Newrez's request to bar OneTrust CEO's employment denied by judge

A judge in a Pennsylvania federal court declined to grant Newrez's request to issue an emergency injunction, which would bar its former head of retail, James Hecht from continuing to serve as CEO for his current employer, OneTrust Home Loans.

The ruling, however, hinges on the defendants' response to Newrez's communication asking to hash out an "acceptable standstill on defendant Hecht's employment acts with his new employer." 

If Newrez, Hecht and OneTrust fail to come to an agreement, Newrez may then present a fulsome description of the "back- and-forth and positions before seeking emergency injunctive relief," the judge ruled Feb. 23.

Newrez asked for the injunction shortly after it filed the suit accusing its former head of retail lending of bringing a handful of Newrez's division managers with him to a direct competitor. The mortgage lender also accused OneTrust Home Loans of conspiring with Hecht in this alleged ploy.

In its injunction, Newrez argues the former executive had access to a plethora of internal information and it is "inevitable" Hecht will utilize and disclose trade secrets in connection with his employment at OneTrust to gain a competitive advantage.

Newrez did not immediately respond to a request for comment. OneTrust also did not immediately respond.

The original suit claims Hecht fired a number of Newrez managers and later rehired them at his new place of employment. The scheme, Newrez claims, also took place shortly after it had announced a recommitment to its retail business after plans to sell didn't materialize.

The mortgage lender is concerned that Hecht's access to sensitive information and trade secrets gives the executive an advantage in soliciting other employees to join OneTrust.

The mortgage lender points to Hecht's knowledge of the production and compensation information for Newrez's loan originators and said it can be used to formulate compensation offers "sufficient to incentivize the larger producers to jump ship from Newrez for OneTrust."

Josh Erskine, founder of OneTrust Home Loans, denied all the allegations in an email Feb 23, noting he is "very surprised to see these claims being made."

"Any claim that James Hecht took confidential information or orchestrated the departure of Newrez employees is absolutely false," he wrote. "Our response will make clear that Newrez has filed this litigation out of spite without any facts to support its claims, and that James Hecht did all he could to urge Newrez to avoid what he regarded as a misguided path toward which it was set regarding its retail business."

Erskine added the claims are being used by other lenders to scare recruits from working at OneTrust. 

"The decision to file this lawsuit appears to have been driven far more by emotion rather than reason," he said. 

Newrez is suing Hecht for breach of contract, misappropriation of trade secrets, unfair competition and tortious interference with existing contracts.