Choreo, LLC v. Kevin Lors

United States Court of Appeals
For the Eighth Circuit
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No. 25-1706
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Choreo, LLC
lllllllllllllllllllllPlaintiff - Appellee
v.
Kevin Lors; Aaron Schomer; Joleen Scheer; Lindsey O’Neil; Atomi Financial
Group, Inc., doing business as Compound Planning
lllllllllllllllllllllDefendants - Appellants
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Appeal from United States District Court
for the Southern District of Iowa - Central
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Submitted: September 17, 2025
Filed: January 12, 2026
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Before LOKEN, KELLY, and ERICKSON, Circuit Judges.
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LOKEN, Circuit Judge.
In January 2025, Appellants Kevin Lors, Aaron Schomer, Joleen Scheer, and
Lindsey O’Neil (“Four Advisors”) resigned as senior financial advisors at the Des
Moines branch of Choreo, LLC, a national investment advisory firm, and joined
Appellant Atomi Financial Group, Inc., a competing investment advisory firm doing
business as Compound Planning (“Compound”) that was opening a new office in Des

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Moines. A few weeks after the Four Advisors left, eight of the nine remaining
Choreo financial advisors in Des Moines resigned in unison and joined Compound,
which paid them lavish incentives to continue serving their former clients despite
restrictive covenants in the Four Advisors’ employment contract with Choreo.
Choreo quickly filed this lawsuit, alleging breach of three restrictive covenants
by the Four Advisors, tortious interference with contract by Compound, and theft of
trade secrets under federal and Iowa law by all Defendants. The district court granted
Choreo’s motion and entered a sweeping preliminary injunction. Defendants appeal.
We have jurisdiction to review an interlocutory order granting a preliminary
injunction. 28 U.S.C. § 1292(a)(1).
“The basis of injunctive relief in the federal courts has always been irreparable
harm and inadequacy of legal remedies.” Beacon Theatres, Inc. v. Westover, 359
U.S. 500, 506-07 (1959). The Supreme Court’s “frequently reiterated standard
requires plaintiffs seeking preliminary injunctive relief to demonstrate that irreparable
injury is likely in the absence of an injunction.” Winter v. Nat. Res. Def. Council, 555
U.S. 7, 22 (2008) (citations omitted; emphasis in original); see Sessler v. City of
Davenport, 990 F.3d 1150, 1156 (8th Cir. 2021). “Irreparable harm occurs when a
party has no adequate remedy at law, typically because its injuries cannot be fully
compensated through an award of damages.” Gen. Motors Corp. v. Harry Brown’s,
LLC, 563 F.3d 312, 319 (8th Cir. 2009).
Here, the district court concluded that “[t]he coordinated departure of all senior
wealth advisors, followed by the near-simultaneous resignation of the remaining eight
investment advisors, has effectively decimated Choreo’s Des Moines office, leaving
the firm without the human capital necessary to maintain client relationships and
deliver its services.” We conclude the preliminary injunction record falls short of the
showing required to establish that Choreo’s alleged injuries cannot be compensated
by an award of damages for Defendants’ alleged breach of contract and tortious
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interference absent extraordinary preliminary injunctive relief. Accordingly, we
vacate the preliminary injunction and remand for further proceedings.
I. Background
In 2022, a large private equity firm purchased Choreo, raised client fees, and
reduced advisor compensation, causing about a third of the office’s financial advisors
to leave over the next few years. The Four Advisors resigned in January 2025,
effective February 2025. Their Choreo employment contract contained three one-to-
two-year restrictive covenants:
1. “I will not . . . directly . . . or indirectly . . . solicit, divert, take away
or conduct any financial planning . . . with . . . any of [Choreo’s] clients,
customers or accounts” (the “No-Service/No-Solicitation” covenant).
“Clients, customers or accounts” is defined as any clients the Four
Advisors serviced or gained business information about in the last two
years (“Covered Clients”).
2. “I shall not . . . directly or indirectly . . . use or disclose to any party
other than [Choreo] and its affiliates any trades secrets or other
Confidential Information that I learned or obtained while an employee
of [Choreo]” (the “No-Disclosure” covenant).
