Opinion
No. 2015/11723.
11-19-2015
David WEGMAN d/b/a Angels in Your Home, Plaintiff v. Marco ALTIERI, Jean Pierre Garvey, Jaidy Rosario–Delgado, Daniela Rosario–Delgado, Molly Slifer, Sean O'Brien, Elisa Heckathorn, Beyri Payamps–Delgado, and Glidedowan LLC d/b/a All American Home Care, Defendants.
LeClairRyan, A Professional Corporation, Richard A. McGuirk, Esq., Attorneys for Plaintiff. Woods Oviatt Gilman LLP, F. Michael Ostrander, Esq., Attorneys for Defendants.
LeClairRyan, A Professional Corporation, Richard A. McGuirk, Esq., Attorneys for Plaintiff.
Woods Oviatt Gilman LLP, F. Michael Ostrander, Esq., Attorneys for Defendants.
MATTHEW A. ROSENBAUM, J.
AMENDED DECISION
Plaintiff, David Wegman d/b/a Angels in Your Home, moves by Order to Show Cause for an order: (1) directing Defendants to return to Angels any and all documents, files, and computer equipment removed from Angels' offices; (2) preliminarily enjoining Defendants from possessing, disclosing, reproducing, disseminating, or using Referral Files, Customer Files, and Care Provider Files, the personal and confidential information of Angels' customers and care providers, and Angels' proprietary business information, in addition to any other confidential information belonging to and/or removed from Angels; (3) preliminarily enjoining Defendants from (i) directly or indirectly soliciting or otherwise contacting any current customers or Care Providers of Angels, or any potential customers or Care Providers referred to Angels by Lifetime Care, (ii) soliciting, employing, or otherwise engaging as an employee, independent contractor, or otherwise, any person who is or was a Care Provider employed by Angels at any time during the Individual Defendants' employment by Angels, or in any manner inducing or attempting to induce any such person to terminate his or her employment with Angels; (4) preliminarily enjoining Defendants from using, transferring, selling, pledging, assigning, or otherwise disposing of the Referral Files and Angels' computers and/or computer equipment removed from Angels' premises and enjoining Defendants from using the Referral Files to contact or solicit any potential customer; (5) an Order of Seizure requiring Defendants to return to Angels the Referral Files and any computer and/or computer equipment removed from Angels' premises; and (6) preliminarily enjoining Defendants from further acts of unfair competition.
Upon the signing of the Order to Show Cause, the Court also granted the following TRO: pending the return date, Defendants are (1) enjoined from directly or indirectly disclosing, reproducing, disseminating, and using the Protected Information, together with any other confidential and proprietary information of any kind, nature or description belonging to Angels and/or removed from Angels; (2) enjoined from directly or indirectly soliciting or otherwise contacting any current Customers or Care Providers, limited to those they had a direct relationship with or gleaned from the files; and (3) enjoined from using, transferring, selling, pledging, assigning, or otherwise disposing of the Referral Files or any of Angels' computers and/or computer equipment removed from Angels' premises and are further enjoined from using the Referral Files to contact or solicit any of those potential Customers.
Plaintiff is a licensed home care service agency approved by the Department of Health to provide an array of services to assist people with their care needs so as to enable them to live independently in their community. The services provided by Plaintiff includes consumer directed personal attendant services, home health aide services, personal care attendant services, and skilled nursing services.
The consumer directed personal attendant services provided by Plaintiff are provided in accordance with New York's Consumer Directed Personal Assistance Program ("CDPAP"). Plaintiff offers CDPAP coordination services in Monroe, Ontario, Orleans, and Yates counties. CDPAP is a Medicaid program providing services to chronically ill or physically disabled individuals who have a medical need for assistance with daily living activities and is an alternative to traditional home health care services that enables a consumer to have a higher degree of control over his or her own care. Under CDPAP, customers generally retain a licensed home care service agency to employ and manage the retention of the customer's Care Providers. The licensed home care service agency pays the wages and employee benefits of the Care Providers, provides insurance for the Care Providers, and maintains the training and documentation required by the State and County. Plaintiff states that for each Care Provider employed by it, Plaintiff maintains a file including the required training and employment documentation for the Care Provider, evidence of CDPAP training completion, the Care Provider's social security number, and other personal information, including some health records. The Care Provider Files are protected by HIPAA, ADA, and FMLA.
Before a customer is enrolled in CDPAP, the customer's doctor must submit a physician's order for services to the local social services district which then completes a social and nursing assessment of the customer. The assessment is performed in Monroe County through Lifetime Care, a subsidiary of Excellus. The nurse-assessor determines whether the recipient can appropriately participate in CDPAP and recommends the amount, frequency, and duration of services.
