RAYMOND JAMES WINS HIGH COURT LITIGATION ON RESTRICTIVE COVENANTS
07 Mar, 2012
International law firm Faegre Baker Daniels LLP has successfully defended its clients, Raymond James and seven former Edward Jones financial advisors, in a high-value and legally significant High Court restrictive covenant claim, resulting in all claims being dismissed and costs awarded in the Defendants’ favour.
Financial advisory firm Towry acquired Edward Jones in late 2009 and brought proceedings after the EJ employees left to join Raymond James and a significant number of their clients followed. Towry claimed that the employees had ‘solicited’ the clients and were therefore in breach of their restrictive covenants. Faegre Baker Daniels LLP argued that the clients had moved of their own volition and, since there was no restriction in their contracts on ‘dealing’ with clients and no evidence of solicitation, there was no breach of the restrictive covenants. Towry also pursued a number of other allegations including misuse of confidential information and conspiracy.
The decision handed down today by Mrs Justice Cox DBE represents a ringing endorsement of the recruitment process adopted by Raymond James, as well as the actions of the advisors. Following a two month trial comprising over 40 witnesses, the Judge comprehensively exonerated the defendants of all allegations of breach of their restrictive covenants, misuse of confidential information and alleged conspiracy to induce breach of contract.
Faegre Baker Daniels employment partner, Alex Denny, advised Raymond James on its recruitment process with litigation partner, Robert Campbell, leading the High Court litigation.
Commenting on the case, Alex Denny said:
“This is a fantastic and well deserved result for Raymond James and the advisors and an important decision from a wider legal perspective. It shows that the courts will not be persuaded that a non-solicitation restriction is effectively the same as a non-dealing restriction (as argued by the Claimant) and also that a non-solicitation clause on its own will not be sufficient to protect a business where the key relationship is between the employee and the client, rather than the employer and the client. We are delighted that we were able to defend the claim successfully for Raymond James, who had invested significant time and resources in recruiting the advisors lawfully and defending the litigation.”
Litigation partner, Robert Campbell added:
“Towry’s case was built entirely on inference. However, through the evidence of our witnesses we were able to disprove those claims. The defendants were also completely successful in dismissing all other claims of misuse of confidential information, conspiracy and inducement of breach of contract. This is a comprehensive victory, reflected in the costs order made in favour of the Defendants.”
Mark de Ste Croix, Head of Legal and Compliance at Raymond James, commented as follows:
“Raymond James is absolutely delighted with the outcome in the case. Without question Faegre have played a pivotal and key role from start to finish in getting all of the defendants to where we are, and as with all of these cases we understand that it is very much a team effort all round. On behalf of all at Raymond James, I would like to thank everyone at Faegre who has been involved in the case, however large or small that involvement. It has been a pleasure to work with you.”
The successful team at Faegre Baker Daniels included employment partner Alex Denny, assisted by Victoria Pengelly and Anna Byford and litigation partner Robert Campbell, assisted by Stephen Llewellyn and Amy Coburn.