Edelman Financial Engines, LLC v. Mariner Wealth Advisors LLC

CourtDistrict Court, D. Kansas
DecidedFebruary 16, 2024
Docket2:23-cv-02515
StatusUnknown

This text of Edelman Financial Engines, LLC v. Mariner Wealth Advisors LLC (Edelman Financial Engines, LLC v. Mariner Wealth Advisors LLC) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Edelman Financial Engines, LLC v. Mariner Wealth Advisors LLC, (D. Kan. 2024).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

EDELMAN FINANCIAL ENGINES, LLC, ) et al., ) ) Plaintiffs, ) ) v. ) Case No.: 23-2515-HLT-KGG ) MARINER WEALTH ADVISORS, LLC, ) ) Defendant. ) _________________________________________ )

MEMORANDUM & ORDER DENYING MOTION TO STAY

Now before the Court is the “Motion to Stay” filed by Defendant (Doc. 6), in which it argues that the case should be stayed because of four pending arbitrations and another lawsuit “concerning some of the individuals referenced in this case, and the same or similar issues are involved in those proceedings.” (Doc. 7, at 1.) Defendant continues that the requested stay would “promote judicial economy and avoid the potential for inconsistent results.” (Id.) Plaintiffs oppose the motion, arguing that the requested stay, which Plaintiffs characterize as “indefinite,” would not promote judicial economy but would instead cause Plaintiffs undue prejudice. (See generally Doc. 16.) Having considered the submissions of the parties, Defendant’s Motion (Doc. 6) is DENIED for the reasons set forth below. FACTUAL BACKGROUND Plaintiffs are in the business of financial planning, investment management, and retirement income services with both individual and institutional clients. (Doc. 1, at 2.) Defendant is alleged to be Plaintiffs’ “direct competitor.” (Id.) In the present lawsuit, Plaintiffs bring claims against Defendant for violations of the federal Defend Trade Secrets Act, 18 U.S.C. §1839, the Kansas Uniform Trade Secrets Act, K.S.A. §60-3320, et seq., and common law causes of action for conspiracy to misappropriate trade secrets, tortious interference with contract, tortious interference with business relations and expectations, unfair competition, and defamation. (See generally Doc. 1.) More specifically, Plaintiffs allege they filed this lawsuit to end Defendant’s “flagrant and ongoing efforts to misappropriate [Plaintiffs’] trade secrets, tortiously interfere with [Plaintiffs’] contracts and business expectations, defame [Plaintiffs’] reputation, and steal the fruits of [Plaintiffs’] multimillion dollar investments in marketing and client goodwill.” (Doc. 16, at 5 (citing Doc. 1, at

¶¶ 2-3).) According to Plaintiffs, [Defendant’s] strategy is simple: recruit [Plaintiffs’] planners, convince those planners to breach restrictive covenant and confidentiality agreements they executed with [Plaintiffs] – agreements that are substantively identical to contracts [Defendant] has its own planners sign – and use the [Plaintiffs’] trade secret information the planners divulge to poach [Plaintiffs’] clients and divert hundreds of millions in Assets Under Management (‘AUM’).

