A recent ruling by a federal district judge in Roanoke is a big WIN for the employee in a case with non-compete issues. The case, Zurich American Insurance Company v. Turbyfill and Neuenschwander, involved allegations of conspiracy, breach of a non-compete agreement, and tortious interference with a customer contract.
In short, Turbyfill and Neuenschwander were employed by Zurich, a financial services and insurance company. Both employees left Zurich and began their own competitive company…even contacting and soliciting former clients of Zurich.
The case has multiple issues but the most important issue from my perspective was Zurich’s allegation that Neuenschwander had tortiously interfered with Zurich’s contractual relationship with its clients. The court held that in order to prevail under Virginia law, Zurich must allege and prove:
1) the existence of a valid contractual relationship or business expectancy; 2) knowledge of the relationship or expectancy on the part of the interferor; 3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and 4) resultant damage to the party whose relationship or expectancy has been disrupted.
Most importantly, as here, when the contract at issue may be terminated by either party and has no set length of time, the former employer must prove not only an intentional interference that caused the termination of the at-will contract, but also that the defendant employed “improper methods” to cause the interference.
Improper methods are those means that “are illegal or independently tortious, such as violations of statutes, regulations, or recognized common-law rules. Improper methods may include violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation or deceit, defamation, duress, undue influence, misuse of inside or confidential information, or breach of a fiduciary relationship.”
The court found Zurich had not raised nor proved “improper methods” and dismissed that portion of Zurich’s claim against Neuenschwander.
My Take: As my grandfather used to say, “pigs get fat and hogs get slaughtered.” Zurich was over-reaching in this case and the judge told them so.