Beber v. Navsav Holdings, LLC

• Docket Number: 8:23CV323,8:23CV325
• Decision Date: 22 August 2023
• Parties: AUSTIN MICHAEL BEBER, Plaintiff, v. NAVSAV HOLDINGS, LLC, Defendant. CODY ROACH, Plaintiff, v. NAVSAV HOLDINGS, LLC, Defendant.
• Court: U.S. District Court — District of Nebraska

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AUSTIN MICHAEL BEBER, Plaintiff, v. NAVSAV HOLDINGS, LLC, Defendant.

CODY ROACH, Plaintiff, v. NAVSAV HOLDINGS, LLC, Defendant.

Nos. 8:23CV323, 8:23CV325

United States District Court, D. Nebraska

August 22, 2023

MEMORANDUM AND ORDER ON MOTIONS FOR PRELIMINARY INJUNCTIONS

Brian C. Buescher, United States District Judge

In these separate actions originating in state court, former insurance account representatives sue their former employer to bar enforcement of restrictive covenants in their employment contracts after they started working for another insurance company. Each plaintiff obtained an ex parte temporary restraining order from the state court which was then extended by this Court after removal of their cases. The temporary restraining orders enjoined the former employer from making any further submissions, filings, or appearances in the former employer's action against the former employees in Texas state court and from taking any action to enforce the noncompetition and non-solicitation covenants in their employment contracts. This matter is before the Court after a joint hearing on the plaintiffs' Motions for Preliminary Injunctions. For the reasons stated below, the Motions for Preliminary Injunctions are granted.

I. INTRODUCTION

These separate actions by plaintiffs Austin Michael Beber and Cody Roach against defendant NavSav Holdings, LLC, their former employer, have not been formally consolidated. However, the Court held a joint hearing on Plaintiffs' Motions for Preliminary Injunctions. Furthermore, because the pleadings and filings are nearly identical, all references in this ruling are to Beber's case except when expressly indicated otherwise. Citations to the record in Roach's case are not provided for similar facts because the Court's statement of facts pertaining to Roach will indicate any differences from facts pertaining to Beber.

A. Factual Background

This statement of the factual background is drawn from the Complaint in the first-filed case, Beber v. NavSav Holdings, LLC, Case No. 8:23cv323, with occasional additions from the Complaint in the second case, Roach v NavSav Holdings, LLC, Case No. 8:23cv325. The factual background is also drawn from the evidence submitted at the preliminary injunction hearing. Overlapping and/or identical exhibits were offered in each case. To avoid confusion, all citations to the record in this decision are to the docket numbers and docket page numbers of documents in Beber's case. References to comparable documents in Roach's case appear without docket citations. Unless otherwise indicated, these factual statements appear to be undisputed. The Court's factual findings in this decision are provisional and not binding in future proceedings. See Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981) (“[F]indings of fact and conclusions of law made by a court granting a preliminary injunction are not binding at trial on the merits[.]”) (citations omitted); SEC v. Zahareas, 272 F.3d 1102, 1105 (8th Cir. 2001) (same).

1. The Parties and Their Contracts

Prior to April 12, 2022, Beber and Roach were at-will employees of Universal Group, Ltd., a corporation licensed to sell insurance in Nebraska. Filing 1-1 at 64-65 (¶¶ 5-14). On or about April 12, 2022, Universal was acquired by defendant NavSav Holdings, LLC. Filing 1-1 at 65 (¶ 14); Filing 8-1 at 1 (¶ 5) (stating that NavSav's purchase of Universal occurred on April 14, 2022). NavSav is a Texas company with its principal place of business in Beaumont, Texas. Filing 1-1 at 176 (¶ 2). NavSav is an insurance agency conglomerate with sixty to seventy individual agencies, a ten-person executive management team, operations in at least seventeen states, and access to more than one-hundred-fifty carriers. Filing 1-1 at 65 (¶ 15).

