Patricia Adkins Insurance Agency v. State Farm Mutual Automobile Insurance

In this appeal we conclude that a collection of State Farm insurance companies (State Farm) breached an agreement with their independent contractor agents (the Agents) by imposing trade secret and noncompetition restrictions on certain employees of the Agents. Consequently, we reverse the judgment in which the trial court refused to grant the Agents declaratory and injunctive relief in these respects, and we direct that such relief be granted.

Background

State Farm solicits and services its products through a nationwide network of agents, including the 17 Agents who comprise the appellants here.

State Farm and the Agents operate pursuant to similar AA3 or AA4 forms of a “State Farm Agent’s Agreement” (collectively AA3-4). Under the AA3-4, State Farm agents are “independent contractors] for all purposes. As such [they] have full control of [their] daily activities, with the right to exercise independent judgment as to time, place, and manner of soliciting insurance, servicing policyholders, and otherwise carrying out the provisions of’ the AA3-4.

Pursuant to section I(L) of the AA3-4, State Farm retains the right to prescribe “all policy forms and provisions; premiums,…