Brown & Brown, Inc. v. Ali
| Decision Date | 07 January 2009 |
| Docket Number | No. 07 C 2893.,07 C 2893. |
| Citation | 592 F.Supp.2d 1009 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | BROWN & BROWN, INC., Plaintiff, v. Muhammad Munawar ALI, Defendant. |
James M. Witz, Gia Fonte Colunga, Matthew John Kramer, Michael J. Kelly, William N. Krucks, Freeborn & Peters, LLP, Chicago, IL, Mark E. King, Brown & Brown, Inc., Daytona Beach, FL, for Plaintiff.
Alan S. Madans, Robin Korman Powers, Rothschild, Barry & Myers, P.C., Chicago, IL, for Defendant.
FINAL ORDER
Plaintiff Brown & Brown, Inc., d/b/a Risk Management Services and Program Management Services, Inc. ("Brown") filed this suit against its former employee, Muhammad Munawar Ali ("Ali") for breach of a non-compete clause contained in his employment agreement. (R. 1, Compl.) Beginning on October 14, 2008, this Court held a four-day bench trial on Brown's claims. The Court also heard evidence pertaining to Brown's motion for contempt (R. 81) and supplemental motion for contempt (R. 134), in which Brown accuses Ali of violating a preliminary injunction previously entered by this Court. See Brown & Brown v. Ali, 494 F.Supp.2d 943 (N.D.Ill.2007). Also pending before the Court is a third motion for contempt and sanctions recently filed by Brown (R. 163), alleging that new evidence shows that Ali and other witnesses gave false testimony during the bench trial before this Court.
The Court concludes that the overwhelming evidence establishes Ali's liability in this case and that his conduct justifies serious contempt sanctions and possible criminal prosecution for perjury.
Pursuant to Federal Rule of Civil Procedure 52, the Court hereby enters the following written Findings of Fact and Conclusions of Law, which are based upon consideration of all the admissible evidence1 as well as this Court's own assessment of the credibility of the trial witnesses. To the extent, if any, that the Findings of Fact, as stated, may be considered Conclusions of Law, they shall be deemed Conclusions of Law. Similarly, to the extent that matters expressed as Conclusions of Law may be considered Findings of Fact, they shall also be deemed Findings of Fact.
1. Brown is a Florida corporation with its principal place of business at 220 South Ridgewocd Avenue, Daytona Beach, Florida. (Agreed Facts ¶ 1.) Ali is a citizen of Illinois. (Agreed Facts ¶ 2.) The matter in controversy exceeds $75,000, exclusive of interest and costs. (See Agreed Facts ¶ 19.)
2. Brown and its subsidiaries comprise a national insurance organization broken into five divisions: retail; program management; service/third party administration; brokerage; and corporate support services. (PX002.) Brown has approximately 100 retail locations. (Parker Test. at 99:24-25; 100:1-12) Brown has more than 100 profit centers. (Snearer Test. at 574-75:23-3) Brown is among the insurance industry leaders with respect to public entity and non-profit insurance pools or trusts. (Parker Decl. ¶ 8.)
3. In January 2003, Ali began working for Brown as a wholesale insurance broker and subsequently became Brown's Executive Vice President or "profit center leader" of the Brown & Brown Public Entity Service ("BBPES") Chicago office. (Parker Decl. ¶ 12; Ali Aff. ¶ 4; PX001; Ali Test. at 145:06-13, 152:16-153:05; Cothron Test. at 657:10-12; Agreed Facts ¶¶ 3-4.)
4. Before working at Brown, Ali was employed from 2001-2003 as an actuary at Governmental Risk Solutions ("GRS"), where he was responsible for pricing accounts and brokering some accounts. Before that he spent four years at Coregis Insurance ("Coregis"), where he became Pricing Leader, responsible for all actuaries and for pricing every account that Coregis wrote. He was also in charge of a product that involved taking larger risks and restructuring insurance needs by placing various kinds of reinsurance on behalf of the company. Coregis provided insurance exclusively for public entities. Ali began his career in insurance at Kemper, where from 1996-97 he was an actuarial associate, pricing large workers compensation accounts. (Ali Aff. ¶ 6)
5. When procuring insurance, a wholesale broker receives the customer's confidential information from the retail agent or other customer contact. That information may include such items as the insurance services contemplated, policy term, target price, expiring price, expiring coverage, description of operations, loss history, and exposures. After analyzing the information, the wholesale broker summarizes, assembles and provides the information to the insurance carrier based on its knowledge of the carrier and the customer. (Parker Decl. ¶ 6.)