Once approved for CDPAP, Lifetime Care refers the customer to one of the licensed home care service agencies in the County to make the necessary arrangements to commence CDPAP services. A Referral File containing the physician's order, the assessment, and other medical information, is created. The information in the Referral File is protected by HIPAA, according to Plaintiff. When a customer selects Plaintiff to provide services under CDPAP, Plaintiff creates and maintains a hard copy and electronic file concerning the customer, including the Referral File, plan of care and abstract, release forms, progress notes, assessments, and clinical notes.
Plaintiff contends that its Customer Files, Referral Files, and Care Provider Files are maintained securely under lock and key, including passwords with limited employees access, employee training as to privacy laws, and employee confidentiality agreements and HIPAA compliance agreements. It is alleged that the Individual Defendants were trained on the privacy laws and executed confidentiality and HIPAA compliance agreements. Plaintiff began providing CDPAP services to customers in June 2010.
Defendant Altieri was initially employed by Plaintiff as the COO and then was appointed CEO in February of 2012. Altieri resigned from Angels on October 13, 2015. Likewise, the seven other Individual Defendants also resigned from Plaintiff's employ and joined Altieri at his new place of employment, AAHC. Plaintiff contends that prior to leaving, the Individual Defendants either copied or took Plaintiff's Customer Files, Referral Files, and Care Provider Files. The files allegedly copied and/or taken contain allegedly confidential business information and/or Plaintiff's Customers' and Care Providers' personal and confidential health information protected by the Health Insurance Portability and Accountability Act ("HIPAA"), the Americans with Disabilities Act ("ADA"), and the Family and Medial Lease Act ("FMLA"). Plaintiff characterizes Defendants' conduct as shocking and illegal. Altieri contends that some of the customers Plaintiff seeks to prevent him from contacting are clients he solicited to come to Plaintiff with him in 2011.
Defendant AAHC was formed by Thomas Hanna, Jr. in December 2014. In mid–2014, it is alleged that Altieri and Hanna inquired about purchasing Angels, but it does not appear that a sale was ever negotiated or consummated. It is alleged that Hanna applied for AAHC to operate as a home care service agency and that Altieri supported AAHC in its application process. It is alleged that AAHC received approval to operate as a licensed home care services agency in Monroe County on October 7, 2015. AAHC and Altieri state that AAHC is not a licensed home care service agency and instead is an authorized fiscal intermediary for the CDPAP program in Monroe and Ontario Counties.
It is alleged that Altieri, as CEO of Angels, reported to Andrew Wegman, the President of Angels, and David Wegman. The Wegmans state that they were unaware of Altieri's alleged support of AAHC's application process. As noted supra, Plaintiff alleges that the Individual Defendants engaged in wrongful conduct by removing Referral Files from Angels' premises, copying Customer Files and/or information contained therein, and copying Care Provider Files and/or information contained therein.
Plaintiff further alleges that prior to October 13, 2015, the Individual Defendants and/or AAHC used the personal and confidential information contained in the Care Providers Files and Customer Files to solicit Plaintiff's existing Customers and Care Providers. Likewise, prior to October 13, 2015, it is alleged that the Individual Defendants and/or AAHC used the personal and confidential information contained in the Referral Files to solicit Customers to Angels. In sworn Affidavits, the Individual Defendants and AAHC deny that any such solicitation occurred prior to leaving employment with Angels. It is further alleged that solicitation using the Care Provider Files, Customer Files, and Referral Files has continued since October 13, 2015. In so doing, it is alleged that the Individual Defendants and/or AAHC have made misrepresentations to Plaintiff's existing Customers and Care providers stating that Angels was going out of business, that AAHC had purchased Angels, and/or that the Customer could not receive CDPAP services from Angels and had to transition to AAHC. As of the commencement of this action, Angels had received ten notices from existing customers indicating they are transitioning to another licensed home care service agency; Plaintiff alleges AAHC is that agency.
Plaintiff's Complaint seeks a preliminary injunction, and an Order of Seizure, and states causes of action sounding in breach of fiduciary duty against the Individual Defendants, aiding and abetting breach of fiduciary duty against AAHC, unfair competition against all Defendants, tortious interference with business relations against all Defendants, conversion against all Defendants, and fraud against all Defendants.
