Opinion
No. 651673/11.
2012-02-17
AON RISK SERVICES, Northeast, a New York corporation and Aon Corporation, a Delaware corporation, Plaintiffs, v. Michael CUSACK, an individual, and Alliant Insurance Services, Inc ., a Delaware corporation, Defendants.
DLA Piper LLP (US), (Shand Stephens, Barbara Harris), New York, for Plaintiffs. Fensterstock & Partners, LLP, (Blair Fensterstock, Eugene Kublanovsky), New York, for Defendant Michael Cusack.
DLA Piper LLP (US), (Shand Stephens, Barbara Harris), New York, for Plaintiffs. Fensterstock & Partners, LLP, (Blair Fensterstock, Eugene Kublanovsky), New York, for Defendant Michael Cusack.
Weil, Gotshal & Manges, LLP, (Jeffrey S. Klein, Allan Dinkoff), New York, for Defendant Alliant Insurance Services, Inc.
BERNARD J. FRIED, J.
In this action, plaintiffs Aon Corporation and Aon Risk Services Northeast, Inc. (Aon Northeast) (collectively, Aon) seek damages and injunctive relief against defendant Michael Cusack, a former Aon Senior Vice President and Managing Director, and his new employer, defendant Alliant Insurance Services, Inc., as a result of their orchestration and participation in a massive raid on the clients and employees of Aon's Construction Services Group (Aon CSG).
Aon previously moved for a preliminary injunction against both Cusack and Alliant. On November 9 and 10, 2011, I conducted a hearing on the preliminary injunction motion. In a decision and order dated December 20, 2011 (the Order), I found that Aon would likely succeed on its claims for breach of contract, breach of fiduciary duty, breach of the duty of loyalty, aiding and abetting breach of fiduciary duty, conspiracy, intentional interference with contractual relations, and tortious interference with prospective economic advantage. I then entered a preliminary injunction against Cusack and Alliant, which ordered that:
defendants Michael Cusack and Alliant Insurance Services, Inc., as well as any of Alliant's employees in its Construction Services Group who were formerly employed by Aon Risk Services Northeast, Inc. and resigned from Aon on June 13, 2011, and who were subject to restrictive covenants with Aon, and their agents, servants, employees and all other persons acting under the jurisdiction, supervision and/or direction of defendants or such former employees, are enjoined and restrained, during the pendency of this action, from doing or suffering to be done, directly or through any attorney, agent, servant, employee or other person under the supervision or control of defendants, any of the following acts:
(1) soliciting business from or entering into any business relationship with, on behalf of Alliant, any Aon client or customer for whom any such former Aon employee was the producer or on whose account he or she worked during the twenty-four (24) months prior to June 13, 2011; or
(2) soliciting any Aon Construction Services Group employees to work for Alliant;
Aon contends that Alliant violated the Order because, on January 11, 2012, current Alliant, and former Aon, employee Peter Arkley sent an “Alliant Update” email to certain Aon clients, and because Alliant, on behalf of Arkley, sent emails inviting certain Aon clients to an Alliant construction industry event scheduled for January 12, 2012, commonly known as the “Pre–Beaver” dinner. Aon further contends that Arkley and current Alliant, and former Aon, employee, Leslie Curry, recently solicited certain Aon clients, also in violation of the Order.
Aon now moves for an order holding Alliant in contempt of the preliminary injunction; requiring Alliant to immediately produce a list of recipients of the “Alliant Update” email; requiring Alliant to immediately produce a list of invitees to the “Pre–Beaver Dinner; requiring Alliant to send an email to each recipient of Arkley's “Alliant Update” email stating that, pursuant to court order, the January 11 email from Arkley is retracted; fining Alliant in an amount sufficient to deter future violations; and ordering Alliant to pay Aon's attorneys' fees and costs associated with the filing of this motion.
As set forth below, the motion is denied.
