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Expertconnect, LLC v. Fowler

United States District Court, S.D. New York

January 6, 2020

EXPERTCONNECT, LLC, Plaintiff,
v.
MAYOKIA FOWLER, et al., Defendants.

          OPINION & ORDER

          LORNA G. SCHOFIELD, DISTRICT JUDGE.

         This action concerns alleged violations of the Defend Trade Secrets Act (“DTSA”) and various New York state law claims. Plaintiff ExpertConnect, LLC timely filed an application to extend a preliminary injunction first issued on July 26, 2018, against Defendants Mayokia Fowler, Dipali Parmar and Strafluence, LLC. Plaintiff also seeks to expand the preliminary injunction's scope and to obtain the injunction pursuant to its claims for unfair competition and tortious interference. For the following reasons, Plaintiff's applications are denied.

         Background

         On June 8 and 28, 2018, a hearing was held on Plaintiff's motion for preliminary injunction. At the hearing, Plaintiff offered credible evidence that Defendants Fowler and Parmar accessed ExpertConnect's proprietary information and, in close proximity, accessed personal computer storage drives. This “very powerful circumstantial evidence of misappropriation of trade secrets” was sufficient to deem that Plaintiff was likely to succeed on the merits. Irreparable harm was presumed, and it was held in the public interest to issue an injunction that protects a company's proprietary information from employees who violate nondisclosure agreements covering that information. Accordingly, Plaintiff's motion was granted.

         Defendants filed a motion for reconsideration, arguing that irreparable harm should not be presumed. Though the motion was granted, Defendants application to reverse the preliminary injunction was denied. The basis for finding irreparable harm, upheld by the Second Circuit, was that Defendants' actions would impair ExpertConnect's goodwill and reputation. See ExpertConnect, LLC v. Parmar, 773 Fed.Appx. 651, 653 (2d Cir. 2019).

         After direction from the Second Circuit to ensure that the injunction complies with Federal Rule 65(d), the injunction was re-issued on August 15, 2019, stating that “the restrictions, prohibitions, and mandatory conditions set forth in the preceding paragraphs of this Order (injunctive relief) shall expire on November 30, 2019 (the end date of the non-disclosure agreement that Defendants each entered with Plaintiff, see at Dkts. 9-2 and 9-3), but this temporal limitation, is applied without prejudice to an extension (upon Plaintiff's motion).” The parties' knowledge of the facts is otherwise assumed for purposes of this Opinion.

         Standard of Review

         Preliminary injunctions are categorized as prohibitory or mandatory. “Prohibitory injunctions maintain the status quo pending resolution of the case; mandatory injunctions alter it.” N. Am. Soccer League, LLC v. United States Soccer Fed'n, Inc., 883 F.3d 32, 36 (2d Cir. 2018). The relief Plaintiff seeks is in part the continuation of a mandatory injunction, as the requested relief includes enjoining Defendants from continuing to solicit or accept business from Plaintiff's clients. A party seeking a mandatory preliminary injunction must show (1) “a clear or substantial likelihood of success on the merits”; (2) “a strong showing of irreparable harm”; and (3) “that the preliminary injunction is in the public interest.” New York ex rel. Schneiderman v. Actavis P.L.C., 787 F.3d 638, 650 (2d Cir. 2015) (internal quotation marks omitted). The motion must be denied if Plaintiff fails to meet any of the three elements. Id.

         Plaintiff Demonstrates a Clear or Substantial Likelihood of Success on the Merits

         To state a claim for trade secret misappropriation under the DTSA, a plaintiff must plausibly allege that (1) it possessed a trade secret, and (2) the defendant misappropriated the trade secret. 18 U.S.C. § 1836(b)(1). The submissions do not appear to refute that Plaintiff's information was a trade secret when the non-disclosure agreement was in effect.

         Plaintiff offers testimony that Defendants misappropriated ExpertConnect's trade secrets, specifically its data and research on existing and prospective clients and on experts. The testimony notes that the information Defendants possess is nearly identical to ExpertConnect's information. And the testimony asserts -- building on evidence from the June 2018 hearing --that Defendants Parmar and Fowler extracted this information from ExpertConnect's computers before leaving the company. Plaintiff also offers documentary evidence showing that Strafluence's client list includes information that ExpertConnect also possesses, and that Defendants solicited ExpertConnect clients.

         Plaintiff's evidence that Defendants possess information nearly identical to Plaintiff's trade secrets reinforces the “very powerful circumstantial evidence of misappropriation” established at the June 2018 hearing. Defendants' evidence, which suggests that some of Strafluence's information on clients and experts could have come from public resources, does not overcome the circumstantial evidence that suggests that this information came from ExpertConnect's computers.

         Plaintiff Fails to Demonstrate Irreparable Harm

         “[T]o satisfy the irreparable harm requirement, plaintiff[] must demonstrate that absent a preliminary injunction [it] will suffer an injury that . . . cannot be remedied if a court waits until the end of trial to resolve the harm.” Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009). “A showing of irreparable harm is the single most important prerequisite for the issuance of a preliminary injunction.” Id. (internal quotation marks omitted). “[W]here there is no danger that a misappropriator will disseminate proprietary information, the only possible injury that the plaintiff may suffer is a loss of sales to a competing product which should be fully compensable by money damages.” Id. at 119 (internal quotation omitted); see also Espiritu Santo Holdings, LP v. L1bero Partners, LP, 19 Civ. 3930, 2019 WL 2240204, at *21 (S.D.N.Y. May 14, 2019) (“Where a misappropriator seeks only to use those secrets- without further dissemination or irreparable impairment of value-in pursuit of profit . . . an award ...


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