(Doc. 16, at 5.) The eight planners referenced in pages 9-49 of Plaintiffs’ Complaint were registered investment advisor representatives of Financial Engines Advisors L.L.C. (hereinafter “FEA”), Plaintiffs’ California-based affiliate that is an SEC-registered investment adviser. These individuals are Garvey, Azzopardi, Geilfus, Mercer, Borgatti, Horne, McGuire, and Kelly (hereinafter “the departed planners”). Defendant generally denies Plaintiffs’ allegations. Defendant references Plaintiffs’ “campaign” of filing lawsuits and initiating arbitrations against four of the individuals referenced in the Complaint. (Doc. 7, at 2.) Defendant contends that these actions, which are currently pending in other jurisdictions, are merely an attempt by Plaintiffs to “unlawfully stifle fair competition in the investment advisory services industry.” (Id.) According to Defendant, it, along with Plaintiffs and one of the individuals named in the Complaint (Horne), are parties in a related lawsuit, which is “pending – but stayed at Plaintiffs’ and FEA’s request in light of the pending arbitration – in Orange County Superior Court in California (the ‘California Case’).” (Id. (referencing Superior Court of the State of California, County of Orange, Case No. 30-2021-01209577-CU-CO-CJC (Exh. 7-1).) That lawsuit seeks declaratory relief regarding choice of law and enforceability of Horne’s employment agreement, as well as claims for unfair competition, violations of California labor statutes, and failure to pay. (Id.) Defendant also refers to four pending arbitrations, which concern “some of the individuals referenced in this case, and the same or similar issues are involved in those proceedings.” (Id., at 1.)

Defendant argues that the pending arbitrations “involve essentially the same factual and legal issues Plaintiffs are now raising against [Defendant]” in this litigation – including (a) alleged confidential information and/or trade secrets of Plaintiffs and FEA; (b) the enforceability of restrictive covenants in agreements Plaintiffs are seeking to enforce for the benefit of FEA; (c) whether Plaintiffs and FEA can lawfully prohibit clients from deciding for themselves what is in their best interests when it comes to selecting their financial planner; and (d) alleged damages.

(Id., at 2, 3.) Defendant contends that the purpose of the present lawsuit is not related to Plaintiffs’ concern for their proprietary information, but rather is an attempt by Plaintiffs to “send a chilling public message to the marketplace” that employees of Plaintiffs who leave “in accord with industry standards, customs and practices, will be subjected to meritless litigation … .” (Id.) With the present motion, Defendant seeks an Order staying this litigation until these four arbitrations and California lawsuit are resolved. (Doc. 7.) Defendant argues that the stay would “promote judicial economy and avoid the potential for inconsistent results.” (Id.) Plaintiffs respond that “a close reading” of Defendant’s motion to stay shows that Defendant concedes – as it must – that arbitrations are only pending against ‘some’ of [Plaintiffs’ departed employees] (three of eight), that only ‘some’ of the issues between those arbitrations and this litigation overlap, that [Defendant] is not a party to any of the pending arbitrations, and that [Defendant’s] conduct described in the Complaint is not at issue in the arbitrations. (Doc. 16, at 6 (citing brief in support of Defendant’s Motion to Stay, Doc. 7 at 3-5).) Thus, Plaintiffs argue, there would “simply be no significant ‘judicial efficiency’ in waiting for the results of the arbitrations because the overwhelming majority of factual and legal issues – including all issues concerning five of the Departed Planners not in arbitration and all of [Plaintiffs’] claims against [Defendant] – will still need to be resolved in this Court.” (Id., at 6-7.) Plaintiffs argue that the requested stay would cause it undue prejudice “because it would delay [Plaintiffs] from obtaining

relief and allow [Defendant] to continue its unlawful conduct with impunity.” (Id., at 7.) ANALYSIS I. Legal Standards. “The general rule is that arbitration and federal litigation should proceed simultaneously absent compelling reasons to stay the litigation.” Pipia v. Rauscher Pierce Refsnes, Inc., 714 F. Supp. 501, 503 (D. Kan. 1989) (citing Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 225, 105 S.Ct. 1238, 1244, 84 L.Ed.2d 158 (1985) (White, J., concurring), Chang v. Lin, 824 F.2d 219, 223 (2d Cir.1987), and Girard v. Drexel Burnham Lambert, Inc., 805 F.2d 607, 611 (5th Cir.1986). “The decision to stay discovery and other pretrial proceedings is firmly vested in the sound discretion of the trial court.” Toney v. Harrod, No.

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Bluebook (online)
Edelman Financial Engines, LLC v. Mariner Wealth Advisors LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edelman-financial-engines-llc-v-mariner-wealth-advisors-llc-ksd-2024.