Gottlieb v. The Variable Annuity Life Insurance Company et al

Filing 6

ORDER TO SHOW CAUSE: It is hereby Ordered that Plaintiff's # 4 Motion for TRO is DENIED, and further that the Application for an Order to Show Cause is GRANTED regarding the # 4 Emergency Motion for Preliminary Injunction to stay mediatio n and arbitration with AAA. ORDERED that personal service of the papers upon which the Order to Show Cause is based shall be served upon Defendants on or before Monday, 12/21/2015 at 4:00 p.m. shall be deemed sufficient. Show Cause Response due by 1/4/2016. Show Cause Hearing set for 1/11/2016 at 10:00 AM in Albany before Senior Judge Thomas J. McAvoy. Signed by Senior Judge Thomas J. McAvoy on 12/17/2015. (jmb)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________________
STEVEN GOTTLIEB,
Plaintiff,
vs.

1:15-CV-1420
(TJM/TWD)

THE VARIABLE ANNUITY LIFE INSURANCE
COMPANY, VALIC FINANCIAL ADVISORS, INC.,
and VALIC RETIREMENT SERVICES COMPANY,
Defendants.
_________________________________________
THOMAS J. McAVOY,
Senior United States District Judge

ORDER
Plaintiff commenced this action on November 30, 2015, seeking a declaratory
judgment that he did not violate the terms of his employment agreement with the
Defendants and injunctive relief preventing the Defendants from pursuing mediation over
his alleged violation of their agreement. See Complaint (“Complt.”), dkt. # 1. On
December 16, 2015 Plaintiff filed an ex parte application for an Order to Show Cause
(“OSC”) requesting a Temporary Restraining Order (“TRO”) staying mediation and
arbitration with the American Arbitration Association (“AAA”).
This case concerns a Registered Representative Agreement (“RRA”) between
Plaintiff Steven Gottlieb and Defendant VALIC Financial Advisors, Inc. (“VALIC”). See
Complt. VALIC sells financial products and services to employees of government and

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non-profit institutions. Id. at ¶ 12. Plaintiff worked for VALIC from October 8, 2012 until he
resigned on July 31, 2013. Id. at ¶ 13. Upon commencing his employment he signed the
RRA at issue, which “provide[d] for confidentiality, non-solicitation and non-competition.”
Id. at ¶ 15. Under the terms of the RRA, Plaintiff agreed that he would not “directly or
indirectly induce or attempt to induce” any VALIC client to terminate or change its
relationship with the Defendant for a year after he left VALIC’s employment. Id. at ¶ 25.
Plaintiff returned any property and documentation belonging to the Defendant when he left
VALIC’s employ. Id. at ¶¶ 28, 33.
Plaintiff’s non-compete agreement expired on July 31, 2014. Id. at ¶ 36.
Approximately fifteen months later, on or about October 27, 2015, Plaintif f alleges that
VALIC “attempted to enforce the non-compete and the provisions of the Gottlieb RRA”
and served Plaintiff with a demand to mediate. Id. at ¶ 37. Plaintiff contends that this
demand had no basis in the RRA, and that he did not “interf ere with, alter or contact any
VALIC clients during his period of non-competition and non-solicitation.” Id. at ¶¶ 38-39.

Local Rule LR 7.1(e) provides:
[A] motion brought by Order to Show Cause must include an affidavit clearly
and specifically showing good and sufficient cause why the standard Notice
of Motion procedure cannot be used. Reasonable adv ance notice of the
application for an Order to Show Cause must be given to the other parties,
except in those circumstances where the movant can demonstrate, in a
detailed and specific affidavit, good cause and substantial prejudice that
would result from the requirement of reasonable notice.
Local Rule 7.1(f) provides: "Any application for a temporary restraining order must
be served on all other parties unless Fed. R. Civ. P. 65 otherwise permits." Fed. R. Civ.
P. 65 provides:
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(b) Temporary Restraining Order.
(1) Issuing Without Notice. The court may issue a temporary restraining
order without written or oral notice to the adverse party or its attorney only if:
(A) specific facts in an affidavit or a verified complaint clearly show
that immediate and irreparable injury, loss, or damage will result to the
movant before the adverse party can be heard in opposition; and
(B) the movant's attorney certifies in writing any efforts made to give
notice and the reasons why it should not be required.
In apparent compliance with these provisions, Plaintiff’s counsel submitted an
affidavit asserting:
5.

