Posted on 07 Sep 2010
Wholesale broker AmWins has won a court order to stop a former employee from soliciting business from his former clients for his new employer, R-T Specialty, the wholesale division of Ryan Specialty.
U.S. District Court Judge Mark R. Kravitz's order states that AmWins, R-T Specialty and the former AmWins broker, David B. Austin, have agreed -- without Austin or R-T Specialty admitting any wrongdoing -- for Austin to not directly or indirectly accept or replace any insurance policy related to about 200 specific clients named in the order.
AmWins is the second wholesale broker to go to court against Ryan Specialty, which was founded in January by Patrick Ryan, the former chairman and chief executive officer of Aon. CRC Insurance Services, a subsidiary of BB&T Corp., claims it lost 120 employees who quit en mass on May 4 to work for R-T Specialty, which was created by Ryan and Tim Turner, former co-president of CRC.
In June, a federal judge denied CRC's request for an injunction, saying any harm to CRC is outweighed by the "significant harm" to the 39 individual plaintiffs in the case who would be prohibited from working for R-T Specialty. Also, the judge said the harm to CRC was also outweighed by the damage to R-T Specialty, if it would be forced to close its doors, and harm to CRC's former clients, if they were unable to choose their own broker (BestWire, June 23, 2010).
According to the AmWins lawsuit, which was filed in Connecticut, R-T Specialty filed a number of lawsuits in California, Illinois and Pennsylvania seeking to void restrictive covenants contained in CRC's employee agreements.
"Given that R-T Specialty has only 'expanded' by massive raids previously unparalleled in scope followed by strategic filing of lawsuits bent on voiding more than 100 employment agreements, members of the industry are understandably concerned that it is open season on their employees and customers," AmWins said in its complaint.
AmWins alleges that Austin, a former AmWins broker, also left on May 4 to join R-T Specialty and violated his employment agreement by taking with him confidential information related to 226 accounts that generate more than $10 million annually in premiums and $1 million revenue for AmWins. According to his employment contract, if Austin left the company, he was prohibited from soliciting any clients for 12 months.
Austin tracked Turner's departure from CRC and planned to leave AmWins at least nine months before his resignation, according to the lawsuit, which quotes several e-mails between Austin and various colleagues.
In one e-mail, Turner thanked Austin for sending him a golf shirt, and the two arranged to meet at the mid-year conference held by the National Association of Professional Surplus Lines Offices in March. Before leaving for the conference, Austin generated a report that listed all of his accounts with expiration/renewal dates from March 1, 2010 to Feb. 28, 2011.
In the weeks following Austin's departure, AmWins received notice that several of Austin's former clients had chosen to do business with R-T Specialty rather than AmWins.
"Armed with the renewal date of the account, the type of coverage purchased, the current insurance carrier, the premium AmWins' commission and fee structures and the retail brokers' contact information, a competitor could put together a quote in an effort to steal the business from AmWins," the lawsuit said. This report is "a confidential road map to over 250 of AmWins' accounts without competitors having to expend the same time and resources in developing that information."
Meanwhile the legal battle between CRC and R-T Specialty is still pending.