McGriff Ins. Servs., Inc. v. Hudson

McGriff Ins. Servs., Inc. v. Hudson, 2023 NCBC 3.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
FORSYTH COUNTY 22 CVS 680

MCGRIFF INSURANCE SERVICES,
INC.,
ORDER AND OPINION ON
Plaintiff,
PLAINTIFF’S MOTION FOR LEAVE
TO AMEND COMPLAINT,
v.
DIGITAL INSURANCE, LLC’S
MOTION TO DISMISS,
RYAN HUDSON and DIGITAL
HUDSON’S MOTION TO DISMISS,
INSURANCE, LLC d/b/a ONEDIGITAL
AND PLAINTIFF’S MOTION TO
HEALTH AND BENEFITS,
DISMISS COUNTERCLAIMS
Defendants.

1. Ryan Hudson worked for McGriff Insurance Services, Inc. (“McGriff”),

formerly BB&T Insurance, servicing its clients’ employee benefits needs for more

than a decade. He decided to open his own consulting business in late 2021, and his

former employer alleges that he is profiting from moving its client relationships to a

competitor and soliciting its employees, all in violation of an employment agreement

he signed when he began work years ago. McGriff sues for violation of that

agreement, interference with its customer relationships, misappropriation of its trade

secrets, and unfair and deceptive trade practices. Hudson counterclaims, contending

that it is McGriff that has interfered with his new business.

2. Suit was originally brought against Hudson and OneDigital on 9 February

2022. (ECF No. 4.) On 10 May 2022, McGriff filed a motion for leave to amend its

Complaint. (ECF No. 54.) Among other things, McGriff seeks to add Hudson’s former

co-worker, Katherine Stetson, as a defendant.
3. The case is before the Court on four motions: Defendant Digital Insurance,

LLC’s Motion to Dismiss Plaintiff’s Complaint, (ECF No. 31), Defendant Ryan

Hudson’s Motion to Dismiss, (ECF No. 34), Plaintiff’s Motion for Leave to Amend

Complaint, (ECF No. 54) (collectively, the “Complaint Motions”), and

Plaintiff/Counter-Defendant’s Motion to Dismiss Counterclaims, (ECF No. 48) (the

“Counterclaim Motion,” together with Complaint Motions, the “Motions”).

4. The Court, having considered the Motions, the briefs supporting and

opposing the Motions, the parties’ arguments at a hearing held on 11 August 2022,

and other relevant matters of record, concludes for the reasons stated below that

Plaintiff’s Motion for Leave to Amend Complaint should be GRANTED in part and

DENIED in part, Defendants’ Motions to Dismiss should be DENIED, and

Plaintiff/Counter-Defendant’s Motion to Dismiss Counterclaims should be DENIED.

Constangy, Brooks, Smith & Prophete, LLP, by Jill S. Stricklin,
Jacqueline C. Johnson, and Rodrigo J. Pocasangre, for Plaintiff McGriff
Insurance Services, Inc.

Morris, Manning & Martin, LLP, by Seslee S. Smith, Meredith W,
Caiafa, and Kevin T. Gray, for Defendant Digital Insurance, LLC.

Johnston, Allison & Hord, P.A., by Kimberly J. Kirk and Katie D.
Burchette, for Defendant Ryan Hudson.

I. FACTS AND PROCEDURAL BACKGROUND

5. The Court does not make findings of fact when ruling on either a motion to

dismiss or a motion to amend. It recites below those factual allegations from the

Complaint and its proposed amendment that are relevant and necessary to the

Court’s determination of the motions before it. See, e.g., Krawiec v. Manly, 370 N.C.

602, 606 (2018).
6. McGriff, formerly known as BB&T Insurance Services, Inc. (“BB&T

Insurance”), is a full-service insurance broker. 1 The insurance services it provides

include commercial property and casualty, corporate bonding and surety services,

cyber, management liability, captives and alternative risk transfer programs, small

business, employee benefits, title insurance, and personal lines. McGriff is

headquartered in Charlotte, North Carolina, but provides “risk management and

insurance solutions to clients across the United States.” (Prop. Am. Compl. ¶¶ 1–2,

ECF No. 55.1.)

7. Hudson was hired by McGriff as an Employee Benefits Insurance Agent on

1 February 2010. He was based in Charlotte. (Prop. Am. Compl. ¶¶ 6, 25; Ex. A §2(b)

[“Employment Agreement”], ECF No. 55.3.) McGriff alleges that, during his

employment, Hudson developed customer relationships that were integral “to the

success of the BB&T Insurance/McGriff facility in Charlotte[.]” (Prop. Am. Compl. ¶

29.)

8. Stetson became employed by McGriff in March 2001 as a Total Account

Agent and was later promoted to Account Manager. (Prop. Am. Compl. ¶ 16.) She

worked closely with Hudson to service accounts and maintained significant and on-

going contact with McGriff’s customers and prospective customers with respect to the

sale, purchase, and service of Employee Benefits insurance products. (Prop. Am.

Compl. ¶ 28.)

1 The Court uses the terms “McGriff” and “BB&T Insurance” interchangeably in this Order

and Opinion to refer to Plaintiff.
Hudson’s Employment Agreement

9. Prior to beginning work, as a condition of his employment, Hudson signed

an employment agreement containing non-solicitation provisions (the “Employment

Agreement”). (Prop. Am. Compl. ¶ 7; Employment Agreement.)

10. Paragraph 8(a)(iii) of Hudson’s Employment Agreement dictates that

Hudson may not “[s]olicit, contact, divert, or call upon with the intent of doing

business with, any ‘BB&T Insurance Customer’ . . . on [Hudson’s] own behalf or on

behalf of any Competitive Business . . . if the purpose of the activity is to solicit the

BB&T Insurance Customer for a Competitive Business[.]” (Employment Agreement

¶ 8(a)(iii).)

11. The Employment Agreement defines “BB&T Insurance Customer” as any

“company or individual customer of BB&T Insurance with whom, within the two-year

period ending with the termination of Employee’s employment, Employee had

material contact or who was otherwise contacted or served by Employee regarding

(A) the sale, trade, or service or the attempted sale, trade or service of business

insurance products or (B) any other business activities of BB&T Insurance.”

(Employment Agreement ¶ 8(b)(ii)).

12. The Employment Agreement defines “Competitive Business” as “an

enterprise that is in the business of selling, trading, or servicing business insurance

products that are competitive with those offered by BB&T Insurance during the term

of Employee’s employment with BB&T Insurance.” (Employment Agreement ¶

8(b)(i).)
13. Paragraph 8(a)(i) of the Employment Agreement requires that Hudson not

“[s]olicit, recruit, encourage or support any employee of BB&T Insurance who had

performed work for BB&T Insurance within the last year of [Hudson’s] employment

with BB&T Insurance to leave the employment of BB&T Insurance[.]” (Employment

Agreement ¶ 8(a)(i)).

14. In paragraph 11 of the Employment Agreement, Hudson agreed that during

his employment and for three years thereafter, he would not:

(i) misappropriate; (ii) use for the purpose of competing with BB&T
Insurance, either directly or indirectly; (iii) disclose to any third party,
either directly or indirectly; or (iv) aid anyone else in disclosing to any
third party, either directly or indirectly, all or any part of any
“Confidential Information” . . . to the extent that such Confidential
Information does not rise to the level of a trade secret under applicable
law.

To the extent that said Confidential Information does rise to the level of
a trade secret under applicable law, then . . . Employee will act in
accordance with the terms of applicable law governing trade secrets.

(Employment Agreement ¶ 11(a).)

15. The Employment Agreement defines “Confidential Information” broadly to

include, among other things, “any confidential, proprietary BB&T Insurance

information regarding a customer of BB&T Insurance, including but not limited to

customer lists, contracts, information, requirements, billing histories, marketing

methods, needs and products or services provided by BB&T Insurance to such

customers” and “all confidential information relating to BB&T Insurance’s . . .

employee lists, personnel matters[.]” (Employment Agreement ¶ 11(b)(ii), (vi).)
Stetson’s Non-Solicitation Agreement

16. About four and a half years after starting work, Stetson signed a non-

solicitation agreement (the “Non-Solicitation Agreement”). In exchange for signing

the agreement, Stetson became eligible to receive an annual bonus. (Prop. Am.

Compl. ¶ 17; Ex. D [“Non-Solicitation Agreement”], ECF No. 55.6.)

17. Stetson’s Non-Solicitation Agreement does not permit her to “[s]olicit,

encourage or support any employee of BB&T Insurance who had performed work for

BB&T Insurance within the last year of [Stetson’s] employment with BB&T

Insurance to leave the employment of BB&T Insurance[.]” (Non-Solicitation

Agreement ¶ 2(a)(i).)

18. Stetson also may not “[s]olicit, divert, or call upon with the intent of doing

business with, as or on behalf of any business in competition with BB&T Insurance,

any ‘BB&T Insurance Customer’ . . . for the purpose of engaging in any ‘Competitive

Activity[.]’ ” (Non-Solicitation Agreement ¶ 2(a)(iii)).

19. In addition, Stetson’s Non-Solicitation Agreement contains a pledge of

confidentiality identical in material respects to Hudson’s Employment Agreement.

(See Non-Solicitation Agreement ¶ 4.)

20. Both Hudson and Stetson were provided access to McGriff’s confidential

information to enable them to perform their jobs. (Prop. Am. Compl. ¶ 30.) McGriff

alleges that this information included:

(A) Customer lists and contact information, including the identity of
specific customer contacts and point persons; (B) Customer preferences,
requirements and buying patterns, including products and services
provided to such customers, pricing/premium structures, billing
histories, policy cost and sales information, insurance expiration dates,
insurance renewal schedules, fee agreements, applications,
underwriting, proposals, certificate of holder lists, and claims history;
(C) Marketing and sales strategies, financial, operational and customer
service information; (D) Detailed compilations of data, created over
significant periods of time, regarding each of its customers; and (E)
Other internal business information that is proprietary in nature,
confidential to BB&T Insurance/McGriff, and not generally available to
its competitors or the public at large.

(Prop. Am. Compl. ¶ 30.)

21. The information also included electronic workbooks known as “Watson

Reports,” which contained a “detailed financial snapshot” of each insurance

customer’s plan. (Prop. Am. Compl. ¶ 32.)

22. Hudson and Stetson also had access to “Sherlock Reports,” proprietary

reports containing information related to insurance plan renewals, including

comparative quotes that BB&T obtained for its customers. (Prop. Am. Compl. ¶ 33.)

23. McGriff alleges that it made efforts to protect this information through the

use of confidentiality provisions in employment agreements and by implementing a

Code of Ethics, a Corporate Information Security policy, password protection, and

dual authentication. (Prop. Am. Compl. ¶ 35).

OneDigital

24. Digital Insurance, LLC (“OneDigital”), headquartered in Atlanta, Georgia,

provides advisory consulting and technology solutions to employers regarding their

employee benefits and insurance needs. In that respect, OneDigital and McGriff are

allegedly direct competitors. (Prop. Am. Compl. ¶ 5.)
25. On 1 September 2021, Hudson notified McGriff of his resignation. (Prop.