On January 11, 2010, Arkley, Managing Director of Alliant Insurance Services, and CEO of Alliant's Construction Services Group, sent out the following mass email solicitation to construction insurance clients, including current Aon clients:
Dear Valued Client
Happy New Year.
For nearly 90 years, Alliant Insurance Services has been at the forefront of the country's insurance brokerage industry. We recently continued that proud tradition when we created the industry's first new construction services group in nearly 20 years: The New Option—Alliant Construction Services Group.
Our success has drawn the attention of Aon, who has filed several lawsuits against Alliant in an attempt to slow our progress. Recently, a New York Court issued a decision in one of those lawsuits, which has led to marketplace rumors and erroneous information. Despite what has been reported in various publications, the Court's order has no effect on our ability to service the needs of our existing clients and only a very limited effect on our ability to do business with new customers.
To clarify and correct inaccurate comments that have been made in the press, we have posted the following statement on our website:
“ We believe that this is a transparent attempt by Aon—an industry giant—to protect its diminishing market share by misleading customers about the Court's ruling and attempting to limit the ability of clients to work with their preferred broker. We are proud of the company we have built and will continue to vigorously defend ourselves against Aon's pressure tactics, while continuing to deliver the premier customer service and innovation that has become our hallmark.”
“ The order significantly narrowed the scope of the initial injunction and stated very clearly that there is no legal basis or evidence to support Aon's claim that former Aon CSG employees or Alliant misappropriated any proprietary Aon information.”
“ We continue to actively serve our current clients and appreciate their strong support. Providing trusted advice and service is the foundation for our success and we will continue to capitalize on these attributes as we expand Alliant Construction Services Group.”
The Construction Services Group we have built has quickly differentiated itself by leading with the most talent-laden team of construction risk and surety professionals: Richard Ferrucci, Mike Cusack, Ken Caldwell, ... Leslie Curry, ... and Mike Parizino. I also want to thank all of our clients that upon learning the New Option was available—took it. Your trust in our abilities and our teams are worth more to me and Alliant than I can ever express in a letter.
I look forward to seeing you soon. In the meantime, please contact me at 213.443.2450 or construction@alliantinsurance.com if you have any questions. In addition, your account team stands ready to discuss how Alliant can help you with your insurance and surety needs.
Sincerely,
Peter Arkley
Managing Director
Alliant Insurance Services
( see Aff. of Kelly Nuckolls, Exh A).
Aon contends that this email is a direct violation of the preliminary injunction, because two of its targets—MBK Real Estate (MBK) and Sheldon Mechanical Services (Sheldon Mechanical)-are current Aon clients on whose account Leslie Curry worked during the 24–months prior to her resignation on June 13, 2011 (Nuckholls Aff., ¶¶ 3, 4; Aff. of Carlos Quinteros, ¶¶ 10, 12).
On January 4, 2012, Alliant, on behalf of Arkley and Michael Parizino, e-mailed current Aon client ACCO Engineered Systems (ACCO), an account Arkley had worked on at Aon during the 24–months preceding his resignation on June 13, 2011, as well as current AON clients MBK and Ryland Group (Ryland), two accounts that Curry had worked on at Aon during the 24–months preceding her resignation on June 13, 2011, and invited ACCO, MBK and Ryland to the “Pre–Beaver Dinner” on January 12, 2012 (Quinteros Aff., ¶¶ 6–11; Aff. of Gary L. Stevens, Jr., ¶¶ 5, 6).
The “Beaver Dinner” is an event hosted by an association of construction engineering firms that provides awards to members of civil engineering firms and construction contractors for outstanding contributions in the construction field. Insurance carriers, sureties and brokers typically sponsor tables and attend this event, which is held in Los Angeles, California every January (Quinteros Aff., ¶¶ 3–5). The “Pre–Beaver Dinner,” which is the subject of the Alliant invitation, is a dinner that Aon had previously hosted for many years for Aon clients and prospects. It typically takes place at a restaurant the night before the Beaver Awards Dinner. In years past, the Aon invitations were sent via electronic invitation to the e-mail addresses of Aon's clients and prospects by Aon former employee Denise Wynn, who now works at Alliant ( id.).
