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Employment Law (Non-Compete Agreement): Early Case Mediation

Issue

In a dispute over a non-compete agreement between a small insurance agency and one of its sales representatives, how did the two parties – as well as a second agency that hired the sales representative – use mediation as a means to resolve their differences and move forward?

What Happened?

When the sales representative separated from the insurance agency to begin working for the second agency, the first agency became concerned that the representative would leverage its relationships to the benefit of the second agency by contacting contact the client base he had acquired during his prior employment.  Seeking protection, the first agency sought a preliminary injunction to prevent the representative from competing for its clients.  After the court denied the request, and recognizing that the cost of litigation was potentially more than the amount of money in dispute, all parties agreed to facilitative mediation before conducting extensive discovery.

Special Considerations:

  • Prior to mediation, the attorneys for the two insurance agencies were unable to agree on the ground rules for how the companies would compete for clients or if any of those accounts would be protected.
  • Both agencies sought to establish with certainty what they could and could not do in the future without risking further contractual disputes.
  • Neither insurance agency was in a financial position to pay for protracted litigation, which held uncertain outcomes, and they each wanted to concentrate on growing their businesses and not spending time preparing for and attending depositions or hearings.

How Did PREMi Help?

The attorneys contacted PREMi and selected a mediator with extensive experience in employment issues and a reputation for impartiality and fairness.  The PREMi mediator:

  • Submitted a mediation agreement, including a confidential provision, for the parties’ review and signature prior to beginning the proceedings
  • Met with the parties in a joint session where each side made opening remarks; given the sensitivity of the issues involved, the mediator then divided the parties into different rooms to continue the mediation process
  • Generated momentum by identifying issues that could be easily resolved and then assisting the parties to find common ground on the more complex issues

What Was the Outcome?

After a morning of frank discussion led by the PREMi mediator, the parties left the session with:

  • A binding agreement that not only resolved the lawsuit, but also established procedures for how the two agencies could compete for certain accounts in the future
  • The opportunity to craft their own resolution and conduct their business without further conflict
  • Peace of mind that the matter had been resolved without spending tens of thousands of dollars in legal fees

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Disclaimer: This summary is illustrative of the types of cases and the manner in which the PREMI associate dealt with the matter. Care has been taken to avoid disclosure of sensitive or confidential information.