The Manitowoc Company, Inc. v. John M. Lanning

• Court: Wisconsin Supreme Court
• Decided: January 19, 2018
• Docket: 2015AP001530
• Status: Published

Opinion

2018 WI 6

SUPREME COURT OF WISCONSIN CASE NO.: 2015AP1530 COMPLETE TITLE: The Manitowoc Company, Inc., Plaintiff-Respondent-Petitioner, v. John M. Lanning, Defendant-Appellant.

REVIEW OF A DECISION OF THE COURT OF APPEALS Reported at 371 Wis. 2d 696, 885 N.W.2d 798 PDC No: 2016 WI App 72 - Published

OPINION FILED: January 19, 2018 SUBMITTED ON BRIEFS: ORAL ARGUMENT: September 5, 2017

SOURCE OF APPEAL: COURT: Circuit COUNTY: Manitowoc JUDGE: Gary L. Bendix

JUSTICES: CONCURRED: R.G. BRADLEY, J. concurs, joined by GABLEMAN, J. and KELLY, J. (opinion filed). DISSENTED: ROGGENSACK, C.J. dissents, joined by ZIEGLER, J. (opinion filed). NOT PARTICIPATING:

ATTORNEYS:

For the plaintiff-respondent-petitioner, there were briefs filed by Suzanne M. Glisch, Joel S. Aziere, and Buelow Vetter Buikema Olson & Vilet, LLC, Waukesha. There was an oral argument by Joel S. Aziere.

For the defendant-appellant, there was a brief filed by Oyvind Wistrom and Lindner & Marsack, S.C., Milwaukee. There was an oral argument by Oyvind Wistrom. 2018 WI 6 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2015AP1530 (L.C. No. 2011CV216)

STATE OF WISCONSIN : IN SUPREME COURT

The Manitowoc Company, Inc.,

Plaintiff-Respondent-Petitioner, FILED v. JAN 19, 2018 John M. Lanning, Diane M. Fremgen Acting Clerk of Supreme Defendant-Appellant. Court

REVIEW of a decision of the Court of Appeals. Affirmed.

¶1 SHIRLEY S. ABRAHAMSON, J. This is a review of a published decision of the court of appeals reversing a judgment

of the Circuit Court, Manitowoc County, Gary L. Bendix, Judge.1

The circuit court granted the motion of The Manitowoc Company,

Inc., the plaintiff, for summary judgment and denied the cross-

motion for summary judgment of the defendant, John M. Lanning.

After a bench trial on damages, the circuit court awarded

1 Manitowoc Co., Inc. v. Lanning, 2016 WI App 72, 371 Wis. 2d 696, 885 N.W.2d 798. No. 2015AP1530

Manitowoc Company $97,844.78 in damages, $1,000,000 in attorney

fees, and $37,246.82 in costs against Lanning.

¶2 The court of appeals reversed the circuit court

judgment in favor of Manitowoc Company. It concluded that

Lanning's non-solicitation of employees provision (sometimes

referred to herein as an NSE provision) imposed by Manitowoc

Company as part of Lanning's employment agreement is governed by

Wis. Stat. § 103.465 (2013-14) and that it is unenforceable

under the statute.2

¶3 The non-solicitation of employees provision prohibits

Lanning from directly or indirectly soliciting, inducing, or

encouraging any employee of Manitowoc Company to terminate his

or her employment with Manitowoc Company or to accept employment

with a competitor, supplier, or customer of Manitowoc Company.

The scope of the non-solicitation of employees provision

includes all of Manitowoc Company's 13,000 world-wide employees

regardless of an employee's position within Manitowoc Company or

the employee's connection to Lanning. ¶4 Two issues of law are presented on the cross-motions

for summary judgment:3

1. Does Wis. Stat. § 103.465, which explicitly refers to a

"covenant not to compete," apply to the non-solicitation

2 All subsequent references to the Wisconsin Statutes are to the 2013-14 version unless otherwise indicated. 3 For a discussion of cross-motions for summary judgment, see Ziegler Co., Inc. v. Rexnord, Inc., 139 Wis. 2d 593, 595 n.1, 407 N.W.2d 873 (1987).

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of employees provision prohibiting Lanning from

soliciting, inducing, or encouraging any employee of

Manitowoc Company to terminate his or her employment with

Manitowoc Company or to accept employment with a

competitor, supplier, or customer of Manitowoc Company?

2. If Wis. Stat. § 103.465 governs Lanning's non-

solicitation of employees provision, is the provision

enforceable under § 103.465?4

4 Manitowoc Company set forth five issues in its petition for review as follows:

1. Whether Wis. Stat. § 103.465, which refers to a "covenant by an assistant, servant or agent not to compete with his or her employer or principal during the term of the employment or agency, or after the termination of that employment or agency," governs non-solicitation of employees ("NSE") clauses, which do not prohibit any individual from competing with his/her former employer.

2. Assuming, arguendo, Wis. Stat. § 103.465 governs NSE clauses, whether an NSE clause, which does not prohibit competition with the former employer, should be evaluated under the same legal standard(s) as a non-compete clause, and whether the Court of Appeals erred in equating a 2-year restriction on the solicitation of employees, which permitted any individual to leave the employer and work for a competitor (as Lanning did in this case), to a 3-year restriction from working for a competitor in any capacity.

3. Assuming, arguendo, Wis. Stat. § 103.465 governs NSE clauses, whether Lanning's NSE provision, which permitted him to work for Manitowoc's largest Chinese competitor, unreasonably restrains trade.

4. Assuming, arguendo, Wis. Stat. § 103.465 governs NSE clauses, whether Lanning's NSE provision, which (continued) 3 No. 2015AP1530

¶5 In response to the first issue, the particular terms

of the non-solicitation of employees provision at issue in the

instant case do not appear to have been analyzed by any prior

Wisconsin court decision.5 We conclude, as prior cases have

concluded, that although Wis. Stat. § 103.465 explicitly refers

to a covenant not to compete, the plain meaning of § 103.465 is

merely prevented Lanning from raiding Manitowoc employees, is "reasonably necessary" to protect Manitowoc's legitimate business interests.

5. Assuming, arguendo, Wis. Stat. § 103.465 governs NSE clauses, whether the constitutional right to contract may be infringed upon through the use of aggrandized hypothetical scenarios rather than the undisputed facts of a case to invalidate an NSE clause in a contract between an employer and employee.

The two issues we address are dispositive and in effect address the issues Manitowoc Company set forth. 5 In Equity Enterprises, Inc. v. Milosch, 2001 WI App 186, 247 Wis. 2d 172, 633 N.W.2d 662, the court of appeals analyzed an employment agreement containing restrictive covenants. In one of those covenants, the employee agreed that he would not, after the termination of his employment, entice any sales representative of the employer to terminate his or her employment with the employer. However, the parties in Milosch did not raise or dispute whether Wis. Stat. § 103.465 applied to the employee's non-solicitation provision. The court of appeals' decision did not discuss or rule on the validity of the employee's non-solicitation provision. Instead, it invalidated another restrictive covenant because it was overbroad. That provision of the agreement barred the employee from doing business with customers of the employer after termination of employment. Thus, the court of appeals invalidated the entire agreement.

Lanning's contention that Milosch determined that a non- solicitation of employee provision was governed by § 103.465 is not persuasive.

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not limited to a covenant in which an employee agrees not to

compete with a former employer.6 This court has explicitly

stated that "it would be an exercise in semantics to overlook

§ 103.465 merely because [a provision] of the agreement is not

labeled a 'covenant not to compete.'"7 Rather, § 103.465 has

been applied to agreements viewed as restraints of trade.

¶6 Indeed, this court has acknowledged that "the explicit

purpose of Wis. Stat. § 103.465, as plainly stated in the

statute, is to invalidate covenants that impose unreasonable

restraints on employees" and that § 103.465 "essentially deals

with restraint of trade . . . regardless of whether a

restriction is labeled a 'non-disclosure' provision or a

'covenant not to compete.'"8

¶7 The court has repeatedly recognized that a restraint

of trade may take many forms. The court has interpreted Wis.

Stat. § 103.465 as applying not only to traditional covenants in

6 See, e.g., Lakeside Oil Co. v. Slutsky, 8 Wis. 2d 157, 98 N.W.2d 415 (1959). 7 Tatge v. Chambers & Owen, Inc., 219 Wis. 2d 99, 112, 579 N.W.2d 217 (1998). 8 Heyde Cos., Inc. v. Dove Healthcare, LLC, 2002 WI 131, ¶13, 258 Wis. 2d 28, 654 N.W.2d 830 (citing Tatge, 219 Wis. 2d at 111-12; see also Gary Van Zeeland Talent, Inc. v. Sandas, 84 Wis. 2d 202, 218-21, 267 N.W.2d 242 (1978).

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which an employee agrees not to compete with a former employer,9

but also to other terms of an agreement including provisions

barring the solicitation of the employer's customers or former

customers,10 non-disclosure/confidentiality agreements between

employers and employees,11 and a no-hire provision between two

employers.12

¶8 These cases clearly demonstrate that the application

of Wis. Stat. § 103.465 depends upon whether the particular

terms of the agreement constitute a restraint of trade by

restricting competition or imposing an unreasonable restraint on

9 "A covenant [not to compete] typically provides that the employee shall not work for a competitor or set up a competitive business for himself for a specified period of time in a designated geographical area." Harlan M. Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625, 626 (1960).

For an example of such a traditional covenant not to compete, see, e.g., Lakeside Oil Co. v. Slutsky, 8 Wis. 2d 157, 98 N.W.2d 415 (1959). 10 See, e.g., Star Direct, Inc. v. Dal Pra, 2009 WI 76, ¶¶19-41, 319 Wis. 2d 274, 767 N.W.2d 898 (holding that a provision barring solicitation of an employer's customers was a restraint of trade under Wis. Stat. § 103.465). 11 See, e.g., Gary Van Zeeland Talent, Inc. v. Sandas, 84 Wis. 2d 202, 218, 267 N.W.2d 242 (1978) (concluding that a non- disclosure/confidentiality agreement between an employer and employee was an unreasonable restraint of trade governed by Wis. Stat. § 103.465). 12 Heyde Cos., 258 Wis. 2d 28, ¶¶13-16 (concluding that an agreement between two employers in which one employer agreed not to hire employees of the other employer was a restraint of trade because "[t]he effect of the no-hire provision [was] to restrict" employees' employment opportunities).

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employees. These cases focused on the effect of the restraint

rather than its label.13

¶9 We conclude that Lanning's non-solicitation of

employees provision restricts Lanning's ability to engage in the

ordinary competition attendant to a free market, specifically

restricting Lanning's freely competing for the best talent in

the labor pool. In addition, the limitation on Lanning also

affects access to the labor pool by a competitor of Manitowoc

Company (including Lanning's current employer, SANY America).

Accordingly, we conclude that Lanning's non-solicitation of

employees provision is a restraint of trade governed by Wis.

Stat. § 103.465.

¶10 With regard to the second issue, we conclude that

Lanning's non-solicitation of employees provision is

unenforceable under Wis. Stat. § 103.465. It does not meet the

statutory requirement that the restriction be "reasonably

necessary for the protection of the employer." Wis. Stat.

