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Farmers Group6/29/2001
Appeal from Johnson District Court; JANICE D. RUSSELL, judge.
Affirmed.
This case arises out of a dispute between Terry Lee and his former employer, Farmers Group, Inc., and its related entities (Farmers). It requires us to decide whether Kansas public policy permits an employer to buy a former employee's silence about non-confidential matters and thus prevent the employee from testifying on behalf of or otherwise assisting third parties who bring claims against the employer.
Lee worked for Farmers as a branch claims manager and a regional liability claims manager. At the time Lee left the company in spring 1994, he dismissed a charge against Farmers pending before the Equal Employment Opportunity Commission and signed a severance agreement in exchange for a payment in excess of $100,000. In the severance agreement, Lee agreed not to participate voluntarily in litigation against Farmers and to notify it immediately if anyone attempted to compel his testimony in any litigation "regarding Farmers' business and employment practices."
The severance agreement also contained confidentiality clauses and a liquidated damages provision, and it required Lee to share and review information or participate in litigation on Farmers' behalf. It stated in pertinent part:
"10. Lee agrees that he will not disclose and will do everything possible to maintain in confidence a) the terms of this Agreement and b) the facts and circumstances of any alleged discrimination, defamation, harassment, breach of contract, tort or violation of any law by Farmers against Lee or any agent or employee of Farmers.
"12. If Lee breaches any or all of the terms of [the confidentiality clause in Paragraph 10 or the litigation provision in Paragraph 11] of this Agreement, Lee shall not receive any monies which have not been paid to him under this Agreement. If all monies due under this Agreement have been paid to Lee, Lee shall pay Farmers $20,000. Lee agrees that the $20,000 is fair and reasonable in light of the nature and extent of the damages to Farmers['] business and reputation in the event of a breach and in light of the time, expense and difficulty involved in proving the damages.
"13. Lee agrees that he shall not disclose or utilize any trade secrets, confidential information, or other proprietary information acquired during the course of his employment with Farmers, including without limitation, internal Farmers financial information, operational procedures, or business plans. . . . Lee agrees that, upon Farmers' request, he will cooperate with Farmers in providing information regarding Farmers' business and employment activities in which he was involved; if requested in writing by Farmers, Lee's cooperation will include, without limitation, meetings, review of records and preparation for and presentation of testimony."
When Lee began voluntarily participating in litigation against Farmers a few months later, Farmers filed this action. Lee participated in the ensuing proceedings only haphazardly, and Farmers obtained a permanent injunction at an ex parte nonevidentiary hearing. The injunction provided in pertinent part:
"Defendant and all those persons acting in concert with him are permanently enjoined from committing or attempting to commit the following acts:
"A. participating or assisting in the prosecution of any claims against Farmers . . . .
"B. disclosing or utilizing any trade secrets, confidential information, or other proprietary information acquired during the course of his employment with Farmers Insurance Exchange, including internal financial information, operational procedures, o
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