Four ex-employees of Creative Planning—the full-service, nationwide RIA with more than $210 billion under management as of the end of last year—have sued four former employer over noncompete clauses and other restrictive covenants in their contracts that they claim “illegally restrain” them from continuing to work in the financial-services industry.
Creative Planning is headquartered in Overland Park, Kan., but the suit was brought in Superior Court of California in San Diego, the city in which the plaintiffs had been employed.
The plaintiffs are two advisors, Natalie DeWindt (also known as Natalie Cesmat), who was hired in September 2018, and Darien Horton (also known as Darien Bird), hired in March 2020; and two administrative employees, Carleen Acosta and Monica Suzara, both of whom were hired in June 2016.
All four were employed at Creative Planning’s San Diego office steadily until August of this year, when they left to pursue other opportunities, according to the lawsuit. (Cesmat and Horton are now employed at Cascade Financial Partners in San Diego.)
Their contracts with Creative Planning contained noncompete clauses that restrain them from working elsewhere in the industry for two years. But, they allege, such restrictive employment contracts are illegal in California.
According to the suit, all of the plaintiffs “wish to continue working in California as financial professionals.”
Besides prohibiting the plaintiffs from working in the financial industry, the suit contends, the covenants keep them from soliciting business from Creative Planning clients and contain “overly broad confidentiality provisions” that, among other things, prohibit them from using the names or contact information of clients or prospective clients of Creative Planning.
They further contend that the covenants unfairly grant Creative Planning ownership of all client relationships that Cesmat and Horton developed or maintained while employed by the company.
In addition, the financial advisors allege they are unfairly required to “affirmatively ‘disconnect’” from social media contact with their former clients.
Though Creative Planning allegedly required Cesmat and Horton to provide four weeks notice before resigning, they contend that they had the right to leave when they wanted without notice because they were “at-will” employees, which under California law means they could terminate their contracts any time—and so could their employer.
Moreover, the suit alleges, the restrictive covenants compel all four plaintiffs to have their rights adjudicated in Kansas rather than California, though all four were hired and employed in San Diego throughout their tenures.
The plaintiffs are asking for a “declaratory judgment” to confirm that all of these restrictive provisions are unlawful and to prevent Creative Planning from trying to enforce any of them. They are also seeking reimbursement for attorney fees and other costs, as well as any and all profits that Creative Planning made from its “unlawful restraints of trade.” No dollar amounts were specified.
Neither Creative Planning nor the plaintiffs’ attorney responded to a request for comment.
Correction: An earlier headline for this story misstated the number of advisors suing Creative Planning.