§ 103.465. ¶11 Accordingly, we affirm the decision of the court of

appeals and remand the cause, as did the court of appeals, to

the circuit court with instructions to enter judgment in favor

of Lanning.

I

13 Heyde Cos., 258 Wis. 2d 28, ¶¶13-14.

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¶12 To the extent that the facts affect the issues before

the court, no genuine dispute about material facts is presented.

¶13 Manitowoc Company is a manufacturer with two

divisions: a food service equipment division and a construction

crane division. Lanning began his employment with Manitowoc

Company in 1985 as a chief engineer in Manitowoc Company's crane

division. Lanning worked for Manitowoc Company for over 25

years. Lanning was successful, knowledgeable, and well-

connected within Manitowoc Company.

¶14 In 2008, Lanning signed an employment agreement with

Manitowoc Company that included provisions relating to

confidential information, intellectual property, and non-

solicitation of employees.14 The validity of only the non-

solicitation of employees provision is challenged in the instant

case.

¶15 Lanning terminated his employment with Manitowoc

Company effective January 6, 2010. Beginning on January 8,

2010, Lanning became the director of engineering for SANY America, a direct competitor with Manitowoc Company's crane

division. Manitowoc Company claims that Lanning engaged in a

number of actions that violated the non-solicitation of

employees provision.

14 Over the course of his employment, Lanning signed multiple employment agreements with Manitowoc Company. The 2008 employment agreement explicitly superseded all previous agreements, and the parties agree that the 2008 employment agreement is applicable in the instant case.

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¶16 For example, Manitowoc Company asserts that Lanning

communicated with at least nine Manitowoc Company employees

about potential employment opportunities at SANY, took one

Manitowoc Company employee out to lunch in connection with SANY

recruitment efforts, took another Manitowoc Company employee on

a tour of a SANY crane manufacturing plant in China, and

participated in a third Manitowoc Company employee's job

interview with SANY.

¶17 Lanning's non-solicitation of employees provision

prohibits him, for two years following termination of his

employment, from soliciting, inducing, or encouraging any

Manitowoc Company employee to terminate his or her employment

with Manitowoc Company or to accept employment with a

competitor, supplier, or customer of Manitowoc Company.

¶18 The circuit court concluded that even if Lanning's

non-solicitation provision is viewed as a restriction on trade

or competition subject to Wis. Stat. § 103.465, the provision

was reasonable and enforceable under the statute. ¶19 The court of appeals concluded that Lanning's non-

solicitation of employees provision was a restraint of trade

governed by Wis. Stat. § 103.465.15 It further concluded that

because the provision was not reasonable, it was not enforceable

under the statute. The court of appeals reversed the judgment

of the circuit court in favor of Manitowoc Company.

15 Manitowoc Co., 371 Wis. 2d 696, ¶17.

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II

¶20 We first address the standard of review. This court

applies the same method of analysis to a motion for summary

judgment as does a circuit court. Summary judgment is

appropriate where, based on the pleadings, depositions,

interrogatories, and affidavits on file, there is no genuine

dispute as to any material fact, and a party is entitled to

judgment as a matter of law. Wis. Stat. § 802.08(2); Star

Direct, 319 Wis. 2d 274, ¶18; Belding v. Demoulin, 2014 WI 8,

¶13, 352 Wis. 2d 359, 843 N.W.2d 373; Green Spring Farms v.

Kersten, 136 Wis. 2d 304, 315-17, 401 N.W.2d 816 (1987); Mut.

Serv. Cas. Ins. Co. v. Brass, 2001 WI App 92, ¶4, 242

Wis. 2d 733, 625 N.W.2d 648, overruled on other grounds by Star

Direct, 319 Wis. 2d 274, ¶78 n.12.

¶21 The instant case requires us to interpret both a

statute and a written contract. The interpretation and

enforceability of both a statute and a written contract

ordinarily present questions of law that this court determines independently of the circuit court and court appeals while

benefiting from the analyses of these courts. See, e.g.,

Moustakis v. DOJ, 2016 WI 42, ¶16, 368 Wis. 2d 677, 880

N.W.2d 142; Star Direct, 319 Wis. 2d 274, ¶18; Streiff v. Am.

Family Mut. Ins. Co., 118 Wis. 2d 602, 603 n.1, 348 N.W.2d 505

(1984).

III

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¶22 The first issue of law presented is whether Wis. Stat.

§ 103.465 applies to Lanning's non-solicitation of employees

provision.

¶23 We begin our discussion by setting forth the texts of

Wis. Stat. § 103.465 and Lanning's non-solicitation of employees

¶24 Wisconsin Stat. § 103.465 is broadly entitled

"Restrictive covenants in employment contracts" and refers

explicitly to a covenant by an employee not to compete with the

employer during or after the term of employment. It states as

follows that "any covenant" described in § 103.465 imposing an

"unreasonable restraint is illegal" even as to any part of the

covenant that would be a reasonable restraint:

A covenant by an assistant, servant or agent not to compete with his or her employer or principal during the term of the employment or agency, or after the termination of that employment or agency, within a specified territory and during a specified time is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any covenant, described in this section, imposing an unreasonable restraint is illegal, void and unenforceable even as to any part of the covenant or performance that would be a reasonable restraint. Wis. Stat. § 103.465.

¶25 The agreement between Manitowoc Company and Lanning is

entitled "Agreement Regarding Confidential Information,

Intellectual Property and Non-Solicitation of Employees." The

non-solicitation of employees provision at issue does not use the words "covenant not to compete." Rather, Lanning agrees not

11 No. 2015AP1530

to solicit, induce, or encourage any employee(s) of Manitowoc

Company to terminate their employment with the Company. The

provision states as follows:

I agree that during my Employment by Manitowoc and for a period of two years from the date my Employment by Manitowoc ends for any reason, including termination by Manitowoc with or without cause, I will not (either directly or indirectly) solicit, induce or encourage any employee(s) to terminate their employment with Manitowoc or to accept employment with any competitor, supplier or customer of Manitowoc. As used herein, the term "solicit, induce or encourage" includes, but is not limited to, any of the following: (a) initiating communications with an employee of Manitowoc relating to possible employment; (b) offering bonuses or additional compensation to encourage employees of Manitowoc to terminate their employment therewith and accept employment with a competitor, supplier or customer of Manitowoc; (c) referring employees of Manitowoc to personnel or agents employed or engaged by competitors, suppliers or customers of Manitowoc; or (d) referring personnel or agents employed or engaged by competitors, suppliers or customers of Manitowoc to employees of Manitowoc. ¶26 Lanning's non-solicitation of employees provision does

not conform to "textbook examples" of a covenant not to compete in which the employee is prohibited from engaging in competition

with a former employer. In contrast to a traditional covenant

not to compete, Lanning is free to obtain employment with a

competitor of Manitowoc Company. Manitowoc Company employees

are free to terminate employment with Manitowoc Company, be

employed by any other employer, and compete with Manitowoc

Company. Lanning is restricted from "poaching" any Manitowoc

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Company employee.16 The provision restricting Lanning restrains

competition by limiting a competitor's access to the labor pool.

¶27 Manitowoc Company argues that Wis. Stat. § 103.465

applies only to traditional covenants not to compete wherein an

employee agrees not to engage in business activities that are

competitive with those of the employer. As we stated

previously, however, our cases reveal that § 103.465 has been

applied to provisions that constitute restraints of trade other

than traditional covenants not to compete.

¶28 Time and again, the case law has focused on the effect

of the provision of an employment agreement rather than its

label to determine whether it constitutes a restraint of trade

governed by Wis. Stat. § 103.465.17

¶29 The cases state that "the explicit purpose of Wis.

Stat. § 103.465, as plainly stated in the statute, is to

invalidate covenants that impose unreasonable restraints on

employees"18 and that § 103.465 "essentially deals with restraint

of trade . . . regardless of whether a restriction is labeled a 'non-disclosure' provision or a 'covenant not to compete.'"19 16 Manitowoc Co., 371 Wis. 2d 696, ¶17. 17 See supra ¶¶6-8. 18 Wisconsin Stat. § 103.465 "evidences a strong public policy against enforcement of trade restraints which are determined to be unreasonable upon all employees". Tatge, 219 Wis. 2d at 114-15. 19 Heyde Cos., 258 Wis. 2d 28, ¶13 (citing Tatge v. Chambers & Owen, Inc., 219 Wis. 2d , 99, 111-12, 579 N.W.2d 217 (1998); Gary Van Zeeland Talent, 84 Wis. 2d at 218-21.

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Whether a particular agreement constitutes a restraint of trade

is based not upon how the agreement is labeled but upon the

effect of the agreement on employees and competition.20

¶30 Accordingly, courts have applied Wis. Stat. § 103.465

to traditional non-compete agreements, non-solicitation of

customer agreements, and non-disclosure/confidentiality

agreements between employers and employees as well as a no-hire

provision between two employers.21

¶31 In 1995,22 1997,23 and 2015,24 the legislature amended

Wis. Stat. § 103.465 but chose not to amend the statute in such

20 Heyde Cos., 258 Wis. 2d 28, ¶¶13-14 ("[A] restrictive covenant may be made between employers that acts as a covenant not to compete on the employees. . . . The effect of the no- hire provision is to restrict the employment of Greenbriar's employees; it is inconsequential whether the restriction is termed a 'no-hire' provision between Dove and Greenbriar or a 'covenant not to compete' between Greenbriar and its employees."). 21 See supra ¶¶6-8. 22 As adopted in 1957, Wis. Stat. § 103.465 (1957-58) read as follows:

A covenant by an assistant, servant or agent not to compete with his employer or principal during the term of the employment or agency, or thereafter, within a specified territory and during a specified time is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any such restrictive covenant imposing an unreasonable restraint is illegal, void and unenforceable even as to so much of the covenant or performance as would be a reasonable restraint.

Ch. 444, Laws of 1957.

(continued) 14 No. 2015AP1530

a way as to undermine the court's broad application of the

statute. Legislative acquiescence to a judicial construction of

a statute gives rise to a presumption, albeit sometimes a weak

one, that an earlier judicial construction should stand.25 This

precept of statutory interpretation reinforces the principle of

A 1995 amendment replaced "his employer" with "his or her employer." 1995 Wis. Act 225, § 347. 23 Wisconsin Stat. § 103.465 was amended by 1997 Wis. Act 253, § 81. The changes are shown in italics:

A covenant by an assistant, servant or agent not to compete with his or her employer or principal during the term of the employment or agency, or after the termination of that employment or agency, within a specified territory and during a specified time is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any covenant, described in this subsection, imposing an unreasonable restraint is illegal, void and unenforceable even as to any part of the covenant or performance that would be a reasonable restraint.

