Texting as a reckless activity is well-documented when it comes to driving. It is also noted as an increasing health hazard for “petextrians” (pedestrians who are texting, clever huh?) according to Ben Zimmer of the Wall Street Journal in his article “What Do You Call a Reckless Texter?”
But can it be “reckless” for your company’s non-compete agreements? The short answer is yes if your CEO decides to negotiate the termination or modification of a non-compete restriction. I’ll leave it to someone far more clever to come up with a name for this texting danger.
“Shoulda, woulda, coulda” is no way to manage your company’s non-compete agreements.
Our law firm recently represented a former employee in a non-compete dispute. After the employment relationship ended the former employer’s CEO (Ken in the black font of the text message below) texted the former employee about how the non-compete restriction would be treated going forward. This exchange resulted in an evidentiary gem for defending the non-compete lawsuit.
Specifically, a written agreement confirming the CEO would not “stop you from working if you decided to start your own [competing] business …” Another text message from the CEO also confirmed that the non-compete restriction would not be enforced if the former employee worked for a competitor.
As one can imagine, at an evidentiary hearing to determine if the former employee should be enjoined from operating his “competing business” the CEO’s text messages took center stage.
In this regard, the CEO testified extensively about what he “should” have texted, and what he “would” have clarified in his text, and if he “could” just explain that he intended first to sit down and talk before a decision was to be made about waiving the non-compete restriction.
Now as all good attorneys do, it was argued that the text messages don’t really mean what they say, and let’s not forget that these are “just text” messages that are more like “verbal” communications, and the non-compete agreement expressly prohibits oral modifications (I’m greatly simplifying opposing counsel’s arguments for effect. But in reality, he did an excellent job of advocating for his client and minimizing the damage from the CEO’s text messages – being an attorney would be so much easier – but a lot less profitable – if clients would stop creating bad facts).
But at the end of the day, the Judge denied the Plaintiff’s motion for an injunction, in part because the factual issues created by the CEO’s text messages.
You get a Mulligan (or two) in Golf, but not non-compete lawsuits.
Anyone who golfs with me knows that a Mulligan is “par for the course,” i.e., you can always count on a do-over for a less than stellar tee-shot. But business and, more specifically, non-compete lawsuits aren’t like golf with judges eager to hand out a Mulligan for situations like the one described above.
Adding injury to insult, the judge in this matter noted that the non-compete restriction appeared to have been drafted with care by an attorney. As such, it would have likely been otherwise enforceable, but for the CEO’s text messages seemingly promising to forego enforcement of the company’s non-compete restriction.
For companies, technology often creates conveniences. But convenience needs to be exercised with caution. And even if texting is increasingly an acceptable form of communication, it is no way to conduct business – How many deals do you think Warren Buffet has closed or terminated with a quick text that included a happy or sad emoji?
Employment decisions, as with most business decisions need to be carefully made with equal care in how the decision is communicated. Otherwise, you end up with a situation like that described above.
For more information about Michigan non-compete law, including best practices for drafting and implementing a non-compete component into your company’s existing HR policies, contact attorney Jason Shinn.