Fired employee must comply with earlier agreement

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Reprints

Travelex

An employee fired for refusing to sign a new noncompete agreement can be sued for failing to comply with an earlier agreement, which was still in force, said a federal appeals court Monday in overturning a lower court ruling.

Lynn Barty, who began work as a regional account manager for Travelex Insurance Services Inc., an Omaha, Nebraska-based travel insurance services distribution firm, in 2008, allegedly signed a confidentiality and nonsolicitation agreement at the time, according to Monday’s ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in Travelex Insurance Services Inc. v. Lynn Barty.

In 2016, Travelex was acquired by the Sydney, Australia-based Cover-More Group and Ms. Barty was asked to sign a new confidentiality and nonsolicitation agreement as a condition of continued employment. She refused, and was terminated.

She then began working for a Travelex competitor and allegedly engaged in conduct that violated the 2008 agreement, according to the ruling.

Travelex filed suit in U.S. District Court in Omaha against Ms. Barty, which ruled in her favor, stating the 2008 agreement was nullified because it “lacked mutuality of obligation” once Travelex terminated Ms. Barty for refusing to sign the new nonsolicitation agreement.

The ruling was overturned by a three-judge appeals court panel. “We disagree that the Cover-More acquisition and the demand that Barty sign a new agreement in 2016 nullified the 2008 agreement,” the ruling said.

“The parties did not reach a new agreement in 2016, so there was no new contract that could have superseded a former agreement. That Travelex terminated Barty when she decided not to sign a new non-solicitation agreement did not eliminate the ‘mutuality of obligation’ on which the 2008 agreement rested,” the ruling said, in reversing the lower court’s decision and remanding the case for further proceedings.

Attorneys in the case had no comment or could not be reached.

In June, a Pennsylvania state court awarded USI Insurance Services LLC $1.1 million in litigation over a former employee’s alleged failure to honor his noncompete agreement, in a ruling that focused on the broker’s handwriting.