The note to § 81 of the Act explains: "Replaces nonspecific references with specific references for greater readability and conformity with current style." 24 In 2015, Wis. Stat. § 103.465 was amended by the Legislative Reference Bureau pursuant to § 35.17(2) to correct obvious nonsubstantive errors. The words "in this subsection" were changed to "in this section." See 2015 Wis. Act 197, § 51. 25 See, e.g., Force ex rel. Welcenbach v. Am. Family Mut. Ins. Co., 2014 WI 82, ¶124 n.76, 356 Wis. 2d 582, 850 N.W.2d 866; Milwaukee Journal Sentinel v. City of Milwaukee, 2012 WI 65, ¶43 n.21, 341 Wis. 2d 607, 815 N.W.2d 367; Wenke v. Gehl Co., 2004 WI 103, ¶¶32, 33, 35, 274 Wis. 2d 220, 682 N.W.2d 405; State v. Hansen, 2001 WI 53, ¶38, 243 Wis. 2d 328, 627 N.W.2d 195; Reiter v. Dyken, 95 Wis. 2d 461, 471-72, 290 N.W.2d 510 (1980).

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stare decisis and supports the interpretation of the statute set

forth herein.26

¶32 Manitowoc Company maintains that the non-solicitation

provision does not restrict competition by Lanning or restrain

employees. Lanning and Manitowoc Company employees are free to

work for anyone, including a competitor, and competitors are

"free to hire any Manitowoc employee(s) to take any job at their

company . . . . By the plain language . . . it was not

Manitowoc's intent to prevent any employees from leaving or

26 In interpreting and applying Wis. Stat. § 103.465, the concurrence renounces reliance on prior judicial interpretations of the statute, interprets the statute anew, and would overrule the decision in Heyde, a decision interpreting the statute that has stood for 15 years and has never been repudiated by the legislature. Neither Manitowoc Company nor Lanning has asked this court to overrule Heyde.

The concurrence advocates an interpretive rule significantly different from the generally accepted rule that when a court interprets a statute, prior judicial interpretations of the statute become "as much a part of the statute as if plainly written into it originally." State ex rel. Klinger v. Baird, 56 Wis. 2d 460, 468, 202 N.W.2d 31 (1972). See also Champlin v. State, 84 Wis. 2d 621, 624, 267 N.W.2d 295 (1978) (quoting Klinger); Clean Water Action Council of N.E. Wis. v. DNR, 2014 WI App 61, ¶16, 354 Wis. 2d 286, 848 N.W.2d 336 (quoting Klinger).

Ordinarily (and in the instant case), this court should not reach beyond the issues presented in the petition for review and should not overrule a prior judicial decision that the parties accept as pertinent, without at least affording the parties an opportunity to brief the issue of the continued validity of the decision. This approach to judicial interpretation of a statute comports with the important concepts of precedent and finality. Stare decisis, although not an absolute rule, is important to promote finality and predictability in the law and is undermined by the concurrence's reasoning.

16 No. 2015AP1530

joining another employer, and/or to restrict their mobility or

ability to practice and earn a living in their chosen field.

Rather, the intent of the clause was to limit a key employee

like Lanning from raiding Manitowoc employees. . . ."27

According to Manitowoc Company, "the harm [to the Company] is

the loss of the employee itself——not any potential competition

that employee could provide against Manitowoc after leaving."28

¶33 The effect of Lanning's non-solicitation provision is

to prevent Lanning and a Manitowoc Company competitor from

competing fully with Manitowoc Company in the labor pool by

soliciting Manitowoc Company employees. The provision prevents

Lanning from taking steps to persuade a Manitowoc Company

employee to leave Manitowoc Company, which would limit the

ability of Lanning and other Manitowoc Company employees from

working together in the future. Thus, the provision prevents

employees of Manitowoc Company from having complete information

regarding employment opportunities elsewhere. It limits a

potentially valuable professional resource Lanning would otherwise have regarding resources in the labor market.

Although the law encourages the mobility of workers, Lanning's

non-solicitation of employees provision hinders the mobility of

27 Brief of Plaintiff-Respondent-Petitioner The Manitowoc Company, Inc. at 31-32 (emphasis in brief). 28 Brief of Plaintiff-Respondent-Petitioner The Manitowoc Company, Inc. at 39-40.

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Manitowoc Company employees.29 This court has stated that "the

fundamental right of a person to make choices about his or her

own employment is well-established."30

¶34 In sum, the cases have interpreted Wis. Stat.

§ 103.465 as including more than the "textbook example" of an

employee covenant not to compete with his or her employer. In

the instant case, the effect of Lanning's non-solicitation of

29 "The law, however, does not protect against the raiding of a competitor's employees. Rather, it encourages the mobility of workers." Mut. Serv. Cas. Ins. Co. v. Brass, 2001 WI App 92, ¶17, 242 Wis. 2d 733, 625 N.W.2d 648, overruled on other grounds by Star Direct, 319 Wis. 2d at ¶78 n.12; see also Genzyme Corp. v. Bishop, 460 F. Supp. 2d 939, 947 (W.D. Wis. 2006) ("[T]he public policy underlying Wis. Stat. § 103.465 is that Wisconsin law favors the mobility of workers."). 30 Heyde Cos., 258 Wis. 2d 28, ¶22.

As the Supreme Court has recognized, the ability to make choices about one's own employment "is an elementary part of the rights of personal liberty . . . ." Prudential Ins. Co. of Am. v. Cheek, 259 U.S. 530, 536 (1922).

Judge Learned Hand wrote regarding an employer's ability to offer a job to a competitor's employee and the employee's ability to take the job as follows:

Nobody has ever thought, so far as we can find, that in the absence of some monopolistic purpose every one has not the right to offer better terms to another's employe, so long as the latter is free to leave. The result of the contrary would be intolerable, both to such employers as could use the employe more effectively and to such employes as might receive added pay. It would put an end to any kind of competition.

Triangle Film Corp. v. Artcraft Pictures Corp., 250 F. 981, 982 (2d Cir. 1918).

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employees provision is clear. The provision restricts one form

of competition with Manitowoc Company. It restricts Lanning

(and any employee of Manitowoc Company) from freely competing

against Manitowoc Company in the labor market by insulating any

Manitowoc Company employee from Lanning's solicitations.

¶35 We agree with the reasoning of the court of appeals

that Lanning's non-solicitation of employees provision is a

restraint of trade governed by Wis. Stat. § 103.465. As the

court of appeals explained:

It is no leap of logic to conclude that a provision aimed at restricting a former employee from "systematically poaching" the valuable and talented employees of his former employer is a restraint of trade. Lanning may not, among other things, compete with Manitowoc by attempting to recruit Manitowoc's best employees. While the NSE provision does not circumscribe Lanning's own employment opportunities, it nevertheless limits how Lanning——now employed by a direct competitor——can compete with Manitowoc. In short, the NSE provision does not allow for the ordinary sort of competition attendant to a free market, which includes recruiting employees from competitors. Lanning, 371 Wis. 2d 696, ¶17.

¶36 Our reasoning and conclusion are in accord with

federal courts interpreting Wisconsin law31 and with cases in

31 In Corporate Express Office Products, Inc. v. Brown, 2001 WL 34381111 (W.D. Wis. July 18, 2001), the non-solicitation of employees provision was similar to Lanning's provision. The federal district court held that although the employer had an interest in retaining experienced employees, the non- solicitation provision was not necessary to advance that interest. Corporate Express, 2001 WL 34381111, at *7-8.

19 No. 2015AP1530

other jurisdictions interpreting non-solicitation of employees

provisions.32 These decisions have determined that similar non-

solicitation of employees provisions constitute restraints of

trade. These decisions are not binding on this court but are

persuasive.

¶37 For the reasons set forth, we conclude that the non-

solicitation of employees provision at issue is a restraint of

trade governed by Wis. Stat. § 103.465.

IV

¶38 Having concluded that Wis. Stat. § 103.465 applies to

Lanning's non-solicitation of employees provision, we address

32 See, e.g., Golder Assocs., Inc. v. Edge Envt'l, Inc., 2007 WL 987458 (D. Colo. 2007), (finding that a similar non- solicitation of employees agreement was governed by a Colorado statute prohibiting "any covenant not to compete which restricts the right of any person to receive compensation for performance of skilled or unskilled labor" because "the non-solicitation clause at issue in this case could be interpreted to as [sic] having the effect of preventing the [employees] from working together at [competitor] and, therefore, it is covered by restraint [sic] of trade prohibition contained in [the statute]"); Schmersahl, Treloar & Co., P.C. v. McHugh, 28 S.W.3d 345, 348-51 (Mo. Ct. App. 2000) (holding that a non- solicitation of employees provision was a restraint of trade because "[c]ompetition in the marketplace encompasses competition in the labor market" and the provision can be used to restrict the flow of competitive information about the labor market, including the availability of opportunities and offers of employment to an employer's at-will workforce and has the effect of reducing competition in the labor market and is a restrictive covenant); Lazer Inc. v. Kesselring, 823 N.Y.S.2d 834, 836-39 (N.Y. Sup. Ct. 2005) (concluding that "a covenant not to solicit former co-employees is a species, albeit a limited one, of a covenant not to compete in the broad sense . . .").

20 No. 2015AP1530

the second issue of law presented, namely, whether the provision

is enforceable under § 103.465.

¶39 Beginning in Lakeside Oil Co. v. Slutsky, 8

Wis. 2d 157, 162-67, 98 N.W.2d 415 (1959), and continuing in the

case law thereafter, the court has interpreted Wis. Stat.

§ 103.465 as "establishing five prerequisites that a restrictive

covenant must meet in order to be enforceable."33

¶40 The five "prerequisites" that must be met are as

follows. The restraint must:

(1) be necessary for the protection of the employer, that is, the employer must have a protectable interest justifying the restriction imposed on the activity of the employee;

(2) provide a reasonable time limit;

(3) provide a reasonable territorial limit;

(4) not be harsh or oppressive as to the employee; and

(5) not be contrary to public policy. Star Direct, 319 Wis. 2d 274, ¶20.

¶41 If Lanning's non-solicitation of employees provision

fails to satisfy even one of these "prerequisites," the entire

non-solicitation of employees provision is invalid. By enacting

Wis. Stat. § 103.465, the legislature made a policy choice to

place the burden of drafting a reasonable restrictive covenant

on the employer, who often wields greater bargaining power and

33 Star Direct, 319 Wis. 2d 274, ¶20.

21 No. 2015AP1530

is generally in a better position to show that a restraint is no

broader than is necessary to protect the employer's business.34

34 In Streiff v. American Family Mutual Insurance Co., 118 Wis. 2d 602, 608-09, 614-15, 348 N.W.2d 505 (1984), the supreme court described the background of Wis. Stat. § 103.465 in 1957. It was enacted at the suggestion of a legislator who was critical of our decision in the second Fullerton Lumber case, Fullerton Lumber Co. v. Torborg, 274 Wis. 478, 80 N.W.2d 461 (1957), in which the court "blue-penciled," that is, judicially modified, an unreasonable restrictive covenant by giving it effect to the extent that it might be reasonable:

The legislator wanted a restraint containing overly broad and invalid provisions to be struck down in its entirety; he apparently did not want the court to give effect to an unreasonable restraint to the extent it might be reasonable. The objection to the "Torberg" practice, as the legislator noted, is that it tends to encourage employers possessing bargaining power superior to that of the employees to insist upon unreasonable and excessive restrictions, secure in the knowledge that the promise will be upheld in part, if not in full.

