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ROBINSON v. JARDINE INS. BROKERS INTL.

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA


June 22, 1994

PETER CONROY ROBINSON, Plaintiff,
v.
JARDINE INSURANCE BROKERS INTERNATIONAL LIMITED, Defendant.

The opinion of the court was delivered by: STANLEY A. WEIGEL

MEMORANDUM AND ORDER

 I. BACKGROUND.

 Defendant Jardine Insurance Brokers International Limited ("Defendant") is an English corporation that deals primarily with specialists, agents and other brokers on the wholesale side of the insurance business. Defendant is part of the Jardine Group, a number of associated entities in the insurance business.

 Peter Robinson ("Plaintiff"), a California citizen, was first employed by the Jardine Group in 1983, when he joined a California company called Jardine Emmet & Chandler San Francisco Inc. Insurance Brokers. In January, 1987, Plaintiff moved to London to manage Glanvill Enthovin North America Limited ("GENA"), a North American division of Defendant. *fn1" Plaintiff became a director of GENA in January, 1987, and a director of Defendant in January, 1988.

 In July, 1991, Defendant set up an Accident and Health Division in the United Kingdom. *fn2" Plaintiff was appointed Managing Director of the Division, and in that capacity he reported to Michael Gribbin ("Gribbin"), Defendant's Chairman and Chief Executive Officer. In 1992, the Division's Board of Directors decided to set up an Accident and Health Division in San Francisco, and Plaintiff was given responsibility for establishing and managing the new Division.

 The parties dispute Plaintiff's employment status once he became Managing Director of JIB International Accident and Health, Inc. ("JIB A & H"), the Accident and Health Division in San Francisco. According to Plaintiff, he resigned his directorate position with Defendant effective June 15, 1992. Plaintiff claims his resignation is reflected in Defendant's annual report, and in his receipt of "holiday pay," which Gribbin acknowledges is awarded only upon termination of employment. Plaintiff contends that he was thereafter employed directly by JIB A & H, a California corporation which is wholly owned by HG Holdings, a Pennsylvania corporation. *fn3"

 Defendant argues that Plaintiff remained an employee of Defendant even after he relocated to the United States. Defendant bases its argument on the premise that the San Francisco and London offices acted as a single entity, with Plaintiff still reporting to Gribbin, and London employees still reporting to Plaintiff. *fn4" Defendant emphasizes that it directly or indirectly paid the operating expenses of JIB A & H until December, 1993. *fn5" Defendant also points to several alleged admissions by Plaintiff that he remained an employee of Defendant. *fn6"

 On March 25, 1994, during a trip to London, Plaintiff informed Gribbin that he was resigning. *fn7" Since Plaintiff's resignation, three other employees of Defendant have apparently resigned in order to accept positions with Plaintiff's new employer, AON Group ("AON"). *fn8" Defendant alleges that Plaintiff approached these three employees, as well as two others who have not yet resigned, *fn9" in order to induce them to follow Plaintiff to AON. Defendant also claims that Plaintiff contacted at least one of Defendant's clients regarding transfer of its business to AON.

 Plaintiff denies that he has solicited any of his former colleagues or clients at Defendant and maintains that he is not bound by any contractual non-compete provisions. Plaintiff claims that before he began work for Defendant in London, he was presented with a letter which set forth the proposed terms and conditions of his employment, including salary, projected bonuses, car and living allowances, and relocation expenses. Gribbin acknowledges that the letter, which contains no non-compete provisions, constituted an offer of employment, which Plaintiff accepted.

 Eighteen months later, in June, 1988, Plaintiff was presented with a proposed employment contract containing post-employment restrictions, and he refused to sign it. *fn10" Plaintiff was subsequently given an "annexure" to the non-compete provisions of the unsigned contract, which he also refused to sign. *fn11" At a later date, Plaintiff was presented with an "annexure" reducing his age of retirement from 62 to 60, which he signed on November 28, 1990. The annexure referred to a "contract of employment," which Plaintiff believed to be the offer letter he accepted in 1987. Robinson Depo., 44-50.

 On April 12, 1994, Defendant obtained an ex parte Temporary Restraining Order ("English Order") from the High Court of Justice in London, prohibiting Plaintiff from soliciting former colleagues to leave Defendant, and prohibiting Plaintiff from doing business with Defendant's clients. *fn12" On April 13, 1994, this Court issued a TRO enjoining Defendant from "enforcing or attempting in any way to enforce in the United States the ex parte order" issued by the English Court. On the night of April 13, 1994, agents of Defendant attempted to serve upon Plaintiff, at his residence in California, a copy of the English Order and Summons. *fn13"

 On April 14, 1994, Plaintiff applied to this Court for an Order to Show Cause re Contempt ("OSC"), arguing that Defendant had violated this Court's TRO by serving the English Order and Summons on Plaintiff. This Court issued an OSC, and on May 3, 1994, after two hearings, decided not to hold Defendant or its attorneys in contempt. Also on May 3, the Court modified the TRO by striking the notation "in the United States," so that the prohibition against enforcing the English Order no longer has a territorial limitation.

