Court rules broker nonsolicitation agreement too broadPosted On: May. 13, 2019 3:02 PM CST
The North Carolina Supreme Court on Friday affirmed dismissal of some of the charges filed by Wells Fargo Insurance Services USA Inc. against BB&T Insurance Services Inc. and three Wells Fargo employees who left the brokerage to join BBT.
The unanimous ruling in Wells Fargo Insurance Service USA v. Kevin Link said in part that Wells Fargo’s nonsolicitation agreement was too broadly worded.
Kevin Link, a senior sales executive, left Wells Fargo in October 2016, and commercial insurance producer Nelson Raynor and marketing placement specialist Elizabeth Pack left in April 2017, according to the ruling.
USI Insurance Services LLC agreed to buy Wells Fargo Insurance Services in 2017. BB&T Insurance Services, part of BB&T Corp. subsidiary BB&T Insurance Holdings Inc., said last year it was rebranding as McGriff Insurance Services.
The ruling affirmed dismissal of charges of breach of “non-solicitation of customers restriction” and of the “non-solicitation of employees covenants” against Mr. Link and Mr. Raynor.
It said the term “the Company” is defined so broadly in their agreements “that it sweeps within its ambit customers of far-flung Wells Fargo subsidiaries and affiliates unrelated to Wells Fargo’s commercial insurance business, and customer with whom Link and Raynor would have had no contact.”
The plaintiff “has not alleged any fact that would support a legitimate business interest in restricting Link or Raynor from soliciting employees working for Wells Fargo’s affiliate companies in any segment of the banking, investment, or insurance industries,” the ruling said.
“It is highly unlikely that the vast majority of these employees would have had an involvement or contact with Wells Fargo’s commercial insurance customers. The non-solicitation of employees covenant as written, is unreasonable and unenforceable as a matter of law.”
The court said the misappropriation of trade secret charge should not be dismissed. It concluded that “the allegations in this case, read generously, are minimally sufficient to put Defendants on notice of the trade secrets that they have allegedly misappropriated.” It also did not dismiss claims against Mr. Link and Mr. Raynor for unfair and deceptive trade practice, among other motions in which it ruled in the case.
Attorney in the case could not immediately be reached for comment.
In the latest example of comparable litigation, Marsh LLC sued NFP Corp. for allegedly poaching 13 former JLT Specialty Insurance Services Inc. real estate employees.