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Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 1 of 17

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

---------------------------------x

USDcSDNY
IX>CuMENT
EtECTRONfCAtlY Ffl
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En
DAlE Fr~: ~-4 -13:

13 Civ. 3060

(RWS)

MEMORANDUM
OPINION &
ORDER

DEWITT STERN GROUP,

INC. ,

PIa

if

- against ­

RICHARD EISENBERG,

De ndant.

--------x

A P PEA RAN C E S:

Attorney for Plaintiff DeWitt

GOLDBERG SEGALLA LLP
780 Third Avenue, Suite 3100
New York, NY
By: Peter J. Biging, Esq.

10017

OGLETREE, DEAKINS, NASH, SMOAK
1745 Broadway, 22nd Floor
New York, NY

10019

Aaron Warshaw

& STEWART, P.C.

Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 2 of 17

Sweet, D.J.

Plaintiff DeWitt Stern Group Inc. ("DeWitt" or "Plaintiff")

has moved by order to show cause for a preliminary injunction to

prohibit its former employee, Richard Eisenberg ("Mr. Eisenberg"

or "Defendant"), from violating Defendant's Employment

Agreement, in particular with respect to the confidentiality and

non-solicitation provisions. For the reasons set forth below,

Plaintiff's motion for a preliminary injunction is granted to

the extent it prohibits Defendant from future violations of the

Employee Agreement.

THE PARTIES

DeWitt is a privately held insurance brokerage and risk

management firm, specializing (in part) in insurance for the

entertainment industry, with its primary place of business

operations and senior management located in New York.

(Memo.

opp. at 4.)

Mr. Eisenberg is an established insurance broker.

(Affidavit of Richard Eisenberg ("Eisenberg Aff."); ~ 2-8.)

From 2007 until May 6, 2013, Mr. Eisenberg was employed by

DeWitt as a Senior Vice President and producer, with his primary

1


Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 3 of 17

re

1 Y to sell film insurance products and oversee

handl

of

ient accounts.

(Memo. at 5.) Mr.

senberg is

currently

oyed by Arthur J. Gallagher & Co. ("Gallagher") .

. )

FACTS

Prior to Mr.

rg's employment at DeWitt, he worked at

Aon/AGRIS

2001 until 2007.

(Eisenberg Aff. ~~ 3, 10.) When

Mr. Eisenberg j

S, he was compensated for the sale

of his bus

ss, cl

accounts and goodwill in the amount of

$ 400,000.

(Declaration of Charles Johnson,

("Johnson Decl."); <j[

5.) His employment with Aon/AGRIS therefore contained

restrictive covenants

ing him from soliciting these

clients for another firm, or

with them if he were to

terminate his agreement.

. )

In 2007, Mr. Eisenberg

Aon

S and joined DeWitt,

and shortly thereafter Aon

S fi

a Cross-Compl nt against

DeWitt and Mr. Eisenberg alleging,

ngs, that Mr.

Eisenberg had breached the restrict

covenant provisions in

his agreement, and that DeWitt had

tortuously

interfered with its business by convincing customers to abandon

their relationships with Aon/AGRIS and move inste

to DeWitt.

2


Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 4 of 17

(Biging Decl. ~~ 14, 18.) DeWitt alleges that in order to free

Mr. Eisenberg from the restraints imposed by his contract with

Aon/AGRIS, and to permit Mr. Eisenberg to lawfully solicit his

former clients for DeWitt, DeWitt entered into a settlement with

Aon/AGRIS in which DeWitt paid Aon/AGRIS $425,000.

(Johnson

Decl. ~ 6.) According to DeWitt, as a result of this

settlement, which Mr. Eisenberg signed, Mr. Eisenberg was

permitted to solicit the business he had sold to Aon/AGRIS for

DeWitt and continue cultivating these relationships on behalf of

DeWit t .

( I d . a t ~ ~ 7 - 8 . )

After Mr. Eisenberg joined DeWitt, Plaintiff alleges that

Mr. Eisenberg, in his capacity as Senior Vice President and

producer, had access to DeWitt's confidential information and

trade secrets, including names and lists of accounts and

clients, names of key account contacts, account characteristics,

pricing information, and application information. Further,

DeWitt asserts that in the course of his work for DeWitt, Mr.

