Robert W. Baird & Co., Inc. v. Nichols

Motion for Temporary Restraining Order , Motion for Preliminary Injunction . Oral Argument requested.Expedited Hearing requested.

D. Or.June 6, 2017

STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Timothy S. DeJong, OSB No. 940662 Email: tdejong@stollberne.com STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. Oak Street, Fifth Floor Portland, Oregon 97204 Telephone: (503) 227-1600 Facsimile: (503) 227-6840 Michael S. Taaffe, Esq. Email: mtaaffe@slk-law.com SHUMAKER, LOOP & KENDRICK, LLP 240 S. Pineapple Ave, 10th Floor Sarasota, FL 34236 Telephone: (941) 364-2720 Attorneys for Plaintiff Robert W. Baird & Co., Inc. IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON PORTLAND DIVISION ROBERT W. BAIRD & CO., INC., Plaintiff, v. TONYA NICHOLS, an individual, Defendant. Case No. 3:17-cv-00886 PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION ORAL ARGUMENT REQUESTED [EXPEDITED CONSIDERATION REQUESTED] Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 1 of 27 i TABLE OF CONTENTS I. INTRODUCTION .............................................................................................................. 1 II. FACTUAL BACKGROUND ............................................................................................. 3 A. Nichols’s Agreements to Maintain Confidentiality of Baird’s Information ........... 3 B. Nichols’s Agreements Regarding Her Electronic Devices ..................................... 5 C. Nichols’s Agreements Regarding Non-Solicitation................................................ 6 D. Nichols’s Consent to Injunctive Relief ................................................................... 7 E. Nichols’s Improper Actions .................................................................................... 7 III. LEGAL ARGUMENT ...................................................................................................... 10 F. The Protocol Does Not Shield Defendant’s Actions ............................................ 10 G. Defendant Breached her Contracts with Plaintiff Baird ....................................... 11 IV. PLAINTIFF IS ENTITLED TO INJUNCTIVE RELIEF ................................................ 12 H. Substantial Likelihood of Success on the Merits .................................................. 13 I. Likelihood of Irreparable Harm ............................................................................ 17 J. Granting Injunctive Relief Outweighs Denial ...................................................... 19 V. CONCLUSION ................................................................................................................. 21 Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 2 of 27 ii TABLE OF AUTHORITIES Cases Cascade Exch. Inc. v. Reed 565 P.2d 1095 (Or. 1977) ......................................................................................................... 15 Farmers Ins. Exch. v. Fraley 720 P.2d 770 (Or. Ct. App. 1986) ............................................................................................. 14 FMC Corp. v. Varco Int’l, Inc. ..................................................................................................... 14 IKON Office Solutions v. American Office 178 F.Supp.2d 1154, 1167 (D.Or.2001) aff'd, 61 Fed.Appx. 378 (9th Cir.2003) ..................................................................................... 16 In re Rosenbaum Grain Corp. 103 F.2d 656 (7th Cir. 1939) .................................................................................................... 18 Kelite Prods., Inc. v. Brandt, 294 P.2d 320 (Or. 1956) ................................................................ 14 Merrill Lynch, Pierce, Fenner & Smith Inc. v. McClafferty 287 F.Supp. 2d 1244 (D. Haw. 2003) ....................................................................................... 13 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Anderson No. 6:04-cv-01425-AA (D. Or. Oct. 5, 2004) .......................................................................... 12 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bradley 756 F.2d 1048, 1054 (4th Cir. 1985) .................................................................................. 13, 14 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Kramer 816 F. Supp. 1242, 1247 (N.D. Ohio 1992) .................................................................. 18, 19, 20 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Patinkin 1991 WL 83163 (N.D. Ill. May 9, 1991) .................................................................................. 18 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Ran 67 F. Supp.2d 764, 779 (E.D. Mich. 1999) ............................................................................... 17 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Stidham 658 F.2d 1098, 1102 (5th Cir. 1981) ........................................................................................ 17 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Stone No. 1:01-cv-03107-CO (D. Or. Jan. 15, 2002) ......................................................................... 12 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Zimmerman No. 96-2412-JWL, 1996 WL 707107 (D. Kan. Oct. 1, 1996) .................................................. 19 Morgan Stanley D.W. Inc. v. Savage No. 3:03-cv-00990-PA (D. Or. July 24, 2003) ......................................................................... 12 N. Pac. Lumber Co. v. Moore 551 P.2d 431 (Or. 1976) ........................................................................................................... 14 Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 3 of 27 iii Olsten Corp. v. Sommers 534 F. Supp. 395 (D. Or. 1982) ................................................................................................ 15 Rem Metals Corp. v. Logan 565 P.2d 1080, 1082 (Or. 1977) ............................................................................................... 15 United States v. Odessa Union Warehouse 833 F.2d 172 (9th Cir. 1987) .................................................................................................... 12 Volt Servs. Grp., Div. of Volt Mgmt. Corp. v. Adecco Employment Servs., Inc. 35 P.3d 329 (Or. Ct. App. 2001) ............................................................................................... 14 Statutes Federal Arbitration Act, 9 U.S.C. §§ 3 – 4 ................................................................................... 22 Oregon Uniform Trade Secret Act, Or. Rev. Stat. §§ 646.461–.475 ............................................ 16 Rule 13804 of the Financial Industry Regulatory Authority (“FINRA”) Code of Arbitration Procedure for Industry Disputes ........................................................................................... 1, 20 Rule 65 of the Federal Rules of Civil Procedure ............................................................................ 