Eighth Circuit Rejects Emergency Injunction in Advisor Departure Dispute
From the desk of Jim Eccleston at Eccleston Law
A federal appeals court ruled against an advisory firm seeking immediate, injunctive relief after a team of advisors left with hundreds of millions in client assets. InvestmentNews reports that such a decision may influence how firms pursue restrictive covenant enforcement.
In Choreo, LLC v. Kevin Lors, the U.S. Court of Appeals for the Eighth Circuit reversed the preliminary injunction in place, finding that Choreo had not proven “irreparable harm.”
According to the record, four senior advisors resigned from Choreo’s Des Moines office in January 2025 and joined Compound Planning. InvestmentNews reports that their employment agreements contained standard provisions restricting solicitation of clients, protection of confidential information, and employee poaching.
Weeks later, eight of the nine remaining advisors in the same office also departed and joined the competitor. InvestmentNews reports that within two weeks, more than 100 clients representing approximately $400 million in assets transferred to the new firm.
According to InvestmentNews, the departing advisors notified former clients of their transition and provided updated contact information. Some communications also included the competitor’s website, fee schedule, and account transition materials. InvestmentNews reports that the advisors also publicly announced their move on LinkedIn.
Choreo filed suit and sought emergency relief. Although the district court initially denied relief, it later entered a broad preliminary injunction preventing the advisors from servicing former clients. InvestmentNews reports that the Eighth Circuit reversed the injunction. Writing for the panel, Judge Loken concluded Choreo failed to establish irreparable harm.
According to InvestmentNews, the court emphasized that Choreo’s injury consisted of lost advisory fees. Because the firm charges clients based on account value, the court determined a jury could calculate damages using known asset levels and the firm’s fee schedule. The panel explained that monetary damages, not injunctive relief, addressed this type of loss.
Choreo argued that client goodwill could not be quantified. The court rejected that position, finding the supporting declarations lacked specific explanation. InvestmentNews adds that the panel also dismissed the firm’s claim that the office became nonfunctional, noting the departures had already occurred and no evidence showed continued recruiting activity.
The ruling returns the matter to the trial court, where Choreo may continue pursuing breach of contract and interference claims. The appellate court left open the possibility of a permanent injunction after a full trial.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
