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Edelman Financial Engines, LLC v. Harpsoe

United States District Court, D. Kansas

January 25, 2019

EDELMAN FINANCIAL ENGINES, LLC, Plaintiff,
v.
ERIK HARPSOE and BRIAN K. FOWLES, Defendants.

          MEMORANDUM AND ORDER GRANTING TEMPORARY RESTRAINING ORDER

          Daniel D. Crabtree United States District Judge.

         Plaintiff Edelman Financial Engines, LLC (“Edelman FE”), asserts claims for damages against defendants Erik Harpsoe and Brian K. Fowles. Doc. 1. Plaintiff also has filed a Motion for Temporary Restraining Order. Doc. 4. On January 24, 2019, the court conducted a hearing on plaintiff's motion with counsel for plaintiff and defendants present.

         Based on the conclusions and findings below, the court grants plaintiff's Motion for Temporary Restraining Order under Federal Rule of Civil Procedure 65.

         I. Background

         The following facts are alleged in plaintiff's Verified First Amended Complaint (Doc. 3) and contained in the exhibits attached to its Verified First Amended Complaint. Plaintiff operates a national investment advising system. Two separate companies, Financial Engines and Edelman Financial Services, merged in 2018 to form plaintiff. In February 2016, Financial Engines acquired a Kansas City business called The Mutual Fund Store (“TMFS”). TMFS has since become a part of plaintiff because of Financial Engines' merger with Edelman Financial Services. TMFS's principal place of business was in Overland Park, Kansas, and plaintiff now operates in part in Kansas.

         Defendants were employed by TMFS, Financial Engines, and-finally-plaintiff. While working for plaintiff, defendants signed several agreements governing their contractual obligations with plaintiff. The first of these agreements, which defendants signed in 2011, restricts the use of confidential client information owned by plaintiff. The 2011 agreement prohibits: (1) using or disclosing confidential information except in the course of proper employment performance; and (2) copying or reproducing confidential information for use outside proper employment duties. The 2011 agreement requires that employees return confidential information and any copies of that information at the end of their employment. Doc. 3-1 at 3 (defendant Harpsoe's 2011 agreement), 11 (defendant Fowles's 2011 agreement).

         The 2011 agreement also prohibits defendants from “solicit[ing], divert[ing], or tak[ing] away”-or attempting to solicit, divert, or take away-the business of plaintiff's “Customers” for one year after each employee's last day of work. Id. at 4 (defendant Harpsoe's 2011 agreement), 12 (defendant Fowles's 2011 agreement). Also, former employees cannot cause or attempt to cause plaintiff's “Customers” to end or reduce their relationships with plaintiff, this agreement provides. Id. The 2011 agreement defines “Customers” as

(i) TMFS customers served by Employee at any time during Employee's final two years of employment with TMFS, (ii) customers serviced by TMFS personnel during Employee's final two years of employment with TMFS, if Employee had supervisory duties over the personnel providing such service at the time it was provided, (iii) customers with respect to which Employee had Confidential Information at any time during Employee's final two years of employment with TMFS, and (iv) prospective TMFS customers that Employee solicited or had material contact with, or about whom Employee had access to Confidential Information, at any time during Employee's final two years of employment with TMFS.

Id. at 3 (defendant Harpsoe's 2011 agreement), 11 (defendant Fowles's 2011 agreement); see also Doc. 3-2 at 2-3 (both defendants' 2016 agreements with plaintiff provide that “[t]he term[] . . . ‘TMFS' as used in the [employees' earlier] Agreement shall be deemed to include Financial Engines and its subsidiaries and successors”). And in 2016, defendants signed another agreement requiring them to provide four weeks' notice before terminating their employment with plaintiff. Doc. 3-3 at 2.

         Defendants both resigned from their employment with plaintiff on January 17, 2019. They had not provided four weeks' notice of their resignation, as required by their 2016 agreements. After resigning, defendants sent a letter announcing their new business, Century Wealth Partners. Pl.'s Ex. 7. The announcements, mailed to defendants' former customers from their employment with plaintiff, contain the name of their new firm, contact information, and pictures of defendants. Plaintiff's evidence at the temporary restraining order hearing provided a credible basis for an inference that defendants, before resigning, had accessed plaintiff's business records and collected contact information about plaintiff's customers. The bottom of the announcement contains some language explaining that the letters are not solicitations. Plaintiff argues that these communications violate the provisions prohibiting the use of confidential information and solicitation in defendants' agreements, described above.

         II. Legal Standard

         Federal Rule of Civil Procedure 65(b)(1) authorizes the court to issue a temporary restraining order without written or oral notice to the adverse party only if:

(A) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and
(B) the movant's attorney certifies in writing any efforts made to give notice and the reasons why it ...

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