NU Online News Service, June 23, 3:35 p.m. EDT
A U.S. District Court judge has elected not to grant an injunction requested by wholesale broker CRC Insurance Services Inc. against former employees now with competitor Ryan Specialty Group's R-T Specialty of Illinois, LLC (RTS).
Judge James B. Zagel, sitting in the Northern District of Illinois, found that CRC, a subsidiary of BB&T Corp., is and will continue to be harmed by the fact that 120 employees in May left the company's Chicago office to join the RTS brokerage, part of the group started by Aon Corp. founder Patrick G. Ryan.
However, the judge found that while CRC would indeed suffer a loss to business from the exodus, it would not go out of business without an injunction.
The same could not be said for RTS, Judge Zagel said. The judge said the "balance of harm weighs against issuing the injunction."
While expressing disappointment in the decision, CRC Chief Executive Officer Thomas J. Curtin said the company is "only at the beginning of what will be a protracted legal dispute."
Ryan Specialty Group (RSG) could not immediately be reached for comment.
CRC's request stems from the resignation of more than 120 employees on or about May 4. The brokerage then filed a lawsuit against the Ryan group and the former CRC employees, looking to enforce the confidentiality and non-solicitation agreements they signed.
CRC said 39 employees also signed non-compete agreements. The injunction looked to stop them all from working for RTS, but with the ruling, the former employees now at RTS will remain employed.
CRC and RTS are at odds over the non-compete agreement and scope of the non-solicitation agreement, court records reveal.
"CRC intends to continue vigorously defending itself and protecting its business," Mr. Curtin said.
RTS said it is taking steps to ensure the former CRC employees do not violate the confidentiality agreement, according to court records.
According to court documents, Tim Turner, former co-president of CRC, resigned in January. In February, Mr. Ryan announced the launch of RSG and also announced Mr. Turner as managing director. RTS was founded in March by Mr. Ryan and Mr. Turner.
CRC alleges Ed McCormack, who CRC said served as outside counsel, joined RSG in February and then "solicited CRC employees to join the newly formed RTS."
In his ruling to deny the injunction, Judge Zagel said CRC successfully showed it has suffered irreparable harm in the form of reputation damage, loss of goodwill and loss of employees. The judge admitted that if an injunction was denied, "other employees could doubt the enforceability of their own agreements, leading to further chaos," but if it were granted, each former CRC employee now at RTS would be forced to stop working.
"Both parties admit that if an injunction were issued, RTS would not survive," wrote Judge Zagel.
CRC has offered its former employees the chance to return to the company, but none have expressed a desire to do so, according to the court records.
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