Morgan Stanley DW, Inc. v. Clayson

19 Mass. L. Rptr. 201
CourtMassachusetts Superior Court
DecidedMarch 14, 2005
DocketNo. 042981BLS
StatusPublished
Cited by1 cases

This text of 19 Mass. L. Rptr. 201 (Morgan Stanley DW, Inc. v. Clayson) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Morgan Stanley DW, Inc. v. Clayson, 19 Mass. L. Rptr. 201 (Mass. Ct. App. 2005).

Opinion

van Gestel, J.

This matter is before the Court on a complaint for contempt by the plaintiff, Morgan Stanley DW, Inc. (“MSDW”), against the defendants Robert Clayson (“Clayson”) and Wachovia Securities, LLC (“Wachovia”). The hearings concluded on November 19, 2004. The Court’s findings of fact, rulings of law and an order for judgment follow.

[202]*202FINDINGS OF FACT

MSDW operates a branch office in Wellesely, Massachusetts, wherein it is engaged in the securities brokerage business. Clayson was employed by MSDW at the Wellesley office from September 1999 until he resigned on June 18, 2004. When hired by MSDW, Clayson executed a Financial Advisor Employment Agreement containing confidentiality and non-competition covenants.

Prior to his employment at MSDW, Clayson was employed from 1976 to 1999 as a Financial Advisor by Bear Stearns. Much of Clayson’s client base serviced at MSDW consisted of his former client base that followed him from Bear Steams.

Instantly upon his resignation from MSDW, on June 21,2004, Clayson became employed as a Financial Advisor at Wachovia in its Waltham office.

MSDW filed suit against Clayson seeking injunctive relief enforcing the confidentiality and non-competition covenants in his employment agreement. The agreement is subject to regulation under the mies of the National Association of Securities Dealers (“NASD”) and contains an arbitration provision before an NASD panel.

On July 12, 2004, this Court issued the following preliminaiy injunction enjoining and restraining Clay-son as follows:

(1) from, directly or indirectly, whether alone or in concert with others, including any officer, agent, representative and/or employee of his new employer, Wachovia Securities, LLC (“Wachovia”), from breaching Clayson’s written agreement of September 8, 1999, with MSDW by:
(a) utilizing or disclosing in any way MSDWs confidential and/or proprietary information and trade secrets, including without limitation, client names other than for those serviced by Clayson previously at Bear Steams, client addresses other than for those serviced by Clayson previously at Bear Steams, and client financial information, and personal information, other than for those serviced by Clayson previously at Bear Steams, for any purpose;
(b) utilizing in any way or furnishing to any third-parly any of the documents and other information, if any, misappropriated by Clayson from MSDW, or extracts or copies thereof;
(c) for aperiod of one year from June 18,2004, and within a radius of one-hundred (100) miles from the MSDW office at 45 William Street, Wellesley, Massachusetts 02481, soliciting, directly or indirectly, any MSDW customers whom Clayson serviced at MSDW other than those serviced by Clayson previously at Bear Stearns, or any MSDW customers he learned of during his employment at MSDW, except for his own family members and relatives, and, further, from servicing or accepting any business or account transfers from MSDW accounts serviced by Clay-son previously at MSDW other than for those serviced by Clayson previously at Bear Steams, acquired hereafter by reason of improper solicitation, such solicitation being any form of communication that requests any MSDW customer to transfer his, her or its business to Clayson at Wachovia; provided that this injunctive relief does not preclude Clayson from servicing any client or account who or which Clayson can prove has followed him to his new employer out of choice and not as a result of solicitation by him (such proof depending in great part upon the nature of the communication between Clayson or Wachovia and the former MSDW customer or account, with a simple announcement that Clay-son has left MSDW to join Wachovia being acceptable, and a communication asking the client or account to follow Clayson to Wachovia, accompanied by a “signature ready” account transfer form and a postage pre-paid return envelope, seen as improper solicitation1), nor does it preclude Clayson’s new employer or its agents from servicing said clients, nor still further does it allow MSDW to deny, impede or obstruct the request made by a client for transfer of any account to Clayson’s new employer;
(2) If not already accomplished, Clayson, with his agents, employees and representatives, shall return to counsel for MSDW, on or before 4:00 p.m., July 15, 2004, all documents, computerized materials except for his software called “ACT!,” copies and/or extracts thereof, if any, wrongfully removed by Clayson from MSDW; provided that counsel for him, if he chooses, may prepare and retain a simple list, much like a privilege log, identifying each document by brief descriptive title only — e.g., “customer record for Jane Smith, two pages” — and a copy of such a list, if prepared, must be provided to counsel for MSDW when the documents are returned. MSDW, thereafter, must preserve such documents in an unaltered form pending the conclusion of this litigation and any arbitration that may occur.

Both Clayson and Wachovia were duly served with the foregoing preliminary injunction.

In the period from Clayson’s resignation from MSDW and the Court’s issuance of the preliminaiy injunction a significant number of MSDW accounts followed Clayson and were transferred to Wachovia.

On July 15, 2004, counsel for Clayson delivered to MSDW 14 pages of client account statements representing clients that Clayson serviced while employed by MSDW, excluding documents relating to clients of MSDW who had transferred their accounts and Clayson’s preexisting Bear Steams clients. Clayson also informed MSDW that electronic data relating to clients, including contact information, notes, meet[203]*203ings, etc., were stored in the ACT! Program database on Clayson’s former computer at MSDW. He informed MSDW that the password to the ACT! Program was “dietcoke.”

On August 10, 2004, this Court issued the following memorandum and order:

This matter came before the Court on a request by the plaintiff, Morgan Stanley DW, Inc. (“MSDW’), seeking enforcement of a preliminary injunction issued on July 12, 2004. Among other things, the preliminary injunction included the following:
If not already accomplished, Clayson, with his agents, employees and representatives, shall return to counsel for MSDW, on or before 4:00 p.m., July 15, 2004, all documents, computerized materials except for his software called “ACT!,” copies and/or extracts thereof, if any, wrongfully removed by Clayson from MSDW; provided that counsel for him, if he chooses, may prepare and retain a simple list, much like a privilege log, identifying each document by brief descriptive title only — e.g., “customer record for Jane Smith, two pages” — -and a copy of such a list, if prepared, must be provided to counsel for MSDW when the documents are returned. MSDW, thereafter, must preserve such documents in an unaltered form pending the conclusion of this litigation and any arbitration that may occur.
The Court expects that this Order will be fully complied with. It includes: aU. documents, computerized materials except for his software called “ACT!,” copies and/or extracts thereof, if any, wrongfully removed by Clayson from MSDW.

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

Related

Smith Barney Division of Citigroup Global Markets, Inc. v. Griffin
23 Mass. L. Rptr. 457 (Massachusetts Superior Court, 2008)

Cite This Page — Counsel Stack

Bluebook (online)
19 Mass. L. Rptr. 201, Counsel Stack Legal Research, https://law.counselstack.com/opinion/morgan-stanley-dw-inc-v-clayson-masssuperct-2005.