Aon Risk Servs. v. Cusack

• Decision Date: 20 December 2011
• Docket Number: No. 651673/11.,651673/11.
• Citation: 946 N.Y.S.2d 65
• Parties: 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.
• Court: New York Supreme Court

946 N.Y.S.2d 65

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.

No. 651673/11.

Supreme Court, New York County, New York.

Dec. 20, 2011.

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.

This action involves a systematic and coordinated raid by defendant Michael Cusack and his new employer, defendant Alliant Insurance Services, Inc., on the clients and employees of the Construction Services Group of plaintiffs Aon Corporation and Aon Risk Services, Northeast (Aon CSG), Cusack's former employer. After weeks of planning, while still employed by Aon, Cusack, a former senior executive and Managing Director of Aon, along with Peter Arkley, the former Chief Executive Officer of Aon CSG, and other senior executives, abruptly resigned on June 13, 2001 to join Alliant, and 15 Aon clients moved their business to Alliant. That same day, 38 Aon CSG employees left to join Alliant, including seven who reported directly or indirectly to Cusack. Since then, 60 employees in total have left Aon to join Alliant, and Aon has received more than 100 broker of record letters from clients transferring more than $20 million in revenue from Aon to Alliant.

Based on these facts, on September 28, 2011, I issued a temporary restraining order enjoining Cusack from soliciting business from or entering into any business relationship with any Aon client or customer for whom Cusack was the producer or on whose account he worked; soliciting any Aon CSG employees to work for Alliant; or using any information downloaded from Aon's computer system. I also ordered Cusack to return to Aon any documents taken by him. On October 13, 2011, I likewise temporarily enjoined Alliant and its employees who were formerly employed by Aon and who were subject to restrictive covenants with Aon from soliciting business from or entering into any business relationship with any Aon client; soliciting any Aon CSG employees to work for Alliant; or using any information belonging to Aon, including any information downloaded from Aon's computers and subsequently uploaded to Alliant's computers. I also ordered Alliant to return to Aon any documents taken by any former Aon employee.

After the temporary restraining orders were entered, discovery was conducted, including depositions, document exchange, and forensic examination of computer information.

Aon now moves for a preliminary injunction consistent with the relief granted in the temporary restraining orders. On November 9 and 10, 2011, I conducted a hearing on the preliminary injunction motion. Numerous documents were entered into evidence, and I heard testimony from multiple witnesses, including former Aon employees and current Alliant employees Cusack, Leslie Curry, Richard Ferrucci and Kathleen Flanagan, as well as Kevin White, the CEO of Aon CSG, Eric Andersen, the CEO of plaintiff Aon Risk Services Northeast, Inc ., and Jerold Hall, Alliant's chief operating officer.

FINDINGS OF FACT

Aon is a global insurance broker, providing commercial insurance brokerage services (Second Amended Complaint, ¶ 11). Aon delivers these services through groups organized by product specialty, including the Aon CSG, which provides surety bonding services to construction clients around the world ( id., ¶ 13). Aon asserts that, because the commercial insurance business is highly competitive, and Aon CSG depends on long-term relationships with its clients, Aon carefully protects its confidential employee and client-related information, which are trade secrets ( id., ¶ 20). Aon only shares this information with senior executives and other professional staff to the extent necessary to perform their jobs ( id.).

Since 1993, Cusack has worked in Aon's Boston office, as a Senior Vice President and Managing Director of Aon CSG, as well as an Executive Vice President for Global Surety (White Aff., ¶ 14). He was a member of Aon CSG's Executive Committee, and a major producer of client accounts ( id.). Cusack initially reported to Kevin White, and later also reported to Arkley, who was the Chairman and CEO of Aon CSG ( id.). Cusack and Arkley were longtime friends (Cusack Dep., at 64).

Cusack was the mostly highly compensated of the Boston CSG employees, with annual compensation exceeding $1 million (White Aff., ¶ 14). In 2006, Aon offered Cusack a compensation package worth millions of dollars. The compensation package was comprised of three agreements: (1) Cusack's January 1, 2006 employment agreement (PX 17); (2) Cusack's participation in the Aon CSG Performance Incentive Program effective January 1, 2006 (the Performance Plan [PX 18 and 19] ); and (3) Cusack's participation in the Aon Corporation Leadership Performance Program for 2009–2011 (the Leadership Program [PX 23] ).

