Jury awards USI $3 million in noncompete countersuit against Lockton
Jury awards USI $3 million in noncompete countersuit against Lockton | Insurance Business America
Insurance News
Jury awards USI $3 million in noncompete countersuit against Lockton
Lawsuit claimed that Lockton’s southeast operation and former brokers breached noncompete agreements
Insurance News
By
Grant Funtila
A Florida jury awarded $3 million to broker USI Insurance Services in a countersuit claiming that Lockton Companies LLC’s southeast operation and former brokers breached noncompete and nonsolicitation agreements in a “carefully orchestrated scheme” to steal business, as per case documents.
The case started when former USI employees sued the company, hoping a court would rule its noncompete and nonsolicitation agreements unenforceable.
The employees said the agreements were anti-competitive, violated state law, and intended to instill a “fear of retribution” to retain employees. The suit also noted that the Federal Trade Commission had proposed a rule to ban the practices.
In the initial complaint, former producer and lead litigant Matthew Simmons said a USI regional executive warned him that if he left “the amount of litigation USI corporate will put you through will be even worse for your health.”
The employees also said they left USI over “insufficient resources and support,” according to their complaint. For example, USI dismantled its private equity diligence team, forcing Simmons to rebuild his business focused on private equity placements.
USI responded with a countersuit, alleging that Simmons orchestrated a “long-developed and carefully structured scheme” to take its clients to Lockton, which supported and encouraged the plan. In its counterclaim, USI said it paid Simmons millions of dollars in retention bonuses for clients that he took to his new employer.
USI also alleged that the employees filed the initial lawsuit as a proactive measure, knowing they would be hit with a breach of contract suit.
The countersuit also named Simmons’ protégé Jack Mitchell, who left the company to join Lockton less than 20 minutes after Simmons resigned. In addition, six USI employees, not party to the countersuit, followed Simmons and Mitchell.
During the trial, USI presented emails sent to Simmons and Mithcel at their USI email addresses, in which a client details receiving the paperwork to move their account to Lockton. The client then sent a notice of broker change form to Lockton, including in the email a message that said, “Matt (Simmons) and his team are simply the BEST!” Simmons was also copied on this email at his USI account.
USI defended its contract agreements in the countersuit by stating they are standard in the industry. One of its spokespeople said, “We appreciate the jury recognizing that Lockton purposely interfered with the USI employment contracts, which contain the same type of restrictions Lockton places on its own employees.”
The jury’s verdict ordered Lockton to pay $915,000 to USI for aiding and abetting the scheme. Simmons was ordered to pay a total of $1.98 million for breach of contract and breaking his fiduciary duty, while Mitchell must pay $152,500 for the same charges.
Julie Gibson, a Lockton spokesperson, said in an emailed statement the company would have preferred a different verdict but was pleased the jury only awarded USI a fraction of the damages it sought.
“Matt Simmons and Jack Mitchell are great additions to the Lockton team,” Gibson said.
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