The Variable Annuity Life Insurance Company (Valic) v. Laeng

Filing 37

ORDER: United States Magistrate Judge Mark A. Pizzo's Report and Recommendation 28 is ACCEPTED and ADOPTED to the extent that it finds VALIC has failed to demonstrate a substantial likelihood of success on the merits. Plaintiff's Motion for Preliminary Injunction 5 is DENIED. Signed by Judge Virginia M. Hernandez Covington on 2/11/2013. (CH)

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UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION THE VARIABLE ANNUITY LIFE INSURANCE COMPANY (VALIC), Plaintiff, v. Case No. 8:12-cv-2280-T-33MAP FAWN LAENG, Defendant. _______________________________/ ORDER This January cause 2, comes 2013, before Report and the Court pursuant Recommendation of to the Mark A. Pizzo, United States Magistrate Judge (Doc. # 28), in which Judge Pizzo recommends that Plaintiff VALIC’s Motion for Preliminary Injunction (Doc. # 5) be denied. On January 16, 2013, Defendant Fawn Laeng filed an objection to the Report and Recommendation. (Doc. # 30). VALIC filed an objection to the Report and Recommendation on January 17, 2013. (Doc. # 31). Each party filed a response to the opposing party’s objection (Doc. ## 35, 36) on January 30, 2013. reasons that follow, After due consideration, and for the the Court adopts Recommendation as articulated herein. the Report and I. Background VALIC is a Texas corporation that markets financial services to tax exempt organizations. 8). (Doc. # 1 at ¶¶ 1, Laeng is a former employee of VALIC. Id. at ¶ 2. As a condition of employment with VALIC, Laeng was required to execute a “Registered Representative Agreement” with VALIC Financial Advisors (VFA). Id. at ¶ 25. Pursuant to the Agreement, “[i]n consideration of [Laeng’s] access to VALIC trade secrets, proprietary and confidential information such as the customer base developed by VALIC and the other benefits and opportunities provided to her by VALIC, [Laeng] promised that she would not disclose trade secrets [or confidential and proprietary information] during the term of the termination.” agreement or at any time after its Id. at ¶¶ 28-29. Additionally, Laeng “agreed to a non-solicitation provision, promising for one year after leaving employment not to solicit business from VALIC customers who were within [Laeng’s] assigned territories and assigned to her during the one year preceding her departure[.]” 31. Id. at ¶ Importantly, this provision does not prohibit Laeng from competing with VALIC upon departure; VALIC describes the non-solicitation provision as “very reasonable” in that 2 it permits Laeng “to work for a VALIC competitor [and sell] competing products in the same region she worked before her resignation.” (Doc. # 5 at 2). Laeng left VALIC on July 11, 2012, and began working at LPL Financial, one of VALIC’s local competitors, the next day. (Doc. # 1 at ¶ 2). VALIC alleges that Laeng is “soliciting and attempting to solicit VALIC’s clients, and otherwise improperly competing against VALIC in violation of the restrictive agreement.” Id. covenants in [Laeng’s] employment VALIC further claims that Laeng’s actions “have resulted in more than $629,113.32 being removed from the VALIC accounts of her former clients accounts brokered by LPL Financial . . . .” and moved to Id. at ¶ 6. On October 5, 2012, VALIC filed the instant action against Laeng. Id. at 1. Also on October 5, 2012, VALIC filed a Motion for Preliminary Injunction, which this Court referred to Judge Pizzo for the issuance of a Report and Recommendation. (Doc. ## 5, 7). VALIC’s for Motion Preliminary Among other requests, Injunction sought the Court’s issuance of an order enjoining Laeng from “directly or indirectly proprietary disseminating information [and VALIC’s trade confidential secrets],” and and also prohibiting Laeng from “attempting to induce any Protected 3 Customer to end or alter his or [her] relationship with VALIC . . . for a period of one year[.]” (Doc. # 5 at 15- 16). Judge Pizzo held a hearing on the Preliminary Injunction on November 16, 2012. Motion for (Doc. # 24). On January 2, 2013, after examining the evidence against the touchstone of Rule 65 of the Federal Rules of Civil Procedure, Judge Pizzo entered a detailed Report and Recommendation (Doc. # 28), finding that the Motion for Preliminary Injunction should be denied. II. Legal Standard After conducting a careful and complete review of the findings and recommendations, a district judge may accept, reject or modify recommendation. 