United States District Court, N.D. Oklahoma
OPINION AND ORDER
GERCORY K. FRIZELL UNITED STATES DISTRICT COURT
the court is the Motion for Order to Show Cause [Doc. No. 10]
of plaintiff JP Morgan Securities, LLC (“JP
Morgan”). Specifically, JP Morgan requests defendant
Laurisa Anderson be held in civil contempt of court. For the
reasons set forth below, the motion is granted in part and
denied in part.
dispute arises from the allegedly unlawful solicitation of JP
Morgan clients by Laurisa Anderson and Steven Remchuk on
behalf of Wells Fargo. See generally [Doc. No. 3].
JP Morgan39;s claims-breach of contract, misappropriation
of trade secrets, breach of fiduciary duty, tortious
interference, unjust enrichment, conspiracy, and
conversion-are now the subject of a pending arbitration
before the Financial Industry Regulatory Authority
(“FINRA”). [Doc. No. 2, pp. 1, 13-19,
¶¶ 1, 50-92]; [Doc. No. 17, p. 11]. To aid in that
proceeding, the parties requested and received a temporary
preliminary injunction on September 15, 2016. [Doc. No. 9].
Among other things, the injunction required defendants to
return all documents and records pertaining to JP
Morgan39;s customers, employees, and business within
twenty-four (24) hours; it also prohibited the destruction of
documents, records, and information related to the lawsuit.
[Id. at 2]. JP Morgan now argues that Ms. Anderson
violated the terms of that order.
district court enjoys broad discretion in using its contempt
power to enforce its orders. See Ross v. Univ. of
Tulsa, 14-CV-484-TCK-PJC, -F.Supp.3d-, 2016 WL 6839459,
at *6 (N.D. Okla. Nov. 21, 2016). Generally, civil contempt
sanctions serve two purposes: (1) to coerce compliance with a
court order; and (2) to compensate a litigating party for an
adversary39;s noncompliance. See O39;Connor v.
Midwest Pipe Fabrications, Inc., 972 F.2d 1204, 1211
(10th Cir. 1992). Noncompliance must be proven by clear and
convincing evidence. FTC v. Kuykendall, 371 F.3d
745, 754 (10th Cir. 2004).
generally requires that a dispute be arbitrated if it
“arises out of the business activities of” a
member and/or associated persons. FINRA, Rule 13200 (2008).
That arbitral forum is exclusive and is governed by pleading,
discovery, evidentiary, and other rules set out in
FINRA39;s Code of Arbitration Procedure. See
FINRA, Rule 13200 et seq.; [Doc. No. 8, p. 1, ¶
2]. A party may, however, seek temporary injunctive relief
from a court “until an arbitration panel can be
assembled.” See Prudential Ins. Co. of Am. v.
Hosto, No. 08-CV-674-MJR-CJp. 2008 WL 4482882, at *2 n.1
(S.D. Ill. Oct. 2, 2008); FINRA, Rule 13804(a). The scope of
such relief is limited and “simply preserves the status
quo until arbitration is commenced.” See PFS Inv.,
Inc. v. Imhoff, No. 11-10142, 2011 WL 1135538, at *7
(E.D. Mich. Mar. 25, 2011). That is confirmed by the fact
that an applicant for temporary relief must simultaneously
submit his claim to arbitration. See id.; FINRA,
preliminary injunction issued on September 15, 2016, in
connection with JP Morgan39;s allegations that defendants
violated their employment agreement. [Doc. No. 9]. Among
other things, it required defendants to return to JP Morgan
all documents and records- in whatever form-“pertaining
to JP Morgan39;s customers, employees and business, within
24 hours” and prohibited the destruction of such
material. [Id. at 2]. There is no question that Ms.
Anderson failed to comply with the precise terms of the
court39;s injunction. See [Doc. No. 11-3, p. 2];
[Doc. No. 11, pp. 11-12] (acknowledging noncompliance). But
the scope, intent, and consequence of that noncompliance are
disputed. For the reasons set forth below, the court finds
that an award of attorney fees is appropriate but a forensic
review of electronic devices is not.
Ms. Anderson violated the court39;s order. As noted above,
Ms. Anderson concedes she failed to return all customer and
business related documents to JP Morgan within twenty-four
(24) hours of the September 15, 2016 injunction. See
[Doc. No. 11-3, p. 2]; [Doc. No. 11, pp. 11-12]. She also
destroyed digital copies of those documents after
transmitting them to her attorney. [Doc. No. 11-2, pp. 2-3,
¶¶ 8-9]. But Ms. Anderson argues that any alleged
noncompliance was limited-to forty-three (43) pages of
documents-and understandable, if incorrect. Specifically, Ms.
