Encore Bank of Little Rock agreed last week to pay Simmons Bank $3.6 million to settle a lawsuit over allegations that Simmons’ former employees took customer and proprietary bank information when they left to work for Encore.
Encore “is glad to get the distraction of litigation behind us,” Encore’s attorney Pat James of James House Swann & Downing of Little Rock told Arkansas Business. “Encore has been growing and doing well even through the distraction of this litigation.”
In November 2020, Simmons and its parent company, Simmons First National Corp. of Pine Bluff, sued Encore, several of its executives and former employees, saying Encore had improperly lured them away starting in 2019. The 64-page complaint filed in Jefferson County Circuit Court named about a dozen Encore officers as defendants, including Chris Roberts, chairman and CEO; Burt Hicks, senior executive vice president and COO; and Phillip Jett, vice chairman and president. Unlike Roberts and Hicks, Jett never worked for Simmons.
Encore Bank denies any wrongdoing, James said.
Simmons’ attorneys, James Gary and Teresa Wineland of the Little Rock office of Kutak Rock LLP, didn’t immediately return a call for comment Tuesday.
The Encore officers who were named as defendants are glad the case is over, said their attorney, Baxter D. Drennon of Hall Booth Smith of Little Rock.
“They’re happy … that Encore was willing to settle the case so that everybody can look to the future and continue building Encore Bank,” Drennon told Arkansas Business.
The settlement also calls for some of Encore’s employees to dismiss their lawsuits against Simmons, according to a "confidential email" Roberts, Hicks and Jett sent to shareholders. Arkansas Business obtained a copy of the email.
“Because of Simmons’ allegations against Encore and its employees, it was a difficult decision to stop fighting and simply settle,” the email said. But after consulting with the bank's board and attorneys, “it was clear that settling now with favorable terms offered by Simmons was the right thing to do from a cost perspective, in terms of both actual dollars and lost productivity.”
The email also said that most of the settlement will be paid by Encore’s insurance carrier.
Encore also said it didn’t have a problem agreeing to the other terms of the settlement, which involve the procedure for hiring employees with non-solicitation agreements.
“Over the course of the past year, it has implemented certain employment policies and protections related to new hires that have employment agreements with their prior employers,” Encore said.
Encore also was under an injunction that prevented it from soliciting Simmons’ employees and certain Simmons’ customers. The injunction would continue for another year under the settlement agreement.
“Encore has done business under the injunction for nearly a year and had unimaginable success during that time,” the letter to shareholders said. “In addition, we considered this a win for Encore because the 365-day duration is actually a shorter period of time than it would have been in place if the case went to trial, which wasn’t scheduled until early 2023.”
While the lawsuit was pending, Encore said it has expanded into seven markets and grown its total assets by more than $750 million. Encore's total assets were nearly $1.2 billion as of Sept. 30.
“We have also continued to add highly talented associates in key positions,” it said. “Now, with the settlement of this lawsuit, we look forward to even greater successes.”