Secured Preliminary Injunction Against Former E*TRADE Employee
Payne & Fears obtained a victory in favor of client E*TRADE in an action brought against a former employee.
In the case E*TRADE Financial Corporation v. Eaton, 305 F. Supp. 3d 1029 (D. Ariz. 2018), the former employee testified that he contacted his former employer’s clients, by telephone, to announce his new position and provide his new contact information. The former employee claimed that he was required, by certain rules applicable to certified financial planners, to provide his new contact information to the clients he previously serviced. The former employee admitted, however, that if he was unable to speak with a client in “real-time,” he did not send that client an e-mail, letter, flyer, or some other written communication to provide his new contact information.
The court found that by insisting on conveying his switching firms only in a live and real-time conversation and never following up to provide his new contact information to those former clients who did not assent to a telephone call, “[the former employee’s] primary purpose was to solicit their business to him and away from [his former employer].” This, the court held, constituted improper solicitation in violation of the agreement between the former employee and employer.
Rod Sorensen and Rhianna Hughes defended the case on behalf of E*TRADE. This case expanded the definition of client solicitation under Arizona law. Now, not only is the content of the former employee’s communications relevant, but so is the manner in which the communication occurs.