Eisenberg was provided substantial support in his efforts to

make former Aon/AGRIS clients DeWitt clients, thereby building

his book of business, including:

(1) substantial compensation on

commissions earned on the business;

(2)

two full-time employees

to assist him in servicing any business he could bring in;

(3)

3


Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 5 of 17

offices he could work out of on both coasts; and (4)an apartment

in California, half of which was paid for by DeWitt so he could

develop clients on the west coast.

(Id. at err 8.)

Mr. Eisenberg also signed a series of employment agreements

with DeWitt, including his final agreement executed on or about

October 9, 2012 (the "Employment Agreement") .

(Declaration of

Peter S. Biging, ("Biging Decl.").) The Employment Agreement in

Paragraph 5(a) states that "by signing this Agreement, Employee

acknowledges and agrees that the restrictive covenants contained

in this Agreement are reasonably necessary to protect Company's

business interests and that during and after the term of this

Agreement Employee will not use or disclose, directly or

indirectly, and will keep strictly secret and confidential all

Confidential Information and Trade Secrets except as required in

the course of Employee's employment by Company." (Id.) Further,

Paragraph 5(c) of the Employee Agreement states that,

In consideration of Employee's continued employment with
the company, Employee agrees that during the term of
employment, and for the two (2) year period immediately
following termination of employment for any reason,
Employee will not use Company's Confidential Information or
Trade Secrets to solicit, accept, divert, or take away, in
whole or in part, directly or indirectly, any clients or
"Prospect" (as hereinafter defined) of Company who were
solicited or serviced by Employee or by anyone directly or
indirectly under Employee's supervision, or with whom
Employee had any business relationship, within the two (2)
year period immediately prior to Employee's termination of

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Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 6 of 17

employment. For purposes of this Agreement, "Prospect"
shall be defined as a potential customer known and
contacted by Employee or Company prior to the date of
termination of employment.

(Id.) 1

Mr. Eisenberg voluntarily agreed to these provisions, which

included an acknowledgement in Paragraph 6 of the Employment

Agreement that, "[iJn the event Employee breaches any of its

obligations under Paragraph 5 above the Company will suffer

irreparable injury, not readily susceptible of valuation in

monetary damages." (Id.) Accordingly, Mr. Eisenberg agreed that

DeWitt would be "entitled to injunctive relief against any

breach or prospective breach" by him of the "obligations under

Paragraph 5 above." (Id.)

The Employment Agreement defines confidential information in paragraph 5(a)

1
as including:

All information (whether or not specifically labeled or identified as
confidential, and whether oral, written, or in any electronic medium)
relating to Company's trade secrets, knowledge, data, financial
information, business methods and techniques, technology, processes,
innovations, concepts, names and lists of accounts, employees,
customers, clients, vendors, expiration information, name of key
account contacts, account characteristics, application information, and
all other information relating to Company that is unique, proprietary,
or not in the public domain.

(Employment Agreement §5(a).) Trade Secret, also in Paragraph 5(a), is
defined as "all information that Company reasonably informs Employee (whether
orally or in writing) from time to time is a trade secret, as well as any
other Confidential Information reasonably the subject of trade secret
protection. Such information is considered secret and is disclosed to
Employee in confidence."

(Id. )

5


Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 7 of 17

On April 30, 2013, Mr. Eisenberg

DeWitt and

requested a meeting on May 1, 2013 at

tt's corporate

headquarters

New York.

(Memo. at 10.) Mr. Eisenberg

canceled the meeting on May 1, and instead met with the

Company's Pres

and Chief Operating Officer (Charles

Johnson) on May 6, 2013, where he announced his resignation.

(Id. ) During this meeting, Mr. Eisenberg

s acknowledged that

he told DeWitt's President Charles Johnson that

would not

abide by the Employment Agreement's non-soli

tat

provision

because he did not

1

any non-compete was en

Ie

against him.

s

f. ~ 27.) Mr. Eisenberg

s since

stated that he Ie DeWitt because he felt undercompensated due

to deductions reducing his income.

(Eisenberg Aff. ~~ 25-26.)