Am. Compl. ¶ 39.) Hudson has since done business as “Hudson

InsuranceConsulting,” but McGriff alleges that OneDigital exercises control over

Hudson’s business operations, instructs Hudson on how he should conduct business,

and directs Hudson to comply with its requirements. (Prop. Am. Compl. ¶¶ 46, 50.)

26. Shortly after leaving McGriff, Hudson announced the formation of Hudson

Consulting Group in a LinkedIn post and encouraged anyone interested in his

services to reach out to him. (Prop. Am. Compl. ¶ 62.) Several McGriff customers

replied directly to this post. (Prop. Am. Compl. ¶ 64.)

27. Hudson has allegedly referred McGriff’s current and prospective customers

to OneDigital in exchange for fifty percent (50%) of OneDigital’s net commission

received. (Prop. Am. Compl. ¶ 47.)

28. McGriff alleges that this business arrangement has given OneDigital access

to confidential information and trade secrets belonging to McGriff, as well as to

Hudson and Stetson’s book of business. (Prop. Am. Compl. ¶ 51.)

29. Stetson resigned from McGriff two weeks after Hudson left. (Prop. Am.

Compl. ¶ 43). She went to work for OneDigital in a position designed to provide

support for Hudson’s business activities. (Prop. Am. Compl. ¶¶ 44, 48.)

30. McGriff alleges that Hudson and Stetson, working with OneDigital

employees, have violated their agreements not to solicit McGriff’s insurance

customers. (Prop. Am. Compl. ¶ 66.)
31. McGriff further alleges that Hudson and Stetson have encouraged other

McGriff employees to resign and become employed by OneDigital, and that Hudson

has provided OneDigital with the names, positions, and contact information for

McGriff employees. (Prop. Am. Compl. ¶ 58.)

32. In addition, McGriff contends that in anticipation of his departure, Hudson

took a number of steps to solicit customers away from McGriff and to prevent McGriff

executives from building relationships with certain clients. (Prop. Am. Compl. ¶¶

59–60.)

33. For example, with certain employee benefits customers, McGriff enters

into Employee Benefits Broker Services Agreements (“Fee Agreements”) whereby the

customer agrees to pay McGriff a fee for insurance placement and employee benefit

management services. (Prop. Am. Compl. ¶ 37.) Typically, Fee Agreements may be

terminated upon thirty (30) days’ notice by either party. (Prop. Am. Compl. ¶ 38.)

34. Prior to his departure, Hudson allegedly failed to procure Fee Agreement

renewals for certain McGriff customers so that he could later solicit the business for

OneDigital. (Prop. Am. Compl. ¶ 61.) After his departure, Hudson has allegedly

suggested to McGriff customers ways to avoid paying the amounts due under their

Fee Agreements with McGriff. (Prop. Am. Compl. ¶ 84.)

35. Moreover, Hudson and Stetson allegedly provided OneDigital with

confidential customer information that they acquired as employees of McGriff. (Prop.

Am. Compl. ¶ 69.) Hudson had access to this information, in part, through Stetson.

(Prop. Am. Compl. ¶ 51.) The information includes Fee Agreements, contact
information for customer point persons, and insurance renewal dates, as well as

McGriff’s disclosure and reporting compliance guide, and its Watson and Sherlock

Report templates. (Prop. Am. Compl. ¶¶ 70, 71, 75–77.)

II. STANDARD OF REVIEW

36. Dismissal of a claim pursuant to Rule 12(b)(6) of the North Carolina Rules

of Civil Procedure (“Rule(s)”) is proper if “(1) the complaint on its face reveals that no

law supports the plaintiff’s claim; (2) the complaint on its face reveals the absence of

facts sufficient to make a good claim; or (3) the complaint discloses some fact that

necessarily defeats the plaintiff’s claim.” Corwin v. Brit. Am. Tobacco PLC, 371 N.C.

605, 615 (2018). Otherwise, “a complaint should not be dismissed for insufficiency

unless it appears to a certainty that plaintiff is entitled to no relief under any state

of facts which could be proved in support of the claim.” Sutton v. Duke, 277 N.C. 94,

103 (1970) (emphasis omitted).

37. When deciding a Rule 12(b)(6) motion, the Court construes the complaint

liberally and accepts all allegations as true. See, e.g., Sykes v. Health Network Sols.,

Inc., 372 N.C. 326, 332 (2019); Laster v. Francis, 199 N.C. App. 572, 577 (2009).

However, the Court is not required “to accept as true allegations that are merely

conclusory, unwarranted deductions of fact, or unreasonable inferences.” Good Hope

Hosp., Inc. v. N.C. Dep’t of Health & Human Servs., 174 N.C. App. 266, 274 (2005)

(quoting Veney v. Wyche, 293 F.3d 726, 730 (4th Cir. 2002)). In its review, the Court

may consider documents that are the subject of the Complaint and to which the

Complaint specifically refers, including the contracts that form the subject matter of
the action. See, e.g., McDonald v. Bank of N.Y. Mellon Trust Co., 259 N.C. App. 582,

586 (2018); Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52, 60 (2001).

38. On a motion to amend, Rule 15(a) provides that, after a responsive pleading

has been served, a party may amend his pleading only by leave of court or by written

consent of the adverse party, and “leave shall be freely given when justice so

requires.” N.C.G.S. § 1A-1, R. 15(a). Reasons justifying denial of a motion to amend

are undue delay, bad faith, dilatory motive, repeated failure to cure defects by

previous amendments, undue prejudice, and futility of the amendment. See

JPMorgan Chase Bank, N.A. v. Browning, 230 N.C. App. 537, 541 (2013).

39. “Ultimately, whether to allow an amendment rests in the trial judge’s

discretion.” KRG New Hill Place, LLC v. Springs Invs., LLC, 2015 NCBC LEXIS 20,

at *8 (N.C. Super. Ct. Feb. 27, 2015) (citing House of Raeford Farms, Inc. v. Raeford,

104 N.C. App. 280, 282 (1991)).

40. A claim under N.C.G.S. § 75-1.1 predicated on allegations of deceptive

conduct is governed by Rule 9(b). See Vitaform, Inc. v. Aeroflow, Inc., 2020 NCBC

LEXIS 132, at **37 (N.C. Super. Ct. Nov. 4, 2020) (citing Topshelf Mgmt., Inc. v.

Campbell-Ewald Co., 117 F. Supp. 3d 722, 731 (M.D.N.C. 2015) (“Rule 9(b) applies to

section 75-1.1 claims alleging detrimental reliance on false or deceptive

representations.”). Rule 9(b) requires allegations of “the time, place and contents of

the fraudulent representation, the identity of the person making the representation

and what was obtained by the fraudulent acts or representations” to be pleaded with

particularity. Terry v. Terry, 302 N.C. 77, 85 (1981) (emphasis omitted).
III. ANALYSIS

41. McGriff’s Proposed Amended Complaint asserts five claims for relief:

breach of contract against Hudson and Stetson, tortious interference with contract

against Hudson and OneDigital, tortious interference with contract and prospective

business relations against Hudson and OneDigital, misappropriation of trade secrets

against all three Defendants, and unfair and deceptive trade practices against all

three Defendants. (See generally Prop. Am. Compl.) Hudson and OneDigital seek to

dismiss all of McGriff’s claims, both as originally pled and as amended, for failure to

state a claim upon which relief may be granted and because the proposed amended

claims are futile.

42. Since the test for futility mirrors the sufficiency test for a motion to

dismiss, the Court will evaluate McGriff’s claims, original and proposed, using this

same standard. See Smith v. McRary, 306 N.C. 664, 671 (1982) (an amendment was

properly denied when “plaintiff’s proposed amendment could not withstand

a motion to dismiss for failure to state a claim”); Bourgeois v. Lapelusa, 2022 NCBC

LEXIS 111, at **11 (N.C. Super. Ct. Sept. 23, 2022) (“test for futility with respect to

a proposed amendment mirrors the sufficiency test of Rule 12(b)(6)”); Gateway Mgmt

Servs. v. Carrbridge Berkshire Grp., Inc., 2018 NCBC LEXIS 45, at *8 (N.C. Super.

Ct. May 8, 2021) (“Although an amended pleading would ordinarily moot a pending

motion to dismiss, the Court will consider Defendants’ Motions to Dismiss as to the

Amended Complaint because Defendants and Plaintiff both addressed the sufficiency

of the Amended Complaint in their respective briefs and at the hearing.”).
43. In response to McGriff’s Complaint, Hudson asserted three counterclaims:

(1) tortious interference with prospective economic advantage, (2) misrepresentation,

and (3) violation of North Carolina’s Unfair and Deceptive Trade Practices Act. (Def.

Ryan Hudson’s Answer and Counterclm. [“Counterclm.”], ECF No. 36.) McGriff

moved to dismiss all three. (See ECF No. 48.) However, Hudson has since voluntarily

dismissed the second cause of action (misrepresentation), leaving only Hudson’s first

and third counterclaims for the Court’s consideration. (See ECF No. 57.)

Complaint Motions

44. The Court begins with a review of the sufficiency of McGriff’s proposed

claims for relief.

A. Breach of Contract (Hudson and Stetson)

45. There are two contracts at issue in this case: Hudson’s Employment

Agreement and Stetson’s Non-Solicitation Agreement. By virtue of their respective

agreements, both Hudson and Stetson promised not to (1) solicit employees, (2) solicit

customers, and (3) reveal confidential information.

46. The elements of a claim for breach of contract are “(1) existence of a valid

contract and (2) breach of the terms of that contract.” Poor v. Hill, 137 N.C. App. 19,

26 (2000).

47. Here, the alleged breach involves restrictive covenants in the form of non-

solicitation provisions. To be valid in North Carolina, a restrictive covenant must be:

“(1) in writing; (2) part of an employment contract; (3) based on valuable

consideration; (4) reasonable as to time and territory; and (5) designed to protect a
legitimate business interest.” Med. Staffing Network, Inc. v. Ridgway, 194 N.C. App.

649, 655 (2009).

48. The restrictive covenants in this case take the form of promises not to solicit

customers or employees of McGriff. Although non-solicitation agreements “must

meet the same requirements as are applied to the covenant not to compete[,]”

Aeroflow Inc. v. Arias, 2011 NCBC LEXIS 21, at **24 (N.C. Super. Ct. July 5, 2011),

“non-solicitation agreements are more easily enforced.” Id. at **24 fn.8 (citing

Asheboro Paper & Packaging, Inc. v. Dickinson, 599 F.Supp. 2d 664 (M.D.N.C. 2009).

