United States District Court, D. Connecticut
ORDER ON MOTION FOR A TEMPORARY RESTRAINING ORDER AND
A. Bolden United States District Judge
Financial Services Inc. (“UBS” or
“Plaintiff”) brings this action against Phil G.
Fiore Jr., Jeffrey H. Farrar, Louis Gloria, and Thomas M.
Gahan (collectively, “Defendants”), alleging
breach of contract, misappropriation of trade secrets under
the Connecticut Uniform Trade Secrets Act
(“CUTSA”), violations of the Connecticut Unfair
Trade Practices Act, Conn. Gen. Stat. § 42-110a, et.
seq. (“CUTPA”), breach of fiduciary duties
owed to UBS, and unfair competition. ECF No. 1. Pending
before the Court is Plaintiff's motion for a temporary
restraining order and a preliminary injunction against the
Defendants, dated June 16, 2017, which the Court construes as
a motion for preliminary injunction. ECF No. 3.
a telephonic status conference held on June 20, 2017, ECF No.
21, the Court set a briefing schedule and hearing date. ECF
No. 22. Defendants filed their response to the motion for a
preliminary injunction on July 10, 2017. ECF No. 53. The
Court held a preliminary injunction hearing and heard
evidence on July 17, 2017.
reasons that follow, the Court DENIES Plaintiff's motion
for a preliminary injunction in its entirety.
a Delaware corporation with its principal place of business
in New Jersey. Compl. ¶ 9, ECF No. 1. UBS also transacts
business from its offices in Stamford, Connecticut
(“Stamford Office”). Id. Defendants are
individuals who were formerly employed by UBS as financial
advisors in the Stamford office. Id. ¶ 10.
While at UBS, Defendants worked as part of a financial
advisor team (the “FDG Group”) with Steve
DesRochers and Dean Gaugler, among others. Id.
¶ 15. Some of the FDG Group's clients were
introduced to them by “UBS financial advisors outside
of their team, ” id. ¶ 17, while others
were brought to the FDG Group and UBS by Mr. Fiore and his
team, which included Mr, Farrar, Mr. Gloria, Mr. DesRochers,
and Mr. Gaugler, when they joined UBS in 2009. Fiore Decl.
2016, the FDG Group serviced client accounts with
approximately $8 billion in assets under management,
generating nearly $6 million in annual gross revenue. Compl.
¶ 16. The type of work done by the FDG Group and by
Defendants' includes institutional consulting, on behalf
of “institutional clients - often ERISA plan sponsors,
such as pension or 401(k) plans of a company, municipality,
charity or professional practice.” Fiore Decl ¶ 4,
ECF no. 51. The FDG Group and some of the Defendants, as well
as Mr. DesRocher and Mr. Gaugler, also work on “private
wealth management” on behalf of private clients.
Id. ¶¶ 6, 12.
Group typically collected fees from its institutional client
consulting business as a “percentage of assets under
management” or as a “hard dollar figure
established by contract. Fiore Decl. ¶ 11, ECF no. 51.
Fees from the private wealth management side of the business
were “generally based on a percentage of assets under
management, although some clients engage in commission-based
business.” Id.; see also Minerva Dep.
33:19-34:15 (containing UBS representative's
terminated Mr. Fiore's employment in November of 2016.
Compl. ¶ 1. Mr. Fiore subsequently founded Procyon
Private Wealth Partners, LLC (“Procyon”).
Id. Mr. Fiore launched Procyon on June 2, 2017.
Fiore Decl. ¶ 16, ECF No. 51. Mr. Farrar, Mr. Gloria,
and Mr. Gahan resigned from UBS on June 2, 2017 and
immediately joined Procyon. Compl. ¶ 1. This
case concerns Plaintiff's allegations that Defendants
have been soliciting UBS clients and misusing UBS client
information. The parties agree that this dispute is subject
to FINRA arbitration. See Def.'s Br. at 29, ECF
No. 53; Pl.'s Br. at 27-28, ECF No. 4.
Relevant Contractual Provisions
Protocol for Broker Recruiting
Procyon are signatories to the Protocol for Broker Recruiting
(“Protocol”). Compl. ¶ 33 n. 3. In relevant
part, the Protocol provides that, if certain conditions are
met, signatory firms agree not to enforce their rights
regarding non-solicitation of clients against financial
advisors that depart their firms for other signatory firms.
See id.; Def.'s Br. at 2. Specifically the
Protocol provides that:
If departing [financial advisors] and their new firm follow
this protocol, neither the departing [financial advisor] nor
the firm that he or she joins would have any monetary or
other liability to the firm that the [financial advisor] left
by reason of the [financial advisor] taking the information
identified below or the solicitation of the clients serviced
by the [financial advisor] at his or her prior firm,
provided, however, that this protocol does not bar
or otherwise affect the ability of the prior firm to bring an
action against the new firm for “raiding.”