Within a day of t

announcement of Mr. Eisenberg's

departure, DeWitt received a Broker of Record ("BORll) Letter

from one of the clients Mr.

senberg serviced at DeWitt

notifying DeWitt of its move to Gallagher.

(Johnson

12.) DeWitt has since rece

more such BOR letters,

uding one from a client who had only come to DeWitt in March

this year.

(See Declaration of John Hamby,

("Hamby Declo ll) i

~ 3.) The record also shows that Mr. Eisenberg, beginning no

later than March 18, 2013, began

ating his Employment

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Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 8 of 17

Agreement by sending confidential information from his Company

e-mail to his personal e-mail and to Brian Kingman, Managing

Director at Gallagher, a direct competitor of DeWitt.

(Memo. at

10.) More specifically, Mr. Eisenberg, beginning on April 30,

2013 through May 4, 2013, forwarded e-mails containing

confidential information and/or trade secrets to his personal e-

mail account, including:

(1) an e-mail describing coverage

issues for a current DeWitt client; (2) interactive policy

renewal applications for a different current DeWitt client; (3)

a current DeWitt client's movie script, budget, and other

confidential information necessary to solicit preliminary

insurance quotes and (4) a current movie client's cast log and

medical forms containing confidential coverage and other

information. (See Biging Decl.; Exhibit B.)2 Additionally,

DeWitt establishes that Mr. Eisenberg on April 17, 2013 in his

2 The Employment Agreement in Paragraph 5(b) states that,

Employee shall not retain copies, in any format, of Company Property.
Employee agrees and understand that Company property shall not, at any
time, be copied or transferred to any memory storage device, online
account or person email address that is maintained by or for Employee.
Such copying or transferring includes, for example, forwarding emails
or an attachment to a personal email account, and exceeds the scope of
Employee's authority relating to the use of Company's computer network
and electronic communications.

(Employment Agreement at § 5(b).) Company Property is defined as including,
but not being limited to, "all files, papers, memoranda, letters, emails and
attachments, instant messages, handbooks and manuals, facsimile or other
communications that were written, authorized, signed, received or transmitted
during Employee's employment." (Id.)

7


Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 9 of 17

e-mail correspondence with Brian Kingman shared confidential

information and/or trade secrets pertaining to a business

opportunity to place insurance on behalf of a client with

respect to a forthcoming film.

(Plaintiff's Order to Show

Cause, Exh. C.)

Immediately upon resigning, Mr. Eisenberg joined Gallagher

on May 6, 2013 as Area Executive Vice President, where he is

responsible for producing business from his clients and

servicing that business. (Eisenberg Aff. ~ 26.) Mr. Eisenberg's

Employment Agreement does not prohibit him from competing with

DeWitt in this new role so long as he is not using confidential

information obtained during his employment at DeWitt, or

attempting to divert clients he serviced while at DeWitt.

DISCUSSION

I. Preliminary Injunction

In order to obtain a preliminary injunction,

a party must demonstrate (1) that he or she will suffer
irreparable harm absent injunctive relief, and (2) either
(a) that he or she is likely to succeed on the merits, or
(b) that there are sufficiently serious questions going to
the merits to make them a fair ground for litigation, and
that the balance of hardships tips decidedly in favor of
the moving party.

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Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 10 of 17

Moore v. Consolo Edison Co. of N.Y., Inc., 409 F.3d 506, 510 (2d

r.2005) (internal quotation marks and citation omitt

).

Pursuant to Fed. R. Civ. P. 52(a), in granting or re

ing

a

liminary injunction, the court shall set

"

findings of fact and conclusions of law" whi

constitute the

grounds of its action. The Second Ci

s stated that

"[t]hese findings are not conclusive, and may

altered after a

trial on the merits." Visual Sciences, Inc. V. Integrated

Communications Inc., 660 F.2d 56, 58

(

ing Hamilton Watch Co.

v. Benrus Watch Co., 206 F.2d 738, 740 (2d Cir.1953).

I. Plaintiff Has Demonstrated Irreparable Harm

Irreparable injury exists where a monetary award does not

provide adequate compensation.

See Jackson Dairy, Inc. v. H.P.

