Opinion
No. 101822/2010.
2010-07-9
1–800 POSTCARDS, INC. d/b/a William Van Waardt, Plaintiff, v. AD DIE CUTTING & FINISHING INC. d/b/a AD Die Cutting & Finishing, Harold I. Gutman, Julio E. Sanchez and Arallance Solomon, XYZ Corporation, Defendants.
Berliner & Pilson, Great Neck, Attorney for Plaintiff. Christian Aaron Pickney, Mineola, Attorney for Defendant.
Berliner & Pilson, Great Neck, Attorney for Plaintiff. Christian Aaron Pickney, Mineola, Attorney for Defendant.
DORIS LING–COHAN, J.
Plaintiff is a company which performs printing services and has allegedly been in business for over thirty (30) years. Individual defendants Harold I. Gutman, Julio E. Sanchez & Arallance Solomon, former employees of plaintiff, resigned on or about December 2009 and soon thereafter commenced employment with defendant AD Die Cutting & Finishing, Inc (“AD Die”), a competitor of plaintiff.
On or about February 11, 2010, plaintiff filed the within order to show cause seeking a preliminary injunction pursuant to CPLR § 6301, enjoining defendants from: (1) using any of the trade secrets of plaintiff; and (2) contacting and/or doing business with any person or entity listed upon plaintiff's customer list.
Plaintiff's application for a preliminary injunction is premised upon its claim that defendants have and continue to misappropriate plaintiff's trade secrets and chattel, consisting of knowledge of plaintiff's operation, pricing strategies, customer base and other pertinent proprietary information, as well as various cutting, stamping and/or embossing “dies”
, which were manufactured by plaintiff and were allegedly discovered missing after the individual defendants left plaintiff's employ to work for AD Die.
“Dies” are allegedly used to print logos and other materials onto a variety of products.
Plaintiff commenced this action against defendants asserting the following three causes of action: (1) breach of a fiduciary duty against the individual defendants; (2) permanent injunction prohibiting the use of the “dies” by defendants and an order of replevin compelling the returning of the “dies” to plaintiff; and (3) conspiracy against all defendants.
In seeking a preliminary injunction, plaintiff asserts that plaintiff's business will be irreparably harmed if it does not receive its property back and if defendants are not enjoined from any further misappropriation of its trade secrets. Plaintiff maintains that following the individual defendants' termination of employment with plaintiff, plaintiff's revenue dropped from approximately $25,000.00 per week, to an average of $3,333.00, per week.
In opposition, defendants maintain that there are no “trade secrets” herein and therefore there can be no misappropriation, nor any irreparable harm. Further, the individual defendants maintain that they did not take the subject “dies” and that it is the custom and practice in the industry that the “dies” are actually the property of the customer for which they were produced and are subject to return to the customer upon demand. According to defendant Gutman, several of the missing “dies” were in fact returned to the customers, upon demand, as is common practice in the industry.
Upon review of the submitted papers, plaintiff's motion for a preliminary injunction is denied, as detailed below.
A preliminary injunction is a drastic remedy which should only be granted where the movant has demonstrated in the moving papers a clear legal right to the relief demanded based upon the undisputed facts. See Cohen v. Department of Social Servs., 37 A.D.2d 626,affd30 N.Y.2d 571(1972); William M. Blake Agency, Inc. v. Leon, 283 A.D.2d 423, 424 (2nd Dept 2001). Being a provisional remedy, its function is not to determine the ultimate rights of the parties, but to maintain the status quo until there can be a full hearing on the merits. Residential Board of Managers of the Columbia Condominium v. Alden, 178 A.D.2d 121 (1st Dept 1991). To be entitled to a preliminary injunction, plaintiff must clearly demonstrate: (1) a likelihood of success on the merits; (2) irreparable injury absent granting the preliminary injunction; and (3) a balancing of the equities in their favor. See W.T. Grant Co. v. Srogi, 52 N.Y.2d 496, 517 (1981); Aetna Ins. Co. v. Capasso, 75 N.Y.2d 860, 862 (1990); Borenstein v. Rochel Props., Inc., 176 A.D.2d 171, 172 (1st Dept 1991). Irreparable injury has been held to mean an injury for which monetary damages are insufficient. See James v. Gottlieb, 85 A.D.2d 572 (1st Dept 1981); Klein, Wagner & Morris v. Klein, 186 A.D.2d 631, 633 (2nd Dept 1992). Here, plaintiff has failed in the moving papers to meet its burden of establishing such requirements.
In particular, plaintiff has failed to establish the likelihood of success on the merits. To establish a claim of misappropriation of trade secrets where there is no employment contract expressly restricting the former employees from competing with the prior employer as is the case herein, plaintiff must demonstrate: (1) it possessed a trade secret; and (2) that defendants are using such trade secret in breach a duty of loyalty or as a result of discovery by improper means. See Integrated Cash Mgmt. Servs., Inc. v. Digital Transactions, Inc., 920 F.2d 171, 173 (2nd Cir.1990); Doubleclick, Inc. v. Henderson, 1997 WL 731413 (New York County, Sup Court 1997).
