Indiana Supreme Court Clarifies State Blacklisting Statute

The Indiana Supreme Court recently provided its first comprehensive discussion of Indiana's Blacklisting Statute, Ind. Code § 22-5-3-2, in more than a century. In response to several certified questions from the U.S. District Court for the Southern District of Indiana, the Supreme Court for the first time offered a definition of "blacklisting" under the statute. It also clarified that employers cannot face liability under the Blacklisting Statute merely for attempting to enforce a noncompetition agreement or protect trade secrets in court.

Factual Background

Stephen Odders and Gerald Kerber worked for the same company. Odders was fired in September 2008, and Kerber resigned in September 2009. Both Odders and Kerber were subject to one-year noncompetition agreements forbidding them from soliciting the employer's customers or working for a competitor within a certain geographical area. After leaving the company, both Odders and Kerber went to work for a competitor – MPI Release Technologies, Inc. (MPI).

The former employer sued MPI, Odders, and Kerber in the U.S. District Court for the Southern District of Indiana, alleging that Odders and Kerber violated the state trade secret statute and breached their noncompetition agreements. Odders and Kerber filed counterclaims under Indiana's Blacklisting Statute, Ind. Code § 22-5-3-2, and sought damages, including attorneys' fees. After Judge Jane Magnus-Stinson granted summary judgment in favor of Odders and Kerber on the company's claims, she certified three questions to the Indiana Supreme Court regarding the Blacklisting Statute.

Legal Analysis

Indiana's Blacklisting Statute prohibits employers from "black-list[ing] any discharged employees, or attempt[ing] by words or writing, or any other means whatever, to prevent such discharged employee, or any employee who may have voluntarily left said company's service from obtaining employment with any other person, or company." Ind. Code § 22-5-3-2. Violations of the statute subject employers to liability for damages "in such sum as will fully compensate" the injured employee. Although the statute has been on the books for the more than a century, the Indiana Supreme Court has rarely interpreted it. In this case, the court provided some much-needed guidance about the scope of the statute.

The Indiana Supreme Court began by answering two technical questions. First, it determined that the statute properly applies both to discharged employees and those who...

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