Thrivent Financial for Lutherans v. Hutchinson

906 F. Supp. 2d 897, 2012 WL 5413123, 2012 U.S. Dist. LEXIS 158879
CourtDistrict Court, D. Nebraska
DecidedNovember 6, 2012
DocketCase No. 8:12CV380
StatusPublished

This text of 906 F. Supp. 2d 897 (Thrivent Financial for Lutherans v. Hutchinson) is published on Counsel Stack Legal Research, covering District Court, D. Nebraska primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thrivent Financial for Lutherans v. Hutchinson, 906 F. Supp. 2d 897, 2012 WL 5413123, 2012 U.S. Dist. LEXIS 158879 (D. Neb. 2012).

Opinion

MEMORANDUM AND ORDER

LAURIE SMITH CAMP, Chief Judge.

This matter is before the Court on the Plaintiffs’ Application for Temporary Re[899]*899straining Order and Preliminary Injunction (Filing No. 2). Having considered the parties’ briefs, evidence, and arguments heard on November 2, 2012, the Court will grant the Plaintiffs’ Application, in part.

PROCEDURAL HISTORY

Thrivent filed its Complaint (Filing No. 1) and Application for Temporary Restraining Order and Preliminary Injunction on October 25, 2012. Thrivent asserts two causes of action against Hutchinson: (1) breach of contract, and (2) violation of Nebraska’s Trade Secrets Act. Thrivent alleges that Hutchinson wrongfully solicited Thrivent’s clients and misappropriated confidential information. Thrivent seeks to enjoin Hutchinson from (1) using or disclosing its confidential information; (2) for a one-year period, soliciting Thrivent clients with whom Hutchinson had direct contact and for whom he had access to Thrivent’s Confidential Business information during the two years before August 30, 2012; and (3) otherwise violating his contractual agreements with, and statutory duties owed to, Thrivent.

Thrivent notes that one of two contracts it entered into with Hutchinson contains a mandatory arbitration provision (Filing No. 1-2) and, therefore, it commenced an arbitration claim with the Financial Industry Regulatory Authority (“FINRA”) concurrently with this action. The parties acknowledge that, from a substantive perspective, FINRA will hear the issues currently before the Court; and, if a temporary restraining order (“TRO”) is granted, FINRA will expedite its hearing.

FACTUAL BACKGROUND

Plaintiffs Thrivent Financial for Lutherans (“Thrivent Financial”) and Thrivent Investment Management, Inc. (“Thrivent Investment”) (collectively, “Thrivent”) offer financial protection planning products and services to customers through Financial Associates. Defendant Michael C. Hutchinson is a Nebraska resident, and a registered representative and securities broker registered with FINRA.

From 2006 until August 28, 2012, Hutchinson was a Financial Associate affiliated with Thrivent on an independent contractor basis. In order to become affiliated with Thrivent, Hutchinson was required to sign two contracts: (1) the Financial Associate Agreement (“FAA”) entered into with Thrivent Financial (Filing No. 1-1), and (2) a Registered Representative Agreement (“RRA”) entered into with Thrivent Investment (Filing No. 1-2). Those two contracts each have a provision titled “CONFIDENTIAL INFORMATION,” and a provision titled “PRESERVATION OF BUSINESS.” (See Filing No. 1-1 at CM/ECF p. 5; Filing No. 1-2, at CM/ECF p. 5.)

The provision titled “CONFIDENTIAL INFORMATION” states:

[Hutchinson] agrees that, while this Agreement is in effect and for a period of one (1) year immediately following termination of this Agreement, [Hutchinson] will not directly or indirectly use or disclose any Confidential Business Information. [Hutchinson] agrees that his ... obligations under this subsection will apply equally to Confidential Business Information that is in the Society’s possession and that may be discovered or developed by [Hutchinson], whether [Hutchinson] has any such Confidential Business Information recorded in written, electronic or other form. “Confidential Business Information” means all information that is not readily available to or generally ascertainable by the public, and that has limited disclosure within the Society or that is treated or designated as Confidential Business Information by the Society, the disclosure of which would be harmful to the interests of the Society.

[900]*900(See id. HIV. A.) The provision titled “PRESERVATION OF BUSINESS” states:

[Hutchinson] agrees that, while this Agreement is in effect and for a period of one (1) year immediately following termination of this Agreement, [Hutchinson] will not engage in solicitation, or take any other action, that would cause or attempt to cause or influence a Restricted Society Client to terminate, replace, surrender or cancel any Society Product.... A “Restricted Society Client” is the owner or recipient of a Society Product for whom [Hutchinson] had access to the Society’s Confidential Business Information about such client, during the two (2) year period immediately preceding termination of this Agreement.

(See id. 1ÍIV.B.)

Hutchinson contends that he “had access” to many of Thrivent’s clients with whom he never had personal contact. Thrivent points to Thrivent’s privacy policy and security-of-customer-information policy, that indicates it uses “physical, technical and administrative safeguards ... to protect” its confidential information, and that its confidential information is maintained on a “need to know basis.” (Filing No. 21-3 at CM7ECF p. 2.) Under those policies, someone “need[s] to know” confidential information if the information is “necessary to perform the duties of [his or her] job.” (Id. at 5.) The person in control of the confidential information is “responsible for ascertaining the ‘need to know1 before sharing it with another ...” (Id.) Therefore, Thrivent contends that it had policies in place to ensure that Hutchinson, and others, did not have access to Thrivent’s Confidential Business Information with respect to a Thrivent client unless they did business with that client.

On or about August 28, 2012, Thrivent received a letter from Hutchinson indicating he was terminating his affiliation with Thrivent and accepting a position with another company, which turned out to be New York Life, one of Thrivent’s competitors. Although Hutchinson changed his affiliations, he used the same office and telephone number as he did when he was affiliated with Thrivent. Thrivent alleges it subsequently discovered Hutchinson had sent a letter to at least one of his Thrivent clients the day prior to announcing his resignation. (See Filing No. 1-6.) That letter states:

I would like to take this opportunity to personally thank you for allowing me to serve you as your financial representative, and have enjoyed our working relationship over the years.
To continue to better serve you and offer the quality, professional service you desire as my valued client, I am changing my affiliation to New York Life. By doing so, I will be able to provide products and services not currently available to you through Thrivent Financial.
Due to my contractual agreement with Thrivent Financial, I will not be able to contact you regarding your Thrivent Financial products once I change affiliations. My office will be in the same location and my phone number will remain the same. If you need assistance with your financial planning or have questions about your financial products, please feel free to stop by the office or give me a call.
I am here to help you, and look forward to serving you and your family in the future.

(Id.) Thrivent contends this letter is evidence that Hutchinson solicited Thrivent clients to move with him to New York Life. Hutchinson alleges he was merely attempting to inform his clients that he was changing his affiliation to New York Life.

[901]

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Bluebook (online)
906 F. Supp. 2d 897, 2012 WL 5413123, 2012 U.S. Dist. LEXIS 158879, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thrivent-financial-for-lutherans-v-hutchinson-ned-2012.