Preliminary Injunction granted to Govcon for Non-Solicitation Restriction
GCPC Practical Counsel: Restrictive Covenants must be drafted as narrowly as possible and the enforceability depends on the facts of the particular situation. In this case, prohibition against soliciting clients to provide competing services enforced.
TechINT Solutions Group, LLC v. Sasnett, U.S. Dist. Ct, W.D.Va, Harrisonburg Div (September 27, 2018)
TechINT Solutions Group, LLC provides intelligence and training services to government and commercial clients. TechINT hired Brandon Sasnett as an intelligence analyst in 2013. On January 1, 2016, Sasnett entered into a Services Agreement, under which Sasnett became Director of Intelligence. The Services Agreement contained two solicitation clauses: one prohibiting solicitation of TechINT clients and another prohibiting solicitation of TechINT employees or contractors.
The non-solicitation of clients provision stated that during employment and two years following termination of employment, “Sasnett shall not, on his own behalf or on behalf of any other person or entity . . . solicit to provide or provide any Competing Services to any Client of the Company.” “Client” included any entity “for which the Company has performed any services in any capacity . . . at any time during the twelve (12) month period immediately preceding [termination] or any entity . . . to which the Company has marketed any of its services to at any time prior to [termination] provided that (1) the Company’s marketing efforts were specifically targeted to such entity and were not merely in the form of general marketing activities . . . and (2) Sasnett was aware of and/or participated in such marketing efforts.”
In July 2017, TechINT performed services for Red Six Solutions, including an exercise led by Sasnett. On October 11, 2017, Sasnett resigned from TechINT and, shortly after, began working at Red Six as Director of Threat Analysis. On October 17, with work still to be completed under the purchase order, Red Six indicated it no longer needed TechINT’s services. On January 29, 2018 TechINT learned Sasnett would provide services for Red Six, and other clients, that were the same or substantially the same as the services TechINT planned to provide. TechINT filed for a preliminary injunction asking the court to enjoin Sasnett from providing competing services to TechINT’s clients as was set forth in the Services Agreement.
To be granted a preliminary injunction, the party seeking the preliminary injunction must show: (1) he is likely to succeed on the merits at trial; (2) he is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in his favor; and (4) an injunction is in the public interest. For the non-solicitation agreement to be enforceable, and thus TechINT likely to succeed at trial, TechINT generally must show the covenant is no broader than necessary to protect legitimate business interests, not unduly burdensome on Sasnett, and doesn’t offend sound public policy. When making this determination, the court considers the function, geographic scope, and duration of the restrictions.
Sasnett argued that the provision wasn’t enforceable, because it restricted him from providing services to others that he did not actually perform for TechINT. However, the court noted that the question turns not on what services he as the employee performed, but “whether the prohibited activity is of the same type as that actually engaged in by the former employer.” The court explained that a valid provision would prohibit “an employee from engaging in activities that would actually or potentially compete with the employee’s former employer,” but could not prohibit an employee from working for a competitor if he engaged exclusively in activities that do not compete with the former employer. The court concluded that TechINT made a clear showing that it was likely to succeed on the merits in that the restrictive covenant was a legally enforceable obligation held by Sasnett, which he violated.
Next, the court found that TechINT showed it was likely to suffer irreparable harm without an injunction, since Sasnett had already used his experience with TechINT to the benefit of Red Six and his work with other TechINT clients could result in lost business for TechINT. To determine the balance of the equities, the court weighed the harm to Sasnett if he were prevented from providing competing services to or soliciting TechINT’s clients as set forth in the Services Agreement against the likelihood of irreparable harm to TechINT without a preliminary injunction. The court determined the balance weighed in TechINT’s favor. Finally, regarding the public interest, the court found that the public has an interest in the enforcement of valid contracts and in protecting the rights of local business.
Finding in favor of TechINT, the court enjoined Sasnett from providing competing services to TechINT’s clients and from soliciting employees of TechINT.
Just because the court decided to grant an injunction in this case, doesn’t mean a court will decide similarly in every case. These types of issues are decided on a case-by-case basis and other situations may be decided differently. Each agreement is unique based on the circumstances and a court will balance the factors to determine if each specific agreement is narrow and reasonable enough to be enforceable. However, other cases with similar facts and a similar non-solicitation clause may find guidance in the court’s ruling, since, here, the court found a two-year provision preventing solicitation of clients or potential clients (based on specific marketing) enforceable. Here, the court also specified that the restricted services don’t have to be limited to services the employee actually performed, but could also restrict services “of the same type as that actually engaged in by the former employer.”
Whether you’re an employer or employee dealing with a potentially breached non-solicitation agreement, attorneys at General Counsel PC can provide you with knowledge and assistance to better understand your rights. Our attorneys are experienced in reviewing, drafting, negotiating, and litigating non-solicitation agreements for businesses and individuals across Virginia, specifically in Fairfax County, Arlington, Loudoun County, and Prince William. Call General Counsel PC at 703-556-0411 today to see how we can help you.