Alliant Insurance Services, Inc. et al. -against- Resilience Insurance Advisory…

Background

Alliant Insurance Services and its wholly owned subsidiary, Harbor Group Consulting, alleged that Harbor’s former chief operating officer, Emily Rasmussen, coordinated a reduction in Harbor’s workforce and helped former Harbor employees and clients move to Resilience Insurance Advisory Corp., a competitor. The plaintiffs alleged that Resilience and former Harbor employees caused confusion about whether Harbor and Resilience were affiliated and that Resilience copied parts of Harbor’s website and other materials.

Rasmussen had signed agreements containing two-year restrictions on soliciting Harbor’s clients and employees. The plaintiffs alleged that she violated those restrictions, breached duties owed to Harbor, redirected business to Resilience, and helped create Resilience’s website. The defendants disputed many of the allegations, but the court generally treated well-pleaded allegations as true because the motions were filed under Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim.

Rulings on Resilience’s Motion

The court granted Resilience’s motion to dismiss the false-designation-of-origin claim under Section 43(a) of the Lanham Act. The plaintiffs adequately alleged that “Alliant” and “Harbor” were protected trade names, but they did not adequately allege that Resilience used those names or used a false representation in commerce in connection with selling or advertising services. Alleged customer confusion alone was not enough.

The court also dismissed the plaintiffs’ New York common-law unfair-competition claim against Resilience because the plaintiffs failed to state the related Lanham Act claim. The court dismissed the tortious-interference-with-contractual-relations claim because the plaintiffs did not identify the relevant contracts, the provisions allegedly breached, or the nature of any breach.

The court dismissed the tortious-interference-with-business-relations claim against Resilience because the plaintiffs did not adequately allege that Resilience committed a crime, an independent tort, or otherwise used wrongful means. It dismissed the unjust-enrichment claim against Resilience because that claim duplicated other dismissed claims and did not identify distinct conduct supporting restitution.

The court denied Resilience’s motion as to copyright infringement. The plaintiffs plausibly alleged that Harbor owned a valid copyright in its website text and that Resilience’s website copied protected material. The court found that the alleged similarities in phrasing, sentence structure, and paragraph structure were sufficient at the pleading stage.

Rulings on Rasmussen’s Motion

The court denied Rasmussen’s motion to dismiss the two breach-of-contract claims. The plaintiffs plausibly alleged that Rasmussen solicited Harbor clients, helped transfer their business to Resilience, and recruited Harbor employees for Resilience in violation of the client and employee non-solicitation provisions. The court declined to decide at this stage whether those provisions were overbroad or otherwise unenforceable.

The court also denied Rasmussen’s motion to dismiss the breach-of-fiduciary-duty claim. The plaintiffs plausibly alleged that Rasmussen, while working for Harbor, coordinated the workforce reduction to move employees to Resilience and directed Harbor employees to turn away clients so that business could be redirected to Resilience. The court analyzed the claim under New York’s faithless-servant doctrine, which can deny compensation to an employee who is disloyal in performing services.

The court granted Rasmussen’s motion to dismiss the tortious-interference-with-contractual-relations claim because the plaintiffs did not identify the contracts or breached provisions at issue. It denied her motion as to tortious interference with business relations, finding that the alleged communications with Harbor’s clients and the alleged diversion of those clients plausibly stated a claim.

The court denied Rasmussen’s motion as to unjust enrichment. Although that claim overlapped with the contract claims, the plaintiffs pleaded it as an alternative claim because Rasmussen disputed the enforceability of the non-solicitation provisions. The court also denied Rasmussen’s motion as to copyright infringement because the plaintiffs plausibly alleged that she created the website that copied Harbor’s website text.

Disposition

The court’s final order granted Resilience’s motion to dismiss as to the First, Fourth, Fifth, Seventh, and Eighth causes of action and denied it as to the Ninth cause of action. It granted Rasmussen’s motion as to the Fourth cause of action and otherwise denied it. The surviving claims therefore included Rasmussen’s contract, fiduciary-duty, business-relations, copyright, and alternative unjust-enrichment claims, along with the copyright claim against Resilience.