* * * *

Courts and commentators have engaged in debate over the equities of giving effect to reasonable aspects of restraints in a covenant. An argument for giving effect to reasonable aspects of a restraint is the business need for restrictive covenants and the difficulty for larger businesses to tailor each covenant to the particular requirements of the individual employee. A principal argument against giving effect to reasonable aspects of a restraint is that the employer can fashion ominous covenants which affect the mobility of employees because of their in terrorem effect on employees who respect contractual obligations and their effect on competitors who do not wish to risk legal difficulties. At least where the restraint is indivisible, it is clear that our legislature has balanced the employer's business needs and the employee's interest in personal liberty and has, by the adoption of sec. 103.465, opted not to (continued) 22 No. 2015AP1530

¶42 We begin with the first prerequisite, that is, that

the Manitowoc Company must have a protectable interest

justifying the restriction on Lanning's employee's activities.

¶43 Manitowoc Company asserts that it has an interest in

protecting itself from "the loss of the employee(s) it trained

and invested time and capital in, and the institutional

understanding, experience, and intellectual capital they

possess."35

¶44 The text of the non-solicitation of employees

provision bars solicitation by Lanning of "any employee(s)" to

terminate employment with Manitowoc Company. The court

interprets and applies this language in accordance with the

maxims adopted for the interpretation of restrictive covenants.

give effect even to so much of the covenant as would be a reasonable restraint. The legislature has in sec. 103.465 instructed the court as to the equities between the parties. Under sec. 103.465 if an indivisible covenant imposes an unreasonable restraint, the covenant is illegal, void, and unenforceable even as to so much of the covenant as would be a reasonable restraint.

See also Harlan M. Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625, 648 n.76 (1960) ("The employer, having a fuller 'picture' of the company's interests and needs than any employee, should be in a much better position to show that a restraint is no more burdensome than needed to protect the employer's legitimate interest. The employee, on the other hand, would find it difficult to show that the restrain is unreasonable."). 35 Brief of Plaintiff-Respondent-Petitioner The Manitowoc Company, Inc. at 39.

23 No. 2015AP1530

¶45 A restraint of trade to which Wis. Stat. § 103.465

applies is interpreted in a reasonable way to give the words

their plain meaning, to give effect where possible to the entire

provision, and to avoid absurd results. Star Direct, 319

Wis. 2d 274, ¶62. Within this maxim, restrictive covenants are

disfavored at law, subject to close scrutiny, and are read in

favor of the employee. Star Direct, 319 Wis. 2d 274, ¶62.

¶46 The words "any employee" in the non-solicitation of

employees provision prohibits Lanning from soliciting every one

of Manitowoc Company's 13,000 world-wide employees. The words

"any employee" mean, in common parlance, every employee. The

court has in a number of cases explained that a phrase modified

by the word "any" indicates broad application.36

¶47 The non-solicitation provision contains no limitations

based upon the nature of the employee's position within

Manitowoc Company. No limitations are based upon Lanning's

personal familiarity with or influence over a particular

employee. There is no limit based upon the geographical location in which the employee works.

36 State v. Jensen, 2010 WI 38, ¶29, 324 Wis. 2d 586, 782 N.W.2d 415 (noting in its interpretation of Wis. Stat. § 971.19(12) that "a phrase modified by the word 'any' indicates broad application.") (internal quotation marks and citation omitted); Marotz v. Hallman, 2007 WI 89, ¶25, 302 Wis. 2d 428, 734 N.W.2d 411 (the word "any" modifying "person or "organization" in Wis. Stat. § 632.32(5)(i)1. indicates broad application); Burbank Grease Servs., LLC v. Sokolowski, 2006 103, ¶22, 294 Wis. 2d 274, 717 N.W.2d 781 (the broad dictionary definition of word "any" is used to define "any" in Wis. Stat. § 134.90(6)(b)2.).

24 No. 2015AP1530

¶48 Manitowoc Company asserts a protectable interest in

protecting its investment of time and capital involved in

recruiting, training, and developing its employee base from

"poaching" by a "former employee who ha[s] full awareness of the

talent and skill set of said employee base."37 At trial,

Manitowoc Company presented evidence to establish the financial

and non-monetary costs and harm it experienced in losing and

trying to replace employees.38 Manitowoc Company asserts that

the loss of employees harms the Company regardless of whether

the employee goes to work for a competitor or a non-competitor

of Manitowoc Company.

¶49 The argument that Manitowoc Company has a protectable

interest in maintaining its entire workforce flouts the

generally recognized principle that the law "does not protect

against the raiding of a competitor's employees."39 The cases

37 Brief of Plaintiff-Respondent-Petitioner The Manitowoc Company, Inc. at 39. 38 Brief of Plaintiff-Respondent-Petitioner The Manitowoc Company, Inc. at 13-14. 39 Brass, 242 Wis. 2d 733, ¶17, overruled on other grounds by Star Direct, 319 Wis. 2d 274, ¶78 n.12.; see also Gary Van Zeeland Talent, 84 Wis. 2d at 214 ("[S]o long as a departing employee takes with him no more than his experience and intellectual development that has ensued while being trained by another, and no trade secrets or processes are wrongfully appropriated, the law affords no recourse.").

(continued) 25 No. 2015AP1530

and literature explain that ordinarily an employer's protectable

interest is limited to retaining top-level employees, employees

who have special skills or special knowledge important to the

employer's business, or employees who have skills that are

difficult to replace.40 Ordinarily, a stranger may entice

The Gary Van Zeeland Talent case cites Abbott Laboratories v. Norse Chemical Corp., 33 Wis. 2d 445, 463, 147 N.W.2d 529 (1967) (setting forth the factors a court must consider when determining whether certain material qualifies as a "trade secret") and K.H. Larsen, Annotation, Former employee's duty, in absence of express contract, not to solicit former employer's customers or otherwise use his knowledge of customer lists acquired in earlier employment, 28 A.L.R. 3d 7, § 4 (1969) (collecting cases regarding the right of an employee to use general knowledge and experience gained in former employment). 40 K.H. Larsen, Annotation, Former employee's duty, in absence of express contract, not to solicit former employer's customers or otherwise use his knowledge of customer lists acquired in earlier employment, 28 A.L.R. 3d 7, § 4[a] (Cumulative Supp.):

Courts have universally recognized the former employee's right to use, in competition with his former employer, general knowledge, skill, and experience acquired in the former employment.

Harlan M. Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625, 652 (1960) (footnotes omitted):

It has been uniformly held that general knowledge, skill, or facility acquired through training or experience while working for an employer appertain exclusively to the employee. The fact that they were acquired or developed during the employment does not, by itself, give the employer a sufficient interest to support a restraining covenant, even though the on- the-job training has been extensive and costly. In the absence of special circumstances the risk of future competition from the employee falls upon the employer and cannot be shifted, even though the (continued) 26 No. 2015AP1530

Manitowoc Company employees to accept employment with a

competitor of the Company.41 The court has declared that "[a]n

employer is not entitled to be protected against legitimate and

ordinary competition of the type that a stranger could give."42

¶50 Manitowoc Company drafted the non-solicitation of

employees provision and could have tailored the language to its

specific needs. It does not argue that the non-solicitation of

employees provision is limited to Lanning's solicitation of only

certain employees. Manitowoc Company does not contend that it

intended to limit the words to apply only to the solicitation of

employees with sensitive or company-specific information or to

possible damage is greatly increased by experience gained in the course of the employment.

McHugh, 28 S.W.3d at 350:

[An employer does not have a proprietary interest in its employees at will or in their skills.] The normal skills of a trade are not included in an employer's protectable interest. Thus, the basic skill of a craftsman will not support a restrictive covenant. . . . The fact of an employer-employee relationship, standing alone, is not sufficient to cause a confidential relationship to exist as to knowledge which is the natural product of the employment.

For a collection of cases, see 3 Louis Altman & Malla Pollack, Callmann on Unfair Competition, Trademarks and Monopolies § 16:44 (4th ed. Cum. 2017). 41 Lakeside Oil, 8 Wis. 2d at 163. 42 Lakeside Oil, 8 Wis. 2d at 163; see also Star Direct, 319 Wis. 2d 274, ¶56 (citing Lakeside).

27 No. 2015AP1530

the solicitation of employees with whom Lanning has worked or to

those employees with skill sets with which Lanning was familiar.

¶51 Rather, Manitowoc Company argues that the court should

apply a "sliding scale" to gauge whether the non-solicitation

provision meets the prerequisites of Wis. Stat. § 103.465,

maintaining that because the non-solicitation of employees

provision is less onerous than a traditional covenant not to

compete, it should receive less-exacting scrutiny. In other

words, the Company argues that a less burdensome non-

solicitation of employees provision should not be held to the

same legal requirements as a traditional covenant not to

compete.43

¶52 The sliding scale, Manitowoc Company argues, would

recognize that significant restrictions imposed on an employee

place a significant burden on the employer to justify the

restriction by showing that the restriction is no broader than

is necessary to protect a legitimate business interest.44 Less

significant restrictions imposed on an employee should place a less significant burden on the employer to justify the

restriction, Manitowoc Company argues.

¶53 We reject Manitowoc's proposed "sliding scale" approach

that would subject various restraints of trade and competition

43 Brief of Plaintiff-Respondent-Petitioner The Manitowoc Company, Inc. at 41. 44 Brief of Plaintiff-Respondent-Petitioner The Manitowoc Company, Inc. at 42.

28 No. 2015AP1530

to different legal standards. The sliding scale approach has no

basis in Wisconsin law.

¶54 Wisconsin Stat. § 103.465 does not create separate

legal standards applicable to traditional and non-traditional

non-compete provisions. Our legislature has balanced the

employer's business needs and the employee's interest in

personal liberty under § 103.465 and has declared that if an

agreement imposes an unreasonable restraint, it is illegal,

void, and unenforceable even as to so much of the covenant as

would be a reasonable restraint. We are bound by the

legislature's decision.

¶55 Because Lanning's non-solicitation of employees

provision restrains trade by restraining competition and

inhibiting the mobility of employees, it must meet all five

prerequisites identified in Lakeside Oil and Star Direct in

order to be enforceable under Wisconsin law. Manitowoc Company

has the burden to prove that Lanning's non-solicitation of

employees provision meets all five prerequisites.45 ¶56 The plain language of Lanning's non-solicitation of

employees provision creates a sweeping prohibition that prevents

Lanning from encouraging any Manitowoc Company employee, no

matter the employee's job or location, to terminate his or her

employment with Manitowoc Company for any reason, or soliciting

45 Star Direct, 319 Wis. 2d 274, ¶20.

29 No. 2015AP1530

any Manitowoc Company employee to take any position with any

¶57 Lanning does not have specialized knowledge about all

of Manitowoc Company's 13,000 world-wide employees across both

its construction crane and food service equipment divisions.

Lanning does not have a relationship with every Manitowoc

Company employee. Yet Lanning's non-solicitation of employees

provision prevents him from encouraging any Manitowoc Company

employee to terminate his or her employment.