1 Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 4 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 1 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION MOTION Plaintiff Robert W. Baird & Co., Inc. (“Baird” or “Plaintiff”) respectfully moves this Court for a Temporary Restraining Order and a Preliminary Injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure. Plaintiff has filed a Complaint with this Court, which is incorporated herein and made a part of by this reference. Under Rule 13804 of the Financial Industry Regulatory Authority (“FINRA”) Code of Arbitration Procedure for Industry Disputes, Plaintiff has the express right to seek temporary injunctive relief from a court of competent jurisdiction pending an expedited arbitration hearing before a full panel of duly-appointed arbitrators. I. INTRODUCTION This application is made by Plaintiff against Tonya Nichols, a former Baird Financial Advisor, in support of Plaintiff’s application for a preliminary injunction and, pending the determination of such application, for a temporary restraining order to preserve the status quo pending a final confirmed award in the arbitration between Plaintiff and Defendant before Financial Industry Regulatory Authority ("FINRA") Dispute Resolution. As is more fully set forth below and in the papers submitted herewith, Defendant Nichols resigned from Plaintiff Baird on May 18, 2017. Defendant Nichols prepared to engage in, engaged in, and continues to engage in, the following unlawful acts: (1) copying, removing and retaining Plaintiff Baird’s confidential and trade secret information, including the names and addresses at least 40 of Plaintiff’s customers; (2) disclosing this confidential, trade secret information to her new employer, RBC Capital Markets (hereinafter “RBC”); and Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 5 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 2 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION (3) using Baird's confidential, trade secret customer information to solicit Baird's customers away from Baird, prior to her resignation. Through these actions Defendant Nichols committed torts and has breached the express terms of various agreements that she signed while employed with Baird. Defendant Nichols breached her fiduciary duties to Plaintiff Baird. Defendant cannot seek the protection of the "Protocol for Broker Recruiting," an agreement between thousands of financial services companies, including Baird and Defendant Nichols’s employer, RBC. Defendant failed to comply in good faith with the requirements of the Protocol and thus has placed herself outside of its provisions. While Plaintiff will seek enforcement of Defendant’s non-solicitation agreements as permanent injunctive relief in FINRA arbitration, Plaintiff requests that this Court provide temporary injunctive relief requiring Defendant to turn over all devices containing Plaintiff’s confidential and proprietary information and prohibiting Defendant from destroying evidence. Upon entry of a temporary restraining order or preliminary injunction, the FINRA arbitration automatically becomes expedited and a hearing will be scheduled on permanent injunctive relief within 15 days of the Court's order. Without a temporary restraining order or preliminary injunction, however, any award rendered in the arbitration will be rendered ineffectual because, as described herein, the damage being inflicted by Defendant, which Plaintiff has no reason to believe will stop, will become even more irreparable by the time such an award is rendered. To maintain the status quo and prevent irreparable harm pending the outcome of the FINRA arbitration, Plaintiff asks that injunctive relief be granted compelling the Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 6 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 3 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION immediate production to Plaintiff of all devices containing Plaintiff’s confidential and proprietary information and prohibiting Defendant’s destruction of evidence. As discussed below, Plaintiff has shown a likelihood of success on the merits, the potential for irreparable injury if the injunction is not granted, and that the equities balance in Plaintiff's favor. Accordingly, Plaintiff is entitled to injunctive relief pending a final confirmed award in the arbitration proceeding. II. FACTUAL BACKGROUND Defendant Nichols became an employee of Plaintiff Baird in approximately May 2012. She worked in Plaintiff Baird’s Portland, Oregon office at all material times. While Defendant was employed by Baird, she signed numerous agreements restricting her use of Baird’s confidential and proprietary information, both during and after her employment. A. Nichols’s Agreements to Maintain Confidentiality of Baird’s Information Throughout the course of her employment with Plaintiff, Defendant Nichols executed four separate promissory notes (“Notes”). (Complaint, Ex. A–D). By executing the Notes, Plaintiff agreed to a provision regarding confidentiality of Plaintiff’s records: Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 7 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 4 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION (Complaint, Ex. A, at 4; Shick Declaration ¶ 8). During the course of her employment with Plaintiff, and as recently as January 18, 2017, Defendant Nichols attested to reading and thereafter complying with Plaintiff Baird’s “Compliance Basics for All Associates” Manual. (Complaint, Ex. I–J). The Manual includes multiple provisions relating to the protection of Plaintiff Baird’s records. (Complaint, Ex. J). First, a “Privacy” section defines and restricts the use of Personally Identifying Information (“PII”). Id. at 81. PII includes clients’ personal information, such as client name, address, social security number, federal tax ID number, account numbers, driver’s license number, bank card number, and Baird’s information, including business plans and strategies, historical and prospective financial information, client and potential client lists, operating methods and procedures, management decisions, HR matters, and trading practices and patterns. Id. By attesting to the Privacy section, Defendant Nichols agreed to keep all PII confidential and to not use or divulge any PII except “in furtherance of [her] duties and responsibilities at Baird.” Id. at 82. If Defendant Nichols needed to transmit PII in furtherance of her duties at Baird, she was required to transmit the information in an encrypted fashion to properly maintain Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 8 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 5 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION the confidentiality and trade secret nature of the PII. Id. She was prohibited from retaining PII on a personally owned electronic device and required to save any work she created on a personal device to the Baird server immediately. Id. Finally, Defendant Nichols agreed never to release any PII to anyone other than the named account holder unless authorized by the client or in accordance with a legal or regulatory proceeding. Id. at 83. The Manual contains an additional “Confidentiality” section, which reads: Associates, both during and following employment, must keep confidential and maintain the secrecy of all confidential information and not use, divulge or make available any confidential information except in furtherance of their duties and responsibilities at Baird or otherwise required by law. Associates also disclaim ownership or other right to any confidential information they create or develop while at Baird or bring to Baird and use in connection with employment at Baird. Associates are bound by the policies found in the Use of Inside Information and Privacy sections of this manual. Upon termination of employment, associates shall promptly surrender to Baird all property and other things of value in their possession or in the possession of any person or entity under their control, including without limitation, all personal