On January 5, 2011, Curry called current Aon client Sheldon Mechanical, an account that Curry had worked on at Aon during the 24–months preceding her resignation on June 13, 2011, and told Kelly Nuckolls of Sheldon Mechanical that Alliant had obtained a ruling from this court that allowed her to contact her former Aon CSG clients, and that Alliant “was there to help” Sheldon Mechanical with its insurance business (Nuckolls Aff., ¶¶ 3–5; Stevens Aff., ¶¶ 7, 8).
On January 11, 2012, Arkley sent Sheldon Mechanical an unsolicited email purporting to provide it with an update on Alliant's Construction Services Group and this litigation. The letter ends with a solicitation of Sheldon Mechanical's insurance business (Nuckolls Aff., ¶ 3; see Exh A).
During oral argument of this matter on January 17, 2012, I ordered Alliant to produce a list of recipients and invitees of the Arkley “Update” email, and the “Pre–Beaver” dinner invitations.
CPLR 5104 provides the remedy of contempt for the refusal or willful neglect to abide by an order of the court. “Contempt is a drastic remedy, which should not issue absent a clear right to such relief” (Coronet Capital Co. v. Spodek, 202 A.D.2d 20, 29 [1st Dept 1994]; Usina Costa Pinto, S.A. v. Sanco Sav. Co., 174 A.D.2d 487 [1st Dept 1991] ). To establish civil contempt based on an alleged violation of a court order, the movant must establish, by clear and convincing evidence, that a lawful order of the court expressing an unequivocal mandate was in effect, and that the order was disobeyed to a reasonable certainty ( see Matter of Department of Envtl. Protection of City of N.Y. v. Department of Envtl. Conservation of State of NY, 70 N.Y.2d 233 [1987];Matter of McCormick v. Axelrod, 59 N.Y.2d 574,amended60 N.Y.2d 652 [1983];Vujovic v. Vujovic, 16 AD3d 490 [2d Dept 2005] ). The party to be held in contempt must be shown to have had knowledge of the order, and the disobedience must have prejudiced the right of another party ( see McCain v. Dinkins, 84 N.Y.2d 216 [1994],McCormick v. Axelrod, 59 N.Y.2d 574,supra; Garcia v. Great Atl. & Pac. Tea Co., 231 A.D.2d 401 [1st Dept 1996] ).
As set forth below, Aon has failed to establish by clear and convincing evidence that Alliant has disobeyed the Order, and thus, Alliant cannot be held in contempt.In support of its contempt application, Aon argues that the Order clearly and unambiguously precludes any direct or indirect solicitation of Aon's current clients for whom any former Aon employee who is subject to a restrictive covenant with Aon was the producer or on whose account he or she worked during the 24 months prior to June 13, 2011. Thus, Aon argues, the Order was intended to enjoin Alliant from soliciting or transacting business with Aon clients whom the five key Aon CSG employees with restrictive covenants—Peter Arkley, Michael Cusack, Leslie Curry, Michael Parizino and Kenneth Caldwell—had worked on or was the producer. Aon contends that Alliant violated the Order because both the Arkley “Update” email and the “Pre–Beaver” dinner invitation were solicitations to current Aon clients on whose accounts Arkley or Curry had worked. Moreover, Aon contends, Curry personally called three of her former Aon clients to encourage their attendance at the dinner, and to solicit their business, in direct violation of the Order.
Aon's broad interpretation of the Order, however, is clearly erroneous. Contrary to Aon's arguments, a plain reading of the Order reveals that the only clients off-limits under the Order are those clients who, during the twenty-four month period from June 13, 2009 to June 13, 2011, worked with or were produced by a current employee of Alliant who (1) previously worked for Aon Northeast; (2) had a restrictive covenant; and (3) resigned on June 13, 2011. It is undisputed that Arkley, Parizino, Caldwell and Curry were employees of Aon Risk Services Companies. Thus, Michael Cusack is the only employee of Alliant who previously worked for Aon Northeast, had a restrictive covenant, and resigned on June 13, 2011.
