we must not be made "the abettor of iniquity." Id. at 245, 54
S.Ct. 146 (internal quotation marks and citation omitted).
In further explaining the application of the equitable maxim of
clean hands, the Supreme Court stated, "The governing principle
is that whenever a party who, as actor, seeks to set the judicial
machinery in motion and obtain some remedy, has violated
conscience, or good faith, or other equitable principle, in his
prior conduct, then the doors of the court will be shut against
him in limine." Id. at 244-45, 54 S.Ct. 146 (internal quotation
marks and citation omitted). The rule is not without its
limitations. We are not to consider misconduct that has no
connection to the case at hand. Rather, any "unconscionable act"
of the plaintiff must have "immediate and necessary relation to
the equity that he seeks in respect of the matter in litigation."
Id. at 245, 54 S.Ct. 146; see also In re New Valley Corp.,
181 F.3d 517, 525 (3d Cir. 1999), cert. denied 528 U.S. 1138,
120 S.Ct. 983, 145 L.Ed.2d 933 (2000).
Plaintiff has painted a picture of Vockel making off with
valuable client information in order to woo them surreptitiously
and expeditiously to his new employer, one of Smith Barney's arch
competitors, and doing so in a manner that made it nearly
impossible for Smith Barney to prevent the loss of valuable
business. If it does not obtain preliminary relief in this case,
argued Smith Barney, clients will be hoodwinked into transferring
accounts without realizing what they are doing. According to
Smith Barney, competing brokerage firms might be encouraged to
lure its brokers away and deprive it of business in which it had
invested so many resources to develop.
Unfortunately for Smith Barney, in determining the issue of
clean hands, we look solely at the conduct of the plaintiff — the
one who seeks the aid of the chancellor — and not the conduct of
the defendant. As the Court of Appeals observed in Monsanto Co.
v. Rohm & Haas Co., 456 F.2d 592, 598 (3d Cir. 1972), "This
maxim [of clean hands] is far more than a mere banality. It is a
self-imposed ordinance that closes the doors of a court of equity
to one tainted with inequitableness or bad faith relative to the
matter in which he seeks relief, however improper may have been
the behavior of the defendant." (emphasis added).
It is undisputed that in 1994 Smith Barney secretly encouraged
and aided Vockel to engage in the same unconscionable behavior of
which it now complains. For over five years, Smith Barney has
shared in the gains of its unconscionable conduct. At the time it
hired Vockel, Smith Barney showed no respect for the confidential
nature of Merrill Lynch's client data. It obtained information
about Vockel's Merrill Lynch clients and prepared solicitation
packages in advance of his departure from Merrill Lynch. It
instructed Vockel to resign from Merrill Lynch late on a Friday
afternoon and to begin contacting his clients immediately in
order to persuade them to transfer their accounts to Smith
Barney. It also provided Vockel with a significant signing bonus
for joining the firm.
Smith Barney seeks the help of a court of equity to prevent the
same conduct by Vockel which it had previously abetted and from
which it has handsomely profited. Now it wants the court to
prevent the loss of that profit. If what Vockel is doing in 2000
is wrong, it is hard to see why Vockel's and Smith Barney's
conduct in 1994 was not wrong. At the very least, Smith Barney is
"tainted with inequitableness or bad faith relative to the matter
in which [it] . . . seeks relief." Monsanto, 456 F.2d at 598.
The misdeeds of Smith Barney have an "immediate and necessary
relation to the equity that [it] . . . seeks" in
this case. Keystone Driller, 290 U.S. at 245, 54 S.Ct. 146. The
circumstances here are analogous to a patentee obtaining a patent
by deceit or misrepresentation and then attempting to enforce it.
In those instances, the Supreme Court and our Court of Appeals
denied help to the plaintiff because of unclean hands.*fn5 See
id. at 241-46, 54 S.Ct. 146; Monsanto, 456 F.2d at 594-601.
While we do not condone the behavior of Vockel, it is the
behavior of Smith Barney on which we must focus here. See
Monsanto, 456 F.2d at 598. Simply put, Smith Barney has not
shown that it has come into this court with clean hands. In fact,
the opposite has been established. Accordingly, as a court
sitting in equity, we will not aid a wrongdoer. We will leave the
parties to their monetary and other remedies before the National
Association of Securities Dealers.*fn6
The motion of Salomon Smith Barney Inc. for a preliminary
injunction will be denied.
AND NOW, this ____ day of May, 2000, for the reasons set forth
in the accompanying Memorandum, it is hereby ORDERED that the
motion of plaintiff Salomon Smith Barney Inc. for a preliminary
injunction is DENIED.