FP 37569621.1

IN THE UNITED STATES DISTRICT COURT FOR

THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

__________________________________________

:

FIDELITY BROKERAGE SERVICES LLC, :

:

Plaintiff, :

:

v. : CASE NO. 1:20-cv-02133

:

JENNIFER TAYLOR, :

:

Defendant. :

PLAINTIFF’S REPLY TO DEFENDANT’S OPPOSITION TO PLAINTIFF’S MOTION 

FOR LIMITED EXPEDITED DISCOVERY

Plaintiff Fidelity Brokerage Services LLC (“Fidelity”) respectfully files this Reply to 

Defendant’s Opposition to Plaintiff’s Motion for Limited Expedited Discovery to correct certain 

misstatements and misleading arguments contained in Defendant’s Opposition:

I. ARGUMENT

A. Expedited Discovery Must Be Addressed by the Court In Accordance with Its Rules

Defendant tries to mislead the court by arguing that FINRA does not allow discovery prior 

to the permanent injunctive hearing and therefore Fidelity is circumventing the FINRA Rules 

through its motion. However, what Defendant carefully ignores, and hopes the Court will not 

realize, is that the FINRA Code of Arbitration Procedure, agreed to by the parties, provides that 

courts of competent jurisdiction, and not FINRA arbitrators, decide requests for temporary 

injunctive relief. FINRA has no procedure for deciding requests for temporary injunctive relief, 

which is why it directs parties to proceed in court. Because FINRA essentially outsources matters 

of temporary and preliminary injunctive relief to the courts, FINRA of course has no procedures 

for expedited discovery in aid of temporary restraining orders or preliminary injunction requests. 

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There would be no reason for FINRA to create rules for expedited discovery for a procedure that 

its rules provide must be handled elsewhere. Since the parties must go to Court and FINRA does 

not have any rules around temporary injunctive relief, it is not “circumventing” the FINRA rules 

to seek expedited discovery, it is simply following the Court procedures, as FINRA has directed. 

B. A Preliminary Injunction is Not the Same as a Permanent Injunction

Defendant also attempts to mislead the Court by referencing a number of FINRA rules and 

then arguing that the “temporary” injunctive relief that must be sought in Court supposedly does 

not include preliminary injunctive relief. Rather, Defendant states with no citation to authority the 

falsehood that although the FINRA Code of Arbitration Procedure clearly states that what the 

arbitration panel handles is “permanent” injunctive relief, nevertheless it is “really” preliminary 

injunctive relief the panel is handling. Building from this falsehood, Defendant argues that it is 

improper gamesmanship for Fidelity to be seeking preliminary injunctive relief in court. The 

FINRA Code is clear on this point, stating clearly that when it refers to parties seeking “temporary 

injunctive relief” in court, this includes not only a temporary restraining order, but also a 

preliminary injunction. FINRA Definitions defines a “temporary injunctive order” that must be 

sought only in court as:

(dd) Temporary Injunctive Order

The term “temporary injunctive order” means a temporary restraining order, 

preliminary injunction or other form of initial, temporary injunctive relief.

See FINRA Rule 13100(dd)(emphasis added); see also Merrill Lynch v. Murvin, No. 09-cv-329, 

2009 WL 528605, at *1 (M.D. Fla. Mar. 2, 2009) (“Pursuant to FINRA Rule 13804(b)(1), this 

[Preliminary Injunction] Order shall be construed as a ‘temporary injunctive order’ and the FINRA

arbitration hearing in this matter shall commence within fifteen (15) days of the entry of this 

Order.”). Accordingly, there is no merit to Defendant’s argument that the Rule 13804 hearing is 

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FINRA’s equivalent to a preliminary injunction hearing. The only chance that Fidelity will have 

at temporary or preliminary injunctive relief is through this Court proceeding.

C. Defendant Relies on Law Prior to the Change to FINRA’s Rules

Defendant relies almost exclusively on a single case, Merrill Lynch v. O’Connor, 194 

F.R.D. at 623 (N.D. IL 2000), for the proposition that Fidelity is not entitled to expedited discovery 

in aid of the preliminary injunction. However, Defendant fails to tell the Court that O’Connor was 

decided in 2000 and FINRA Rule 13804 – which requires the parties to go to Court exclusively

for temporary and preliminary injunctive relief – was only adopted in 2007. Importantly, until 

March 2002, parties could seek temporary injunctive relief under NASD Rule 10335 in court or

in arbitration (NASD’s arbitration forum and rules were the predecessors to today’s FINRA). In 

O’Connor, Merrill Lynch had the option to seek the injunctive relief that it was requesting from 

the arbitration panel. In fact, the Court noted that the parties had already exchanged lists of 

arbitrators and the arbitration was “well on its way”. Id. at 621. However, in this case, with the 

change adopted by FINRA in 2002, Fidelity cannot seek temporary or preliminary injunctive relief 

in arbitration. The arbitration is not well underway, in fact, FINRA is waiting to see whether 

injunctive relief is granted before even generating arbitrator ranking lists. Unlike Merrill Lynch 

in the O’Connor case, Fidelity will not have a chance to ask the arbitration panel, in short order, 

to stop Taylor’s solicitation of its customers. Fidelity has one chance at temporary injunctive 

relief, and it is with this Court. If the Court does not grant injunctive relief, the parties will proceed 

on a non-expedited track and the next substantive hearing with the Panel will likely be in 

approximately nine months or more. 

