JPMorgan Chase Bank, N.A. et al v. Wirtanen et al

Filing 17

ORDER Mooting Plaintiffs' Motion for Temporary Restraining Order, Granting Motion for Preliminary Injunction and Mooting Motion for Expedited Discovery 2 . Signed by District Judge Denise Page Hood. (LSau)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JPMORGAN CHASE BANK, N.A. and
J.P. MORGAN SECURITIES LLC,
Plaintiffs,
Case No. 15-11929
v.
HONORABLE DENISE PAGE HOOD
DANIEL J. WIRTANEN, JR. and
AIMEE S. O’DONNELL,
Defendants.
_______________________________________/
ORDER MOOTING PLAINTIFFS’
MOTION FOR TEMPORARY RESTRAINING ORDER, GRANTING
MOTION FOR PRELIMINARY INJUNCTION
AND MOOTING MOTION FOR EXPEDITED DISCOVERY
I.

BACKGROUND
This matter is before the Court on a Motion for Temporary Restraining Order,

Preliminary Injunction and an Order Permitting Expedited Discovery filed by
Plaintiffs JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC (collectively,
“Plaintiffs” or “JPMorgan”) filed May 29, 2015. Plaintiffs seek an order to enjoin
Defendants Daniel J. Wirtanen, Jr. (“Wirtanen”) and Aimee S. O’Donnell
(“O’Donnell”) from soliciting JPMorgan’s customers and from using and disclosing
JPMorgan’s trade secrets and confidential and proprietary information, including
customer lists. Plaintiffs claim Defendants have violated their express contractual

obligations to Plaintiffs.
Plaintiffs’ Complaint against Defendants seeks injunctive relief pending
arbitration proceedings before the Financial Industry Regulatory Authority
(“FINRA”). (Comp., ¶ 1) Plaintiffs allege the eight counts: 1) Breach of Contract; 2)
Misappropriation of Trade Secrets; 3) Breach of Fiduciary Duty; 4) Breach of Duty
of Loyalty; 5) Intentional Interference with Actual and Prospective Economic
Advantages; 6) Negligent Interference with Actual and Prospective Economic
Advantages; 7) Conversion; and, 8) Unfair Competition.
Defendants were employed in a JPMorgan Chase bank branch in Grosse Pointe,
Michigan until Defendants voluntarily resigned on May 22, 2015. (Comp., ¶ 2) Later
that day, Defendants became affiliated with Morgan Stanley Smith Barney LLC
(“Morgan Stanley”), in its Grosse Pointe Farms, Michigan office. (Id.) Plaintiffs
allege that prior to their resignation, Defendants informed JPMorgan clients they were
going to Morgan Stanley and that Defendants misappropriated confidential and
proprietary JPMorgan customer contact information. (Comp., ¶ 3) Upon joining their
new firm, Defendants have aggressively solicited JPMorgan clients to transfer their
accounts to Defendants’ new firm, Morgan Stanley. (Comp., ¶¶ 3-4) Plaintiffs assert
that without misappropriating from JPMorgan confidential client contact information,
including cell phone numbers, Defendants would have been unable to engage in such
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improper solicitation. (Comp., ¶ 5) Defendants’ improper solicitation has jeopardized
Plaintiffs’ relationships with its clients, including at least eight JPMorgan clients who
have informed Plaintiffs that they intend to move their accounts (collectively in excess
of $3 million) to Defendants at Morgan Stanley. (Comp., ¶ 6)
On January 24, 2012, Wirtanen entered into a Chase Wealth Management
Supervision, Arbitration, Confidentiality and Non-Solicitation Agreement with
JPMorgan. (Comp., ¶ 22) Wirtanen is required to maintain the confidentiality of
JPMorgan’s confidential customer information and a restrictive covenant prohibiting
him from soliciting JPMorgan clients for a one year period after his employment with
JPMorgan terminates for any reason. (Comp., ¶ 22)
On June 7, 2010, O’Donnell entered into a Chase Investment Services Corp.
Supervision, Arbitration, Confidentiality and Non-Solicitation Agreement with
JPMorgan. (Comp., ¶ 24) O’Donnell is required to maintain the confidentiality of
JPMorgan’s confidential customer information and a restrictive covenant prohibiting
her from soliciting JPMorgan clients for a one year period after employment with
JPMorgan terminates for any reason. (Comp., ¶ 24)
JPMorgan claims it has invested substantial time and money, totaling millions
of dollars, to acquire, develop and maintain its customers over many years. But for
Defendants’ employment with JPMorgan, Defendants would not have had any contact
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with any of the clients the firm assigned to them. (Comp., ¶ 28)
On the same date the Complaint and instant motion were filed, Plaintiffs’
counsel informed the Court that defense counsel representing both Defendants was
notified regarding the filing of the Complaint and the instant motion. Defendants filed
a response to Plaintiffs’ motion on June 1, 2015. The parties agreed to hold a hearing
on June 2, 2015.
II.

