Meridian Bank v. Sandy Spring Bank

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MERIDIAN BANK, Plaintiff v. SANDY SPRING BANK et al., Defendants

Civil Action No. 22-3951

United States District Court, E.D. Pennsylvania

November 29, 2023

MEMORANDUM

PRATTER, J.

This action arises primarily out of what Meridian Bank avers was the improper and unlawful acquisition, misappropriation, and use of Meridian's confidential and proprietary trade secret information, as well as a breach of, and/or tortious interference with, employment agreements Meridian had with several of its former employers. Meridian has sued 12 defendants, who have organized themselves into two categories: (1) the “SSB defendants,” which include Sandy Spring Bank and Malcom Hollensteiner, who is an employee of Sandy Spring; and (2) the “FME defendants,” namely Robert Johnston, Anthony Sos Stephen Haney, Sr., Michelle Wasmuth, Alexander Giba III Craige Charlow, Evan Kreitzer, Michael Savani, Kevin Albertini, and John Willingham. All of the individual defendants in this latter category are former employees of Meridian Bank and, like Mr. Hollensteiner, are now working at Sandy Spring.

The SSB defendants moved to dismiss Meridian's Complaint as to all claims against them for lack of personal jurisdiction and improper venue, and after holding an oral argument on that motion, the Court instructed the parties to engage in limited, jurisdictional discovery, after which the SSB defendants could renew their motion to dismiss. The SSB defendants renewed their motion, and the Court heard additional oral argument. Upon consideration of the new evidence and the parties' renewed briefing, the Court will deny the renewed Motion to Dismiss.

Background

Sandy Spring Bank is a financial institution organized under the laws of Maryland with a principal office in Olney, Maryland. Sandy Spring has 40 branch offices located in Maryland, 13 offices in Virginia, and 3 in Washington, D.C. Sandy Spring has no branches or offices in Pennsylvania and does not advertise or solicit for business in Pennsylvania. Sandy Spring is not registered to do business in Pennsylvania and does not own or lease real estate in Pennsylvania, Meridian Bank is a Pennsylvania-chartered banking corporation with its headquarters located at 9 Old Lincoln Highway, Malvern, PA 19355. As of the Spring of 2022, all of the FME defendants were employed by Meridian as either Residential Branch Managers or Residential Mortgage Loan Originators, and all of them had executed employment agreements as a condition of their employment with Meridian. These employment agreements all included a forum selection clause providing either that “[a]ny litigation relating to this agreement shall be brought in the federal or state courts in or for Montgomery County, Pennsylvania” or “[n]othing ... shall prohibit Meridian from filing at State or Federal Court in relation to this Agreement[;] ... venue for any such Court proceeding shall be in that Federal or State Court nearest to Meridian's then headquarters and [employe] consents to personal jurisdiction at such forum.” Ex, A to Pl.'s Resp. to Mot. to Dismiss ¶ 5-9 (emphasis removed).

In the Spring of 2022 three of the FME defendants-Messrs. Johnston Haney, and Sos- began negotiating for new employment with Sandy Spring. They and Sandy Spring Senior Vice President Malcom Hollensteiner purportedly “developed a plan” in which those three FME defendants would “subvert their contractual and statutory obligations” by temporarily remaining employed by Meridian while attempting to convince other Meridian employees to leave Meridian for employment at Sandy Spring and bring with them proprietary Meridian information. After his initial conversations with Messrs. Johnston, Haney, and Sos, Mr. Hollensteiner began reaching out to other Meridian employees via text message, phone calls, and in-person meetings. These inperson meetings involved all of the FME defendants and others who ultimately decided not to leave Meridian.

In or around April 2022, Mr. Hollensteiner met with FME defendants Messrs. Johnston, Haney, and Sos and two other individuals who were (and still are) employed by Meridian, Mr. Robb and Mr. Sawheny, at a restaurant in Maryland called Eggspectation (“Eggspectation Meeting”). Messrs. Johnston, Haney, and Sos were still employed by Meridian at that time. During the Eggspectation Meeting, they all discussed prospective employment with Sandy Spring, including matters such as Sandy Spring's compensation structure and how Sandy Spring's pricing models compared to Meridian's confidential pricing model. They also discussed whether there were any other Meridian employees who would be interested in leaving Meridian to join Sandy Spring. At some point during the Eggspectation Meeting, Mr. Robb expressed concern about whether there would be any problems with so many Meridian employees leaving for Sandy Spring, to which Mr. Hollensteiner responded by stating, “yes, no problem,” and telling those present not to worry because Sandy Spring would have them covered.