Order of Seizure
CPLR 7102(c) sets forth the required documents to be submitted and the necessary allegations that must be made in an application for an Order of Seizure. See N.Y. CPLR § 7102(c). Pursuant to CPLR 7102(c), the application for an order of seizure must be supported by an affidavit that identifies the chattel to be seized and further states: plaintiff's entitlement to possession by virtue of the facts; wrongful holding by the defendant; whether an action to recover the chattel has been commenced and whether the defendants were served; if plaintiff seeks a provision requiring the sheriff to break, open, and enter to search for the chattel, the location of the chattel; whether there is a defense to the claim known to plaintiff; and if it is an order of seizure without notice, facts sufficient to establish that unless the application were made with notice, the chattel would become unavailable or impaired in value. See id. "In an action for recovery of chattels under § 7101, the sole issue is which party has the ‘superior possessor right’ to the chattels." Christie's Inc. v. Davis, 247 F.Supp.2d 414, 419 (S.D.NY 2002).
Through the Affidavit of Andrew Wegman dated October 20, 2015, Plaintiff seeks the seizure of any property of Angels' in Defendants' possession, including but not limited to the Referral Files and Altieri's computer and/or the hard drive of Altieri's computer, all of which Plaintiff claims "upon information and belief" is in Defendants' wrongful possession. Affidavit of Andrew Wegman dated October 20, 2015, ¶¶ 63–64.
Plaintiff fails to establish entitlement to an Order of Seizure with allegations that "upon information and belief" Defendants possess property belonging to Angels. Moreover, in any event, Defendants raise questions about their alleged possession that, even if Plaintiff had met its initial burden, would prevent the Court from granting this aspect of the relief sought.
The application for an Order of Seizure is denied.
Preliminary Injunction
In order for a party to obtain a preliminary injunction, the party must establish that (1) there is a likelihood of ultimate success on the merits, (2) that there is a prospect of irreparable harm if the relief is not granted, and (3) that the balance of equities favor the moving party. See Doe v. Axelrod, 73 N.Y.2d 748 (1988). A preliminary injunction is a drastic remedy and should be issued cautiously. See Uniformed Firefighters Assn. of Greater New York v. City of New York, 79 N.Y.2d 236 (1992). This relief "should be awarded sparingly, and only where the party seeking it has met its burden of providing both the clear right to the ultimate relief sought and the urgent necessity of preventing irreparable harm." City of Buffalo v. Mangan, 49 A.D.2d 697, 697 (4th Dept.1975).
Irreparable Harm
Irreparable injury means "any injury for which money damages are insufficient." McLaughlin, Piven, Vogel, Inc. v. W.J. Nolan & Co ., 114 A.D.2d 165, 174 (2d Dept.1986). "[I]rreparable injury generally cannot be established where any damages sustained are calculable, because the plaintiff in such a case would have an adequate remedy in the form of monetary damages." Destiny USA Holdings, LLC v. Citigroup Global Markets Realty Corp., 69 AD3d 212,220 (4th Dept.2009).
Plaintiff alleges that Defendants' willful and wanton conduct puts Angels at risk to suffer tremendous irreparable harm. Angels' customers have an expectation of privacy in the private and confidential information maintained by Angels, and Angels alleges that its customers and Care Providers are concerned about the status of their personal health information and any potential unauthorized dissemination to another entity.
While the Court acknowledges that certain aspects of damages in this action are calculable based upon loss of sales, the Court further determines that the use of confidential information in the context presented poses additional concerns and agrees with Plaintiff that the dissemination of such information places Plaintiff at risk for loss of confidence and goodwill from its Customers and Care Providers. It is undisputed that at some of the Individual Defendants used Angels' Customer Files while employed by Angels to solicit for a different entity, AAHC. Irreparable harm is demonstrated.
Balancing of the Equities
"[T]he ‘balancing of the equities' usually simply requires the court to look to the relative prejudice to each party accruing from a grant or a denial of the requested relief." Ma v. Lien, 198 A.D.2d 186,186–87 (1st Dept.1993), lv to app dismissed 83 N.Y.2d 847 (1994). In so doing, a court must balance the relative hardship suffered by the parties in the event the relief is granted. See Rockland Dev. Assoc. v. Village of Hillburn, 172 A.D.2d 978, 979 (3d Dept.1991).
Here, the harm to Plaintiff and its reputation emanating from the transfer and/or use of confidential information to or by another entity outweighs any inconvenience to Defendants. Moreover, as noted by Plaintiff, if Defendants are not using the information as they contend, the preliminary injunction will not cause them any harm.
Likelihood of Success
Plaintiff must also establish a likelihood of success. "[A] likelihood of ultimate success must not be equated with a final determination on the merits." Times Square Books, Inc. v. City of Rochester, 223 A.D.2d 270, 278 (4th Dept.1996). A likelihood of success does, however, require demonstration of a prima facie case. See Invar Intern., Inc. v. Zorlu Enerji Elektrik Uretim Anonim Sirketi, 86 AD3d 404, 405 (1st Dept.2011). "To sustain its burden of demonstrating a likelihood of success on the merits, the movant must demonstrate a clear right to relief which is plain from the undisputed facts." Related Prop., Inc. v. Town Bd. of Town/Village of Harrison, 22 AD3d 587, 590 (2d Dept.2005).