Here, while plaintiff alleges that defendants are using plaintiff's trade secrets, it has not been established that defendants in fact possess trade secrets of plaintiff.
“There is no generally accepted definition of a trade secret but that found in section 757 of Restatement of Torts, comment b, has been cited with approval ... It defines trade secret as any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it' “.
Ashland Mgmt. Inc.v. Janien, 82 N.Y.2d 395 (1993) (citations omitted). Significantly, trade secret protection does not attach to information which is “readily ascertainable”. See Leo Silfen, Inc. v. Cream, 29 N.Y.2d 387, 392 (1972). Pricing information and customer lists are generally not considered to be trade secrets. See Ken J. Pezrow Corp. v. Seifert, 197 A.D.2d 856, 857 (4th Dept 1993)(“where an employer's customer lists are readily ascertainable from sources outside its business, trade secret protection will not attach and their solicitation by the employee will not be enjoined' “ (citations omitted); Richard M. Krause, Inc. v. Gardner, 99 N.Y.S.2d 592, 595 (Sup Ct, New York County 1950)(holding that plaintiffs' prices were learned in the ordinary course of business and will therefore not be enjoined); Price Paper & Twine Co. v. Miller, 182 A.D.2d 748 (2nd Dept 1992)(the court refused to enjoin the use of an employer's customer list and pricing information). Even when a plaintiff asserts that defendants took confidential customer lists, injunctive relief will not be granted unless those customers could only have been found through plaintiff's business, which is not alleged herein. See Metal & Salvage Ass'n v. Siegel, 121 A.D.2d 200, 201 (1st Dept 1986). Moreover, “it is the general rule that an employee may solicit an employer's customers ... when the employment relationship has been terminated”. Catalogue Service of Westchester, Inc. v. Wise, 63 A.D.2d 895 (1st Dept 1978). Here, plaintiff failed to establish the existence of trade secrets and their misappropriation by defendants, to warrant injunctive relief. Moreover, in opposition, defendants allege that many of the customers at issue, were already longstanding customers of defendant AD Die, prior to the employment of the individual defendants herein.
Further, it is unclear whether plaintiff may prevail on its claims for replevin and the granting of a permanent injunction, as defendants maintain that the “dies” at issue, are not in fact the property of plaintiff, but rather belong to the customers for which they were created. Nor has plaintiff established a likelihood of success on its conspiracy claim, as it has been held that “conspiracy to commit a [tort] is never a cause of action”. Alexander & Alexander, Inc. v. Fritzen, 68 N.Y.2d 968 (1986); see also Riverbank Rlty. Co., v. Koffman, 179 A.D.2d 542 (1st Dept 1992).
Moreover, plaintiff has not demonstrated that it will suffer irreparable injury if defendants are not enjoined from using any of the alleged trade secrets of plaintiff, nor contacting and/or doing business with any person or entity listed upon their customer. Throughout the moving papers, plaintiff makes references to the economic harm it has and will be suffering-including a reduction in weekly sales revenue; however, financial harm is not considered to be “irreparable” and therefore does not warrant the granting of an injunction. See Hoppmann v. Sargent Stein, Inc., 141 A.D.2d 332 (1st Dept 1988).
Additionally, plaintiff has not sustained its burden of demonstrating that a balance of the equities favors the granting of injunctive relief it seeks. See W.T. Grant Co. v. Srogi, 52 N.Y.2d at 517;Hoppmann v. Sargent Stein, Inc., 141 A.D.2d at 334;Borenstein v. Rochel Props., Inc., 176 A.D.2d at 172. There has been no showing that defendant AD Die lured plaintiff's former employees, or did anything improper to obtain their employment. Further, it appears that AD Die is merely involved in routine competition in the industry. Notably, no employment contracts exist between plaintiff and the individual defendants, which might have limited the individual defendants' actions after leaving plaintiff.
Additionally, since the granting of an injunction is part of the ultimate relief being sought by plaintiff herein (plaintiff's second cause of action seeks a permanent injunction prohibiting the use of the dies by the defendants), the granting of a preliminary injunction as to such ultimate relief at this time is improper. See New York City Police Officers v. City of New York, 34 AD3d 392 (1st Dept 2006)(“[t]he purpose of a provisional remedy is to maintain the status quo, pending a hearing on the merits, rather than to determine the parties' ultimate rights” [citations omitted] ).
Preliminary injunctions are drastic remedies which should be used sparingly. See67A N.Y. Jur 2d, Injunctions § 49. Thus, this Court declines to issue a preliminary injunction.
Accordingly, it is
ORDERED that plaintiff's motion for a preliminary injunction is denied; it is further
ORDERED that any and all stays issued by the signing of plaintiff's order to show cause dated February 11, 2010 are hereby vacated forthwith; and it is further
ORDERED that, within thirty days of entry of this decision/order, defendants shall serve upon plaintiff a copy with notice of entry.
This constitutes the decision and order of the Court.