¶58 Noting the extensive reach of the language of the non-

solicitation of employees provision, the court of appeals

explained that "Manitowoc has drafted a provision that requires

it to prove that it has a protectable interest in preventing

Lanning from encouraging any employee to leave Manitowoc for any

reason, or to take any job with any competitor, supplier, or

customer." Lanning, 371 Wis. 2d 696, ¶30.

¶59 In applying the prerequisites that must be met under

Wis. Stat. § 103.465, we conclude, as did the court of appeals, that the non-solicitation of employees provision is overbroad on

its face. Without a specified territory or class of employees,

the provision restricts Lanning's conduct as to all employees of

Manitowoc Company everywhere. Lanning's non-solicitation of

employees provision covers each of the 13,000 Manitowoc Company

employees regardless of the business unit in which they work or

where in the world they are located.

¶60 We agree with the court of appeals that Manitowoc Company has failed to satisfy the first prerequisite, namely 30 No. 2015AP1530

that Manitowoc Company does not have a protectable interest

justifying the restriction imposed on the activity of the

employee. Because our conclusion as to the first prerequisite

is dispositive, we need not and do not consider the other four

prerequisites.

¶61 The non-solicitation of employees provision cannot

survive simply because Manitowoc Company seeks to enforce the

non-solicitation provision in the instant case in a narrower

situation than that which is compelled by the plain language of

the agreement.46 Enforcing an overbroad restraint to the

extent it can be reasonably enforced is exactly what § 103.465

was enacted to prevent.

¶62 A non-solicitation of employees provision may be

enforceable under Wis. Stat. § 103.465 if it is reasonably

necessary to protect the employer and reasonable as to time,

geography, and type of conduct covered.47 Manitowoc Company

failed to show that it has a protectable interest justifying the

sweeping restriction imposed by the plain language on Lanning's non-solicitation of employees. Lanning's non-solicitation

provision does not meet the prerequisites under § 103.465.

¶63 For the reasons set forth, we conclude that Wis. Stat.

§ 103.465 applies to Lanning's non-solicitation of employees

provision. Because Lanning's non-solicitation of employees

46 Manitowoc Co., 371 Wis. 2d 696, ¶19. 47 Lakeside Oil, 8 Wis. 2d at 163-67.

31 No. 2015AP1530

provision does not meet the statutory requirement that the

restriction be "reasonably necessary for the protection of the

employer," it is an unreasonable restraint of trade

unenforceable under the statute.

¶64 Accordingly, the cause is remanded to the circuit

court with instructions to enter judgment in favor of Lanning.

By the Court.—The decision of the court of appeals is

affirmed.

32 No. 2015AP1530.rgb

¶65 REBECCA GRASSL BRADLEY, J. (concurring). I join the

lead opinion's decision affirming the court of appeals and its

holding that Wis. Stat. § 103.465, entitled "Restrictive

covenants in employment contracts," applies to Lanning's

nonsolicitation of employees covenant (NSE). I also agree that

this NSE is unreasonable under the Lakeside Oil1 prerequisites.

I write separately because the lead opinion neglects to

undertake a textual analysis of § 103.465, instead grounding its

interpretation of the statute almost exclusively in Wisconsin

case law in which the court has interpreted and applied

§ 103.465 expansively, sometimes straying far from the text in

advancing policy choices that should be made legislatively, not

judicially. For example, the lead opinion liberally cites Heyde

Cos., Inc. v. Dove Healthcare, LLC, 2002 WI 131, 258 Wis. 2d 28,

654 N.W.2d 830, which should be overruled as unsound in

principle because its analysis is patently wrong. Additionally,

I caution that merely because the court concludes § 103.465

applies to this NSE, not every NSE provision necessarily falls under the purview of that statute.

¶66 The lead opinion skips the critical first step of

statutory analysis——examining the plain language of the text.

In abandoning this process, the lead opinion risks reading into

Wis. Stat. § 103.465 imagined words derived from the court's

perception of the legislature's unspoken policies and purpose.

1 Lakeside Oil Co. v. Slutsky, 8 Wis. 2d 157, 98 N.W.2d 415 (1959).

1 No. 2015AP1530.rgb

Of course, legislative policies and purpose may aid the court in

its interpretative function, but only to the extent they are

discernable from the actual text of the statute.2

¶67 For this reason, statutory analysis must begin with

the plain language of the statute. State ex rel Kalal v. Cir.

Ct. for Dane Cty., 2004 WI 58, ¶45, 271 Wis. 2d 633, 681

N.W.2d 110 (citations omitted). "Statutory language is given

its common, ordinary, and accepted meaning, except that

technical or specially-defined words or phrases are given their

technical or special definitional meaning." Id. (citations

omitted). Where "the meaning of the statute is plain, we

ordinarily stop the inquiry."3 Id. (citations omitted).

Generally, statutory meaning comes from examining the text,

context and structure of the statute. See Wisconsin Carry, Inc.

v. City of Madison, 2017 WI 19, ¶20 n.15, 373 Wis. 2d 543, 892

N.W.2d 233.

¶68 The text of Wis. Stat. § 103.465 is relatively plain.

For the most part, the dissent correctly and succinctly examines the relevant words and their ordinary meanings. Dissent, ¶¶10-

14. In summary and in the context of the facts presented here,

2 "[T]he purpose must be derived from the text, not from extrinsic sources such as legislative history or an assumption about the legal drafter's desires." Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 56 (2012). 3 The court does not consult extrinsic sources unless the statute is ambiguous, that is to say, "it is capable of being understood by reasonably well-informed persons in two or more senses." State ex rel Kalal v. Cir. Ct. for Dane Cty., 2004 WI 58, ¶46, 271 Wis. 2d 633, 681 N.W.2d 110 (citations omitted).

2 No. 2015AP1530.rgb

§ 103.465 governs only covenants between an employer and its

employee in which the employee agrees not to compete with the

employer. The enforceability of such a covenant depends in part

upon the inclusion of limits on its duration and territorial

scope. Its restrictions must also be "reasonably necessary for

the protection of the employer."

¶69 The crux of the issue presented in this case is

whether this NSE constitutes a covenant not to compete within

the meaning of Wis. Stat. § 103.465. While I agree with the

lead opinion's conclusion that § 103.465 governs this NSE, I

depart from its over-expansive analysis of the statute.

¶70 Because this court has never applied the statute to an

NSE between an employer and an employee, it is fundamental to

first identify what an NSE is. Black's Law Dictionary defines a

"nonsolicitation agreement" as "[a] promise . . . in . . . an

employment contract, to refrain, for a specified period of time,

from . . . enticing employees to leave a company."

Nonsolicitation agreement, Black's Law Dictionary 1221 (10th ed. 2014). Here, Lanning entered into a nonsolicitation agreement

by promising that he would "not (either directly or indirectly)

solicit, induce, or encourage any employee(s) to terminate their

employment with Manitowoc or to accept employment with any

competitor, supplier or customer of Manitowoc."

¶71 In order to determine if this NSE may be subject to

close scrutiny under Wis. Stat. § 103.465, I begin with the

types of restrictive covenants the text of the statute covers. The first sentence of the statute identifies as its subject

3 No. 2015AP1530.rgb

matter "[a] covenant . . . not to compete." The dissent defines

"compete" as "the struggle for commercial advantage," equating

competition with actions by an employee laboring for commercial

advantage over his or her employer. This definition broadly

encompasses all sorts of restrictive covenants. The dissent,

however, does not consider the phrase "covenant not to compete"

as a legal term of art.

¶72 Black's Law Dictionary defines "covenant not to

compete" as "[a]n agreement, generally part of a contract of

employment . . . in which the covenantor agrees for a specific

period of time and within a particular area to refrain from

competition with the covenantee." Covenant not to compete,

Black's Law Dictionary 364 (6th ed. 1990). The title of Wis.

Stat. § 103.465 also refers to covenants not to compete as

"Restrictive covenants in employment contracts."4 In the context

of an employment contract, Black's Law Dictionary defines

"[r]estrictive covenant" as a provision that "limit[s] a

contracting party after termination of the contract in performing certain work for a period of time within a certain

4 Under Wis. Stat. § 990.001(6), "titles to subchapters, subsections, paragraphs and subdivisions of the statutes and history notes are not part of the statutes." "Although titles are not part of statutes, see Wis. Stat. § 990.001(6), they may be helpful in interpretation. Nevertheless text must control over title." Aiello v. Village of Pleasant Prairie, 206 Wis. 2d 68, 73, 556 N.W.2d 697 (1996). "The title and headings [of a statute] are permissible indicators of meaning" although "a title or heading should never be allowed to override the plain words of a text." Scalia & Garner, supra note 2, at 221-22. Here, the title and the text are harmonious.

4 No. 2015AP1530.rgb

geographic area." Restrictive covenant, id. at 1315. While the

NSE does not altogether prohibit Lanning from going to work for

a competitor, it does restrain Lanning from soliciting,

inducing, or encouraging any Manitowoc employee from accepting

employment with any Manitowoc competitor, thereby limiting

Lanning in performing certain work——namely, recruitment for his

new employer, a competitor of Manitowoc's. Notwithstanding the

NSE's label, it constitutes a restrictive covenant by an

employee not to engage in a particular form of competition with

the employer both during his employment and for a two-year

period after his employment ends. Accordingly, Lanning's NSE is

a type of covenant "described in this section" under § 103.465.

¶73 The dissent reaches the opposite conclusion but errs

in adopting a cramped construction of what it means to "compete"

with a former employer. Proposing a definition of competition

as "the struggle for commercial advantage," the dissent then

inexplicably asserts the NSE "protects against only the raiding

of Manitowoc's key employees by Lanning" but "does not prevent Lanning from competing with Manitowoc." Dissent, ¶38. The

dissent thereby narrowly rewrites the scope of the NSE, which is

clearly much broader. By its very terms, the NSE applies not

only to key employees but "any employee(s)" and the NSE

prohibits not only "raiding" of "key" employees but also, for

example, encouraging an entry-level employee to terminate his or

her employment to pursue higher education. For this reason

(among others), the lead opinion correctly concludes that the NSE is not reasonably necessary for Manitowoc's protection as

5 No. 2015AP1530.rgb

Manitowoc cannot demonstrate a protectable interest in

prohibiting Lanning from encouraging an unskilled Manitowoc

employee to retire in order to spend more time with family (an

example aptly stated by the court of appeals in this case).

Manitowoc Co. v. Lanning, 2016 WI App 72, ¶24, 371 Wis. 2d 696,

885 N.W.2d 798.

¶74 The dissent proceeds to adopt the internally

contradictory position of Manitowoc. On one hand, it notes that

"Lanning and SANY's recruitment efforts were successful. Key

employees left Manitowoc and joined SANY." Dissent, ¶6. The

dissent accurately identifies the adverse effect on the employer

(here, Manitowoc): "the former employer will become a less

effective competitor." Dissent, ¶45. Nonetheless, the dissent

views Lanning's role as something other than competing with

Manitowoc despite the obvious "commercial advantage" to Lanning

individually in enhancing his new employer's competitive

position in the marketplace at the expense of Manitowoc.