All of these agreements contained restrictive covenants not to compete for the business in which Aon was investing, not to solicit Aon employees, and not to misappropriate Aon's confidential and trade secret information. Specifically, Cusack's employment agreement contained a “Covenant Not to Compete,” pursuant to which Cusack expressly agreed, for a two-year period following the termination of his employment, not to compete directly or indirectly with Aon's business, including not entering into a business relationship with Aon's existing customers. The employment agreement also contained a “Covenant Not to Hire,” pursuant to which Cusack agreed not to solicit any employees of Aon to leave Aon's employ, for a period of two years after the end of his employment. Finally, Cusack's employment agreement contained a section entitled “Trade Secrets and Confidential Information,” which provided that Cusack could not disclose any trade secrets or confidential or proprietary information belonging to Aon, including client and customer lists, data, records, computer programs, and the like. All of these agreements contained an Illinois choice of law provision.

Cusack, who was represented by counsel when he signed these agreements (White Aff., ¶ 19; Hearing Tr., at 70–71), testified that he intended to be bound by these agreements to the extent that they were enforceable ( see Hearing Tr., at 72–77).

Alliant is headquartered in California, and, like Aon, provides specialized brokerage services (Hall Aff., ¶ 3). Before January 1, 2011, Alliant had virtually no construction surety business (PX 52). At the close of 2010, Alliant acquired TH Holdings, which included RFF Associates, a construction surety business headed by Richard Ferrucci, a former Aon senior executive who led Aon CSG from 1992 through 2003 (Ferrucci Aff., ¶¶ 6–7, 9). The Alliant Construction Services Group was formed with the acquisition of RFF Associates, which had a revenue of approximately $9–12 million per year (Ferrucci Dep., at 12–13). Alliant's Construction Services Group, although much smaller than Aon, competes with Aon CSG (Hall Aff., ¶ 4; Hall Dep., at 21). Ferrucci, a Managing Director of Alliant's Construction Services Group who is headquartered in New York, testified that, almost immediately after acquiring RFF, Alliant directed him to begin calling his “old friends” at Aon ( id. at 44, 69–71). In early 2011, Ferrucci contacted Cusack to discuss the possibility of joining Alliant in early 2011 (Ferrucci Dep., at 121; Cusack Aff., ¶ 11).

Beginning in the first quarter of 2011, Cusack began to secretly meet and negotiate with Alliant for employment through Ferrucci (Hearing Tr., at 238). According to Cusack, Ferrucci and Cusack discussed Ferrucci's favorable view of Alliant, including Alliant's privately-held status, good management, solid financial backing, and its platform of services (Hearing Tr., at 78; Cusack Dep., at 42). Ferrucci testified that he did not tell Cusack that he was also speaking to other Aon employees about Alliant, and did not discuss with Cusack the value or client identities of Cusack's book of business at Aon (Hearing Tr., at 244; Ferrucci Aff., ¶¶ 14–16). Ferrucci further testified that he did not tell any of the Aon employees that he spoke to about Alliant that he was also speaking with other Aon employees about Alliant (Hearing Tr., at 251; Ferrucci Aff., ¶¶ 14–15).

Cusack testified that, after speaking with Ferrucci, he received a telephone call from Jerry Hall, Alliant's Chief Operating Officer, and he was invited to meet the Alliant senior management team in California in late February or early March 2011 (Hearing Tr., at 78). While attending an Aon leadership meeting in California, Cusack interviewed and had dinner with Alliant's most senior management (Cusack Aff., ¶ 12; White Aff., ¶ 38). Cusack expensed the cost of this trip to Aon (White Aff., ¶ 38; Hearing Tr., at 78–79).

Although Alliant was actively recruiting Arkley, Cusack's long-time friend, and others from Aon at this time, Cusack testified that: (1) Arkley's name never came up during his interview and dinner with Alliant; (2) he never discussed Aon's clients, revenues, trade secrets or other Aon employees with Alliant during this trip; and (3) when he saw Arkley at the Aon leadership conference the next day, he never mentioned to him that he had met with Alliant (Cusack Dep., at 62–64; Cusack Aff., ¶ 12).

Cusack met again with Alliant's senior management team on May 17, 2011 in Garden City, New York. Cusack did not conduct any Aon-related business on this trip, but again expensed the entire trip to Aon (Cusack Dep., at 69; White Aff., ¶ 38). At this meeting, Cusack and Alliant discussed his interest in working with Ferrucci and his New York operation...