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The Minnesota Supreme Court Weighs in on Non-Compete Clauses

June 2, 2015
Attorney at Law Magazine - Twin Cities Edition
Author: Aaron R. Hartman

In the recent case of Sysdyne Corporation v. Brian Rousslang, et. al., 860 N.W.2d 347 (Minn. 2015), the Minnesota Supreme Court held that tortious interference with a non-compete agreement may be “justified” by a defendant’s good-faith reliance on advice of counsel, provided that the legal advice is obtained through reasonable inquiry.

Despite concerns that the court’s ruling would “unfairly transfer the consequences of erroneous legal advice onto [an] innocent party,” the Sysdyne court did not find that “reliance on advice of counsel per se justifies tortious interference with contract.” Rather, the party asserting the defense must carry its burden of showing that the opinion was the result of a “reasonable inquiry” by the lawyer and relied upon in “good faith” by the client.

The fact pattern in Sysdyne is familiar to any lawyer who represents clients in non-compete cases. Brian Rousslang worked as an account manager for Sysdyne Corporation. As part of his employment, Rousslang signed a 12-month non-compete agreement. Rousslang left Sysdyne to take a similar position with Xigent Solutions, LLC a competitor of Sysdyne. Prior to hiring Rousslang, Xigent obtained a copy of Rousslang’s non-compete agreement and showed it to an outside lawyer. The lawyer concluded that Rousslang’s non-compete was over broad as to Rousslang’s pre-existing customers (i.e., those customers with whom Rousslang had a relationship before he began working for Sysdyne) and therefore, the entire agreement was unenforceable. Read more.