See also, Sandhills Home Care, L.L.C. v. Companion Home Care - Unimed, Inc., 2016

NCBC LEXIS 61, at **36 (N.C. Super. Ct. Aug. 1, 2016). This is because, in general,

non-solicitation provisions are “more tailored and less onerous on employees’ ability

to earn a living” than noncompete restrictions. Azko Nobel Coatings, Inc. v. Rogers,

2011 NCBC LEXIS 42, at **31 (N.C. Super. Ct. Nov. 3, 2011).

49. Nonetheless, restrictive covenants as a whole are “not viewed favorably in

modern law[,]” Hartman v. W.H. Odell & Assocs., 117 N.C. App. 307, 311 (1994), and

must be carefully scrutinized. ChemiMetals Processing v. McEneny, 124 N.C. App.

194, 197 (1996).

50. A central principle for determining whether a restrictive covenant is

enforceable is whether it is tailored to be no more burdensome than is necessary to

protect a legitimate business interest of the employer. If the covenant is “too broad

to be a reasonable protection to the employer’s business[,] it will not be enforced.”

Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523, 529 (1989). See also Hartman,
117 N.C. App. at 316 (a covenant “must be no wider in scope than is necessary to

protect the business of the employer”); Bite Busters, LLC v. Burris, 2021 NCBC

LEXIS 26, at **15–16 (N.C. Super. Ct. March 25, 2021) (employer must establish a

protectable interest and show the prohibition is no broader than necessary to protect

that interest).

51. Whether a restrictive covenant is reasonable and enforceable is a matter

of law for the Court to decide. See Farr Assocs. v. Baskin, 138 N.C. App. 276, 279

(2000).

52. Defendants Hudson and Stetson argue that the covenants at issue here are

unenforceable for two reasons. First, they contend that no contracts were formed due

in each instance to a lack of consideration. Second, Defendants argue that the

restrictive covenants at issue are not sufficiently tailored to McGriff’s legitimate

business interests to be enforceable. As a result, Hudson and Stetson contend that

the breach of contract claim against each of them fails. (See Def. Mem. Opp’n Pl.’s

Mot. Leave Am. Compl. 4–10 [“Hudson’s Opp’n Mot. Am.”], ECF No. 61.)

1. Hudson’s Contract

53. The Court begins with the parties’ dispute over the sufficiency of the

consideration to support Hudson’s contract. Germane to this discussion is an

“evergreen” provision in Hudson’s Employment Agreement, which states:

unless this Agreement is otherwise earlier terminated, this Agreement
shall automatically renew for consecutive one-year terms . . . unless
either party gives notice in writing to the other party, at least 30 days
before the end of the current term, that it does not wish to renew this
Agreement for an additional term.
(Employment Agreement ¶ 3(a)(iv).)

54. The parties spar over the effect of this provision, disagreeing on whether

the non-solicitation obligations were adequately supported by consideration after the

first one-year term. Hudson and Digital contend that new consideration was required

to support the covenants when the contract automatically renewed in January 2011,

and that continued employment alone was insufficient. (Digital’s Memo. Supp. Mot.

Dismiss Pl.’s Compl. 4–6 [“Digital’s Mot. Dismiss Br.”], ECF No. 32.) 2

55. McGriff responds that Hudson’s contract does not require additional

consideration apart from the original offer of “evergreen” employment. Alternatively,

McGriff argues that the potential for a severance package is consideration that

supports each yearly renewal. (Mem. Opp’n Mots. Dismiss 3–4 [“Mem. Opp’n Mots.

Dismiss”], ECF No. 45.)

56. In this instance, the Court agrees with McGriff. The original

consideration—Hudson’s offer of employment—is sufficient to support Hudson’s

continuing non-solicitation obligations. This is so because Hudson’s Employment

2 Hudson and Digital cite American Air Filter Company, Inc. v. Price, 2017 NCBC LEXIS 55

(N.C. Super. Ct. June 26, 2017), a North Carolina Business Court case applying Kentucky
law, in support of their position. The language of the contract in Price differed from that
found here. In Price, the non-solicitation obligations began when the agreement terminated,
regardless of whether the employee continued employment. Once it began, the non-
solicitation obligation ran until it expired, and then a new agreement with new consideration
was necessary to create a new non-solicitation obligation. Compare Price, 2017 NCBC LEXIS
55, at *5–6 (“[i]f the Employee terminates this Agreement or Company terminates this
Agreement for cause, then in either event, for a period of one (1) year after such termination,
Employee will not . . . (b) solicit” (emphasis added)), with (Employment Agreement ¶ 8(a)
(“Employee will not, during Employee’s employment and for a period of two years following
the date of termination of Employee’s employment with BB&T Insurance . . . (i) Solicit[.]”
(emphasis added))).
Agreement did not end and restart in a staccato series of mini agreements, but rather

the term rolled from one year to the next continuously, until Hudson notified McGriff

of his intention to end it.

57. The evergreen provision in Hudson’s Employment Agreement, phrased as

it is, requires affirmative action by the parties (or a terminating event like death) to

end the employment relationship and trigger the non-solicitation obligations. Absent

that affirmative action (or a terminating event), the plain language of the agreement

establishes that the parties intended for the contract, with its non-solicitation

obligations, to continue unabated year-to-year. See Brown v. Ginn, 181 N.C. App.

563, 567 (2007) (“The intent of the parties is determined by examining the plain

language of the contract.”). Because there was no break in the contractual

relationship, no new consideration was necessary to support the non-solicitation

obligations. 3

58. Therefore, the Court determines that the employment relationship itself,

unbroken by the parties, constitutes adequate consideration for the non-solicitation

obligations in Hudson’s Employment Agreement.

59. The Court next determines if the employee and customer non-solicitation

provisions in the agreement are sufficiently tailored to McGriff’s legitimate business

interests. “The party seeking enforcement of a restrictive covenant has the burden

3 Defendants’ reliance on Cox v. Dine-A-Mate, Inc., 129 N.C. App. 773, 777–78 (1998), is

misplaced. Hudson did not sign a restrictive covenant in the middle of his employment, as
was the case in Cox. See id. Instead, Hudson signed the restrictive covenant at the beginning
of his employment. “[T]he North Carolina Supreme Court has held that keeping one’s existing
job is insufficient consideration for the signing of a covenant not to compete.” Id. at 778
(citing Paper Co. v. McAllister, 253 N.C. 529 (1960)).
of proving its reasonableness.” Sandhills Home Care L.L.C., 2016 NCBC LEXIS 61,

at **13. “If the covenant is wider in scope than is necessary to protect the business

of the employer, ‘it will not be enforced.’ ” InVue Sec. Prods., Inc. v. Stein, 2017 NCBC

LEXIS 115, at *10 (N.C. Super. Ct. Dec. 18, 2017) (quoting VisionAIR, Inc. v. James,

167 N.C. App. 504, 508 (2004)).

a. Non-Solicitation of Employees

60. Hudson agrees not to “[s]olicit, recruit, encourage or support any employee

of BB&T Insurance who had performed work for BB&T Insurance within the last

year of [Hudson’s] employment with BB&T Insurance to leave the employment of

BB&T insurance.” (Employment Agreement ¶8(a)(i).)

61. An employer may choose to protect not only its employment relationships

but also its customer relationships, as well as its confidential information, through

the use of employee non-solicitation agreements. Current Med. Servs., LLC v.

Current Dermatology, PLLC, 2020 NCBC LEXIS 138, at *9 (N.C. Super. Ct. Nov.

2020) (typically, the purpose of a restriction against soliciting employees is to protect

the employer's customer relationships and confidential information); Wells Fargo Ins.

Servs. USA v. Link, 2018 NCBC LEXIS 42, at *28 (N.C. Super. Ct. May 8, 2018)

(covenants restricting the solicitation of employees “are another means of protecting

the former employer’s interest in the good-will it has with its customers.”); Carlson

Envtl. Consultants, PC v. Slayton, 2017 U.S. Dist. LEXIS 154191, *25 (W.D.N.C.

2017) (protection of customer relationships and goodwill against misappropriation by

departing employees is well recognized as a legitimate protectable interest of the

employer). Moreover, the employer’s investment in employee hiring, training and
retention may itself be a legitimate reason for it to use agreements designed to tamp

down efforts by disgruntled former employees to recruit established employees.

62. The question here is whether Hudson’s provision is broader than necessary

to protect McGriff’s legitimate interests. Hudson argues that this non-solicitation

provision is too broad to enforce because “the class of off-limits employees is not

tailored to (i) the employees with whom he has interacted, (ii) those who worked in

the same region, or (iii) those who further a competitive business interest of McGriff.

Still further. . . it prohibits. . . encouraging employees from leaving McGriff for

reasons unrelated to competitive endeavors.” (Hudson Br. Supp. Mot. Dismiss 16).

63. Hudson cites Bite Busters for the proposition that, to be reasonable, the

employee non-solicitation provision must be limited to those employees with whom

Hudson worked. But the decision in Bite Busters is more nuanced than Hudson

suggests.

64. In Bite Busters, the Court found that a five-year restriction was

unenforceable when the plaintiff did not plead the special circumstances necessary

for the Court to determine that it was reasonable. Id. at **16—17. Included in the

list of circumstances the plaintiff could have pled, but did not, were factors that

addressed the protectible interest of customer goodwill, such as whether the

defendant (who had customer contact) had worked with the employees, whether they

worked in the same territories, and other factors that would have supported a

conclusion that the restriction was necessary to protect customer goodwill because

the protected employees provided services or developed relationships that would be
of value to a competitive business. 4 Additionally, the Court observed that the former

employer did not contend in briefing or oral argument that the restriction was

necessary to protect customer goodwill or any other legitimate protectible interest.

Id. at **17.

65. Such is not the case here. In addition to customer goodwill, Hudson’s

Employment Agreement, incorporated in the Complaint, identifies as legitimate

business interests both a desire to safeguard its proprietary and confidential

information and the need to protect its investment in training its personnel.