Anderson explains she retained the documents in connection
with a contemplated employment discrimination claim. [Doc.
No. 17-1, pp. 2-3, ¶¶ 8-19]. Of course, no such
retention was permitted by the court39;s order, nor did Ms.
Anderson seek an exception to allow retention of documents on
that basis. In any event, “a finding of willfulness is
not required to award attorney fees in a civil contempt
proceeding.” See John Zink Co. v. Zink, 241
F.3d 1256, 1262 (10th Cir. 2001). JP Morgan spent time and
resources determining the scope of Ms.Anderson39;s
violation of the temporary injunction and litigating this
motion. [Doc. No. 11]; [Doc. No. 11-3]; [Doc. No. 11-5].
Accordingly, an award of fees is appropriate. See
O39;Connor, 972 F.2d at 1211 (identifying compensation
of a litigating adversary as a remedial purpose of sanctions
for civil contempt).
forensic review of electronic devices, however, is not. To
start, such a coercive sanction could only be justified by a
continuing violation of the court39;s order.
See O39;Connor, 972 F.2d at 1211. JP Morgan makes
no such showing here. Indeed, in its papers, JP Morgan argues
that “it is not clear” whether all covered
documents “have been deleted, ” [Doc. No. 11, p.
6-7], and speculates that “there may be copies”
on Ms. Anderson39;s personal devices, [id. at 6].
The court notes that Ms. Anderson brought herself into
voluntary compliance with the court39;s order and supplies
forensic verification from Wells Fargo to that effect, though
that is likely cold comfort to JP Morgan given its
allegations. See [Doc. No. 17-2]. In any event, the
court finds that JP Morgan has not proven a continuing
violation of the September 15, 2016 injunction by clear and
fundamentally, the scope of requested forensic relief is
incommensurate with the limited role of temporary injunctions
in the FINRA arbitration scheme. See Hosto, 2008 WL
4482882, at *2 n.1; Imhoff, 2011 WL 1135538, at *7.
In truth, ordering forensic electronic 12]. The court is
unpersuaded. For one thing, “[u]npublished opinions are
not precedential” and are cited only “for their
persuasive value.” See 10th Cir. R. 32.1(A).
Indeed, Mercado itself notes that “the
citation of orders and judgments” is
“disfavored.” See Mercado, 165
Fed.App39;x at 641 n. For another, Mercado is
flatly contradicted by published Tenth Circuit precedent,
which notes and adopts the majority rule from circuit courts
of appeals-namely, that a finding of civil contempt does not
require a showing of willfulness. See Zink, 241 F.3d
at 1261-62; Ross v. Univ. of Tulsa, No.
14-CV-484-TCK-PJC, --F.Supp.3d--, 2016 WL 6839459, at *6
(N.D. Okla. Nov. 21, 2016) review-and policing compliance
with that mandate and the court39;s September 15, 2016
order-would effectively transform this court into a discovery
adjunct for the arbitral panel. The court declines that
invitation. JP Morgan may seek expanded discovery from the
FINRA panel if it sees fit. And in any case, the allegations
that are the subject of this motion-Ms. Anderson39;s
improper removal, retention, and use of JP Morgan customer
information-are the subject of pending FINRA proceedings.
[Doc. No. 2, p. 1, ¶ 1]; [Doc. No. 17, p. 11]. Thus,
“[a]ny damages that [JP Morgan] may have
suffered” “both before and after issuance of
the” preliminary injunction order “are available
for recovery . . . in the FINRA arbitration
proceedings.” See Morgan Stanley & Co. Inc. v.
Choy, No. 08-467 HG KSC, 2009 WL 330210, at *4 (D. Haw.
Feb. 10, 2009). JP Morgan “will be able to advance . .
. the same arguments it has presented to this [c]ourt”
to FINRA as to why it should receive permanent injunctive
relief. See Suntrust Inv. Servs., Inc. v. Wachovia Secs.,
LLC, No. 8:08-cv-852-T-26TGW, 2008 WL 2074395, at *1
(M.D. Fla. May 15, 2008). “It makes very little sense
from the perspective of preserving client and judicial
resources to continue to litigate” this matter before
this court when “the key issue of whether [JP Morgan]
is entitled to permanent injunctive relief will [soon] be
decided by a panel of arbitrators.” See id.
plaintiff JP Morgan's Motion for an Order to Show Cause
[Doc. No. 10] is granted in part, as to attorneys' fees
and costs, and denied in part, as ...