Enforcing a Non-Compete Agreement in the Connecticut Insurance Industry

Case Background

Grayling Associates, Inc., an executive recruiting agency for large national insurance companies, employed Mr. Albert Villota from October 2002 to April 8, 2004.  The parties executed a non-compete agreement at the start of Mr. Villota’s employment that prohibited him from working at a competing firm within a one-hundred-mile radius of Grayling’s Connecticut office for a period of two years after his termination.

He began to work at a direct competitor, Park Avenue Group, Inc. (PAG), after he voluntarily terminated his employment with Grayling.  The company sued Mr. Villota in Connecticut state court and sought the enforcement of the provisions contained in the non-compete agreement.

The Court’s Decision

The court found in favor of Grayling and granted the company’s request for injunctive relief.  It enjoined Ms. Villota from working at PAG or other companies in competition with Grayling until April 8, 2006, the end of the two-year period as stipulated in the non-compete agreement.  The court went on to confirm that the time and geographical restrictions in the agreement were reasonable so that they properly balanced the interests of the parties.

The major point of contention in the case focused on the one hundred mile radius restriction.  Grayling was based in Hartford, referred to by many in the business world as the “insurance capital of the world” and as such, the nature of its services was very dependent on its location and proximity to the city.

Many of the nation’s most prominent insurance firms have their headquarters in Hartford and Mr. Villota’s actions within the vicinity of the city could negatively affect Grayling’s business interests and operations.  Grayling noted that the non-compete agreement allowed for the application of the “blue pencil rule” that would allow the court to modify the terms of the geographical restriction.  The court held that the restriction was enforceable as stated in the agreement and enforced the one hundred mile radius provision to protect Grayling’s legitimate interests.

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