 Plaintiff's Application for Preliminary Injunction is now before the Court.

 II. DISCUSSION.

 A. Standard for Granting Preliminary Injunction.

 The standard for issuing a preliminary injunction is settled. The moving party must show either (1) a combination of probable success on the merits and the possibility of irreparable injury, or (2) the existence of serious questions going to the merits and that the balance of the hardships tips sharply in his favor. California Cedar Prods. Co. v. Pine Mountain Corp., 724 F.2d 827, 830 (9th Cir. 1984).

 1. Likelihood of Success.

 a. Existence of Contract. Plaintiff argues that he cannot be held to the terms of the contract because the contract was never executed.

 It is undisputed that neither Plaintiff nor Defendant ever signed the employment contract containing the non-compete provisions which Defendant is attempting to enforce in the English action. It is also undisputed that Plaintiff never signed the annexure to the non-compete provisions of the unsigned employment contract. Plaintiff did sign an annexure to his "employment contract" which lowered his retirement age from 62 to 60. But, that annexure did not specifically identify the unsigned employment contract which Defendant is attempting to enforce, and Plaintiff has testified that he believed that "employment contract" referred to the original offer letter, the terms of which he accepted before beginning work in England in 1987.

 Defendant has set forth no legal basis for enforcing the non-compete provisions of a contract which Plaintiff never signed, and which Defendant's Chief Executive Officer testified was not a condition of Plaintiff's employment. *fn14"

 b. Validity of Contract. Plaintiff alternatively argues that even if he could otherwise be bound by the terms of the contract, the contract is invalid under California public policy.

 As a general proposition, an individual has a right to freely pursue the livelihood of his or her choice. Futurecraft Corp. v. Clary Corp., 205 Cal. App. 2d 279, 285-86, 23 Cal. Rptr. 198 (1962). California Business and Professions Code § 16600 provides that any contract "by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void." Cal. Bus. & Prof. Code § 16600. This statute has been found to represent a strong public policy of the state, and contains only two exceptions, neither of which applies to the instant controversy. *fn15"

 Although a person is generally free to compete with his former employer, there are limits on that freedom. For example, an employer may under certain circumstances contractually prohibit an employee from soliciting its clients or raiding its workforce for a limited period of time following termination of employment. *fn16" See Moss, Adams & Co. v. Shilling, 179 Cal. App. 3d 124, 224 Cal. Rptr. 456 (1986); Loral Corp. v. Moyes, 174 Cal. App. 3d 268, 219 Cal. Rptr. 836 (1985).

 Here, the alleged employment contract and the English Order based thereon, purport to prohibit Plaintiff from doing any business with Defendant's clients, regardless of who initiates contact. Plaintiff has demonstrated a probability of succeeding on the claim that such a restriction is invalid under § 16600. *fn17"

 2. Balance of Hardships.

 Plaintiff claims that he will suffer immediate and irreparable injury if a preliminary injunction does not issue because he will be prevented from pursuing his livelihood by competing freely in the insurance business. *fn18" In particular, his ability to serve clients who choose to transfer their business to AON would be interrupted, causing loss or damage to those client relationships. *fn19"

 Defendant counters that if a preliminary injunction is issued, Defendant will suffer the greater injury because it will lose employees and clients to AON, and Plaintiff will continue to disclose trade secrets to AON for the purposes of soliciting Defendant's clients. However, Defendant's statements are merely conclusory. Defendant has not even attempted to identify a legally protected trade secret, or a basis for protecting that trade secret. Moreover, Defendant has failed to explain how the potential loss of a few clients and employees to a company of its size outweighs the hardship to an individual employee in Plaintiff's position. *fn20"

 In light of the foregoing, Plaintiff has shown a possibility of immediate and irreparable harm, which outweighs the risk of harm to Defendant.

 3. Comity.

 Defendant concedes that this Court may properly and fairly enjoin enforcement of the English Order in the United States. *fn21" The primary issue before the Court, therefore, is whether Defendant should be enjoined from enforcing the English Order in England.

 As a general principle, one court will not interfere with or try to restrain proceedings in another court in an ordinary action in personam. Compagnie Des Bauxites De Guinea v. INS Co. of North America, 651 F.2d 877, 887 (3d Cir. 1981) (citing Donovan v. City of Dallas, 377 U.S. 408, 412, 12 L. Ed. 2d 409, 84 S. Ct. 1579 (1964)). Where judgment is sought in personam, two courts with concurrent jurisdiction may proceed with litigation at least until judgment is obtained in one case which may be used as res judicata in the other. Id. (citing Princess Lida v. Thompson, 305 U.S. 456, 466, 83 L. Ed. 285, 59 S. Ct. 275 (1939)). This principle applies even where one action is foreign. Id.