3. “I will not directly or indirectly solicit, attempt to solicit, or in any
manner encourage any employee of [Choreo] to leave [Choreo]” (the
“No-Recruitment” covenant). This covenant applied while the Four
Advisors were still employed at Choreo and prohibited them from aiding
anyone else in offering employment to Choreo’s employees.
A few weeks after the Four Advisors left, eight of the nine remaining Choreo
financial advisors resigned in unison and joined Compound. The Four Advisors also
took three allegedly solicitous actions directed at Covered Clients. First, contrary to
Choreo’s instruction that it would handle the client transition process, they sent
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former clients an email stating: “I’m writing to inform you that I have left Choreo,
and since I have left the firm I am no longer servicing your accounts. My registered
contact information at my new firm is below should you have any questions.” Choreo
informed Covered Clients of the Four Advisors’ departure prior to their resignation
becoming effective, but they did not tell clients where the Four Advisors had gone.
Second, when one Covered Client contacted Lors for information, Lors responded
with Compound’s website, fee schedule, and two PDFs about how to transition.
Third, each Advisor made posts on LinkedIn about their transition to Compound.
Within two weeks after the Four Advisors departed, Choreo’s Des Moines
branch lost over 100 clients to Compound representing $400 million in assets under
management, approximately one-third of the branch’s total business. The Four
Advisors continued serving as financial advisors to the Covered Clients who switched
to Compound. Defendants do not dispute that this violated the No-Service
provisions. Rather, they contest this covenant’s enforceability.
Choreo quickly filed suit and requested a temporary restraining order, which
the district court denied for lack of a showing of immediate irreparable injury.
Choreo then moved for a preliminary injunction which the district court granted,
properly looking to the four Dataphase factors in determining whether to grant a
preliminary injunction set forth in our controlling decision in Dataphase Sys., Inc. v.
C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981). The injunction bars the Four
Advisors from servicing the Covered Client accounts, providing any information
about their new employment to Covered Clients, using Choreo’s confidential
information for any purpose, and encouraging any employee of Choreo to quit during
the period each restrictive covenant is in effect. It also bars Compound from using
Choreo’s confidential information or interfering with any Choreo employment
agreements. Defendants timely appealed. The district court and this court denied
their motions to stay the injunction pending appeal.
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II. Discussion
“We review the district court’s decision to grant a preliminary injunction for
abuse of discretion, with factual findings examined for clear error and legal
conclusions considered de novo.” Sleep No. Corp. v. Young, 33 F.4th 1012, 1016
(8th Cir. 2022) (quotations omitted). Preliminary injunctive relief is “an
extraordinary remedy that may only be awarded upon a clear showing that the
plaintiff is entitled to such relief.” Winter, 555 U.S. at 22 (citation omitted). We
consider four factors in determining whether to grant a preliminary injunction: “(1)
the threat of irreparable harm to the movant; (2) the state of balance between this
harm and the injury that granting the injunction will inflict on other parties litigant;
(3) the probability that movant will succeed on the merits; and (4) the public interest.”
Dataphase, 640 F.2d at 114.
We begin with the irreparable harm factor because “[t]he failure of a movant
to show irreparable harm is an ‘independently sufficient basis upon which to deny a
preliminary injunction.’” Sessler, 990 F.3d at 1156 (quotation omitted). To show
irreparable harm, “a party must show that the harm is certain and great and of such
imminence that there is a clear and present need for equitable relief.” Dakotans for
Health v. Noem, 52 F.4th 381, 392 (8th Cir. 2022). The party seeking preliminary
injunctive relief must show a likelihood of irreparable harm in the future. Sessler,
990 F.3d at 1156. The failure to show irreparable harm is, by itself, a sufficient basis
to deny a preliminary injunction. Gelco Corp. v. Coniston Partners, 811 F.2d 414,
418 (8th Cir. 1987).
The district court’s finding of irreparable harm is based on (1) Choreo’s further
loss of customer relationships from Compound’s ongoing client poaching and (2) the
destruction of Choreo’s Des Moines branch resulting from Defendants’ violations of
the No-Recruitment provision. We conclude this does not meet the required showing.
