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Dewitt Stern Group, Inc. v. Eisenberg

United States District Court, Second Circuit

October 29, 2013

DEWITT STERN GROUP, INC., Plaintiffs,
v.
RICHARD EISENBERG, Defendant.

By: Peter J. Biging, Esq., GOLDBERG SEGALLA LLP, New York, NY, Attorney for Plaintiff DeWitt.

By: Aaron Warshaw, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C., New York, NY, Attorney for Defendant Eisenberg.

OPINION

ROBERT W. SWEET, District Judge.

Plaintiff DeWitt Stern Group Inc. ("DeWitt" or "Plaintiff") oves for sanctions against Defendant Eisenberg ("Eisenberg" or "Defendant") and Arthur J. Gallagher & Co. ("AJG") (collectively, the "Defendants"), based on Defendant allegedly violating the preliminary injunction issued by this Court on June 4, 2013. For the reasons set forth below, Plaintiff's motion for sanctions is denied at this time.

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.)

Eisenberg is an established insurance broker. (Affidavit of Richard Eisenberg ("Eisenberg Aff."); ¶ 2-8.) From 2007 until May 6, 2013, Eisenberg was employed by DeWitt as a Senior Vice President and producer, with his primary responsibility to sell film insurance products and oversee the handling of client accounts. (Memo. at 5.) Eisenberg is currently employed by AJG. ( Id. )

PRCOEDURAL HISTORY

On May 6, 2012, DeWitt filed a Complaint against Eisenberg with an order to show cause for a preliminary injunction prohibiting Eisenberg from violating his Employment Agreement, in particular with respect to the confidentiality and non-solicitation provisions. On June 4, 2013, this court granted Plaintiff's motion for a preliminary injunction to the extent it prohibits Defendant from future violations of his Employment Agreement (the "June 4 Order"). The preliminary injunction was explicitly modeled on the terms of the Employment Agreement.

On June 18, 2013, Plaintiff filed the First Amended Complaint (the "FAC"). On July 17, 2013, Plaintiff filed an order to show cause for sanctions. This motion was heard and marked fully submitted on October 2, 2013.

FACTS

Prior to Eisenberg's employment at DeWitt, he worked at Aon/AGRIS from 2001 until 2007. (Eisenberg Aff. ¶¶ 3, 10.) When he joined Aon/AGRIS, he was compensated for the sale of his business, client accounts and goodwill in the amount of $400, 000. (Declaration of Charles Johnson, ("Johnson Dec "); ¶ 5.) His employment with Aon/AGRIS therefore contained restrictive covenants preventing him from soliciting these clients for another firm, or competing with them if he were to terminate his agreement. ( Id. )

In 2007, Eisenberg left Aon/AGRIS and joined DeWitt, and shortly thereafter Aon/AGRIS filed a Cross-Complaint against DeWitt and Eisenberg alleging, among other things, that Eisenberg had breached the restrictive covenant provisions in his agreement, and that DeWitt had raided and tortuously interfered with its business by convincing customers to abandon their relationships with Aon/AGRIS and move instead to DeWitt. (Biging Decl. ¶¶ 14, 18.) DeWitt alleges that in order to free Eisenberg from the restraints imposed by his contract with Aon/AGRIS, and to permit 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 Eisenberg signed, Eisenberg was permitted to solicit the business he had sold to Aon/AGRIS for DeWitt and continue cultivating these relationships on behalf of DeWitt. ( Id. at ¶¶ 7-8.)

After Eisenberg joined DeWitt, Plaintiff alleges that 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, 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 ...


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