Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301, 304 (Minn. Ct. App. 1987); see also Eaton Corp. v. Giere, 971 F.2d 136, 141 (8th Cir. 1992); Sanitary Farm Dairies, 112 N.W.2d at 48. An employee may prepare to compete with his employer while he is still employed, however, so long as he does not actually solicit or otherwise compete with his employer.
Marn v. Fairview Pharmacy Servs., LLC, 756 N.W.2d 117, 121 (Minn.Ct.App.2008), review denied (Minn. Dec. 16, 2008); see also Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301, 304 (Minn.Ct.App.1987) (stating that the employee's duty of loyalty prohibits an employee from competing with the employer while still employed). “[A]n employee breaches the duty of loyalty, and thus engages in employment misconduct, by encouraging a third party to terminate a contract between the employer and the third party [through solicitation].”
In Minnesota, an employee owes his employer a duty of loyalty, which prohibits him from competing with his employer while still employed. Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301, 304 (Minn.Ct.App. 1987) (citing Sanitary Farm Dairies, Inc. v. Wolf, 112 N.W.2d 42 (Minn. 1961)).
Whether an employee's actions constitute a breach of this duty is a question of fact to be determined by a jury. Rehabilitation Specialists, Inc. v. Koering, 404 N.W.2d 301, 305 (Minn.Ct.App. 1987). [¶ 18] While the lack of resistance may be material, the standard of review is whether genuine issues of material fact exist within the record.
Rest. (2d) Agency § 393 comment e. Several courts have also stated the rule that pre-termination solicitation of customers for a new rival business violates an employee's duty of loyalty. AGA Aktiebolag v. ABA Optical Corp., 441 F. Supp. 747, 754 (E.D.N.Y. 1977) (by soliciting customers for rival business prior to end of his employment, employee violated his fiduciary obligations to employer); Fish v. Adams, 401 So.2d 843, 845 (Fla.App. 1981) (employee may not engage in disloyal acts in anticipation of future competition such as soliciting customers prior to end of her employment); Maryland Metals, 382 A.2d 564, 569 (Md.App. 1978) (it is breach of duty of loyalty to solicit employer's customers prior to cessation of employment); Rehabilitation Specialists, Inc. v. Koering, 404 N.W.2d 301, 304 (Minn.App. 1987) (employee's duty of loyalty prohibits her from soliciting employer's customers for herself while she is employed); Las Luminarias of New Mexico Council of the Blind v. Isengard, 587 P.2d 444, 449 (N.M.App. 1978) (employee may not solicit customers before end of his employment). The court of appeals affirmed the trial court's holding that Mulei's pre-termination meetings with customers did not violate a duty of loyalty since ACT did not become operational and commence competing with Jet until after Mulei left Jet's employ.
The duty of loyalty prohibits an employee "from soliciting the employer's customers . . . or otherwise competing with [its] employer." Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301, 304 (Minn.App. 1987). Winters argues that this court should eliminate the duty of loyalty because it is generally unfair to employees.
In the absence of a contract provision, "[a]n employee has the right . . . while still employed, to prepare to enter into competition with her employer." Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301, 304 (Minn. App. 1987). But appellants cite no authority indicating that a contract that prohibits a current employee from preparing to compete is void as a matter of public policy.
Unfair competition is a general category of torts recognized by Minnesota courts to protect commercial interests. Rehabilitation Specialists v. Koering, 404 N.W.2d 301, 305 (Minn.App. 1987). Unfair competition can include tortious interference with contract, improper use of trade secrets, and an employee's breach of a duty of loyalty to his or her employer. United Wild Rice v. Nelson, 313 N.W.2d 628, 632 (Minn.
“Under Minnesota law, the duty of loyalty prohibits an employee from soliciting his employer's customers for himself, or from otherwise competing with his employer, while he is still employed.” Hot Stuff Foods, 726 F.Supp.2d at 1043 (citing Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301, 304 (Minn.Ct.App. 1987)). Moreover, “employees have a common law duty not to use trade secrets or confidential information obtained from their employer.” Eaton Corp. v. Giere, 971 F.2d 136, 141 (8th Cir. 1992) (citing Jostens, Inc. v. Nat'l Comput. Sys., 318 N.W.2d 691, 701 (Minn. 1982)).
“An employee's duty of loyalty prohibits her from soliciting the employer's customers for herself, or from otherwise competing with her employer, while she is employed.” Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301, 304 (Minn.Ct.App. 1987). An employee's fiduciary duties to her employer also include a common law duty not to use confidential information obtained from her employer, even if that information does not qualify as a trade secret.