ANALYSIS
A.

Standard of Review

The Federal Rules of Civil Procedure provides for preliminary injunctions with
notice under Rule 65(a) and temporary restraining orders without notice under Rule
65(b). Fed. R. Civ. P. 65; Deleon v. Hamilton County Sheriff’s Dep’t, Case No. 1:12CV-68, 2012 WL 3116280 at *13 (E.D. Tenn. Jul 31, 2012); Walnut Private Equity
Fund, L.P. v. Argo Tea, Inc., Case No. 1:11-cv-770, 2011 WL 6013000 at *9 (S.D.
Ohio Dec. 2, 2011) (Because defendants are on notice, the court treats the plaintiff’s
motion as a motion for a preliminary injunction rather than a motion for a temporary
restraining order.). Given that Plaintiffs provided Defendants with notice of the
instant motion and Plaintiffs have filed a response, the Court considers Plaintiffs’
Motion as a Motion for Preliminary Injunction under Rule 65(a) instead of a Motion
for a Temporary Restraining Order under Rule 65(b).
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“The court may issue a preliminary injunction only on notice to the adverse
party.” Fed. R. Civ. P. 65(a)(1). Four factors must be balanced and considered before
the Court may issue a preliminary injunction pursuant to Fed. R. Civ. P. 65(a): 1) the
likelihood of the plaintiff's success on the merits; 2) whether plaintiff will suffer
irreparable injury without the injunction; 3) the harm to others which will occur if the
injunction is granted; and 4) whether the injunction would serve the public interest.
In re Delorean Motor Co., 755 F.2d 1223, 1228 (6th Cir. 1985); In re Eagle-Pitcher
Indus., Inc., 963 F.2d 855, 858 (6th Cir. 1992); and N.A.A.C.P. v. City of Mansfield,
Ohio, 866 F.2d 162, 166 (6th Cir. 1989). The first factor is the most critical inquiry
of the four criteria. Mason Cnty. Med. Ass’n v. Knebel, 563 F.22d 256, 261 (6th Cir.
1977). In making its determination the “district court is required to make specific
findings concerning each of the four factors, unless fewer factors are dispositive of the
issue.” Six Clinics Holding Corp., II v. Cafcomp Sys., Inc., 119 F.3d 393, 399 (6th
Cir. 1997). Courts should consider the merits of a requested preliminary injunction
even where the validity of the underlying claims will be determined in arbitration.
Am. Exp. Fin. Advisors, Inc. v. Thorley, 147 F.3d 229, 231 (2d Cir. 1998); Blumenthal
v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 910 F.2d 1049, 1052-54 (2d Cir. 1990)
(The expectation of speedy arbitration does not absolve the district court of its
responsibility to decide requests for preliminary injunctions on their merits.); Wells
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v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 919 F. Supp. 1047, 1051 (E.D. Ky.
1994).
B.

