PFS Investments Inc. v. Thompson, Timothy
3:23-cv-00050
| W.D. Wis. | Mar 2, 2023Background
- Primerica, a FINRA-registered broker‑dealer that uses independent contractor agents, employed Timothy Thompson for 33 years; he became a regional vice president (RVP) and earned significant commissions from his own clients and downline agents.
- Thompson signed three agreements with restrictive covenants (Independent Contractor Agreement, Representative Agreement, Regional VP Agreement) limiting misuse of confidential information and solicitation of customers/agents.
- By mid‑2022 Thompson decided to leave for a new firm, Terra Wealth; he met with Terra Wealth founders, provided them with summaries of assets he and his downline managed, and discussed the move with downline agents.
- On September 16, 2022, Thompson and 28 others resigned from Primerica (18 were his downline); many clients moved with them and assets under management in the affected accounts fell by roughly 52%.
- Primerica sued on January 23, 2023 asserting breach of contract, breach of fiduciary duty, and trade secret misappropriation and sought emergency injunctive relief; the parties agreed merits belong in FINRA arbitration, so the court considered only the preliminary injunction request.
- The court found some likelihood of success on breach/fiduciary claims (not on trade secrets) but denied the preliminary injunction because Primerica failed to show likely, ongoing irreparable harm or lack of an adequate legal remedy and the proposed injunction was overbroad; case closed pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Trade‑secret misappropriation | Thompson took confidential customer/production data to Terra Wealth and thus misappropriated trade secrets | No specific trade‑secret material was identified that meets statutory definitions | Court: Primerica failed to identify trade secrets; no likelihood of success on trade‑secret claim |
| Breach of contract / fiduciary duty | Thompson solicited downline agents and customers in violation of restrictive covenants and RVP fiduciary duties | Thompson followed resignation protocols, only contacted long‑standing clients and did not impermissibly solicit or misuse confidential info | Court: Primerica showed some likelihood of success on breach/fiduciary claims; merits to be decided in arbitration |
| Irreparable harm / adequacy of legal remedy | Loss of customers, goodwill, referrals and incalculable future commissions justify immediate injunctive relief | Any loss already occurred; Primerica offers no evidence of likely future solicitation or inability to quantify damages in arbitration | Court: Primerica did not show likely future irreparable harm or that legal remedies are inadequate; injunction denied |
| Scope/tailoring of requested injunction | Broad prohibitions needed to stop ongoing harm | Proposed injunction as drafted was vague and overbroad; must be narrowly tailored to solicitation risk | Court: Directed Primerica to narrow request; even narrowed request failed on irreparable‑harm proof, so denied |
Key Cases Cited
- Turnell v. CentiMark Corp., 796 F.3d 656 (7th Cir. 2015) (preliminary injunction is an extraordinary remedy; plaintiff must show clear need)
- Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) (plaintiff seeking preliminary injunction must show likelihood of success on the merits)
- Speech First, Inc. v. Killeen, 968 F.3d 628 (7th Cir. 2020) (likelihood of success is threshold for preliminary injunction)
- Planned Parenthood of Ind. & Ky., Inc. v. Comm’r, 896 F.3d 809 (7th Cir. 2018) (preliminary injunction factors include likelihood of success, irreparable harm, balance of harms, public interest)
- Michigan v. U.S. Army Corps of Engineers, 667 F.3d 765 (7th Cir. 2011) (irreparable harm must be likely and an injunction should prevent or reduce the alleged harm)
- Life Spine, Inc. v. Aegis Spine, Inc., 8 F.4th 531 (7th Cir. 2021) (legal remedies are inadequate only when they are seriously deficient compared to the harm)
- Courthouse News Serv. v. Brown, 908 F.3d 1063 (7th Cir. 2018) (weighing harms and public interest in injunction analysis)
- Halczenko v. Ascension Health, Inc., 37 F.4th 1321 (7th Cir. 2022) (when plaintiff fails to show irreparable harm, court need not balance harms)
- Bar Indy LLC v. City of Indianapolis, 508 F. Supp. 3d 334 (S.D. Ind. 2020) (conclusory allegations of impending loss are insufficient to show irreparable harm)