241 F. Supp.2d 30 (2003) | Cited 0 times | D. Maine | January 22, 2003


The four defendants were employees, then independent contractors, thenfranchisees of American Express Financial Advisors Inc.1 They havenow left that organization and have gone to a competitor. AmericanExpress seeks a temporary restraining order to stop the defendants fromhaving access to their former customers or using a former telephonenumber.2 The agreement in question is subject to NASD arbitration,but American Express seeks injunctive relief prior to that arbitration.The four part test is well known.

To award preliminary injunctive relief, [t]he Court must find: (1) that the plaintiff will suffer irreparable injury if the injunction is not granted; (2) that such injury outweighs any harm which the granting of injunctive relief would inflict on the defendant; (3) that plaintiff has exhibited a likelihood of success on the merits; and (4) that the public interest will not be adversely affected by the granting of the motion.

Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bennert,980 F. Supp. 73, 74 (D.Me. 1997) (citations omitted); see alsoRoss-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 15 (1stCir. 1996). I DENY the motion based upon the degree of likelihood ofsuccess on the merits and the lack of irreparable injury.

The agreement (it is the same for each of the four defendants3)provides a way for the franchisees to leave the American Expressorganization without running afoul of the prohibition on access to formercustomers. American Express argues that the defendants have violatedthree important provisions, however: (1) no recruitment or solicitationof others to leave the American Express organization; (2) no use of theirformer telephone number; and (3) no notice to customers that they areleaving or solicitation of their business until the effective date oftermination.


American Express's case on this point is circumstantial. Because thefour defendants all left simultaneously and together, American Expressinfers that they must have solicited or recruited each other to leave. Byindividual affidavits the four defendants each deny that. I find littlelikelihood of success on this point. It is quite reasonable that fourpeople working together could reach a decision to leave, one following theexample of another, with no recruitment or solicitation.


According to the agreement, the "Independent Advisor agrees toimmediately cease using any telephone number used by Independent Advisorin the Independent Financial Advisor Business." Compl., Ex. 1, at 27.Here, the four defendants put a voice message on their previously usednumber that said:

Hello, if you are trying to reach Michael Reed, Bill Temm, Bruce Sawyer, or Andy Stickney please dial 207-885-8827. Thank you.

Kondal Aff. ¶ 5 (Docket No. 4).

After this lawsuit was filed, they changed the message to:

Hello. You have reached 207-885-8825. If you are trying to reach American Express Financial Advisors, please call 603-668-1273. If you are trying to reach Michael Reed, Bill Temm, Bruce Sawyer, or Andy Stickney, they have left American Express Companies and can be reached at 207-885-8827. Thank you.

Temm Aff. ¶ 8 (Docket No. 10).4

Did they immediately cease using the number by leaving the firstforwarding message? Perhaps. Perhaps not. That will be for the arbitratorto determine. But the prohibition is sufficiently ambiguous in meaning inthese circumstances to make American Express's temporary restrainingorder case weak.


The record is very unsatisfactory on this point. For American Express,I have the affidavit of Martha Kondal who was in charge of an intensivecalling campaign with respect to the customers in question. Shesummarizes in her affidavit what she believes she learned from thesecustomers about what the defendants did. The information is, of course,hearsay, not inadmissible for purposes of this preliminary relief, butsubject to careful treatment. What is more troubling is that the specificrecords she refers to are capable of different interpretation, and thefour defendants in their affidavits explicitly deny engaging in theprohibited activity and provide a substitute explanation for customerconfusion. (Docket Nos. 10-13) Of course, their affidavits in turn areself-serving and therefore also subject to question. I would much preferto have heard the testimony of live witnesses under oath subject tocross-examination to determine what really happened during the two-weektermination process. The parties did not offer me that and, because I amin the midst of a lengthy criminal trial, I did not have the luxury ofdemanding it. But based upon the conflicting affidavits and weighing thespecifics of the information the affiants are able to provide, I concludethat American Express has not shown a likelihood of success on thispoint.


Judge Carter of this District has ruled more than once on the questionof irreparable injury in a dispute like this over former customers. See,e.g., Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bennert,980 F. Supp. 73 (D.Me. 1997); Merrill Lynch, Pierce, Fenner & Smith,Inc. v. Bishop, 839 F. Supp. 68 (D.Me. 1993). While issues ofconfidentiality and the former employer's right to its records justifyinjunctive relief to restore improperly taken records (not the situationhere), he has also ruled clearly that money damages for lost business areavailable if former employees improperly solicit former customers.Bennert, 980 F. Supp. at 75; Bishop, 839 F. Supp. at 74-75. Thisavailability "cuts heavily against a conclusion that the injury . . . isirreparable in nature." Bishop, 839 F. Supp. at 74. Citing Ross-Simons ofWarwick, Inc. v. Baccarat, Inc., 217 F.3d 8 (1st Cir. 2000), AmericanExpress argues that the injury to its good will, relationships and moraleare not easily quantifiable. American Express's reliance on Ross-Simonsis misplaced, however. In Ross-Simons, the First Circuit held that theloss of a prestigious product line would cause irreparable harm to adealer because the impact on the dealer's bridal registry (the number ofcouples who would register elsewhere, the disappointment to formerregistrants, and the harm to the dealer's image) could not becalculated. Ross-Simons, 217 F.3d at 13; see also Ross-Simons ofWarwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 19-20 (1st Cir. 1996).Here, any damages caused by the loss of customers could be calculatedfrom consumer account records and expert testimony. I therefore concludethat American Express has an adequate remedy at law.


For these reasons, American Express's motion for temporary restrainingorder is DENIED.

1. After becoming an independent contractor, the defendant BruceSawyer transformed his affiliation with American Express back to anemployee and then to a franchisee. Compl. ¶¶ 62-63 (Docket No.1).

2. The plaintiffs, American Express and IDS Life Insurance Company(together, "American Express"), filed a complaint seeking injunctiverelief against the four defendants and an accompanying motion for atemporary restraining order (Docket No. 2) on January 16, 2003. I heardoral argument on the motion on January 21, 2003.

3. I recognize that the defendant Andrew Stickney may not be able totake advantage of the rider specifying how to leave the organizationbecause it requires more seniority than he has. Nevertheless, theirreparable injury part of the analysis leads me to the same conclusionfor him as the other three defendants.

4. Under the franchise agreement, American Express reserves the rightat its expense "to add a forwarding message to any such telephonenumber, indicating the telephone number for [American Express] and forthe departing Independent Advisor." Compl., Ex. 1, at 27. It appears thatthe defendants attempted to modify their message to conform to thisprovision.

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