Restrictive Covenants and Trade Secrets

Weil represented Alliant in three lawsuits in New York, Illinois, and California involving allegations of misappropriation of trade secrets and confidential and proprietary information related to the departure of a group of 60 Aon employees, five of whom had restrictive covenants in either their employment agreements or stock appreciation awards. Weil served as national coordinating counsel overseeing all of the lawsuits, and as trial counsel in the California and New York actions. In the California action in June 2012, Weil was successful in obtaining partial summary judgment rejecting Aon’s attempt to enforce employee covenants. After engaging in mediation, the parties settled the action (and all related actions) and dismissed the litigation with prejudice in June 2013.

Weil successfully defended Elite in a restrictive covenant and trade secrets litigation brought by industry competitor, Men Women NY Model Management, seeking to restrain four of its former senior executives from commencing work with Elite. At four separate hearings, Weil defeated two applications for temporary restraining orders and two applications for preliminary injunctions seeking to restrain four former senior executives of Women from commencing work with Elite and Elite from engaging in various business activities involving the representation and development of fashion models. At these hearings, the Court rejected Women’s claims for, among other things, breach of a broad range of restrictive covenants, breach of fiduciary duties and misappropriation of trade secrets. Following these injunction victories, the case was resolved on extremely favorable terms to our client with no business interruption.

HBC retained Weil in 2015 when HBC was hiring a new Chief Information Officer, Janet Schalk, who had a non-compete agreement with her prior employer, Kohl’s Department Stores. Weil counseled HBC with respect to the hiring of Ms. Schalk, noting that her non-compete agreement with Kohl’s was overbroad and likely unenforceable. When Kohl’s filed a complaint against Ms. Schalk in Wisconsin state court seeking to enforce the non-compete, Weil then led the litigation defense. In this action, Kohl’s moved for a temporary injunction to block Ms. Schalk from commencing employment with HBC, but after a two-day evidentiary hearing, the judge denied Kohl’s motion based on his finding that Kohl’s failed to show a reasonable probability of success on the merits. Specifically, the judge found that Kohl’s failed to demonstrate that the restriction on Ms. Schalk was reasonably necessary for the protection of Kohl’s business interests. Ms. Schalk, following the court’s denial of Kohl’s motion, has commenced employment as the new CIO of HBC. The plaintiff subsequently dropped the case entirely.

Weil represented Marsh in an action against the former Head of Marsh’s Hawaii Office who resigned to become the Head of the Hawaii Office for Marsh’s chief competitor, Aon. Marsh alleged that the former Office Head solicited Marsh employees and clients in violation of his various restrictive covenant agreements. Following extensive, expedited cross-country deposition and document discovery, the U.S. District Court for the Southern District of New York granted Marsh’s motion for a preliminary injunction in full, which, inter alia, precluded Defendant from servicing or supervising the servicing of any former Marsh clients and from soliciting or otherwise interfering with Marsh’s client relationships. The Court also reset the one-year restriction period from the date of the Order (adding another six months to the one-year period) and awarded Marsh attorneys’ fees. As a result of the sweeping injunction victory, Karasaki and Aon (his indemnitor) paid Marsh a substantial monetary sum to settle the case. This case broke new ground regarding the broad scope of the injunctive relief awarded to Marsh, the resetting of the one-year restrictive covenant period from the date of the Order (giving Marsh an additional six months of relief for a total of 18 months) and awarding Marsh substantial attorneys’ fees as reimbursement for the expensive litigation.

Weil represented MasterCard in connection with a top executive’s departure to a substantially similar position at a competitor in the burgeoning growth area of prepaid consumer cards, in violation of a non-competition agreement. Weil successfully negotiated an agreement with American Express memorialized in a court-ordered injunction that precluded the executive from beginning work at American Express for a significant “cooling off” period, and thereafter only permitted the executive to begin employment at American Express with multi-stage limitations to protect MasterCard’s confidential strategies. The agreement also provided for the repayment of a portion of the bonus that the executive received shortly before her resignation.

On behalf of UnitedHealth Group (UHG), Weil successfully enjoined the former President of an affiliate industrial bank from accepting a position with its principal competitor in the health savings account industry, enforcing the full two-year term of the non-competition agreement following a four-day evidentiary hearing. 

Separately, we also brought a successful action in Minnesota state court against one of UHG’s former high-level employees who violated his post-employment restrictive obligations and began work for a competitor in a comparable position, seeking, among other relief, a temporary restraining order and preliminary injunction. After UHG successfully obtained a temporary restraining order, it resolved the matter with the former UHG employee on highly favorable terms.

Weil represented WoodSpring Hotels, an extended stay hotel company, in connection with litigation commenced in Kansas by industry competitor Extended Stay America hotels (ESA) against WoodSpring, WoodSpring’s former Vice President of Sales, and a former IT consultant of both WoodSpring and ESA. ESA brought eleven claims against the defendants, alleging misappropriation and use of ESA’s confidential information and trade secrets, which it claimed occurred with the knowledge and acquiescence of certain members of WoodSpring management.

Weil developed a strategy to immediately turn over all materials, and focused our efforts on developing a model that showed the potential impact on ESA to be far more limited than they had suggested. Weil successfully negotiated ESA’s withdrawal of its motions for expedited discovery and preliminary injunction at the outset of the case, allowing the parties to avoid costly and rigorous discovery. After a successful mediation, the parties reached a quick settlement despite the challenging and complex set of facts. A consent judgment and permanent injunction were entered by the court in July 2017.