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A federal judge in New Jersey on Tuesday refused to issue a preliminary injunction barring Endurance Specialty Holdings Ltd. from soliciting Chubb Ltd. real estate and hospitality clients following Endurance’s recruitment of former Chubb executive Michael Chang and several of his staff last year.
But the judge in Chubb INA Holdings Inc. v. Michael Chang et al. also refused to throw out a revised lawsuit filed by the Chubb unit alleging that employees poached by Endurance had obtained confidential business records “on a massive scale through multiple mediums” prior to leaving Chubb.
U.S. District Judge Brian Martinotti in Trenton, New Jersey, wrote that Endurance’s argument that the former employees obtained the confidential information in the ordinary course of employment “is based entirely on their own self-serving denials.”
Mr. Chang worked at Chubb for more than 19 years in its real estate and hospitality division, and allegedly indirectly coordinated Endurance's recruitment of many key employees of that division. Other former Chubb employees named in the suit include Bentley Betts and Daryl Dubrovich, who are now casualty underwriters at Endurance.
Endurance announced in February 2016 that Mr. Chang would be joining the company as CEO of global risk solutions. In the following weeks, the complaint said, Mr. Chang began indirectly working with other Endurance employees and an outside search firm to coordinate a simultaneous lift out of a block of Chubb employees to create a “turnkey” operation for Endurance.
Fifteen employees in Chubb’s real estate and hospitality division received employment offers from Endurance; all but three employees accepted, and Endurance subsequently hired 12 former employees of Chubb, the ruling said.
The ruling said that Endurance allegedly simultaneously delivered to each of the former Chubb employees a written offer of employment “greatly in excess of market rates” to pressure them to make a decision in haste, and, ultimately, “caused the former Chubb employees to notify Chubb of their resignations on the same day, Friday, April 22, 2016” in an effort “to cripple Chubb's business operations in the real estate and hospitality division.”
Chubb would lose 40% of the division’s senior management in one day, the complaint said and Endurance allegedly “ensured that their departures were coordinated so as to exact maximum harm to Chubb's relationships” with various accounts serviced by Chubb.
Chubb also charged that Mr. Chang and other former Chubb employees accessed confidential information on Chubb’s computer system to send it their personal email accounts so they could download, transfer, save or store the information on cloud service platforms and portable storage devices. Generally, the complaint said, the alleged data transfers all occurred while the former Chubb employees were still working at Chubb.
Chubb alleges that “Chang, aided and abetted by and acting as agent for Endurance, violated his contractual and legal obligations to Chubb, including, among others, not to use or disclose Chubb's confidential information and to refrain from soliciting, recruiting, or taking actions to solicit or recruit Chubb’s employees to work for a competitor.”
In allowing the case to proceed but in denying a preliminary injunction, the ruling said that while Chubb had “made a persuasive showing that Chang breached his nonsolicitation agreement,” any alleged harm that resulted could be “remedied by money damages. The same is true with respect to Endurance’s alleged use of confidential information to solicit Chubb's customers.”
Endurance Specialty Holdings Ltd. has recruited a former Chubb Corp. executive to lead its push into large account commercial insurance.