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Microtech Consultants, Inc. v. Hewlett Packard Financial Services Company

A-1567-03T2 (N.J. Super. App. Div. 2004) (Unpublished)

EMPLOYER-EMPLOYEE; NON-SOLICITATION—A non-solicitation agreement that doesn’t expressly forbid a company from changing the employee leasing company from which it rents a particular employee, permits the renter to do so if it doesn’t initiate the change in the leased employee’s employer.

A technician worked for an employee leasing company. The employee leasing company leased the employee to a computer company. The agreement between the employee leasing company and the computer company included a non-solicitation clause “that precluded each party to the contract from ‘knowingly solicit[ing] for employment employees of the other party during performance of this agreement ... without the other party’s written consent.’” The technician worked at the computer company for over two years. At that point, he told the computer company that he was unhappy with the leasing company for “not taking care of medical and dental insurance and ... also delaying my Green Card process.” He asked if he could remain with the computer company if he resigned from the employee leasing company and joined another one. The second company was also leasing technical service employees to the computer company. The computer company consulted with its legal department as to whether the contract would permit a switch of employers. The technician’s supervisor told the legal department that he “would really like to help [the technician] out.” The legal department studied the contract and concluded that there was no legal impediment to the switch so long as the technician terminated his employment with the first leasing company and began employment with the second leasing company. That’s what the technician did.

The first leasing company then offered a replacement employee, but the computer company declined the offer. The employee leasing company then sued the computer company for lost revenues, alleging a breach of the consulting services agreement. There was no question that the non-competition provision did not cover this situation. The technician had no contract with the first employee leasing company precluding his employment by another firm. The computer company never solicited the technician for employment and never employed him directly. The lower court found that the computer company “did not in any way encourage [the technician] to leave his employ ... and had no interest in doing so.” The first employee leasing company argued that the computer company “violated the implied covenant of good faith and fair dealing” by failing to notify it of the employee’s situation and by encouraging and assisting the technician in leaving the leasing company’s employ. It also alleged that the computer company indirectly rehired the employee through the second leasing company. The Court found no evidence of bad faith on the part of the computer company. It refused to find a breach of implied covenant of good faith and fair dealing, warning that “[a]n overly broad application of the implied covenant, without bad faith being present, can result in an expansion of the agreement that the parties entered into.” It refused to make a better contract for the parties than the one that they had made for themselves and was fearful that “an application of the covenant in the manner [the original employee leasing company] suggest[ed] [would result] in this court rewriting the contract for the parties.”

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