On April 25, 2022, after the Eggspectation Meeting, Mr. Hollensteiner met again with Messrs. Johnston, Haney, Sos, and Robb at another Maryland restaurant called Stanford Grill (“Stanford Grill Meeting”) to continue their previous discussion about each individual's prospective employment with Sandy Spring. At the time of this meeting, Messrs. Johnston, Haney, Sos, and Robb were all still employed by Meridian. They again talked about Sandy Spring's pricing models compared to Meridian's confidential and proprietary pricing models, purportedly in an effort by Mr. Hollensteiner (on behalf of Sandy Spring) to entice Messrs. Johnston, Haney, Sos, and Robb to join Sandy Spring by tailoring Sandy Spring's models to match Meridian's. Crucially, during the Stanford Grill Meeting, Mr. Hollensteiner asked Messrs. Johnston, Haney, Sos, and Robb whether they had employment agreements with Meridian and whether those agreements were “standard.” See Hollensteiner Dep. Tr. at 16:20-24; 17:1-8; 24:22-24; 25:1-4.

Messrs. Johnston, Haney, Sos, and Robb informed Mr. Hollensteiner that they did have employment agreements with Meridian. On April 26, the day after the Stanford Grill Meeting, the Mortgage Production Assistant for Meridian, Diana Corbin, discovered a writing on Mr. Johnston's desk in his Meridian office reflecting his discussions with “Malcolm” about the various proposed terms and conditions of Iris prospective employment with Sandy Spring. Doc. No. 55, 7-8 (citing Diana Corbin Decl. ¶4).

At some point after learning that Mr. Johnston had an employment agreement with Meridian (but before Mr. Johnston left Meridian), Mr. Hollensteiner spoke with Mr. Johnston about the terms of that agreement and whether Mr. Johnston could join Sandy Spring without violating that agreement. Mr. Johnston provided Mr. Hollensteiner with a physical copy of his employment agreement with Meridian-which included a forum selection clause-and Mr. Hollensteiner reviewed it and then passed it on to Lynne Pulford, the Mortgage Division President for Sandy Spring. After Ms. Pulford reviewed the agreement, she sent it to Sandy Spring's legal team. Thereafter, Sandy Spring hired Mr. Johnston.

On July 7, 2022, Meridian sent a letter to Sandy Spring's General Counsel and Chief Administrative Officer, Aaron Kaslow, about Mr. Johnston's Meridian's employment agreement. See Doc. No. 55, at 10. On July 14, 2022, Mr. Kaslow responded via letter, which made specific reference to the employment agreement Mr. Johnston previously had with Meridian and stated that Sandy Spring had “counseled” Mr. Johnston about the obligations he owed under his former employment agreement, including that he cannot solicit customers he had closed for Meridian in the 12 months prior to his departure. Id.

Sandy Spring proceeded to hire Mr. Haney and Mr. Sos and seven other Meridian employees, all of whom were subject to employment agreements containing the same jurisdictional waiver language that was included in Mr, Johnston's employment agreement. Although Mr. Hollensteiner does not recall asking these seven individuals whether they had employment I agreements like Mr. Johnston's, he “assumed” at the time they had such agreements because in his experience “if one employee of a mortgage division of a bank has an agreement, [then] all other commission or sales employees will also have agreements.” Hollensteiner Dep, Tr. at 27:3 24; 2S: IE.

On October 4, 2022, Meridian filed a complaint, which was subsequently amended on October 18, asserting several claims against the SSB defendants arising from the events recounted above. Doc. Nos. 1, 4, On January 9, 2023, the SSB defendants filed a Motion to Dismiss Meridian's Amended Complaint for lack of personal jurisdiction and improper venue. Doc. No. 18. Following the filing of various responses, replies, and surreplies, the Court scheduled oral argument on SSB's Motion to Dismiss. Doc. No. 30. Shortly after that hearing, the Court denied the SSB defendants' Motion to Dismiss with prejudice and ordered the parties to engage in limited, jurisdictional discovery. Doc. No. 34. Following the conclusion of this jurisdictional discovery, with the Court's permission, the SSB defendants filed this Renewed Motion to Dismiss. Doc. No. 50.

The SSB defendants argue that this Court lacks personal jurisdiction over them because they do not have the requisite minimum contacts with Pennsylvania to subject them to its jurisdiction. They also argue that, for the same reasons, venue is improper. Meridian counters by arguing primarily that the SSB defendants should be bound by the forum selection clauses in the FME defendants' employment agreements with Meridian under the “closely related party” doctrine, even though the SSB defendants did...