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D. Courts Consistently Allow Limited Expedited Discovery In Aid of Preliminary 

Injunction Proceedings Prior to FINRA Hearings

Defendant erroneously claims that courts do not grant expedited discovery in aid of 

preliminary injunction proceedings, and certainly not prior to pending arbitration proceedings and 

definitely not in advance of arbitrations in a forum “like FINRA.” This is not the case. In similar 

disputes involving similar injunctive relief actions filed by FINRA firms, courts across the country 

have granted the firms’ requests for expedited discovery in aid of preliminary injunction 

proceedings prior to FINRA arbitrations. See, e.g., Morgan Stanley Smith Barney LLC v. Maloy, 

No. C14-5388, 2014 WL 12720908, at *1 (W.D. Wash. May 13, 2014) (granting, inter alia, leave 

to conduct depositions and respond to requests for production of documents in preparation for 

preliminary injunction hearing in case subject to FINRA Rule 13804); Wachovia Sec., L.L.C. v.

Stanton, 571 F. Supp. 2d 1014, 1050 (N.D. Iowa 2008) (permitting up to 15 interrogatories, 5

depositions, and requests for production of documents in a matter subject to FINRA after the denial 

of a temporary restraining order); JPMorgan Chase Bank, N.A. v. Soderquist, No. 11-CV-00445-

WYD-CBS, 2011 WL 742549, at *3 (D. Colo. Feb. 24, 2011) (granting “leave to commence 

expedited discovery immediately in aid of preliminary injunction proceedings before this Court, 

including the right to depose Defendant and inspect his personal and office computers.”); 

Prudential Ins. Co. of Am. v. Sandvold, No. CIV. 12-132 DSD/JJK, 2012 WL 245161 (D. Minn. 

Jan. 25, 2012), modified, 845 F. Supp. 2d 971 (D. Minn. 2012) (granting leave to engage in 

expedited discovery). 

Likewise, in Charles Schwab & Co., Inc. v. McMurry, Case No. 2:08-cv-00534-JES-SPC 

(M.D. Fla. 2008) (attached hereto as Exhibit “A”), the court granted Schwab’s motion for 

expedited discovery. The McMurry Court noted that, just like the present case, Schwab was 

seeking preliminary injunctive relief to enforce a former employee’s confidentiality and nonCase: 1:20-cv-02133 Document #: 23 Filed: 04/14/20 Page 4 of 9 PageID #:176
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solicitation agreement, and that the employee in question was accused of misappropriating 

Schwab’s confidential information. Exhibit A at 1. Although the court stated that discovery is 

ordinarily not permitted before the parties hold their Rule 26(f) conference, it held that “[Schwab] 

has demonstrated sufficient good cause to proceed with the expedited discovery” because “the use 

[of Schwab’s] customer list could result in irreparable injury due to the loss of business potentially 

associated with the customer information” and because “there is a clear connection between the 

discovery sought and the alleged potential harm.” Exhibit A at 3. The Court ultimately granted 

Schwab leave to conduct discovery more burdensome than that sought by Fidelity in this case, 

including 10 document requests, two depositions, and discovery of the defendant’s computers. 

Consistent with all of this case law, in a recent case involving a broker-dealer seeking 

injunctive relief pending arbitration, the Honorable Joan B. Gottschall granted Morgan Stanley 

leave to conduct expedited discovery, and after reviewing the evidence gathered thereby, granted 

temporary injunctive relief prohibiting the defendant from soliciting clients pending FINRA 

arbitration. See Morgan Stanley Smith Barney LLC v. Ouwenga, 1:18-cv-06373 (N.D. Ill. 2018) 

(attached hereto as Exhibit “B”) (orders granting expedited discovery and thereafter temporary 

injunctive relief). In Ouwenga, the Court initially denied Morgan Stanley’s motion for a temporary 

restraining order, but after submission of evidence garnered in expedited discovery, the Court 

granted relief virtually identical to what was originally requested. This of course is precisely why 

Defendant is resisting expedited discovery so aggressively here – she knows full well that she has 

solicited clients in violation of her agreement, and is fully aware this will come to light under the

bright lights of discovery, just as it did in the Ouwenga case.

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E. Defendant’s Unsworn Denials in a Brief Are Entitled to No Weight

Defendant makes numerous allegations in opposition to Fidelity’s motion for expedited 

discovery (and its motion for preliminary injunction), but notably absent is any sworn statement 

from Defendant, even in the face of reports from customers that she has solicited them, set forth 

in the declarations filed by Fidelity. 