Protocol at 1, Farrar Decl. Ex. A, ECF No. 46 (emphasis in
the Protocol, departing financial advisors are permitted to
take certain client information:
When [financial advisors] move from one firm to another and
both firms are signatories to this protocol, they may take
only the following account information: client name, address,
phone number, email address, and account title of the clients
that they serviced while at the firm (“the Client
Information”) and are prohibited from taking any other
documents or information. Resignations will be in writing
delivered to local branch management and shall include a copy
of the Client Information that the [financial advisor] is
taking with him or her.”
Id. Thus, when a financial advisor resigns under the
Protocol, they are obligated to provide their former firm
with a resignation letter and attach a list that includes all
of the Client Information they intend to take (a
“Protocol list”). See Id. The Protocol
further provides that:
In the event that the [original] firm does not agree with the
[departing financial advisor's] list of clients, the
[financial advisor] will nonetheless be deemed in compliance
with this protocol so long as the [financial advisor]
exercised good faith in assembling the list and substantially
complied with the requirement that only Client Information
related to clients he or she serviced while at the firm be
taken with him or her.
the departing financial advisor and their new firm's use
of the relevant client information, the Protocol states that:
[T]he new firm will limit the use of the Client Information
to the solicitation by the [financial advisor] of his or her
former clients and will not permit the use of the Client
Information by any other [financial advisor] or for any other
Id. Additionally, the Protocol also provides that:
[Financial advisors] that comply with this protocol would be
free to solicit customers that they serviced while at their
former firms, but only after they have joined their new
firms. A firm would continue to be free to enforce whatever
contractual, statutory or common law restrictions exist on
the solicitation of customers to move their accounts by a
departing [financial advisor] before he or she has left the
Id. at 2.
employed Mr. Fiore from April 24, 2009 through November 30,
2016. Compl. ¶ 13. On or around April 24, 2009, Mr.
Fiore signed a transition agreement with UBS, which contained
certain post-employment restrictions. Id. ¶ 14.
Specifically, the agreement provided that:
In the event Employee's employment with [UBS] is
terminated for any reason whatsoever, whether voluntarily or
involuntarily, Employee agrees, for a period of one year from
the date of termination or until such time that all amounts
owed by Employee to [UBS] and all related entities have been
fully repaid, whichever is earlier, to not solicit, directly
or indirectly, any of the clients who maintain accounts at
[UBS] . . . whom Employee serviced during his/her employment
at [UBS] or other [clients of UBS] whose names became known
to Employee while in the employ of [UBS].
Trans. Agr. ¶ 5, ECF No. 1 Ex. A. The agreement defined
“solicit” as communicating in any way with a
client that “may have the effect of inviting,
encouraging or requesting a client” to (a)
“transfer his/her [UBS] accounts to [Mr. Fiore] or
his/her new employer”, (b) “open a new account
with [Mr. Fiore] or his/her new employer”, or (c)
“otherwise discontinue his/her existing business
relationship with [UBS].” Id. The agreement
also contained the following provision regarding the
confidentiality of client information:
Employee further expressly agrees that, in the event
Employee's employment is terminated for any reason
whatsoever, whether voluntarily or involuntarily, Employee
may not take any records or information referring or relating
to Clients of [UBS], former clients of [UBS] and prospective
clients of [UBS], whether originals or copies, in hard copy
or computerized form.
Id. ¶ 6. Mr. Fiore's April 2009 transition
agreement with UBS also included the following provision:
In the event that Employee enters into other agreements with
[UBS] that contain non-solicitation and/or confidentiality
obligations . . . the non-solicitation and/or confidentiality
provisions of any such agreement shall govern Employee's
conduct with respect to the solicitation of clients and use
of client information covered by those agreements.
Id. ¶ 7.
his time at UBS, Mr. Fiore also executed other transition
agreements and deferred cash award (“DCA”)
agreements with UBS, which included comparable
post-employment restrictions on solicitation of clients and
use of client information. Compl. ¶ 14. More recently,
in February 2016, members of the FDG Group, including Mr.
Fiore, signed a financial advisor team agreement
(“February 2016 Team Agreement”) governing their
servicing of team accounts. Compl. ¶ 18. This team
agreement provided that:
Upon the termination of employment of any Team Member or
former Team Member, the departing Team Member or former Team
Member agrees that, in addition to any other non-solicitation
obligations he/she may have in any other agreement with UBS
or its predecessors . . . he/she will not solicit, for a
period of one year from the date of termination of the
departing Team Member's employment, any clients of [UBS]
serviced by the Team.
