World v. Hill
2024 COA 100
| Colo. Ct. App. | 2024Background
- Ivy Ngo was employed as head of the class action department at Franklin D. Azar & Associates P.C. (the "Azar firm"), signing a Confidentiality, Non-Disclosure, and Non-Solicitation Agreement and a separate Employment Agreement with restrictive covenants.
- Ngo, while still employed, made plans to leave and attempted to have colleagues join her at another firm; she sent a presentation to other firms, leading to her termination from the Azar firm.
- Azar firm sued Ngo for breach of contract and fiduciary duty; Ngo counterclaimed for defamation and sought declaratory judgment arguing certain contract provisions violated Colorado Rule of Professional Conduct 5.6(a).
- The trial court held the client nonsolicitation provision violated Rule 5.6(a) but found the employee nonsolicitation provision (as applied to predeparture conduct) enforceable, partially granting summary judgment for Ngo and allowing remaining claims to trial.
- The jury found Ngo breached both agreements and awarded $4,000 in damages; the Azar firm was awarded over $1 million in attorney fees and over $100,000 in costs.
- Ngo appealed on several grounds, including the enforceability of the employee nonsolicitation provision, jury instructions, application of the litigation privilege, and the attorney fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether employee nonsolicitation provisions violate Rule 5.6(a) | Provision only restricts predeparture conduct, not post-employment practice; common law duty exists | Restricts lawyer's autonomy and ability to build teams post-employment | Not a violation of Rule 5.6(a) when limited to predeparture conduct; enforceable |
| Refusal to give jury instruction on employee preparation privilege | Not applicable to breach of contract claims; only applies to fiduciary duty | Employees can prepare to compete prior to leaving employment | Jury instruction properly denied; no error |
| Application of litigation privilege to Azar firm’s letters to other law firms | Letters related to subject matter of existing litigation; intended to preserve evidence | Letters not sent to those involved or closely connected with litigation | Privilege applied; trial court acted properly |
| Attorney fee shifting provision as impermissible financial disincentive under Rule 5.6 | Fee provisions not punitive, only triggered after breach | Provisions are unreasonable financial penalty restricting lawyer practice | Argument not preserved for appeal; court did not address merits |
Key Cases Cited
- Jet Courier Serv., Inc. v. Mulei, 771 P.2d 486 (Colo. 1989) (predeparture employee solicitation and duty of loyalty in employment relationships)
- Johnson Fam. L., P.C. v. Bursek, 2024 CO 1 (Colo. 2024) (interpretation of Rule 5.6(a) regarding agreements restricting lawyers’ practice)
- Killmer, Lane & Newman, LLP v. BKP, Inc., 2023 CO 47 (Colo. 2023) (scope and criteria for applying the litigation privilege)
- Dowd & Dowd, Ltd. v. Gleason, 816 N.E.2d 754 (Ill. App. Ct. 2004) (duty of loyalty for attorneys and orchestrated departures)
- Howard v. Babcock, 863 P.2d 150 (Cal. 1993) (limits on lawyer autonomy and firm association rights)