(Employment Agreement, Recitals.) McGriff alleges that Hudson breached his

promise in order to improve the talent at OneDigital, its competitor, at McGriff’s

expense. (Prop. Am. Compl. ¶¶ 58, 93.) 5

66. While an employee’s personal interaction with customers resulting in the

development of customer goodwill plainly affords the employee the ability to sway

4 Indeed, it was not clear to the Court that the restriction was even limited to the solicitation

of the employer’s current employees. Clearly, an employer does not have a legitimate interest
in preventing the solicitation of a former employee who may have worked for it once, but who
no longer does.
5 Defendants also cite Power Home Solar, LLC v. Sigora Solar, LLC, 2021 NCBC LEXIS 55

(N.C. Super. Ct. June 2021) for the proposition that “employers do not have a legitimate
business interest in prohibiting solicitation of employees with whom the departing employee
never interacted.” (Hudson Br. Supp. Mot. Dismiss 16) But as in Bite Busters, the Court in
Power Home Solar included that factor among other listed factors that would have been
necessary to protect customer goodwill, as one example of a legitimate protectible interest.
It ultimately found the non-solicitation provision unenforceable because the Complaint did
not reveal that the provision was reasonably necessary to protect any legitimate business
interest of Power Home’s. Here, the restriction is narrowed to any employee “who had
performed work for BB&T Insurance within the last year of Employee’s employment,” and
the employer’s investment in training is identified as one of several legitimate protectible
interests.
customer allegiances, the same relationship-building activity may not be necessary

to sway the allegiance of fellow employees. A departing employee who has seen what

it is like to play for a new team may well be able to convince a former teammate–even

one with whom he has not had previous personal interaction–to make the switch,

creating a talent drain for his former employer. 6

67. Indeed, the employer’s protectible interest does not come from the

departing employee’s relationship with those employees he is attempting to solicit. It

arises from the solicited employees’ relationships with customers, their possession of

6 Hudson asks that the Court take judicial notice of information on McGriff’s website stating
that McGriff is a full-service insurance broker with more than 3500 employees at over 120
offices. When a party requests that the Court take judicial notice of a fact and supplies the
Court with the necessary information, the Court is required to take judicial notice of the fact
if it otherwise satisfies Rule 201(b). See N.C. Gen. Stat. § 8C-1, Rule 201(d). That rule states
that a Court may take judicial notice of adjudicative facts that are not subject to reasonable
dispute if they are either “generally known within the territorial jurisdiction of the trial
court” or “capable of accurate and ready determination by resort to sources whose accuracy
cannot reasonably be questioned.” N.C. R. Evid. 201(b). Hudson contends that the
information it offers is accurate and should be considered with respect to its argument
because McGriff is the keeper of the information, and McGriff is the one that posted it.
Notably, McGriff does not contest its accuracy.

As long as the website's authenticity is not in dispute and the fact is “capable of accurate and
ready determination by resort to sources whose accuracy cannot reasonably be questioned,”
the Court may take judicial notice of information available on a website. See Herrera v.
Charlotte Sch. of Law, LLC, 2018 NCBC LEXIS 35, at *21 (N.C. Super. April 20, 2018) (citing
Feeling Great, Inc. v. N.C. Dep't of Revenue, 2015 NCBC LEXIS 84, at *10 (N.C. Super. Ct.
Aug. 20, 2015).

In this case, however, the Court is not able to accurately determine that McGriff has 3500
employees at over 120 offices by resort to anything other than McGriff’s own website.
However, absent objection from McGriff, the Court, in its discretion, takes judicial notice of
the fact that McGriff’s insurance business is sizeable and requires it to employ many more
individuals than those with whom Hudson could have become personally acquainted in
offices that span across a large territory. The Court considers this fact in its determination.
See Sivadhanam v. 7 Hills Learning, LLC, 2021 NCBC LEXIS 74) (“On a motion to dismiss,
the Court may ‘consider records of which it has taken judicial notice’ ” (citation omitted)).
confidential information, or the cost to replace them. Even a loner can disrupt those

business interests by luring others to follow the breadcrumbs of an exit path he has

laid. 7

68. Defendants’ reliance on Wells Fargo Ins. Servs. USA v. Link is unavailing.

In Wells Fargo, this Court evaluated an employee non-solicitation provision providing

that “for two years following termination, [Defendants] "will not . . . solicit, recruit,

or promote the solicitation or recruitment of any employee or consultant of the

Company for the purpose of encouraging that employee or consultant to leave the

Company's employ or sever an agreement for services." Wells Fargo, 2018 NCBC

LEXIS 42 at *26 (internal citation omitted.) The “Company” was defined to include

not only Wells Fargo Insurance Services, but also its “past, present, and future parent

companies, subsidiaries, predecessors, successors, affiliates, and acquisitions." Id. at

*14 (internal citation omitted.) This Court concluded that the provision was

unenforceable because the employer, Wells Fargo Insurance Services USA, had not

alleged facts to support a finding that a restriction that stretched well beyond the

confines of its business to cover all of its affiliates’ businesses was necessary to protect

7 For much the same reason, the Court is not persuaded by Hudson’s citation to Virginia and

Georgia case law to support his argument that the non-solicitation provision is overly broad
because it is not limited strictly to solicitation that was “for a competitive purpose.”
(Hudson’s Br. Supp. Mot. Dismiss 18-19.) Again, the employer’s legitimate interests are
implicated not just when an established employee leaves to go to a competitor, but simply
when an established, trained and functioning employee leaves. His departure disrupts the
status quo and costs the employer in lost efficiencies, as well as in the expense of recruiting
and training his replacement. Therefore, if a former employee, perhaps motivated by nothing
more than the adage, “misery loves company,” urges another employee to become
disenchanted and quit, the employer suffers an impact to its legitimate business interests,
regardless of where the ex-employee ends up.
its goodwill with insurance customers. As this Court observed, “[i]t is highly unlikely

that the vast majority of these employees would have had any involvement or contact

with Wells Fargo's commercial insurance customers.” Id. at *29.

69. The Complaint in the present case, unlike those in Power Home Solar and

Bite Busters, alleges that the non-solicitation provision was necessary to protect

legitimate employer interests, including its investment in training. It does not

attempt to prevent the solicitation of employees working for numerous affiliates in

unrelated businesses, as was the case in Wells Fargo and in the more recent decision

Relation Insurance Inc. v. Pilot Risk Mgmt. Consulting, LLC, 2022 NCBC LEXIS 49

(N.C. Super. Ct. May 25, 2022). The provision here is limited to the solicitation of

“any employee of [McGriff],” and further limited to only those current McGriff

employees, “who had performed work for [McGriff] within the last year of Employee’s

employment.” (Employment Agreement ¶ 8(a)(i).) Thus, the Court concludes that

Hudson’s employee non-solicitation provision is sufficiently narrowly drawn to

protect McGriff’s legitimate business interests.

b. Non-Solicitation of Customers

70. On the other hand, the Court determines that the customer non-solicitation

provision in Hudson’s contract is overly broad, at least in part. The provision

prohibits Hudson from soliciting, contacting, diverting, or calling upon with the

intent to do business any “BB&T Insurance Customer” if the purpose of the activity

is to solicit the BB&T Insurance Customer for a “Competitive Business.”

(Employment Agreement ¶ 8(a)(iii).)
71. McGriff argues that the purpose of the provision is to prevent Hudson “from

bankrolling on McGriff’s customer goodwill (which Hudson was paid to develop on

behalf of McGriff) on behalf of a competitor.” (Mem. Opp’n Mots. Dismiss. 7.)

72. The devil here is in the definitions. The Agreement defines a “BB&T

Insurance Customer” as one:

with whom, within the two–year period ending with the termination of
Employee’s employment, Employee had material contact or who was otherwise
contacted or served by Employee regarding (A) the sale, trade or service or the
attempted sale, trade or service of business insurance products or (B) any other
business activity of BB&T Insurance.

(Employment Agreement ¶8(b)(ii)) (emphasis added).

73. Defendants first argue that the “two-year period” specified in the first line

above applies only to customers with whom the employee had material contact and

does not apply to any language after the disjunctive “or.” They argue that any

attempt to apply the “two-year period” to the group described after the “or” would be

grammatically nonsensical (“BB&T Insurance Customer” means any company or

individual customer of BB&T Insurance with whom, within the two year period

ending with the termination of Employee’s employment, who was otherwise contacted

or served by Employee[.]”) According to Defendants, the disjunctive “or” separates

the first group of customers from the second, leaving the second group

uncircumscribed by time. (Hudson’s Reply Br. 4-7.)

74. McGriff responds that the two-year period applies to both the first and

second groups of customers as evidenced by the fact that there is no comma before

the “or.”
75. Despite this linguistic tangle, two things are clear at this stage. First,

without a time boundary that applies to the second group of customers, Hudson would

be prohibited from soliciting any customer he contacted or served during the entirety

of his eleven-plus years of employment with McGriff, no matter how long ago or how

fleeting the contact. Such a restriction is broader than is necessary to protect

McGriff’s goodwill with customers. See e.g., Sterling Title Co. v. Martin, 266 N.C.

App. 593 (2019); Bite Busters, LLC, 2021 NCBC LEXIS, at *12–13 (restriction looking

back to beginning of employee’s tenure was unreasonable).

76. Second, it is not possible to discern as a matter of law what the parties

intended from the language of this contract. Both parties’ interpretations are

plausible. “An ambiguity exists in a contract if the language of a contract is fairly

and reasonably susceptible to either of the constructions asserted by the parties.”

Barrett Kays & Associates, P.A. v. Colonial Bldg Co., Inc. of Raleigh, 129 N.C. App.

525, 528 (1998) (citations omitted). “The fact that a dispute has arisen as to the

parties’ interpretation of the contract is some indication that the language of the

contract is, at best, ambiguous.” St. Paul Fire & Marine Ins. Co., v. Freeman-White

Assocs., Inc., 322 N.C. 77, 83 (1988).

77. Given the ambiguity, the Court leaves to the fact-finder a determination of

whether the “two-year period” modifies the second group of customers. “If the writing

leaves it uncertain as to what the agreement was, parol evidence is competent, not to

contradict, but to show and make certain what was the real agreement between the

parties.” Int’l Paper Co. v. Corporex Constructors, Inc., 96 N.C. App. 312, 317 (1989).
However, in that event, interpretation of the contract is a question of fact for the jury.

Id.; see also Schenkel & Schultz, Inc. v. Hermon F. Fox & Assocs., P.C., 362 N.C. 269,

273 (2008); Whirlpool Corp. v. Dailey Constr., Inc., 110 N.C. App. 468, 471 (1993);

Martin v. Ray Lackey Enterprises, Inc., 100 N.C. App. 349, 354 (1990) (“[I]ntent is a

question of law where the writing is free of any ambiguity which would require resort

to extrinsic evidence or the consideration of disputed fact.”); Cleland v. Children’s

Home, Inc., 64 N.C. App. 153, 57 (1983) (ambiguities in contracts are to be resolved

by the jury). The Court observes only that the parties have agreed that the language

“shall be construed as drafted by both of them.” (Employment Agreement ¶ 22.) 8

78. But the problems with the customer non-solicitation provision do not end

there. Once past the first troublesome “or,” the reader is faced with another pair of

descriptors. To be a “BB&T Insurance Customer” the Employee must have had

material contact with the company or individual, or the company or individual must

have been “otherwise contacted or served by Employee regarding (A) the sale, trade

or service or the attempted sale, trade or service of business insurance products or (B)

8 If the “two-year period” applies to the second group of customers, then the total temporal

limitation is four years because “when a non-compete agreement reaches back to include
clients of the employer during some period in the past, the look-back period must be added
to the restrictive period to determine the real scope of the time limitation." Farr Assocs.,
Inc., 138 N.C. App. at 280.

The customer-based territory and time limitation must be viewed in tandem when
determining the reasonableness of the covenant. Id. A four-year restriction approaches
the outer limit of reasonableness. “A five-year time restriction is the outer boundary which
our courts have considered reasonable, and even so, five-year restrictions are not favored."
Id. "[O]nly 'extreme conditions' will support a five-year covenant." Sterling Title Co. v.
Martin, 266 N.C. App. 593, 599 (2019) (quoting Hartman, 117 N.C. App. at 315).
any other business activities of BB&T Insurance.” (Employment Agreement ¶ 8(b)(ii)

(emphasis added).)

