A federal judge dismissed some of Edelman Financial Engines' claims in its ongoing lawsuit against Mariner Wealth, though many of the most important allegations remain.
U.S. District Judge Holly Teeter dismissed Edelman's defamation charges against Mariner, saying the RIA did not identify who made the “allegedly defamatory statements” or to whom they were made or how they were published.
“The court finds that Edelman has not met the standard for a defamation claim,” the judge's order said. “The complaint does not identify any person who made the allegedly defamatory statement. It only says that 'Mariner's agents' have said a few things.”
Edelman filed her lawsuit in Kansas federal court last November, accusing Mariner of theft of trade secrets and breach of confidentiality agreements and non-solicitation clauses. According to Edelman, Mariner's “calculated campaign” to hire Edelman planners and persuade them to disclose proprietary client information began in 2021. The firm claimed it lost 10 advisers, about 851 clients and $621 million in the years intermediate.
But Mariner fired back in a response last December, accusing the $281 billion Edelman of a “nearly three-year campaign to unlawfully stifle fair competition” in the industry. In its response, Mariner, which manages $105 billion in assets, speculated that Edelman intended to send a “scary public message” to any of his employees who decide to leave that they would be targeted by judicial process.
At the time, Mariner argued that the suit should be stayed while four pending arbitrations against some of the advisers who left Edelman continue, but the court rejected the request in February. Mariner moved to dismiss all of Edelman's claims in March, arguing that it had not disclosed sufficient facts to support the allegations.
Although the judge agreed with Mariner on the defamation charges, Edelman's claims of conspiracy and embezzlement were allowed to proceed. Edelman alleged that Mariner stole trade secrets by “aiding or inducing planners” to disclose information that Mariner knew it should not.
“These factual allegations are few, but they are sufficient to allege misappropriation at this stage,” the judge's order said.
The lawsuit against Edelman was not Mariner's only court appearance in recent months. Since late last year, the firm has come under increasing fire in state and federal courts, including from RWA Wealth Advisors and Avantax, which, like Edelman, accused Mariner of aggressive recruiting tactics that cross legal lines. .
The RWA case was filed in federal court in Los Angeles, with Mariner calling for a jury trial in April, while the Avantax case was recently returned to state court in Iowa.
An Edelman spokesman said the firm stands by its claims “and will continue to vigorously contest.” Mariner did not return a request for comment before publication.
According to a recent scheduling order, settlement offers could happen in July. Discovery is set to end next February, and a pretrial conference is scheduled for April 2025 (meaning a trial won't be expected until mid-next year, at the earliest).