Many trade secret cases, especially those in the financial sector, arise out of the departure of important sales representatives who leave for greener pastures and try to take their former clients with them, typically in violation of a non-solicitation agreement. In these cases, one of the most hotly contested issues is figuring out which customers are covered by the non-solicitation agreement.
A recent opinion from one of New York’s State Supreme Courts, Aon Risk Services v. Cusack, highlights the importance of the language of the actual non-solicitation provision, as well as the order enforcing it. This opinion arises in the context of a plaintiff’s request to have a former employee and his new employer held in contempt of a previous preliminary injunction order. (A PDF copy of the court’s February 17, 2011 opinion is attached below). As you will see below, the court followed the letter of the order and found no violation.
For those unfamiliar with non-solicitation agreements, they allow former employees to compete with their former employer provided the former employees do not contact or solicit their former customers. Courts are generally more receptive to enforcing these agreements than covenants not to compete because they strike a reasonable balance between protecting the legitimate business interests of the former employer in its customers but still allow the former employees to make a living. However, it is important to remember that, like any restrictive covenant, courts will generally provide no more protection than the plain language of the agreement provides.
Back to the case at hand. Aon Risk Services Northeast sued Michael Cusack, a former Senior Vice President and Managing Director, and his new employer, Alliant Insurance Services, alleging that they had orchestrated a massive raid on the clients and employees of Aon’s Construction Services Group. After a preliminary injunction hearing last year, Supreme Court Judge Bernard J. Fried entered an order forbidding Cusack and Alliant from “soliciting business from or entering into any business relationship with, on behalf of Alliant, any Aon client or customer for whom any such former Aon employee was the producer or on whose account he or she worked during the twenty-four (24) months prior to June 13, 2011.” According to Judge Fried, the only “former Aon employee” covered by this language was Cusack, a determination that proved critical.
When two of Alliant’s other employees (who coincidentally, were also former Aon employees) sent emails to or contacted several of Aon’s clients, Aon filed an order to show cause why Alliant should not be held in contempt for violation of the order. Aon argued that those clients had been serviced by Cusack previously and fell within the intent of the order.
Judge Fried rejected that argument and found, under the literal language of his injunction, that the provision did not apply to the other Alliant employees and questioned whether he even had jurisdiction over those employees. In an interesting twist, Judge Fried noted that his interpretation was consistent with a press release issued by counsel for Aon that described the order as covering Aon clients “with whom Cusack might have had contact while employed at Aon.”
It is unclear why Aon (or Judge Fried) did not simply identify the clients that it believed should be subject to the order during the course of the preliminary injunction hearing. This would have provided the requisite clarity to avoid future disputes about the scope of the order. In my experience, a list of customers covered by the order has the additional benefit of frequently promoting settlement of a dispute as the parties have the opportunity to try to negotiate who or what should be covered.
The takeaway? There are two: (1) To paraphrase former Arizona Cardinals coach Denny Green, the order (or the agreement) “is what it says it is.” As a result, don’t expect a court to enforce anything more than what the language of an agreement or an order expressly provides; and (2) In the context of a request for an injunction involving a solicitation dispute, consider proposing a list of customers to the court (or to the opposing party) to provide clarity to the order, minimize future disputes, and perhaps even facilitate a resolution of this issue.