Eighth Circuit Vacates Preliminary Injunction in Choreo v. Compound Planning, Emphasizing Irreparable Harm Standard

On January 12, 2026, the U.S. Court of Appeals for the Eighth Circuit issued a notable decision in Choreo, LLC v. Kevin Lors et al., vacating a preliminary injunction granted by the Southern District of Iowa. This ruling emphasizes the rigorous standards for obtaining injunctive relief and offers important insights into the enforcement of restrictive covenants, client solicitation, and competitive hiring within the financial services sector.

Background on the Dispute

Choreo, LLC (Choreo), a national investment advisory firm, experienced a significant advisor exodus from its Des Moines branch in early 2025. Four senior advisors resigned and joined Atomi Financial Group, Inc. (Atomi), operating as Compound Planning (Compound), which was establishing a new office in Des Moines. Shortly thereafter, eight of the nine remaining advisors from Choreo also departed to join Compound. The advisors each signed an employment agreement with Choreo in which they agreed to the following restrictions:

1. No-Service/No-Solicitation: solicit or service Choreo clients for one to two years.
2. No-Disclosure: use or disclosure of Choreo’s confidential information.
3. No-Recruitment: encourage other Choreo employees to leave.

As a result of the departures, Choreo lost more than 100 clients and approximately $400 million in assets under management.

Choreo filed suit and requested a temporary restraining order, which the district court denied because Choreo did not show it would suffer immediate irreparable injury. Choreo then moved for a preliminary injunction. Choreo asserted that the Defendants’ breaches, combined with Compound’s alleged tortious interference and misappropriation of trade secrets, caused Choreo to suffer irreparable harm. The district court agreed and, following the “Dataphase” factors (irreparable harm, balance of harms, likelihood of success, and public interest), issued a broad preliminary injunction prohibiting the advisors from servicing former clients and restricting Compound’s use of confidential information. See Dataphase Sys., Inc. v. C L Sys., Inc., 640 F2d. 109, 114 (8^th Cir. 1981). The defendants then appealed.

The Eighth Circuit’s Analysis

The appellate court emphasized that preliminary injunctions are an “extraordinary remedy” requiring a clear and convincing showing of irreparable harm. Here, the court mentioned the four Dataphase factors, but its primary focus was on the requirement that the plaintiff show it would suffer irreparable harm.

Irreparable Harm Standard

The court began with the irreparable harm factor because “the failure of a movant to show irreparable harm is an independently sufficient basis upon which to deny a preliminary injunction.” The Court continued that 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.4^th 281, 292 (8^th Cir. 2022).

The Eighth Circuit found that the district court’s finding of irreparable harm was based on Choreo’s further loss of customer relationships and destruction of Choreo’s Des Moines branch both resulting from the defendants’ violation of the employment agreements. The Eighth Circuit said that those reasons did not meet the required showing.

First, though the Court acknowledged that permanent loss of customer goodwill can constitute irreparable injury, there was nothing in the record demonstrating that irreparable harm would occur absent preliminary injunctive relief. The Court emphasized that economic loss alone does not constitute irreparable harm if, like here, damages can be calculated and recovered. Because Choreo charges clients a percentage fee based on the size of their account, the Court could reliably estimate the annual fees Choreo would receive from lost clients. Because the financial harm from lost client revenues will not be so uncertain it renders the damage incalculable, the harm is not irreparable. See Washington T. 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”).

Choreo argued that employee declarations adequately explained why the harm from loss of goodwill is incalculable, but the Court found the declarations conclusory because they only stated that Choreo lost client goodwill and the resulting harm is incalculable. The declarations did not explain why the loss defies calculation.

Timing of Harm

Choreo also argued that it was irreparably harmed because its Des Moines office was left with one employee, and it could not serve its remaining customers. The Court rejected the argument because even if there was irreparable harm, the preliminary injunction was issued after the harm occurred. The Court said that future harm resulting from Choreo’s understaffing will occur with or without the preliminary injunction and, therefore, cannot provide the basis for preliminary equitable relief.

Outcome and Implications

The Eighth Circuit vacated the preliminary injunction and remanded the case for further proceedings. This decision highlights several critical considerations for employers and advisors:

• High Standard for Injunctive Relief: Courts require compelling evidence that harm cannot be remedied through monetary damages.
• Restrictive Covenant Enforcement: While covenants may be enforceable, to obtain injunctive relief, the plaintiff must have sufficient of imminent, irreparable harm. The evidence cannot merely be conclusory but must detail facts showing why the harm is irreparable.
• Strategic Planning: Employers should be prepared by maintaining detailed documentation of specific facts supporting the loss of customer goodwill and be prepared to move quickly when these issues arise. As the court here said, preliminary equitable relief is not appropriate when the harm will occur whether or not the injunction is entered.

Conclusion

The ruling in Choreo v. Compound Planning serves as a cautionary example for firms relying on restrictive covenants to safeguard client relationships. It reinforces that financial losses—even substantial ones—are generally compensable through damages and that courts will closely scrutinize evidence of irreparable harm.

This decision is a timely reminder for businesses in competitive industries to review employment agreements and implement comprehensive strategies for protecting client relationships without over-reliance on preliminary injunctions.