notes, manuals, lists, reports, documents or information stored or contained on computers and related disks or drives (including flask or thumb drives), containing, derived from, or related to any confidential information or otherwise related to the business of Baird. (Complaint, Ex. K). This provision makes it clear that Defendant was strictly prohibited from disclosing Baird’s confidential information, had no rights to Baird’s confidential information, and was required to return all confidential information upon termination of her employment. Id. B. Nichols’s Agreements Regarding Her Electronic Devices On approximately May 4, 2012, Defendant Nichols signed Plaintiff’s “Cellular/PED User Agreement. (Complaint, Ex. L). This Agreement provides that, in exchange for Baird permitting Nichols to use her own cellular telephone, Defendant Nichols agreed not to use text messaging or Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 9 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 6 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION non-Baird e-mail to conduct Baird-related business, not to maintain client or prospective client information on any other non-Baird electronic device, and to furnish Baird with access to her PED to ensure proper and adequate supervision of her business-related activities. Id. Baird’s Associate Handbook also provides “Baird reserves the right to inspect an associate’s work area, computer, files, desk, cabinets and personal items brought on to company property (including, but not limited to, purses, lunch containers, briefcases and other personal property).” C. Nichols’s Agreements Regarding Non-Solicitation In addition to the Confidentiality provision, the Notes that Defendant Nichols executed also contain a Non-Solicitation of Baird Clients and Employees provision, which reads: Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 10 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 7 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION (Complaint, Ex. A–D ¶ 8; Shick Declaration ¶ 9). At the time of her termination, Defendant Nichols was required to immediately return Baird’s records and to refrain from soliciting Baird’s clients and employees for a one-year period. Id. D. Nichols’s Consent to Injunctive Relief Defendant Nichols further agreed that in the event she violated any of the restrictions in the Notes, she would consent to the issuance of a temporary restraining order or preliminary injunction: (Complaint, Ex. A–D ¶ 9). E. Nichols’s Improper Actions Tonya Nichols submitted her resignation from Baird employment on May 18, 2017, stating falsely that she conducted herself in accordance with the Protocol (Complaint, Ex. “M”; see also Shick Declaration ¶ 17). In conjunction with Nichols’s resignation, Carolynn Ashton, the Senior Client Associate that worked with Nichols at Baird also resigned to join RBC and submitted a resignation letter that was identical to Nichols’s. Prior to Nichols’s resignation, she engaged in activity that not only violates the various contracts and firm policies outlined herein, but that also violates the Protocol. (See Complaint, Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 11 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 8 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION Exs. “E” and “P”). During the months preceding her resignation, Nichols engaged in competitive activity by producing binders containing her Baird clients’ account and financial information (Westlund Declaration at ¶4). This was the first and only time that Nichols had ever created such binders. (Shick Declaration ¶ 20). The binders contained extensive client information, including but not limited to the following categories: personal and family information, personal property, liabilities and debt, contracts, trusts, wills and directives, insurance, banking and investments, real estate, medical history, user ID and security and other documents. One of the documents included in each binder was the Baird client’s 2016 end of year statement, which includes both PII and several categories of information that are not permitted under the Protocol. Nichols engaged the assistance of both Ashton and the Baird Portland branch office receptionist to put the binders together. The Baird Portland branch office’s printing job log approximately tripled in the few months prior to Nichols’s resignation of employment, as a result of Nichols and her agents creating the binders. (Shick Declaration ¶ 20). Upon information and belief, Defendant Nichols created the binders because she had already decided to leave Baird and was attempting to secure future access to the materials by placing them in the hands of Baird’s clients prior to her resignation. Defendant Nichols was aware that she, personally, could not retain possession of the non-Protocol Baird Confidential information contained within the binders, but likely hoped to retrieve the confidential information from Baird’s clients after her departure. If the binder creation was not enough of a brazen attempt to violate the Protocol to gain a competitive advantage over Baird when she left its employ, Nichols also deliberately violated the Protocol by sending herself Baird customer information that is not permitted under the Protocol. Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 12 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 9 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION Nichols requested certain information from Baird in the weeks prior to her resignation. This information included customer assets under management at Baird for Nichols’s top Baird clients. On April 18, 2017, Nichols forwarded the email she received from Baird containing the information that Nichols requested—which includes customer information that is not permitted by the Protocol—to her personal Yahoo email address. (Complaint, Ex. N - Confidential client information has been redacted from this Exhibit; see also Shick Declaration ¶18). This Baird confidential client information is still in the possession of Nichols notwithstanding Baird’s several demands for return of same (Complaint, Ex. E and P). Two of the three attachments to the email Nichols forwarded to her personal Yahoo email account include the names, account numbers, and assets under management at Baird for Nichols’s Top 40 customers, which represent approximately 90% of Nichols’s total assets under management at Baird. Forwarding the email put non-Protocol information in Nichols’s possession and is prima facie evidence that Nichols violated the Protocol, as at least one of the spreadsheets Nichols received from Baird and forwarded to her personal email address included client names, with said clients’ parent account numbers and assets under management to the dollar. In addition to this information deliberately forwarded by Nichols to her home email address from her Baird email address in a non-encrypted manner containing non-Protocol categories, this information is also covered by the various Confidential Information restrictions outlined above. By sending this information from Baird’s system to an unsecured email address in an unencrypted manner, Nichols violated every contract and policy she agreed to at Baird regarding confidential information and use of electronic devices. Additionally, several Baird customers have indicated to Baird financial advisors that they Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 13 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 10 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION were aware of Nichols’s move to RBC prior to her resignation. (Shick Declaration ¶ 19; Westlund Declaration at ¶7). This is evidence of the pre-solicitation of Baird customers, which not only violates the Protocol, but also the various non-competition restrictions outlined above in the promissory notes. Since Nichols explicitly violated the Protocol, she no longer is entitled to its protections. Despite violating the Protocol, and in direct violation of her contractual agreements, upon information and belief Nichols has been actively soliciting the clients she listed on her Protocol list. III. LEGAL ARGUMENT F. The Protocol Does Not Shield Defendant’s Actions Both Plaintiff Baird and Defendant’s new employer, RBC, are signatories to an agreement called the Protocol for Broker Recruiting ("Protocol"). (Exhibit “1”). The Protocol is an agreement between brokerage firms that allows the transfer of financial advisers from one firm to another if both firms are signatories to the Agreement, and if the departing financial advisor adheres to and implements the requirements of the Protocol in good faith. Because both Plaintiff and RBC are signatories to the Protocol, Plaintiff anticipates that Defendant therefore will attempt to invoke the Protocol as a shield against any action against her for any subsequent solicitation of Plaintiff's customers on behalf of Defendant and her new employer, RBC. The Protocol, however, expressly prohibits financial advisors from soliciting customers in advance of their resignations or from taking any information with them other than their customers’ basic contact information. The permissible customer information is limited to name, address, phone number, email address, and account type. Additionally, the Protocol does not Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 14 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 11 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION affect the promises that a financial advisor made in an agreement, like Defendant Nichols’s agreements with Plaintiff. The Defendant has not complied with the Protocol in good faith for at least the following reasons: First, Defendant breached a fiduciary duty owed to Plaintiff when, during her employment with Plaintiff, she sent an email containing confidential client information to her personal email account. Second, Defendant breached the Protocol by sending herself client information that exceeds the information allowed by the Protocol. Third, Defendant Nichols pre- solicited Baird’s customers prior to her resignation in violation of the Protocol. Consequently, the Protocol does not apply here and Plaintiff seeks a temporary restraining order and preliminary injunction to enjoin Defendant from continuing the wrongful conduct she started while still employed by Plaintiff. G. Defendant Breached her Contracts with Plaintiff Baird By her conduct, Defendant has not only committed torts but has also misappropriated Plaintiff's confidential and proprietary customer information and has breached the express terms of her employment agreements. As set out above, Defendant signed one or more agreement with Plaintiff, including multiple promissory notes and the “Compliance Basics for All Associates” Manual, which confirmed the confidentiality of Plaintiff's records and prohibited the Defendant from communicating to third parties the contents of any records belonging to Plaintiff and from soliciting customers that the Defendant serviced, or whose names the Defendant learned through her employment by Plaintiff Baird. Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 15 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 12 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION In consideration of the above covenants by the Defendant, Plaintiff paid Defendant considerable amounts of money. Defendant did not follow in good faith the provisions of the Protocol, as set out above, and breached her agreements with Plaintiff to keep Plaintiff’s records confidential and to not solicit Plaintiff’s clients. As a result, Plaintiff is entitled to injunctive relief. IV. PLAINTIFF IS ENTITLED TO INJUNCTIVE RELIEF Federal and state courts regularly grant securities firms injunctive relief under similar circumstances, including the District Court of Oregon in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Anderson, No. 6:04-cv-01425-AA (D. Or. Oct. 5, 2004); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Stone, No. 1:01-cv-03107-CO (D. Or. Jan. 15, 2002); and Morgan Stanley D.W. Inc. v. Savage, No. 3:03-cv-00990-PA (D. Or. July 24, 2003). The factors that are traditionally considered when determining whether to grant a preliminary injunction are: (1) the likelihood of plaintiff's success on the merits; (2) the possibility of plaintiff's suffering irreparable injury if relief is not granted; (3) the extent to which the balance of hardships favors the respective parties; and (4) in certain cases, whether the public interest will be advanced by the provision of preliminary relief. United States v. Odessa Union Warehouse, 833 F.2d 172, 174 (9th Cir. 1987). Thus, Plaintiff “must show either (1) a combination of probable success on the merits and the possibility of irreparable injury or (2) that serious questions are raised and the balance of hardships tips in its favor.” Id. In this case, Plaintiff will show not only a high likelihood of success on the merits coupled with the possibility of irreparable harm, but also that the balance of hardships tips in Plaintiff’s favor. Temporary restraining orders are appropriate to obtain relief from such harm. Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 16 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 13 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION See Merrill Lynch, Pierce, Fenner & Smith Inc. v. McClafferty, 287 F.Supp. 2d 1244 (D. Haw. 2003) (granting TRO prohibiting employee from violating his employment agreement with his former firm and ordering parties to arbitrate their dispute under Federal Arbitration Act, where: (1) firm showed likelihood of success on merits because evidence tended to show that employee used confidential client information to contact and solicit firm clients to transfer accounts to his new employer, which, even assuming contacts were a matter of professional courtesy, appeared likely to violate covenants that were valid under state law; (2) firm showed that it would be irreparably harmed, absent a TRO, as disclosure of customers' financial information to third parties breached firm's fiduciary duties and could result in loss of trust; (3) balance of hardships tipped strongly in favor of the firm and would not unduly burden the employee, who was ordered to comply with agreement that he had made; and (4) a TRO served the public interest). H. Substantial Likelihood of Success on the Merits Plaintiff's right to injunctive relief is set forth in the express language of the Defendant’s Notes. Defendant contractually agreed to treat Plaintiff's records and customer information as strictly confidential and also agreed to refrain from soliciting, for one year, the Baird clients she serviced or whose names she learned through her employment at Baird. Despite her contractual commitments, Defendant has already disclosed Plaintiff's confidential information and solicited Plaintiff’s clients. In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bradley, the Fourth Circuit held that immediate injunctive relief is necessary under these circumstances to avoid irreparable harm and to maintain the status quo: Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 17 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 14 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION When an account executive breaches his employment contract by soliciting his former employer's customers, a nonsolicitation clause requires immediate application to have any effect. An injunction even a few days after solicitation has begun is unsatisfactory because the damage is done. The customers cannot be "unsolicited." 