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Morgan Stanley Smith Barney, LLC v. Abel

United States District Court, M.D. Florida, Jacksonville Division

January 23, 2018

DANIEL J. ABEL, Defendant.



         THIS CAUSE is before the Court on Plaintiff's Emergency Motion for Temporary Restraining Order and Preliminary Injunction and Incorporated Memorandum of Law in Support Thereof (Emergency Motion, Doc. 2), filed January 22, 2018. On January 22, 2018, at 5:19 p.m., Plaintiff Morgan Stanley Smith Barney, LLC, (Morgan Stanley) filed its Amended Complaint for Injunctive and Other Relief (Amended Complaint, Doc. 6). In the Emergency Motion Morgan Stanley seeks a temporary restraining order and preliminary injunction precluding Defendant Daniel J. Abel (Abel), and anyone acting in concert with him, from soliciting Morgan Stanley's customers. Morgan Stanley further seeks an order directing Abel to return its confidential information. Emergency Motion at 1.

         In support of its Emergency Motion, Morgan Stanley alleges that Abel, a former employee of the company, is breaching non-solicitation and non-disclosure agreements between himself and Morgan Stanley and is seeking to “misappropriate and convert Plaintiff's confidential information and trade secrets relating to Plaintiff's clients with over an estimated $18 million in combined assets for the benefit of himself and his own new firm, Abel Wealth Management, LLC (“AWM”) in Jacksonville FL.” Amended Complaint at ¶ 1.

         Beginning in March 2014, Abel was initially employed by Morgan Stanley as a financial planner. Id. at ¶ 6. However, he eventually transitioned from that position to be part of the financial planning support staff. Id. In both roles Morgan Stanley asserts Abel had significant contact with Morgan Stanley clients “and had permission to access [Morgan Stanley's] databases and access client information in order to service [Morgan Stanley's] clients.” Id. at ¶ 8. Morgan Stanley further asserts that it has “expended considerable money, time, and resources to identify, service, and maintain clients and to secure confidential personal and financial information derived from Morgan Stanley clients.” Id. at ¶ 9. Doing so, Morgan Stanley deems it a “central responsibility” to safeguard “the confidentiality of the comprehensive personal and financial information provided to [Morgan Stanley] and its employees” by its clients. Id. at 10. As such, Morgan Stanley contends that its client information is held “in the strictest confidence, with safeguards designed to prevent any unauthorized disclosure of client information.” Id.

         When Abel joined Morgan Stanley, he entered into an Employment Agreement which contains “restrictions against taking confidential customer (including names and contact information) or Morgan Stanley information, restrictions against solicitation of Morgan Stanley customers, and agreed to the entering of an injunction in the event that he breached these obligations.” Id. at ¶ 13. Likewise, in December of 2015, Abel executed the Morgan Stanley Wealth Management Joint Production Arrangement Policy (“JP Policy”) which includes a non-solicitation provision and further directs that “[i]n the event of a breach of any of the restrictions contained or incorporated herein, [Abel] agrees that [Morgan Stanley] will suffer immediate and irreparable harm, that money damages will not be adequate to compensation (sic) [Morgan Stanley], and [Morgan Stanley] will therefore be entitled to appropriate injunctive relief.” Id. at ¶¶ 12, 17; Exhibit 2 at 5 (JP Policy).[1] The JP Policy also provides that its “non-disclosure, confidentiality and non-solicit restrictions will survive termination of the JP Arrangement.” Id. at ¶ 20. Finally, Morgan Stanley asserts that as a Morgan Stanley employee, Abel was subject to the Morgan Stanley Code of Conduct. Within the applicable Code of Conduct is a provision obligating employees to protect client and firm confidential information, during as well as after their employment at Morgan Stanley. Id. at ¶ 21.

         Morgan Stanley alleges that on or about January 12, 2018, Abel submitted a letter of resignation by slipping it under the door of his supervisor, Albert S. Toto III, while Toto was out of town for a long weekend. Amended Complaint, Attach. 3 at ¶ 8 (Toto Declaration). Hence, it was not until Tuesday, January 16, 2018, that any manager at Morgan Stanley became aware of Abel's resignation. Id. Morgan Stanley asserts that in the interim, and perhaps even prior to his departure from Morgan Stanley, Abel engaged in acts which violated the terms of his Employment Agreement, the JP Policy, and Morgan Stanley's Code of Conduct. Amended Complaint at ¶¶ 23-25; Toto Declaration at ¶¶ 8- 11; Supplemental Declaration of Albert S. Toto III (Doc. 4-1, Toto Supplemental Declaration) at ¶¶ 5-11.

