Allegis Group Loses Appeals in Jobot Proxy War

Final victory for Allegis Group employees who moved to Jobot

A long-running proxy war between Allegis Group and Jobot has ended with appellate court victories for two former Allegis employees. The lesson here is that employers should consider the potential downside before taking non-compete/trade secret matters into court.

In Allegis Group, Inc. v. Bero, the federal Fourth Circuit Court of Appeals in Maryland affirmed the District Court’s summary judgment in favor of Christopher J. Bero, a former employee of Allegis Group subsidiary Aston Carter. The case centered on allegations that Bero violated the restrictions in his employment agreement after leaving Aston Carter to join Jobot.

In Aerotek and Allegis Group v. Nosky, the Fourth Circuit upheld the District Court's decision to grant summary judgment in favor of Nosky, a former Aerotek employee accused of breaching his duty of loyalty and violating provisions of his employment agreement.

Copies of both appellate opinions are attached below.

The Bero case

Here is SLN's 2023 summary of Bero's District Court win:

In a recent ruling on dueling motions for summary judgement in the Bero case, Judge Ellen L. Hollander of the United States District Court for the District of Maryland ruled that both the non-solicitation and confidential information restrictions in the Aston Carter employment agreement are unenforceable as written. This is a total victory for Beros. Allegis and Aston Carter have appealed, and it will take up to a year for the Fourth Circuit Court of Appeals to issue a ruling.

Judge Hollander's order is a strategic disaster for Allegis and Aston Carter. The invalidated contract provisions are similar to the terms utilized by other Allegis divisions. Unless overturned on appeal, the ruling can be cited as precedent in future restrictive covenant cases involving Allegis and subsidiaries.

On appeal, the Fourth Circuit found in Bero's favor on every issue:

1. Non-Solicitation Covenant: Allegis argued that Bero violated the non-solicitation provision by contacting two clients after joining Jobot. However, the court found that Bero’s actions did not relate to the business areas he serviced while at Aston Carter. 
2. Nondisclosure Covenant: Allegis claimed Bero violated the nondisclosure provision by forwarding confidential information to his personal email. The court ruled that the covenant prohibited disclosure of confidential information to third parties, not to oneself. Allegis failed to provide evidence that Bero disclosed any confidential information to others or used it in a manner that violated the agreement.
3. Return and Preservation of Records: Allegis alleged that Bero breached the agreement by failing to return emails he had forwarded to his personal account. The court found that while the agreement explicitly required the preservation of emails, it did not specify that emails must be returned upon termination. Construing ambiguities against Allegis, who drafted the agreement, the court held that Bero was not obligated to return the emails.

The Noski case

In June 2022, Allegis Group and its subsidiary Aerotek sued Kenneth D. Nosky, described in the Complaint as a "high-performing employee of Aerotek in an Account Manager position in Aerotek’s Edison, New Jersey, office location until his resignation on September 3, 2021 to work for Jobot." The Complaint went on to allege, "Allegis and Aerotek bring this action seeking legal relief based on Nosky’s misappropriation of Aerotek’s confidential information and his failure to return such information—Aerotek’s property—upon his departure from Aerotek to work for a competitor called Jobot, LLC (“Jobot”)."

Nosky's position, contained in a later filing, was as follows:

This case is about a vindictive former employer trying to punish a former employee and discourage other employees from leaving for opportunities with another company that will treat them better. Defendant Kenneth Nosky does not dispute that he emailed himself various documents on his last day of employment, including some Aerotek-related documents. However, the evidence is undisputed that he deleted all such files 10 days later, without ever having used or disclosed them and without Plaintiffs being damaged.

Plaintiffs readily admit they suffered no damages from any conduct by Nosky. But because Nosky went to Jobot, a newcomer in the staffing industry that has upset Aerotek by hiring Nosky and other employees, Aerotek decided to improperly make a federal case out of it. As their motion makes clear, Plaintiffs’ motivation for filing this action was to force Nosky to remain in a case where they admit he caused them no damages, run up attorneys’ fees, and then manufacture an attorneys’ fees award against Nosky based on being a “prevailing party” for obtaining, at best, nominal damages.... Plaintiffs’ motion for summary judgment should be denied. Instead, summary judgment should be granted in Nosky’s favor to put an end to this waste of judicial resources.

The original Complaint filed by Allegis and Aerotek against Nosky made it clear that the real target of the lawsuit was Jobot, not Noski:

Plaintiffs are informed and believe that Nosky stole Plaintiffs’ confidential information to use or disclose, or intending to use or disclose, it for his benefit and the benefit of Jobot. For its part, Jobot is a growing competitor that has hired in excess of 30 Aerotek’s (or its affiliates) employees, generally providing substantial compensation increases, and shows no signs of curtailing its continued cherry picking of employees from Allegis companies (emphasis added).

As in Bero, the Fourth Circuit found in favor of Nosky on every count:

1. Common Law Duty of Loyalty: Maryland law requires proof of harm to the employer to establish a breach of the duty of loyalty. Aerotek failed to provide evidence that Nosky caused harm, as he did not use, share, or benefit from the confidential documents he emailed to himself. The court also ruled that merely leaving Aerotek to work for a competitor does not constitute harm.
2. Nondisclosure Covenant: The covenant prohibited employees from disclosing confidential information to third parties. Aerotek argued that Nosky violated this provision by forwarding documents to his Gmail account, claiming this constituted disclosure to Google. While noting that "this argument strains credulity," the court rejected it because Aerotek did not raise this claim in its original complaint and was therefore precluded from introducing it during the summary judgment phase.
3. Return and Preservation Provision: This provision required employees to return company records upon termination and prohibited unauthorized deletion or destruction of records. The court found the provision ambiguous regarding whether emails needed to be returned. Since Aerotek did not explicitly require the return of "emails" in the Employment Agreement, the court ruled that Nosky did not breach this provision.

The takeaway

It seems that Allegis, in its enthusiasm to combat perceived raiding of employees by Jobot, overreached by bringing these two weak cases against individual employees. The hallmark of each case is that no actual harm, such as lost clients, actually ensued. Situations like this are often handled out of court by formal or informal agreements between the parties. A lawsuit brings higher stakes for all sides.

Finally, there is a clear trend by courts, regulators, and legislatures to disfavor overbroad or unclear restrictive covenants. It is evident that the District Court and Fourth Circuit judges handling this case were displeased with the attempt to send a message to Jobot by suing individual workers for relatively minor indiscretions.