79. Hudson draws a bright line at “(B) any other business activity of BB&T

Insurance,” arguing that the language is far too broad to be enforceable, especially

with a business the size of BB&T Insurance/McGriff that sells and services multiple

lines of insurance across the United States, and when Hudson’s employment was

limited to employee benefits products sold to businesses in and around the Charlotte

area. (Hudson Br. Supp. Mot. Dismiss 9.)

80. McGriff counters that the “any other business activity” language is

narrowed by language establishing that it applies only to those matters about which

Hudson “contacted or serviced” customers. Therefore, McGriff contends, the

restriction is necessary to prevent Hudson from bankrolling McGriff’s customer

goodwill on behalf of a competitor. (Mem. Opp’n Mot. Dismiss 7).

81. The Court agrees that McGriff has a legitimate business interest in

protecting its customer goodwill, and “[t]he greater the employee's opportunity to

engage in personal contact with the employer's customer, the greater the need for the

employer to protect these customer relationships.” Kennedy v. Kennedy, 160 N.C.

App. 1, 12 (2003). See also United Labs., Inc v. Kuykendall, 322 N.C. 643, 652 (1988)

(“When an employee, during the course of his or her employment, develops or

improves customer relationships, the employee is establishing business goodwill,

which is a valuable asset of the employer, a principle that this Court has implicitly

and explicitly endorsed.").
82. But a provision that, read literally, would prohibit Hudson from soliciting

a company or individual with whom he had limited contact regarding any of the

business activities of McGriff – even those activities that do not involve the sale of

insurance products – is unreasonable in its breadth. Compare Farr Assocs., Inc., 138

N.C. App. at 280 (finding covenant protected former employer’s legitimate business

interest in customer relationships because employer’s work required that former

employee “develop an intimate relationship” with its clients) with Sterling Title Co.

v. Martin, 266 N.C. App. 593, 598–99 (2019) (stating that a restriction that prohibits

solicitation of employer’s current or former clients with whom defendant had “any

form of contact” during his employment “suggests that [the restriction] is

unreasonable.”). 9

9 Hudson asks the Court to take judicial notice of the fact that McGriff has itself contended
in other litigation that the scope of the covenant must “align” with the employee’s precise
duties in order to be reasonable. (Hudson Br. Supp. Mot. Dismiss 14, citing Wells Fargo Ins.
Servs. USA, 2018 NCBC LEXIS at *24.) Hudson contends that McGriff should be held to its
own argument and, given that the restriction in this case encompasses more than the sale of
employee benefit plans from the Charlotte office, McGriff should acknowledge its overbreadth.

But while there was dicta in Wells Fargo suggesting “there may be merit” to the “alignment”
argument, no North Carolina court has held that the alignment between the scope of the
covenant and an employee’s duties must be as precise as Hudson suggests. Instead, when
evaluating whether the restriction reasonably protects an employer’s legitimate business
interest, North Carolina courts look more broadly at, among other things, the nature of the
business involved, the nature of the employee’s duty, and the employee’s knowledge of the
business operation. Cf. Hartman, 117 N.C. App. 307, 312 (1994).

A restriction attempting to prevent the departing employee from doing work even wholly
unrelated to his former duties is overly broad, see, e.g., Id. at 317. The same can be said for
customer non-solicitation restrictions. Here, however, the restriction is limited to BB&T
Insurance Customers with whom Hudson had relatively recent “material contact” or who he
“otherwise contacted or served” regarding “the sale, trade or service or the attempted sale,
trade or service of business insurance products.” The restriction is not wholly unrelated to
Hudson’s sales and service activities.
83. In response to McGriff’s request that the Court strike from the agreement

“any distinctly severable part of the restrictive covenants that the Court might deem

to be overly broad as drafted[,]” (Prop. Am. Compl. ad damnum), the Court initially

observes that it has limited power to cure defects in restrictive covenants. See

Whittaker General Medical Corp. v. Daniel, 324 N.C. 523, 528 (1988) (refusing to

rewrite a contract that was overly broad); Hartman, 117 N.C. App. at 317 (“When

the language of a covenant not to compete is overly broad, North Carolina's ‘blue

pencil’ rule severely limits what the court may do to alter the covenant.”).

84. However, in some circumstances, this state’s “blue pencil” rule may be

narrowly applied. “A court at most may choose not to enforce a distinctly separable

part of a covenant in order to render the provision reasonable. It may not otherwise

revise or rewrite the covenant.” Id. at 317. Application of the “blue pencil” rule is

narrow and within the discretion of the Court. Tech. Ptnrs, Inc. v. Hart, 298 F. App’x

238, 243 (4th Cir. 2008) (applying North Carolina law).

85. To be a “distinctly separable” provision, other restrictions in the covenant

must not be dependent on the portion to be excised. Sec. Nat'l Investments, Inc. v.

Rice, 2 0 1 6 N . C . A p p . L E X I S 1 1 1 9 , 1120 (2016) (unpublished) (citing Jon P.

McClanahan & Kimberly M. Burke, Sharpening the Blunt Blue Pencil: Renewing

the Reasons for Covenants Not to Compete in North Carolina, 90 N.C. L. Rev. 1931,

1955-56 (Sept. 2012).

86. Here, the language at issue, “or any other business activities of BB&T

Insurance,” is distinctly separable. But Defendants contend that merely striking it
would not be enough to salvage the non-solicitation provision. (Hudson Br. Supp.

Mot. Dismiss 11). The Court disagrees. If, as discussed above, a fact-finder were to

determine that the “two-year period” applies to the second group identified as “BB&T

Customers”, then absent the reference to “any other business activity of BB&T

insurance,” the non-solicitation provision would be reasonably tailored to McGriff’s

legitimate protectible interests. See, e.g., NFH, Inc. v. Troutman, 2019 NCBC LEXIS

66, at *33 (N.C. Super. Ct. Oct. 29, 2019) (North Carolina’s strict blue pencil doctrine

allows the court to “avoid scrapping an entire covenant” by “enforc[ing] the divisible

parts of [the] covenant that are reasonable.”); Sec. Nat'l Investments, Inc., 2 0 1 6

N . C . A p p . L E X I S a t 1 1 2 0 (striking sentence defining scope of the restriction

because it was too broad and enforcing the remainder). Cf. Wachovia Ins. Servs.,

Inc. v. McGuirt, 2006 NCBC LEXIS 25, at *89 (N.C. Super. Ct. Dec. 19, 2006)

(upholding covenant not to compete where, after striking separately numbered

geographic provision, r emaining text was not overly broad and could stand on its

own); Welcome Wagon Int'l, Inc. v. Pender, 255 N.C. 244, 248 (1961) (citations

omitted) (striking unreasonable provisions in a string of territorial provisions

connected by the word "or").

87. Therefore, the Court determines that the language at issue, (“or (B) any

other business activity of BB&T Insurance”), is unenforceable as a matter of law, may

properly be “blue penciled,” and will not be considered when the balance of the

customer non-solicitation provision is construed to determine its enforceability.
88. Hudson next argues that the non-solicitation provision is overly broad

because it includes in the definition of “BB&T Insurance Customer” individuals or

companies that Hudson contacted or served regarding the attempted sale, trade or

service of business insurance. Prohibiting him from soliciting McGriff’s prospective

clients, he argues, is unenforceable. (Hudson Br. Supp. Mot. Dismiss 12.)

89. McGriff counters that the cases cited by Hudson involved prospective

customers with whom the employee had no contact and of whom the employee had no

personal knowledge. They argue that North Carolina courts have upheld covenants,

like Hudson’s, which “barred the former employee from contacting prospective

customers with whom the defendant had contact during his employment.” (Reply Br.

Supp. Pl.’s Mot. Leave Am. Compl. 4 [“Pl.’s Reply Br.”], ECF No. 65.)

90. The Court agrees with McGriff. An employer has a legitimate protectible

interest in the goodwill it has developed with a prospective customer. But to develop

that goodwill, the departing employee must have had some contact with the

prospective customer. See, e.g., Hejl v. Hood, Hargett & Assocs., Inc., 196 N.C. App.

299, 307 (2009) (restriction unenforceable when it extended to areas where plaintiff

had no connections or personal knowledge of the customers); Wade S. Dunbar Ins.

Agency v. Barber, 147 N.C. App. 463, 469 (2001) (recognizing the validity of covenant

limiting defendant from soliciting prospective customers whom defendant himself

had solicited). Here, the restriction is limited to prospective customers who were

“otherwise contacted or served” by Hudson regarding the “attempted sale, trade or

service of business insurance products.” Consequently, it is limited to prospective
customers with whom Hudson had some degree of influence and, therefore, it is

designed to protect McGriff’s developing goodwill.

91. In sum, the Court finds the employee non-solicitation provision is not overly

broad, and the Court leaves for the fact-finder a determination of the parties’ intent

with respect to the blue-penciled customer non-solicitation provision. Accordingly,

McGriff’s Motion for Leave to Amend Complaint with respect to its breach of contract

claim as to Hudson is GRANTED and Defendants’ corresponding motions to dismiss

McGriff’s breach of contract claim with respect to the Hudson Employment

Agreement are DENIED.

2. Stetson’s Contract

92. A review of Stetson’s Non-Solicitation Agreement is necessitated by

McGriff’s Motion for Leave to Amend its Complaint to add Stetson as a defendant, as

well as by Hudson and OneDigital’s motions to dismiss McGriff’s intentional

interference with contract claim as to Stetson, discussed supra at paragraphs 120 et

seq.

93. The Court’s analysis again begins with the issue of consideration.

Defendants correctly argue that when, as here, an employment relationship already

exists before the non-solicitation restriction is imposed, merely continuing the

employment relationship is not sufficient consideration to support that restrictive

covenant. (See Hudson’s Br. 4, 6–9 .)

94. In addition, while acknowledging that the guarantee of “a raise, bonus, or

other change in compensation” can supply the necessary consideration for a newly-
imposed non-solicitation obligation, Defendants point out that merely being eligible

for a discretionary raise is insufficient.

95. Here, the Non-Solicitation Agreement states that Stetson “shall be eligible

to receive an annual bonus” as consideration for the agreement. However, the specific

terms of the bonus plan are not provided, making it possible that the bonus was

discretionary. In such a case, Defendants argue, any consideration would be illusory,

rendering the Non-Solicitation Agreement unenforceable. (Prop. Am. Compl. Ex. D,

ECF No. 55.6; Hudson’s Br. 4, 6–9.)

96. In response, McGriff observes that “[n]othing on the face of McGriff’s

Proposed Amended Complaint, or the Agreement itself, suggests that the bonus was

discretionary, that Stetson failed to receive the bonus, or that the consideration was

illusory.” Therefore, McGriff essentially argues that Defendants are tilting at

windmills. (Pl.’s Reply Br. 5—6.)

