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)

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