Hood & Sons, Inc., 596 F.2d 70, 72 (2d

r. 1979).

Irreparable

harm to an employer res

s through both the loss of client

relationships and customer goodwill from a breach of a non­

compete clause, and where "an employee has misappropriated trade

secrets or confident 1 customer information, including pricing

methods, customer lists and customer preferences."

Johnson

Controls, Inc. v. A.P.T.

tical Sys., 323 F. Supp. 2d 525,

532-33 (S.D.N.Y. 2004); see also Ticor Title Ins. Co. v. Cohen,

9


Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 11 of 17

173 F.3d 63, 69 (2d Cir. 1999) (recognizing that" would be

difficult to calculate monetary damages that would

successfully redress the loss of a relationship with a client

that would produce an

erminate amount of bus

ss in years

to come. U

) . For

stance, in Arthur J. Gallagher Servo Co. v.

Egan, 2013 U.S. App. LEXIS 5875 (11th Cir. Fla. March. 25,

2013), the court found

"the factors of irreparable harm and

balance of harms weighed in

of issuing a preliminary

injunction

if Defendant] continued to solicit his

former clients, the companies stood to lose accounts in which

they had invested significant resources, revenues from t

renewal of those accounts, and goodwill cultivat with those

cl

s." See

. at *11. The court therefore determined that

"the loss of longstanding clients and goodwill [was] an

irreparable injury." Here, DeWitt

already received notice

of three clients, previously under Mr.

senberg at DeWitt, that

are 1

ng DeWitt.

(See Johnson Decl. ~~ 10 11.)

Additionally, Mr. Eisenbe

has sent confidential Company

property, as defined in the

oyment Agreement, from his

DeWitt e-mail address both to a Gallagher employee and his

sonal e-mail account. Mr. Eisenbe

does not deny that these

clients have moved to Gall

or not that he has sent such e-

mails from his work address. Given the potential future

ss of

10


Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 12 of 17

cl

s and confidential information, DeWitt has shown that they

will su

r irreparable harm if the Employment Agreement is not

II. Plaintiff Has Demonstrated a Likelihood of Success on the

Merits

The likelihood of success on the merits is

where, as

, the Employment Agreement at issue is

with

respect to both the non-compete and confident

y provisions.

rst, a covenant not to compete will be

"to the

extent that it is reasonable in time and area, necessary to

protect an employer's legitimate interests, not harmful to the

general public and not unreasonably burdensome to the employee."

BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 289 (N.Y. 1999). "New

York courts addressing

month restrictions on

solicitation of former clients

industry have

fond them to be reasonable." USI Ins. Servs. LLC v. Miner, 801

F. Supp. 2d 175, 188 (S.D.N.Y. 2011). Such agreements are not

found overbroad even if

Y "would prohibit [the employee] from

accepting business from

r

ients who voluntarily and

without any soli

e to continue to do business with

[the employee]. fI Id.

11

Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 13 of 17

Here, the Employment Agreement narrowly tailors the two

r non-compete provision to

t Mr. Eisenberg only from

"using the Company's Confident

1 Information and/or Trade

Secrets .

. to solicit, accept, divert, or take away, in whole

or

part, directly or indirectly,N any clients or prospect of

DeWitt "who were solicit

or se

ced by Employee or by anyone

directly or indirectly under [Mr. Eisenberg's] supervision, or

with whom Employee had any business relationship.N (See Biging

Decl.) This does not

Mr. Eisenberg from soli

t

clients retained through

existingN relationships or through

his "own independent efforts, unassisted by the firm.N

Barbagallo v. Marcum LLP, -- F. Supp. 2d --, 2013 WL 132711, at

*18 (E.D.N.Y. Jan. 10, 2013).

Second, New York courts have expressly recogniz

t

secrets and other conf

1 information of the nature DeWitt

specified in the Employment Agreement.

See~ e.g., John Hancock

Mut. Life Ins. Co. v. Austin, 916 F. Supp. 158, 165 (N.D.N.Y.

1996) (noting

"papers and records in question were not mere

customer lists.

In addition to customer names,

e papers

contained information involving customer coverage, premium

amounts, cash values and loans against existing policies,N and

that such

formation "rises to the level of 'confidential

12

Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 14 of 17

customer information.'''); USI Ins. Servs. LLC v. Miner, 801 F.

