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Ubs Financial Services, Inc. v. Christenson

United States District Court, Eighth Circuit

May 15, 2013


Michael T. Roche, Schuyler Roche & Crisham PC, and Robert Bennett and Jeffrey S. Storms, Gaskins, Bennett, Birrell, Schupp, LLP, Counsel for Plaintiff.

Livia E. Babcock and Laura C. Sands, Meagher & Geer, PLLP, Counsel for Defendant.


MICHAEL J. DAVIS, Chief District Judge.


This matter is before the Court on Plaintiff's Request for Expedited Hearing on Emergency Injunctive Relief Pursuant to Local Rule 7.1(d). [Docket No. 7] The Court heard oral argument on May 15, 2013. For the reasons that follow the Court grants the motion for a preliminary injunction, but modifies Plaintiff's requested relief to permit Defendant to inform his former clients of his new contact information.

A. Factual Background

1. Defendant's Employment with UBS

Defendant Tyler S. Christenson ("Christenson") is a Minnesota resident and registered broker with the Financial Industry Regulatory Authority ("FINRA"), holding Series 7 and 63 security industry licenses and a Series 65 investment advisor license. (Christenson Aff. §§ 4-5.) Christenson worked for Piper Jaffray from 1999 until 2005. (Id.)

In September 2005, Christenson joined Defendant UBS Financial Services Inc. ("UBS") as a financial advisor. (Christenson Aff. §§ 2, 5.) He joined as a partner to John Bloom, who was already a UBS advisor. (Id. §§ 6-7.) Bloom and Christenson negotiated to operate as a team. (Id. § 7.) They agreed that their already existing respective clients would become team clients under a team representative identification number. (Id.) Initially, Bloom would receive 80% of the commission and Christenson would receive 20% of the commission, but, over time, Christenson's percentage would increase to 40%. (Id.)

a) 2006 Team Agreement

After Christenson joined UBS, UBS required that he sign the Financial Advisor Team Agreement ("2006 Team Agreement"). (Christenson Aff. § 9; Christenson Aff., Ex. 1, 2006 Team Agreement.) The 2006 Team Agreement had an effective date of January 1, 2006. (Id.) The agreement contains a one-year non-solicitation clause, a confidentiality provision, and a mandatory arbitration provision. (2006 Team Agreement §§ 8(A), 15, 19.)

b)> RFAAs

After Christenson joined UBS, he was asked to sign a Receiving Financial Advisor Agreement ("RFAA"), reflecting that if Christenson and a retiring UBS advisor agreed, Christenson would buy the retiring advisor's book of business over time, paying the retiring advisor a gradually decreasing share of commissions earned on the book of business until the clients were transitioned to Christenson. (Christenson Aff. § 17.) He signed one RFAA on December 28, 2005, and another on October 31, 2006. (Christenson Aff., Exs. 3-4.) Bloom and Christenson bought the books of two retiring advisors under their joint team representative number. (Christenson Aff. § 18.)

c) 2009 Team Agreement

After the make-up of the team changed, the 2006 Team Agreement was replaced with a Team Agreement dated June 1, 2009, which superseded all prior agreements. (Christenson Aff., Ex. 2, 2009 Team Agreement § 16.) The 2009 Team Agreement also contained a non-solicitation clause, providing that Christenson

will not solicit, for a period of one year from the date of termination of the departing Team Member's employment, any clients of UBS Financial Services Inc. serviced by the Team; provided, however, that unless otherwise prohibited by a non-solicitation provision in another agreement, this provision does not apply to clients the departing Team Member introduced to the Team either at its inception or during its existence.

(2009 Team Agreement § 11(A).) The 2009 Team Agreement required Bloom and Christenson to annually designate which team clients would be deemed to have been introduced to the team by each of them. (2009 Team Agreement § 6.)

The agreement also contains a confidentiality non-disclosure provision, applying to "nonpublic information concerning UBS Financial Services Inc.'s financial data, strategic business plans, product development, customer lists, customer financial information, marketing plans, and any other proprietary information." (2009 Team Agreement § 21.)

The 2009 Team Agreement contained a mandatory arbitration clause; however, the arbitration clause did not waive UBS's right to seek injunctive relief from a court for violation of the non-solicitation or confidential information clauses of the 2009 Team Agreement. (2009 Team Agreement §§ 17, 22.)

d) Change to Senior Wealth Strategy Associate Position

In January 2010, UBS began to terminate low producers. (Christenson Aff. § 21.) Bloom told Christenson that his production was too low, and that, in order to avoid termination, he should move to the position of Senior Wealth Strategy Associate. (Id. § 22.) Bloom promised Christenson would be salaried, but he would receive a bonus based on the revenue generated by the team clients, and his annual compensation would still be a percentage of the team revenue - in fact it would be 35%. (Id. § 22.) Christenson claims that Bloom represented that, besides the change to compensation, nothing else in their relationship or Christenson's relationship with customers would change. (Id.)

Christenson alleges that, in reliance on Bloom's representations, he agreed to the change. (Christenson Aff. § 23.) Christenson avers that he did not sign any documents associated with the change, and he was not advised that the change would terminate his producer status. (Id. § 23.) ...

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