Statutory Interpretation – Non-solicitation of Employees Provision

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WI Supreme Court

Case Name: The Manitowoc Company, Inc., v. John M. Lanning

Case No.: 2018 WI 6

Focus: Statutory Interpretation – Non-solicitation of Employees Provision

This is a review of a published decision of the court of appeals reversing a judgment of the Circuit Court, Manitowoc County, Gary L. Bendix, Judge. The circuit court granted the motion of The Manitowoc Company, Inc., the plaintiff, for summary judgment and denied the cross-motion for summary judgment of the defendant, John M. Lanning. After a bench trial on damages, the circuit court awarded Manitowoc Company $97,844.78 in damages, $1,000,000 in attorney fees, and $37,246.82 in costs against Lanning.

In response to the first issue, the particular terms of the non-solicitation of employees provision at issue in the instant case do not appear to have been analyzed by any prior Wisconsin court decision. We conclude, as prior cases have concluded, that although Wis. Stat. § 103.465 explicitly refers to a covenant not to compete, the plain meaning of § 103.465 is not limited to a covenant in which an employee agrees not to compete with a former employer. This court has explicitly stated that “it would be an exercise in semantics to overlook § 103.465 merely because [a provision] of the agreement is not labeled a ‘covenant not to compete.'” Rather, § 103.465 has been applied to agreements viewed as restraints of trade.

With regard to the second issue, we conclude that Lanning’s non-solicitation of employees provision is unenforceable under Wis. Stat. § 103.465. It does not meet the statutory requirement that the restriction be “reasonably necessary for the protection of the employer.” Wis. Stat. § 103.465. Accordingly, we affirm the decision of the court of appeals and remand the cause, as did the court of appeals, to the circuit court with instructions to enter judgment in favor of Lanning.

Affirmed and Remanded

Concur: R.G. BRADLEY, J. concurs, joined by GABLEMAN, J. and KELLY, J. (opinion filed).

Dissent: ROGGENSACK, C.J. dissents, joined by ZIEGLER, J. (opinion filed).

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.