Supp. 2d 175, 189 (S.D.N.Y. 2011) (finding that where employee

sent e-mail from former employer's business e-mail account to

personal e-mail containing names of companies and their

financial information, the document might contain trade secrets

or confidential information). Here, Mr. Eisenberg agreed not to

"use or disclose, directly or indirectly, and [] keep strictly

secret and confidential all Confidential Information and Trade

Secrets" or ret n copies of Company Property during or for two

years a er

s employment. Such covenants are reasonable and

enforceable under New York law, and as such Mr. Eisenberg should

be rest

by the provisions he signed.

In any event, the

ance of hardsh

tips in favor of

DeWitt. Dewitt has established irreparable harm if Mr.

Eisenbe were to breach, or continue to

ch, the Employment

Agreement.

In contrast, Mr. Eisenberg can continue earning

s

livelihood at Gallagher or elsewhere; he is merely restrict

from using DeWitt's protected information as outlined in t

Employment Agreement to solicit clients.

Indeed, the Employment

Agreement at issue neither prohibits Mr.

senberg from

competing with DeWitt nor precludes h

from soliciting clients

the entertainment insurance industry.

Imposing the

13

Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 15 of 17

restrictions Mr. Eisenberg voluntarily

to cannot

reasonably be said to disrupt his 1

lihood or cause him undue

rm. See Arthur J. Gallagher Servo Co, 2013 U.S. App. LEXIS

5875, at *11 (finding that factors weighed

favor of

liminarily enjoining employee from

ing his restrictive

covenant where employee retained

to compete for new

accounts, but employee's lost abil

y to solicit clients for two

years with whom the companies had an ongoing relationship).

III. DeWitt is not Required to Post a Bond

"The language of Rule 65(c) confers broad discretion on the

trial judge to set the amount of the bond, even to dispense

th

the bond requirement al

Inflight Newspapers v.

Magazines In-Flight, L.L.C., 990 F. Supp. 119, 140 (E.D.N.Y.

1997). Mr. Eisenberg

iled to establish that he is likely

to suffer any harm

ent

posting of a bond and as such t

bond requirement is unnecessary.

See Doctor's Associates, Inc.

v. Stuart, 85 F.3d 975, 985 (2d Cir. 1996).

The following

r is explicitly modeled by the terms of

the Employment

. Mr. Eisenberg is hereby

liminarily

enjoyed from vio

ing the Employment Agreement, including:

14


Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 16 of 17

1. Disc

ing, misusing and/or otherwise

sappropriating

DeWitt's confident

I information and/or trade secrets in

viol

ion of Paragraph 5(a) of the

oyment Agreement;

2. Vi

ing Paragraph 5(b) of the Employment Agreement

requiring Defendant to return any and all Company property

(including but not limited to hard copies of documents, e-

mails, electronic data and attachments) he may

in his

session;

3.

olating Paragraph 5(c) of the

oyment Agreement which

prohibits Defendant, for the two (2) year pe od

immediately

llowing termination of employment (to be

extended by a

od of time

to the

of time

Defendant al

spent in violation of Paragraph 5(c)),

from using DeWitt's confidential information and/or trade

secrets to solicit, accept,

vert, or take away, in whole

or in part,

rectly or indirectly, any cl

s or prospect

of DeWitt who were solicited or serviced by Defendant or by

anyone directly or indirectly under Defendant's

supervision, or with whom Defendant had any business

relation

, within the two (2) year period immediately

prior to Defendant's termination of employment; and

15

Case 1:13-cv-03060-RWS Document 12 Filed 06/04/13 Page 17 of 17

4. Violating Paragraph 5(d) of the Employment Agreement

prohibiting Defendant, for the two (2) year period

immediately following termination of employment, from

directly or indirectly (i) making known to any person,

business entity, firm or corporation the names or contact

details of any current employees of DeWitt, or any other

information pertaining to them, or (ii) attempting to

recruit of soli

, or a

in

recruitment or

solicitation of any employees of DeWitt.

It is so ordered.

New York, NY

:7-- 1

2013

U.S.D.J.

16