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LinkedIn: Prime source for contacts ... and lawsuits?

Employment lawyers worry about noncompete issues

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By Mary Johnson for NJBIZ

It's no wonder the ruling in Valley National Bank v. Kleiber was the fifth most requested case by New Jersey attorneys in 2013.

Its important decision involving a uniquely deceptive theft of company clients is one any employment lawyer needs to know.

But as the calendar turns to 2014, some attorneys already are questioning if the Kleiber case is outdated as it doesn't answer the next big employment law question:

Who owns the rights to a person's LinkedIn contact list?

That's right, LinkedIn.

The social network that more than 259 million people worldwide have joined — felt they had to join to keep up in the networking world — figures to be the next battleground in the field of employment law.

The issue arises — somewhat inadvertently — through the Kleiber case, which was all about client lists.

It involved two employees of Valley National Bank — Robert Kleiber and Jill Graceffo — who left the company in 2011 to start their own venture.

They didn't pilfer any company documents or corporate secrets on their way out, but that doesn't mean they left empty-handed.

Instead of downloading client lists, they memorized them. And at home after work, they rewrote every name they could recall.

In court, attorneys representing Kleiber and Graceffo argued there were no valid noncompete agreements in place and that rewriting memorized lists doesn't constitute stealing.

But a Bergen County Chancery Court judge disagreed, ruling in favor of Valley National Bank.

"They didn't take a list, but they prepared a list. The court said that is a distinction without a difference," said John Petrella, an attorney with Genova Burns Giantomasi Webster in Newark, which represented Valley National Bank in the case.

But some attorneys argue the case may not have been so cut and dry if those customer names had been pulled from the defendants' social media accounts.

"If all of these customers were LinkedIn contacts of these people, I don't know if the court would have viewed it the same way because the door is wide open at that point," said Ian Meklinsky, an attorney with Fox Rothschild in Princeton and a member of the New Jersey State Bar Association.

"What do you do in that context?" Meklinsky added. "And I see that's where the law hasn't yet evolved to really address it. I think the court got it right here on the facts, but I think the issue is what's the next logical step in the process."

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Louis Chodoff, a partner at Ballard Spahr LLP in Cherry Hill, wonders if companies will put in new rules regarding social media as a sort of preemptive attack against potential theft.

"LinkedIn and other forms of social media are here to stay and, in a lot of ways, are displacing traditional forms of solicitation," Chodoff said.

When someone updates a LinkedIn profile, a notification is automatically sent out to that person's list of contacts. That could make it an even more effective form of solicitation than traditional change-of-job announcements, Chodoff said.

"I think employers need to think about that when they're crafting their restrictive covenant agreements," he said.

That could mean adding elements to their noncompete agreements that outline rules for LinkedIn and other forms of social media, requiring that departing employees "de-link" from the contacts they developed on the job before leaving.

But Lynda Wallace, a career coach in Montclair, said adding that to an employee's noncompete agreement could have "a very material impact."

"By requiring that de-linking, then you're really cutting those former employees off from their clients and other people that they've met through the job, not only as potential sources of jobs themselves, but as potential sources of an additional link in the network," Wallace said. "To be fair to the former employee, you have to be more surgical about that."

Before launching her career coaching business, Wallace spent two decades at Johnson & Johnson, where she did a lot of work with company acquisitions — and the accompanying employee noncompete agreements involved.

"That's why I know that employers can only go so far in terms of inhibiting their employees' or their former employees' ability to earn a living," she said.

LinkedIn is an extremely important part of people's job search, she added, and cutting them off in that way could constitute a significant loss for job seekers.

"It almost feels like it goes farther than it needs to," she said. "You would certainly damage their prospects, it seems to me, of making a living."


Mary Johnson

Mary Johnson

Mary Johnson is a staff reporter covering midsized and growth companies, as well as women in business. Mary lived in Fla., Texas, Conn. and N.Y. before moving to N.J. with her husband and infant son. Email her at maryj@njbiz.com. She is @mjohns422 on Twitter. Read her blog, Breaking Glass.

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