Labor & Employment Law Daily Wrap Up, REMEDIES, DAMAGES—D. Nev.: Morgan Stanley not entitled to preliminary injunction against former employee, (Jan 10, 2025)

By Kevin M. Finson

Injunctive relief was denied in a dispute over client information allegedly retained and used by a former employee because there was only speculation and no actual evidence to suggest the employee had retained any confidential information.

Morgan Stanley failed to meet the high standard required to obtain pre-trial injunctive relief in a dispute with a former employee over his alleged retention of client information subject to trade secret protection, the U.S. District Court in Las Vegas has held. The record before the court contained only speculation and not actual evidence that the employee had retained client information (Morgan Stanley Smith Barney LLC v. Takahashi, No. 2:24-cv-02127-CDS-MDC (D. Nev. Jan. 6, 2025)).

Morgan Stanley Smith Barney, LLC (Morgan Stanley) is a wealth management firm which employed Nicholas Takahashi as a financial advisor until Takahashi, along with other Morgan Stanley employees, resigned and joined the competing company Raymond James & Associates, Inc. Morgan Stanley brought suit against Takahashi, alleging that he retained confidential information about Morgan Stanley clients which he used to solicit their business in violation of the Financial Advisor Employment Agreement which he signed as part of his employment. Morgan Stanley petitioned for a temporary restraining order and preliminary injunction. Morgan Stanley has filed its instant motions pursuant to Rule 13804 of the Financial Industry Regulatory Authority (FINRA). The court considered the traditional injunction factors.

Likelihood of success on the merits. Morgan Stanley argued that its Financial Advisor Employment Agreement was properly enforceable as being neither unreasonably restrictive nor otherwise unenforceable, and that courts had consistently held that client information was deserving of trade secret protections. Takahashi argued that the enforceability of the agreement was irrelevant because he had not in fact retained or misappropriated any of Morgan Stanley’s information.

The court found that on the record before it there was only speculation, and not evidence, that Takahashi had actually retained any client information as opposed to using publicly available information from the internet to contact former clients, which was not forbidden by the agreement.

Finding that Morgan Stanley had failed to show a likelihood of success on the merits, the court denied the request for a temporary restraining order and preliminary injunction without reaching the remaining factors.

The Case is No. 2:24-cv-02127-CDS-MDC.

Judge: Silva, C.

Attorneys: Christopher Coss (Coss & Momjian, LLP) for Morgan Stanley Smith Barney LLC. Mark J. Ricciardi (Fisher & Phillips, LLP) for Nicholas Takahashi.

Companies: Morgan Stanley Smith Barney LLC

Cases: RemediesDamages ContractClaims TortClaims TradeSecrets NevadaNews