales office, the Manager shall not, personally or through the efforts of others, induce or attempt to induce:

(a) any agent, branch sales manager, field vice president, employee, consultant, or other similar representative of the Company to curtail, resign, or sever a relationship with the company;

(b) any agent, branch sales manager, field vice president or employee of the Company to contract with or sell insurance business with any company not affiliated with the company, or

(c) any policyholder of the company to relinquish, surrender, replace, or lapse any policy issued by the company.

After Gelineau’s employment ended, he was hired by a competitor, American Senior Benefits (“ASB”) as its senior vice president.

On August 21, 2015, Bankers Life filed a complaint alleging breach of contract against Gelineau and six other defendants. In its breach of contract count against Gelineau, Bankers Life alleged that, after joining ASB, Gelineau recruited or attempted to recruit Bankers Life employees and agents from the Warwick, Rhode Island office, by sending LinkedIn requests to connect to three employees, Richard Connors, Sally Levesque, and Russell Dolan. According to Bakers Life, its employees would then click onto Gelineau’s profile and would see a job posting for ASB. Bankers Life alleged that a second method of recruiting that Gelineau used was to direct his subordinates at ASB, including Mark Medeiros, to contact Bankers Life agents and employees to induce them to leave Bankers Life and join ASB.

Gelineau filed a motion for summary judgment stating that he did not recruit any Bankers Life agents or employees in his geographic area, and did not direct Mark Medeiros or any other ASB employee to recruit Bankers Life employees or agents in that geographic area. He also attested that he never used LinkedIn to send direct messages to Bankers Life agents or employees in the Warwick, Rhode Island area regarding ASB or any other possible professional opportunities. Instead, Gelineau stated, all of the individuals on his email contact list were sent LinkedIn generic emails asking them to form a professional connection on social media. The parties submitted various affidavits, text messages and evidence related to the motion for summary judgment.

The circuit court granted Gelineau’s motion for summary judgment holding that, after reviewing all the submissions, Bankers Life failed to identify any solicitation or other breach of contract by Gelineau. The court further ordered that the judgment be made immediately final and appealable pursuant to Illinois Supreme Court Rule 304(a).

On appeal, Bankers Life contended that the circuit court erred in concluding that no genuine issue of material fact existed regarding whether Gelineau induced or attempted to induce Bankers Life agents and employees to leave Bankers Life, in violation of the noncompetition provisions contained in his employment agreement. Bankers Life maintained that Gelineau affirmatively sent the LinkedIn invitation to the three employees, that the invitations directed its recipients to a job posting, and that it was Gelineau’s modus operandi to first utilize LinkedIn to make contact as a first step in recruiting Bankers Life employees.

Under Illinois law, to plead a cause of action for breach of contract, a plaintiff must allege: (1) the existence of a valid and enforceable contract; (2) substantial performance by the plaintiff; (3) a breach by the defendant; and (4) resultant damages. W.W. Vincent & Co. v. First Colony Life Ins. Co., 351 Ill. App. 3d 752, 759 (2004). The question before the appeals court was whether the emails sent through Gelineau’s LinkedIn account to the three individuals working in the Bankers Life’s Warwick, Rhode Island office and Gelineau’s LinkedIn activity sought to induce or attempted to induce the Bankers Life employees in the Warwick, Rhode Island area to curtail, resign, or sever a relationship with Bankers Life.

The appellate court reviewed case law from other jurisdictions. It observed that a few courts have considered whether LinkedIn communications or postings can violate a non-solicitation or non-competition requirement. In BTS, USA, Inc. v. Executive Perspectives, LLC, 2014 WL 6804545 (Conn. Super. Oct. 16, 2014) Marshall Bergmann, a webpage designer, updated his LinkedIn account to reflect his new job after he joined a competitor. Bergmann also made a LinkedIn posting encouraging his contacts to “check out” a website he designed for his new company. BTS sued Bergmann and his new employer claiming that Bergmann’s LinkedIn posting violated his legal obligations under a nonsolicitation agreement that prohibited him from soliciting BTS customers for two years after his BTS employment ended.

The court rejected BTS’s claim and held that there was no evidence that any BTS customer actually viewed or visited Bergmann’s LinkedIn website or did any business with Bergmann’s new employer as a result of the purported solicitation. The court also noted that BTS had no policies or procedures regarding its employees’ use of LinkedIn or other social media, which prohibited or restricted what Bergmann had done. The court stated that “to this day” the employer permitted “employees to maintain LinkedIn accounts without monitoring or restrictions from BTS.”

The appeals court pointed out that the court’s decision in BTS, USA, Inc. was similar to that of a few other courts which have considered the issue. Enhanced Network Solutions Grp. v. Hypersonic Techs., 951 N.E. 2d. 265 (Ind. Ct. of App. 2011) (posting of job opportunity on LinkedIn page was not a solicitation); Invidia v. DeFonzo, 2012 WL 5576406 (Mass. Super. Oct. 22, 2012) (becoming “friends” with former clients on Facebook did not, in and of itself, violate the non-compete clause); PrePaid Legal Services v. Cahill, 924 F. Supp. 2d 1281 (E.D. Okla. 2013) (holding that employee’s postings on Facebook which touted his new employer’s product and which was viewed by former colleagues did not violate agreement to not recruit employees from his former employer).

