Alliant barred from servicing accounts it allegedly gained from rival's staff

A Delaware Chancery Court judge has issued a preliminary injunction barring a company from servicing the accounts of about 55 customers it had allegedly gained after raiding the staff of a rival.

Vice Chancellor J. Travis Laster said Thursday it was “reasonably probable” that affiliates of the Lockton Cos. would succeed at trial on their claims of tortious interference against Alliant Insurance Services Inc., which it said had organized the “en masse” resignation of 26 employees in order to start a competing office in Denver.

Lockton has accused Alliant in court filings of purposely violating restrictive covenants in the workers’ contracts, which prevent the employees from soliciting Lockton’s customers and personnel for two years after leaving the companies.

According to a March 22 complaint, Alliant senior executive Peter Arkley organized the defection of 26 insurance professionals from Lockton’s Denver office earlier this year. Lockton said that Arkley originally timed the move for March 8 but changed the plans to March 12. The new date, Lockton said, aligned with a company retreat that Lockton leadership was attending in Arizona and deprived the company of the chance to develop a litigation strategy over the weekend.

In total, Lockton said Alliant has been able to solicit 144 customers, 55 of which switched their business over to Alliant.

Alliant has countered that the restrictive covenants were invalid, and it was simply taking advantage of an opportunity to expand its operations in a new market.

On Thursday, Laster said it was clear that Alliant had precipitated the resignations, and the company had gone out of its way to cover it up. A preliminary injunction, he said, wouldn’t repair any alleged harm that Lockton had already suffered, but it would prevent any further action ahead of trial.

“Issuing a preliminary injunction in this case will restore the status quo, at least to the extent possible, pending a final determination on the merits after trial,” Laster wrote in a 57-page memorandum opinion.

“Although it is not possible to fully recreate the status quo pending trial, a preliminary injunction can go part of the way,” he said.

Under the order, Alliant would be barred from servicing any of the customer accounts it allegedly pilfered and would be prevented from soliciting any more Lockton employees or using any confidential information they possessed.

Michael B. Carlinsky, a partner with Quinn Emanuel Urquhart & Sullivan who represented Lockton, welcomed the ruling Friday.

“This ruling recognizes that Delaware courts will not countenance misconduct and deception and will not hesitate to take action to remedy it,” he said in a statement.

The case is captioned Mountain West Series of Lockton Cos. v. Alliant Insurance Services.

Related: Alliant accused of poaching Wells Fargo insurance brokers

This article first published on Law.com, a sister publication of PropertyCasualty360.