28 the magistrate U.S.C. § judge’s 636(b)(1); report and Williams v. Wainwright, 681 F.2d 732 (11th Cir. 1982), cert. denied, 459 U.S. 1112 (1983). In the absence of specific objections, there is no requirement that a district judge review factual findings de novo, Garvey v. Vaughn, 993 F.2d 776, 779 n.9 (11th Cir. 1993), and the court may accept, reject or modify, in whole or in part, the findings and recommendations. judge reviews 28 U.S.C. § 636(b)(1)(C). legal conclusions 4 de novo, The district even in the absence of an objection. See Cooper-Houston v. S. Ry. Co., 37 F.3d 603, 604 (11th Cir. 1994); Castro Bobadilla v. Reno, 826 F. Supp. 1428, 1431-32 (S.D. Fla. 1993), aff’d, 28 F.3d 116 (11th Cir. 1994) (Table). III. Analysis As explained in the Report and Recommendation of Judge Pizzo, The decision to grant or deny a preliminary injunction is within the discretion of the district court. Carillon Importers, Ltd. v. Frank Pesce Int’l Group Ltd., 112 F.3d 1125, 1126 (11th Cir. 1997). . . . In determining whether a preliminary injunction should issue, the district court considers whether the moving party has demonstrated (1) a substantial likelihood of success on the merits; (2) irreparable harm to the moving party unless the injunction issues; (3) the threatened injury to the movant outweighs the potential harm the proposed injunction may cause the opposing party; and (4) if issued, the injunction would not disserve or be adverse to the public interest. MacGinnitie v. Hobbs Group, LLC, 420 F.3d 1234, 1240 (11th Cir. 2005). Since a preliminary injunction is an extraordinary and drastic remedy, a district court should not issue a preliminary injunction unless the movant clearly establishes the burden of persuasion as to each of the four prerequisites. Four Seasons Hotels and Resorts, B.V. v. Consorcio Barr, S.A., 320 F.3d 1205, 1210 (11th Cir. 2003). (Doc. # 28 at 4-5). demonstrate merits of a its Judge Pizzo found that VALIC failed to substantial claims likelihood against 5 Laeng, of success and thus on the that a preliminary injunction should not issue. This Court agrees. In VALIC’s objections to Judge Pizzo’s Report and Recommendation, VALIC argues (1) that Laeng “‘scrubbed’ the VALIC laptop she used by ‘deliberate, sophisticated destroy data,’” the having and and that someone time-intensive this “data, employ a process to were it not completely eliminated, could have been used by VALIC to uncover any Laeng;” (2) trade that, secret “in the copying days or before dissemination her by resignation, Laeng . . . set[ ] an appointment with her then-current VALIC customer to be held the afternoon after her morning resignation;” (3) that VALIC presented “evidence of written solicitations [Laeng];” and to (4) VALIC that customers “VALIC formerly demonstrated assigned that to Laeng facilitated the transfer of hundreds of thousands . . . in funds from . . . protected VALIC clients in the months after her resignation.” (Doc. # 31 at 1-2). The Court will address each of these arguments in turn. VALIC alleges that Laeng “concealed any trade secret violations” by scrubbing her laptop. Id. at 9. This Court agrees with Judge Pizzo’s finding that VALIC has produced “no evidence [that Laeng] removed VALIC’s trade secrets.” 6 (Doc. # 28 at 11). Laeng acknowledges in her declaration that she “wiped [her VALIC laptop] to prevent VALIC[’s] dissemination of personal information.” 10). (Doc. # 14-1 at VALIC argues that the circumstances surrounding the scrubbing of Laeng’s computer make Laeng’s justifications for doing so “demonstrably implausible.” 10). Nonetheless, insufficient to VALIC’s establish that (Doc. # 31 at suspicions Laeng alone are the trade violated secrets provision of the Agreement. VALIC additionally argues that Laeng’s “mass-mailing” of a certain letter to former VALIC clients soon after Laeng’s resignation “would [have been] extremely difficult, if not impossible, to accomplish without retaining VALIC’s customer information.” 23). (Doc. # 31 at 13; Doc. # 5-2 at ¶ Laeng argues, however, that “the names of and contact information within each for assigned group were currently not unique enrolled to participants VALIC,” and that “lists of employees or eligible participants in both the Pasco County School District and Hillsborough County School District are publicly available upon request.” 