Merrill Lynch, Pierce, Fenner & Smith v. Roodveldt

31 Pa. D. & C.3d 432, 1983 Pa. Dist. & Cnty. Dec. LEXIS 133
CourtPennsylvania Court of Common Pleas, Montgomery County
DecidedJuly 7, 1983
Docketno. 83-09272
StatusPublished

This text of 31 Pa. D. & C.3d 432 (Merrill Lynch, Pierce, Fenner & Smith v. Roodveldt) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Montgomery County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Merrill Lynch, Pierce, Fenner & Smith v. Roodveldt, 31 Pa. D. & C.3d 432, 1983 Pa. Dist. & Cnty. Dec. LEXIS 133 (Pa. Super. Ct. 1983).

Opinion

SUBERS, J.,

This is an action in equity brought by plaintiff, Merrill Lynch, Pierce, [434]*434Fenner and Smith (Merrill Lynch) seeking a preliminary injunction restraining defendant, Stephany Roodveldt, from: (1) soliciting or accepting the business of any client of Merrill Lynch whom defendant served or whose name became known to her while in the employ of Merrill Lynch; (2) using or disclosing any confidential information, trade secrets and/or commercially sensitive materials contained in the records of Merrill Lynch; (3) using the good will of Merrill Lynch for her own benefit; for a period of one year from the date of the order of court.

A hearing was held before the undersigned sitting as Chancellor commencing on June 28th, 1983. From the pleadings and the testimony, the Chancellor makes the following

FINDINGS OF FACT

1. Plaintiff and defendant entered into an agreement which has been designated in the record as P-1.

2. Defendant knew the provisions of P-1.

3. At least three months prior to leaving plaintiff, Merrill Lynch, Defendant, Roodveldt, was seeking a guarantee of payment of her legal fees by Prudential-Bache in the event that plaintiff, Merrill Lynch, brought an action against her.

4. Defendant was advised approximately three months prior to leaving Merrill Lynch of injunctive action which had been taken against other account executives who left Merrill Lynch and that Merrill Lynch intended to enforce the agreeement designated as P-1.

5. At least one month prior to leaving plaintiff and beginning at Prudential-Bache, defendant began contacting clients of Merrill Lynch, clients whose names became known to her and/or were served by her, all of which clients were in communi[435]*435ties served by the Jenkintown Merrill Lynch Office. All of this was done without the permission or knowledge of Merrill Lynch.

6. Prior to leaving Merrill Lynch, defendant removed from Merrill Lynch’s premises copies of lists of clients, copies of holding cards and names, addresses and telephone numbers of clients.

7. Defendant gave notice of termination on June 21, 1983 to Merrill Lynch and immediately left their employ and reported to Prudential-Bache where announcement cards were immediately sent to Merrill Lynch clients. This was the first notice of termination which Merrill Lynch received.

8. While still in the employ of Merrill Lynch defendant, Roodveldt, obtained signed broker-to-broker forms from approximately 18 clients to transfer these accounts from Merrill Lynch to Prudential-Bache, and further, while still in the employ of Merrill Lynch and by her own admission, contacted at least 26 more clients whom she had served or were known to her at Merrill Lynch.

9. Customer list P-2, holding cards and other information are confidential records and are not accessible to competitors through any means other than transfer by an employee having access to same.

10. A temporary restraining order was entered by this court on June 23, 1983 and amended on June 24, 1983, which order reads as follows:

Upon entry of security of $50,000, defendant is enjoined and restrained until the hearing and thereafter until further order of this court from:

A. Soliciting any business from any clients of Merrill Lynch whom defendant served or whose names became known to defendant while in the employ of Merrill Lynch, including, without limita[436]*436tion, all individuals and entities referenced on Exhibit “C” to plaintiffs complaint.

B. Using, disclosing or transmitting information contained in the records of Merrill Lynch including the names and addresses of its clients including Exhibit “C”, using, disclosing or transmitting any confidential information, trade secrets and commercially sensitive materials unique to Merrill Lynch.

C. Using to her own benefit the Merrill Lynch name and logo.

That order was to remain in force and effect until this court specifically ordered otherwise and a hearing was set for Tuesday, June 28, 1983 at 9:30 a.m. Said hearing did begin on June 28, 1983 at 9:30 a.m.

DISCUSSION

Prior to this court’s issuance of the June 23, 1983 temporary restraining order, defendant moved to quash plaintiffs action in trespass based upon this court’s lack of subject matter jurisdiction due to the arbitration clause contained in the Account Executive Trainee Agreement (Plaintiffs Exhibit no. 1) which provides as follows:

“I agree that any controversy between myself and Merrill Lynch arising out of my employment, or the termination of my employment, with Merrill Lynch for any reason whatsoever shall be settled by arbitration at the request of either party in accordance with the Constitution and Rules of the New York Stock Exchange, then in effect.”

