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MERRILL LYNCH, PIERCE, FENNER & SMITH v. RAHN
November 2, 1999
MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., PLAINTIFF,
TREVOR B. RAHN AND JACQUELINE BENDERSKI, DEFENDANTS.
The opinion of the court was delivered by: Berman, District Judge.
On October 26, 1999, Merrill Lynch, Pierce, Fenner & Smith Inc.
("Plaintiff" or "Merrill Lynch") filed this action seeking
(temporary) injunctive relief against Trevor B. Rahn and
Jacqueline Benderski (together, "Defendants") for (i) breach of
contract; (ii) conversion of trade secrets, customer lists, and
confidential business information; (iii) breach of duty of
loyalty; and (iv) unfair competition.
On the same day, October 26, 1999, United States District Judge
Milton Pollack, sitting as the Part I judge, signed a Temporary
Restraining Order ("TRO"). The TRO provided, among other things,
that "Defendants shall show cause . . . on the 1st day of
November, 1999 at 10:30 a.m., or as soon thereafter as counsel
may be heard, why a Preliminary Injunction should not be ordered
according to the terms and conditions set forth above." (TRO at
3). A copy of the TRO is attached hereto as Exhibit A and
incorporated into the record of these proceedings.
Based upon the parties' written submissions, as well as oral
argument on November 1, 1999, the Court has determined that a
preliminary injunction is appropriate. The preliminary injunction
shall contain substantially (but not entirely) the same terms and
conditions as the TRO. This injunction, an "extraordinary"
remedy, is intended only as an interim measure pending the
expedited determination of the merits of this case through
securities industry arbitration pursuant to Rule 10335 of the
National Association of Securities Dealers Code of Arbitration
Briefly stated, the relevant facts include the
(i) Defendant Rahn was employed as a registered
representative with Merrill Lynch in its Grand
Central Financial Complex in New York City until
October 22, 1999. (See Rahn Affidavit at ¶ 3).
Defendant Benderski was employed as a sales assistant
with Merrill Lynch in its Grand Central Financial
Complex in New York City until October 22, 1999.
(See Benderski Affidavit at ¶ 3);
All records of Merrill Lynch, including the names
and addresses of its clients are and shall remain
the property of Merrill Lynch at all times during
my employment with Merrill Lynch and after
termination of my employment for any reason with
Merrill Lynch. None of such records, nor any part
of them is to be removed by me from the premises of
Merrill Lynch either in original form or in
computerized, duplicated, or copied form except
with the permission of an office manager . . .
Defendant Rahn also expressly agreed in paragraph 3
of the "Financial Consultant Agreement" "to the
issuance of a temporary restraining order or a
preliminary or permanent injunction to prohibit the
breach of any provision of this contract or to
maintain the status quo pending the outcome of any
arbitration proceeding which may be initiated."
(iii) Defendant Benderski did not execute the
"Financial Consultant Agreement";
(iv) both Defendants executed Merrill Lynch's
"Compliance Outline for Private Client Financial
Consultants" and "Guidelines for Business Conduct."
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