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(1) We have held that the permanent loss of customer goodwill can constitute
irreparable injury. Iowa Utils. Bd. v. FCC, 109 F.3d 418, 426 (8th Cir. 1996). But
nothing in the record demonstrates irreparable harm will occur absent preliminary
injunctive relief in this case. “Economic loss, on its own, is not an irreparable injury
so long as the losses can be recovered.” Wildhawk Invs., LLC v. Brava I.P., LLC, 27
F.4th 587, 597 (8th Cir. 2022). Choreo charges clients a percentage fee based on the
size of their account. Both the amount of assets attributable to the allegedly stolen
clients and Choreo’s fee table are in the record. From this data and the evidence
developed at summary judgment or after trial on the merits of Choreo’s claims, the
court can determine or reliably estimate the annual fees Choreo would receive from
clients Compound poached. Indeed, the district court referred to financial harm from
the loss of clients as “calculable.” True, this calculation might not account for
incidental benefits of client relationships such as referrals. But the financial harm
from lost client revenues will not be so uncertain that it renders the damages
incalculable and therefore irreparable. See Washington Tr. Advisors, Inc. v. Arnold,
646 F. Supp. 3d 210, 221 (D. Mass. 2022) (“the financial services industry is uniquely
skilled at computing the economic value of a given client.”).
For example, in MPAY Inc. v. Erie Custom Comp. Apps., Inc., 970 F.3d 1010
(8th Cir. 2020), we rejected plaintiff’s argument that financial harm from losing
customers is incalculable and therefore irreparable, noting that the estimate in the
record of $580,000 in lost annual fees from those customers demonstrated that the
lost profits were quantifiable. Like Choreo, plaintiff argued that the amorphous loss
of goodwill and reputation was irreparable harm supporting preliminary injunctive
relief. We rejected this argument as uncorroborated and therefore too speculative to
establish irreparable harm and affirmed the denial of a preliminary injunction.
Similarly in Mgmt. Registry, Inc. v. A.W. Cos., 920 F.3d 1181, 1183 (8th Cir. 2019),
we found that plaintiff had a potentially viable damages theory from the loss of
goodwill but the little evidence in the preliminary injunction record cut against a
finding of incalculability, as the plaintiff had estimated lost revenues to be $65,000
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per week. In both cases, as here, the plaintiff did not persuasively explain why the
estimated money damages did not adequately compensate them for their losses.
Choreo argues that declarations by two of its employees adequately explain
why its alleged harm from loss of goodwill is incalculable. But the declarations are
conclusory, stating Choreo has lost client goodwill and the resulting harm is
incalculable, but not explaining why the loss defies calculation. The employees assert
that “[t]he departure of these clients has destabilized Choreo’s business by
undermining the notion that these client relationships belong to Choreo.” But if
actionable, the client fees lost because Defendants’ conduct made clients willing to
follow their existing investment advisors to Compound is calculable.
(2) Choreo argues it was irreparably harmed when Defendants’ allegedly
wrongful conduct left its Des Moines office with just one employee and unable to
serve its remaining customers. The fatal problem with this argument is that even if
this harm is irreparable, it has already happened and will not be remedied by the
preliminary injunction. When Choreo filed this action, it requested injunctive relief
preventing the eight employees who had not left from leaving. The district court
denied that relief. All but one of Choreo’s Des Moines investment advisors had left
when the district court granted the preliminary injunction. There is no evidence in
the record that Defendants did or will attempt to recruit the remaining employee.
Therefore, future harm resulting from Choreo’s understaffing will occur with or
without a preliminary injunction and cannot provide the basis for preliminary
equitable relief. Whether a permanent injunction will be appropriate equitable relief
to prevent future irreparable harm will depend in large part on future events such as
Choreo’s success assuming it intends to maintain a branch office in Des Moines.
In sum, because the preliminary injunction does not prevent irreparable harm
that cannot be calculated and remedied after a determination of Choreo’s breach of
contract and tortious interference claims on the merits, the district court abused its
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discretion in granting it. Accordingly, we vacate the district court’s order granting
preliminary injunctive relief and remand for further proceedings consistent with this
opinion.
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