Marsh & McLennan Agency LLC v. Williams, Jr.

Background

Marsh & McLennan Agency LLC (MMA) sued Defendants for breach of contract, misuse of confidential information and trade secrets, breach of the duty of loyalty, and unfair competition. MMA alleged that Defendants were former employees of MMA or one of its subsidiaries and, in violation of their employment agreements and other duties, solicited MMA’s clients, took confidential information, and solicited MMA employees to join them after leaving MMA.

Donald Drennan Williams, Jr., and Phillip Andrew Blankenship separately began an arbitration proceeding before the Financial Industry Regulatory Authority against two MMA subsidiaries and two officers of those subsidiaries. That arbitration alleges, among other things, that MMA interfered with Williams’s and Blankenship’s relationships with their own clients and that the subsidiaries improperly accepted commissions from those clients.

Motions and standard

Defendants moved to dismiss this case for lack of standing or, alternatively, to compel arbitration and stay this case while arbitration proceeded. They also moved to stay discovery until the court resolved that motion. MMA opposed both requests.

The court explained that it has substantial discretion to stay discovery when there is good cause. In deciding whether to do so, courts consider the amount of discovery sought, the burden of responding, the harm to the party opposing the stay, and the strength of the motion supporting the requested stay.

Court’s analysis

The court found that the proposed discovery would be significant even under MMA’s description of it as narrowly tailored. It would involve communications about MMA’s clients, alleged solicitation and servicing, files allegedly removed from MMA offices, related revenues, communications about Defendants’ resignations, and some discovery from nonparties. This factor favored a stay.

The court also found that discovery could overlap substantially with the arbitration. Although the arbitration did not include all Defendants and involved MMA subsidiaries rather than MMA itself, the court concluded that the arbitration could resolve disputes relevant to this case and significantly narrow the discovery needed here. This potential overlap and the risk of duplicative litigation favored a stay.

MMA argued that delaying discovery could cause witnesses’ memories to fade and documents to become stale. The court acknowledged that MMA would suffer some prejudice, but concluded that this factor weighed against a stay only slightly because the relevant events—Defendants’ departures from MMA in mid-June 2022—were fairly recent. Finally, without prejudging the pending motion, the court found that the motion was sufficiently strong to favor staying discovery.

Ruling

Judge John P. Cronan granted Defendants’ motion to stay discovery pending resolution of their motion to dismiss for lack of standing or, alternatively, to compel arbitration and stay this action pending arbitration. The Clerk of Court was directed to close the motion at Docket Number 32. The order did not resolve Defendants’ underlying standing or arbitration motion.