There have been circumstances where courts have found an employee’s use of LinkedIn violated a non-compete, or non-solicitation agreement. Bankers Life pointed to Coface Collections North America v. Newton, 430 Fed. Appx. 162 (3d Cir. 2011), where the Third Circuit affirmed the district court’s grant of a preliminary injunction for the defendant, William Newton, for the breach of his non-competition and non-solicitation agreement. In Coface, Newton entered into an asset purchase agreement with Coface, a Delaware corporation engaged in the business of collections and receivables management. The agreement contained several restrictive covenants, including a non-compete provision providing that Newton would not: “(i), for a period of five years following the sale, compete with Coface or solicit, or interfere with Coface’s relationships with Coface’s employees and customers, or (ii) include the name ‘Newton’ in the name of any entity in competition with Coface.” About eight months before the non-compete was set to expire, Newton formed and began operating a company called “Newton, Clark & Associates, LLC.” He also posted on LinkedIn that he was “Chairman of the Board” at Newton Clark, and posted on Facebook that his “noncompete ends on 12/31/2010 & [he] decided that the USA needs another excellent, employee oriented Commercial Collection Agency.” The posts encouraged professionals to contact him to apply for a position with his new company. While the non-compete and non-solicitation agreement was still in effect, Newton also sent friend requests on Facebook to current Coface employees. The Third Circuit affirmed the district court’s finding that Newton’s involvement with social media violated the non-compete and non-solicitation provisions of his Asset Purchase agreement and thus upheld the injunction.

In Amway Global v. Woodward, 744 F. Supp. 2d 657 (E.D. Mich. 2010), the court considered whether an employee’s use of his LinkedIn account violated his non-solicitation agreement. The employee argued that his LinkedIn postings and other social media communications could not be considered improper solicitations because they were “passive, untargeted communications.” The court disagreed and stated that “it is the substance of the message conveyed, and not the medium through which it is transmitted, that determines whether a communication is a solicitation.” The court noted that, “communications qualifying as solicitations do not lose this character simply by virtue of being posted on the Internet.”

The appeals court believed the different results reached by BTS and Amway Global could be reconciled by looking at the content and the substance of the communications. In BTS, the communication reflected that the employee changed jobs, identified the new employer, and provided an example of the employee’s work. In contrast, in Amway Global, the former employee went further, by urging his former co-workers to leave Amway by stating, “If you knew what I knew, you would do what I do.” The court found that this message “would readily be characterized as solicitation.”

Here, as in BTS, the undisputed facts established that the invitations to connect via LinkedIn were sent from Gelineau’s LinkedIn account through generic emails that invited recipients to form a professional connection. The court referred to Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Orbach, 2013 U.S. Dist. LEXIS 159984 (E.D. Mich. Nov. 8, 2013) (noting that a message to remind someone who had not responded to an earlier invitation that the “invitation to is awaiting for your response” was a generic email and did not constitute a solicitation). Gelineau’s generic emails did not contain any discussion of Bankers Life, no mention of ASB, no suggestion that the recipient view a job description on Gelineau’s profile page, and no solicitation to leave their place of employment and join ASB. Instead, the emails contained the request to form a professional networking connection. Upon receiving the emails, the Bankers Life employees had the option of responding to the LinkedIn requests to connect. If they did connect with Gelineau, the next steps, whether to click on Gelineau’s profile, or to access a job posting on Gelineau’s LinkedIn page, were all actions for which Gelineau could not be held responsible. Furthermore, Gelineau’s post of a job opening with ASB on his public LinkedIn portal did not constitute an inducement or solicitation in violation of his non-competition agreement.

In the court’s view, it made no difference that Gelineau acknowledged that he used LinkedIn to evaluate potential recruits from other geographic areas and that he made a “sheet for recruiting” indicating the differences between ASB and Bankers Life. To violate his contract, Gelineau would have to actually, directly recruit individuals working in the Warwick, Rhode Island area.

Bankers Life also maintained that the circuit court improperly ignored its additional claim, that Gelineau instructed Medeiros to recruit Bankers Life agents and employees from the Warwick, Rhode Island area. In his affidavit attached to his motion for summary judgment, Gelineau stated that he never instructed Medeiros to solicit Bankers Life agents and employees from the Warwick, Rhode Island area. Medeiros stated in his own affidavit that Gelineau never instructed him to do so, and that he attempted to call Christopher Fernandez, a Bankers Life agent in February 2015, before Medeiros began working for ASB.

Bankers Life pointed to a statement made by a Chris Fernandez where he indicated that Medeiros contacted him about working with ASB sometime in spring of 2015, and claimed that this statement created a material issue of fact precluding a summary disposition in favor of Gelineau.

Initially, the court noted that Medeiros was not bound by a non-competition agreement with Bankers Life. Contrary to Bankers Life’s argument, Fernandez’ affidavit did not contradict Medeiros’ affidavit on a material issue because it did not contain any information relevant to Gelineau’s actions. Fernandez’ affidavit did not state that Gelineau instructed Medeiros to contact Fernandez to induce Fernandez to leave Bankers Life for ASB. Since the apparent contradiction as to the exact date of contact between Medeiros and Fernandez did not relate to a material issue of fact, the circuit court did not err in granting summary judgment in favor of Gelineau.

The appeals court affirmed summary judgment in favor of Gelineau. The case is Bankers Life and Casualty Co. v. Gelinau et al., 2017 IL App (1st) 160687-U (non-precedential).

 

· Michael R. Lied
· Howard & Howard Attorneys PLLC
· One Technology Plaza, 211 Fulton Street, Suite 600, Peoria, IL 61602
· (309) 999-6311
· MLied@howardandhoward.com 

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