Mercer Health & Benefits LLC v. DiGregorio
307 F. Supp. 3d 326
S.D. Ill.2018Background
- Mercer Health & Benefits sued three former employees (DiGregorio, Steed, Preston) and Lockton Companies, LLC after the employees resigned on the same day and joined Lockton entities, allegedly soliciting Mercer clients and taking confidential Mercer materials.
- Each Individual Defendant signed Mercer Non‑Solicitation and Confidentiality Agreements (one‑year non‑solicit of covered clients/employees; confidentiality of client and personnel information) governed by New York law and venue in SDNY.
- Evidence showed the defendants emailed Mercer documents to personal accounts and used Airdrop to transfer contacts while still employed; some targeted client contacts and meetings occurred after resignation; at least one Mercer client (Planned Parenthood) moved to a Lockton entity.
- Mercer sought a preliminary injunction to enforce the agreements and enjoin misuse/solicitation of Mercer clients and confidential information; Judge Koeltl held evidentiary hearings and reserved a separate order granting in part and denying in part relief.
- The court found Mercer likely to succeed on enforceability and breach of the agreements (as to current Mercer clients and use of confidential information), tortious interference, unfair competition, misappropriation, and fiduciary duty claims as to defendants, but declined to find personal jurisdiction over the Lockton corporate defendant on the present record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over Lockton Co. | Lockton Co. is subject to general jurisdiction in NY via "mere department"/local Lockton entities and does business in NY | Lockton Co. has no NY offices/employees; the sued entity has no operations in NY | Court: Mercer unlikely to show general jurisdiction over Lockton Co.; no injunction against Lockton Co. on present record |
| Irreparable harm needed for preliminary injunction | Mercer will suffer irreparable loss of clients and goodwill and cannot be made whole by money | Defendants: monetary damages suffice for lost clients | Court: loss of client relationships/goodwill constitutes irreparable harm; injunction warranted for current clients/confidential info |
| Enforceability/scope of non‑solicit/confidentiality covenants | Agreements reasonably limited (1 year; contacts in last 2 years); protect client relationships and confidential info | Defendants argue some taken information is public and covenants overbroad as to prospective clients | Court: Covenants enforceable as to solicitation of current Mercer clients contacted in last 2 years and confidentiality barred for use with current and prospective clients; not enforceable to bar solicitation of mere prospective clients |
| Breach and related tort claims | Defendants secretly copied Mercer materials, solicited Mercer clients after resignation, and interfered with client relations | Defendants deny retaining confidential materials or understood restrictions | Court: Likely breaches of contracts, fiduciary duty, unfair competition, misappropriation, and tortious interference established by evidence (emails, Airdrop, client contacts, lost client) |
Key Cases Cited
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (discusses limits of general jurisdiction)
- Daimler AG v. Bauman, 571 U.S. 117 (clarifies "at home" standard for general jurisdiction and casts doubt on broad subsidiary‑based theories)
- Ticor Title Ins. Co. v. Cohen, 173 F.3d 63 (2d Cir.) (enforceability of restrictive covenants and protection of client relationships)
- BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (N.Y.) (reasonableness test for restrictive covenants)
- Johnson Controls, Inc. v. A.P.T. Critical Sys., Inc., 323 F. Supp. 2d 525 (S.D.N.Y.) (loss of client relationships constitutes irreparable harm)