A multi-location Missouri independent insurance agency fired three producers who were considering leaving for a competitor. When some of their clients jumped to the competitor, the agency sued the producers and their new agency and requested a restraining order.
According to the judge’s opinion on the restraining order, the producers had done well during their time with the first agency. In their last full year there, they each made six-figure compensations ranging from $230,000 to $400,000. All three had contracts that included:
- A ban on inducing clients to go elsewhere during their employment and for 24 months after the end of their employment.
- Prohibitions on interfering with the agency’s relationships with certain types of clients.
- Restrictions on their usage of the agency’s confidential information.
In November 2024, the area president for the location they worked out of learned that the three were discussing resigning and joining a competing agency. She also learned that a fourth producer had considered and rejected the move. Three days later, she called the three to a conference room, suspended them pending further investigation, cut off their access to agency systems, and removed their name plates from their offices.
During the investigation, she learned that one of the producers printed nearly 11,000 pages of information from agency systems. That information included lists of current and prospective clients and client account details. The agency fired all three producers late in the month. The agency also contacted the competitor to inform them of the producers’ contractual obligations. The other agency provided assurances that they would hold the producers to those obligations.
The producers joined the competitor in early December. Their new agency informed the prior one that the producers would return directly to them any confidential agency information they had in their possession. They did so that week and testified to the court that they made no copies of the records.
By mid-December, broker of record letters (BORs) appointing the new agency started arriving at the old one. A medical practice moved its malpractice insurance to the new agency. The old one asked the new agency about this, and the new agency relayed that the client had contacted them after learning that its former producer would no longer be handling their insurance. The client subsequently decided to change brokers, but the new agency was adamant that the three new producers had nothing to do with it.
Nevertheless, the agency sued the other agency and its three new producers on several claims. More BORs arrived in January, and a prospective client who was on the list one of the producers had printed informed the agency in February that it was going with the other one. Ten days later, the agency asked the court for a temporary restraining order on the other agency and the producers while their lawsuit was being litigated.
On March 10, the judge denied that request. She explained that a court looks at four factors when evaluating a request for a restraining order, one of which is the threat of irreparable harm to the first agency. She ruled that the agency had failed to show it would suffer irreparable harm outside of lost profits; despite their claims of reputational and goodwill damage, they had not shown how that would occur. She also rejected the argument that continued loss of clients would cause non-monetary damage. Because the agency could not explain how it would suffer irreparable harm, she denied the request for a restraining order and told the parties to begin the legal discovery process.
There is no further public record since the judge published this March 10, 2025 opinion, indicating that an out-of-court settlement may have been reached.
It is natural for an agency to become suspicious when clients follow producers out the door. However, suspicion alone is not enough to convince a court to make the producers and their new agency stop whatever they are doing. It takes more than forecasts of lost revenue; the agency must show that it will suffer intangible damage. This agency was unable to do that and the court ruled against them.
