NU Online News Service, June 20, 12:07 p.m. EDT

Insurance broker Aon may not be doing much California dreaming after a U.S. District Court struck down its assertion that several former employees violated their restrictive covenant agreements after leaving the company.

Last week, U.S. District Judge Dale S. Fischer, sitting in U.S. District Court Central District of California, ruled that former Aon employees Peter Arkley, Ken Caldwell and Michael Parizino did not violate non-compete agreement, handing the insurance broker another defeat in its poaching allegations against Newport Beach, Calif.-based Alliant Insurance Services, where the three employees now work.

“These important rulings reject Aon’s attempt to use illegal employee covenants to restrict Alliant’s brokers from working with their clients,” says Jeffrey S. Klein, chairman of the employment litigation practice at Weil, Gotshal & Manges LLP and lead counsel for Alliant in the dispute. “From the beginning of this dispute, Aon has sought to stifle fair competition in the marketplace. Alliant will continue to vigorously defend its right to compete.”

Judge Fischer ruled that, under California law, the employees did not violate their covenants that are based on Illinois law concerning non-compete over clients. The judge found that California law gives a higher bar of protection to employees and businesses than Illinois’ law that seeks to foster “predictability.”

“Under California law, the interests of the employee in his own mobility and betterment are deemed paramount to the competitive business interest of the employers,” Judge Fischer says in his opinion.

Since the employees live and work in California, and did so at the time they were with Aon before moving to Alliant, the California law takes precedent over Illinois, the judge ruled.

On that same day, June 13, Judge Fischer did give Aon a win on at least one count, ruling that the London-based insurance broker did have cause to seek attorney fees for an allegation that Aon’s suit attempted to deny the defendants the ability to file its case.

For its part, Aon issued a statement saying, “The injunction prohibiting Alliant from soliciting Aon’s employees or specified clients remains in place, and the New York court has found it likely that Alliant engaged in misconduct. We look forward to continuing to pursue our claims for damages from Alliant.”

In February, a U.S. District Court Judge in New York ruled that former employees working with Alliant did not violate their non-solicitation agreements.

But the same judge previously ruled that Aon is likely to prevail in its claims over breach of contract, breach of fiduciary duty, conspiracy, breach of the duty of loyalty, intentional interference with contractual relations and tortuous interference with prospective economic advantage.

There are a number of outstanding issues that the courts have not resolved and court filings indicate the parties are prepared to go to trial over stock awards and other compensation the defendants have been denied.

A June 18 court filing indicates the parties are seeking a mediator.

Arkley was terminated from Aon on June 6, 2011, and he began working for Alliant in Los Angeles on the 13^th.

Subsequently, 50 employees left Aon, which the broker says cost it $15 million in revenue.

Special Reports /

U.S. District Court Tosses Aon&rsquo;s Restrictive Covenant Claims Against Alliant

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