A federal district court in Illinois issued a temporary restraining order against an insurance agent who left Prudential to work for a competitor, Broker Dealer Financial. The employee, Barry Hosto, had executed a non-compete agreement with Prudential before his departure.
Hosto's undoing was largely caused by his new employer, which, after receiving information about Hosto's post-employment activities, turned over to Prudential 109 customer files Hosto allegedly pilfered before he quit. Several months later, when it was apparent Hosto was still violating his non-compete obligations and contacting his old insurance accounts from Prudential, Prudential filed suit seeking an immediate injunction.
The district court had little trouble concluding a temporary restraining order was warranted. It did not discuss or analyze the validity or reasonableness of the non-compete agreement. The opinion issued by Judge Reagan was notable in one respect - despite the clear evidence of Hosto's misappropriation of customer files, the court rejected Prudential's request for Hosto to turn over all documents then in his possession related to his former Prudential clients.
Decisions are generally split over whether this element of relief is warranted at the TRO or preliminary injunction proceeding, with the dissenters claiming such an order would be tantamount to a permanent injunction. However, in the face of clear evidence Hosto had taken Prudential's property, it seems a better result would have required Hosto to immediately turn over and account for property taken at the TRO stage.
Court: United States District Court for the Southern District of Illinois
Opinion Date: 10/2/08
Cite: Prudential Ins. Co. of America v. Hosto, 2008 U.S. Dist. LEXIS 77051 (S.D. Ill. Oct. 2, 2008)