Liberty Mutual Sues Nine Departed Employees and Their New Employer for Trade Secret Theft

The online magazine, Insurance Journal, is reporting that Liberty Mutual Insurance is suing nine former employees and their new employer, Bermuda-based Aspen Insurance Holdings, alleging they have plotted to steal professional liability insurance business from its Liberty International Underwriters unit.

The suit, filed Feb. 1 in New York County Supreme Court, says the workers and Aspen "unlawfully conspired (and continue to conspire) to breach duties of loyalty to Liberty, raid Liberty's business operations, and misappropriate Liberty's trade secrets and goodwill."

The Liberty suit alleges that the plot was planned and executed by senior employees at Liberty International Underwriters while they were still employed by Liberty. It claims Aspen induced these employees to steal confidential information that helped Aspen build an infrastructure necessary to run a successful professional liability insurance operation in direct competition with Liberty Mutual.

Liberty says all of the nine individuals quit between Jan. 14 and Jan. 20.

The complaint says Eisler and the others began communicating with Aspen in December, 2009 "to discuss the possibility of moving Liberty professional liability insurance business over to Aspen," and began using private email addresses and not their Liberty addresses to discuss the plan.

It says that Eisler met with Aspen Holdings U.S. division president William F. Murray to plan his resignation and solicited other LIU employees to come with him to Aspen. When he resigned from Liberty on Jan. 14, Eisler "said he was taking at least five other employees with him" and turned in resignation letters for Cunningham, Camara, Goodman, Herlands and Sifert, according to the complaint.

Within days, according to the complaint, Dufresne, Olivier and Nogaki also resigned from LIU.
"The en masse departure of nine key employees of LIU's professional liability insurance unit was clearly the result of Aspen's conspiracy with Eisler and/or the other individual defendants, who at the time were still employed by Liberty, to recruit the Liberty employees whom they supervised. The purpose of the conspiracy is clear: to move the necessary infrastructure for a successful professional liability insurance operation -- including personnel, confidential proprietary information and trade secrets -- from LIU to Aspen, so that Aspen, without expending the time and funds necessary to lawfully develop a competitive professional liability insurance business, could nonetheless compete against Liberty sooner than it would be able to otherwise, and at a time when Liberty's ability to compete would be weakened by the departure of key employees," the complaint continues.

This legal concept of "raiding" is common to the securities industry and it will be interesting to learn if developed New York law will recognize the alleged competitive unfairness of hiring a significant number of employees away, as opposed to one or two. We'll keep an eye on this one for you.