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Ripple v. Zurich American Insurance Co.

United States District Court, E.D. Wisconsin

September 13, 2017




         1. INTRODUCTION

         On March 31, 2017, the plaintiff, Thomas Ripple (“Ripple”), filed this lawsuit seeking a declaration as to the enforceability of the terms of his employment agreements with the defendant, Zurich American Insurance Company (“Zurich”).[1] (Docket #1). Ripple claims that the agreements he executed pursuant to his employment at Zurich are void and unenforceable. See generally id.[2] Zurich, for its part, denies the allegations in Ripple's complaint and brings several counterclaims against him for breach of contract, breach of fiduciary duty and duty of loyalty, misappropriation of trade secrets, and conversion. (Docket #7). Zurich's counterclaims are based on Ripple's alleged misconduct following the termination of his employment with Zurich, including his operation of a competing business, RBI, LLC (“RBI”), which Zurich claims is unfairly competing in the same territory previously serviced by Ripple on Zurich's behalf.

         On April 26, 2017, Zurich filed a motion for a temporary restraining order and a preliminary injunction. (Docket #8). That motion sets forth the same core allegations as appear in Zurich's counterclaims: that Ripple continues to breach the non-solicitation and confidentiality terms of his former employment contract and that such activities are irreparably harming Zurich's reputation and business relationships. (See generally Docket #9). In light of these harms, Zurich asks the Court to grant it a temporary restraining order and preliminary injunction pursuant to Rule 65(b) of the Federal Rules of Civil Procedure. (Docket #8, #9). Specifically, Zurich asks this Court to enter an order enjoining “Ripple, and all parties in active concert or participation with him, . . . from using or disclosing any of Zurich's confidential, proprietary and/or trade secret information” and from “engaging in or participating in any employment or activity, insomuch as such activity is directed to or designed to solicit or divert any of Zurich's customers or potential customers that Ripple contacted, targeted or serviced, or about which he had access to confidential information while in Zurich's employ.” (Docket #9-1). Zurich further asks the Court to direct Ripple, and all parties in concert with him, to return to Zurich any files, devices, or documents that contain its confidential information. Id.

         Zurich's motion is fully briefed and ripe for adjudication. (Docket #8, #9, #16, #17, #22). For the reasons stated herein, the Court concludes that a preliminary injunction is inappropriate and will, therefore, deny Zurich's motion for preliminary equitable relief. (Docket #8).[3]

         2. BACKGROUND

         The following facts, most of which are undisputed, are drawn from the complaint and the parties' submissions. (Docket #1, #8, #9, #16, #17, #22).

         2.1 Ripple's Employment with Zurich

         Zurich is a commercial property-casualty insurance provider with its principal place of business in Illinois. One of Zurich's categories of offerings is Finance & Insurance (“F&I”) products for auto dealerships. These products include vehicle service contracts, tire and wheel protections, prepaid maintenance, guaranteed asset protection, limited warranty programs, theft deterrent, paintless dent repair, environmental protection, windshield protection, and key protection.

         Generally, Zurich's account executives are responsible for cultivating and growing relationships with dealerships in their territory. They also provide consulting services to dealerships and help them to maximize their profitability in the sale of add-on services after a customer purchases a vehicle from the dealership. Zurich states that it invests substantial time and resources to build and maintain goodwill and long-term relationships with dealerships across the country.

         Ripple began working for Zurich in its auto dealership F&I division in July 2008. He remained at Zurich for ten years until he voluntarily resigned in January 2017. Ripple's assigned territory included five counties in Southeastern Wisconsin: Milwaukee, Ozaukee, Washington, Waukesha, and Dodge. As a function of his position as an F&I executive for Zurich, Ripple had access to “Zurich's trade secret information with respect to its product offerings, including marketing analysis, fee schedules for profit sharing with customers, and customer portfolios for those customers and prospective customers in his Territory only.” (Docket #9 at 7). In addition, Ripple was entrusted with Zurich's “highly valuable customer relationships.” Id. He was the “direct liaison between Zurich and its customers.” Id. In Ripple's capacity as one of Zurich's national sales trainers, he had access to information regarding “Zurich's proprietary sales process, how Zurich used it to increase its dealership satisfaction, and how to use this proprietary information as an enticement to new dealerships to move their F&I business from their existing provider to Zurich.” Id. at 4.

         Ripple signed two agreements at the commencement of his employment with Zurich-an Employment Agreement and an Agreement Relating to Proprietary Information/Equipment/Work Development (“Proprietary Information Agreement”). Id. at 7. The Employment Agreement contains several provisions relevant to this dispute. First, in Paragraph 9, Ripple agreed that during his employment with Zurich and for five years afterward, he would keep confidential and not use or disclose, but for the benefit of the company, any “sensitive and/or confidential information of Company.” (Docket #9-4 at 3). It goes on to define sensitive and confidential information to include various things such as customer lists, business plans, and pricing strategies. Id. Paragraph 10 of the Employment Agreement relates to trade secrets, which are defined to include an array of things such as customer lists, premiums charged, expiration dates of policies, the company's prospect list, inspection reports, maps, rate computations, inventory reports, and etcetera. Id. Under this Paragraph, Ripple agreed not to disclose such “trade secrets, ” except to other employees or affiliates, “during or after the term of his/her employment, ” with no outer time limit. Id. Breach of Paragraph 10 entitles Zurich to an injunction restraining inference with Zurich's rights for one year following the employee's termination. Id. at 4. The next paragraph requires Ripple to return company documents and property to Zurich upon leaving the company. Id.

         Finally, Paragraph 12 contains a non-solicitation provision prohibiting Ripple, for one year following termination of his employment, from soliciting policies, applications, or inquiries about insurance, or “insurance-related products or services, ” from any person or firm that was a customer of Zurich or its affiliates within one year prior to Ripple's termination, or, in the case of insurance policies (as opposed to insurance-related products), with whom Zurich regularly transacted business. Id. The restriction applies within the territory to which Ripple was assigned during the year preceding his termination. Id. The Employment Agreement contains a Kansas choice-of-law provision. Id. at 5.

         The other agreement Ripple signed at the start of his employment with Zurich, the Proprietary Information Agreement, covers much of the same type of information referenced in the Employment Agreement. (Docket #1-2 at 1). It prohibits Ripple from disclosing, during or after his employment, “proprietary information” including, for example, computer software programs, access codes, marketing and pricing information, financial data, strategic information, and etcetera. Id. Zurich downplays the importance of this agreement, stating that this agreement was not ...

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