97. When reviewing the Proposed Amended Complaint for futility, it is

incumbent on the Court to afford the nonmoving party the benefit of favorable

inferences. See Laster, 199 N.C. App. at 577 (when reviewing the complaint for

sufficiency, non-movant’s allegations are liberally construed and generally treated as

true). Paragraph 17 of the Proposed Amended Complaint states, “Stetson received

certain valuable consideration for [the restrictive covenants], including but not

limited to becoming newly eligible to receive an annual bonus based on the terms and

conditions of BB&T Insurance’s bonus plan.” (Prop. Am. Compl. ¶ 17.)
98. McGriff attached Stetson’s contract to the Proposed Amended Complaint as

Exhibit D. The contract literally reads, “[i]n consideration of Employee entering into

this Agreement, Employee shall be eligible to receive an annual bonus based on the

terms and conditions of (describe BB&T Insurance’s bonus plan).” (Prop. Am. Compl.

Ex. D (emphasis added).) Defendants contend that this parenthetical is a “vague

placeholder in the agreement” and leaves “material portions [of the agreement] open

for future agreement” which, they argue, makes the agreement “nugatory and void

for indefiniteness.” (Hudson’s Opp’n Mot. Am., quoting Boyce v. McMahan, 285 N.C.

730, 734 (1974).)

99. Unlike the contract in Boyce, however, Stetson’s contract does not leave

material terms open for future negotiation. Compare Boyce, 285 N.C. at 734 (“The

‘preliminary’ agreement . . . begins by stating that it is a preliminary agreement and

closes by reciting that a more detailed agreement will be made at some specific and

subsequent date to be agreed upon by the parties”), with Prop. Am. Compl. Ex. D

(containing neither statement).

100. Although it is true that Stetson’s contract omits a description of the bonus

plan, there is no indication that such a plan did not yet exist, or that the bonus was

discretionary. Consequently, McGriff has adequately pled that consideration in the

form of eligibility for a bonus exists. See Laster, 199 N.C. App. at 577. See also Davis

v. HCA Healthcare, Inc., 2022 NCBC LEXIS 108, at **38 (N.C. Super. Ct. Sept. 19,

2022) (“To dismiss [the plaintiff’s] complaint because of some initial skepticism would

be to mistakenly collapse discovery, summary judgment, and trial into the pleading
stages of a case.” (quoting SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412, 434

(4th Cir. 2015)); Presnell v. Pell, 298 N.C. 715, 719 (1979) (“A claim for relief should

not suffer dismissal unless it affirmatively appears that plaintiff is entitled to no

relief under any state of facts which could be presented in support of the claim.”).

101. Defendants next contend that the scope of Stetson’s non-solicitation

restrictions is not tailored to McGriff’s legitimate business interests. With respect to

the employee non-solicitation provision, for the same reasons that the Court

concludes that Hudson’s employee non-solicitation provision is not overly broad, it

concludes that Stetson’s similarly worded employee non-solicitation provision is not

overly broad.

102. As for the customer non-solicitation provision, the excessively broad “or any

other business activities of BB&T Insurance” clause must once again be blue-penciled

out, but this time the additional troublesome language that created the ambiguity

with respect to Hudson’s agreement (see infra paragraph 78) is absent, and the

provision as written is narrowly tailored to protect the goodwill that Stetson might

otherwise be able to influence by virtue of her material contact with actual and

prospective McGriff customers. Accordingly, absent the blue-penciled clause

identified above, McGriff’s Motion for Leave to Amend Complaint as to its breach of

contract claim with respect to Stetson is GRANTED.

B. Misappropriation of Trade Secrets

103. The Court moves next to the claim for misappropriation of trade secrets

against all three defendants, Hudson, Stetson, and OneDigital. Each Defendant

moves to dismiss the claim on the grounds that McGriff has not sufficiently pled
either a trade secret or the requisite acts of misappropriation. Particularly

considering the fullness of the allegations in McGriff’s proposed amendment,

however, the Court determines that the allegations are sufficient to state a claim

against each Defendant.

104. In North Carolina a “trade secret” means

“[B]usiness or technical information, including but not limited to a formula,
pattern, program, device, compilation of information, method, technique, or
process that:

a. Derives independent or potential commercial value from not being generally
known or readily ascertainable through independent development or reverse
engineering by persons who can obtain economic value from its disclosure or use;
and

b. Is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.

N.C.G.S. § 66-152(3).

105. Misappropriation means “acquisition, disclosure, or use of a trade secret of

another without express or implied authority or consent[.]” N.C.G.S. § 66-152(1).

Misappropriation does not occur, however, when a trade secret is arrived at by

“independent development, reverse engineering, or was obtained from another person

with a right to disclose the trade secret.” Id.

106. On a motion to dismiss, McGriff must “identify a trade secret with sufficient

particularity so as to enable a defendant to delineate that which he is accused of

misappropriating and a court to determine whether misappropriation has or is

threatened to occur.” Washburn v. Yadkin Valley Bank & Tr. Co., 190 N.C. App. 315,

326 (2008) (quoting Analog Devices, Inc. v. Michalski, 157 N.C. App. 462, 468 (2003)
(citations omitted)). General, sweeping, and conclusory allegations are insufficient.

See Krawiec v. Manly, 370 N.C. 602, 610 (2018).

107. In paragraph 30 of the Proposed Amended Complaint, McGriff alleges that

its confidential information and trade secrets include, but are not limited to:

A. Customer lists and contact information, including the identity of specific
customer contacts and point persons;

B. Customer preferences, requirements and buying patterns, including
products and services provided to such customers, pricing/premium
structures, billing histories, policy cost and sales information, insurance
expiration dates, insurance renewal schedules, fee agreements,
applications, underwriting, proposals, certificate of holder lists, and claims
history;

C. Marketing and sales strategies, financial, operational and customer service
information;

D. Detailed compilations of data, created over significant periods of time,
regarding each of its customers; and

E. Other internal business information that is proprietary in nature,
confidential to BB&T Insurance/McGriff, and not generally available to its
competitors or the public at large.

(Prop. Am. Compl. ¶ 30.)

108. McGriff further alleges that its trade secrets include proprietary Excel

workbooks developed by BB&T Insurance/McGriff known as “Watson Reports,” as

well as the customer data therein (such as net claims paid by a benefits plan, actual

versus forecast claims for the plan year and trailing 24-month period, historical

trends related to the relationship between plan costs, claims and expected claims,

loss ratios, and a detailed financial snapshot for the plan). (Prop. Am. Compl. ¶ 32.)
109. In addition to the Watson Reports, McGriff alleges that its trade secrets

include “Sherlock Reports,” which are proprietary Excel workbooks developed by

BB&T Insurance/McGriff that contain “detailed data and analysis related to a

customer’s insurance plan renewal, including comparative quotes that BB&T

Insurance/McGriff obtains for the customer on insurance products and services.”

(Prop. Am. Compl. ¶ 33.)

110. Finally, in paragraph 120 of the Proposed Amended Complaint, McGriff

summarizes the trade secrets at issue as:

compilations of customer data, claims history, policy information and
terms, fee agreements and renewal dates, as well as information
concerning customer service, projects and proposals. This includes, but
is not limited to, the pharmacy program McGriff was working on for
Vector Fleet Management and other McGriff customers, personnel
information regarding McGriff employees, and proprietary tools such as
the Watson Reports and Sherlock Reports.

(Prop. Am. Compl. ¶ 120.)

111. McGriff alleges that these trade secrets are the subject of “substantial time,

money, and effort in developing, compiling, and safeguarding such materials and

information for its business use and to obtain a competitive advantage.” (Prop. Am.

Compl. ¶ 121.) Some of the efforts to maintain its secrecy include the use of

confidentiality agreements, enforcement of company policies dealing with proprietary

information, password protection, dual authentication, and other cybersecurity

measures. (Prop. Am. Compl. ¶¶ 35–36, 122.)

112. Defendants argue that, even if permitted to amend, McGriff’s trade secret

allegations fall short of stating a claim. (Hudson Br. Resp. Mot. Amend 12–18, ECF

No. 61.) They contend that some of the information identified by McGriff (the names
of customers, a pharmacy proposal and personnel information) constitutes the type

of “general skills and knowledge” acquired by Hudson and Stetson during their

employment that falls outside the ambit of North Carolina’s Trade Secret Protection

Act. They further argue that McGriff’s allegation that former employees provided

McGriff’s Watson and Sherlock Reports to Hudson undercuts McGriff’s allegation

that it made reasonable efforts to protect their secrecy, and that McGriff’s policy

information and renewal dates are data publicly available on IRS Forms 5500.

(Hudson Br. Resp. Mot. Amend 12-17.)

113. McGriff counters that Defendants are subjecting its allegations to a

preliminary injunction or even a summary judgment standard, not one appropriate

for either a Rule 12(b)(6) sufficiency analysis or a Rule 15 futility analysis. For now,

McGriff argues that it has identified its trade secrets with sufficient particularity for

Defendants to understand what it is they are accused of misappropriating, and that

is all that is required at this stage. (Pl.’s Reply Br. 8–11.)

114. McGriff further responds that the fact that two other employees may have

also misappropriated the Watson and Sherlock Reports does not establish as a matter

of law that McGriff failed to engage in efforts that were reasonable under the

circumstances to protect their secrecy. In addition, McGriff contests Hudson’s

contention that one can use IRS Forms 5500 to glean the customer information it has

compiled. (Mem. Opp’n Mots. Dismiss 13.)

115. The Court agrees that the Proposed Amended Complaint sufficiently pleads

a claim for misappropriation of trade secrets. At this stage, McGriff does not have to
prove that the listed documents and information constitute trade secrets. It must

merely allege what it contends constitutes a trade secret sufficiently to allow the

Defendants “to delineate that which [they are] accused of misappropriating . . . .”

Washburn, 190 N.C. App. at 326.

116. While information collected in the routine course of business, without any

effort to compile, develop, or maintain the information may not constitute a trade

secret, McGriff’s description of the data compilations at issue in this case compares

favorably to descriptions in prior cases that have passed muster when challenged

under Rule 12(b)(6). See, e.g., State ex rel. Utils. Comm'n v. MCI Telecomms., Corp.,

132 N.C. App. 625, 634 (1999) (“compilation of information” involving customer data

and business operations constituted trade secret); Koch Measurement Devices, Inc.

v. Armke, 2015 NCBC LEXIS 45, at *13 (N.C. Super. Ct. May 1, 2015) (“[T]he Court

of Appeals has held that where an individual maintains a compilation of detailed

records over a significant period of time, those records could constitute a trade

secret even if ‘similar information may have been ascertainable by anyone in the . . .

business.’ ”) (citing Byrd's Lawn & Landscaping, Inc. v. Smith, 142 N.C. App. 371,

376 (2001). See also AYM Techs., LLC v. Rodgers, 2018 NCBC LEXIS 14, at *38–39

(N.C. Super. Ct. Feb. 9, 2018) (collecting cases).