         In particular, Morgan Stanley alleges in its Amended Complaint and supporting declarations that “despite the numerous contractual restrictions designed to prohibit any misuse or disclosure of Plaintiff's confidential information, [Abel] engaged in various and repeated activities to take Plaintiff's confidential information, store it outside of Plaintiff's servers and databases, and use that information to solicit Plaintiff's customers.” Amended Complaint at ¶ 23. In the days preceding his resignation, Morgan Stanley contends that Abel contacted Morgan Stanley clients by phone, one of whom decided to transfer his accounts to Abel's new firm. Id. at ¶ 24. Morgan Stanley asserts that Abel has contacted at least five other Morgan Stanley clients to solicit their business. Id. at ¶¶ 24-25; Toto Declaration at ¶ 11; Toto Supplemental Declaration at ¶¶ 5-8. Similarly, Morgan Stanley alleges that Abel “sent out a notification to his connections - several of whom are Morgan Stanley clients - on the social networking site,, asserting that he was starting his own firm.” Amended Complaint at ¶ 25. Morgan Stanley contends that “[t]his conduct violates the Non-Solicitation Provision contained in the JP Policy, which prohibits Defendant from soliciting any of Plaintiff's clients.” Id.

         Upon learning of Abel's resignation from Morgan Stanley on January 16, 2018, and of his alleged activities in violation of his Employment Agreement, the JP Policy, and the Morgan Stanley Code of Conduct, Morgan Stanley sent two separate letters to Abel, seeking clarification as to his actions, requesting that he return any and all Morgan Stanley confidential information, and demanding that he cease and desist from violating his obligations to the firm. Amended Complaint, Attach. 4 (January 17, 2018 letter); Attach. 5 (January 18, 2018 letter). According to Morgan Stanley, Abel responded through an attorney, but “failed to return any customer lists and other documents belonging to Morgan Stanley and refused to certify compliance with restrictive covenants going forward.” Emergency Motion, Attach. 1 at ¶ 4 (Declaration of Michael D. Bressan). Consequently, Morgan Stanley filed its Emergency Motion before this Court seeking temporary and preliminary injunctive relief.

         Having considered the Amended Complaint, Emergency Motion, and declarations filed in support thereof, and in accordance with Rule 65(b), Federal Rules of Civil Procedure (Rule(s)), and Local Rule 4.05, United States District Court, Middle District of Florida (Local Rule(s)), [2] the Court makes the following findings for purposes of resolving this Motion:[3]

1. Morgan Stanley is a Delaware corporation with its principal place of business in either New York or New Jersey. Amended Complaint at ¶ 2. Defendant Abel is an individual who is a citizen of Florida. The amount in controversy is in excess of $75, 000. Accordingly, this Court has diversity jurisdiction over this action pursuant to 28 U.S.C. § 1332.
2. This Court has personal jurisdiction over Abel because he resides in the state of Florida, is engaged in business in the state, and is alleged to have committed tortious acts in the state. See Morrison Management Specialists, Inc. v. LVDC, Inc., No. 8:11-cv-660-T-30TGW, 2011 WL 2446701, *1 (M.D. Fla. June 15, 2011).
3. Venue is proper in this district pursuant to 28 U.S.C. § 1391 (b)(2), in that the matter is founded solely on diversity jurisdiction and a substantial part of the events or omissions giving rise to the claim are alleged to have occurred in this district.
4. It is within the Court's discretion to grant injunctive relief. All Care Nursing Serv. v. Bethesda Memorial Hosp., Inc., 887 F.2d 1535, 1537 (11th Cir. 1989). In order for a court to grant injunctive relief, a movant must show: (1) the movant has a substantial likelihood of success on the merits; (2) irreparable injury will be suffered if the injunction does not issue; (3) “the threatened injury to the movant outweighs whatever damage the proposed injunction will cause the opposing party;” and (4) that the proposed injunction would not be adverse to the public interest. Id; Davidoff & CIE, S.A. v. PLD Int'l Corp., 263 F.3d 1297, 1300 (11th Cir. 2001); Am. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407, 1410 (11th Cir. 1998).
5. Morgan Stanley asserts claims for breach of contract, misappropriation of trade secrets, tortious interference with business relationships, and deceptive and unfair trade practices. See Amended Complaint at 11, 12, 14, 15. In Florida, a breach of contract action requires the following three elements: a valid contract, material breach, and damages. Sanderson v. Zurich American Ins. Co., No. 8:09-cv-1755-T-23AEP, 2009 WL 4899403, *2 (M.D. Fla. Dec. 11, 2009) (quoting Friedman v. New York Life Ins. Co.,985 So.2d 56, 58 (Fla. 4th Dist. Ct. App. 2008). With respect to its claim for trade secret misappropriation, [4] Morgan Stanley must establish the following: “(1) that the plaintiff possessed secret information and took reasonable steps to protect its secrecy and (2) that the secret it possessed was misappropriated.” H2Ocean, ...

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