“Raiding” Redefined: Fourth Circuit Narrows the Broker Protocol Exception and Affirms Contractual Supremacy in Salomon & Ludwin, LLC v. Jeremiah Winters

1. Introduction

The United States Court of Appeals for the Fourth Circuit, in a published opinion delivered by Judge Quattlebaum on 12 August 2025, confronted a recurring controversy in the wealth-management industry: when may departing advisers freely solicit former clients, and when are they restrained by their employment agreements? The decision harmonises two potentially conflicting instruments—the industry-wide “Protocol for Broker Recruiting” (Broker Protocol) and bespoke non-solicitation/confidentiality covenants—while also clarifying the elusive concept of “raiding.”

Salomon & Ludwin, LLC (“Salomon”) sought a preliminary injunction after four former employees (Winters, Atwood, Thompson, Sorensen) resigned, formed Albero Advisors, LLC (now Founders Grove Wealth Partners, LLC), joined the Broker Protocol the same day, and quickly transferred over 400 client accounts worth roughly $300 million. The district court granted an injunction against all defendants, reasoning that the activity constituted a “raid” under the Protocol. On appeal, the Fourth Circuit affirmed as to the individual employees but vacated as to the new entity, simultaneously laying down two important doctrines:

1. “Raiding,” for purposes of the Broker Protocol, involves a competing firm’s predatory hiring of another firm’s employees—not employees leaving on their own to start a new firm.
2. Bargained-for restrictive covenants may expressly supersede the Broker Protocol irrespective of the firm’s later membership in, or adherence to, that Protocol.

2. Summary of the Judgment

• Broker Protocol Interpretation: The Court rejected the district court’s expansive definition of raiding (severe economic impact + bad motive). Employing textual, ordinary-meaning, and industry-specific analyses (including corpus linguistics), it limited raiding to situations where an outside firm lures away the personnel of another firm.
• Contractual Supremacy: The employees’ 2022 Employment Agreements expressly provided that those agreements “shall apply and control” over the Protocol in any conflict. That clause was enforceable even though Salomon had already joined the Protocol in 2018.
• Injunction Scope: The Court affirmed the preliminary injunction against the four individuals (who were parties to the Agreements) but vacated it as to Founders Grove (not a party). Nevertheless, individual defendants are restrained even when acting through that entity.
• Winter Factors: The Court agreed Salomon showed likelihood of success on trade-secret claims, irreparable harm via loss of goodwill/clients, and favourable balance of equities and public interest.

3. Analysis

3.1 Precedents Cited

a) Winter v. NRDC, 555 U.S. 7 (2008) – Governs the four-factor test for preliminary injunctions (likelihood of success; irreparable harm; balance of equities; public interest). The Fourth Circuit reiterated strict adherence.

b) Direx Israel, Ltd. v. Breakthrough Med. Corp., 952 F.2d 802 (4th Cir. 1991) – Cited for the “extraordinary remedy” character of injunctions and standard of review (abuse of discretion).

c) Mountain Valley Pipeline, LLC v. 6.56 Acres, 915 F.3d 197 (4th Cir. 2019) – Quoted regarding clear-error review of fact-finding versus de novo review for legal conclusions.

d) TravCo Ins. Co. v. Ward, 736 S.E.2d 321 (Va. 2012)  / Wilson v. Holyfield, 313 S.E.2d 396 (Va. 1984) – Virginia contract-interpretation authorities: words given ordinary meaning; courts may not add or subtract terms.

e) Trade-Secret cases: Multi-Channel TV Cable (irreparable harm via lost customers) and district-level decisions (Variable Annuity Life Ins. Co. v. Coreth) supporting that showing only one viable claim suffices for injunction.

The appellate panel used these precedents chiefly to articulate standards of review and to fortify its narrower interpretation of equitable relief.

3.2 Legal Reasoning

Textual Analysis of the Protocol:  The provision “this protocol does not bar … the prior firm [from] bring[ing] an action against the new firm for ‘raiding’” singles out firm-to-firm litigation. Because four defendants were individuals and the fifth was a firm they themselves created, the text could not apply.

Ordinary Meaning:  Using contemporary dictionaries, “raid” denotes a hostile incursion by an outside force. By analogy, employees declaring independence resemble American colonists separating from Britain—not Babylonian troops descending upon Judah.

Corpus Linguistics:  Through COCA sampling, the Court demonstrated that “raid” is consistently used to describe external attacks (military, police, or corporate poaching).

Industry-Specific Scholarship:  The panel referenced the very article relied on below—Finnerty, Calculating Damages in Broker Raiding Cases—which defines raiding as “compensable hiring of producers … by a competing firm.” Again, the presence of an existing competing firm is required.

Contractual Hierarchy:  The Employment Agreements state that, regardless of Salomon’s Protocol status, the covenants “shall take precedence.” Under Virginia law, courts must enforce such plain language. The panel refused to manufacture a gap for the peculiar scenario where Salomon had already joined the Protocol before the agreements were signed.

3.3 Impact of the Decision

• Broker-Dealer Mobility: The ruling narrows exposure of departing advisers. So long as they are not poached by an existing competitor, their migration may escape the “raiding” label, though they remain bound by any controlling restrictive covenants.
• Drafting Employment Agreements: Firms can—and should—expressly state that their covenants override the Broker Protocol. The Fourth Circuit has now blessed such language even where the firm is already a Protocol signatory.
• Litigation Strategy: Plaintiffs invoking the raiding exception must plead and prove predatory hiring by another firm; large-scale client attrition, without external poaching, is insufficient.
• Scope of Injunctions: Courts must tailor injunctive relief to entities actually bound by covenants. Entity defendants not party to the underlying contract may still be reached indirectly through agency principles, but blanket injunctions risk reversal.
• Trade-Secret Enforcement: The opinion reaffirms that customer lists and related data can qualify as trade secrets and that loss of goodwill/customers equals irreparable harm.

4. Complex Concepts Simplified

• Broker Protocol: A voluntary agreement among wealth-management firms intended to facilitate client choice when advisers change firms. Advisers may take limited client info (name, address, phone, e-mail, account title) if notice rules are followed.
• Raiding Exception: A carve-out in the Protocol that lets a “prior firm” sue a “new firm” for predatory mass hiring. It protects against corporate poaching, not ordinary departures.
• Preliminary Injunction: A temporary court order issued early in litigation to maintain the status quo when the moving party shows likelihood of success and risk of irreparable harm.
• Trade Secret: Information deriving independent economic value from not being generally known and that is subject to reasonable measures to keep it secret (e.g., client lists, pricing).
• Likelihood of Success on the Merits: Not a full trial finding; the court estimates—on preliminary record—whether the plaintiff is probably right.
• Irreparable Harm: Injury that money damages cannot adequately remedy—e.g., permanent loss of customers or goodwill.

5. Conclusion

The Fourth Circuit’s decision in Salomon & Ludwin v. Winters significantly prunes the concept of “raiding” under the Broker Protocol and underscores that clear contractual language can supersede industry customs. Going forward, firms cannot invoke the raiding exception merely because former employees decamp en masse and take clients. A competing firm must actively entice those employees. Simultaneously, employees must heed any restrictive covenants that unequivocally subordinate the Protocol. The ruling thus provides sharper guidance both to litigants seeking or resisting injunctive relief and to counsel drafting employment agreements in the financial-services sector.