Merrill Lynch, Peirce, Fenner & Smith, Inc. v. Callaha

265 F.Supp.2d 440 (2003).

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Nature of the Case

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Facts

Merrill Lynch is a financial services company and a Delaware corporation maintaining its principal place of business in New Jersey. Ds worked as financial analysts with Merrill Lynch for over 15 years. P provided both significant training as financial analysts. Ds executed Account Executive Trainee Agreements. Each promised that in the event of termination of his employment he would not solicit, for one year, any clients he served while at P or any clients whose names became known to him during that time. The names and addresses of P's clients would remain the property of P and would be treated by him as confidential information of P at all times during his employment and after his termination. Ds agreed in writing, on an annual basis, to abide by P's privacy policy regarding confidentiality of client information which prohibited the sale or rent of clients' personal information and the release of such information without client authorization. On Friday, April 25, 2003, Ds and a client associate resigned, without notice. On the same day they joined Wachovia Securities, Inc., Ds had access to accounts representing more than $79 million in assets and generating over $801,000 in commission revenues for P in the preceding 12 months. As a condition of their transfer, Ds received substantial upfront financial benefits from Wachovia. Ds maintained a list of the names, addresses, and phone numbers of 429 clients whose accounts they handled. They took a hard copy of this list with them and used it to contact many of these clients by phone. Callahan also has an electronic version of the list. Within a few days of their resignation, they sent mailings to virtually all the clients on the list. As of the hearing, two clients had transferred their accounts to Wachovia. Ds sent a second mailing to their former clients on the day of the hearing. The mailing included a letter stating that the three were 'settled in' at Wachovia and asking the clients to call if they had questions about the account transfer forms. P moved for temporary restraining order and preliminary injunctive relief. The Court held an evidentiary hearing on the motion on May 2, 2003.