117. McGriff has adequately pled misappropriation as well. For example,

McGriff alleges that Hudson provided to OneDigital McGriff’s Fee Agreements with

its customers, contact information for customer point persons, and insurance renewal

dates. (Prop. Am. Compl. ¶ 70.) McGriff further alleges that Hudson acquired the
Sherlock and Watson reports from two former McGriff employees, neither of whom

was authorized to possess or disclose the information, and that he has used the

reports to further his business. (Prop. Am. Compl. ¶¶ 71–74, 77.) McGriff also

alleges that Hudson’s use of information in a pharmacy proposal McGriff presented

to a customer, Vector Fleet Management, was a misappropriation of the trade secret

information in the proposal. (Prop. Am. Compl. ¶ 82.) McGriff alleges that

Defendants used McGriff’s confidential personnel information, without

authorization, “in order to solicit and recruit McGriff employees and encourage and

support their departure from McGriff to join OneDigital.” (Prop. Am. Compl. ¶ 132.)

118. In short, McGriff avers that Hudson, with the help of Stetson, has disclosed

and used the trade secrets to benefit OneDigital, which in turn gave OneDigital an

unfair competitive advantage. (Prop. Am. Compl. ¶¶ 69–77, 95, 120.) These

allegations are sufficient to survive both a Rule 12(b)(6) sufficiency challenge and a

futility challenge under Rule 15. See, e.g., Tribike Transp. v. Essick, 2022 NCBC

LEXIS 143, at **7 (N.C. Super. Ct. Nov. 30, 2022) (allegations of confidentiality,

uniqueness of the information to a company, and lack of ready discoverability from

public information met the pleading standard); United Therapeutics Corp. v. Liquidia

Techs., 2022 NCBC LEXIS 120, at **13–14 (N.C. Super. Ct. Oct. 13, 2022) (allegations

that former employee had access to trade secrets, carried them to a competitor, and

used them to benefit the competitor were sufficient to plead misappropriation); (Mech.

Sys. & Servs., Inc. v. Howard, 2021 NCBC LEXIS 69, at *7 (N.C. Super. Ct. Aug. 11,

2021) (allegations that former employee accessed trade secrets after deciding to join
a competitor, kept them in his possession, and used them to solicit his former

employer’s customers sufficient to state a claim for misappropriation.)

119. Accordingly, the Court GRANTS Plaintiff’s Motion for Leave to Amend

Complaint with respect to its misappropriation of trade secrets claim, and

Defendants’ corresponding motions to dismiss this claim are DENIED.

C. Tortious Interference with Contract

120. Defendants next move to dismiss McGriff’s claims for tortious interference

with contract against Hudson and OneDigital. With respect to OneDigital alone, the

allegations are that it induced Hudson to breach his Employment Agreement, to

misappropriate its trade secrets, and to wrongfully solicit its employees and

customers. As for OneDigital and Hudson together, the claim is that they

unjustifiably induced Stetson to breach her Non-Solicitation Agreement and to use

McGriff’s trade secret information to solicit other employees and customers. (Prop.

Am. Compl. ¶¶ 104-111.)

121. A claim for tortious interference requires: “(1) a valid contract between

the plaintiff and a third person which confers upon the plaintiff a contractual right

against a third person; (2) the defendant knows of the contract; (3) the defendant

intentionally induces the third person not to perform the contract; (4) and in doing so

acts without justification; (5) resulting in actual damage to plaintiff.” Beverage Sys.

of the Carolinas, LLC v. Associated Beverage Repair, LLC, 368 N.C. 693, 700 (2016)

(citation omitted). Given the potential for restraint on legitimate competition, the

pleading standards for a tortious interference with contract claim are strict. Kerry

Bodenhamer Farms, LLC v. Nature’s Pearl Corp., 2017NCBC LEXIS 27, at *16 (N.C.
Super. Ct. March 27, 2017) (“The complaint must admit of no motive for interference

other than malice.”).

122. First, with respect to the claim that OneDigital interfered with Hudson’s

Employment Agreement and that both Hudson and OneDigital interfered with

Stetson’s Non-Solicitation Agreement, the Court has found that valid agreements

exist. 10 Moreover, on the face of the Proposed Amended Complaint, it is alleged that

OneDigital both knew of Hudson’s Employment Agreement with McGriff during the

relevant time frame and induced him to breach it. It is further alleged that

OneDigital and Hudson were aware of Stetson’s Employment Agreement with

McGriff and induced her to breach it. (See Prop. Am. Compl. ¶¶ 106–09). The focus

of the motions, then, is on the fourth element of a tortious interference with contract

claim: whether Defendants had legal justification for allegedly inducing Hudson and

Stetson to violate their contracts.

123. McGriff contends that it has adequately alleged that Digital lacked legal

justification for its interference with Hudson’s contract. (Mem. Opp’n Mots. Dismiss

10.) While McGriff acknowledges that ordinary competition constitutes justifiable

interference, it argues that the competitive privilege to “interfere” is lost if it is

exercised for a wrongful purpose. (Mem. Opp’n Mots. Dismiss 10.) Thus, McGriff

invites the Court to find that OneDigital’s alleged goal of using Hudson and Stetson

to misappropriate its trade secret information, disrupt its business operations, and

10 Even if a fact-finder ultimately construes the non-solicitation provisions in the Hudson

Employment Agreement as too broad, the confidentiality provision, which is not subject to
the same level of scrutiny, creates a contractual obligation on the part of Hudson to McGriff.
otherwise engage in unfair competition constitutes an improper motive that satisfies

this element of the tort. (Mem. Opp’n Mots. Dismiss 10–11.)

124. OneDigital responds that McGriff’s allegations are conclusory and lack a

supporting factual basis, a flaw it argues is fatal to this claim. (Digital’s Mot. Dismiss

Br.7–8). In addition, it cites Sunbelt Rentals, Inc. v. Head & Engquist Equip., L.L.C.,

2002 NCBC LEXIS 2, at **36 (N.C. Super Ct. July 10, 2002) in support of its

argument that to defeat the competitive privilege, McGriff is required to allege “some

monopolistic purpose.” (Digital’s Mot. Dismiss Br. 7.)

125. Unjustifiable interference, otherwise known as legal malice, is not

synonymous with actual malice. It is “the intentional doing of a harmful act without

legal justification.” Murray v. Justice, 96 N.C. App. 169, 174 (1989). In addition, for

interference to be justified, it must be carried out by means that are lawful. Indeed,

“[n]umerous authorities have recognized that competition in business

constitutes justifiable interference in another's business relations and is not

actionable so long as it is carried on in furtherance of one's own interests and by

means that are lawful.” Peoples Sec. Life Ins. Co. v. Hooks, 322 N.C. 216, 221 (1988)

(emphasis added).

126. Among other things, McGriff alleges that Hudson and OneDigital’s

interference involved the misappropriation of McGriff’s trade secret information.

These allegations, if true, constitute unlawful conduct and by definition cannot be

justifiable interference. Cf. Med1 NC Servs., LLC v. Med1 Plus, L.L.C., 2020 NCBC

LEXIS 24, at *30 (N.C. Super Ct. Feb. 26, 2020) (improper use of confidential
information constitutes intentional interference with prospective economic

advantage); Roane-Barker v. Southeastern Hosp. Supply Corp., 99 N.C. App. 30, 39

(1990) (hiring employee for the purpose of soliciting the same customers he serviced

for plaintiff in violation of non-solicitation agreement is not legal means of

competition).

127. Moreover, Plaintiff alleges that OneDigital’s “distinctive” consulting

arrangement with Hudson and the employment of his colleague, Stetson, was

designed as an attempt to circumvent their contractual commitments and to solicit

its customers and use its trade secret information, all in an effort to disrupt McGriff’s

business operations. These allegations, if true, do not constitute lawful means of

competition. See, e.g., Sandhills Home Care, L.L.C., 2016 NCBC LEXIS 61, at **46–

48 (a specific plan or scheme to destroy plaintiff’s business went beyond “reasonable

competitive behavior”).

128. Accordingly, with respect to the Tortious Interference with Contract claim

against Hudson (regarding Stetson’s Non-Solicitation Agreement) and OneDigital

(regarding both the Hudson and Stetson’s employment obligations), the Court

GRANTS McGriff’s Motion for Leave to Amend Complaint and DENIES Defendants’

corresponding motions to dismiss.

D. Tortious Interference with Contract and Prospective
Business Relations

129. McGriff also alleges tortious interference with customer contracts and

prospective business relations against both Hudson and OneDigital for allegedly
unjustifiably interfering with McGriff’s existing Fee Agreements with its customers,

as well as with its potential renewal business. (Prop. Am. Compl. ¶¶ 112–118.)

130. Hudson argues that his conduct amounted to nothing more than regular

competition given that each customer had the ability to terminate its Fee Agreement

with McGriff on thirty days’ notice. (Hudson’s Opp. Motion Amend 11.) But Hudson

does not address McGriff’s allegations that Hudson “advised certain BB&T Insurance

Customers—specifically, Arroweye Solutions and PLI—about how they could get out

of paying the amounts due and payable under their Fee Agreements with McGriff,”

or that at Hudson’s request, OneDigital “engaged [its] attorneys to . . . determine how

customers could avoid compliance.” (Prop. Am. Compl. ¶¶ 84–85.)

131. As for renewal business, McGriff alleges that, while still employed,

Hudson purposefully “failed to request or procure Fee Agreement renewals for three

BB&T Insurance Customers—Vector Fleet Management, LLC, City of Kings

Mountain, and Arroweye Solutions—whose Fee Agreements with McGriff became

due for renewal on September 1, 2021.” It alleges upon information and belief that

Hudson “deliberately refrained from securing signed renewal agreements from these

customers in order to solicit and divert their Employee Benefits business on behalf of

himself and OneDigital. (Prop. Am. Compl. ¶ 61.)

132. In addition, McGriff avers that Hudson has provided its trade secret

information to OneDigital and has himself used its trade secret information,

including that found in its Watson and Sherlock Reports, to compete against it for

renewals. (Prop. Am. Compl. ¶¶ 70-77, 83.)
133. Finally, McGriff alleges upon information and belief that with regard to a

pharmacy project McGriff had been working on with Vector, Hudson stated that “he

understood, through Stetson, that the ‘new guy’ assigned to the account after Hudson

left McGriff had made errors in the pharmacy project exhibits that would increase

the costs by as much as double, and that McGriff’s proposals for other customers had

been wrong, too.” McGriff further alleges, upon information and belief, that “Hudson

has made similar statements to other BB&T Insurance Customers about McGriff’s

pharmacy proposals . . . to divert the customer’s business from McGriff and solicit

these accounts on behalf of himself and OneDigital.” (Prop. Am. Compl. ¶¶ 78–79.)

