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Monday, July 25, 2011

Indiana Court of Appeals: LinkedIn Job Ad Not a Solicitation or Inducement

Hypersonic Technologies Corporation (Hypersonic), an advanced software engineering firm based in Fort Wayne, Indiana, entered into a sub contractor agreement (Agreement) in October 2009 with Enhanced Network Solutions (ENS) a firm  that modifies existing software. 

The Agreement stated that if ENS and Hypersonic successfully bid on a joint project, ENS would authorize Hypersonic to act as a subcontractor for ENS clients.  Also in the Agreement was the following clause:

11.5 Employee Protection. During the term of this Agreement and for a period of twelve (12) months from the date of effective date of its termination, unless mutually agreed to in writing otherwise the Parties (including any successor-in-interest or related company) shall refrain from soliciting or inducing, or attempting to solicit or induce, any employee of the other Party in any manner that may reasonably be expected to bring about the termination of said employee toward that end and, in the event of a breach of this clause, that party in breach shall pay to the party not in breach the sum equivalent to twelve (12) months salary of the employee in question.

Dictionary Hypersonic terminated the Agreement on June 12, 2010 after the parties never successfully bid on a project together.

The dispute arose because during the Agreement period, Hypersonic posted a listing for an outside sales representative on LinkIn.  Robert Dobson, an ENS sales representative, saw the posting and informed the President of Hypersonic he was interested in the position.  After meeting with Hypersonic’s owner and president, Dobson was offered and accepted the position of Executive Director of Sales at Hypersonic. 

Hypersonic filed a complaint seeking a declaratory judgment that the Agreement was unenforceable.  ENS counterclaimed.  The trial court ruled for Hypersonic, finding that it did not “solicit, induce, or attempt to solicit or induce Dobson to terminate his employment with ENS.”  On Appeal by ENS, in Enhanced Network Solutions v. Hypersonic Technologies Corp., the Indiana Court of Appeals found that the trial court was correct in finding Hypersonic did not act to solicit any of ENS’s employees.  

In interpreting the Agreement, the Court noted that the terms “solicit” and “induce” were not defined.  The Court therefore utilized the dictionary definitions of both words, treating “inducing” as “enticing or persuading” and “soliciting” as “requesting or seeking.”  Based on these definitions, the Court found that Hypersonic did not solicit or induce Dobson because he had initiated the first contact about the position.  Further, during the second meeting Dobson laid out his compensation requirements before Hypersonic made any offer of employment. 

The Court of Appeals concluded that Hypersonic did not breach the Agreement.

We note that, while the decision might be correct, it seems a stretch to claim that a job posting is not a solicitation or inducement.  Rather, the key here is that the LinkedIn post was directed at the public at large and was not an attempt to solicit or induce any particular person and does not appear to have been directed at Dobson or any other ENS employee.

[JT & Katherine Freeman]

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Comments

In case it's of interest, here's my analysis of the issue raised by this opinion: http://www.koncision.com/no-soliciting-provisions-in-a-linkedin-world/.

Posted by: Ken Adams | Jul 25, 2011 7:55:02 AM

Most (~90%) non-proselytization clauses I see explicitly exclude hirings resulting from the advertisement of job openings in public media. This is a great example of why. ENS comes out looking unsavory from the perspective of ENS employees as well as future prospective teammates.

Posted by: Matt | Jul 27, 2011 5:04:32 AM

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