906 N.W.2d 130
Wis.2018Background
- John Lanning worked 25+ years for Manitowoc Company and signed a 2008 employment agreement containing a two-year non‑solicitation of employees (NSE) provision after termination.
- The NSE barred Lanning, for two years post‑employment, from directly or indirectly soliciting, inducing, or encouraging any Manitowoc employee to leave or accept employment with any competitor, supplier, or customer (applied to all ~13,000 global employees).
- Lanning left Manitowoc in January 2010 to work for SANY, a direct competitor; Manitowoc alleged Lanning solicited multiple employees and sued for breach, obtaining summary judgment and damages in circuit court.
- The court of appeals reversed, holding the NSE is governed by Wis. Stat. § 103.465 and is unenforceable as an unreasonable restraint.
- The Wisconsin Supreme Court affirmed the court of appeals: it held the NSE is a restraint of trade governed by § 103.465 and is overbroad and not reasonably necessary to protect Manitowoc’s interests, so unenforceable; the case was remanded with instructions to enter judgment for Lanning.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wis. Stat. § 103.465 (restrictive covenants) applies to an employee non‑solicitation clause | §103.465 is limited to traditional covenants not to compete and should not cover NSE clauses that do not prohibit working for competitors | NSEs that restrict recruiting constitute restraints on competition and fall within §103.465’s scope | §103.465 applies: courts focus on effect of the covenant (restraint on competition), not its label; NSE here is a restraint governed by §103.465 |
| If §103.465 applies, whether this NSE is enforceable under §103.465 (meets Lakeside Oil prerequisites) | The NSE is less burdensome than a full non‑compete and should be evaluated with a more lenient standard; Manitowoc has protectable interest in preventing employee raiding | The NSE is sweeping (applies to any employee worldwide) and Manitowoc cannot show a protectable interest in preventing solicitation of all employees | NSE is overbroad and fails the first Lakeside Oil prerequisite (no protectable interest in barring solicitation of all employees); thus unenforceable under §103.465 |
Key Cases Cited
- Lakeside Oil Co. v. Slutsky, 8 Wis. 2d 157 (court sets out five prerequisites for enforceability of restrictive covenants)
- Tatge v. Chambers & Owen, 219 Wis. 2d 99 (Wis. 1998) (§103.465 reflects strong public policy against unreasonable restraints on employees)
- Heyde Cos., Inc. v. Dove Healthcare, 258 Wis. 2d 28 (Wis. 2002) (applied §103.465 to a no‑hire agreement between employers; treated effect over label)
- Star Direct, Inc. v. Dal Pra, 319 Wis. 2d 274 (Wis. 2009) (applied §103.465 to customer‑non‑solicit provisions and reiterated enforceability framework)
- Equity Enterprises, Inc. v. Milosch, 247 Wis. 2d 172 (Wis. Ct. App. 2001) (case involving restrictive covenants, discussed in relation to NSE issues)
- Gary Van Zeeland Talent, Inc. v. Sandas, 84 Wis. 2d 202 (Wis. 1978) (recognized non‑disclosure and related covenants may be subject to §103.465 scrutiny)