A federal jury has ruled that insurance brokerage Lockton Cos. and two brokers will pay $3 million to USI Insurance Services for allegedly breaching noncompete agreements, Business Insurance reported July 23.
Additionally, Lockton will pay $915,000 in damages for aiding and abetting the brokers’ breach of fiduciary duty, and tortiously interfering with contractual relationships.
Six USI brokers sued Valhalla, New York-based USI Insurance in January 2023 seeking an order saying the noncompete and nonsolicitation agreements they entered into were unenforceable. The brokers said they were forced to leave USI from insufficient resources and support and joined the Southeast Series of Lockton Cos.
The jury ruled that the USI brokers were liable for breach of contract and breach of fiduciary duty, according to the report. The jury said USI suffered damages of more than $2 million from the brokers’ misconduct.
USI countersued, alleging the broker’s departure was a part of a coordinated effort with Lockton. USI sought more than $5 million in damages and the trial judge dismissed the punitive damages claim.
The move comes after Federal Trade Commission voted 3-2 pass a law in April that makes it illegal to include noncompetes in employment contracts unless the employer is a nonprofit, requires companies with noncompetes to inform workers that they are void. The ban is facing a preliminary injunction that prevents the ban from taking effect Sept. 4 while the court considers if the FTC has authority to ban noncompetes.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.