It is undisputed that this is not a situation covered by restrictive covenants set forth in employment agreements.
"It is fundamental that absent a restrictive covenant not to compete, an employee is free to compete with his or her former employer unless trade secrets are involved or fraudulent methods are employed." Walter Karl, Inc. v. Wood, 137 A.D.2d 22, 27 (2d Dept.1988). See also, Aklpha Funding Group, Inc. v. Aspen Funding LLC, 17 Misc.3d 1126(A), *3 *Sup.Ct. Kings Co.2007). "In general, an employee may solicit an employer's customers only when the employment relationship has been terminated." Island Sports Physical Therapy v. Burns, 84 AD3d 878, 878 (2d Dept.2011). " ‘Further, [s]olicitation of an entity's customers by a former employee or independent contractor is not actionable unless the customer list could be considered a trade secret, or there was wrongful conduct by the employee or independent contractor, such as physically taking or copying files or using confidential information .’ " Id. (citation omitted). "[T]rade secret protection attaches to customer lists where such customers are readily ascertainable from sources outside the former employee's business ... unless the employee has engaged in an act such as stealing or memorizing his employer's customer lists." Walter Karl, Inc., 137 A.D.2d at 27.
Moreover, an active employee may prepare to compete-even in secret-prior to his departure, provided that he does not use his employer's time, facilities or proprietary secrets to do so. Id. at 28. Where the allegations of trade secrets and misappropriation or copying are sharply refuted by Defendants and issues of fact are created, a movant will not be entitled to a preliminary injunction. See Pearlgreen Corp. v. Yau Chi Chu, 8 AD3d 460, 461 (2d Dept.2004).
"[A] trade secret must first of all be secret ...". Ashland Management Inc. v. Janien, 82 N.Y.2d 395,407 (1993). Regarding the disclosure of trade secrets, the Fourth Department Appellate Division has stated:
[I]t is the utilization of confidential information constituting a breach of trust, and not the mere knowledge of a business's intricacies, which is prohibited ... [A]bsent any wrongdoing * * * [an employee] should [not] be prohibited from utilizing his knowledge and talents in [his] area [of expertise]....
Accent Stripe, Inc. v. Taylor, 204 A.D.2d 1054, 1055 (4th Dept.1994) (citations omitted). See also, Newco Waste Systems, Inc. v. Swartzenberg, 125 A.D.2d 1004 (4th Dept.1986). The Court of Appeals has addressed the definition of a trade secret:
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 by this and other courts (citations omitted). It defines a 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." The Restatement suggests that in deciding a trade secret claim several factors should be considered:
"(1) The extent to which the information is known outside of [the] business; (2) the extent to which it is known by employees and others involved in [the] business; (3) the extent of measures taken by [the business] to guard the secrecy of the information; (4) the value of the information to [the business] and [its] competitors; (5) the amount of effort or money expended by [the business] in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others" [ Restatement of Torts § 757, comment b ).
As these considerations demonstrate, a trade secret must first of all be secret: whether it is is generally a question of fact.
Ashland Management, 82 N.Y.2d at 407 (citations omitted). See also, Mann ex rel. Akst v. Cooper Tire Co., 33 A.D.23d 24, 31 (1st Dept.2006)(conclusory assertion of trade secret status insufficient). "In order to receive trade secret protection, plaintiff must allege that it employed precautionary measures to protect the allegedly exclusive knowledge of the process at issue." Midsummer Fin. Prod., Inc. v. Rapid Filing Serv. LLC, 14 Misc.3d 1209(A), *2 (Sup.Ct. N.Y. Co.2006).
"[T]he gravamen of a claim of unfair competition is the bad faith misappropriation of a commercial advantage belonging to another by infringement or dilution of a trademark of trade name or by exploitation of proprietary information or trade secrets." Eagle Comtronics, Inc. v. Pico Prod., Inc., 256 A.D.2d 1202, 1203 (4th Dept.1998). A customer list will be treated as a trade secret where the names and addresses of the customer are "not readily known in the trade" or are "discoverable only through effort." Stanley Tulchin Associates, Inc. v. Vignola, 186 A.D.2d 183 (2d Dept.1992). "Generally, where the customers are readily ascertainable outside the employer's business as prospective users or consumers of the employer's services or products, trade secret protection will not attach...." Leo Silfin, Inc. v. Cream, 29 N.Y.2d 387, 392 (1972).