6. After the wholesale broker learns that the carrier may be interested in insuring the customer, the broker analyzes the information provided by the carrier for the customer and then relays it to the customer. The information may be relayed in several different ways: it may come in the format of a formal proposal, or in the format of a bindable quote or a bindable carrier quote, or it may simply be conveyed over the phone or in an email. (Parker Decl. ¶ 6; Parker Test. at 73:03-74:01.)
7. The insurance industry is highly competitive and is relationship-driven. Brown treats its customer relationships as critical to its business and expends significant resources to develop, maintain, and expand these relationships. (Parker Decl. at ¶ 9; Parker Test. at 106:24-107:02; Ali Test. at 228.)
8. Brown invests in its relationships through the training and development of its brokers, and by reimbursing its brokers for customer-related expenses, including travel, meals, drinks, and sporting events. (Parker Decl. at ¶ 10; Parker Test. at 106:10-23.)
9. Given the competitive nature of the insurance industry, Brown diligently protects its customer relationships, business interests, and confidences. Brown requires its employees to safeguard all such interests as a condition of their employment with Brown. The obligation to safeguard Brown's customer relationships, business interests, and confidences is mandated by Brown's Employee Handbook and the employment agreements it enters into with its employees. (Parker Decl. ¶¶ 11, 13-14; PX001; PX002; PX003; PX007; Bangloria Test. at 548:05-18; Rakowski Test. at 560:02-04; Caldwell Test. at 764:01-18.)
10. The customers of BBPES's Chicago office are the named insureds. If Brown loses a named insured, the excess premium necessarily is reduced, which in turn reduces revenue for the BBPES Chicago office. In contrast, the retail broker or administrator of an entity may change, but BBPES Chicago still may retain the entity initially associated with that retail broker or administrator as a customer. (Parker Test. at 103:12-104:03.)
11. In the case of a pool, the BBPES Chicago office's customer is the pool and its members. If Brown loses a pool or a member of the pool, the excess premium necessarily is reduced, which in turn reduces revenue for the BBPES Chicago office. (Parker Test. at 104:11-105:01; Ali Test. at 480:04-10.)
12. Brown's production reports note the revenue attributed to each customer, and the entities listed on the production reports as customers are the named insureds. (Parker Test. at 104:04-10.)
13. When Brown places one line of insurance for a customer, it attempts to expand the relationship and place additional lines of insurance with that same customer. This was the practice of the BBPES Chicago office. Ali taught his employee James Parker ("Parker") to pursue additional lines of insurance with the same customer and specifically talked about this goal at Brown's Fall 2006 retreat. Ali also engaged in this practice. For instance, he expanded Brown's customer relationship with San Diego Schools Risk Management Joint Powers Authority ("JPA"). Brown initially placed only the buffer layer of worker's compensation coverage for the JPA, but expanded the relationship by negotiating a deal for the JPA's statutory layer of worker's compensation. (PX064; PX245; Parker Test. at 107:19-108:10, 108:22-109:07, 114:03-18; Caldwell Test. at 763:14-23.)
14. Selling additional lines of insurance to customers is something brokers know to do instinctively because brokers always want to grow their business by obtaining additional lines of business from current clients. (Parker Test. at 108:22-109:07; Caldwell Test. at 763:14-23.)
15. One of the reasons Brown invested substantial sums of money in customer entertainment and allowing brokers to attend conferences with clients was to develop customers relationships so that Brown could obtain additional lines of business from its customers. (Parker Test. at 108:11-21; Caldwell Test. at 763:14-23.)
16. As a condition of his employment, Brown required Ali to enter into a Employment Agreement with Brown that included customer non-solicitation, employee no-hire, and confidentiality provisions. (Parker Decl. ¶ 13; PX001; Ali Test. at 146:01-23, 151:02-152:10; Caldwell Test. at 764:08-18; Agreed Facts ¶ 10.)
17. The confidentiality provision in Ali's Employment Agreement provides:
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