Aon fails to submit any evidence that Alliant or any of its employees solicited business or entered into any business relationship with any Aon client or customer for whom either Cusack or any of Alliant's former employees who were formerly employed by Aon Northeast who resigned from Aon on June 13, 2011 and were subject to restrictive covenants with Aon were the producers or on whose account they worked during the 24 months prior to June 13, 2011. Indeed, Aon does not allege in its application that any client who worked with Cusack was solicited. Instead, the application is premised solely on the conduct of non-parties Arkley and Curry who have always lived and worked in California; were never employed by Aon Northeast; and have not solicited any clients associated in any way with Cusack.
The lists of recipients and invitees of the Arkley “Update” email, and the “Pre–Beaver” dinner invitations produced by Alliant to Aon demonstrate that neither the Pre–Beaver dinner invitation nor the Arkley “Update” email were sent to any “client or customer” of any former employee of Aon Northeast who resigned on June 13, 2011, and was subject to restrictive covenants with Aon. A comparison between the lists and the 46 accounts produced or worked on by Cusack at Aon during the two years prior to June 13, 2011 reveals overlap in only two accounts that Cusack worked on—Tutor Perini and Turner Construction ( see Reply Affidavit of Jeffrey S. Klein, Esq.,, Exh D). It is undisputed that both of these clients were already Alliant clients when the Order was issued, and thus are not subject to the injunction.
In addition, Aon does not assert that any of the Aon clients contacted by Curry or Arkley were clients for whom Cusack was the producer or for whom he worked during the 24 months prior to June 13, 2011. Rather, Arkley, Curry and Parizino were the producers for these clients. Thus, under the plain and unambiguous language of the Order, this conduct is clearly permitted.
I reject Aon's argument that “Alliant's interpretation of the order is not reasonable” (Aon Reply Br., at 4). Alliant's interpretation is exactly the same interpretation that plaintiffs' counsel, DLA Piper, has given in its press release and public statement on its website, in which it describes the Order as prohibiting “Cusack and Alliant from soliciting business or entering into any business relationship with any Aon client or customer with whom Cusack might have had contact with while employed at Aon, or soliciting any Aon employees to work for Alliant” (January 4, 2012 Publication on DLA Piper's website discussing Preliminary Injunction Order [emphasis added] [Klein Aff., Exh 2] ).
Moreover, it is clear that I cannot enforce Curry and Arkley's restrictive covenants, as they are both non-parties, as well as California residents over whom I have no jurisdiction. Thus, I cannot enjoin Alliant based on Aon's claim that Curry and Arkley breached their personal and non-assignable restrictive covenant obligations, as any injunction against Alliant as to those restrictive covenants would be tantamount to an injunction against Arkley and Curry themselves. Indeed, Aon cites no cases where the court enforced a restrictive covenant of a non-employee against its employer, where the employee was not subject to the jurisdiction of the enjoining court.
Accordingly, Aon's application for an order of civil contempt is denied ( see Guillot v. Australia and New Zealand Banking Group, 270 A.D.2d 73 [1st Dept 2000] [motion for an order of contempt denied as it was not established with reasonable certainty that subject order was disobeyed] ). In light of this determination, Aon's motion for costs incurred by it in connection with the enforcement of the Order is denied.
I have considered the remaining arguments, and find them to be without merit.
Accordingly, it is
ORDERED that the motion to find defendants in contempt of the order dated December 20, 2011; to order a retraction of the January 11, 2012 email from non-party Peter Arkley; to fine Alliant; and to order Alliant to pay Aon's attorneys' fees and costs associated with the filing of this motion, is denied.