Even where trade secret protection does not attach, " ‘[i]f there has been a physical taking or studied copying, the court may in a proper case enjoin solicitation, not necessarily as a violation of a trade secret, but as an egregious breach of trust and confidence while in Plaintiffs' service.’ " Marcone APW, LLC v. Servall Co., 85 AD3d 1693, 1695 (4th Dept.2011), quoting Leo Silfin, 29 N.Y.2d at 391–92. "[C]onfidential information not amounting to a trade secret may be protected from pirating and subsequent use under common law theories of unfair competition. To qualify for such protection, the confidential and/or proprietary material at issue must have been garnered by the Defendant by way of tortious, criminal or other wrongful conduct." First Mfg. Co., Inc. v. Young, 45 Misc.3d 1214(A), *4 (Sup.Ct. Suffolk Co.2014), citing Marcone, 85 AD3d at 1694–96.
Where the information at issue includes customer names, social security numbers, and similar information, such information is not readily available to the public. See Alpha Funding Group, 17 Misc.3d 1126(A), at *5. The information at issue in the case at bar is confidential in nature. While the Court agrees with Defendants and concedes it does not achieve trade secret status as it is provided by and held by third-parties, the information is nevertheless confidential and, as Altieri states, "subject to protection from improper disclosure." Affidavit of Marco Altieri, ¶¶ 27–28.
Consequently, the inquiry is whether Plaintiff has established a likelihood of success as to Defendants' alleged wrongful taking of the proprietary information at issue. Through the Affidavit of Andrew Wegman, it is alleged that approximately fifty Referral Files were backlogged between August 2015 and late September 2015. See Affidavit of Andrew Wegman, sworn October 20, 2015, ¶ 40. Wegman states that the backlog was caused by Altieri's failure to review the files with Faye Sugar. See id. Wegman states that the Referral Files were in Sugar's office in late September 2015, but that Sugar discovered some were missing in early October 2015. Moreover, he alleges that the remaining files were removed from Sugar's office between October 9, 2015 and October 12, 2015. See id. at ¶¶ 41–44. The basis for Wegman's personal knowledge of the Referral Files is not stated.
Plaintiff also submits the Affidavit of Faye Sugar, described in the affidavit as David J. Wegman's personal assistant. Sugar's Affidavit reiterates the allegations contained in the Andrew Wegman Affidavit and states that by October 13, 2015, all of the Referral Files were gone from Angels' premises. See Affidavit of Faye Sugar, sworn October 20, 2015, ¶¶ 4–9. Sugar also states that she last met with Altieri on the Referral Files in late August. See id. at ¶ 4.
In reply, Plaintiff submits an additional affidavit from Sugar, wherein she describes herself as Altieri's administrative assistant from March 2015 through October 13, 2015. In reply, Sugar states that Altieri possessed a large accordion folder with alphabetical dividers. Sugar states that Referral Files that were rejected by Angels were placed in the accordion folder. See Affidavit of Faye Sugar, sworn on November 16, 2015, ¶ 9. Sugar states that she was never instructed to destroy or shred any Referral Files. See id. at ¶ 10. Sugar further states that in the event Angels accepted a referral, after copies were made, the Referral File was placed in Altieri's accordion folder. See id. at ¶ 11. Sugar states that she noticed that when the accordion file would become full, Altieri would move certain Referral Files in his desk drawers. See id. at ¶¶ 13–14. Sugar states that she last saw the accordion file in Altieri's office in late September 2015, and that upon his resignation, she was unable to locate the accordion folder or the documents in Altieri's office or desk. See id. at ¶ ¶ 15–16.
Tiffany Harrell, administrative assistant for Altieri in January and February of 2015, similarly testifies to the use of the accordion file by Altieri, the placement of Referral Files in the accordion file, and finally also states that Altieri never instructed her to destroy or shred any Referral Files. See Affidavit of Tiffany Harrell, ¶¶ 8–10.
Altieri states that he did not remove or destroy the files and that the files were under Sugar's "exclusive care and supervision." See Marco Altieri Affidavit, ¶¶ 31, 34. Altieri states that he and Sugar reviewed files at the end of September 2015 and again in early October 2015. See id. at ¶¶ 36–37.
