Merrill Lynch, Pierce, Fenner & Smith Inc. v. Shubert
| Decision Date | 23 November 1983 |
| Docket Number | No. 83-903-Civ-Orl-11.,83-903-Civ-Orl-11. |
| Citation | 577 F. Supp. 406 |
| Parties | MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, Plaintiff, v. John M. SHUBERT, Defendant. |
| Court | U.S. District Court — Middle District of Florida |
C.B. Rogers and Phillip S. McKinney of Rogers & Hardin, Atlanta, Ga., and Lawrence Phalin, of Mateer, Harbert, Frey, Bechtel & Phalin, Orlando, Fla., for plaintiff.
Curtis Carlson, of Fowler, White, Burnett, Hurley, Banick & Strictroot, Miami, Fla., and Lawrence G. Mathews, Jr., of Smith, Mackinnon & Mathews, Orlando, Fla., for defendant.
On 10 November 1983 the plaintiff filed a verified complaint alleging that the defendant in October 1979 had signed an employment contract with the plaintiff. A copy of the agreement was attached to the complaint. The complaint alleged that the defendant resigned his employment with the plaintiff on 7 November 1983 and, in violation of the contract, had taken or copied certain of Merrill Lynch's records. Further it alleged that after the termination of defendant's employment with Merrill Lynch, he solicited former customers for the benefit of the defendant's new employer, Prudential-Bache Securities, Inc. The relief demanded included a temporary restraining order, a preliminary and permanent injunction, damages and a constructive trust. The court denied the application for a temporary restraining order, but heard the application for preliminary injunction on 17 November 1983. Before the hearing, the defendant filed a motion to stay the litigation and compel arbitration. Without objection, the court heard both motions on 17 November 1983.
Paragraph 5 of the employment agreement expressly provides that any controversy between the defendant and the plaintiff arising out of the employment relationship or the termination of the relationship "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 plaintiff does not take issue with the arbitrability of the dispute. Nevertheless plaintiff insists that a preliminary injunction should issue to preserve the status quo during the pendency of the arbitration. See plaintiff's brief filed 16 November 1983.
The inquiries which guide the court's discretion in connection with preliminary injunctions are whether or not: (1) the movant has established a substantial likelihood of success on the merits; (2) the movant has established a substantial threat that it will be irreparably harmed if injunctive relief is not granted; (3) the threatened injury to the movant outweighs the potential harm which the injunctive relief might cause the defendant, and (4) granting the preliminary injunction will disserve the public interest. Canal Authority of State of Florida v. Callaway, 489 F.2d 567, 572 (5th Cir.1974).
The defendant's affidavit admits he made copies of account statements of certain customer records. The defendant likewise has admitted that after leaving the employment of Merrill Lynch, he sent a letter to his former customers advising them of his new association. However little may be said for the position the defendant apparently takes, this court concludes that the preliminary injunction should be denied and the litigation stayed during the pendency of arbitration. The agreement between Merrill Lynch and the defendant, given its purpose, is obviously an agreement evidencing "a transaction involving commerce" for purposes of Section 2 of the federal arbitration act, 9 U.S.C. § 1 et seq. See Dickstein v. DuPont, 443 F.2d 783, 785 (1st Cir.1971).
The issues raised by the complaint are whether or not the employment contract was breached by the plaintiff by his post termination solicitation of customers with whom he had done business as an employee of Merrill Lynch and by his copying of Merrill Lynch records relating to such customers. These...
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