Judge Kills TRO Against RayJay Team, Saying Former Employer Misled Him
A federal judge in Florida has reversed a restraining order he imposed against two brokers who left Regions Bank to work at Raymond James & Associates earlier this month, accusing the bank of having misrepresented their practice.
The brokers wrote in affidavits the judge reviewed after his order that they had years of experience that allowed them to build their own prospect and client lists, and did not violate employment contracts and privacy laws by sending client lists to their personal emails
In its filing for an injunction and restraining order, the brokerage unit of Alabama-based Regions Financial said they were using customer contact lists that belonged to the bank both before and after they moved to Raymond James on April 6. It also said they had little brokerage industry experience and had exploited the coronavirus economic crisis by moving when they and Raymond James hoped the court would be unable to operate efficiently.
In reversing himself, the judge cited the brokers’ contention that they had pre-existing relationships with 75% of their client base before they joined Regions in 2015 with $100 million in assets. The information they sent to their emails in alleged violation of their employment contracts was inconsequential, involving just two customers and done in the normal course of business, the judge wrote.
“The Court is at a loss to understand how such information could have aided the Individual Defendants in soliciting former clients,” he wrote. “[T]he misstatements and omissions in Plaintiff’s TRO motion paint a picture which seems at odds with the reality of the Individual Defendants’ motives and relationships with their clients.”
A spokesman for Regions, which filed its complaint on April 16, declined to comment.
“The tone of the judge’s response to regions is pretty telling,” said James Heavey, an employment lawyer in New York who was not involved in the case but has successfully represented some brokers opposing TROs. “Regions got over their skis on the facts here.”
The brokers affirmed that at least 40 clients had reached out to them proactively after learning from the bank that they had left, the judge wrote.
“Montalvo’s affidavit explains how each of those incidents could not reasonably be described as part of a scheme to abscond with client information,” his reversal order said.
Montalvo and Cárdenas pushed back against Regions’ “false and speculative” allegation that they attempted to utilize the chaos of the national state of emergency in timing their move.
“The advisors joined Raymond James in spite of the current pandemic and not because of it,” they wrote in their affidavits. “An injunction in these highly volatile times which takes away the advisors’ cell phones and necessarily chills their responses to clients’ questions out of fear that a response may be misinterpreted as a solicitation.”
In August, a federal judge in Oregon refused to extend a nonsolicit order he had imposed three weeks earlier against a former Morgan Stanley broker who joined UBS after finding that Morgan Stanley was unlikely to suffer “irreparable harm.”
Judge Byron’s order said his order will not prejudice the “ultimate outcome” of the case or the full briefing he will conduct.