Presently the Defendant Variable Life Annunity Life Insurance
Company seeks to compel mediation of the Plaintiff in Houston,
Texas as it relates to his former employment with VALIC that ended
on July 31, 2013.

6.

The mediation demand was dated October 27, 2015.

7.

I contacted counsel [for Defendants] on November 24, 2015 and advised him
that we did not view the demand as proper, timely or in accordance with the
RRA.

8.

As a result of this communication, Attorney Michael Rollin and I had further
communication over the course of the next few days and as a result of same,
Rollin requested that he be given an opportunity to speak with his client
regarding same before we moved forward with our current motion.

9.

As such and as a courtesy, we agreed to briefly wait to file this motion for
preliminary injunction but immediately proceeded to file our federal
complaint, which was filed on November 30, 2015.

10.

Subsequent discussions with Counsel resulted in the Defendants refusing to
withdraw their demand for mediation. Accordingly, we are proceeding with
our motion.

11.

Mr. Rollin did not accept service of the complaint on behalf of the
Defendants, although, [sic] I have forwarded him a courtesy copy of same.
Thus, the complaint has been sent for service along with the applicable court
issued summonses.
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Affidavit of Elena Defio Kean, dkt. # 4-9. ¶¶ 5-11.
In support of Plaintiff’s need for a TRO, his counsel asserts that Plaintiff is likely to
succeed on the merits of his claim that the non-compete provisions of the RRA have
expired and are inapplicable and unreasonable and theref ore cannot be enforced.
Plaintiff’s Brief, dkt. # 4-13, at 7-8. Plaintiff also contends he is likely to succeed on any
claim that he has not violated the terms of the RRA. Id. at 8-11. In terms of the
irreparable harm that Plaintiff faces without a TRO, counsel argues that:
To require Mr. Gottlieb to proceed with mediation/arbitration on matters that are not
only untimely and suspect, but in another state thousands of miles away, would
cause irreparable harm. The Defendants are seeking to require Mr. Gottlieb to
travel and expend significant cost, but most importantly take away from his new
business endeavors. To allow VALIC to proceed until such time as a determination
of the validity and timeliness of its attempts to pursue these claims and a
determination as to the correct venue is made would irreparably harm Mr. Gottlieb.
Id. at 13.
Plaintiff fails to satisfy the requirements of Fed. R. Civ. P. 65(b) sufficient to
dispense with the notice requirements for an ex parte TRO. Plaintiff argues that he will
face irreparable harm if forced to participate in a mediation/arbitration, but he has not
presented any information to the Court indicating that such an event is imminent. He
alleges only that Defendants have demanded that Plaintiff participate in
mediation/arbitration. No court has ordered mediation/arbitration, and Plaintiff has not
alleged that any arbitrator has been assigned or any date set for arbitration. Nothing
indicates, therefore, that the harm alleged by Plaintiff is imminent. The mere demand that
Plaintiff participate in arbitration, which counsel has challenged in various ways, does not
create the harm he describes. Plaintiff fails to demonstrate any irreparable harm, and the

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Court will deny the application. 1
Therefore, Plaintiffs’ application for a TRO is denied.
The application for an order to show cause is granted. Defendants The Variable
Annuity Life Insurance Company, VALIC Financial Advisors, Inc., and VALIC Retirement
Services Company are hereby:
ORDERED TO SHOW CAUSE at the Federal Courthouse located at 445
Broadway, Albany, New York on January 11, 2016, at 10:00 a.m. or as soon thereafter as
counsel may be heard, why an order should not be entered pursuant to FRCP 65
enjoining Defendants from seeking to mediate and/or arbitrate any claims that relate to or
assert alleged violations of Plaintiff Steven Gottlieb’s Registered Representative
Agreement (“RRA”) before the American Arbitration Association (“AAA”), pending this
action for Declaratory Judgement; and it is further
ORDERED that personal service of the papers upon which the Order to Show
Cause is based shall be served upon Defendants on or before Monday, December 21,
2015 at 4:00 p.m. shall be deemed sufficient; and it is further
ORDERED that response papers, if any, shall be filed and served no later than
Monday, January 4, 2016 at 4:00 p.m.

1

Plaintiff has filed a supplemental affidavit in support of his request for a TRO. See
dkt. # 5. This supplemental affidavit includes correspondence indicating that Defendant
has requested that AAA compel mediation. Nothing indicates that AAA has taken any
action to do so. This supplemental affidavit does not alter the Court’s finding on Plaintiff’s
application.
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IT IS SO ORDERED.
DATED: December 17, 2015

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