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JP Morgan Chase & Co v. Smith

United States District Court, D. Colorado

April 6, 2016

JP MORGAN CHASE & CO., JP MORGAN SECURITIES, LLC, and JPMORGAN CHASE BANK, N.A., Plaintiffs,
v.
MICHAEL SCOTT SMITH and WESTON M. MILLNER, Defendants.

TEMPORARY RESTRAINING ORDER

PHILIP A. BRIMMER UNITED STATES DISTRICT JUDGE

This matter comes before the Court on the Stipulated Motion for Temporary Restraining Order Pursuant to Fed.R.Civ.P. 65(b) [Docket No. 13] and plaintiffs’ Motion for Temporary Restraining Order Pursuant to Fed.R.Civ.P. 65(b) and D.C.COLO.LCivR. 65.1(a)(1)(2) [Docket No. 4]. In the stipulated motion, plaintiffs JP Morgan Chase & Co., JP Morgan Securities, LLC, and JPMorgan Chase Bank N.A. (collectively, “JPMC”), and defendants Michael Scott Smith (“Mr. Smith”) and Weston M. Millner (“Mr. Millner”) agree to entry of a Temporary Restraining Order (“TRO”) pending an expedited arbitration hearing before the Financial Industry Regulatory Authority (“FINRA”).

To justify the issuance of a temporary restraining order, the moving party must show (1) a likelihood of success on the merits; (2) a likelihood that the movant will suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in the movant's favor; and (4) that the injunction is in the public interest. RoDa Drilling Co. v. Siegal, 552 F.3d 1203, 1208 (10th Cir. 2009) (citing Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008)).

The Court finds that JPMC has established a likelihood of success on the merits on at least plaintiffs’ contractual confidentiality and trade secret claims. The exhibits to the complaint, which defendants have not disputed, demonstrate that defendants were contractually obligated to maintain the confidentiality of client information. An exhibit to the complaint is a declaration from Christian Goebel, a JPMC “Executive Director-Market Director.” Docket No. 1-2. The declaration claims that defendants “took, used, disclosed, and converted, for the benefit of themselves and Wells Fargo, JPMC’s Confidential Information, including but not limited to its client account information; lists of client names, addresses, and telephone numbers; client net worth and investment objectives; and similar confidential client information.” Id. at 15, ¶ 63. Such “confidential information” likely constitutes a trade secret under Colorado law, given JPMC’s allegations that the identity of its clients is “the lifeblood of its business, ” is not “ascertainable through sources outside” JPMC, and that JPMC “limits access” to this information “through the use of secured building access, copy-controlled documents, and multiple layers of password protections for computer databases[.]” Docket No. 1 at 5-6, ¶¶ 19, 21.[1] This is sufficient to satisfy the likelihood of success element for the purpose of the TRO [Docket No. 4]. The Court further finds that JPMC has established that it will suffer irreparable harm in the absence of a TRO, given the above-described allegations concerning the importance of JPMC’s customer information to its business. Cf. Otter Prods., LLC v. FreeCo, Inc., No. 10-cv-02028-LTB, 2011 WL 1542150, at *3 (D. Colo. Apr. 25, 2011) (“Loss of customers, loss of goodwill, and threats to a business’ viability can constitute irreparable harm”) (citations omitted). The Court finds that the balance of equities weighs in favor of injunctive relief, as JPMC has demonstrated harm to its business if a TRO is not issued. Finally, the Court finds that the public interest factor is neutral. Weighing the relevant factors, including the fact that the parties have stipulated to injunctive relief in this matter, the Court finds that a TRO is warranted in this case.

The parties include, as part of their proposed TRO, that “this matter is compelled to arbitration before FINRA in accordance with Rule 13804 of the FINRA Code of Arbitration Procedure for Industry Disputes.” Docket No. 13-1 at 2. However, the parties have not provided stipulated facts on which the Court could base an order compelling the parties to arbitrate the dispute. Moreover, the complaint [Docket No. 1] contains no claim to enforce an arbitration agreement, which by itself precludes the Court from entering injunctive relief beyond the scope of the claims. Accordingly, the Court will not adopt this portion of the parties’ proposed TRO.

Wherefore, it is

ORDERED that plaintiffs’ Motion for Temporary Restraining Order Pursuant to Fed.R.Civ.P. 65(b) and D.C.COLO.LCivR 65.1(a)(1)(2) [Docket No. 4] is GRANTED in part. It is further

ORDERED that the parties’ Stipulated Motion for Temporary Restraining Order Pursuant to Fed.R.Civ.P. 65(b) and Request to Vacate Hearing [Docket No. 13] is GRANTED in part as reflected in this order. It is further ORDERED that, on or before April 13, 2016, plaintiffs will file an Amended Complaint dismissing all claims against defendant Weston M. Millner. It is further

ORDERED that defendant Michael Scott Smith is temporarily enjoined from:

(a) soliciting or initiating contact with JPMC clients who were serviced by Mr. Smith while he was employed at JPMC or whose names became known to Mr. Smith by virtue of his employment with JPMC (excluding Mr. Smith’s family members). Mr. Smith can meet with JPMC clients (identified to JPMC’s counsel), if the client has requested the meeting; and

(b) using or divulging “Confidential Information, ” as that term is defined in the Chase Investment Services Corp. Supervision, Arbitration, Confidentiality and Non-Solicitation Agreement (see Docket No. 1-7). It is further ORDERED that the parties shall not destroy, delete, or discard relevant information pertaining to a party’s claim or defense in this action. It is further

ORDERED that, pursuant to Rule 65 of the Federal Rules of Civil Procedure, this Order shall expire 14 days after entry unless before that time the Court, for good cause, extends it for a like period or the adverse party consents to a longer extension. It is further

ORDERED that, given the parties have stipulated to entry of a temporary restraining order, the Court ...


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