LITIGATION
Update: Former BMS Re Employee: Jobs With Competitor Blocked by ‘Sham’ Noncompete Agreements
NEW YORK //BestWire// - (This updates the story throughout) A former BMS Re employee claims the company is barring them from jobs at competitor Guy Carpenter by holding up alleged “sham” noncompete agreements that were never signed or presented, according to a lawsuit before the New York Supreme Court.
The initial complaint says the employee submitted their resignation to BMS Re or told the company of their intention, which prompted the specialty reinsurer to attempt to block them from working at a competitor for 12 months, as prescribed in BMS Re’s restrictive covenant agreements with employees.
When starting work at BMS Re, each employee signed restrictive covenant agreements that included confidentiality and nonsolicitation clauses, but did not include any specific noncompete provisions. The plaintiff claims BMS Re never proposed noncompete agreements and never provided documentation that they agreed to be banned from activities “that could be construed as being ‘competitive’ or ‘in the service of a competitor,’ broadly defined,” according to the complaint.
The plaintiff also alleges BMS Re snuck a noncompete clause inside investment deeds that were tied to a share grant program announced in 2023. As part of the share program, employees would get a portion of any acquisition or investment but had to sign power of attorney forms. BMS Re said the POA forms would make it easier for the company to manage investments on behalf of hundreds of employees, the complaint said.
BMS then used the power of attorney to sign employees onto investment deeds related to a $433 million investment from private equity firm Eurazeo (BestWire, Sept. 29, 2024). The plaintiff said they never signed or even saw the investment deeds, making it impossible for them to agree to their noncompete obligations.
BMS Group indicated it wouldn’t attempt to enforce the investment deed’s clauses, nor did it send any cease and desists, to the plaintiff, according to a Sept. 24 letter from the company’s lawyers.
The initial complaint also attempts to dispel the notion that Guy Carpenter and BMS Re are direct competitors by pointing out that the former is much larger in size and scope of offerings.
Additionally, the plaintiff claims Guy Carpenter’s size will allow them to work in areas where BMS Re does not have any business throughout the duration of the nonsolicitation clauses’ 12-month period.
The employee is asking the court to declare they are able to start work with Guy Carpenter, invalidate the investment deed and any other relief court deems fair.
Attempts to gain comment from BMS Group Ltd. were unsuccessful.
(By Steve Hallo, senior associate editor, BestWire: Steve.Hallo@ambest.com)