Friday, February 1, 2013
IBM Suit Over Corporate Raiding Illustrates Use of Social Media Evidence
The Complaint, filed in the Southern District of New York, alleges that Greiner was the de facto recruiter for CSC in its attempt to shore-up its finance department, allegedly wounded in the wake of an SEC investigation into financial reporting.
IBM alleged a detailed set of facts that illustrate just how prevalent issues of social media and electronic evidence have become in proving liability in non-compete cases. Greiner's agreement not to solicit his fellow IBM co-workers (a covenant contained in an equity incentive plan) is of obvious importance to IBM, because an executive employee who leaves can use his or her goodwill and knowledge of an employee base to recruit away a stable of management level employees. Similar covenants are of less value to lower-level sales employees.
Greiner was allegedly caught using an internal IBM messaging system that demonstrated his contact with IBM employees about job opportunities outside IBM. Those communications - copied verbatim into the Complaint - can have a powerful impact on a judge considering injunctive relief. The relative informality of social media communications often leads to flippant remarks that go over poorly when a third-party reads them.
Greiner also allegedly sent a LinkedIn communication with another IBM employee in an attempt to lure him to CSC. Such in-mail contacts are more and more common, as employees seem to think that such communications simply won't be discovered.
The Complaint, embedded below, is worth a read - if for nothing else in that it establishes how to lay out a factual story about a corporate raid. True, many poaching cases don't seem to involve the number of actors that are laid out here, in fairly compelling detail. But a judge would be hard-pressed not to issue an injunction after reading a pleading like this.
And that's pretty much what happened. Greiner submitted an Affidavit stating he wouldn't solicit or hire IBM employees for almost two years. So the Court had little trouble enjoining him.
One other fact is important.
IBM alleged that Greiner and other CSC employees signed similar non-solicitation agreements. What IBM was trying to indicate was that such agreements are standard among skilled executives and that they, therefore are reasonable post-termination restrictions. Evidence of an industry standard is perhaps the most compelling evidence for a court to consider when examining whether a restraint is consistent with, or against, public policy.
The difficult part for IBM with this case may be establishing damages. There is little case law out there that discusses how to quantify business losses when an employee breaches a no-hire restriction. IBM certainly would be in a position to hire qualified talent. And its most tangible loss may be recruiting and incentive pay it would have to shell out to get them on board.