{"id":591,"date":"2010-08-12T17:50:05","date_gmt":"2010-08-12T17:50:05","guid":{"rendered":"https:\/\/www.bfvlaw.com\/georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision\/"},"modified":"2010-08-12T17:50:05","modified_gmt":"2010-08-12T17:50:05","slug":"georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision","status":"publish","type":"post","link":"https:\/\/www.bfvlaw.com\/georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision\/","title":{"rendered":"Georgia Court of Appeals\u2019 Affirms Holding That Non-Solicitation Provision Is Overbroad; Finds That Employer\u2019s Dissemination of Its Lawsuit Against Its Former Employees Does Not Constitute Libel"},"content":{"rendered":"

In a recent decision, the Georgia Court of Appeals affirmed a trial court\u2019s decision finding a non-solicitation of customers covenant unenforceable.\u00a0 Fine v. Communications Trends, Inc.<\/em>, 10 FCDR 2597 (August 6, 2010).\u00a0 In the case, the Court of Appeals also upheld the trial court\u2019s dismissal of a claim for libel based upon the former employer\u2019s dissemination of the lawsuit against the former employee to customers.<\/p>\n

In the case, the employer was a business engaged in media planning, purchasing, and cable network programming.\u00a0 The employee was a vice-president of the company and was the main contact for the company\u2019s major clients which allowed her to develop relationships with them.<\/p>\n

The agreement she signed during her employment provided as follows:<\/p>\n

The Employee hereby also agrees and covenants with [the company] that throughout the period of his employment and for a period of two (2) years immediately following cessation of Employee\u2019s employment [with company], the Employee shall not solicit advertising media placement business similar to [the company] on behalf of any persons or entity other than [the company], either directly or indirectly, whether as a shareholder, partner, joint venturer, consultant, employee, officer, agent or otherwise, from any person or entity (or otherwise contact, call upon, communicate with or attempt to communicate with any such person or entity with a view to providing advertising media placement services<\/em>, competitive or potentially competitive with [the company] [.]).<\/p>\n

Based upon the terms in italics, the trial court held that the non-solicitation provision was an overbroad and unreasonable restraint of trade in that it not only prohibited the employee from soliciting the company\u2019s clients, but also prohibited her from \u201cotherwise\u201d communicating with the former clients.\u00a0 The court interpreted this to mean the employee was prohibited from accepting business from customers, without solicitation and regardless of who initiated the contact.\u00a0 The Court of Appeals agreed with this interpretation.\u00a0 As such, the provision was found to have violated the rule prohibiting restriction on the acceptance of unsolicited business as originally set forth in Singer v. Habif, Arogeti & Wynne, P.C., <\/em>250 Ga. 376 (1982).<\/p>\n

The company argued that the provision was substantially similar to the non-solicitation provisions upheld in W.R. Grace & Co.<\/em>, 262 Ga. App. 464, and Covington v<\/em>. D.L. Pimper Group, Inc.,<\/em> 248 Ga. App. 265 which also prohibited the employees from \u201ccommunicating with\u201d the customers.\u00a0 However, in a footnote, the Court of Appeals held that contrary to the company\u2019s argument, the non-solicitation covenant in the case was not substantially similar to the non-solicitation provisions upheld in those case because the Court interpreted the restriction to also extend to prohibit the employee from \u201cotherwise\u201d contacting and communicating with former clients to accept business, without her prior solicitation.<\/p>\n

The discussion on this point leads one to wonder how a prohibition on \u201ccommunication with\u201d customers is permissible (as was held in W.R. Grace<\/em> and Covington<\/em>) and does not violate the rule against prohibiting the acceptance of unsolicited business.\u00a0 If the employee cannot communicate with the customer, how can the employee accept unsolicited business?\u00a0 The Georgia courts have reconciled this apparent inconsistency by finding that because the language was upheld in W.R. Grace<\/em>, the seminal case permitting a non-solicitation provision which does not contain a territorial limitation, it must be ok.\u00a0 In Covington,<\/em> the Court of Appeals held that a covenant containing language prohibiting the employee from \u201ccommunicating with\u201d customers in the context of solicitation really only prohibits communication which is tantamount to affirmative solicitation on the part of the employee.<\/p>\n

In any event, in Fine<\/em> the Court of Appeals also affirmed the trial court\u2019s dismissal of the former employer\u2019s claims concerning breach of the confidential information provision and misappropriation of trade secrets finding that there was no evidence that the employee had disclosed any confidential information or trade secrets.<\/p>\n

The Court of Appeals did reverse the trial court\u2019s grant of summary judgment as to the former employer\u2019s claim of breach of fiduciary duty finding that there was sufficient circumstantial evidence that the employee deleted client contact information and destroyed client files prior to her departure which caused the employer to lose crucial information regarding its major clients and weakened its position against its competitor.\u00a0 The Court found that despite the former employee\u2019s testimony that she had not engaged in this activity, there was sufficient circumstantial evidence to be considered by a jury.<\/p>\n

