A Federal Court in Nebraska issued a preliminary injunction enforcing an employee non-compete agreement in a case that explains, for the first time, what a Nebraska court may consider “solicitation.”  The case, Farm Credit Services of America v. Opp, No. 8:12-cv-382 (D. Neb. 2013), involved a crop insurance salesman, Opp, who signed a non-compete agreement at the beginning of his employment. The employer, FCSA, provided crop insurance sales training, helped Opp satisfy licensing and continuing education requirements, and assigned him a set of policies to service. FCSA also helped Opp develop customers by providing him leads and financial support to entertain customers. Opp was eventually terminated in May 2012.

Following his termination, former customers contacted him with complaints about FCSA and questions about their policies and why he was no longer working for FCSA. Opp referred them to FCSA.  Within months after his termination, Opp incorporated his own crop insurance sales company as the president, owner, and sole crop insurance salesperson.  Opp published advertisements for his new company and as a result, some of his former customers asked him to transfer their business away from FCSA. Opp accepted business from certain customers after they signed a declaration stating, among other things, that they were soliciting Opp “of [their] own free will and that Mr. Mark Opp did not directly solicit [their] business.” With only one exception, all of the former customers were those with whom he did business and had personal contact while employed by FCSA.

FCSA sued Opp for breaching his non-compete agreement. The non-compete agreement prohibited Opp from “directly or indirectly” selling, soliciting, directing, managing or otherwise having any involvement whatsoever in the sale, marketing or solicitation of any customer of FCSA with whom the employee actually did business and had personal contact while employed by FCSA. The court found the non-compete to be valid  under Nebraska law because it only went so far as to prohibit contact with customers with whom Opp did business and had personal contact. Opp claimed that he did not breach the agreement because he did not directly solicit any of the customers with whom he had done business during his employment – rather they sought him out. Opp submitted the declarations from those customers to show that they had solicited him. The court found that Opp solicited the transferred customers’ business by publishing advertisements  that induced them to request transfers to his new company. The court deemed any argument about whether the advertisements were “direct” or “indirect” solicitation to be irrelevant because the agreement prohibited Opp from engaging in either type of solicitation.  Opp also argued that the transferred customers would have left FCSA anyway. The court rejected that argument as well, because the customers did not leave FCSA for some other company, they left for Opp’s new company due to the goodwill established by Opp’s employment.

Because reported decisions in Nebraska on non-compete agreements are rare, the case is a helpful guide to Nebraska law in this area, as well as an example of how the term “solicitation” might be interpreted in other jurisdictions. The two main takeaways from this case are:

  • Employers should make sure Nebraska non-competes comply with that state’s law and go no further than to prohibit a former employee from soliciting customers with whom he or she actually did business and had personal contact during his or her employment; and
  • General advertisements and continued inquiries from customers with whom a former employee did business and had personal contact may constitute “solicitation” and therefore constitute a breach of a non-solicitation agreement, even if the customer claims he or she was not directly solicited by the former employee.