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CARPETMASTER OF LATHAM, LTD. v. DUPONT FLOORING SY

June 11, 1998

CARPETMASTER OF LATHAM, LTD., Plaintiff, against DUPONT FLOORING SYSTEMS, INC. and RONALD CASSIN, individually and in his capacity as Vice-President of Dupont Flooring Systems, Inc., Defendants.


The opinion of the court was delivered by: MCAVOY

MEMORANDUM-DECISION and ORDER

 Presently before the Court are objections submitted by plaintiff CarpetMaster of Latham, Ltd. ("CarpetMaster") to the Report-Recommendation of United States Magistrate Judge Gary L. Sharpe, which recommends that defendant Dupont Flooring Systems' ("Dupont") motion to dissolve a state court temporary restraining order be granted and that Plaintiff's motion for a preliminary injunction be denied.

 I. BACKGROUND

 The facts of this case are fully stated in Judge Sharpe's February 10, 1998 Report-Recommendation and April 23, 1998 Order and Report-Recommendation which are attached hereto as appendices. Familiarity with these facts is assumed.

 In summary, CarpetMaster and Dupont are competitors in the sale and installation of carpeting in the Albany area. In October 1996, defendant Ronald Cassin approached CarpetMaster's President, Robert Taylor, concerning the purchase of CarpetMaster's commercial carpeting division. On October 23, 1996, CarpetMaster and MSA Industries, a carpeting company purchased by Dupont, executed an agreement ("Confidentiality Agreement") that required the parties to exchange confidential and proprietary information to be used exclusively for acquisition evaluations. The acquisition negotiations ultimately broke down.

 On November 14, 1997, CarpetMaster filed suit in New York State Supreme Court alleging breach of contract, misappropriation of trade secrets, tortious interference with business relations, and fraud, all arising from the failed negotiations for its purchase by Dupont. In essence, CarpetMaster alleges that Dupont violated the Confidentiality Agreement by disclosing proprietary information to Cassin and that Cassin used that information to steal CarpetMaster's subcontractors, employees, and customers.

 In the state court proceeding CarpetMaster obtained a Temporary Restraining Order ("TRO") preventing Dupont from engaging in certain business practices. Dupont removed the action to this Court and moved to dissolve the TRO. Pursuant to 28 U.S.C. section 636(b) and Local Rule 72.3(c) the Court referred the instant dispute to the Honorable Gary L. Sharpe, United States Magistrate Judge, for a report and recommendation.

 Judge Sharpe conducted a hearing and afforded both parties the opportunity to present witness, which they declined, instead relying on affidavits and oral argument. Judge Sharpe issued a Report-Recommendation on February 10, 1998, finding: "[CarpetMaster] failed to sustain its burden of persuading this court that it will suffer non-compensatory, irreparable harm, including loss of goodwill. So too, CarpetMaster has failed to demonstrate either a likelihood of success on the merits or serious questions going to the merits." February 10, 1998 Report-Recommendation (hereinafter "First R & R") at 3.

 CarpetMaster filed timely objections as well as additional evidence that convinced this Court to refer the matter to Judge Sharpe for reconsideration of his February 10, 1998 Report-Recommendation. On March 13 and 16, 1998, Judge Sharpe conducted an evidentiary hearing, taking testimony from three witness. On April 23, 1998, Judge Sharpe issued a second report-recommendation, stating "the court fails to find anything new in CarpetMaster's evidence and again recommends that the TRO be dissolved and a preliminary injunction denied." April 23, 1998 Order and Report-Recommendation (hereinafter "Second R & R") at 12. CarpetMaster again filed timely objections.

 II. DISCUSSION

 A. Standard of Review

 Under Federal Rule of Civil Procedure 72(b) and 28 U.S.C. section 636(b)(1)(A), a district court evaluating a magistrate judge's recommendation is permitted to adopt those portions of the recommendation to which no "specific, written objection" is made, as long as those sections are not clearly erroneous. See, e.g., Thomas v. Arn, 474 U.S. 140, 106 S. Ct. 466, 471-72, 88 L. Ed. 2d 435 (1985); Greene v. WCI Holdings Corp., 956 F. Supp. 509, 513 (S.D.N.Y. 1997), aff'd, 136 F.3d 313 (2d Cir. 1998). Where a party makes a "specific written objection," the district court is required to make a de novo determination regarding those parts of the report to which objection is made. See, e.g., United States v. Raddatz, 447 U.S. 667, 100 S. Ct. 2406, 2412-13, 65 L. Ed. 2d 424 (1980); Ehinger v. Miller, 942 F. Supp. 925, 927 (S.D.N.Y. 1996).

 A de novo determination entails an independent review of all objections and responses to the magistrate's findings and recommendations. See, e.g., United States v. Tortora, 30 F.3d 334, 337 (2d Cir. 1994); Bristol-Myers Squibb Co. v. McNeil-P.P.C., 973 F.2d 1033, 1045 (2d Cir. 1992). When objections are filed a district court is not, however, required to ignore the magistrate judge's recommendations. As Judge Spatt has noted, "by using the phrase de novo determination . . . rather than de novo hearing, Congress intended 'to permit whatever reliance a district judge, in the exercise of sound judicial discretion, chose to place on a magistrate's proposed findings and recommendations.'" U.S. v. Ten Cartons, Ener-B Nasal Gel, 888 F. Supp. 381, 390 (E.D.N.Y.), aff'd, 72 F.3d 285 (2d Cir. 1995) (quoting Grassia v. Scully, 892 F.2d 16, 19 (2d Cir. 1989) (quoting Raddatz, 100 S. Ct. at 2412)). Thus, the statute does not require a district court rehear the contested testimony in order to make its determination. Id. ; Grassia, 892 F.2d at 19.

 Here, Plaintiff has filed objections. Consequently, the Court reviews de novo those portions of Judge Sharpe's Report-Recommendation to which Plaintiff has objected. See 28 U.S.C. § 636(b)(1).

 B. Plaintiff's Objections

 In both his First and Second R & R, Judge Sharpe recommended that the TRO be dissolved and that Plaintiff's request for a preliminary injunction be denied. Plaintiff's objections essentially focus on two aspects central to Judge Sharpe's findings. First, Plaintiff argues that in hiring two of CarpetMaster's key employees, Dupont acquired protected trade secrets. ...


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