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Prudential Insurance Company of America v. Hosto

October 2, 2008


The opinion of the court was delivered by: Reagan, District Judge


A. Background

On September 25, 2008, Plaintiffs filed a complaint against Hosto alleging eight causes of action: breach of contract, misappropriation of trade secrets, breach of fiduciary duty, breach of the duty of loyalty, intentional interference with actual and prospective economic advantages, negligent interference with actual and prospective economic advantages, conversion, and attorney's fees (Doc. 1). Plaintiffs simultaneously filed a motion for a temporary restraining order and a preliminary injunction (Doc. 4). However, the Court was unable to determine whether subject matter jurisdiction existed and ordered further briefing on that issue (Doc. 8). In lieu of filing a memorandum, Plaintiffs filed an amended complaint further explaining the jurisdictional basis (Doc. 9).

On September 26, 2008, the Court construed the motion for a temporary restraining order (Doc. 4) as pertaining to the newly filed amended complaint, and set a hearing for 10:00 a.m. on October 2, 2008 (Doc. 11). On September 29, 2008, Plaintiffs' counsel called Hosto in order to give him notice of the hearing and sent a copy of the pleadings via overnight delivery (Doc. 12). The Court later rescheduled the hearing for 9:30 a.m. on October 2, 2008 (Doc. 13) and Hosto was again given notice.

On October 2, 2008, the parties appeared before this Court, with Hosto appearing pro se. The Court received argument regarding the factual support for Plaintiffs' motion, and Hosto gave testimony and minimal argument.

The argument and testimony at the hearing, along with the pleadings provide the following factual background. Plaintiffs allege that Hosto was employed by Prudential from January 1991 through April 2, 2007. In 2003, Prudential sold a portion of its auto and homeowners' insurance businesses to Liberty Mutual Insurance Group. In connection with that sale, Plaintiffs inform the Court that Prudential Insurance Brokerage, Inc. was appointed as the exclusive agent for Liberty Mutual and its affiliates to service the insurance products involved in that transaction. The parties also agreed that Prudential would safeguard confidential information related to those products and pursue legal remedies against former Prudential agents who solicited or caused policyholders to turn to a competitor in violation of the agents' contracts.

In connection with Hosto's employment, he signed two agreements at issue in this case: the Statutory Agent Agreement took effect on March 9, 2001 (Doc. 9-2, Exh. B) and the Liberty Authorized Agent Agreement took effect on October 31, 2003 (Doc. 9-2, Exh. C). These agreements include provisions stating that any client information Hosto obtained in the course of his association with Prudential was proprietary and confidential. According to Plaintiffs, the agreements also provide that Hosto could only use such information in connection with his activities as a Prudential agent, and that any such documents must be returned to Prudential upon his termination. Plaintiffs also claim that Hosto agreed not to solicit, directly or indirectly, Prudential customers that he serviced or whose names he knew because of his Prudiential affiliation for two years following his termination.

Hosto resigned on or about April 2, 2007. However, Prudential soon learned that a large number of its customers whom Hosto serviced had cancelled their Prudential policies and obtained competitor policies with Hosto as their agent. In response, Prudential sent a demand letter on August 20, 2007 ordering Hosto to cease and desist with such actions (Doc. 9-2, Exh. E). On September 13, 2007, Hosto executed an affidavit swearing that he no longer possessed or controlled any Prudential property (Doc. 9-2, Exh. G).

Nonetheless, Prudential alleges that it continued to receive complaints from customers that Hosto was soliciting them and/or divulging their confidential information without authorization. Thus, on April 24, 2008, Prudential contacted Hosto's employer, Broker Dealer Financial, and provided evidence that Hosto continued to retain confidential documents and contact former clients (Doc. 9-2, Exh. H). On May 2, 2008, Broker Dealer responded and informed Prudential that it performed an unannounced inspection of Hosto's office, during which it removed 109 Prudential files (Doc. 9-2, Exh. I). Broker Dealer returned these files to Prudential. Despite all of this, Prudential claims that it still receives complaints from customers (as recently as last week) that Hosto solicited them in an attempt to transfer their Prudential policies to competitors (see Doc. 14).

As a result, Prudential now moves for a temporary restraining order to stop Hosto's further solicitation of Prudential clients and to order Hosto to return any Prudential documents in his possession (Doc. 4).*fn1

For reasons thoroughly explained herein, the Court now GRANTS IN PART AND DENIES IN PART Plaintiffs' motion for a temporary restraining order (Doc. 4) under the terms and conditions explained below.

B. Analysis

It should be noted at the outset that Plaintiffs refer to their motion as one for a temporary restraining order. Generally, under FEDERAL RULE OF CIVIL PROCEDURE 65, a temporary restraining order is only issued when notice is not given to the defendant. Where notice is given, the proper relief is typically a preliminary injunction. However, the Court issues a temporary restraining order (TRO) here, rather than a preliminary injunction, in light of the circumstances. Primarily, the Court notes that Plaintiffs only ask for temporary relief of a limited duration. Additionally, Hosto appeared pro se, explained that he has no experience with such legal matters, and that he intends to retain counsel in the coming days.


65 authorizes the issuance of preliminary injunctions and temporary restraining orders. Temporary injunctive relief is an extraordinary remedy that is only granted where there is a clear showing of need. Cooper v. Salazar,196 F.3d 809, 813 (7th Cir. 1999) (citing Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) ("[A] preliminary injunction is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion.")). District Courts within this Circuit hold that the standard for granting a TRO and the standard for granting a preliminary injunction are identical. See, e.g., Charter Nat'l Bank and Trust v. Charter One Financial, Inc., 2001 WL 527404 (N.D. Ill. May 15, 2001) (unreported). In order to obtain a TRO, the movant must make an initial showing that (1) its case has a likelihood of success on the merits, (2) no adequate remedy at law exists, and (3) they will suffer irreparable harm if injunctive relief is not granted. See, e.g., Hodgkins ex rel. Hodgkins v. Peterson, 355 F.3d 1048, 1054-55 (7th Cir. 2004). If the movant ...

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