Plaintiffs’ Likelihood of Success on the Merits

For purposes of this motion, the Court considers the merits under the laws of
New York, in light of the contractual provision that New York law applies. (Doc. No.
5, Pg ID 225, 231, 243) The first claim in this action is a breach of contract claim.
The agreements at issue contain non-solicitation clauses. The agreement signed by
Wirtanen sets forth confidentiality and non-solicitation provisions, as follows:
7.b. In addition to any description contained in the Code of
Conduct, such Confidential Information concerning the
business of JPMC includes, but not limited to:
I. names, addresses and telephone numbers of
clients and prospects ...
* * *
e. . . . If ... you cease to be employed by JPMC for any
reason, ... immediately return to JPMC all documents,
materials or property you were allowed use of, including,
... any information derived from any JPMC source stored
on any personal electronic devices (e.g. PDAs, cell phones,
personal computers), ...
* * *
8.a. . . . [Y]ou understand and agree for a period of twelve
(12) months after your employment with JPMC terminates
for any reason that you may not on your own behalf or that
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of any other persons or entities, directly or indirectly solicit
or attempt to solicit, induce to leave or divert or attempt to
induce to leave or divert from doing business with JPMC,
any then current clients, ... that were serviced by you or
whose names became known to you by virtue of your
employment with JPMC, or otherwise interfere with the
relationship between JPMC and such clients ...”
(Pg ID 224, 229) O’Donnell’s agreement also contained identical confidentiality and
non-solicitation provisions. (Pg ID 241) Courts have held that such confidentiality
and non-solicitation agreements are valid. Wells, 919 F. Supp. at 1051 (collecting
cases) (the court finding that plaintiff demonstrated a reasonable likelihood of success
on the merits and expounding further on the merits of each of the parties’ arguments
would be to engage in the work of the arbitration panel).
New York law provides that an employer retains “a legitimate interest in
preventing former employees from exploiting ... the goodwill of a client or customer,
which had been created and maintained at the employer’s expense, to the employer’s
competitive detriment.” Scott, Strackrow & Co., CPA’s v. Skavina, 9 A.D. 805, 806,
780 N.Y.S.2d 675 (2004). A non-solicitation provision will be rejected as overly
broad, if it seeks to bar the employee from soliciting or providing services to clients
with whom the employee never acquired a relationship through his or her employment
or if the covenant extends to personal clients recruited through the employee’s
independent efforts. Id.
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The declaration of Nichole M. Baaki, Executive Director for Plaintiffs, assert
that Defendants have solicited JPMorgan clients and that clients have informed the
firm that Defendants are aggressively soliciting them to move their accounts to
Morgan Stanley. (Pg ID 191-92) Wirtanen’s affidavit asserts that he did not
“presolicit” any clients to move accounts to Morgan Stanley. (Pg ID 405) He further
asserts that client cell phone numbers are not JPMorgan’s property and that clients
frequently contact him on his cell phone repeatedly. (Pg ID 406) Wirtanen claims he
was able to save the clients’ cell phone numbers. (Pg ID 406) Wirtanen asserts that
he obtained client information from publicly available sources after he joined Morgan
Stanley or from the clients themselves and that he use this “basic client information”
to “announce” his new affiliation with Morgan Stanley. (Pg ID 406) Wirtanen claims
he had the right to do so and he did not create or retain a protocol list and that he did
not solicit any clients to transfer accounts from JPMorgan to Morgan Stanley. (Pg ID
406) Wirtanen states that if clients decide to transfer their investment accounts to
another firm, JPMorgan is not necessarily losing its relationships with the clients since
they have other account relationships with JPMorgan, such as checking, savings, loans
and credit cards. (Pg ID 407) Wirtanen claims that to enjoin him from providing
services to his clients would unnecessarily and improperly infringe on the clients’
exercise of choice in the person with whom the clients deals. (Pg ID 407)
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O’Donnell asserts she did not solicit any of her clients to transfer their accounts
from JPMorgan to Morgan Stanley. (Pg ID 410) She claims that client cell phone
numbers are not JPMorgan’s property and that clients frequently contacted her on her
cell phone and that she was able to easily save those numbers. (Pg ID 411) O’Donnell
claims that to the extent she obtained client information, she obtained those from
publicly available sources after she joined Morgan Stanley, or from the clients
themselves. (Pg ID 411) O’Donnell asserts that she used this basic client information
to announce her new affiliation with Morgan Stanley and that she believed she had the
right to do so. (Pg ID 411) O’Donnell states that she did not create or retain a
protocol list and did not solicit any clients to transfer their accounts from JPMorgan
to Morgan Stanley. (Pg ID 411) She states that an account transfer by a client will
not automatically result in the end of JPMorgan’s relationship with the client because
the clients still have checking, savings, loans or credit card accounts with JPMorgan.
(Pg ID 412) O’Donnell claims that the restraining order sought by JPMorgan would
deprive her of the opportunity to work with clients whose business has supported her
family and would be devastating to her career and family. (Pg ID 412)
Defendants further assert that JPMorgan and Morgan Stanley have adopted the
Protocol for Broker Recruiting (“Protocol”) which sets the industry standard as to the
information that a departing advisor may retain when he or she moves from one firm
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to another. (Pg ID 303) They argue that the Protocol specifically allows a departing
advisor to take certain account information, including client name, address, phone
number, email address and account title. Defendants claim that the Protocol also
allows the departing advisors who comply to solicit customers that they serviced while
at their former firms. Morgan Stanley joined the Protocol on November 1, 2006 and
JPMorgan adopted by way of a letter on February 6, 2014. Defendants also argue that
FINRA does not allow interference of customer accounts in the context of
employment disputes under FINRA Rule 2140.
Based on the submissions by the parties, Plaintiffs have shown that they would
prevail on the merits on their breach of contract claim. Although Defendants assert
they have not solicited clients, they also assert that they believed it was their right and
their clients’ right to contact each other. The confidentiality provisions provide that
Defendants immediately return to Plaintiffs all materials and information derived from
any of Plaintiffs’ sources stored on personal devices, including cell phones.
Defendants do not dispute that but for their employment with Plaintiffs, the clients’
phone numbers, stored in their cell phones, would not have been available to
Defendants.
As to the Protocol argument by Defendants, there are specific steps an
employee must perform prior to leaving a firm. “Resignations will be in writing
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delivered to local branch management and shall include a copy of the Client
Information that the RR [employee] is taking with him or her. The RR list delivered
to the branch also shall include the account numbers for the clients serviced by the
RR.” (Protocol, Resp. Ex. A, Pg ID 318) The principal goal of the protocol is to
further the clients’ interests of privacy and freedom of choice in connection with
movement of their “Registered Representatives.” Ameriprise Fin. Serv., Inc. v.
Koenig, 2012 WL 379940 at *1 (D.N.J. Feb. 6, 2012). Employees that comply with
the Protocol would then be free to solicit customers that they serviced while at their
former firms, but only after they have joined the new firms. Id. An employer would
be free to enforce whatever contractual, statutory or common law restrictions that exist
on the solicitation of customers to move their accounts by a departing employee
before he or she has left the firm. Id.
Defendants’ affidavits do not assert that they followed the Protocol requirement
that they were to deliver a list to their former employer as to which accounts/clients
they were going to take with them. In fact, Defendants’ affidavits assert that they did
not retain client information of clients they serviced while at JPMorgan, but instead
obtained client information from public sources. Wirtanen’s affidavit specifically
asserts that he did not “invoke the protections of the Protocol ...” (Pg ID 405) These
statements are contrary to the Protocol where employees are able to move with certain
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clients as long as the former employers are aware which clients the employees plan
to solicit after the employees move to another firm. Defendants have not shown at
this stage that they properly followed the Protocol. The likely to succeed factor
weighs in favor of Plaintiffs.
C.

