Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Stidham

658 F.2d 1098 (5th Cir. 1981)

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Nature of the Case

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Facts

Ds were employed by P and placed in an 'account executive training program,' which involved intensive as well as expensive training at P's New York headquarters. None of the Ds had any prior securities experience, and none met the strict license and registration requirements applicable to dealers in securities. Ds were compensated as salaried employees while training and generated no income for approximately one-half year. After licensing, Ds became stockbrokers. Each D executed a contract with P containing two restrictive covenants; All records of P including the names and addresses of its clients, are and shall remain the property of P at all times during employment with P and after termination for any reason of my employment with P, and that none of such records nor any part of them is to be removed from the premises of P either in original form or in duplicated or copied form, nor transmitted verbally except in the ordinary course of conducting business for P; and in the event of termination each D promised not solicit any of the clients of P whom they served or whose names became known to me while in the employ of P in any community or city served by the office of P. Prior to their respective resignations from Merrill Lynch salaries ranged from approximately $54,000 to $84,000 per year. Ds were hired by Robinson-Humphrey, and prior to informing P of their plans, Ds duplicated various records containing vital sales information and provided Robinson-Humphrey with client names and addresses so that they could be solicited. On September 12, 1980, Ds resigned. Five days later P brought suit. Eventually, the district court enjoined Ds from violating the nondisclosure provision of their employment contract. Ds appealed.