Feb. 2016 Team Agr. ¶ 11(A), ECF No. 1 Ex. G. It further
provides, in the next paragraph that:
Notwithstanding the preceding Paragraph, the Team Members
agree and acknowledge that unless otherwise prohibited by a
non-solicitation provision in another agreement, this
provision does not apply to client accounts the departing
Team Member introduced to the team either at its inception or
during its existence.
Id. ¶ 11(B). This team agreement also contains
a provision governing confidentiality and nondisclosure:
Each Team Member hereby agrees not to disclose to any person
any Confidential Information relating to [UBS] except in the
course of carrying out his or her duties for [UBS] or as
required by law or governmental agency with jurisdiction. For
purposes of this paragraph, “Confidential
Information” means any nonpublic information concerning
[UBS's] . . . customer lists, customer financial
information . . and any other proprietary information; except
for specific items that have become publicly available other
than through a breach by you of this Paragraph 20 or any
other confidentiality agreement.
Id. ¶ 20.
the other Defendants, Mr. Fiore agreed to be bound by a code
of conduct, and agreed to maintain the confidentiality of
UBS's confidential information. Minerva Aff. ¶ 19,
ECF No. 6.
Garrar, Mr. Gloria, and Mr. Gahan (collectively, the
“Protocol Defendants”) worked at UBS until June
2, 2017. Compl. ¶ 22. Throughout their employment at
UBS, the Protocol Defendants also executed transition
agreements and DCA agreements with UBS, which also contained
post-employment restrictions on solicitation of clients and
non-disclosure of client information as in Mr. Fiore's
April 2009 transition agreement, discussed above.
Id. ¶ 24 n. 2. After UBS terminated Mr. Fiore
in November 2016, the Protocol Defendants signed a new team
agreement with Mr. DesRochers and Mr. Gaugler (the
“December 2016 Team Agreement”). Id.
¶ 23. This team agreement contained the following
provision regarding non-solicitation:
If the employment of any Team Member (current or former)
terminates for any reason, that Team Member will not, for a
period of one year from the employment termination date,
solicit any clients that were serviced by the Team. This
provision does not apply to client accounts the departing
Team Member introduced to the Team, either at its inception
or during its existence. Nothing in this Non-Solicitiation
provision limits any rights UBS or any Team Member may have
under the Protocol for Broker Recruiting.
Dec. 2016 Team Agr. ¶ 5, ECF No. 1 Ex. H.
their employment at UBS, the Protocol Defendants were also
required to read and comply with firm policies and
procedures. Compl. ¶ 25. These policies and procedures,
including UBS's Code of Conduct and Investment Advisor
Code of Ethics (“Code of Conduct”), included
provisions “designed to ensure the confidentiality and
security of UBS's confidential client and business
information.” Id. The Code of Conduct includes
an agreement that departing employees “would not be
permitted to retain, disclose or utilize any of UBS's
Confidential Information after the termination of their UBS
employment.” Id. ¶ 26.
Events Prior to Defendants' Employment at UBS
Preliminary Injunction hearing, Mr. Fiore testified as to the
history of the FDG Group, which he had built, initially under
another name, prior to the group joining UBS. Mr. Fiore
worked in the financial services business in Connecticut
since 1994, beginning his career at Prudential Securities,
Incorporated (“Prudential”). Fiore Decl. ¶
4. Mr. Fiore testified that he began focusing on
institutional client consulting in 1997. While at Prudential,
Mr. Fiore formed the Fiore Consulting Group. Id.
¶ 5. In or around 2003, Prudential eventually
“sold its retail securities business to Wachovia
Securities” (“Wachovia”), at which point
Mr. Fiore's team went to Wachovia. Id.
While Mr. Fiore and his group were at Wachovia, his group
merged with that of a Mr. Monaghan, whose work focused on
religious institution clients, and became the Fiore- Monaghan
Consulting Group, until Mr. Monaghan retired before Mr.
Fiore's group moved to Merrill Lynch.
around October of 2005, Mr. Fiore moved his business to
Merrill Lynch, Pierce, Fenner and Smith (“Merrill
Lynch”). Id. ¶ 6. There, Mr. Fiore formed
an “FDG Group” (the “MLPFS FDG
Group”) that included Mr. Farrar, Mr. Floria, Mr.
DesRochers, and Mr. Gaugler. Id. ¶ 6. Mr.