Irreparable Injury

Regarding the irreparable injury requirement, it is well settled that a plaintiff's
harm is not irreparable if it is fully compensable by money damages. Basicomputer
Corp. v. Scott, 973 F.2d 507, 511 (6th Cir. 1992). However, an injury is not fully
compensable by money damages if the nature of the plaintiff's loss would make
damages difficult to calculate. Id. at 511-512. “The loss of customer goodwill often
amounts to irreparable injury because the damages flowing from such losses are
difficult to compute.” Id. at 512. The loss of fair competition that results from the
breach of a non-competition covenant is also likely to irreparably harm an employer.
Id.
The Court finds that Plaintiffs have shown through their Complaint, briefs and
documents submitted, that Plaintiffs would suffer immediate and irreparable harm if
an injunction is not entered. Plaintiffs’ harm includes goodwill with its clients and
breaches of the confidentiality and non-solicitation agreements signed by Defendants.
Plaintiffs have shown that Defendants are now employed with Plaintiffs’ direct
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competitor, Morgan Stanley. Plaintiffs have further shown that Defendants have in
fact solicited Plaintiffs’ customers prior to leaving Plaintiffs’ employ, contrary to the
Protocol. Some of these customers have already indicated to Plaintiffs they were
moving their accounts to Defendants’ current employer, Morgan Stanley.
Defendants argue that the same arguments were raised before the district court
in the Western District of Michigan where the court found the issue was only
monetary damages, therefore JPMorgan did not suffer irreparable injury. (Resp., Ex.
H, Pg ID 345-360) The Court does not find the district court’s oral ruling persuasive
because this Court finds, as noted above, that the loss of customer goodwill and fair
competition are irreparable. As noted above, although the Protocol allows brokers to
move from one firm to another and solicit clients, certain procedures must be follow
in order to put the former employer on notice. Defendants have not shown that they
followed these procedures under the Protocol. The irreparable injury factor weighs
in Plaintiffs’ favor.
D.

