Edward Jones Loses Trade Secrets Arbitration

May 10, 2017

To the unsophisticated observer, lawsuits typically appear to be about winning. After all, when someone files a lawsuit in court or proceeds with an arbitration, the point must be to vanquish their adversary. Commonsense would dictate that you don't incur the costs of litigation just for the hell of it, right? Well . . . you know . . . that's one way of looking at it.

To those of us who have made a career of practicing law, lawsuits aren't always about winning versus losing -- at least not the way some of our clients explain to us why they want to sue. Sometimes a lawsuit isn't as much about the endgame as about the opening gambit. Sometimes a large corporation, for example, might figure that whether it wins or loses a particular case there is a lot of merit to be found in making a so-called point. Which isn't to suggest, even remotely, that the big boys don't want to win. That almost always goes without saying. On the other hand, you ever watch a baseball game where the score is 14 to 1 in the eighth inning and the pitcher for the losing team throws a purpose-pitch fastball that hits the batter in the helmet and knocks him down?

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in March 2016, Claimant Edward D. Jones & Co., L.P. asserted, in part, misappropriation of trade secrets; breaches of contract and fiduciary duty; civil conspiracy; unjust enrichment; interference with contractual relationships; and aiding and abetting breach of fiduciary duty. In the Matter of the FINRA Arbitration Between Edward D. Jones & Co., L.P., Claimant, vs. Dudley John Dupuis, Jr. and Wells Fargo Advisors, Respondents (FINRA Arbitration 16-00917, May 2, 2017). As set forth in the FINRA Arbitration Decision:

The causes of action relate to Respondents' alleged use of proprietary information to solicit the transfer of client accounts from Claimant to Respondent Wells Fargo, upon Respondent Dupuis' termination of employment with Claimant.

Bill Singer's Comment: Not thrilled with the above explanation in the Decision because it's not clear as to whether Edward Jones "discharged" Dupuis (which is one form of "termination of employment") or whether Dupuis resigned and, by doing so, voluntarily terminated his employment. In securities industry parlance, the term "termination" technically refers to the termination of registration with a member firm and does not necessarily equate with someone being fired; hence, the derivation of the title of the Form U5: "UNIFORM TERMINATION NOTICE FOR SECURITIES INDUSTRY REGISTRATION."

Relief Sought

In addition to actual and punitive damages, costs, and fees, Claimant  requested an immediate permanent injunction enjoining Respondents from:

a) using disclosing, or transmitting information including, all books, records, documents and information pertaining to Claimant's business activities, including but not limited to clients, clients' accounts, and the identities, addresses or other information related to said clients and accounts; and that all original documents, and copies thereof, be immediately returned to Claimant; and

b) soliciting, either directly or indirectly, sales of securities and/or insurance business to or from any Edward Jones client or otherwise induce any said Edward Jones client to terminate his/her relationship with Edward Jones, for those clients to whom Respondent Dupuis provided services or about whom Respondent Dupuis has information or knowledge of confidential information or Edward Jones trade secrets arising from employment with Edward Jones for a period of one year, to expire on March 7, 2017;

Also, Claimant sought another permanent injunction:

a) ordering Respondents to return in no more than seventy-two (72) hours to counsel for Claimant any and all information, materials, documents, files or data, in whatever form, and any copies (including electronic files stored on any portable electronic storage medium, including but not limited to, "thumb drives," portable hard drives, DVDs, CDs or any other electronic storage device) thereof, containing, reflecting, or referring to any of Claimant's confidential, proprietary, or trade secret data or information; and . . .

Respondents generally denied the allegations and asserted various affirmative defenses. Respondent Dupuis sought $16,841.00 in attorneys' fees incurred during litigation involving temporary injunctive relief.

At the close of the hearing, Claimant and Respondent Dupuis waived their respective claims for attorneys' fees.

Civil Court Denial

The FINRA Arbitration Decision states that:

On or about April 14, 2016, FINRA received notice that the court denied Claimant's request for temporary injunction. Accordingly, this case proceeded pursuant to Rules 13302 and 13402 of the Code of Arbitration Procedure for Industry Disputes (the "Code").

Bill Singer's Comment:  Once more, I'm not particularly enamored with a disclosure in this Decision. With literally the last substantive fact presented in the Decision before presenting the Award, we are informed of the apparent prior existence of some state court action by Claimant Edward Jones seeking a temporary injunction; and we have no indication of the state in which the injunctive action was filed or of the precise court within said system.


The FINRA Arbitration Panel denied Claimant Edward Jones' claims but required Respondent Dupuis to reimburse Claimant $500 for the non-refundable portion of FINRA filing fees.

Bill Singer's Comment

You may think that this is a wonderful victory for Respondent Dupuis and, to some extent, he was vindicated by both the court's declination to impose a temporary injunction and the FINRA arbitrators' denial of his former employer's claim. In preparing for the court and arbitration cases, there were likely demands upon Dupuis' time that diverted him from servicing his clients, and that doesn't even begin to address the financial costs. Also, consider this:

Hearing Session Fees and Assessments

The Panel has assessed hearing session fees for each session conducted. A session is any meeting between the parties and the arbitrator(s), including a pre-hearing conference with the arbitrator(s) that lasts four (4) hours or less. Fees associated with these proceedings are:

One (1) pre-hearing session with a single arbitrator @ $450.00/session =$ 450.00
Pre-hearing conference: March 23, 2017 1 session

One (1) pre-hearing session with the Panel @ $1,125.00/session =$ 1,125.00
Pre-hearing conference: August 15, 2016 1 session

Eight (8) hearing sessions @ $1,125.00/session =$ 9,000.00
Hearing Dates: April 11, 2017 2 sessions April 12, 2017 3 sessions April 13, 2017 3 sessions ______________________________________________________________________
Total Hearing Session Fees =$10,575.00

The Panel has assessed the total hearing session fees of $10,575.00 to Respondent Dupuis.