Contrary to the dissent's construction, nothing in the text of Wis. Stat. § 103.465 restricts its application to covenants not

to work for the employer's competitor and nothing in the

statutory text exempts covenants not to compete on behalf of the

employer's competitor. Logically, recruiting Manitowoc

employees to join a Manitowoc competitor is a form of

competition by Lanning and that aspect of the NSE's restriction

subjects it to the close scrutiny of § 103.465.

6 No. 2015AP1530.rgb

¶75 While the dissent's interpretation of Wis. Stat.

§ 103.465 is too restrictive, the lead opinion errs in the other

direction. Typically relying on the second sentence of Wis.

Stat. § 103.465, referring to "any covenant described in this

section imposing an unreasonable restraint," this court over

time opened wide the semantic door through which an assortment

of restrictive covenants were brought under § 103.465's purview.

See lead op., ¶¶6-8; Tatge v. Chambers & Owen, Inc., 219 Wis. 2d

99, 112, 579 N.W.2d 217 (1998) (reasoning that it "would be an

exercise in semantics to overlook" § 103.465's applicability to

different types of restrictive covenants "merely

because . . . the agreement is not labeled a 'covenant not to

compete'"). For example, in Heyde the court concluded that a

no-hire provision between two companies "acts as a restrictive

covenant on [the covenantee's] employees" even though the

covenant was not made in an employment contract and was not

otherwise made by any employee; therefore, it could not possibly

constitute a "covenant described in this section," regardless of whether it in effect operated to restrict the employment

opportunities of the covenantee's employees.

¶76 The plain language of Wis. Stat. § 103.465 applies

only to certain covenants between an employer and its

"assistant, servant or agent." As the dissent notes, "servant"

encompasses an employee. Dissent, ¶11. Nothing in the text

intimates an extension of its application beyond the employer-

employee relationship. Nonetheless, the court in Heyde set the statutory text aside and divined an overriding statutory

7 No. 2015AP1530.rgb

"purpose" that could be advanced only by ignoring certain words

in the statute so as to capture contracts between two businesses

within the ambit of § 103.465. Relying on Heyde, the lead

opinion in this case lends continued but unwarranted credence to

Heyde's erroneous application of the statute by concluding

"Lanning's nonsolicitation of employees provision is a restraint

of trade governed by Wis. Stat. § 103.465" because "the

limitation on Lanning also affects access to the labor pool by a

competitor of Manitowoc Company (including, Lanning's current

employer SANY America)" and "hinders the mobility of Manitowoc

Company employees." Lead op., ¶¶9, 33.

¶77 The lead opinion mistakenly emphasizes a relationship

not contemplated by the statute, namely one between two

employers, SANY and Manitowoc, as well as the NSE's effect on

the mobility of Manitowoc employees generally. Other than

Lanning himself, no SANY or Manitowoc employees are party to the

NSE; therefore, neither SANY nor Manitowoc workers are

considerations in applying Wis. Stat. § 103.465. Accordingly, we should not base our interpretation of the statute on the

NSE's effect, if any, on SANY's ability to compete with

Manitowoc or the mobility of its workers generally. The focal

relationship under § 103.465 is the one between the employer,

Manitowoc, and the employee, Lanning. In basing part of its

determination regarding the statute's applicability on SANY's

ability to compete and Manitowoc employees' mobility, the lead

opinion further widens the rabbit hole encircling Wis. Stat. § 103.465 by extending the statute beyond the only contract

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mentioned in the statute——a covenant between an employer and its

assistant, servant, or agent.

¶78 Because Heyde provides the foundation for courts to

disregard the plain language of Wis. Stat. § 103.465 in order to

apply it inappropriately in the name of good public policy, I

would overrule it as unsound in principle. Decisions to

overrule prior case law depend on the presence of one or more of

the following circumstances:

(1) Changes or developments in the law have undermined the rationale behind a decision; (2) there is a need to make a decision correspond to newly ascertained facts; (3) there is a showing that the precedent has become detrimental to coherence and consistency in the law; (4) the prior decision is "unsound in principle;" or (5) the prior decision is "unworkable in practice." Bartholomew v. Wis. Patients Comp. Fund & Compcare Health Servs.

Ins. Corp., 2006 WI 91, ¶33, 293 Wis. 2d 38, 717 N.W.2d 216

(citing Johnson Controls, Inc. v. Employers Ins. of Wausau, 2003

WI 108, ¶¶98-99, 264 Wis. 2d 60, 665 N.W.2d 257). Although

principles of statutory interpretation predating Kalal

"generat[ed] some analytical confusion," 271 Wis. 2d 633, ¶43, the basic tenets of plain language interpretation were well

established when this court decided Heyde. See, e.g., Moorman

Mfg. Co. v. Indus. Comm'n, 241 Wis. 200, 208, 5 N.W.2d 743

(1942)("The meaning of a legislative act must be determined from

what it says——not by what the framer of the act intended to say

or what he thought he was saying."); Nekoosa-Edwards Paper Co.

v. Pub. Serv. Comm'n, 8 Wis. 2d 582, 591, 99 N.W.2d 821 (1959)

("The meaning of a legislative act must be determined from the language used."); Kalal, 271 Wis. 2d 633, ¶45; Wisconsin Carry, 9 No. 2015AP1530.rgb

Inc., 373 Wis. 2d 543, ¶20 n.15. See generally Daniel Suhr,

Interpreting Wisconsin Statutes, 100 Marq. L. Rev. 969 (2017).

¶79 This court began its analysis in Heyde by

acknowledging that Wis. Stat. § 103.465 "only refers to

covenants between employers and employees"; nevertheless, it

wholly ignored this language in favor of a liberal construction

to achieve what it deemed the legislature's purpose underlying

the statute. 258 Wis. 2d 28, ¶13-15. The text of the statute,

however, is devoid of any mention of this "purpose." In

adopting this interpretation, the Heyde court deviated from what

already was a fundamental principle of statutory construction——

interpreting a statute to mean what the text actually says.

¶80 The Heyde court justified its application of the

statute to a no-hire provision in a services contract between

two businesses because by "restricting one employer's ability to

hire former employees of the other employer," by "indirection,"

the covenant restricted "the employees' future opportunities of

employment." Heyde, 258 Wis. 2d 28, ¶14; id., ¶28 (Abrahamson, J., concurring). This interpretation flouted the statute's

language in order to favor "those intended to benefit from" Wis.

Stat. § 103.465, never mind the statute's utter silence on whom

the legislature intended to advantage. Id., ¶15.

¶81 Indeed, until Heyde, no Wisconsin court had ever

applied Wis. Stat. § 103.465 to any restrictive covenant other

than those "by an assistant, servant or agent not to compete

with his or her employer or principal." The Heyde court boldly labeled this unprecedented leap beyond the plain text

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"inconsequential." Id., ¶14. The Heyde court's failure to give

effect to the actual words of the statute in order to advance

judicial notions of the public interest propels the lead opinion

in this case along an unsound analytical path. Although the

lead opinion correctly concludes that § 103.465 applies to

Lanning's NSE, it incorrectly supports its conclusion with

Heyde's shaky reasoning: because the NSE hinders the mobility

of Manitowoc employees and affects SANY's ability to compete

with Manitowoc, the statute applies. In order to steer the

scope of § 103.465 back to its textual bounds, I would overrule

Heyde as unsound in principle and reinstitute a plain language

interpretation of the statute, confining its application to an

employee's covenant not to compete with an employer.5

5 The people of Wisconsin should be wary of the lead opinion's suggestion that prior judicial interpretations of a statute become set in stone once decreed. Lead op., ¶31 n.26. Reflexively cloaking every judicial opinion with the adornment of stare decisis threatens the rule of law, particularly when applied to interpretations wholly unsupported by the statute's text. In evaluating whether to persist in upholding a decision that elevated judicially-imagined legislative purpose over the words the legislature actually enacted, "[i]t is well to keep in mind just how thoroughly [the court's opinion] rewrote the statute it purported to construe." Johnson v. Transp. Agency, 480 U.S. 616, 670 (1987) (Scalia, J., dissenting). When a judicial opinion like Heyde replaces the words the legislature actually wrote with language the court preferred, in advancing the court's own policy choices, courts of last resort are duty- bound to correct the prior court's error.

(continued) 11 No. 2015AP1530.rgb

¶82 The dissent warns that the outcome of the lead

opinion's holding will leave employers "unable to prevent

raiding of their key employees by a former employee." Dissent,

¶45. Employers are not so hamstrung. The NSE Lanning signed

could have been narrowly drawn to protect a legitimate interest

of Manitowoc and to satisfy the other prerequisites identified

in Lakeside Oil. Finally, while the court concludes that Wis.

Stat. § 103.465 applies to Lanning's NSE, this conclusion should

not be interpreted to mean that § 103.465 will categorically

Finally, the lead opinion's conclusion that we can glean anything from the legislature's inaction in the 15 years following Heyde has long been discredited. "[I]t [is] impossible to assert with any degree of assurance that congressional failure to act represents (1) approval of the status quo, as opposed to (2) inability to agree upon how to alter the status quo, (3) unawareness of the status quo, (4) indifference to the status quo, or even (5) political cowardice." Id. at 672. "[E]ven if we were prepared to let members of Congress authoritatively express their collective ratification of a judicial decision without using the formal legislative process, the failure to pass an override bill is weak evidence of any such collective ratification. In most cases, it is easy to imagine that Congress would not have overridden the opposite decision either. After all, enacting a new statute is a lot harder than not enacting a new statute." Caleb Nelson, Stare Decisis and Demonstrably Erroneous Precedents, 87 Va. L. Rev. 1, 77 (2001). The lead opinion invokes the importance of promoting finality and predictability in the law in its application of stare decisis to Heyde. However, Heyde "is a demonstration not of stability and order, but of the instability and unpredictable expansion which the substitution of judicial improvisation for statutory text has produced." Johnson, 480 U.S. at 672. Because Heyde's interpretation of Wis. Stat. § 103.465 finds no mooring in statutory text, it does not deserve the status of inalterable law that stare decisis would afford it.

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apply to every NSE. Applying § 103.465 to a particular

restrictive covenant always requires a fact-specific inquiry.

¶83 I agree with the lead opinion that Wis. Stat.

§ 103.465 applies to this NSE, and under the Lakeside Oil

prerequisites, it is unreasonable and therefore unenforceable.

Because the lead opinion looks beyond the text of the statute to

consider the effect of this NSE on Manitowoc's workforce and

competitors rather than solely the employee restrained by the

covenant, I respectfully concur.

¶84 I am authorized to state that Justices MICHAEL J.

GABLEMAN and DANIEL KELLY join this concurrence.

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¶85 PATIENCE DRAKE ROGGENSACK, C.J. (dissenting). The

lead opinion distorts the plain meaning of Wis. Stat. § 103.465,

thereby changing it from a statute that balanced the rights of

employees and their employers into a broad mandate that prevents

employers from protecting their businesses from third-party

raiding. In so doing, it permits John M. Lanning to assist SANY

America, Inc. in cherry picking Manitowoc Company, Inc.'s key

employees and thereby reduces the competition that Manitowoc

would otherwise be able to exert against SANY, as both compete

in the same marketplace.