Also included in Plaintiff's reply papers is the Affidavit of Mary Mann, a care provider whose daughter recently became eligible for CDPAP. Mann states that her daughter was evaluated by a nurse in August 2015 and that the nurse stated that her daughter would be referred to Plaintiff. See Affidavit of Mary Mann, ¶ 2. Mann agreed with that referral. Id. Mann did not hear from Plaintiff, but in October 8, 2015, Slifer called Mann and identified herself as an employee of AAHC and stated that the file had been referred to AAHC. See id. at ¶ 3. Mann believed Slifer had her Referral File because she had contacted Mann and knew her daughter's name. See id. Mann states that when she questioned the Referral to AAHC, an entity she had not previously heard of, Slifer was evasive and "suggested that Angels had rejected" her daughter's referral and that AAHC was the second referral. See id . at ¶ 4. At oral argument, defense counsel stated that the Mann file was referred to AAHC only after Angels did not act on the referral. The Court notes that Altieri was responsible for reviewing the Referral Files and that, had the Referral Files been reviewed in late September or early October, as alleged by Altieri, presumably the Mann file would have been reviewed.
Andrew Wegman further states that while he was on vacation in August 2015, Defendant Garvey directed Taras Feszczyszyn and Yashira Rodrigues, employees of Angels, to copy all of Angels' employee files, including the Care Provider Files. See Affidavit of Andrew Wegman, sworn October 20, 2015, ¶¶ 45–46. Without his knowledge, Andrew Wegman alleges Garvey directed Angels' employees to mail copies of the Care Provider files to each Care Provider under the alleged guise of confirming the accuracy of the records. See id. at ¶ 47. Andrew Wegman contends that this was actually done so that each Care Provider could than provide that file to AAHC, and thus enable the Care Provider to continue providing care services to Angels' customers without interruption. See id. Finally, Wegman alleges that during that same time frame, Altieri and/or Garvey caused Angels to hire at least three temporary employees to copy "upon information and belief" Angels' hard copy file, including "potentially" the Customer Files and Care Provider Files. See id. at ¶ 48.
Taras Feszczyszyn, general clerk for Plaintiff, submits an affidavit wherein he states that he was asked by Garvey to copy all of Angels' employee files, including the Care Provider files. See Affidavit of Taras Feszczyszyn, sworn October 20, 2015, at ¶ 3. He further states that temporary employees were hired to copy Angels' hard copy files. See id. at ¶ 4. Yashira Rodriguez swears similarly, and further states that she was terminated shortly after questioning the practice and raising concerns about confidentiality. See Affidavit of Yashira Rodriguez, sworn October 20, 2015, ¶ 2.
In opposition, Altieri states that the temporary employees hired did not copy Customer Files or Customer Information and that he did not take and does not possess any of Plaintiff's Customer Files. See Affidavit of Marco Altieri, ¶¶ 41–42. As to the copying of the Care Provider files, Altieri states that all direct care workers' files were copied and that this was done as a cost-cutting measure because the use of a third-party vendor to obtain and maintain the Care Provider medical documentation was a significant cost. See id. at ¶¶ 47–48. Altieri states that the records were sent to the Care Providers to confirm their accuracy and current status. See id. at ¶¶ 50–51.
In reply, Wegman states that responsibility to maintain the personnel records cannot be shifted to the Care Providers; Angels was nonetheless required by regulation to monitor the status of the Care Provider and to properly maintain records and files related to the Care Provider. See Affidavit of Andrew Wegman, sworn November 16, 2015, ¶¶ 24–26.
Andrew Wegman also recounts that Feszczyszyn entered Altieri's office in the early morning in August 2015 and observed Defendant O'Brien in Altieri's office, accessing the internal components of Altieri's desktop computer. See Affidavit of Andrew Wegman, sworn October 20, 2015, ¶ 49. Wegman states that Angels has not been able to locate Altieri's computer, and that the computer left behind by Altieri is not the computer used in his work at Angels. See id. at ¶ 50. It is alleged that Altieri's missing computer contained confidential information belonging to Angels. See id. at ¶ 51. Feszczyszyn also submits an Affidavit, stating that it appeared that in late August 2015 O'Brien was removing and replacing Altieri's hard drive and not fixing the power supply, as he said. See Affidavit of Taras Feszczyszyn, ¶ 5. He states that he has not been able to locate the computer Altieri used since Altieri left. See id. at ¶ 6.
Altieri avers that O'Brien did not remove or replace his hard drive. See Affidavit of Marco Altieri, ¶ 54. Altieri states that his desktop computer was having operational issues in May 2015, and O'Brien had made attempts to make the computer operational. See id. at ¶ 56. Altieri states that the efforts were unsuccessful and a new (black) computer was purchased in June 2015. See id. at ¶ 57. Altieri states that he directed O'Brien to take the old computer to a vendor, POD Computers, to be destroyed in June 2015, after the computer was backed up to Plaintiff's server. See id. at ¶ 59. Altieri states that O'Brien was not observed accessing the grey computer in August, 2015, because the computer had been disposed of by then. See id. at ¶ 61.