Fidelity urges the Court to take cognizance of the assiduousness with which Defendant is 

trying to avoid putting her factual assertions under oath. She has put forward multiple factual

“defenses,” yet has buttressed none of them with an affidavit or declaration. Likewise, she 

strenuously resists Fidelity’s request for narrowly-tailored expedited discovery that would allow 

the Court and the parties to have the benefit of sworn testimony, from both Plaintiff and Defendant, 

to aid in its adjudication of the pending request for preliminary injunction. Defendant’s careful 

evasion of being under oath suggests even more strongly the need for limited expedited discovery.

F. “Remembering” a Trade Secret Does Not Offer a License to Misuse It.

Defendant speciously suggests that if she is able to remember Fidelity’s trade secret 

information, this somehow gives her license to misappropriate and misuse it. This contention is 

absurd and has been rejected repeatedly by Illinois courts both before and after enactment of the 

Illinois Uniform Trade Secrets Act. See, e.g., Stampede Tool Warehouse Inc. v. May, 651 N.E.2d 

209, 216-217 (Ill. App. Ct. 1995) (finding customer list to be a trade secret and ruling that it was 

misappropriated by employees who used their memory to reconstruct portions of the list, 

explaining that “taking [of a trade secret] does not have to be a physical taking by actually copying 

the names. A trade secret can be misappropriated by physical copying or by memorization”); 

E*TRADE Financial Corporation v. Pospisil, No. 18 C 5908, 2018 WL 4205401, at *4 (N.D. Ill. 

Sept. 4, 2018) ( “Using memorization to rebuild a trade secret does not transform that trade secret 

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from confidential information into non-confidential information”); First Financial Bank, N.A. v. 

Bauknecht, 71 F. Supp. 3d 819, 845 (C.D. Ill. 2014) (“Bauknecht admitted during his deposition 

that he created the list of 73 by remembering the names of his past customers and his former 

colleague Dustin Smith's customers. Memorization is one manner in which a trade secret may be 

misappropriated. Evidence that a defendant has remembered names of customers is sufficient to 

establish memorization) (internal citations omitted) (citing, inter alia, Schulenburg v. Signatrol, 

Inc., 212 N.E.2d 865 (Ill. 1965)).

G. Defendant’s Suggestion That Her Conduct Does Not Harm Fidelity is Baseless

Defendant self-servingly attempts to minimize the impact of her improper solicitation of 

Fidelity clients by asserting that Fidelity is not harmed because her new firm has its clients custody 

their assets at Fidelity. What Defendant leaves out is that by soliciting these clients to follow her 

to her new firm, she is seeking to divert for her own benefit and the benefit of her new firm, 

Fairhaven, the advisory portion of these clients’ business relationships. While the assets remain 

lodged at Fidelity while a customer is serviced at Fairhaven, it is Fairhaven, not Fidelity, that will 

enjoy the present and unknown future revenue stream that comes from providing that client with 

investment advice and guidance. Defendant is not seeking to divert Fidelity clients to service on 

a pro bono basis – she and Fairhaven of course plan to divert the vast majority of the clients’ 

business relationships away from Fidelity so that she can enjoy that business relationship at 

Fairhaven. Such a diversion, and the incalculable loss of business resulting from it, is exactly what 

the Seventh Circuit and trial courts within this District have repeatedly found to constitute 

irreparable harm. See, e.g., Merrill Lynch v. Salvano, 999 F.2d 211 (7th Cir. 1993); Morgan 

Stanley v. Ouwenga (N.D. Ill. 2018) (Exhibit “B”).

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II. CONCLUSION

For the foregoing reasons, Fidelity respectfully requests that the Court issue an Order 

granting the limited, expedited discovery requested by Fidelity.

Dated: April 14, 2020 Respectfully submitted,

FISHER & PHILLIPS LLP

/s/ Joel W. Rice 

Joel W. Rice

Franklin Z. Wolf

10 South Wacker Drive, Suite 3450

Chicago, IL 60606

TEL: (312) 346-8061

FAX: (312) 346-3179

jrice@fisherphillips.com

fwolf@fisherphillips.com

Attorneys for Plaintiff

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CERTIFICATE OF SERVICE

The undersigned hereby certifies that, on this 14th day of April, 2020, a true and correct 

copy of the foregoing PLAINTIFF’S REPLY TO DEFENDANT’S OPPOSITION TO 

PLAINTIFF’S MOTION FOR LIMITED EXPEDITED DISCOVERY was served via ECF 

on the following:

Christopher Griesmeyer

Greiman, Rome & Griesmeyer, LLC

Two N. LaSalle, Suite 1601

Chicago, Illinois 60602

Dated: April 14, 2020 Respectfully submitted,

FISHER & PHILLIPS LLP

/s/ Joel W. Rice 

Joel W. Rice

Franklin Z. Wolf

10 South Wacker Drive, Suite 3450

Chicago, IL 60606

TEL: (312) 346-8061

FAX: (312) 346-3179

jrice@fisherphillips.com

fwolf@fisherphillips.com

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