United States District Court, E.D. Kentucky, Central Division, Lexington
MEMORANDUM OPINION AND ORDER
M. Hood Senior U.S. District Judge
matter is before the Court upon Plaintiff's renewed
Motion for a Temporary Restraining Order [DE 15], renewed
Motion for Expedited Discovery [DE 16], and Motion for a
Preliminary Injunction [DE 17]. BB&T's Motion for a
Temporary Restraining Order [DE 15] will be
GRANTED because BB&T has met the
substantive requirements for issuance of a temporary
restraining order. BB&T's Motion for Expedited
Discovery [DE 16] will be GRANTED IN PART
and DENIED IN PART. BB&T has shown good
cause for limited expedited discovery but the Court will
significantly narrow the scope of the expedited discovery.
Finally, a hearing will be scheduled to consider the Motion
for a Preliminary Injunction [DE 17].
Procedural and Factual Background
Branch Banking and Trust Company (“BB&T”)
filed this breach of contract action on November 9, 2018. [DE
1]. BB&T brought this action against four former
employees, and Individual Defendants, Laura Massey Jones,
Ralph S. “Bud” Watson, II, John Cadwell, and Lee
Lamonica Walker (“Individual Defendants”), and
The Farmers National Bank of Danville, d/b/a WealthSouth
(“WealthSouth”). BB&T alleges the defendants
misappropriated BB&T trade secrets in violation of the
Kentucky Uniform Trade Secrets Act and engaged in a civil
conspiracy. [Id. at 14-15, 20-21]. BB&T also
alleges that the Individual Defendants violated contractual
non-disclosure agreements and interfered with contractual
relations. [Id. at 15-18]. Furthermore, BB&T
alleges that Defendants Jones, Watson, and Cadwell breached
contractual non-solicitation agreements and that Defendant
WealthSouth interfered with the contractual relationship
between BB&T and the Individual Defendants. [Id.
at 12-13, 18-19]. BB&T seeks punitive damages, injunctive
relief, compensatory damages, costs, and attorneys' fees.
[Id. at 19-20, 21-24].
to BB&T, Defendants Jones, Watson, and Cadwell are former
employees who entered into contractual employment agreements
that provided that during their employment, and for certain
periods following their termination of employment
with BB&T, that the defendants would not “call
upon, solicit, divert, or take away any of BB&T's
clients, current or potential.” [Id. at 3].
BB&T alleges that these defendants acknowledged
“that for any violation or threatened violation of any
[contractual] covenants, BB&T will . . . be entitled to
specific performance and an injunction (without bond) to be
issued . . . .” [Id. at 4, DE 1-1 at 2; DE 1-3
at 2, DE 1-4 at 2]. Finally, BB&T claims that Defendant
Walker signed a non-disclosure agreement. [DE 1 at 8; DE
asserts that the Individual Defendants “abruptly
resigned” on September 4, 2018. [DE 1 at 10]. BB&T
further contends that the Individual Defendants
“immediately went to work for WealthSouth, ” a
direct competitor of BB&T, and “began calling on
and soliciting BB&T clients and business
the parties attempted to resolve the dispute before the
commencement of this action. BB&T has attached exhibits
containing correspondence between the parties' attorneys.
[See DE 1-6; DE 1-7; DE 5-1]. In fact, counsel for
the Defendants assured BB&T that Individual Defendants
Jones, Watson, and Cadwell would honor their continuing
contractual obligations with respect to the BB&T
contracts. [See DE 1-6 at 1, Page ID # 38; DE 1-7 at 2, Page
ID # 56].
so, the relationship soured. BB&T claims that the
Individual Defendants are actively soliciting their customers
and exposing their trade secrets, in violation of the
contractual provisions in the employee contracts. [See DE 1;
DE 5]. BB&T further claims that the actions of the
Defendants are causing continuing and irreparable harm. [DE
1; DE 15].
result, on November 12, 2018, BB&T moved for a temporary
restraining order against the Defendants. [DE 5]. Initially,
the Court granted an ex parte temporary restraining
order [DE 6] but it was subsequently vacated without
prejudice due to a procedural deficiency. [DE 14]. The Court,
having vacated the temporary restraining order, also denied
BB&T's previous Motion for Expedited Discovery.