Plaintiff also contends that prior to October 13, 2015, one or more of the Individual Defendants and/or AAHC used the personal and confidential information in the Care Provider Files and Customer Files to solicit Angels' existing Customers and Care Providers to transition to AAHC. See Affidavit of Andrew Wegman, sworn October 20, 2015, ¶ 52. It is further alleged that the information has been used since October 13, 2015 and that information in Referral Files has also been used by Defendants both before and after October 13, 2015. See id. at ¶¶ 52–53. Since October 7, 2015, Plaintiff has received ten notices from existing customers indicating that they are transitioning to another care service agency, and Plaintiff believes they are transitioning to AAHC. See id. at ¶ 57.
Altieri responds, stating that he did not take, copy or study the Care Provider Files, Customer Files, or Referral Files. See Affidavit of Marco Altieri, ¶ 66. Rather, Altieri states that he has made solicitations only after he terminated his employment and only based upon personal relationships he has with the individuals solicited and casual memory. See id. at ¶ 67. Altieri states that he has not made any false statements about Plaintiff. Likewise, the other Defendants have also signed sworn Affidavits averring that to the extent any solicitation has occurred, it did not occur until after their employment with Angels ended. See Affidavit of Sean O'Brien, ¶ 10; Affidavit of Jaidy Rosario–Delgado, ¶ 10; Affidavit of Daniela Rosario–Delgado, ¶ 10; Affidavit of Molly Slifer, ¶ 10; Affidavit of Beyri Payamps–Delgado, ¶ 10; Affidavit of Thomas Hanna, ¶¶ 9–10, 29, 37, 47.
Finally, Wegman notes that Altieri approached Feszczyszyn on October 8, 2015 and requested to see his cellular phone and then proceeded to delete all the text messages between them stored on the phone. See Affidavit of Andrew Wegman, sworn October 20, 2015, ¶ 58. Feszczyszyn avers that when he questioned why Altieri deleted the messages, Altieri allegedly referenced Watergate, stated that he did not want anyone knowing what he asked him to do, and suggested he take the following week off of work. See Affidavit of Taras Feszczyszyn, ¶ 7. Altieri responds and acknowledges that he deleted the messages, but states that the message did not relate to this litigation. See Affidavit of Marco Altieri, ¶ 76.
The Court has read and considered all of the submission made by both parties. After thorough review of those submission, it is the Court's determination that Plaintiff establishes a likelihood of success on the breach of fiduciary duty, unfair competition, and tortious interference claims as to the Referral Files. Both Sugar and Harrell explain the Referral File process and the disappearance of those files. The Mann affidavit demonstrates what occurred to at least one of the Referral Files. The Court notes that at oral argument, defense counsel argued that AAHC received the Mann referral because Plaintiff had failed to act on it. Even if this is accurate, it is undisputed that it was Altieri's responsibility at Angels to act on the referrals. Altieri did not do so, and one way or another (discovery will no doubt shed further light), the Mann Referral File ended up with AAHC instead of Angels. A preliminary injunction is granted as to the Referral Files as follows: Defendants are enjoined from possessing, disclosing, reproducing, disseminating, destroying, or using the Referral Files in any respect and are further enjoined from soliciting or, contacting, or servicing the subject Referral Files. Plaintiff shall provide Defendants with a copy of the Referral List by 5 p.m. on November 30, 2015. Defendants will then have until 5 p.m. on December 2, 2015 to advise Plaintiff and the Court which of the individuals listed on the Referral List are being or have been solicited and/or serviced by Defendants through AAHC. See Marcone APW, LLC, 85 AD3d at 1695.
As to the Customer Files, the application for a preliminary injunction is granted in part as set forth infra. Plaintiff submits the Affidavit of Margy Mattison, the legal guardian of two sons participating in CDPAP and customers of Angels. Mattison avers that Altieri called her on October 8, 2015 and stated that he was leaving Angels and opening a new business. See Affidavit of Margy Mattison, ¶ 3. Mattison was told that he was taking some good employees with him and asked her to switch from Angels to AAHC. See id. Mattison states that Altieri assured her that the transition would be smooth, that the Care Providers would receive a pay increase, and the care for her sons would be uninterrupted. See id. at ¶ 4.
Plaintiff submits the Affidavit of Rebecca Starling–Jones, a care provider for her parents who participate in CDPAP. Starling–Jones avers that she was contacted by Altieri in late September or early October to ask if she would switch to a new financial intermediary company. See Affidavit of Rebecca Starling–Jones, ¶ 3. She states that Altieri told her "everything was unsettled and ‘on the QT’ because he was still at Angels, but that he was contacting potential new customers for the new business." See id. She further states that she was told the transition would be simple and seamless. See id. at ¶ 4.
