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Arthur J. Gallagher & Co. v. Lang

United States District Court, N.D. California

September 2, 2014



CLAUDIA WILKEN, District Judge.

Plaintiff Arthur J. Gallagher & Co. brought this action against its former employee, Defendant Christopher Lang, for breach of contract and various business-related torts. Defendant moves to dismiss the amended complaint. Plaintiff opposes the motion. After considering the parties' submissions, the Court grants the motion in part and denies it in part.


This Court granted in part Defendant's prior motion to dismiss, and granted Plaintiff leave to amend its complaint. The following facts are alleged in the amended complaint.

Gallagher is an insurance brokerage firm with its principal place of business in Illinois. In September 2008, it acquired the California Insurance Center, the firm where Lang was employed immediately prior to his employment with Gallagher. On the date of the acquisition, Lang signed an employment agreement with Gallagher. A copy of that agreement was filed after Gallagher filed his amended complaint.

Section 5 of the employment agreement addressed termination of Lang's employment. Section 5(d) provided that Lang could terminate the employment agreement for any reason upon giving sixty days' notice to Gallagher;[1] and Section 5(g) provided that, both during his employment and after the termination of his employment, Lang would make himself available to Gallagher's legal counsel to provide information relevant to any actual or potential legal proceeding. Docket No. 21, Errata, Ex. A, Employment Agreement, at 10-11.

Section 7 of the employment agreement stated that Gallagher provided Lang with confidential trade secret information, and that Lang agreed that, upon termination of his employment, he would return to Gallagher "all copies or tangible embodiments of materials" containing such information. Id. at 13-15.

Section 8 of the employment agreement included the non-competition and non-solicitation provisions that this Court previously held to be unenforceable as contrary to California public policy. Docket No. 18, Order, at 6-11. Additionally, Section 8(b) prohibited Lang from recruiting Gallagher's employees:

The Executive [Lang] recognizes that employees of the Corporation [Gallagher] and its affiliates are a valuable resource of the Corporation and its affiliates and are integral to their full enjoyment of the goodwill and other assets acquired in the Transaction. Accordingly, the Executive agrees that, for a period equal to two (2) years following the termination of the employment of the Executive with the Corporation or its affiliates (as applicable) for any reason whatsoever, the Executive will not directly solicit, induce or recruit any employee of the Corporation or its affiliates to leave the employ of the Corporation or its affiliates.

Employment Agreement 17.

In January 2014, Lang submitted his resignation to Gallagher. Shortly thereafter, he formed a new insurance brokerage firm with two of Gallagher's other former employees, who had left their employment with Gallagher shortly before Lang himself left. Several clients soon ended their relationship with Gallagher and brought their business to Lang's new firm. Gallagher alleges that "the amount of this lost business to Gallagher exceeds $400, 000. If [Lang] had provided the required 60-days written notice prior to his departure, it is very likely that many, if not all, clients would have remained with Gallagher." Am. Compl. ΒΆ 22.

On June 6, 2014, Gallagher filed its amended complaint, charging Lang with breach of contract, to wit: failure to provide written notice of his resignation sixty days prior to leaving the firm, as required by Section 5(d); refusing to meet with the firm's legal counsel after leaving the firm, as required by Section 5(g); failing to return certain materials to the firm, as required by Section 7(c); and recruiting employees to leave the firm, in violation of Section 8(b). The amended complaint also asserts claims for intentional interference with prospective economic advantage, negligent interference with contracts and prospective economic advantage, unjust enrichment and unfair competition.[2] It seeks both monetary and injunctive relief.


A complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a). On a motion under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. NL Indus., Inc. v. Kaplan , 792 F.2d 896, 898 (9th Cir. 1986). However, this principle is inapplicable to legal conclusions; "threadbare ...

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