756 F.2d 1048, 1054 (4th Cir. 1985). In FMC Corp. v. Varco Int’l, Inc., the Fifth Circuit echoed the sentiments of the Fourth Circuit in Bradley, emphasizing that absent immediate injunctive relief an employer's trade secrets could “be lost before a full trial on the merits could be held." 677 F.2d 500, 504 (5th Cir. 1982). Defendant's Agreements are valid under Oregon law. Defendant contractually agreed to treat Plaintiff's records and customer information as strictly confidential and to refrain from soliciting the Baird clients she serviced or whose names she learned through her employment by Plaintiff for one year following the termination of her employment for any reason. Indeed, Oregon courts consistently recognize the validity of restrictive covenants that protect an employer's confidential information, including customer contacts. See N. Pac. Lumber Co. v. Moore, 551 P.2d 431, 434–35 (Or. 1976); Kelite Prods., Inc. v. Brandt, 294 P.2d 320 (Or. 1956); Volt Servs. Grp., Div. of Volt Mgmt. Corp. v. Adecco Employment Servs., Inc., 35 P.3d 329, 334 (Or. Ct. App. 2001). Moreover, Oregon courts embrace covenants like those found in Plaintiff’s Agreements—which limit their scope only to specific customers. See, e.g., Kelite Prods., 294 P.2d at 328; Farmers Ins. Exch. v. Fraley, 720 P.2d 770 (Or. Ct. App. 1986). Defendant’s written agreements are not "non-competition" agreements. Plaintiff does not seek to prevent Defendant from earning a living as a financial advisor. Rather, Plaintiff seeks only to enjoin Defendant from earning a living by misappropriating Plaintiff’s customers or information, conditions to which Defendant specifically agreed. Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 18 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 15 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION The contracts containing the restrictions are valid and enforceable. Defendant’s Notes are supported by consideration. Defendant executed the Notes in exchange for monetary amounts. The restrictions are reasonable in that any time period required by the non-solicitation provision provides fair protection for Plaintiff without interfering with public interests. The restrictions are limited to a single year and only to those of Plaintiff’s clients and potential clients that Defendant became aware of as Plaintiff’s employee. Defendant is free to compete in the securities industries except for these limited restrictions. Finally, the agreements fairly protect Plaintiff's "protectible interest" in its trade secrets and its customer information and relationships. See Adecco Employment Servs., 35 P.3d at 334 (“Contacts between an employer's employees and its customers can create a protectible interest when the nature of the contact is such that there is a substantial risk that the employee may be able to divert all or part of the customer's business.”). Trade secrets include the Defendant’s training as to Plaintiff's method of handling and treating its customers' highly confidential financial information. See Rem Metals Corp. v. Logan, 565 P.2d 1080, 1082 (Or. 1977). Protectible customer information includes customer lists and customer contacts or "goodwill," knowledge of customers' and suppliers' names and requirements, and information on the nature of the employer's business. Olsten Corp. v. Sommers, 534 F. Supp. 395, 398 (D. Or. 1982); Cascade Exch. Inc. v. Reed, 565 P.2d 1095, 1098 (Or. 1977); N. Pac. Lumber Co., 551 P.2d at 434–35. Plaintiff seeks only to restrict information related to Plaintiff’s clients whom Defendant became aware of as Plaintiff’s employee. Regardless of the employment agreements, Plaintiff is also entitled to immediate injunctive relief to protect its trade secret customer list. As a trade secret, Plaintiff's customer list Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 19 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 16 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION is entitled to protection under the Oregon Uniform Trade Secret Act, Or. Rev. Stat. §§ 646.461– .475, which expressly provides for injunctive relief to protect an employer's trade secrets. Id. § 646.463. A trade secret is defined as: information, including a drawing, cost data, customer list, formula, pattern, compilation, program, device, method, technique or process[,] that: (a) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Id. § 646.461(4). The "economic value" of Plaintiff’s trade secret customer list misappropriated by Defendant is enormous. It represents approximately one hundred million dollars in client assets under Plaintiff’s management, which have generated for Plaintiff significant commission revenues. Plaintiff's customer list is not generally known to, or readily ascertainable by, any of Plaintiff's competitors that could obtain economic value from its disclosure or use. In addition, Plaintiff's Portland, Oregon office has instituted procedures to maintain the secrecy of its trade secret customer list. These measures include the contractual provisions discussed at length herein restricting the use of confidential information and requiring Baird employees to agree to those restrictions before they are provided with password-protected access to the confidential information. Thus, Plaintiff's customer list qualifies as a trade secret under the Oregon Uniform Trade Secret Act. See IKON Office Solutions v. American Office, 178 F.Supp.2d 1154, 1167 (D.Or.2001), aff'd, 61 Fed.Appx. 378 (9th Cir.2003) (list of customers can constitute a trade secret when considerable time and money has been expended to compile it). Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 20 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 17 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION Plaintiff is entitled to injunctive relief both to enforce the terms of its agreements with Defendant, and to protect against the conversion and misappropriation of its trade secret customer list and confidential customer information. I. Likelihood of Irreparable Harm Unless immediate injunctive relief is granted, it will be impossible to measure Plaintiff's damages with any reasonable degree of certainty. In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Stidham, the Fifth Circuit held that the defendant/employee's misappropriation of trade secrets caused irreparable harm: “Were defendant permitted by the law to exploit the clientele of their former employers, every investment that reasonably flowed from the exploitation should be included in the damages award. How such a figure could be arrived at escapes us.” 658 F.2d 1098, 1102 (5th Cir. 1981). Other courts have reached similar conclusions: [T]he loss of customer goodwill can amount to irreparable injury because the damages flowing from such an immeasurable loss are extremely difficult to compute ... There is simply no way of predicting (1) how clients' portfolios might have grown if not transferred away from Merrill Lynch, (2) what assets existing clients may earn, inherit, or even win over time, nor (3) what potential referrals transferring clients might have made. The goodwill of Merrill Lynch is an invaluable intangible, which, despite defendants' protestations to the contrary, is not easily quantified. Given the complexities and uncertainties of developing a client base, unless injunctive relief is granted now, the impact of defendants' breaches on Merrill Lynch simply cannot be measured. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Ran, 67 F. Supp.2d 764, 779 (E.D. Mich. 1999). It is impossible to determine at this time the number of Plaintiff’s clients who will be pirated away by Defendant, nor is it possible to determine with any degree of certainty the commissions each of these clients will generate not only this year, but in the future. Accordingly, Defendant’s misappropriation of trade secrets results in financial loss to Plaintiff, which is Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 21 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 18 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION incapable of measurement, requiring the issuance of an injunction to protect Plaintiff from irreparable harm. In addition to the fact that Plaintiff's damages are impossible to determine with any degree of certainty, irreparable harm also lies in the fact that Plaintiff acts as an agent and fiduciary to its customers. In re Rosenbaum Grain Corp., 103 F.2d 656, 659 (7th Cir. 1939). As such, clients expect their financial information, their market transactions, and their investment assets to be known only to themselves and Plaintiff. In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Kramer, the Northern District of Ohio agreed with the Plaintiff’s argument that “irreparable and immeasurable harm lies in the fact that [the firm’s] clients, when they discover that their financial information, market transactions, and investment assets which they presumed were held in confidence have been disclosed, will lose trust and confidence in [the firm].” 816 F. Supp. 1242, 1247 (N.D. Ohio 1992). If Defendant is permitted to continue her conduct, each client's sensitive financial information will lose its confidentiality guaranteed by Plaintiff to its customers, thereby causing customers to lose their trust and confidence in Plaintiff. Immediate injunctive relief also is necessary to protect the stability of Plaintiff's Portland, Oregon office and to discourage competitor firms from encouraging employees to breach their reasonable contractual commitments and divert Plaintiff's trade secret client lists to a competitor: The Court believes that the denial of the extension of the TRO under the circumstances presented in this case would leave Merrill Lynch vulnerable to the same conduct from other employees. Hence, the potential harm plaintiff faces, on several levels, is enormous. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Patinkin, 1991 WL 83163 (N.D. Ill. May 9, 1991); see also Kramer, 816 F. Supp. at 1247 ("Finally plaintiff argues convincingly that injunctive relief is required to protect it from similar conduct by other employees and to Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 22 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 19 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION discourage competitor firms . . . from paying such employees large sums of money to induce them to breach their contracts, to confiscate confidential client records and to divert those clients to the competitor."). In sum, Plaintiff faces significant irreparable harm on numerous levels, including the infliction of damages that are impossible to calculate at this time, a loss of client confidentiality, and a threat of office stability, all of which necessitate the issuance of immediate injunctive relief. Preservation of the status quo demands that Defendant shall be required to return all confidential data that she wrongfully diverted from Plaintiff and be enjoined from spoliation of any Plaintiff’s information. J. Granting Injunctive Relief Outweighs Denial The benefit of injunctive relief to Plaintiff outweighs any detriment to the Defendant. On the one hand, an injunction would protect Plaintiff's goodwill, business reputation, trade secrets, methods of business operation, and contract rights. See, e.g., Kramer, 816 F. Supp. at 1248 ("To deny injunctive relief in this case would . . . jeopardize the integrity of the securities industry to the detriment of the public interest."). Most importantly, however, an injunction would protect Plaintiff's highly sought after client list and the confidentiality of those clients' records. See, Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Zimmerman, No. 96-2412-JWL, 1996 WL 707107, at *3 (D. Kan. Oct. 1, 1996) ("[T]here is a strong public interest in protecting trade secrets."). By contrast, Defendant deliberately breached her contractual commitments to Plaintiff and intentionally misappropriated Plaintiff's trade secret property. Plaintiff seeks only to require Defendant to honor her obligations. The requested relief will not bar Defendant from earning a Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 23 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 20 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION living as a stockbroker, in fact she is already working with a competitor firm, serving the same community. Rather, Plaintiff seeks only to enjoin Defendant from stealing Plaintiff’s information and customers. See Kramer, 816 F. Supp. at 1248 ("[T]he restriction upon Mr. Kramer is limited to his existing customers and then only for a period of one year. There is nothing in the agreement which prohibits Mr. Kramer from continuing his occupation as a broker in the securities industry."). As the above authorities amply demonstrate, temporary and preliminary injunctive relief is fully warranted and necessary in this action. The public also has an interest in the enforcement of reasonable arbitration agreements. Rule 13804 of the FINRA Code of Arbitration Procedure for Industry Disputes addresses the means by which brokerage companies and registered representatives may seek temporary injunctive relief in arbitrable disputes. Rule 13804 authorizes a court of competent jurisdiction to grant temporary injunctive relief. Rule 13804(a)(1) states, in relevant part: “Parties to a pending arbitration may seek a temporary injunctive order from a court of competent jurisdiction even if another party has already filed a claim arising from the same dispute in arbitration.” FINRA Rule 13804(a)(1). Under Rule 13804(b), only when a court enters temporary injunctive relief can an expedited arbitration hearing on the request for permanent injunctive relief be held within 15 days of the date the court issued the injunctive order. See FINRA Rule 13804(b)(1). Therefore, to preserve the status quo between the parties and to ensure an expedited arbitration hearing, Plaintiff requests that this Court issue injunctive relief enjoining Defendant’s misappropriation of Plaintiff’s clients, confidential information and to enjoin Defendant from destroying any evidence or Plaintiff information. Accordingly, injunctive relief is fully warranted and necessary under Oregon law. Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 24 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 21 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION V. CONCLUSION Plaintiff has established both a likelihood of success on the merits of its claims, and the possibility that it will suffer irreparable harm. Defendant removed Plaintiffs trade secrets and has used this misappropriated information at her new, competing employer, RBC, in breach of her agreement not to solicit Plaintiff’ customers and the Protocol. Therefore, Plaintiff seeks a temporary restraining order and preliminary injunctive relief, pending final arbitration of this dispute pursuant to the FINRA Code of Arbitration Procedure for Industry Disputes, without waiver of the parties' rights thereunder. WHEREFORE, Baird respectfully prays that this Court ORDER and DECREE that: A. Defendant is immediately enjoined and restrained, directly and indirectly, whether alone or in concert with others, including any officer, agent, employee, and/or representative of Defendant’s new employer, RBC Capital Markets LLC, until hearing and thereafter until further Order of this Court, from: 1. Using or disclosing any information contained in any Baird records, whether original, duplicated, computerized, handwritten, or in any other form whatsoever, and Defendant is ordered to return all such records to Plaintiff; and 2. Destroying, erasing, or otherwise making unavailable for further proceedings in this matter, or in any arbitration proceeding between the parties, any records or documents (including data or information maintained in electronic form) in Nichols’s possession or control which were obtained from or contain information derived from any Baird Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 25 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 22 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION records, which pertain to Baird clients whom Nichols served or whose names became known to Nichols while employed by Baird, or which relate to any of the events alleged in the Complaint in this action. B. Defendant shall immediately provide Plaintiff with Defendant’s cellular telephone with the telephone number (503) xxx-8860, Defendant’s iPad, Defendant’s home computer(s), and any other devices used to access Defendant’s Yahoo! Email address so that Plaintiff may examine said devices, pursuant to Plaintiff’s Cellular/PED User Agreement and other policies, to ensure compliance with the policies and to ensure that Plaintiff’s confidential information has not been disseminated further. C. The Court’s Order shall remain in full force and effect until such a time as either a FINRA arbitration panel renders a final decision on Plaintiff’s request for permanent injunctive relief, or this Court specifically orders otherwise. D. Pending a preliminary injunction hearing before this Court, and pursuant to the requirements of sections 3 and 4 of the Federal Arbitration Act, 9 U.S.C. §§ 3–4, the parties are directed to proceed expeditiously with an arbitration pursuant to Rule 13804 of the FINRA Procedure. Dated this 6th day of June, 2017. STOLL STOLL BERNE LOKTING & SHLACHTER P.C. By: s/Timothy S. DeJong Timothy S. DeJong, OSB No. 940662 Email: tdejong@stollberne.com 209 SW Oak Street, 5th Floor Portland, OR 97204 Telephone: (503) 227-1600 Facsimile: (503) 227--6840 Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 26 of 27 STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 209 S.W. OAK STREET PORTLAND, OREGON 97204 TEL. (503) 227-1600 FAX (503) 227-6840 Page 23 - PLAINTIFF BAIRD’S EMERGENCY FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT TO FED. R. CIV. P. 65 AND MEMORANDUM IN SUPPORT OF MOTION -And- Michael S. Taaffe, Esq. Email: mtaaffe@slk-law.com SHUMAKER, LOOP & KENDRICK, LLP 240 S. Pineapple Ave, 10th Floor Sarasota, FL 34236 Telephone: (941) 364-2720 Attorneys for Plaintiff Robert W. Baird & Co., Inc. Case 3:17-cv-00886-MO Document 2 Filed 06/06/17 Page 27 of 27 PROTOCOL FOR BROKER RECRUITING The pnnc1pal goal of the followmg protocol is to further the cbents' interests of pnvacy and freedom of choice m connection with the movement of their Registered Representatives ("RRs") between firms If departmg RRs and then new finn follow this protocol, neither the departmg RR nor the finn that he or she JOms would have any monetary or other hab11tty to the firm that the RR left by reason of the RR takmg the mformatlon 1dent1fied below or the sohc1tat1on of the cbents serviced by the RR at his or her pnor firm, proVIded, however, that this protocol does not bar or otherwise affect the ab1hty of the pnor firm to bnng an action agamst the. new firm for "raidmg " The signatones to this protocol agree to implement and adhere to it m good faith When RRs move from one finn to another and both firms are s1gnatones to this protocol, they may take only the followmg account mformat1on chent name, address, phone number, email address, and account title of the chents that they serviced whde at the firm ("the Chent Information") and are proh1b1ted from ta.long any other docwnents or mfonnat10n Res1gnat1ons will be m wntmg dehvered to local branch management and shall include a copy of the Chent Information that the RR is takmg wtth him or her The RR hst delivered to the branch also shall mclude the account numbers for the clients serviced by the RR The local branch management Wiii send the mformat1on to the firm's back office In the event that the firm does not agree with the RR's hst of cbents, the RR will nonetheless be deemed m comphance with this protocol so long as the RR exercised good faith m assemblmg the hst and substantially complied with the requirement that only Chent Information related to clients he or she serviced while at the finn be taken With hini or her To ensure comphance with GLB and SEC Regulation SP, the new firm will bmit the use of the Chent Infonnatton to the sohc1tatton by the RR ofhts or her former cbents and will not pennit the use of the Chent Information by any other RR or for any other purpose If a fonner chent md1cates to the new firm that he/she would hke the pnor finn to provide account number(s) and/or account mformatton to the new finn, the former chent will be asked to stgn a standardized form authonzmg the release of the account number(s) and/or account mfonnat1on to the new firm before any such account number(s) or account mformat1on are provided The pnor firm will forward to the new firm the cbent's account number(s) and/or most recent account statement(s) or mformat1on concernmg the account's current pos1t1ons w1thm one busmess day, if possible, but, m any event, w1thm two busmess days, of its receipt of the signed authonzation This mfonnation will be transmitted electromcally or by fax, and the requests will be processed by the central back office rather than the branch where the RR was employed A chent who wants to transfer his/her account need only sign an ACAT form W/850873v1 Exhibit 1 Page 1 of 10 Case 3:17-cv-00886-MO Document 2-1 Filed 06/06/17 Page 1 of 10 RRs that comply with tlus protocol would be free to sohc1t customers that they servICed wlule at their former firms, but only after they have jOmed their new firms A firm would contmue to be free to enforce whatever contractual, statutory or common law restnct1ons exist on the sobc1tatlon of customers to move their accounts by a departing RR before he or she has left the firm The RR's former firm ts required to preserve the documents associated with each account as required by SEC regulations or finn record retention requirements It shall not be a v1olat10n of this protocol for an RR, pnor to his or her resignation, to provide another firm with mformat1on related to the RR' s busmess, other than account statements, so long as that mformation does not reveal chent identity Accounts subject to a services agreement for stock