After Aspen Insurance lured away nine top Liberty Mutual employees last month, Liberty Mutual is hitting back, throwing out accusations of conspiracy and theft of trade secrets.

Now it’s up to a court to decide whether Liberty’s allegations are justified, or whether this is just a case of nasty, but perfectly legal, poaching.

The exodus of those employees was enough to seriously harm Liberty Mutual’s lucrative professional liability business, according to court documents. As a result, the company wants its former workers to be barred from doing their jobs at any competing insurer for a full year.

The stakes are high for both companies, according to the complaint, filed in the New York State Supreme Court. The employees came from a highly specialized department built up for nearly a decade at much effort and expense, Liberty Mutual said.

But in one fell swoop, Aspen nabbed top employees – and with them, apparently vital trade secrets and customer contacts. In doing so, Aspen lured away much of what Liberty Mutual had already built.

“This must have really decimated the business,” said Scott Birnbaum, partner with Boston business litigation law firm Birnbaum & Godkin. “[The court filing] is really kind of a public acknowledgement of the harm that was done to them.”

In that filing, Liberty Mutual accuses former employees of conspiring with each other to leave en masse, as well as ferrying away company documents before they resigned.

Even without stealing documents, the mere act of leaving their jobs for similar positions at a competitor will have done major damage, Liberty Mutual said.

“[Liberty Mutual is saying] there’s no way [the employees] could work in a competitive job without invariably or inevitably using or disclosing [its] secrets,” Birnbaum said. “That is really a back-door way to a non-competition clause.”

Inconvenient, Or Illegal?

Many companies lock in valuable employees with a non-compete clause to keep them from taking valuable information and client contacts away, he said. But given the fact a non-compete clause is never mentioned in filings, it seems clear there wasn’t one in place.

Instead, Liberty Mutual is claiming that the employees breached their fiduciary duty by competing with their employer while still employed there.

There’s a fine line between innocuously preparing to take another job, and illegally conspiring against one’s employer, said Jonathan Friedmann, partner of Boston-based litigation firm Rudolph Friedmann.

Employees have a right to leave their employer, he said. And, “when you leave, you can’t just abandon what you learned. … But if there is proprietary information that the company has sought to safekeep, that’s something the court has to protect.”

Liberty Mutual implied the nine employees in question conspired before resigning. The company says Bruce Eisler, the apparent ringleader of the departed employees, obtained coworkers’ private e-mail addresses to have off-site conversations, and convinced them to depart together.

The court documents note that Eisler submitted resignations for five other employees, along with his own. Several days later, three more people from the same department resigned.

Companies do sometimes aggressively recruit several people at once, Birnbaum said, but in general, a current employee can’t solicit fellow employees to leave, and he or she can’t start trying to take away customers before departing their current company.

The court filing claims that some of the employees sent confidential Liberty information to their private e-mail accounts shortly before the mass exodus, including “information relating to a highly valuable insurance program” and a spreadsheet relating to rating professional liability insurance for lawyers.

Much depends on how specific the allegedly stolen information is, Friedmann said. Although the court filing emphasizes that professional liability insurers have their own individualized, valuable trade secrets, Friedmann said these materials could be formulaic and standardized enough to be harmless.

The American Way

Representatives for both Liberty and Aspen declined to comment on the case, but Liberty’s filings strongly accuse its rival of dirty tricks.

“It is highly unlikely that Aspen would have attempted such a mass hiring – greatly adding to its overhead – unless it knew it could quickly enter the professional liability business in the United States using a large part of the core of Liberty’s team and Liberty’s trade secrets,” according to the filings.

But the lawsuit might be as much a public relations move as a legal action, Birnbaum said. Although Liberty Mutual confesses to being hard-hit, it also plants doubts in potential Aspen professional liability customers. Those prospects might hesitate to work with a company that has legal troubles – especially when those legal troubles might leave its employees out of commission for a full 12 months.

Birnbaum said he couldn’t speculate as to which way the New York court would go with the case, but that this type of lawsuit isn’t uncommon.

“Groups of people are disenchanted, and they leave, and join a competitor,” he said. “On some level, this is the American way.”