¶86 Because I conclude that the Non-Solicitation of

Employees (NSE) clause in Lanning's employment contract with

Manitowoc does not come within the plain meaning of Wis. Stat.

§ 103.465 and is enforceable, I respectfully dissent.

I. BACKGROUND

¶87 Manitowoc, a Wisconsin employer, participates in a

global market, where one of its divisions manufactures and

services large cranes. Lanning was a contract employee of Manitowoc's crane division, where he worked as an engineer for

more than 24 years. During his employment he signed several

contracts of employment with Manitowoc; however, all parties

agree that the contract at issue here was signed August 11,

2008.

¶88 Manitowoc was concerned with protecting its

confidential information that permitted it to compete in a

global marketplace, and it emphasized that concern in Lanning's employment contract. The NSE clause in Lanning's contract with

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Manitowoc was preceded by the following acknowledgement that was

set out in all caps:

I AM EMPLOYED OR MAY BE EMPLOYED BY MANITOWOC IN A CAPACITY IN WHICH I MAY RECEIVE OR CONTRIBUTE TO CONFIDENTIAL INFORMATION. IN CONSIDERATION OF SUCH EMPLOYMENT OR CONTINUED EMPLOYMENT, AND THE WAGES, SALARY OR COMMISSIONS AND OTHER EMPLOYEE BENEFITS IN COMPENSATION FOR MY SERVICES, AND IN CONSIDERATION OF BEING GIVEN ACCESS TO CONFIDENTIAL INFORMATION, I AGREE TO ALL OF THE FOLLOWING: ¶89 As a Manitowoc employee who had access to Manitowoc's

confidential information, Lanning agreed:

(2) Non-Solicitation of Employees. I agree that during my Employment by Manitowoc and for a period of two years from the date my Employment by Manitowoc ends for any reason, including termination by Manitowoc with or without cause, I will not (either directly or indirectly) solicit, induce or encourage any employee(s) to terminate their employment with Manitowoc or to accept employment with any competitor, supplier or customer of Manitowoc. ¶90 In January 2010, Lanning terminated his employment

with Manitowoc and went to work for SANY, a worldwide competitor

of Manitowoc's crane division. Shortly after joining SANY,

Lanning and SANY began an aggressive attack on Manitowoc, as

SANY attempted to hire Manitowoc's skilled employees. For

example, Lanning took a Manitowoc employee to lunch during

SANY's recruitment efforts. He accompanied another employee on

a SANY plant tour in China and participated in SANY interviews

of Manitowoc employees. Lanning and SANY's recruitment efforts

were successful. Key employees left Manitowoc and joined SANY.

¶91 Lanning has not denied that he violated the NSE clause in his employment contract. The circuit court found that he

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breached his contract with Manitowoc and awarded compensatory

damages. The court of appeals reversed.

II. DISCUSSION

A. Standard of Review

¶92 This case turns on the interpretation and potential

application of Wis. Stat. § 103.465. Statutory interpretation

and application present questions of law that we decide

independently, while benefitting from the analyses of the court

of appeals and the circuit court. DeHart v. Wis. Mut. Ins. Co.,

2007 WI 91, ¶8, 302 Wis. 2d 564, 734 N.W.2d 394.

B. Statutory Interpretation

1. General principles

¶93 The purpose of statutory interpretation is to

determine the statute's meaning so that we can give the statute

its proper effect. Id., ¶12 (citing State ex rel Kalal v. Cir.

Ct. for Dane Cty., 2004 WI 58, ¶44, 271 Wis. 2d 633, 681 N.W.2d

110). We begin with the language chosen by the legislature.

Kalal, 271 Wis. 2d 633, ¶45. Statutory words are given their plain and ordinary meaning unless they are technical terms or

have specific definitions within the statute. Id. If the

meaning of the statute is apparent from the plain meaning of the

words chosen by the legislature, we ordinarily stop our analysis

and apply that plain meaning to the questions presented for our

review. Id. We may use legislative history to confirm a plain

meaning interpretation. Id., ¶51.

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2. Wisconsin Stat. § 103.465

¶94 We interpret and consider whether to apply Wis. Stat.

§ 103.465, which provides:

A covenant by an assistant, servant or agent not to compete with his or her employer or principal during the term of the employment or agency, or after the termination of that employment or agency, within a specified territory and during a specified time is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any covenant, described in this section, imposing an unreasonable restraint is illegal, void and unenforceable even as to any part of the covenant or performance that would be a reasonable restraint. ¶95 The "covenant" addressed in Wis. Stat. § 103.465 is

the promise made by an "assistant, servant or agent" and is

limited in scope in that he or she promises "not to compete"

with "his or her employer" while employed by the employer or, in

specified circumstances, after that employment has ended. An

employee is an individual included within the statute's

protection of "servant." Romero v. West Bend Mut. Ins. Co.,

2016 WI App 59, ¶39, 371 Wis. 2d 478, 885 N.W.2d 591 (citing Restatement (Second) of Agency § 220 cmt. g. (1958) ("explaining

that 'servant' and 'employee' are interchangeable terms")).

¶96 The statutory language is limited in regard to whom it

applies. That is, Wis. Stat. § 103.465 applies only to the

employee who signs a contract containing such a covenant and

"his or her employer." A plain reading of the statute shows

that the statute is not to be read as applying to a universe of

employers, but rather, it is directed at one particular employer.

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¶97 "To compete" is not defined within the statute.

Black's Law Dictionary defines competition as, "the struggle for

commercial advantage." Black's Law Dictionary 322 (9th ed.

2009). Accordingly, competition equates with those actions by

an employee that evince the struggle for commercial advantage of

the employee over his or her employer.

¶98 The statute also says that "any covenant described in

this section," i.e., a covenant by an employee not to compete

with his or her employer, that imposes an "unreasonable

restraint" is not enforceable. On whom do we focus to determine

if the covenant is an "unreasonable restraint?" Plainly, we

focus on the effect of the covenant on the employee because it

is the individual employee who made the promise to be restrained

in his or her actions.

¶99 It is important to note that the term "trade" is

nowhere to be found in Wis. Stat. § 103.465. Nor should it be

implied because the restraint that § 103.465 addresses is

plainly the restraint of the employee who signed the NSE agreement. As I will explain in some detail below, it is not a

broad restraint of trade that is referenced in § 103.465, even

though some opinions casually incorporate that term.1

1 The court of appeals specifically interpreted the term "restraint" in Wis. Stat. § 103.465 as restraining trade. Manitowoc Company, Inc. v. Lanning, 2016 WI App 72, ¶14, 371 Wis. 2d 696, 885 N.W.2d 798. This interpretation goes far beyond what a plain reading of the statute permits and creates a universe of persons to which § 103.465 may be applied that is much broader than that which the legislature created.

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¶100 A restraint of trade is prohibited under the

provisions of Wisconsin Statutes ch. 133. A restraint of trade

has a broad focus. For example, Wis. Stat. § 133.01 is grounded

in a different scope of coverage and has a different analysis

for alleged violations than does Wis. Stat. § 103.465. Alleged

restraints of trade are examined under the "rule of reason,"

wherein Wisconsin courts follow federal court analyses of

alleged violations of section 1 of the Sherman Antitrust Act.

Indep. Milk Producers Co-op v. Stoffel, 102 Wis. 2d 1, 6-7, 298

N.W.2d 102 (Ct. App. 1980). Restraints of trade involve such

matters as monopolies, that inhibit competition, sometimes

vertically and sometimes horizontally, but on a broad basis.

See Olstad v. Microsoft Corp., 2005 WI 121, ¶¶13, 14, 284

Wis. 2d 224, 700 N.W.2d 139.

¶101 By inserting "restraint of trade" language into our

opinions, we have moved little by little away from Wis. Stat.

§ 103.465's plain meaning, which addresses only the restraint of

an employee. In so doing, we have incrementally broadened what the legislature chose to regulate under § 103.465. We did so

with a casual reference to a broad doctrine, restraint of trade,

without reasoning whether § 103.465 actually proscribed a

restraint of trade or something more narrow.

¶102 For example, in 1959, in Lakeside Oil Co. v. Slutsky,

8 Wis. 2d 157, 98 N.W.2d 415 (1959), we were presented with an

injunction against a former employee that enforced a covenant

not to compete. Slutsky contended that the covenant was a restraint of trade and therefore was illegal. Id. at 161. In

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deciding whether the injunction was properly placed, we

evaluated the employment contract in light of controlling

statutes. We concluded, the "contract on its face is not

illegal." Id. The statute to which we referred when we

reviewed whether a "restraint of trade" had occurred was Wis.

Stat. § 133.01. Id. It was not Wis. Stat. § 103.465. However,

we noted later in the opinion that in 1957 the legislature had

enacted § 103.465. Id. at 161-62. We then went on to examine

the effect of the non-compete on the employer and employee, at

times drawing in antitrust concerns that are properly analyzed

under § 133.01, but not under § 103.465. Id. at 167.

¶103 In Behnke v. Hertz Corp., 70 Wis. 2d 818, 235 N.W.2d

690 (1975), we addressed a non-compete agreement that National

Car Rental required of its employee, Barbara Kreft. The

agreement provided:

I agree not to work for any car rental competitor in the city of Milwaukee for one year if and when this present job is terminated. Id. at 820.

¶104 We began our discussion in Behnke by recognizing that

the contract provision at issue was controlled by Wis. Stat.

§ 103.465. Id. We then mused about various contract provisions

spoken to in Restatement (Second) Contracts, picking up

"restraint of trade" language from the Restatement. Id. at 821.

We did not discuss whether a restraint of trade was a broader

concept than a restraint of an employee; the question was never

presented.

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¶105 In Zimmermann v. Brennan, 78 Wis. 2d 510, 254 N.W.2d

719 (1977), we examined whether a profit sharing plan provision

was unenforceable under Wis. Stat. § 103.465 when it provided

that Zimmermann would lose the unpaid portion of his vested

interest if he became employed by a "competitive business." Id.

at 512. Zimmermann alleged that "the forfeiture provision

contained in the plan constituted an unreasonable restraint of

trade under sec. 103.465, Stats.," using the broad "restraint of

trade" language found in earlier opinions. Id. Although the

trial court found the provision was an unreasonable restraint of

trade, we opined that we need not decide whether the trial

judge's conclusion was correct because the business that

Zimmermann engaged in subsequent to his employment by Brennan

was not a "competing business." Id. at 512-13.

¶106 In Strief v. Am. Family Mut. Ins. Co., 118 Wis. 2d

602, 348 N.W.2d 505 (1984), we concluded that a clause in an

insurance agent's contract was unenforceable under Wis. Stat.

§ 103.465 as "an unreasonable restraint of trade." Id. at 603- 04. However, the opinion actually turns on the interpretation

of the contractual provisions, not on an interpretation of the

scope of § 103.465. Id. at 611-12.