Beber and Roach allege that their at-will employment with NavSav began on the date NavSav purchased Universal and that NavSav presented them with form employment applications only after the acquisition of Universal and after their employment with NavSav began. Filing 1-1 at 65-66 (¶¶ 16-17). Beber and Roach also claim that on April 20, 2022, after NavSav's acquisition of Universal, NavSav presented each of them with a NavSav form NonCompetition, Non-Solicitation, Confidential and Non-Disclosure Agreement (the April Agreement), which each signed a few days later. Filing 1-1 at 66 (¶¶ 19-20). The April Agreement for Beber states that it was “entered into” on April 14, 2022. Filing 1-1 at 77. The electronic record of the document execution indicates that the Agreement was provided to Beber on April 20, 2022, and that he signed it on April 25, 2022. Filing 1-1 at 85; see also Filing 1-1 at 66 (¶¶ 19-20) (Beber Aff.) (confirming receipt and signature dates). The comparable April Agreement for Roach also states that it was “entered into” on April 14, 2022. T he electronic record of the document execution indicates that the Agreement was provided to Roach on April 20, 2022, and that Roach signed it on April 26, 2022. Beber avers that he did not participate in the drafting of the April Agreement. Filing 1-1 at 66 (¶ 21). He also avers that he did not engage in any negotiations regarding the April Agreement and that he was not represented by counsel before or at the time he signed the April Agreement. Filing 1-1 at 66 (¶ 22). Roach avers that he did not participate in drafting the April Agreement and was not represented by counsel before or at the time he signed the April Agreement.

In contrast, Daniel Headlee, NavSav's Vice President of Commercial Sales, avers that Roach and Beber negotiated the terms of their employment with NavSav after NavSav purchased Universal, that each negotiated for a higher commission structure, and that each also signed various employment-related documents for NavSav as part of the terms of their NavSav employment. Filing 8-1 at 3 (¶ 12). Ragen Murray, NavSav's Vice President of Talent and Human Resources, avers that she attended a meeting with Beber and Gary Sanders, another NavSav employee, during which Beber and Sanders negotiated certain terms of Beber's employment with NavSav, including his commission rates. Filing 8-2 at 3 (¶ 11). Murray makes an identical averment about a meeting with Roach and Sanders during which Roach and Sanders negotiated certain terms of Roach's employment with NavSav, including his commission rate. Filing 8-2 at 2 (¶ 8). Murray avers that the documents received, completed, and signed by Beber and Roach include in addition to the April Agreement a “Pay Details Form” sent to and signed by Roach on April 21, 2022, Filing 8-2 at 2 (¶ 10), and sent to Beber on April 18, 2022, and signed by him on April 21, 2022, Filing 8-2 at 3 (¶ 13). Headlee also avers that NavSav would not have retained Roach and Beber without execution of the April Agreement, nor would NavSav have agreed to and paid their higher commission structure or given them access to NavSav confidential information including pricing, contract terms, and other information that is only available to NavSav employees. Filing 8-1 at 4 (¶ 15).

2. Pertinent Contract Provisions

a. The NavSav April Agreements

The restrictive covenants in the April Agreement for each Plaintiff include the following non-competition provision:

4. (a). Covenant Not to Compete; Area Restriction. Employee agrees that he/she will not, without prior written consent of Employer, directly or indirectly on his/her own account, or in any individual or representative capacity, or on behalf of or in conjunction with any person, partnership, agency, or corporation, engage, participate, be employed by, be an agent of or manager for, be a producer for, or own an interest in any business in competition with the business of Employer for a period of one (1) year from the date of Employee's last date of employment with NavSav, and within a five (5) mile radius of Employee's primary office location during Employee's employment. For purposes of clarity, the one (1) year and five (5) mile restrictions are combined and read together as one (1) restriction, i.e. Employee cannot open or work for an insurance agency that is both within the five (5) mile radius and within one (1) year of employment. “Business of the Company” shall include, but not be limited to, an insurance agency or other similar business engaged in the sale and service of insurance and insurance related products, services, and policies.

Employee understands the nature and extent of selling insurance products and insurance services out of a certain geographical location. Employee agrees that the covenant not to compete that limits employment for one (1) year within five (5) miles of Employee's last location is not an industry wide exclusion because: (1) Employee recognizes and understands he/she can work outside the five (5) mile radius; and (2) due to the nature of selling insurance, the limitation is necessary to protect the legitimate business interest of Employer to keep Employee from selling to the same territory of customers as Employee did prior to termination.

Filing 1-1 at 77-78 (bold and underlining in the original).

The April Agreements also include the following non-solicitation provisions:

4. (b). Covenant Not to Solicit; Customers. Employee agrees that he/she will not, without prior written consent of Employer, directly or indirectly on his/her own account, or in any individual or representative capacity, or on behalf of or in conjunction with any person, partnership, agency, or corporation, solicit or attempt to solicit, the transfer of any customers or policies, cancellation of customers or policies or writing of new insurance policies for any customer that is a part of any book of business owned by NavSav or a NavSav related or affiliated entity,

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