A Dallas County district judge barred two former Cushman & Wakefield capital markets brokers, who recently joined the firm's biggest competitor JLL, from engaging in U.S. real estate deal-making activity or disclosing any of the firm's confidential information for the next two weeks.
The judge granted a temporary restraining order Wednesday afternoon prohibiting high-profile capital markets brokers Mike McDonald and Jonathan Napper, who resigned from Chicago-based Cushman & Wakefield weeks ago, from conducting real estate deals at rival JLL. The order, which expires in 14 days, was made after Cushman & Wakefield filed a lawsuit this week alleging the brokers breached their contracts and took the firm's "confidential business information, several clients and all of Cushman & Wakefield's Dallas-based institutional investment sales brokers" or advisers with them.
While Cushman & Wakefield claims the brokers either directly or indirectly through their new employer solicited or attempted to solicit at least seven employees to JLL, Napper told CoStar News Wednesday afternoon that he and McDonald "are abiding by the restrictive covenants in our agreement not to compete or solicit business in the United States. We have not [competed or solicited business] and we will not be doing so during the restricted term. Cushman & Wakefield knows and understands this, as does JLL."
McDonald told CoStar News on Wednesday afternoon he was unaware the judge had granted the temporary restraining order. Cushman & Wakefield declined to comment on the judge's ruling. JLL didn't immediately comment.
The new development in the case sheds light on the high-stakes nature of the relationship between commercial real estate brokers and their firms. It also gives insight into the broader issue of non-competition clauses in corporate America.
Dallas County District Judge Dale Tillery, who is presiding over the lawsuit filed by Cushman & Wakefield on Tuesday, granted the temporary order after finding Cushman & Wakefield had met its burden of proof to obtain such an order preventing the duo from acting as an "employee, owner, stockholder, partner, operator, manager, advisor, consultant, or agent" at any real estate brokerage or investment firm, including JLL, according to the signed court order.
McDonald and Napper are also barred from directly or indirectly disclosing confidential information tied to Cushman & Wakefield's business, the order said.
Protecting 'Confidential Information'
The judge made his ruling after reviewing the lawsuit filed by Cushman & Wakefield, which outlined its five-year employment contracts with McDonald and Napper that were signed on Oct. 2, 2018. The brokerage said the brokers agreed to noncompetition and nonsolicitation provisions that protected the firm's "highly valuable confidential information" in return for an undisclosed eight-figure payment.
Under the terms of Cushman & Wakefield's contracts with McDonald and Napper, the brokers could not engage in any real estate work in the United States prior to Sept. 17, 2023, according to the lawsuit.
The two brokers resigned in mid-September, a year ahead of what was outlined in the contract, the filing claims.
"This is a saber-rattling session to restrict and scare current Cushman & Wakefield employees from ever wanting to part ways with the firm," Napper told CoStar News. "Mike and I have been widely above board with our decision to leave and our intention to do the best by Cushman & Wakefield and their clients through this transition and we will continue to do so."
Cushman & Wakefield declined to respond to Napper's assertion, but pointed to Tuesday's filing in which the brokerage wrote that it uses its noncompete clauses sparingly and only when their use is "essential to protect its investments in certain key teams and individuals — particularly when it outlays significant financial and other resources to recruit and retain such teams and individuals, as it did here."
The district court's temporary restraining order will automatically lift after the 14 days, the order states, with an additional hearing for a temporary injunction scheduled in two weeks in a Dallas courtroom.