[D]efendant alleges that for nearly two years, Plaintiff concealed the existence of another agreement Defendant had signed contemporaneously with the Nonsolicitation Agreement, and that Plaintiff and its attorneys misrepresented such non-existence to Defendant, Defendant's counsel, and the Court. (Mot. at 4.) ¹ That agreement, also signed on May 16, 2011 and titled Agreement Regarding Employment and Proprietary Information and Inventions ("Employment Agreement"), contained a California choice of law provision. The Nonsolicitation Agreement, on the other hand, specified no choice of law. The Court therefore applied Arizona law in ruling on the preliminary injunction motion. 

Defendant argues that the Employment Agreement's California choice of law provision should have governed the parties' dispute. He further contends some of the Nonsolicitation Agreement's restrictive covenants, on which the Court partially predicated its Preliminary Injunction Order, would have been unenforceable under California law. Accordingly, Defendant now moves to set aside the Preliminary Injunction Order under Federal Rule of Civil Procedure 60(d)(3). 

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Footnote 1: Defendant learned of the Employment Agreement and its California law provision in May 2019, when he received it in response to a Request for Production of his E*Trade personnel file that he served in October 2018 in the FINRA arbitration. Plaintiff did not request his personnel file during discovery in this action. (See Resp. Ex. E.)

[P]laintiff created-and last updated-the standard Employment Agreement when E*Trade was headquartered in California. Accordingly, E*Trade included a California choice of law provision. (Persico Decl. ¶ 7.) E*Trade then moved its headquarters to New York in 2004. According to Persico, "[f]ollowing this move, the [Nonsolicitation Agreement] should have been the only agreement governing the solicitation of customers that was provided to employees outside of California." (Persico Decl. ¶ 7.) However, when Eaton appeared for his first day of work in Scottsdale on May 16, 2011, E*Trade was apparently still administering the Employment Agreement- something Persico attributes to an "inadvertently continued and outdated company procedure." (Persico Decl. ¶ 7.) 

[Y]ou have advised that E*Trade believes Mr. Eaton has potentially breached certain obligations under a non-solicitation and non-disclosure provision in his employment agreement. This is expressly denied. To the extent such agreement is governed by California law, as previous E*Trade agreements we have reviewed have been, we note the general rule in California is that covenants not to compete are unenforceable.  

[F]irst, as Persico notes, the fact that Henneman had seen other E*Trade employment agreements with California law provisions might not necessarily surprise Persico because E*Trade continues to use those agreements with its California employees. (Persico Decl. ¶ 14.) Second, Persico responded to Henneman: "You also mentioned that the Nonsolicitation and Nondisclosure Agreement (‘Agreement') dated May 16, 2011, that Mr. Eaton signed, was governed by California law and was unenforceable as a result. There is no mention of California anywhere in the Agreement." (Mot. Ex. 4 at 4.) It appears Persico understood Henneman's later as referring to a choice of law provision within the Nonsolicitation Agreement, not a separate Employment Agreement.

Defendant also directs the Court to May 2019 filings that Plaintiff made in a similar case pending in the Northern District of California. There, Plaintiff explicitly and abundantly refers to both a nonsolicitation and nondisclosure agreement and an employment agreement identical to the Employment Agreement in this case. (See Reply Ex. A.) Defendant characterizes this as hypocritical, as Plaintiff then turns around and maintains in this case that it learned of Defendant's Employment Agreement for the first time in September 2019. The Court disagrees with Defendant's portrayal. As noted above, E*Trade still utilizes the employment agreements with its California employees. In the Northern District of California case, the employee lived and worked in California the entire time she was employed by E*Trade, and then moved to a California office of Morgan Stanley. (Reply. Ex. A ¶ 2.) It would therefore be in E*Trade's regular practice to have a separate employment agreement with a California law provision. (See Persico Decl. ¶ 14.)

In short, Defendant has failed to meet his demanding burden of demonstrating fraud on the court by clear and convincing evidence. The Court is careful to note that this decision does not condone what appears to be sloppiness on the part of Plaintiff during Defendant's onboarding process in 2011. However, Plaintiff's eight-year-old actions are not at issue in this motion. What the Court must decide is whether Plaintiff's actions throughout this litigation amounts to "defilement of the court itself." The Court concludes it does not.