134. The Court has already discussed the elements of a tortious interference

with contract claim. Applying those elements here, the Proposed Amended

Complaint alleges the existence of enforceable Fee Agreements, that Hudson and

OneDigital were aware of these Fee Agreements, that their actions inducing

Arroweye Solutions and other customers not to perform pursuant to the Fee

Agreements were intentional and unjustified, and that McGriff was damaged. (Prop.

Am. Compl. ¶¶ 113-116.) Again, McGriff’s allegation that Hudson and OneDigital

misappropriated its trade secret information in order to interfere with its Fee

Agreements supplies the necessary legal malice to state a claim for interference with

existing contracts.

135. “An action for tortious interference with prospective economic advantage is

based on conduct by the defendant[ ] which prevents the plaintiff[ ] from entering into

a contract with a third party.” Southeast Anesthesiology Consultants, PLLC v. Rose,
2019 NCBC LEXIS 52, at *35 (N.C. Super. Ct. August 20, 2019) . To state such a

claim, McGriff must allege that a contract would have been formed but for

Defendants’ interference. “[T]he plaintiffs must allege facts to show that the

defendant[ ] acted without justification in inducing a third party to refrain from

entering into a contract with them which contract would have ensued but for the

interference.’ ” Id. (quoting Radcliffe v. Avenel Homeowners Ass'n, 248 N.C. App. 541,

567 (2016)).

136. At issue is whether there are sufficient facts alleged to support the

contention that the renewals and pharmacy proposals would have resulted in

contracts but for Hudson and OneDigital’s interference. McGriff alleges that its Fee

Agreements with Arroweye Solutions and others “would have continued without

OneDigital’s and Hudson’s interference.” (Prop. Am. Compl. ¶ 116.) While lean,

given the totality of the facts alleged, and given the liberal construction that notice

pleading requires, Embree Const. Group., Inc. v. Rafcor, Inc., 330 N.C. 487, 500

(1992), the Court determines that the allegations with respect to these established

customers is sufficient to allow the claim to move forward to discovery.

137. The same is not true of the pharmacy proposals, however. From the face of

the Proposed Amended Complaint, it is not possible to discern whether McGriff

alleges that it was deprived of contractual relationships that would otherwise have

occurred but for Hudson’s alleged interference. Therefore, to the extent McGriff seeks

to assert a claim for tortious interference with respect to the pharmacy proposals,

McGriff’s Motion for Leave to Amend Complaint is DENIED.
138. In other respects, McGriff’s Motion for Leave to Amend Complaint as to the

Tortious Interference with Prospective Business Relations claim is GRANTED, and

Defendants’ corresponding motions to dismiss this claim are DENIED. But see

Sports Quest, Inc. v. Dale Earnhardt, Inc., 2004 NCBC LEXIS 10, **23 (N.C. Super.

Ct. March 12, 2004) (on summary judgment, evidence only that plaintiff had an

expectation of future contracts with current customers is insufficient to maintain

tortious interference with prospective advantage claim) (citing Dalton v. Camp, 353

N.C. 647, 655 (2001)).

E. Violation of North Carolina’s Unfair and Deceptive Trade
Practices Act

139. To state a claim under the North Carolina Unfair and Deceptive Trade

Practices Act, (“UDTPA”), N.C.G.S. § 75-1.1, a complainant must allege “(1) an unfair

or deceptive act or practice, or an unfair method of competition, (2) in or affecting

commerce, (3) which proximately caused actual injury to the plaintiff or to his

business.” McLamb v. T.P. Inc., 173 N.C. App. 586, 593 (2005) (quoting Spartan

Leasing v. Pollard, 101 N.C. App. 450, 460–61 (1991)); see also N.C.G.S. § 75-1.1. The

allegations must include “egregious or aggravating circumstances.” Dalton v. Camp,

353 N.C. 647, 657 (2001); Branch Banking & Tr. Co. v. Thompson, 107 N.C. App. 53,

62 (1992).

140. “A practice is unfair if it is unethical or unscrupulous and is deceptive if it

has a tendency to deceive.” Sports Quest, Inc., 2004 NCBC LEXIS 10, at **24 (quoting

Marshall v. Miller, 302 N.C. 539, 548 (1981)). Whether an act is unfair or deceptive
is a question of law for the court. Gray v. N.C. Ins. Underwriting Ass’n, 352 N.C. 61,

68 (2000).

141. McGriff bases its claim for violation of the UDTPA in large part on its

claims for tortious interference and misappropriation of trade secrets. Defendants

argue that these underlying claims fail, and therefore, so must the claim for unfair

and deceptive trade practices. (Hudson’s Opp’n. Mot. Am. 19.)

142. Because the Court has found that McGriff has adequately pled claims for

tortious interference and misappropriation of trade secrets, its claim for unfair and

deceptive trade practices also survives. See, e.g., NFH, Inc. v. Troutman, 2019 NCBC

LEXIS 66, at *64-65 (N.C. Super. Ct. Oct. 29, 2019) (it is well-settled that both

violation of the State’s Trade Secret Protection Act and tortious interference with

contract may constitute the basis for a UDTPA claim). 11

143. Therefore, the Court GRANTS McGriff’s Motion for Leave to Amend

Complaint as to its claim for violation of the Unfair and Deceptive Trade Practices

Act and DENIES Defendants’ corresponding motions to dismiss.

Counterclaim Motion

144. The Court now addresses McGriff’s Motion to Dismiss Hudson’s

counterclaims.

11
See also Velocity Sols., Inc. v. BSG Fin., LLC, 2016 NCBC LEXIS 19, at *7-8 (N.C. Super.
Ct. Feb. 22, 2016) (granting motion to dismiss breach of contract claim but denying motion
to dismiss UDTPA claim where plaintiff alleged defendant had “specifically engaged and
directed [plaintiff's former employee] to utilize [p]laintiff's confidential and proprietary
information in order to achieve competitive gain.”).
A. Tortious Interference with Prospective Economic Advantage

145. Hudson alleges that a McGriff executive, Ray Sanders, falsely represented

to one of Hudson’s former clients, Vector, that “because of Hudson’s Employment

Agreement” Hudson was “not permitted to handle” Vector’s account for two years.

(Counterclm. ¶¶ 19, 21.) Hudson also alleges upon information and belief that

Sanders “has continued to perpetuate the lie that Hudson has a non-competition

obligation to McGriff and is precluded from working with former customers.”

(Counterclm. ¶ 23.)

146. As a result of the alleged misrepresentation, the counterclaim avers that

the customer signed a renewal with McGriff. (Counterclm. ¶¶21-22.) Hudson further

alleges that but for this interference, “Vector, among others, would have sent business

to Hudson and/or contracted with Hudson Consulting for procurement of employee

benefit insurance products. (Counterclm. ¶ 33.)

147. Hudson argues that Sanders has misrepresented the truth because there is

no legal restraint on Hudson’s ability to provide service to customers, including

Vector, provided the customers proactively contact Hudson on their own accord.

(Counterclm. ¶¶ 23, 29).

148. The Court first observes that the language of the non-solicitation provision

is not limited to which party to the prospective contract makes the first contact.

Regardless of who initiates the communication, Hudson may not “[s]olicit, contact,

divert, or call upon with the intent of doing business with, any ‘BB&T Insurance

Customer’ . . . if the purpose of the activity is to solicit the BB&T Insurance Customer

for a Competitive Business.” (Employment Agreement ¶ 8(a)(iii).) In particular, use
of the word “divert” in this context conveys an intention for the provision to prevent

Hudson from being more than just the instigator. 12

149. However, the question here is whether Sanders’ statement was protected

by the competitor privilege. Consequently, survival of this claim depends on whether

the customer non-solicitation provision in Hudson’s Employment Agreement is, in

fact, enforceable. If it is, then Sanders’ decision to inform Vector of the existence of

the obligation was a legal means of competition. If it is not, then Sanders’ decision to

communicate that Hudson was contractually prevented from handling the account is

not true, and Sanders’ tactic is not a legal means of competition. As discussed above,

a determination regarding enforceability awaits the development of a fuller record to

determine the parties’ intentions with respect to the definition of “BB&T Insurance

Customer.” For now, however, the claim survives. 13

150. Therefore, the Court DENIES Plaintiff’s Motion to Dismiss Defendants’

Tortious Interference with Prospective Economic Advantage counterclaim.

12 For the same reason, the Court is not convinced that referring to the provision in question

as a “non-compete” as opposed to a “non-solicitation” provision—if, in fact, that’s what
Sanders did—changes anything. Regardless of its use of the verb “solicit” among others, the
provision is a species of noncompetition clause.

13 Furthermore, as was the case with McGriff’s interference with prospective contractual

relationships claim, Hudson’s allegations, while bare-bones, get him past a motion
challenging the sufficiency of his pleading. However, as the case progresses, more will be
required to prove that the claim is not speculative.
B. Violation of North Carolina’s Unfair and Deceptive Trade
Practices Act

151. Lastly, the Court addresses McGriff’s motion to dismiss Hudson’s

counterclaim asserting an alleged violation of North Carolina’s Unfair and Deceptive

Trade Practices Act. Because the Court has determined that Hudson’s intentional

interference claim survives, so too does his claim for violation of the UDTPA based

on the same allegations. 14 See, e.g., United Labs., Inc., 322 N.C. at 665 (holding that

the UDTPA may apply to “tortious interference with contract situations”).

152. Accordingly, the Court DENIES Plaintiff’s Motion to Dismiss Hudson’s

UDTPA counterclaim.

IV. CONCLUSION

153. For the foregoing reasons, the Court hereby GRANTS in part and

DENIES in part Plaintiff’s Motion for Leave to Amend Complaint as stated herein,

DENIES both Defendants’ Motions to Dismiss, and DENIES Plaintiff/Counter-

Defendant’s Motion to Dismiss Counterclaims.

14
Given the Court’s ruling, the Court does not address Hudson’s argument that regardless of
whether he states a claim for interference with prospective economic advantage, the alleged
purposeful misrepresentations regarding his contractual commitments to McGriff are a
sufficient basis for this claim. However, as this Court has stated: “Although certain causes
of action, standing alone, may evoke the action, a claim for unfair and deceptive trade
practices pursuant to N.C.G.S. § 75-1.1 is an independent claim that stands alone as a
distinct action. Therefore, so long as the complaint includes sufficient factual allegations of
potentially unfair or deceptive conduct, the claimant may still maintain a UDTP claim,
notwithstanding the dismissal of breach of contract or tort causes of action based on the same
conduct.” Charah, LLC v. Sequoia Servs., LLC, 2020 NCBC LEXIS 52, at *19-20 (N.C. Super.
Ct. April 17, 2020) (cleaned up).
154. McGriff is directed to file its Amended Complaint, consistent with the

Court’s rulings herein, within seven (7) days.

This the 17th day of January, 2023.

/s/ Julianna Theall Earp
Julianna Theall Earp
Special Superior Court Judge
for Complex Business Cases