In 2006, Capital One Financial Corp acquired North Fork Bank for $13 billion. Pursuant to the acquisition, Capital One signed North Fork’s founder and CEO, John Kanas, and Vice Chairman John Bohlsen to employment agreements as senior executives. These agreements prohibited Mr. Kanas and Mr. Bohlsen from competing with Capital One for 5 years following their departure from the firm. After two years, Mr. Kanas and Mr. Bohlsen negotiated exits from Capital One whereby vesting on $40.9 million in restricted share grants were accelerated and the non-compete clauses revised with the terms set to expire in August 2012. Capital One sued Mr. Kanas and Mr. Bohlsen, alleging that prior to the expiration of the non-compete clauses, Defendants violated the agreements by acquiring BankUnited, Inc, making plans to expand BankUnited’s presence in the New York/New Jersey/Connecticut area, and competing directly with Capital One for customers and business including direct solicitation of former North Fork employees and customers who had remained with Capital One.
Compass Lexecon’s President, Professor Daniel R. Fischel submitted two reports and testified at deposition in support of Capital One. Professor Fischel testified on the harm to Capital One from business lost to BankUnited as well as potential additional business that would be lost absent an injunction holding Defendants to the terms of their non-compete agreements.
On June 19, 2012, Crain’s New York stated that “Capital One announced that Mr. Kanas and Mr. Bohlsen had waved the white flag,” and agreed to a settlement agreement. Pursuant to the settlement, Defendants agreed to pay $20 million in cash and agreed to abide by the terms of the non-competition agreements until January 31, 2013.
Compass Lexecon was retained by Orin Snyder and Howard Hogan of Gibson, Dunn, and Crutcher LLP and Professor Fischel was supported by Rahul Sekhar and Robin Stahl in our Chicago office.