1 at ¶¶ 39, 42). Accordingly, Laeng has (Doc. # 14introduced evidence that the mass-mailing was achievable without the use of VALIC’s customer information, 7 whereas VALIC has merely suggested difficult” that without such that a task “would information. be extremely Again, VALIC’s suspicions fail to establish that Laeng has violated the Agreement’s trade secrets provision. VALIC’s claims involving Laeng’s alleged violation of the restrictive covenant on non-solicitation are similarly devoid of evidentiary support. Contrary to VALIC’s allegation that Laeng “set an appointment with her thencurrent VALIC customer to be held the afternoon after her morning resignation,” the relevant email communication between Laeng and her former customer, “Richard,” reveals no solicitation by Laeng whatsoever (Doc. # 5-2 at 26-27). Furthermore, the letter that Laeng admittedly sent to an elementary school principal “was not intended for general distribution,” and VALIC presented no evidence to show that the principal was Laeng’s former customer (Doc. # 35 at 5; Doc. # several 28 at 12); accounts of and, although Laeng’s former VALIC has customers shown that have been transferred from VALIC to Laeng’s new company since Laeng’s resignation, VALIC has presented no evidence to show that these transfers resulted from any improper solicitation by Laeng (Doc. # 5-2 at ¶ 26; Doc. # 31 at 14-15). thus joins in Judge Pizzo’s 8 well-reasoned The Court determination that the record evidence does not support a finding that Laeng breached the Agreement’s non-solicitation provision. VALIC complains that its “ability to counter Laeng’s implausible excuses was hampered by . . . the Magistrate’s decision to conduct the preliminary injunction proceeding without a full evidentiary hearing, which permitted VALIC to cross-examine Laeng.” Notably, the record lacks any would have (Doc. # 31 at 2). indication that VALIC requested a full evidentiary hearing prior to the November 16, 2012, hearing on VALIC’s Motion for Preliminary Injunction. However, even if VALIC had requested a full evidentiary hearing, the Eleventh Circuit has established that “[a]n evidentiary hearing is not always before issuance of a preliminary injunction.” required All Care Nursing Svc., Inc. v. Bethesda Mem’l Hosp., Inc., 887 F.2d 1535, 1538 (11th Cir. 1989). The instant case does not constitute one similar to All Care Nursing, for example, in which the Eleventh Circuit determined that “in recognition of the complexity of the facts and the number of parties before the court . . . , ‘[a] two-day notice, coupled with thirty minutes for oral presentations[,] can hardly be said to constitute a meaningful opportunity to oppose appellees’ 9 motion for preliminary injunction.’” McDonald’s Corp. v. Robertson, 147 F.3d 1301, 1312 (11th Cir. 1998) (quoting All Care Nursing, 887 F.2d at 1538). does not claim that this Additionally, VALIC injunction “turns on the resolution of bitterly disputed facts,” id. at 1311, in which case an evidentiary hearing might be necessary, but instead apparently blames the lack of an evidentiary hearing for VALIC’s own shortage of evidence to prove its claims against Laeng. The Eleventh Circuit has noted that, in “the category of cases where there is little dispute as to raw facts but much as to the inferences to be drawn from them . . . [,] the First Circuit has adopted an approach . . . that ‘leaves the balancing between speed and practicality versus accuracy and fairness district court.’” to the sound discretion of the Id. at 1313 (quoting Jackson v. Fair, 846 F.2d 811, 819 (1st Cir. 1988)); see also Cumulus Media, Inc. v. Clear Channel Comm., Inc., 304 F.3d 1167, 1178 (11th Cir. 2002) (applying the Jackson approach). case, Laeng does not dispute, for instance, In this that she scrubbed her laptop or that certain former clients have transferred their accounts to LPL Financial; rather, Laeng disputes that either of these facts indicates a breach of 10 the trade secret or non-solicitation provisions of the Agreement. The Court acknowledges that “VALIC’s injunction seeks only the requirement that Laeng abide by her contractual promises with VALIC.” (Doc. # 31 at 3). However, this fact does not excuse VALIC’s burden of persuasion as to the four prerequisites injunction. for issuance of a preliminary Because the Court finds that VALIC has failed to demonstrate a substantial likelihood of success on the merits, the Court need not determine whether established the remaining three prerequisites. VALIC The Court additionally need not address the issues raised in Laeng’s objection to concerns are Preliminary the Report immaterial Injunction establish a merits. The in substantial Court and to Recommendation, resolving light of of denies those Motion for inability VALIC’s likelihood accordingly the as to success the on the Motion for Preliminary Injunction. Accordingly, it is ORDERED, ADJUDGED, and DECREED: (1) United States Magistrate Judge Mark A. Pizzo’s Report and Recommendation (Doc. # 28) is ACCEPTED and ADOPTED to the extent that it finds VALIC has failed 11 to demonstrate a substantial likelihood of success on the merits. (2) Plaintiff’s Motion for Preliminary Injunction (Doc. # 5) is DENIED. DONE and ORDERED in Chambers in Tampa, Florida, this 11th day of February, 2013. Copies: All Counsel of Record 12

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