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Wells Fargo Clearing Services, LLC v. Foster

United States District Court, D. Nevada

April 11, 2018

WELLS FARGO CLEARING SERVICES, LLC, dba WELLS FARGO ADVISORS, Plaintiff,
v.
JAMES F. FOSTER, Defendant.

          ORDER

          MIRANDA M. DU UNITED STATES DISTRICT JUDGE.

         I. SUMMARY

         This dispute involves supposed violations by Defendant James Foster of an employment agreement with Plaintiff Wells Fargo Clearing Services, LLC (“Wells Fargo”). Before the Court are three motions: (1) Wells Fargo's Ex Parte Application for Temporary Restraining Order (“First TRO Motion”) (ECF No. 8); (2) Wells Fargo's Emergency[1] Motion for Temporary Restraining Order (“Second TRO Motion”) (ECF No. 12); and (3) Defendant's Motion to Compel Arbitration and to Dismiss Action (“Motion to Compel”) (ECF No. 17). The Court has reviewed the parties' respective responses and replies (ECF Nos. 18, 25, 28, 37.) Because the Court declined to consider the First TRO Motion on an ex parte basis, Wells Fargo filed the Second TRO Motion. The Court therefore construes the First TRO Motion as moot and denies it as such.

         For the reasons discussed herein, the Court denies the Second TRO Motion and the Motion to Compel. The Court further stays this action pending the result of arbitration proceedings currently underway before the Financial Industry Regulatory Authority (“FINRA”).

         II. BACKGROUND

         Defendant accepted an offer of employment as a financial advisor with Wells Fargo on September 7, 2011. (ECF No. 12 at 5.) At that time, Defendant executed an agreement with Plaintiff entitled “Wells Fargo Agreement Regarding Trade Secrets, Confidential Information, Non-Solicitation, and Assignment of Inventions” (“the Agreement”). (Id. (citing to ECF No. 12-1 at 7-10).) Defendant left Wells Fargo in October 2017 to join a competitor, Edward Jones. Plaintiff alleges that before Defendant left his employment with Wells Fargo, Defendant solicited customers to move their accounts to Edward Jones “despite an explicit one year ‘non-solicitation' provision” in the Agreement. (ECF No. 12 at 5.) Wells Fargo also claims that Defendant violated the Agreement by soliciting customers with its trade secret information after Defendant left his employment with Wells Fargo.

         Plaintiff brings claims for breach of contract, breach of duty of loyalty, misappropriation of trade secrets under Nevada law, interference with prospective economic relations, intentional interference with contractual relations, and fraud, seeking compensatory damages, punitive damages, and injunctive relief. (See ECF No. 1 at 5-13.) Plaintiff also filed a Statement of Claim to commence arbitration against Defendant in FINRA Arbitration on January 18, 2018, one day before Plaintiff initiated this action. (ECF No. 12 at 8.)

         III. SECOND TRO MOTION (ECF No. 12)

         Plaintiff moves for a temporary restraining order (“TRO”) on all of its claims, asking that this Court enjoin “Defendant from using any and all of Plaintiff's trade secrets and confidential information, from refusing to return customer files, [2] and from soliciting Plaintiff's customers in violation of his agreement with Plaintiff.”[3] (ECF No. 12 at 5.) The Court finds that Plaintiff has failed to meet its burden in establishing a likelihood of irreparable harm in the absence of temporary injunctive relief. The Court therefore does not address the remaining factors for a TRO.

         A. Interim Injunctive Relief under FINRA

         As a preliminary matter, Defendant contends that “Wells Fargo wasted [its one opportunity to obtain temporary injunctive relief under FINRA] by seeking a temporary restraining order on an ex parte basis.” (ECF No. 37 at 2.) The Court disagrees and finds that Rule 13804 of FINRA permits the Court to consider the Second TRO Motion.

         Rule 13804 under FINRA states that “[i]n industry or clearing disputes required to be submitted to arbitration under the Code, parties may seek a temporary injunctive order from a court of competent jurisdiction.” Defendant argues that this provision permits only one motion for a TRO such that Plaintiff exhausted its ability to move for injunctive relief with its First TRO Motion. Rule 13804(a)(1). However, the Second TRO Motion merely changed the form of the motion-from an ex parte motion to an emergency motion-on the basis of this Court's minute order (“MO”). That MO did not deny the First TRO Motion or address the merits of it; rather, the Court indicated that it would not consider the motion on an ex parte basis. (ECF No. 10.[4])

         The Court therefore finds it is consistent with Rule 13804 for the Court to consider the merits of the Second TRO Motion.

         B. Legal Standard for ...


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