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Workers' Compensation Recovery6/8/2004
lance of harms favors issuance of the injunction.
3. Likelihood of Success on the Merits
The district court concluded that WCR would likely prevail on one or more of its claims for breach of loyalty, breach of fiduciary duty, tortious interference with contracts, and misappropriation of confidential information. "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." Rehabilitation Specialists, Inc. v. Koering, 404 N.W.2d 301, 304 (Minn. App. 1987). The fact that WCR did not have a written contract with BHS does not preclude a finding that Marvin was competing with WCR in violation of her duty of loyalty. See id. at 305. Nor was WCR required to have a non-compete agreement with Marvin in order to prevent her from soliciting business from BHS during Marvin's employment with WCR. See id. at 304.
We recognize that employees who wish to start their own businesses should not be unduly hindered from doing so, and thus an employee has the right, while still employed, to prepare to enter into competition with her employer. Id.; see also Sanitary Farm Dairies, Inc. v. Wolf, 261 Minn. 166, 175-76, 112 N.W.2d 42, 48-49 (1961). But in Koering, this court recognized that
here is no precise line between acts by an employee which constitute prohibited "solicitation" and acts which constitute permissible "preparation." Because of the competing interests, the actionable wrong is a matter of degree. Whether an employee's actions constituted a breach of her duty of loyalty is a question of fact to be determined based on all the circumstances of the case.
404 N.W.2d at 305 (citations omitted). The Koering court recognized that even passive conduct by the employee in soliciting the employer's customer will "not necessarily shield her from liability." Id. (citing Cmty. Counseling Serv., Inc. v. Reilly, 317 F.2d 239, 244 (4th Cir. 1963) (stating that " f prospective customers undertake the opening of negotiations which the employee could not initiate, he must decline to participate in them")).
Here, the district court made several factual findings supporting its conclusion that WCR would likely be successful on the merits of its claims, including that (1) WCR provided Marvin with its "methodology, its customer relationships, and other important and confidential information"; (2) Marvin told BHS of her availability to provide services for them at the April 17 meeting; (3) Marvin did not inform WCR of her plan to start a new business until April 28, when she told Johansen that BHS would support her efforts to establish her own business; and (4) these facts supported an inference that Marvin solicited BHS to discontinue its relationship with WCR and to do business with Marvin. The court then concluded that " he facts as set forth herein if proven by would establish that [Marvin] breached her duty of loyalty to " pursuant to Koering. These findings have adequate support in the record, and therefore, they are not clearly erroneous. Moreover, the findings support the district court's conclusion that WCR would likely succeed on its breach of loyalty claim. Therefore, we conclude that the court did not abuse its discretion by concluding that this factor weighed in favor of issuance of the injunction. Because there is a likelihood of success on one of WCR's claims, there is no need to address the viability of WCR's other claims.
4. Public Policy
The district court found simply that public policy favors granting the injunction. The public interest is not served if a former employee is allowed to derive benefit from violating his
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