Harm to Others and Public Interest

As to harm to others, based on Defendants’ affidavits, they claim they would
be harmed if they are not able to respond to former clients. However, such harm
would not have occurred if Defendants had followed the procedures set forth in the
Protocol by notifying Plaintiffs which clients they intended to solicit once they were
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employed by another firm. Defendants’ arguments regarding their ability to contact
clients may show their intent of taking away clients from JPMorgan to their new
employer. This factor does not weigh in either party’s favor.
Regarding public interest, the public has an interest in the enforcement of
contracts and also in the freedom to select a broker. Merrill Lynch, Pierce, Fenner &
Smith, Inc. v. Ran, 67 F. Supp. 2d 764, 781 (E.D. Mich. 1999). The public also has
an interest in keeping client lists confidential information. Id. at 775. As to FINRA
Rule 2140, the rule is indicative of a public policy to allow the free transfer of
accounts. Ayco Co. v. L.P. v. Feldman, 2010 WL 4286154 at *10 (N.D. N.Y. Oct. 22,
2010). As noted above, it does not appear that Defendants followed the Protocol as
to how client accounts are transferred. This factor does not weigh in either party’s
favor.
Weighing the factors noted above, because Plaintiffs have shown they will
prevail on the merits and they are or will be irreparably harmed, a preliminary
injunction is issued in this matter pending the arbitration in this matter under FINRA.
III.

CONCLUSION
For the reasons set forth above,
IT IS ORDERED that Plaintiffs’ Motion for Temporary Restraining Order is

MOOT, the Motion for Preliminary Injunction is GRANTED pending arbitration, and
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the Motion Permitting Expedited Discovery pending preliminary injunction hearing
is MOOT (Doc. No. 2).
IT IS FURTHER ORDERED that Plaintiffs must post security to cover costs
and damages in the amount of $50,000.
IT IS FURTHER ORDERED that Defendants are enjoined as follows:
1.

Defendants and all those acting in concert with them, including, but not

limited to, the directors, officers, employees and agents of Morgan Stanley, are
temporarily enjoined and restrained, directly or indirectly, from:
(a) soliciting, attempting to solicit, inducing to leave or
attempting to induce to leave any JPMorgan customer
serviced by Defendants at JPMorgan or whose name
became known to Defendant by virtue of their employment
with JPMorgan (or any of its predecessors in interest); and
(b) using, disclosing or transmitting for any purpose
JPMorgan’s documents, materials and/or confidential and
proprietary information pertaining to JPMorgan,
JPMorgan’s employees, and/or JPMorgan’s clients.
2.

Defendants, and all those acting in concert with them, including, but not

limited to, the directors, officers, employees and agents of Morgan Stanley, are further
ordered to return to JPMorgan or its counsel all records, documents and/or
information in whatever form (whether original, copied, computerized, electronically
stored or handwritten), pertaining to JPMorgan’s customers, employees and business,

15

within 24 hours of notice to Defendants or their counsel of the terms of this Order;
3.

This Preliminary Injunction is binding upon Defendants, their agents,

servants, employer, any entity with which they are employed or affiliated, and those
in active concert or participation with them who receive actual notice of this Order;
4.

The parties are directed to proceed with arbitration in accordance with

Rule 13804 of the FINRA Code of Arbitration Procedure for Industry Disputes.

S/Denise Page Hood
Denise Page Hood
United States District Judge
Dated: June 3, 2015
I hereby certify that a copy of the foregoing document was served upon counsel of
record on June 3, 2015, by electronic and/or ordinary mail.
S/LaShawn R. Saulsberry
Case Manager

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