The agreement containing this arbitration clause was signed by both parties on July 20, 1978, and further provides that the validity, performance, and enforcement of the agreement shall be governed by the laws of the state of New York (Plaintiffs Exhibit no. 1, paragraph 6).

[437]*437Relying upon New York case law, this court concluded that it possessed the requisite subject matter jurisdiction to entertain plaintiffs complaint seeking equitable relief.

“While parties may have agreed to arbitrate their underlying dispute, they should not, by virtue of that agreement, necessarily be precluded from obtaining preliminary injunctive relief (which is perhaps the only means of maintaining the status quo pending an opportunity to arbitrate their dispute upon the merits) especially where it can be clearly demonstrated that they will suffer irreparable injury unless the status quo is maintained”: New England Petroleum Corp. v. Asiatic Petroleum Corp., 82 Misc. 2d 561, 565, 368 N.Y.S.2d 930, 934 (N.Y.Sup.Ct. 1975); E.F. Hutton and Co. v. Bokelmann, 56 Misc. 2d 910, 290 N.Y.S. 2d 415 (N.Y.Sup.Ct. 1968); Merrill Lynch v. Branson, No. 82-3136 (N.Y.Sup.Ct. June 24, 1982).

This court finds that preliminary injunctive relief is the only means available to Merrill Lynch to maintain the status quo pending an opportunity to arbitrate the dispute upon the merits. However, plaintiff must establish its right to such relief.

At the hearing on this matter, plaintiff proceeded on the theory that the confidential list of customers (Plaintiff’s Exhibit No. 2) used by defendant while in the employ of Merrill Lynch constituted a “trade secret” which was entitled to special protection in the form of injunctive relief should defendant attempt to use the list outside the scope of her employment with Merrill Lynch.

The landmark case in Pennsylvania dealing with restrictive covenants not to compete and disclose trade secrets is Morgan’s Home Equipment Corp. v. Martucci, 390 Pa. 618, 136 A.2d 838 (1957). The Morgan case holds that an employer’s confidential [438]*438list of customers may constitute a trade secret which is property and entitled to special protection, independent of a non-disclosure contract, based upon the principles of agency law or the law of unfair trade practices.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Velo-Bind, Inc. v. Scheck
485 F. Supp. 102 (S.D. New York, 1979)
Aga Aktiebolag v. ABA Optical Corp.
441 F. Supp. 747 (E.D. New York, 1977)
Adler, Barish, Daniels, Levin & Creskoff v. Epstein
382 A.2d 1226 (Superior Court of Pennsylvania, 1977)
Adler, Barish, Daniels, Levin & Creskoff v. Epstein
393 A.2d 1175 (Supreme Court of Pennsylvania, 1978)
Certified Laboratories of Texas, Inc. v. Rubinson
303 F. Supp. 1014 (E.D. Pennsylvania, 1969)
David v. Bache Halsey Stuart Shields, Inc.
630 S.W.2d 754 (Court of Appeals of Texas, 1982)
McDonald v. Noga
141 A.2d 842 (Supreme Court of Pennsylvania, 1958)
Berman v. Philadelphia
228 A.2d 189 (Supreme Court of Pennsylvania, 1967)
Wexler v. Greenberg
160 A.2d 430 (Supreme Court of Pennsylvania, 1960)
Morgan's Home Equipment Corp. v. Martucci
136 A.2d 838 (Supreme Court of Pennsylvania, 1957)
Williams v. Bridy
136 A.2d 832 (Supreme Court of Pennsylvania, 1957)
Spring Steels, Inc. v. Molloy
162 A.2d 370 (Supreme Court of Pennsylvania, 1960)
Carpenter & Hughes v. De Joseph
13 A.D.2d 611 (Appellate Division of the Supreme Court of New York, 1961)
Duane Jones Co. v. Burke
117 N.E.2d 237 (New York Court of Appeals, 1954)
Carpenter v. De Joseph
179 N.E.2d 854 (New York Court of Appeals, 1961)
Cosimo v. Hollenbeck
19 A.D.2d 921 (Appellate Division of the Supreme Court of New York, 1963)
People v. Framer
208 Misc. 236 (New York City Magistrates' Court, 1954)
Hughes v. De Joseph
27 Misc. 2d 1003 (New York Supreme Court, 1960)
E. F. Hutton & Co. v. Bokelmann
56 Misc. 2d 910 (New York Supreme Court, 1968)
New England Petroleum Corp. v. Asiatic Petroleum Corp.
82 Misc. 2d 561 (New York Supreme Court, 1975)

Cite This Page — Counsel Stack

Bluebook (online)
31 Pa. D. & C.3d 432, 1983 Pa. Dist. & Cnty. Dec. LEXIS 133, Counsel Stack Legal Research, https://law.counselstack.com/opinion/merrill-lynch-pierce-fenner-smith-v-roodveldt-pactcomplmontgo-1983.