In a not-uncommon twist, the former employer in Fine<\/em> had sent a letter to some of the customers in an effort to keep the customers informed as to the steps the company had been forced to take to protect its company from misinformation and unlawful solicitation by its former employee.\u00a0 The letter further advised the customers that the trial court had issued a restraining order against the former employee and her new employer.\u00a0 Based on this activity, the employee and the new employer had filed a counterclaim for defamation.\u00a0 However, the trial dismissed this claim and the Court of Appeals upheld the dismissal finding that the letter was privileged as a matter of law.<\/p>\n

The company\u2019s president testified that it was his intent in sending the letter to inform the customers about the business situation and the restraining order.\u00a0 He also stated that it was necessary to inform some vendors about the situation since some of the information believed to have been taken by the employee related to exclusive pricing from those vendors which the company deemed to be confidential and subject to the\u00a0 non-disclosure covenant.\u00a0 Based upon the testimony of the company\u2019s president, the Court of Appeals held the trial court was authorized to find that the letter was sent in good faith and that it was undisputed that the company\u2019s business relationships with its clients and vendors was an interest to be upheld.\u00a0 In light of the pending litigation and issuance of the temporary restraining order, the Court found the letter was also issued on a proper occasion.\u00a0 The Court also found that the letter was published to proper persons, having been sent only to certain executives of the customers and vendors who had a business relationship with the company before the employee left to work for the competitor.\u00a0 The Court found the evidence therefore established as a matter of law that the letter was protected by the good faith privilege defense to a claim of defamation.<\/p>\n

.<\/p>\n","protected":false},"excerpt":{"rendered":"

In a recent decision, the Georgia Court of Appeals affirmed a trial court\u2019s decision finding a non-solicitation of customers covenant unenforceable.\u00a0 Fine v. Communications Trends, Inc., 10 FCDR 2597 (August 6, 2010).\u00a0 In the case, the Court of Appeals also upheld the trial court\u2019s dismissal of a claim for libel based upon the former employer\u2019s […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_mo_disable_npp":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4,9],"tags":[66,20,25,16],"acf":[],"yoast_head":"\nGeorgia Court of Appeals\u2019 Affirms Holding That Non-Solicitation Provision Is Overbroad<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bfvlaw.com\/georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Georgia Court of Appeals\u2019 Affirms Holding That Non-Solicitation Provision Is Overbroad\" \/>\n<meta property=\"og:description\" content=\"In a recent decision, the Georgia Court of Appeals affirmed a trial court\u2019s decision finding a non-solicitation of customers covenant unenforceable.\u00a0 Fine v. Communications Trends, Inc., 10 FCDR 2597 (August 6, 2010).\u00a0 In the case, the Court of Appeals also upheld the trial court\u2019s dismissal of a claim for libel based upon the former employer\u2019s […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.bfvlaw.com\/georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision\/\" \/>\n<meta property=\"og:site_name\" content=\"Berman Fink Van Horn P.C.\" \/>\n<meta property=\"article:published_time\" content=\"2010-08-12T17:50:05+00:00\" \/>\n<meta name=\"author\" content=\"Benjamin Fink\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Benjamin Fink\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.bfvlaw.com\/georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision\/\",\"url\":\"https:\/\/www.bfvlaw.com\/georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision\/\",\"name\":\"Georgia Court of Appeals\u2019 Affirms Holding That Non-Solicitation Provision Is Overbroad\",\"isPartOf\":{\"@id\":\"https:\/\/www.bfvlaw.com\/#website\"},\"datePublished\":\"2010-08-12T17:50:05+00:00\",\"dateModified\":\"2010-08-12T17:50:05+00:00\",\"author\":{\"@id\":\"https:\/\/www.bfvlaw.com\/#\/schema\/person\/90455044f3f03e0d44ed8c0925a66ff5\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.bfvlaw.com\/georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.bfvlaw.com\/georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.bfvlaw.com\/georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.bfvlaw.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Georgia Court of Appeals\u2019 Affirms Holding That Non-Solicitation Provision Is Overbroad; Finds That Employer\u2019s Dissemination of Its Lawsuit Against Its Former Employees Does Not Constitute Libel\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.bfvlaw.com\/#website\",\"url\":\"https:\/\/www.bfvlaw.com\/\",\"name\":\"Berman Fink Van Horn P.C.\",\"description\":\"A Business Law Firm In Atlanta\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.bfvlaw.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.bfvlaw.com\/#\/schema\/person\/90455044f3f03e0d44ed8c0925a66ff5\",\"name\":\"Benjamin Fink\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.bfvlaw.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g\",\"caption\":\"Benjamin Fink\"},\"url\":\"https:\/\/www.bfvlaw.com\/author\/benjamin-fink\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Georgia Court of Appeals\u2019 Affirms Holding That Non-Solicitation Provision Is Overbroad","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.bfvlaw.com\/georgia-court-of-appeals-affirms-holding-that-non-solicitation-provision\/","og_locale":"en_US","og_type":"article","og_title":"Georgia Court of Appeals\u2019 Affirms Holding That Non-Solicitation Provision Is Overbroad","og_description":"In a recent decision, the Georgia Court of Appeals affirmed a trial court\u2019s decision finding a non-solicitation of customers covenant unenforceable.\u00a0 Fine v. 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