published lists from several sources for thousands of dollars; (2) paying approximately five salespeople per year to broaden the Company's customer base; (3) attending 15 to 20 trade shows at a cost of approximately $ 10,000 per show; and, (4) advertising in trade publications. Martin Davis Aff. in Support of Application for Preliminary Injunction at P19. To ensure the secrecy of the Customer Materials, ERI asserts, Martin Davis continuously:
(a) informed all employees routinely of the confidentiality of the information (including customers and customer lists) with which they were working; and
(b) informed all employees routinely that they could not copy, modify and/or destroy information with which they worked; and
(c) had certain key employees sign written employment agreements containing confidentiality and other like clauses; and
(d) restricted sales people to only access those customers whom they serve for [the Company] and to only information concerning those customers; and
(e) restricted access of secretaries to limited information concerning all customers; and
(f) informed instructors that the information, and in particular, the customers and customer lists, to which they have access was and is confidential.
Id. at P21.
In response to ERI's claims regarding the development of the Customer Materials, Russo and Hancock assert that the Company obtained the vast majority of its customers through government publications and lists rented from mailing list companies for approximately $ 100 per 1,000 names. Russo Aff. in Opposition at PP26-28; Hancock Aff. in Opposition at P19. Russo further states that the five salespeople allegedly hired to broaden the Company's customer base essentially made cold calls from the rented customer lists. Russo Aff. in Opposition at P28. Russo also maintains that almost all the trade shows which ERI refers to were DEC shows. Lists of DEC show attenders, he continues, could be purchased. Id.
Concerning the secrecy of the Customer Materials, Russo asserts that, during his tenure at the Company, all personnel had access to the Company's customer lists and no one was ever instructed that such lists were confidential. Id. at P25. Similarly, Hancock states that, while he was involved there, the Company imposed no restrictions or guidelines on its personnel with respect to the circulation of customer lists and related information. Hancock Aff. in Opposition at P23.
At first blush, ERI's various allegations concerning a misappropriation of the Company's trade secrets seem to engender a fair ground for litigation. Upon closer scrutiny, however, it is apparent that ERI fails to put forward anything of substance to support the allegations with the materiality and weight prerequisite to the issuance of a preliminary injunction. While the allegations may suffice to make the issues a ground for litigation, they do not suffice to make the issues a fair ground for litigation.
Turning to ERI's unfair competition claim, a court may issue a preliminary injunction on the grounds of unfair competition although the customer information in question does not constitute a trade secret. See Ecolab, Inc. v. Paolo, et al., 753 F. Supp. 1100, 1110 (E.D.N.Y. 1991) (citing Continental Dynamics Corp. v. Kanter, 64 A.D.2d 975, 408 N.Y.S.2d 801 (2d Dep't 1978)). However, to receive such relief, the movant must show that there was an unauthorized physical taking and exploitation of an employer's confidential customer information by an employee. Id. Setting aside the issue of whether Hancock was an employee of the Company or merely an independent contractor, and assuming that the Customer Materials were kept confidential, a preliminary injunction cannot issue against Hancock, Russo and Network because ERI has failed to establish the requisite unauthorized taking and exploitation of the Customer Materials. Absent this proof, there seems little likelihood of ERI's success on the merits.
ERI alleges that, on August 10, 1990, at approximately 1:59 a.m., a person using Hancock's identification number accessed the Company's DEC VAX computer files and copied the file containing the Customer Materials onto a TK-50 magnetic tape which had been inserted into the computer. Mack Aff. in Support of Application for Preliminary Injunction at PP15-19. Hancock flatly denies the alleged misappropriation. Hancock Aff. in Opposition at PP11-18. As Hancock indicates, ERI avers nothing of substance to show that Hancock, as opposed to any other person at the Company, put the tape into the machine, accessed the files, and copied the information at issue. Preliminary injunctive relief cannot rest on mere hypotheticals.
For the foregoing reasons, ERI's motion for a preliminary injunction is denied in its entirety.
DATED: New York, New York
April 28, 1992
KEVIN THOMAS DUFFY, U.S.D.J.