November 21, 2018, BB&T filed a renewed Motion for a
Temporary Restraining Order [DE 15], a renewed Motion for
Expedited Discovery [DE 16], and a Motion for a Preliminary
Injunction [DE 18]. Since the Defendants have appeared in
this action and opposed the initial temporary restraining
order, the Court allowed a response from the Defendants [DE
20] and reply from the Plaintiff [DE 26] on an expedited
briefing schedule. The Defendants responded [DE 23; DE 24]
and BB&T replied [DE 32, DE 33], making this matter ripe
for review. Consideration of all three motions will be
consolidated into this memorandum opinion and order.
asserts that they will be irreparably harmed without
injunctive relief from the Court due to the Defendants'
past and continuing violations of the BB&T employment
contracts. [See DE 15]. Furthermore, BB&T
asserts that expedited discovery is necessary to determine
whether a preliminary injunction is warranted in this matter.
[See DE 16; see also DE 17].
Defendants oppose BB&T's request for injunctive
relief by claiming that BB&T's motion fails to meet
the subsequent requirements for the issuance of a temporary
restraining order. [See DE 24]. Additionally, the
Defendants oppose BB&T's request for expedited
discovery, asserting that the discovery requests are too
broad and that it will difficult to complete the expedited
discovery within twenty-eight days considering the upcoming
holiday season. [See DE 23].
parties make compelling arguments. Still, at this stage, the
Court finds that the issuance of a temporary restraining
order is warranted to preserve the status quo until the Court
may consider whether a preliminary injunction is warranted
for the pendency of the litigation. Furthermore, the Court
will grant BB&T the opportunity to conduct limited
expedited discovery to determine if a preliminary injunction
is warranted in this matter. Still, the Court will
substantially limit the scope of the proposed expedited
Temporary Restraining Order
factors to be weighed before issuing a TRO are the same as
those considered for issuing a preliminary injunction.”
Contrech Casting, LLC v. ZF Steering Sys., LLC, 931
F.Supp.2d 809, 814 (E.D. Mich. 2013) (quoting Monaghan v.
Sebelius, 916 F.Supp.2d 802, 807 (E.D. Mich. 2012)).
Thus, when a party seeks a temporary restraining order, the
Court must consider: (1) whether the movant has a strong
likelihood of success on the merits; (2) whether the movant
would suffer irreparable injury without the injunction; (3)
whether issuance of the injunction would cause substantial
harm to others; and (4) whether the public interest would be
served by the issuance of the injunction. See Certified
Restoration Dry Cleaning Network, LLC v. Tenke Corp.,
511 F.3d 535, 542 (6th Cir. 2007); see also Stein v.
Thomas, 672 Fed.Appx. 565, 569 (6th Cir. 2016). These
are “factors to be balanced, not prerequisites that
must be met.” Tenke Corp., 511 F.3d at 542.
For example, where a party makes “an extremely strong
showing of irreparable harm” they are “not
required to make as strong a showing of a likelihood of
success on the merits.” Stein, 672 Fed.Appx.
Likelihood of Success on the Merits
the renewed Motion, Complaint, and accompanying affidavits
raise serious questions about whether the BB&T
contractual provisions were violated and demonstrate a strong
likelihood that BB&T will proceed on the merits. As the
Court previously discussed, non-solicitation agreements are
generally enforceable under Kentucky law. See, e.g.,
Hammons v. Big Sandy Claims Service, Inc., 567
S.W.2d 313, 315 (Ky. Ct. App. 1978); Crowell v.
Woodruff, 245 S.W.2d 447, 449 (Ky. 1951) (upholding
validity of contractual non-compete agreement). The parties
do not dispute the enforceability of the contracts in
question nor do they contest the validity of the relevant
has provided affidavits and letters in support of its
Complaint and renewed Motion for a Temporary Restraining
Order. In a letter dated September 13, 2018, counsel for the
Defendants assured BB&T that “WealthSouth has
instructed Mr. Watson, Ms. Jones, and Mr. Cadwell to comply
with their non-solicitation obligations [for] the required
term[s].” [DE 1-7 at 2, Page ID # 56]. Still, Lori
McGuire, Senior Vice President and Portfolio Manager at
BB&T, alleges that she contacted clients of
BB&T's Lexington office and learned that “by
September 6, 2018, most of BB&T's more significant
clients had already been contacted by one or more of the
former employees.” [DE 15-2 at 2, Page ID # 304].
