Defining “Marketing” in Connecticut Non-Compete Agreements

Express Scripts, Inc. v. Sirowich, 2002 Conn. Super. LEXIS 3444
Case Background

Ms. Patricia Sirowich worked as a broker at Express Scripts, Inc. (ESI) offering pharmacy benefit management products and services to employers, unions, and third-party administrators.  ESI had Ms. Sirowich sign a contract in connection with her employment with the company wherein she agreed to a restrictive covenant.  The March 1, 1990 document contained a non-compete agreement that prohibited her from marketing services similar to ESI’s for a competitor for two years to any ESI client in New England (defined as Maine, Vermont, New Hampshire, New York, Connecticut, Massachusetts, and Rhode Island).

Ms. Sirowich voluntarily terminated her employment with ESI on December 31, 2000 and started her own company, Pharmacy Benefit Intermediary (PBIrx).  In response to her actions at her new company, ESI alleged that Ms. Sirowich “marketed competitive products and services to its clients in violation of the parties’ non-competition agreement”.  In particular, ESI alleged that Ms. Sirowich marketed products to Diversified Group Brokerage and Group insurance, two of its clients.

The Court’s Decision

ESI sued Ms. Sirowich for breach of the non-compete agreement and sought to enjoin further violations through December 31, 2002.  Ms. Sirowich claimed that she had not violated the covenant because her activities were not marketing, but merely introducing clients to National Medical Health Card (NMHC), a direct competitor of ESI.  She claimed that she did not do any presentation or consummate the sale between the parties.  The court however rejected Ms. Sirowich’s defenses and held that she had indeed violated the covenant by marketing similar products as ESI, triggering the lawful enforcement of the agreement.

“Marketing”, according to the court, included not only the actual sale of products/services but also any efforts to promote and effectuate a sale of products/services.  Facilitating a deal through arranging a meeting between prospective parties amounted to “marketing” as prohibited in the non-compete agreement.  The court held that “the entire thrust of the defendant’s [Sirowich’s] efforts was the replacement of pharmacy benefit management services and products of the plaintiff [ESI] with those of its competitor [NMHC]”.

The general purpose of a non-compete agreement is to prevent former employees from using privileged information and favored relationships with clients acquired during their time as an employee of the company to the disadvantage of the company upon termination.  This case is a prime example of legitimate reasons for the enforcement of the agreement in order to safeguard the operations of the employer from the detrimental actions of a former employee.

 

If you have any questions relating to your non-compete agreement or would to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.