benefits management services be tween the firm and the company sponsormg the stock benefit plan that the account holder participates m (such as with stock option programs) would still be subject to (a) the prov1s1ons of that agreement as well as to (b) the provlSlons of any account serv1cmg agreement between the RR and the finn Also, accounts subject to a part1c1pahon agreement m connection with prospecting IRA rollover busmess would stI11 be subject to the prov1s1ons of that agreement If an RR 1s a member of a team or partnership, and where the entire team/partnership does not move together to another firm, the terms of the team/partnership agreement will govern for which chents the departing team members or partners may take Chent Information and which chents the departing team members or partners can solicit In no event, however, shall a team/partnership agreement be construed or enforced to preclude an RR from takmg the Chent Information for those clients whom he or she mtroduced to the team or partnership or from sohc1tmg such chents In the absence of a team or partnership wntten agreement on this po mt, the following tenns shall govern where the entire team is not movmg (1) If the depamng team member or partner has been a member of the team or partnership m a producmg capacity for four years or more, the departmg team member or partner may take the Chent Information for all clients serviced by the team or partnership and may sohc1t those chents to move their accowits to the new firm Without fear of ht1gat1on from the RR's former firm with respect to such mformabon and sohc1tations, (2) If the departing team member or partner has been a member of the team or partnership m a producmg capacity for less than four years. the departmg team member or partner will be free from htigat10n from the RR's former firm with respect to chent sobc1tat1ons and the Cbent Information only for those chents that he or she mtroduced to the team or partnership If accounts serviced by the departmg RR were transferred to the departmg RR pursuant to a retirement program that pays a retmng RR trailmg comm1ss1ons on the accounts m re turn for certain assistance provided by the retmng RR pnor to hls or her retirement m trans1t1orung the accounts to the departmg RR, the departmg RR s abthty to take Chent Information related to those accounts and the departmg RR's nght to sohc1t those ac- -2- Exhibit 1 Page 2 of 10 Case 3:17-cv-00886-MO Document 2-1 Filed 06/06/17 Page 2 of 10 counts shall be governed by the terms of the contract between the retmng RR, the de partmg RR, and the firm with which both were affiliated A signatory to this protocol may withdraw from the protocol at any time and shall endeavor to provide 10 days• pnor written notice of its withdrawal to all other signatones hereto A signatory who has withdrawn from the protocol shall cease to be bound by the protocol and the protocol shall be of no further force or effect with respect to the signatory The protocol will remam m full force and effect with respect to those s1gnatones who have not withdrawn Citigroup Global Markets Inc ("Smith Barney") By z�� Name Title Kevm McManus Managmg Director and Cluef Admirustrat1ve Officer, Pnvate Chent Branch System Memll Lynch, Pierce, Fenner & Smith Incorporated By N_ am� e�P -kH:� l tfi:!1- i - eg .__ ' _,_ ______ ��- Title Managmg Director, Head of Strategic Leadership and Development -3- Director of Strategic Development Executive Vice President Exhibit 1 Page 3 of 10 Case 3:17-cv-00886-MO Document 2-1 Filed 06/06/17 Page 3 of 10 counts shall be governed by the terms of the contract between the retmng RR, the de- partmg RR, and the firm with which both were affiliated A s1gnatocy to thts protocol may withdraw from the protocol at any time and shall endeavor to provade 10 days' pnor wntten nonce of its withdrawal to all other signatones hereto A s1gnatocy who has withdrawn from the protocol shall cease to be bound by the protocol and the protocol shall be of no further force or effect with respect to the s1gnatocy The protocol will remam m full force and effect with respect to those s1gnatones who have not withdrawn AGREED AND ACCEPTED THIS 19TH DAY OF AUGUST, 2004 STEPHENS INC Name David Knight Title Executive Vice resident General Counsel Exhibit 1 Page 4 of 10 Case 3:17-cv-00886-MO Document 2-1 Filed 06/06/17 Page 4 of 10 JOINDER AGREEMENT FOR BROKER PROTOCOL In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned company hereby joins and becomes a party to the Protocol for Broker Recruiting and agrees to be bound by the tenns of, and perform its obli gations under, the Protocol for Broker Recruiting. Dated as of the �day of March, 2005. UBS •• �"""'' By: -�-1---tr-7"=----- Name: �:.� ----- Nam?: �; ... 1T A.JuAff Title: £.y.f.�n.,( ll11t•c..-,,rz Wl90499M Exhibit 1 Page 5 of 10 Case 3:17-cv-00886-MO Document 2-1 Filed 06/06/17 Page 5 of 10 J011'DER AGREEMENT FOR BROKER PROTOCOL In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Wldersigned company hereby joins and becomes a party to the Protocol for Broker Recruiting and agrees to be bound by the tenns of, and perfonn its obli· gations Wlder, the Protocol for Broker Recruiting. Dated as of the 10 day of January, 2006. WACHOVIA SECURITIES LLC W/S04997v1 Exhibit 1 Page 6 of 10 Case 3:17-cv-00886-MO Document 2-1 Filed 06/06/17 Page 6 of 10 JOINDER AGREEMENT FOR BROKER PROTOCOL In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned company hereby joins and becomes a party to the Protocol for Broker Recruiting and agrees to be bound by the term.s of, and perform its obli gations under, the Protocol for Broker Recruiting. '1{,,. Dated as of the f1!:._ day of ():.'/Ju , 2006. MORGAN STANLEY OW INC. By: -=.><;.._,,;-+----r,.,._-F�� Name: Title: W/904997v1 Exhibit 1 Page 7 of 10 Case 3:17-cv-00886-MO Document 2-1 Filed 06/06/17 Page 7 of 10 / JOINDER AGREEMENT FOR BROKER PROTOCOL In consrderatton of good and valuable cons1derat1on, the receipt and sufficiency of wluch rs hereby acknowledged, the undersigned company hereby JOms and becomes a party to the Protocol for Broker Recru1tmg and agrees to be bound by the terms of, and perform its obh gat1ons under, the Protocol for Broker Recrurtmg Dated as of the \)t day of t1. a.r� 2007 A G Edwards & sons, Inc [NAME OF FIRM] By � /J'l £2.£� Name Title � v r Exhibit 1 Page 8 of 10 Case 3:17-cv-00886-MO Document 2-1 Filed 06/06/17 Page 8 of 10 JOINDER AGREEMEN T FOR BROKER PROTOCOL In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned company hereby joins and becomes a party to the Protocol for Broker Recruiting and agrees to be bowid by the terms of, and perform its obli gations under, the Protocol for Broker Recruiting. Dated as of the r- day of A1vJ, 2007. [Received on October 9, 2007] The Retirement Planning Group, Inc. 7'1PO Colle?;: Bf11J. sf�. !05" ovv/�,.J p,.rf{ 1'!5 /N7-!0 By: ��-sz:: Name: Chris K. Costello Title: CEO W/904997v1 Exhibit 1 Page 9 of 10 Case 3:17-cv-00886-MO Document 2-1 Filed 06/06/17 Page 9 of 10 NOV. 20. 2007 5: 1 OPM CREDIT SUISSE JOINDER AGREEMENT FOR BROKER PROTOCOL In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned company hereby joins and becomes a party to the Protocol for Broker Recruiting and agrees to be bowid by the t:enns of, and perform its obli gations under, the Protocol for Broker Recruiting. Dated as of the J.i day of /JtJrl p , 2007. By: ---��-t--:.....o.�----+-� Name: Anthony eChellis Title: Managing Director and Head of Private Banking Americas ' Exhibit 1 Page 10 of 10 Case 3:17-cv-00886-MO Document 2-1 Filed 06/06/17 Page 10 of 10