It’s often the case that a distributor departs to a new multi-level marketing (“MLM”) company because he or she sees a greater opportunity. It’s also often that distributors use social media as a marketing tool to promote their business – whether it be with the former company or the new company.
A question that I’m routinely faced with is whether the use of Facebook to market a new MLM company violates the distributor’s non-solicitation provision with his or her former MLM company. The answer to this question is always the same – it depends.
What does it depend on? Well, first, the language of the non-solicitation provision is very important and must be analyzed at the outset. On occasion, an MLM company will incorporate language into their non-solicitation provision that explicitly prohibits the use of Facebook to market a competing MLM company after a distributor has departed. The reason behind this is because many Facebook “friends” are active distributors of the former MLM company, and therefore have access to view information posted on the Facebook page. If the non-solicitation provision has such prohibitory language embedded in it, the MLM company may argue that the departing distributor knew what he or she was signing, and therefore must comply with the terms of their agreement to the fullest extent.
Second, it depends on which State law applies. Merely because the non-solicitation provision has such prohibitory language does not mean it’s always enforceable and this depends on the applicable State law. In some jurisdictions, the court may find that the non-solicitation provision violates public policy. Specifically, the Court may find that the non-solicitation provision is so overbroad that is constitutes an unreasonable restraint on trade, in that, it prohibits a departing distributor from reasonably being able to find employment elsewhere. Under these circumstances, the court will strike down the non-solicitation provision, and will allow the distributor free access to his previous downline via Facebook.
On the other hand, there are jurisdictions that may not consider the non-solicitation provision as being so overreaching, thereby finding its terms to be reasonable and enforceable. In this regard, it is vital to know what State law applies when determining whether a particular non-solicitation provision is valid.
Assuming that the provision does not have such explicit language regarding Facebook, the MLM company may nevertheless contend that the use of Facebook to promote a competing company is still a violation of its terms. Whether the MLM company’s contention has any merit depends on the circumstances.
The typical non-solicitation provision that I see with many MLM companies is something like the following:
“During the term of the Distributer Agreement and for 12 calendar months after termination, Distributor shall not directly or indirectly recruit, solicit, induce or otherwise attempt to recruit, solicit, or induce any Company Distributer to join or participate in another multi-level marketing opportunity.”
As you can see, this provision says nothing about Facebook; yet, it is often the case that the MLM company will use it to prohibit departing distributors from using their Facebook webpage to promote another MLM company. Putting aside whether the provision is enforceable under the relevant State law, the departing distributor may have viable arguments that he or she has not violated the non-solicitation provision even though he or she was using Facebook to promote a competing MLM company.
For instance, Merriam-Webster dictionary defines the term “solicit” as, “to approach with a request or plea.” In other words, to “solicit” someone means you are the one initiating the contact and reaching out. Under this definition, a departing distributor would argue that he or she is not in violation of his or her non-solicitation provision even if he or she is posting material about a competing company on Facebook. This is because one’s Facebook webpage can be argued to be akin to a public forum, wherein anyone can opt to join in. This is no different than a TV commercial where anyone could turn to the channel and watch, or a radio station where anyone could turn to the station and listen. Just like a TV commercial and radio station, Facebook “friends” are the ones choosing to opt ina Facebook page so they can view the content being posted. In this context, the “friends” are the ones “approaching” a distributor about information posted on his or her Facebook page; not the other way around.
This is not to say that everything one does on his or her Facebook webpage is ok pursuant to the non-solicitation provision. For example, a departing distributor should not directly target members of his or her former downline by sending out private Facebook messages directly to those people. This may very well constitute a solicitation and subject the departing distributor to liability. In addition, if a Facebook webpage was solely set up for purposes of marketing the former MLM company, wherein all the “friends” are distributors from that company, it can arguably be a violation of the non-solicitation provision to simply re-name the Facebook webpage and begin marketing the new MLM company.
The point is, the mere fact that an MLM company has a non-solicitation provision does not always mean a departing distributor is prohibited from using his or her Facebook to market a competing MLM company. It’s important to review the language of the provision, know which State law applies, and refrain from sending targeted messages to former downline members.
THE ABOVE IS FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOTBE RELIED UPON AS LEGAL ADVICE. EACH SITUATION IS DIFFERENT AND DEPENDS ON THE SPECIFIC CIRCUMSTANCES OF THE PARTIES INVOLVED.