Wendy Stolte submits an affidavit, stating that she is a current participant in CDPAP, and O'Brien came to her house on October 5, 2015, under the auspice of discussing Angels and scheduling issues. See Affidavit of Wendy Stolte, ¶ 3. However, upon arriving, O'Brien gave her a folder of information about a new company he was joining shortly and requested that she switch. See id. O'Brien assured her that the transition with her Care Providers would be very smooth and there would be no disruption in her care. See id. at ¶ 4.
Plaintiff further presents evidence that on October 8, and 9, 2015, Angels received notification that six customers elected to discontinue services and were starting with another agency on October 11, and 14, 2015. See Affidavit of Tori Bryant, ¶ 2. Altieri told Bryant to return the discontinuation notices to Sugar and that they must have been a mistake that he would take care of correcting. See id. at ¶ 3. See also, Affidavit of Faye Sugar dated November 16, 2015, ¶¶ 17–21.
The Court finds that Plaintiff has established a likelihood of success on the merits as to misappropriation of the Customer Files based upon the evidence presented to the Court, and thus establishes a likelihood of success on the breach of fiduciary duty and unfair competition claims. The Individual Defendants signed sworn Affidavits averring that to the extent any solicitation has occurred, it did not occur until after their employment with Angels ended. See Affidavit of Sean O'Brien, ¶ 10; Affidavit of Jaidy Rosario–Delgado, ¶ 10; Affidavit of Daniela Rosario–Delgado, ¶ 10; Affidavit of Molly Slifer, ¶ 10; Affidavit of Beyri Payamps–Delgado, ¶ 10; Affidavit of Marco Altieri, ¶ 67; Affidavit of Thomas Hanna, ¶¶ 9–10, 29, 37, 47. Both the evidence presented to the Court and defense counsel's admission at oral argument reveal that at least some of the Individual Defendants, despite their sworn statements to the contrary, did in fact solicit Angels' customers for AAHC while still employed by Angels and drawing a paycheck from Angels. Accordingly, a preliminary injunction as to the Customer File is granted as follows: Defendants are enjoined from possessing, disclosing, reproducing, disseminating, destroying, or using the Customer Files in any respect and are further enjoined from soliciting or, contacting, or servicing the subject of those files except to the extent that Defendants can demonstrate that they personally brought the customer to Angels (for instance, as alleged by Altieri in his affidavit at paragraph 12). See Marcone APW, LLC, 85 AD3d at 1695. To be clear, as Defendants have requested clarification, unless Defendants can establish that they personally brought the customer to Angels, Defendants are prohibited from soliciting, contacting, or servicing any of the subjects of the Customer Files. As to the Care Provider Files and all other issues, the application is denied and discovery shall commence and proceed in an expedited manner.
Defendants request that the Court reject Plaintiff's reply papers. " ‘[T]he function of a reply affidavit is to address arguments made in opposition to the position taken by the movant and not to permit the movant to introduce new arguments in support of the motion.’ " Lumbermens Mut. Cas. Co. v. Morse Shoe Co., 218 A.D.2d 624, 625–26 (1st Dept.1995), quoting Lazar v. Nico Indus., 128 A.D.2d 408, 409–10 (1st Dept.1987). See also, Bulluck v. Fields, 132 AD3d 1382 (4th Dept.2015) (stating that contentions raised for the first time in reply papers are properly not considered). The Court disagrees with Defendants' argument. The affidavits submitted by Plaintiff in reply directly responded to the sworn statements made by Defendants in opposition to the application pending before the Court and the issues addressed in the reply affidavits were already squarely before the Court by virtue of the original moving papers. See Gumbs v. Flushing Town Ctr. III, L.P., 114 AD3d 573, 576 (1st Dept.2014). Plaintiff's reply papers seek to rebut the claims made by Defendants in their opposing affidavits. It is not an error for a Court to consider evidence presented in reply papers where the evidence is "submitted in direct response to allegations raised" in opposition papers. See Conte v. Frelen Assoc., LLC, 51 AD3d 620, 621 (2d Dept.2008). Indeed, the Court notes again that defense counsel expressly acknowledged that at least one of the Defendants who submitted a sworn denial of any solicitation for AAHC while working for Angels was indeed engaging in such solicitation, as demonstrated by the reply affidavit submitted to the Court.
CPLR 6312(b) states, in relevant part:
[P]rior to the granting of a preliminary injunction, the plaintiff shall give an undertaking in an amount to be fixed by the court, that the plaintiff, if it is finally determined that he or she was not entitled to an injunction, will pay to the defendant all damages and costs which may be sustained by reason of the injunction....
Taking into consideration the circumstances presented to the Court, the Court sets the required undertaking at $50,000.
Signed at Rochester, New York this 25th day of November, 2015.