¶107 In Tatge v. Chambers & Owen, Inc., 219 Wis. 2d 99, 579

N.W.2d 217 (1998), we examined whether a wrongful discharge

claim would lie for the discharge of an at-will employee who

refused to sign a non-disclosure, non-compete agreement. Id. at

101. We assumed that the provisions sought to restrain competition, and therefore, came within Wis. Stat. § 103.465.

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Id. at 112. We reasoned that § 103.465 "evidences a strong

public policy against the enforcement of trade restraints which

are determined to be unreasonable upon all employees." Id. at

114-15.

¶108 Before concluding that no claim for wrongful discharge

could be made, we explained that "the validity of a restrictive

covenant is to be established by examination of the particular

circumstances which surround it." Id. at 116-17 (citing Rollins

Burdick Hunter of Wis., Inc. v. Hamilton, 101 Wis. 2d 460, 468,

304 N.W.2d 752 (1981) ("What is reasonable varies from case to

case, and what may be unreasonable in one instance may be very

reasonable in another.")).

¶109 In Heyde Cos., Inc. v. Dove Healthcare, LLC, 2002 WI

131, 258 Wis. 2d 28, 654 N.W.2d 830, we applied Wis. Stat.

§ 103.465 to a contract between two corporations. Id., ¶1. We

broadly stated the issue as: "whether a no-hire provision

contained in a contract between employers, without the knowledge

and consent of the affected employees, is unenforceable as an unreasonable restraint of trade." Id., ¶9. This broad

statement of the issue permitted us to ignore the plain meaning

of § 103.465, which requires an employee covenant. However,

notwithstanding that little detail, i.e., the words the

legislature chose, we struck down the agreement between two

companies based on our expansion of § 103.465. Id., ¶13.

¶110 Star Direct, Inc. v. Dal Pra, 2009 WI 76, 319 Wis. 2d

274, 767 N.W.2d 898, is our most recent decision involving Wis. Stat. § 103.465. Star Direct involved a business non-compete

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clause and a customer non-compete clause in Dal Pra's employment

contract with Star Direct. We applied § 103.465 to both

clauses. Id., ¶5. No question was raised about the

applicability of § 103.465 to these clauses.

¶111 We started our analysis with the now common, broad

statement: "Restrictive covenants in Wisconsin are prima facie

suspect as restraints of trade." Id., ¶19. (citing Streiff, 118

Wis. 2d at 611). However, we did not expand our analysis

consistent with that broad statement as we had in Heyde, but

instead, we narrowly focused on the particular facts and

circumstances of Star Direct and Dal Pra. We recognized the

legitimate concerns of an employer when a former employee is in

possession of confidential business information. Id., ¶47.

¶112 Equity Enterprises, Inc. v. Milosch, 2001 WI App 186,

274 Wis. 2d 172, 633 N.W.2d 632, contained a contract with a NSE

clause. However, the court of appeals did not address whether

Wis. Stat. § 103.465 applied to NSE clauses or whether it was

relevant to Milosch's claim for commissions that he asserted Equity was retaining.

¶113 In Mut. Serv. Cas. Ins. Co. v. Brass, 2001 WI App 92,

242 Wis. 2d 733, 625 N.W.2d 648, the court of appeals in meeting

MSI's concern that Brass's new employer, American National Ins.

Co., had raided the ranks of its career agents, reasoned that

NSE provisions do not come within Wis. Stat. § 103.465. Id.,

¶17. The court of appeals said that "[t]he law [§ 103.465],

however, does not protect against the raiding of a competitor's employees. Rather, it encourages the mobility of workers." Id.

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In so concluding, the court of appeals affirmed that § 103.465

is focused on covenants that preclude the employee from

realizing employment opportunities, but that it does not apply

to all agreements that employees make with their employers.

¶114 Few states have examined NSE provisions in employment

contracts. However, a provision similar to the NSE covenant at

issue here was addressed in CDI Corp. v. Hough, 9 So. 3d 282

(La. Ct. App. 1 Cir. 3/27/09). Hough was a vice-president of

operations for CDI. In connection with his employment he signed

a NSE agreement that provided:

For a period of twelve (12) months following the termination of your employment with the Company, you will not:

(a) Directly or indirectly hire or cause to be hired, or solicit, interfere with or attempt to entice away from the Company, any individual who was an employee of the Company within six (6) months prior to such contact, solicitation, interference or enticement. Id. at 284.

¶115 Hough and Kyzer, another employee of CDI, decided to

set up a competing business. They did so and then recruited

several CDI employees to go to work for their new company. Id.

at 285.

¶116 CDI sought and obtained an injunction prohibiting

further raiding of CDI employees. On appeal, Hough challenged

the injunction, claiming that it violated a Louisiana statute

that regulated non-compete agreements between employees and

employers. Id. at 286.

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¶117 The court noted that generally parties contract as

they see fit, and courts "will enforce the contract as written,

provided the agreement is not contrary to good morals or public

policy." Id. at 287. The court then noted that the purpose of

the Louisiana statute was to avoid restraints on an employee's

employment opportunities, which is not a concern of an agreement

not to solicit an employer's employees. Id. at 290.

¶118 The court concluded that the NSE agreement "does not

prevent Mr. Hough from exercising his trade, profession, or

business. In fact, the agreement assumes Mr. Hough will compete

with CDI Corporation." Id. at 292. The court then concluded

that the NSE agreement Hough signed with CDI is not governed by

the statute raised by Hough and is enforceable. Id.

C. The NSE Agreement

¶119 As I consider whether the NSE agreement at issue here

comes within the provisions of Wis. Stat. § 103.465, I note how

the statute expresses its concerns for employees. Section

103.465 plainly focuses on contractual promises of an employee "not to compete with his or her employer." The language chosen

by the legislature is driven by a legislative policy choice that

employees not be subjected to undue restraints on their

employability or mobility. Streiff, 118 Wis. 2d at 614.

Covenants that the employee not work for a competitor, supplier

or customer of his or her employer come within covenants not to

compete with the employee's employer.

¶120 However, Wis. Stat. § 103.465 also considers the interests of employers and their necessary business interests.

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For example, § 103.465 does permit employers to contract for

restrictions that would limit their employees employment

opportunities if the restriction is reasonable in time and place

and reasonably necessary to protect a business interest of the

employer. Rollins Burdick, 101 Wis. 2d at 469.

¶121 Lanning's contract with Manitowoc provides: "IN

CONSIDERATION OF BEING GIVEN ACCESS TO CONFIDENTIAL INFORMATION,

I AGREE TO ALL OF THE FOLLOWING:." The NSE clause follows. In

the contract, Lanning agreed that during his employment, and for

two years thereafter, he will not try to persuade other

employees of Manitowoc to leave Manitowoc or to accept

employment with a competitor, supplier or customer of Manitowoc.

¶122 On its face, the NSE clause protects against only the

raiding of Manitowoc's key employees by Lanning, who was given

access to Manitowoc's confidential information. It does not

prevent Lanning from competing with Manitowoc. He can work for

whomever he chooses, including a direct competitor such as SANY,

in any place, at any time. He can use all the engineering skills he possesses. He can contact customers of Manitowoc in

an attempt to sell or service more cranes. Furthermore, the NSE

clause does not prevent Manitowoc's other employees from leaving

Manitowoc for other employment opportunities, including working

for a competitor such as SANY. The NSE clause simply restrains

Lanning from raiding Manitowoc's skilled employees.

¶123 I agree with the court of appeals in Brass; Wis. Stat.

§ 103.465 "does not protect against the raiding of a competitor's employees." That concern is not within the purview

of § 103.465. Stated otherwise, the NSE covenant does not come

within the provisions of § 103.465 because it is not a covenant

that prohibits Lanning from competing with Manitowoc.

¶124 Lanning does not question that there was consideration

for the contract he signed. Courts generally honor the rights

of parties to freely contract. Solowicz v. Forward Geneva Nat.,

LLC, 2010 WI 20, ¶34, 323 Wis. 2d 556, 780 N.W.2d 111.

Accordingly, I would honor the right to freely contract and

enforce the agreement Lanning made.

D. Lead opinion

¶125 The lead opinion gets off track by asserting that Wis.

Stat. § 103.465 applies to "agreements viewed as restraints of

trade."2 It cites Heyde for this proposition, and as I explained

above, Heyde dealt with an agreement between two companies. See

also Heyde, 258 Wis. 2d at 47 (Sykes, J., dissenting) ("The

majority analyzes this case as though it were a lawsuit between

an employer and a former employee, but it is not. It is a breach

of contract lawsuit between two sophisticated businesses."). ¶126 The lead opinion herein creates an even broader

application of Wis. Stat. § 103.465 than that created by Heyde.

The lead opinion states, "§ 103.465 'essentially deals with

restraint of trade . . . regardless of whether the restriction

is labeled a non-disclosure provision or a covenant not to

compete.'"3 The lead concludes the NSE clause violates § 103.465

2 Lead op., ¶5. 3 Id., ¶6.

14 No. 2015AP1530.pdr

because it "affects access to the labor pool by a competitor of

Manitowoc Company (including Lanning's current employer, SANY

America)."4 By that addition, the lead includes the effect of

the NSE on non-parties to the contract. Essentially, the lead

legislates new parameters for § 103.465 that are far beyond what

the plain meaning of the statute can accommodate. In so doing,

it sets the stage for greater and greater judicial legislating.

¶127 As I explained above, using "restraint of trade" as

definitional for Wis. Stat. § 103.465, creates a much broader

regulation than that chosen by the plain meaning of § 103.465,

wherein "trade" is never mentioned. Using restraint of trade as

the matter being regulated has permitted the Wisconsin Supreme

Court to find a violation of § 103.465 in a contract between two

companies, where no employee was involved. Heyde, 258 Wis. 2d

at 47.

¶128 Although "restraint of trade" is a term found in many

opinions, it initially was employed when a restraint of trade,

i.e., a violation of Wis. Stat. § 133.01, was claimed. Lakeside Oil, 8 Wis. 2d at 158-59. While many cases repeat the words,

few expand Wis. Stat. § 103.465 with them as Heyde did and as

the lead opinion does here.

¶129 Employers will be harmed by the lead opinion's

expansive interpretation of Wis. Stat. § 103.465 because

employers will be unable to prevent raiding of their key

employees by a former employee who knows which employees are

4 Id., ¶9.

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important to the former employer's operations. When such an

employee joins an aggressive competitor, competition in the

marketplace will be diminished because the former employer will

become a less effective competitor than it was before its key

employees were raided.

III. CONCLUSION

¶130 The lead opinion distorts the plain meaning of Wis.

Stat. § 103.465, thereby changing it from a statute that

balanced the rights of employees and their employers into a

broad mandate that prevents employers from protecting their

businesses from third-party raiding. In so doing, it permits

Lanning to assist SANY in cherry picking Manitowoc's key

would otherwise be able to exert against SANY as both compete in

the same marketplace.

¶131 Because I conclude that the NSE clause in Lanning's

employment contract with Manitowoc does not come within the

plain meaning of Wis Stat. § 103.465 and is enforceable, I respectfully dissent.

¶132 I am authorized to state that Justice ANNETTE

KINGSLAND ZIEGLER joins this dissent.

16 No. 2015AP1530.pdr