Attached below is Judge Judith Fabricant’s lengthy decision in Hilb Rogal & Hobbs v. Sheppard, decided by Judge Fabricant in the Suffolk Business Litigation Session early this year. To my knowledge, this decision and order became publicly available only recently.
This restrictive covenant case is interesting in one unusual respect: it involves what some lawyers like to call “employee raiding” – a perjorative term that one sometimes hears when a large group of employees leaves to join a new firm. Here, the group was unusually large, consisting of 24 employees who resigned en masse, leaving Hilb Rogal & Hobbs (HRH) identical resignation letters and advising HRH to contact the same lawyer in the event any legal communications were necessary.
HRH filed suit and moved for a preliminary injunction, presenting Judge Fabricant with a complex set of facts (the employees did not all have the identical agreements), and factual variations in their circumstances.
The decision breaks no new ground in Massachusetts noncompete law, but it’s worth making a few observations about how the Judge approached the case:
- Employees whose agreements were entered into in connection with a business that had been sold to HRH earlier were treated much more strictly than the “rank and file” employees, as one would expect given Massachusetts law.
- The Judge viewed HRH’s claim of interference with contractual relations favorably, given that the new employer offered it’s prospective employees defense and indemnification for anticipated litigation arising from a breach of their agreements. Since employers are often asked to provide this sort of protection for new employees who fear litigation of this sort, this decision emphasizes that a decision to hold the employee harmless can backfire.
- While the Judge was unwilling to say that agreements signed by employees as a condition of ongoing employment lacked consideration, she did treat this as an equitable factor that weighed against issuance of a preliminary injunction.
- There is no discussion of “raiding” in the decision and order. In the past I’ve seen lawyers argue that the fact that the new employer hired a large number of employees should, of itself, give rise to some presumption of liability. However, to my knowledge no Massachusetts judge has ever recognized a cause of action for “raiding”. I don’t know if HRH made that argument in this case, but if it did Judge Fabricant did not address it.