 Nevertheless, a district court with jurisdiction over the parties has "the power to enjoin them from proceeding with an action in the courts of a foreign country, although the power should be 'used sparingly.'" Seattle Totems, et al. v. National Hockey League, 652 F.2d 852, 855 (9th Cir. 1981). The issue is not one of jurisdiction, but of comity. Id. The fact that an anti-suit injunction is aimed at the parties to a foreign suit rather than the court itself does not alter the analysis. China Trade and Development v. M.V. Choong Yong, 837 F.2d 33, 35 (2d Cir. 1987) (citing Peck v. Jenness, 48 U.S. 612, 12 L. Ed. 841 (1849)).

 In the Ninth Circuit, foreign litigation may be enjoined where it would "(1) frustrate a policy of the forum issuing the injunction; (2) be vexatious or oppressive; (3) threaten the issuing court's [sic] in rem or quasi in rem jurisdiction, or (4) where the proceedings prejudice other equitable considerations." Seattle Totems, 652 F.2d at 855. *fn22" As the Ninth Circuit has expressly noted, Seattle Totems stands for the proposition that later-filed foreign actions may in certain cases be enjoined. *fn23" Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1984).

 a. Policy of the Forum. Plaintiff claims that the English action frustrates California's public policy against unreasonable restrictions on lawful competition.

 While enforcement of the English Order in the United States may undermine California public policy, enforcement of the English Order in England presents no such conflict. Plaintiff was admittedly an employee of a British corporation in London at the time he allegedly entered into the non-compete provisions. *fn24" He may therefore be subject to an English court's determination of his future rights to engage in business in England without offending California public policy.

 b. Vexatiousness of Foreign Litigation. Plaintiff complains that being forced to defend against the English action in England is vexatious.

 However, the English action was filed first. So, if Plaintiff was concerned about the prospect of pursuing two actions simultaneously, he could have appeared in the English action rather than initiating a second suit here. Moreover, equity does not favor relieving Plaintiff of his duty to defend against the English action in England. Plaintiff claims that an injunction prohibiting enforcement of the English Order in the United States only is inadequate because he travels frequently to England to conduct his business. At the same time, Plaintiff claims that it is vexatious to require him to defend against a suit brought by his former English employer in England. Plaintiff cannot have it both ways. If he intends to conduct business in England, he can expect to have to abide by English law in the course of his English business dealings.

 c. In rem or quasi in rem action. Both actions here are in personam, so there is no threat to this Court's in rem or quasi in rem jurisdiction.

 d. Other Equitable Considerations. Plaintiff has presented no other equitable factors in support of enjoining enforcement of the English Order in England.

 The principle of comity is based on "deference to the foreign country's legal, judicial, legislative and administrative system of handling disputes over which it has jurisdiction, in a spirit of international cooperation." Brinco Mining Ltd. v. Federal Insurance Co., 552 F. Supp. 1233 (D.C. 1982). If the legal system of any foreign jurisdiction is entitled to deference, certainly that of England is. Although both this Court and the English Court have asserted jurisdiction over this matter, if both courts act to define the rights of the parties exclusively within their respective jurisdictions, the interests of both parties can be protected without the threat of inconsistent judgments.

 All of the foregoing constitutes this Court's findings of fact and conclusions of law.

 Accordingly,

 1. Defendant is hereby enjoined from enforcing or attempting to enforce in the United States the ex parte order issued on April 12, 1994, in the matter of Jardine Insurance Brokers International Limited v. Peter Conroy Robinson, action no. 1994-J-721, by the High Court of Justice, Queen's Bench Division, London, England.

 2. Defendant is not hereby enjoined from enforcing the ex parte order in England, nor from serving English court documents on Plaintiff in the United States solely for the purpose of rendering the English Order enforceable in England.

 3. This Preliminary Injunction is binding on Jardine Insurance Brokers International Limited, its officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise.

 4. No person who has notice of this Preliminary Injunction shall fail to comply with the letter and spirit hereof nor shall any person subvert the letter or spirit hereof by any sham, indirection or other artifice.

 5. The Court retains jurisdiction to modify this Preliminary Injunction at any time and from time to time on its own motion or upon the motion of any party in the interest of effectuating its intendments or in the interest of furthering the ends of justice under all applicable law.

 6. The above Preliminary Injunction is effective upon Plaintiff's filing a security in cash or corporate security in the sum of $ 5000.

 Dated: June 22, 1994.

 Stanley A. Weigel


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