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Chicago Federal Judge Denies Injunction in Insurance Brokerage Restrictive Covenant Case

 

Our Chicago noncompete agreement lawyers were interested to read about a significant ruling in a covenant not to compete case. According to insurance industry journal National Underwriter Property & Casualty, a federal district judge for the Northern District of Illinois ruled in June that former employees of CRC Insurance Services Inc. may continue in their new jobs at Ryan Specialty Group Inc. while the courts hear the two companies’ legal dispute. The companies, both of which are specialty insurance brokers, are fighting over employees who left CRC in May to move to Ryan’s R-T Specialty of Illinois, a new company founded by Pat Ryan, the CEO of Aon Corporation and a Chicago philanthropist. The judge’s preliminary ruling means the employees can stay in their jobs at least until the lawsuit by CRC has been decided.

According to the article, the exodus started when Tim Turner resigned as co-president of CRC in January. In February, Ryan announced that it was starting RTS with Turner in the role of managing director. He was joined by a former outside counsel to CRC, Ed McCormack. CRC’s complaint alleges that McCormack solicited CRC employees to join RTS. In all, 120 employees made that switch, including 39 who had signed covenants not to compete. After a large group of resignations on May 4, CRC sued RTS to enforce employees’ agreements not to compete, not to solicit former colleagues or customers for two years, and not to disclose certain company information. RTS told the court it is taking steps to obey the confidentiality agreements, but disagrees with CRC about the non-compete agreement and the scope of the non-solicitation agreement.

In the ruling, the Chicago federal court declined to grant a preliminary injunction to CRC, which would have stopped all 120 employees from working at RTS or any other competitor. In the ruling, the court said allowing the employees to continue working at RTS will harm CRC, but declining to allow them to keep working would put RTS out of business and harm the livelihoods of the employees. Crain’s Chicago Business noted that CRC has also filed suit in Alabama and California.

This ruling is a major victory for RTS and its new employees. RTS is backed by the wealth of Pat Ryan, but it can’t do business if none of its new employees are allowed to work for it. As the judge noted in the article, even CRC agreed that RTS would not survive without the 120 employees at issue — 81 of whom do not have a non-compete agreement. By contrast, the judge noted that CRC would not go out of business for lack of this preliminary injunction. Rulings like this can be appealed, of course, and our Illinois emergency business litigation attorneys may be able to offer other options to clients in CRC’s situation. In fact, as a CRC spokesman said in the article, this is likely to be just the first step in a long dispute between the two companies.


DiTommaso-Lubin is an experienced business litigation firm based in Chicago and Oak Brook, Illinois. Among the legal services we offer are services for emergency business litigation, in which we can help companies that need quick action to head off a threat to their business. This can include covenant not to compete cases like this, but also cases involving trade secrets, intellectual property, fraud and theft, shareholder disputes, professional misconduct and more. Our Wheaton, Ill. covenant not to compete lawyers have won victories for clients on both the defense and plaintiff’s sides and are proud of our strong record of results. From two offices in the Chicago area, we represent people throughout Illinois, Indiana and Wisconsin, including in Waukegan, Evanston and Naperville. To learn more about DiTommaso-Lubin or set up a consultation, you can reach us toll-free at 1-877-990-4990 or send us a message online.