We have talked in the past about what constitutes customer solicitation. In the world of changing business practices, social media marketing, and remote work, the bounds of restrictive covenant — including customer non-solicitation agreements, continue to change.
In a recent case, the Southern District of Georgia addressed, among other things, whether a pizza party can constitute customer solicitation. USI Ins. Servs. LLC v. Tillman, No. 4:23-CV-54, 2024 WL 1836517 (S.D. Ga. Apr. 26, 2024). Garrison was a producer of employee benefits insurance with USI Insurance Services (USI). He drove new business revenue growth, existing client revenue and growth, and strategized regarding business retention with non-insurance buyers. His co-worker, Tillman, was an employee benefits account executive with USI. She was responsible for managing “all of the day-to-day activities with the clients she services.” According to USI, Tillman became very well regarded within the company for her work with USI clients.
The Employment Contracts and Non-Solicitation Agreements
Both Garrison and Tillman had contracts with USI prohibiting them from “solicit[ing] or induc[ing] any employee of USI to leave USI for a competitor.” The contracts also prohibited them from “solicit[ing] USI’s clients and active prospective clients.”
Both Garrison and Tillman were also prohibited from disclosing confidential USI information. These agreements were applicable while Garrison and Tillman were employed and for a specified duration after their employment ended. They both decided to leave USI and join USI competitor, Palmer & Cay (P&C).They discussed and confirmed this transition with one another. Numerous clients of USI contacted Tillman shortly after her departure about transferring their accounts from USI to P&C. Tillman proceeded to provide those clients contact information of other P&C employees who could handle the transition.
Certain clients did not immediately follow Tillman and Garrison to P&C. P&C prepared proposals and presentations to pitch to those clients on transferring their accounts from USI to P&C. Tillman assisted in preparing the presentations and proposals, and Garrison sent a pizza lunch to the employees of the clients.
So, Was the Pizza Party Customer Solicitation?
USI filed suit for damages it alleged it suffered due to Tillman and Garrison’s alleged solicitation of its clients. USI also claimed Tillman and Garrison induced each other to leave USI for P&C.
One unique aspect of the case is that it involved two employees who engaged in different behaviors while interacting with the same clients and with each other. Therefore, it serves as a good illustration of what courts may consider to constitute solicitation.
The court held that Garrison’s conduct presented a jury question as to whether he breached his non-solicitation agreement. The court therefore denied his motion for summary judgment.
Court Findings
The court found evidence that he disclosed the identities of USI clients to P&C so P&C could target them. He was also found to have actively discussed his transition from USI to P&C with clients.
The court noted that some Georgia courts have held an employee telling a client that they were moving to a competitor may imply the employee can service the client at the competitor and can thus constitute indirect solicitation. However, the court found this issue is not settled in Georgia. Other courts have found such actions to be merely informing someone of the change in employment rather than solicitation.
Garrison, however, engaged in these conversations, told P&C that his conversations with USI’s clients were “going really well.” Garrison proceeded to send the clients a pizza lunch. The court found that this pizza lunch, along with the other evidence, could be found by a jury to be an attempt to create a business relationship with the clients. This could be found by a jury to be in violation of his non-solicitation agreement.
Unlike Garrison, Tillman did not actively seek out or communicate with clients—the clients reached out to her. And when she was contacted by the clients, while she gave them contact information for P&C who could have contact with USI’s clients, she informed them that she could not solicit their business.
The court relied on Vulcan Steel Structures, Inc. v. McCarty, 329 Ga. App. 220 (2014), Orkin Exterminating Co. v. Walker, 251 Ga. 536 (1983), and Akron Pest Control v. Radar Exterminating Co., 216 Ga. App. 495 (1995) in holding that Georgia has long recognized non-solicitation covenants cannot bar a person from servicing unsolicited business from clients. Therefore, the court granted her motion for summary judgment as to USI’s claim for breach of her non-solicitation agreement.
Legal Obligations
Employers and employees alike should be mindful of their legal obligations when pursuing business from potential clients. Employees should be particularly mindful in communications with clients if they are subject to non-solicitation covenants. As this decision indicates, the case law governing what constitutes a customer solicitation can be fact-intensive and will often depend on each employee’s specific conduct.
Alexandra Zimmer, a summer associate at BFV, contributed to this article.
Benjamin Fink is known for his work in noncompete, trade secret and competition-related disputes. A shareholder at Berman Fink Van Horn, Ben concentrates his practice in business and employment litigation.
