IP Law Daily, TRADE SECRETS—8th Cir.: Eighth Circuit vacates ‘sweeping’ preliminary injunction in investment advisory noncompete case, (Jan 14, 2026)

By Jason Albright, J.D.

Within two weeks of four advisors’ departure, Choreo’s Des Moines branch lost more than 100 clients, representing $400 million in assets under management, to the firm they joined.

Choreo, LLC, was not entitled to a “sweeping” preliminary injunction barring four of its former senior financial advisors, who left to work for a competing firm, from servicing the accounts of clients allegedly covered by the advisors’ restrictive covenants with Choreo, providing any information about their new employment to those clients, using Choreo’s confidential information for any purpose, or encouraging any employee of Choreo to quit during the period each restrictive covenant is in effect, the Eighth Circuit held. Although the permanent loss of customer goodwill can constitute irreparable injury, “[e]conomic loss, on its own, is not an irreparable injury so long as the losses can be recovered,” the financial harm from lost client revenues here will not be so uncertain that it renders the damages incalculable and therefore irreparable at law, and future harm resulting from Choreo’s current understaffing will occur with or without the requested relief (Choreo, LLC, v. Lors, No. 25-1706 (8th Cir. Jan. 12, 2026)).

Private equity acquisition. In 2022, a large private equity firm purchased Choreo, LLC, a national investment advisory firm. The private equity firm raised client fees and reduced advisor compensation, causing about a third of the office’s financial advisors to leave over the next few years.

Four advisors at issue. The four senior financial advisors at issue in the case resigned in January 2025, effective February 2025. Their employment contracts with Choreo contained three one-to-two-year restrictive covenants.

Restrictive covenants. The restrictive covenants provided, first, that the advisors “will not... directly... or indirectly... solicit, divert, take away or conduct any financial planning... with... any of [Choreo’s] clients, customers or accounts.” Covered clients here were defined as any clients the four advisors serviced or gained business information about in the last two years.

Second, the covenants provided that the advisors “shall not... directly or indirectly... use or disclose to any party other than [Choreo] and its affiliates any trades secrets or other Confidential Information that I learned or obtained while an employee of [Choreo].”

Third, the covenants promised that advisors “will not directly or indirectly solicit, attempt to solicit, or in any manner encourage any employee of [Choreo] to leave [Choreo].” This covenant applied while the four advisors were still employed at Choreo, and it prohibited them from aiding anyone else in offering employment to Choreo’s employees.

Invisible hand. In January 2025, the four appellants resigned as senior financial advisors at Choreo’s Des Moines, Iowa branch, and they joined Atomi Financial Group, Inc., a competing investment advisory firm doing business as Compound Planning and opening a new office in Des Moines. A few weeks after the four advisors left, eight of the nine remaining Choreo financial advisors resigned in unison and joined Compound Planning.

Allegedly solicitous actions. The four appellants also took three allegedly solicitous actions directed at covered clients. First, contrary to Choreo’s instruction that it would handle the client transition process, they sent former clients an email stating: “I’m writing to inform you that I have left Choreo, and since I have left the firm I am no longer servicing your accounts. My registered contact information at my new firm is below should you have any questions.” Choreo informed covered clients of the four advisors’ departures prior to their resignation becoming effective, but it did not tell clients where the four advisors had gone. Second, when one covered client contacted the first of the named appellants for information, the advisor responded with Compound’s website, fee schedule, and two PDFs about how to transition to Compound. Third, each advisor made posts on LinkedIn about their transition to Compound.

Business impacts. Within two weeks after the four advisors departed, Choreo’s Des Moines branch lost more than 100 clients to Compound, representing $400 million in assets under management, or approximately one-third of the branch’s total business.

The four advisors continued serving as financial advisors to the covered clients who switched to Compound, and they do not dispute that this violated the no-service provisions of the covenants. Rather, they contested the covenant’s enforceability.

Lawsuit. Choreo quickly filed suit and requested a temporary restraining order, which the district court denied for lack of a showing of immediate irreparable injury. Choreo then moved for a preliminary injunction which the district court granted.

Preliminary injunction and appeals. The injunction bars the four advisors from servicing the covered client accounts, providing any information about their new employment to covered clients, using Choreo’s confidential information for any purpose, or encouraging any employee of Choreo to quit during the period each restrictive covenant is in effect. It also bars Compound Planning from using Choreo’s confidential information or interfering with any Choreo employment agreements.

The four advisors and Compound Planning timely appealed, and the district court and the Eighth Circuit both denied their motions to stay the preliminary injunction pending appeal.

Four factors. The appeals court initially observed that it considers four factors in determining whether to grant a preliminary injunction: “(1) the threat of irreparable harm to the movant; (2) the state of balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest.” Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981).

The Eighth Circuit began with the irreparable harm factor because “[t]he failure of a movant to show irreparable harm is an ‘independently sufficient basis upon which to deny a preliminary injunction.’” Sessler v. City of Davenport, 990 F.3d 1150, 1156 (8th Cir. 2021). The district court’s finding of irreparable harm, the appeals court noted, was based on: (1) Choreo’s further loss of customer relationships from Compound’s ongoing client poaching; and (2) the destruction of Choreo’s Des Moines branch resulting from the defendants’ violations of the no-recruitment provision of the covenants.

Irreparable harm and customer goodwill. Turning first to the issue of customer poaching, the appeals court noted that it has held that the permanent loss of customer goodwill can constitute irreparable injury. However, “[e]conomic loss, on its own, is not an irreparable injury so long as the losses can be recovered.” Here, Choreo charges clients a percentage fee based on the size of their account, and both the amount of assets attributable to the allegedly stolen clients and Choreo’s fee table are in the record. From these data and the evidence developed at summary judgment or after trial on the merits of Choreo’s claims, the Eighth Circuit concluded, the court can determine or reliably estimate the annual fees Choreo would receive from clients Compound poached. “Indeed, the district court referred to financial harm from the loss of clients as ‘calculable.’” Though this calculation might not account for incidental benefits of client relationships such as referrals, the appeals court concluded, “the financial harm from lost client revenues will not be so uncertain that it renders the damages incalculable and therefore irreparable.”

Destruction of Des Moines branch. Asserted irreparable harm from the alleged destruction of the Des Moines branch fared similarly. Choreo argued that it was irreparably harmed when the defendants’ allegedly wrongful conduct left its Des Moines office with just one employee and unable to serve its remaining customers. “The fatal problem with this argument,” the Eighth Circuit observed, “is that even if this harm is irreparable, it has already happened and will not be remedied by the preliminary injunction.”

When Choreo sued, noted the appeals court, it requested injunctive relief preventing the eight employees who had not left from leaving, but the district court denied that relief. And all but one of Choreo’s Des Moines investment advisors had left when the district court granted the preliminary injunction. Finally, there was no evidence in the record that the defendants did or will attempt to recruit the remaining employee. Thus, future harm resulting from Choreo’s understaffing will occur with or without a preliminary injunction and cannot provide the basis for such requested relief.

The district court’s order granting preliminary injunctive relief was accordingly vacated and the case remanded.

The case is No. 25-1706.

Judge: Loken, J.

Attorneys: Randall D. Armentrout (Nyemaster Goode) for Choreo, LLC. Jesse Linebaugh (Faegre Drinker Biddle & Reath) for Kevin Lors, Aaron Schomer, Joleen Scheer, Lindsey O'Neil, and Atomi Financial Group, Inc. dba Compound Planning.

Companies: Choreo, LLC; Atomi Financial Group, Inc.; Compound Planning

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