Although many restrictive covenants prohibit solicitation, there is comparatively little case law discussing in detail what “solicitation” means. A new Illinois Appellate Court decision sheds some light on the meaning of this key term.
Quality Transportation Services, Inc. v. Thompson Trucking, Inc., 2017 IL App (3d) 160761 involved a contract dispute arising from the language of a transportation brokerage agreement.
Plaintiff Alleges Breach of a Non-Solicitation Provision
The agreement contained a non-solicitation provision, which stated, in relevant part:
“CARRIER will not solicit traffic from any [s]hipper, consignor, consignee, or customer of Broker where (1) the availability of such traffic first become[s] known to CARRIER as a result of BROKER’S efforts, or (2) the traffic of the shipper, consignor, consignee or Customer of BROKER was first tendered to CARRIER by BROKER. If CARRIER breaches this Agreement and directly or indirectly solicits traffic from customers of BROKER and obtains traffic from such customer during the term of this Agreement or for twelve (12) months thereafter, CARRIER shall be obligated to pay BROKER, for a period of fifteen (15) months thereafter, commission in the amount of thirty-five percent (35%) of the transportation revenue resulting from traffic transported for the Customer, and CARRIER shall provide BROKER with all documentation requested by BROKER to verify such transportation revenue.”
Quality Transportation Services (QTS) filed an amended complaint alleging Mark Thompson Trucking, Inc. (MTT) solicited one of QTS’s customers, US Silica Company (USS) in violation of the non-solicitation clause of the agreement between QTS and MTT.
MTT denied that it violated the non-solicitation provision and filed a motion for summary judgment, which was granted by the circuit court.
Solicitation: Active Efforts to Win Business, Not Passive Acceptance of Business
On appeal, QTS argued that a genuine issue of material fact existed as to whether MTT’s conduct violated the non-solicitation provision of the contract QTS sought to enforce.
The term “solicit” was not defined in the agreement. However, both parties agreed that it was appropriate to use the definition of “solicitation” contained in Black’s Law Dictionary, which defines the term as “[t]he act or an instance of requesting or seeking to obtain something” and “[a]n attempt or effort to gain business. The parties further agreed that the mere passive acceptance of business would not violate the terms of the non-solicitation provision because the term “solicitation” connoted taking some affirmative measures.
Illinois law provided some guidance on the type of conduct that constitutes solicitation. In Tomei v. Tomei, 235 Ill. App. 3d 166, 170 (1992), the appellate court stated that “[w]hether a particular client contact constitutes a solicitation, depends upon the method employed and the intent of the solicitor to target a specific client in need of his services.” There, the court held that “the direct solicitation of insurance customers, as opposed to a general advertisement, suggests a private communication directed at a person or persons, known by the solicitor to have an immediate or potential need for insurance.”
QTS argued that Tomei supported its argument that a proper analysis of whether a party has “solicited” business involves a fact-intensive inquiry of multiple considerations regarding the conduct of each party.
Repeated Follow-Up on Calls Initiated by Customers Can Cross Line into Solicitation
It was undisputed that Janice Casey, acting as an agent for USS, initiated the first phone call to Thompson in early 2015. However, following the first telephone call, there were additional communications arguably initiated by MTT after large gaps of time that followed Casey’s initial phone call. Based on a de novo standard of review, when viewing the evidence in the light most favorable to the nonmovant, reasonable minds could differ as to whether MTT’s multiple and arguably separate contacts with USS violated the non-solicitation provision of the agreement between QTS and MTT.
While certain facts were not contested, these facts could logically support different conclusions regarding MTT’s intent to solicit business away from QTS for the same routes that MTT was covering for QTS as part of the agreement. The appeals court reversed the trial court’s grant of summary judgment in favor of MTT and remanded the matter for further proceedings to determine whether MTT’s conduct amounted to solicitation in violation of the agreement.
Michael R. Lied is a partner at Howard & Howard’s Peoria, Illinois office. He concentrates his practice in the areas of labor & employment law, and related litigation and immigration law, representing employers. This post is adapted from his article published at HowardandHoward.com on December 13, 2017.