Wells Fargo Ins. Servs. United States, Inc. v. Link
827 S.E.2d 458
N.C.2019Background
- Wells Fargo (insurance broker) employed Link (senior sales), Raynor (producer), and Pack (marketing); all three later joined BB&T Insurance Services. Wells Fargo alleges the three solicited Wells Fargo customers and solicited each other to resign.
- Link and Raynor signed written restrictive agreements forbidding (for two years) solicitation of employees, solicitation/acceptance of the Company’s customers with whom they had "Material Contact" or about whom they received "Confidential Information," and prohibiting disclosure/use of Trade Secrets/Confidential Information; agreements define "the Company" to include Wells Fargo and its broad set of affiliates.
- Raynor is alleged to have printed/copied documents from Wells Fargo after hours immediately before resigning. Wells Fargo lists ~18 transferred customer accounts.
- Wells Fargo sued for breach of the restrictive agreements (multiple counts), NCTSPA misappropriation of trade secrets, tortious interference, computer trespass (against Raynor), and unfair/deceptive trade practices. Defendants moved to dismiss most counts under Rule 12(b)(6).
- The court granted dismissal in part and denied in part: customer- and employee-nonsolicit covenants were unenforceable (Counts One & Two dismissed); confidentiality breach claim against Link, and misappropriation claims against Link and Raynor, and UDTP claims against Link and Raynor survived; many claims against Pack and BB&T were dismissed for insufficient factual pleading.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of non-solicitation of customers (sections III.b & III.c) | Restriction valid to protect Wells Fargo customers; Material Contact and Confidential Information carveouts limit scope. | Definitions of "the Company" and "Confidential Information" are overbroad and vague (sweeping affiliates, trivial records); covenant unreasonable. | Covenant unenforceable as a matter of law; Counts One dismissed. |
| Enforceability of non-solicitation of employees (section III.a) | Two‑year ban reasonable to protect business goodwill and workforce. | Definition of "the Company" makes restriction unreasonably broad (bars soliciting hundreds of thousands across affiliates/industries). | Covenant unreasonable and unenforceable; Count Two dismissed. |
| Breach of confidentiality and return-of-property (Counts Three & Four vs Link) | Link used Wells Fargo’s confidential information to solicit former clients and failed to return company records. | Allegations against Link are conclusory re: return of property; insufficient specifics. | Breach of confidentiality claim against Link survives; return-of-property claim dismissed for lack of factual detail. |
| Misappropriation of trade secrets under NCTSPA (Count Five) | Wells Fargo identifies customer- and policy-related data and compilations as trade secrets; Defendants used/obtained same to solicit accounts. | Allegations lack particularity as to what trade secrets and lack facts showing acquisition/use by Pack and BB&T; Link didn’t acquire without authorization. | Misappropriation claims survive as to Link and Raynor (Raynor alleged after-hours copying); claims dismissed as to Pack and BB&T for failure to plead means/use. |
| Tortious interference and UDTP (Counts Seven & Eight) | Defendants intentionally induced breaches and engaged in unfair practices (misappropriation, theft, interference). | Allegations against BB&T and Pack fail to plead intentional, unjustified interference or misappropriation; competition is privileged absent legal malice. | Tortious interference mostly dismissed except claim that Link induced Raynor’s confidentiality breach; UDTP claims survive as to Link and Raynor (tied to NCTSPA claims) but dismissed as to Pack and BB&T. |
Key Cases Cited
- Triangle Leasing Co. v. McMahon, 327 N.C. 224 (rule for enforceability of covenants not to compete)
- United Lab., Inc. v. Kuykendall, 322 N.C. 643 (standards for restrictive covenants and tortious interference elements)
- Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (enforcement of client-based restrictions without explicit geographic limitation)
- Medical Staffing Network, Inc. v. Ridgway, 194 N.C. App. 649 (overbroad covenants protecting unrelated affiliates held unenforceable)
- VisionAir, Inc. v. James, 167 N.C. App. 504 (trade secret identification particularity required to plead NCTSPA claim)
- Washburn v. Yadkin Valley Bank & Tr. Co., 190 N.C. App. 315 (complaint must plead specific acts by which trade secrets were misappropriated)