Best Strategy to Handle Non-Solicitation Clause?

What is the name of your state (Georgia)?

I am under the impression that case law in Georgia has shown that any overreaching non-solicitation clauses are usually frowned upon by the court. Additionally, I understand that if a judge finds a clause to be unenforceable, there is no blue line remedy (the judge cannot "fix" it) and the outcome is the entire agreement is not enforceable.

With that being said, here is my scenario:

1. Recently laid off from a sales job.

2. Considering approaching my ex-employer's customers to do consulting service work (as I am also an expert in the industry.) Note - this is not even the same role.

3. Also considering taking a job with a competitor. This would be the same role: sales.

4. The non-solicitation clause in my employment agreement is very restrictive. The clause says that I cannot solicit any business from existing customers of the company, regardless if these customers were ones I sold or ones I never had contact with in my life. (An example may be a California customer as I live in Georgia.) The clause does not end there. It goes on to say I cannot even solicit any but any company in the entire US that has:

"within the last 18 months...has been subject of an individually targeted solicitation by the Company or its authorized sales channels to become a client or customer of the Company."

This effectively means I have a no-solicitation list across all 50 states and the number of companies may literally be in the 1000s. I figure this clause alone makes this unenforceable.

Seeing this is likely the case - I have a "strategy" question. Should I handle this proactively or reactively? In essence should I:

1. Contact my ex-employer and ask for a report of all "customers" that I am to not solicit based upon their definition in my employment agreement - along with the date of last contact (seeing they have an 18 month look-back period)?

2. Proceed with my own consulting efforts with their customers and/or seek a job with a competitor and simply await for them to make a move?

3. Do something different not listed here?

Thanks to all for your insights.

You should show the non-compete agreement to a local qualified attorney to get an expert legal opinion.

fgs1966 said:

I am under the impression that case law in Georgia has shown that any overreaching non-solicitation clauses are usually frowned upon by the court. Additionally, I understand that if a judge finds a clause to be unenforceable, there is no blue line remedy (the judge cannot "fix" it) and the outcome is the entire agreement is not enforceable.

Click to expand...

I know that is true of non-compete agreements. I do not know if that is true of non-solicitation agreements. They are different agreements.

I've heard of GA employees obtaining declaratory judgments voiding their non-compete agreements.

Let's assume that the non-solicitation has a high chance of not being enforceable.

If that is the assumed case, what should my strategy be given the choices I outlined in my original post???

Thanks for assisting!!!

P.S. Recent case law seems to be in my favor. I realize this does not ensure a victory...but again for the sake of this thread, assume I am in good shape.

TRUJILLO v. Great Southern Equipment Sales (March, 2008)

http://www.fordharrison.com/shownewsletter.aspx?Show=3539

fgs1966 said:

Let's assume that the non-solicitation has a high chance of not being enforceable.

If that is the assumed case, what should my strategy be given the choices I outlined in my original post???

Thanks for assisting!!!

P.S. Recent case law seems to be in my favor. I realize this does not ensure a victory...but again for the sake of this thread, assume I am in good shape.

TRUJILLO v. Great Southern Equipment Sales (March, 2008)

Noncompete News: Georgia Court of Appeals Reiterates Narrow Scope of Non-Solicitation Clauses

Click to expand...

Trujillo v Great Southern found that the non-solicitation against ALL customers was invalid because there was NO territorial limit. Your agreement appears to have a territorial limit, so that decision will not necessarily help you.

But... going under your assumption that the agreement will be found unenforceable, the question is "How much are you willing to spend to prove that the agreement unenforceable?".

You can
A) File for a declaratory judgment voiding the agreement
B) violate the agreement and see if they sue.

Choosing B means they have to find out that you are violating the agreement before they do anything.

If you start your consulting gig and call all of your customers, the old employer WILL hear about it.

If you accept the sales position, and never call any of the customers you dealt with, they may not find out. Your new customers won't know you used to work for the other company, so won't be inclined to drop a dime on you. If your old customers call your new employer and end up with you on the phone, that probably doesn't violate the agreement since they called you.

If and when they find out you're violating it, will they do anything about it?

Will the former employer spend the $$$ enforcing the agreement? If they laid you off, they may not have that much money to throw around.

As a single data point, a recent case I was following where the employer sued the salesman cost the employer over $50,000. Salesman's new employer paid his legal expenses. BTW, employer won, but it was not a GA court.

Thanks for your response.

One clarification point: My agreement has NO territorial limit and includes any existing customer and even any "prospect" they have "individually targeted" for business in the last 18 months.

I did speak with an attorney yesterday and his advice was to do "Plan B" and he agreed it would not be enforceable here in Georgia, meaning that the entire agreement would likely be null and void IF the ex-employer sued. In addition, if they damaged my ability to make income I could always file a counterclaim for damages.

He says that too many companies either rely upon generic template language or lawyers who are unfamiliar with Georgia case law and he rarely sees an agreement (non-compete OR non-solicit) that sticks. He figures employers put that in there to work over employees who are uneducated on Georgia law. Funny thing is that I can see how easy it would be to craft a non-compete/non-solicit that would actually "stick" - but the employers seem to overreach in their restrictions.

We also discussed a recent bill that was signed by the Governor of Georgia that might change things on future agreements if a referendum passes on the ballot in November.

Here is a link: Noncompete News: HB 173: Potential Sea Change to Georgia's Noncompete Law

One more thought. If the agreement has a choice of law clause that specifies enforcement under a state besides GA, you may end up in a race to the courthouse.

You sue in a GA court for a declaratory judgement voiding the agreement.

Employer sues in home state enforcing the agreement. Another state may blue-line the agreement, even though you are a GA resident. That is exactly what happened in the case I was following: GA resident was sued in MA court. MA court found agreement was overbroad, so restricted it to what the judge found reasonable.

Great point!

Luckily, both myself and the employer are in Georgia.

The governing law in the agreement is also stated as the state of Georgia.

I wonder if I went down the path you are suggesting (proactively seeking a declarative judgment) what I should expect to absorb in fees? Are we talking about a $1k issue, a $5k issue or a $10k+ issue?

Also, would we be looking at getting this resolved in a matter of days, weeks, months or years? (I doubt it should be years...this is a small company and I am a single salesperson...)

The timing would impact my decision, along with the costs.

Ideas????