Farrar and Mr. Gloria had been financial advisors at Merrill
Lynch before Mr. Fiore's arrival in October 2005. Fiore
Decl. ¶ 6. By 2009, the MLPFS FDG Group had built a
business with approximately $1.8 billion in assets under
management and approximately $2 million in annual
revenue. Id. ¶ 7. Mr. Fiore maintains
that he developed many of the institutional consulting
relationships by himself, or with Mr. Farrar and Mr. Gloria,
and that Mr. DesRochers and Mr. Gaugler introduced very few,
if any, new institutional consulting relationships to the
MLPFS FDG Group. Id.
around September 2008, Bank of America announced that it
would purchase Merrill Lynch. Fiore Decl. ¶ 8. In April
2009, the Defendants, Mr. Gaugler, and Mr. DesRochers left
Merrill Lynch to join UBS. Id. They continued to
refer to themselves as the FDG Group. Id. ¶ 10.
Mr. Gahan was a UBS financial advisor who joined the FDG
Group shortly after it came to UBS from Merrill Lynch.
Id. According to Mr. Fiore, Mr. Gahan also focused
primarily on the institutional consulting business.
Id. Christopher Foster also joined the FDG Group at
UBS shortly after the move to UBS, and Mr. Foster worked on
much of the reporting that the FDG Group provided to its
institutional consulting clients. Id.
Fiore testifies that many of the institutional clients that
he worked with at Prudential or Wachovia had followed him to
Merrill Lynch and continued to work with him and the MLPFS
FDG Group. Fiore Decl. ¶ 9. He further testifies that
when his team moved from Merrill Lynch to UBS in 2009, many
of the institutional clients also moved. Id.
Clients that Defendants Allegedly Introduced to UBS
the parties generally dispute which clients were ones that
Defendants introduced to UBS, see Minerva Aff.
¶ 40 (indicating that members of the FDG Group that
remained at UBS reported that the Protocol Defendants
incorrectly claimed to have introduced certain clients to
UBS), that dispute is largely not relevant to Plaintiff's
motion for a preliminary injunction. At the hearing, UBS
agreed that its argument as to the Protocol Defendants
focused on Procyon's communications with FDG Group
clients that were not included on their Protocol Lists when
they resigned from UBS.
Alleged Solicitation of UBS Clients
terminated Mr. Fiore on November 30, 2016. Fiore Decl. ¶
16; Compl. ¶ 1. Mr. Fiore became the owner of Procyon on
May 26, 2017, and the registered investment advisor entities
owned by Procyon became operational on June 2, 2017. Fiore
Decl. ¶ 16.
2, 2017, the Protocol Defendants resigned from UBS without
prior notice to UBS. Minerva Aff. ¶ 33. Each of them
tendered a resignation letter to Frank Minerva, the Branch
Manager of the Stamford office of UBS, where Defendants had
worked. Id. ¶¶ 1, 33. Their resignation
letters stated that they were joining Procyon. Id.
¶ 34. Their resignation letters each included a Protocol
list. Id. ¶ 36. These lists included
clients' names, addresses, phone numbers, e-mail
addresses, and account titles, and no other information.
Id. ¶ 38. The lists included both institutional
consulting clients and private wealth clients that had been
serviced by the FDG group. Id. ¶ 37. Mr. Foster
also resigned from UBS to join Procyon on June 2, 2017.
Id. ¶ 56.
preliminary injunction hearing, Mr. Farrar testified that the
Protocol lists specifically excluded about 17 or 18 FDG Group
institutional clients. See E-mail, Pl.'s Ex. 5
(attaching document listing institutional clients that
Protocol Defendants intended to exclude from their Protocol
lists). Procyon eventually contacted individuals from some of
those clients, including Satterlee Stephens, DXL Group, and
Apollo. Additionally, Procyon's communications were also
sent to at least one FDG Group private client that had been
introduced by Mr. Gaugler rather than one of the Defendants.
Conduct Predating June 2, 2017
presented evidence that Mr. Fiore and the Protocol Defendants
engaged in certain communications with FDP Group clients
between Mr. Fiore's November 30, 2016 termination from
UBS and June 2, 2017, when Procyon opened for business and
the Protocol Defendants resigned from UBS. Pl.'s Br. at
8-10, ECF No. 4. Defendants dispute whether these
communications are solicitations or otherwise improper.
Def.'s Br. at 20-22.
hearing, UBS presented evidence of Mr. Fiore's text
messages with Lori Disbrow, the Chief Investment Officer and
plan administrator for Jersey City's 457 Plan
(“Jersey City”), which had been a significant
client of the FDG Group. Specifically, UBS presented several
text messages that Mr. Fiore sent to Ms. Disbrow in the
period starting from January 25, 2017 through June 2, 2017.
Mr. Fiore also testified about the larger context of the
communications between himself ...