Importantly, McGuire's affidavit states that over
thirty-three BB&T accounts have transferred to
WealthSouth since the Individual Defendants resigned on
September 4, 2018. [Id. at 2-3, Page ID # 304-05].
has also presented an affidavit [DE 15-3] and supplemental
affidavit [DE 15-5] from Greg Broadridge, Senior
Vice-President for BB&T in Louisville. Similarly, the
Broadridge affidavit alleges that calls to BB&T clients
revealed that BB&T's more significant clients were
being contacted by one or more of the Individual Defendants.
[DE 15-3 at 2, Page ID # 307].
BB&T has included an affidavit from Veronica Wang. [DE
1-5]. Ms. Wang asserts that she is a long-time customer of
BB&T and that she had communicated and worked primarily
on her accounts at BB&T with Bud Watson, Laura Jones, and
Lee Lamonica [Walker] in the Lexington, Kentucky BB&T
wealth management office. [DE 1-5 at 1, Page Id. #
37]. Ms. Wang further alleges that Laura Jones contacted her
on September 6, 2018, to inform Wang that she was employed at
another bank and to ask Wang to move her BB&T accounts to
the new bank where Jones worked. [Id.].
response, the Defendants claim that the affidavits do not
demonstrate that BB&T is likely to succeed on the merits
because the affidavit testimony is replete with hearsay.
[See DE 24 at 7, Page ID # 500]. Of course, the
Defendants are correct that the testimony in the affidavits
concerning contacts to current or former BB&T clients
appears to constitute hearsay.
there is ample evidence in the record to raise grave concerns
about past and continuing violations of the BB&T
contracts. For instance, Lori McGuire has personal knowledge
of the fact that thirty-three BB&T accounts have
transferred to WealthSouth since September 4, 2018. [DE 15-2
at 2, Page Id. # 304]. The timeframe of these
transfers corresponds with the resignation of the Individual
Defendants. Additionally, and most glaringly, BB&T has
provided testimony from Veronica Wang, a BB&T wealth
management client, who alleges that she was directly
solicited by one of the Individual Defendants. The Defendants
response discusses the affidavits from Lori McGuire and Greg
Broadridge but fails to address or even mention the affidavit
provided by Veronica Wang. [See DE 24 at 7, Page ID
the Defendants claim that this Court's previous decision
in Wells v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., is controlling here and that application of
Wells to this case demonstrates that BB&T has
failed to demonstrate likelihood of success on the merits.
See Wells v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., 919 F.Supp. 1047 (E.D. Ky. 1994). [See DE 24 at
5-8 Page ID # 498-501]. But while Wells is highly
instructive, it is not directly on point in this factual
Wells, the Plaintiff signed an employment agreement
that stated, in part, “In the event of termination of
my services with Merrill Lynch for any reason, I will not
solicit any of the clients of Merrill Lynch whom I
served or whose names became known to me while in the employ
of Merrill Lynch . . . .” Wells, 919 F.Supp.
at 1049 (emphasis in original). The Court analyzed the
meaning of the term “solicit” in the Merrill
Lynch non-solicitation agreement. The Defendants correctly
point out that the Wells Court found that
“mere informational contact” with a former client
did not constitute “solicitation” under the
employment agreements. Id. at 1053. Additionally,
the Defendants are correct that the burden of proving
wrongful solicitation is on the Defendant. Id. at
here, the BB&T employment agreements prohibit a range of
conduct that is more broad than the employment agreement that
the Court analyzed in Wells. In Wells, the
employment agreement only prohibited the employee from
soliciting any Merrill Lynch clients for a one-year period.
Id. at 1049-50. In this case, the BB&T
employment agreements prohibit the Defendants from
“call[ing] upon, solicit[ing], divert[ing], or tak[ing]
away any of BB&T's clients, current or