BakeMark LLC v. Negron

Full title: BAKEMARK USA LLC, Plaintiff, v. BRIAN NEGRON, et al., Defendants.

Court: United States District Court, S.D. New York

Date published: Jul 12, 2024

23-CV-2360 (AT) (BCM) (S.D.N.Y. Jul. 12, 2024)

Opinion

23-CV-2360 (AT) (BCM)

07-12-2024

BAKEMARK USA LLC, Plaintiff, v. BRIAN NEGRON, et al., Defendants.

BARBARA MOSES, United States Magistrate Judge.

REPORT AND RECOMMENDATION TO THE HON. ANALISA TORRES

BARBARA MOSES, United States Magistrate Judge.

Now before me for report and recommendation is a motion by plaintiff BakeMark USA LLC (BakeMark), a baking products distributor, for a preliminary injunction against former BakeMark employees Brian Negron (Brian) and Jose Negron Jr. (Jose Jr.) (together, the Negron Brothers or the Individual Defendants) and JB Freight LLC (JB Freight), which is wholly-owned and operated by Brian. BakeMark claims that the Negron Brothers misappropriated its trade secrets and confidential information, surreptitiously set up their own baking products distribution business (of which JB Freight is a part) in direct competition with BakeMark, and successfully solicited BakeMark employees and customers on behalf of that competing business. BakeMark further contends that they did these things while still employed at BakeMark or within one year after their resignations, during which period they were contractually prohibited from competing or soliciting.

After reviewing the parties' extensive written submissions and conducting an evidentiary hearing, I conclude that plaintiff will likely prevail on the merits of one or more of its claims against Brian Negron and JB Freight. However, BakeMark did not seek injunctive relief of any sort until March 20, 2023, which was nine months after suspicions about the Negron Brothers' activities first arose and more than four months after a BakeMark employee provided compelling evidence - including photographs - that Brian was operating a rival baking products distribution business through JB Freight and its affiliate Bakers Depot, LLC (Bakers Depot), employing former BakeMark workers, and selling to former BakeMark customers. For this reason - and because of BakeMark's strong position and lengthy tenure in the national baking products distribution market, which will likely permit it to quantify its damages - I conclude that BakeMark has failed to show that it would be irreparably injured in the absence of a preliminary injunction. Consequently, I recommend that its motion be denied.¹

1 As discussed in more detail below, Bakers Depot (which, like JB Freight, is wholly owned and operated by Brian Negron) was named as a defendant in this action but has filed a petition under Chapter 11 of the Bankruptcy Code and is protected by the automatic bankruptcy stay. Consequently, I make no recommendations as to Bakers Depot.

I. PROCEDURAL HISTORY

Plaintiff filed its Complaint (Compl.) (Dkt. 1) on March 20, 2023, along with a proposed Order to Show Cause (Dkt. 8) and supporting motion papers (Dkts. 9-15), seeking a temporary restraining order (TRO), a preliminary injunction, and expedited discovery.² The Complaint names four defendants - the Negron Brothers, JB Freight (originally sued as NF Transportation, LLC, which was only briefly its name), and Bakers Depot - and asserts claims for breach of contract, breach of the covenant of good faith and fair dealing, misappropriation of trade secrets under the Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836 et seq., and under New York common law, breach of the duty of loyalty, unjust enrichment, and tortious interference with prospective business relationships and with contract. Compl. ¶¶ 9, 109-204. Because plaintiff intends to "pursue claims in arbitration for damages," id. ¶ 1, it seeks only injunctive relief and attorneys' fees in this Court. Id. ¶¶ 9, 123, 135, 149, 160, 181, 192.³

2 Some of the documents filed in this action describe the trade secrets and other confidential information that plaintiff seeks to protect, and consequently were filed in redacted form on the public docket, accompanied by unredacted versions filed under seal. The docket citations provided in this Report and Recommendation are to the publicly-filed documents.

3 The Negron Brothers signed identical Arbitration Agreements with BakeMark. Compl. ¶¶ 38, 57. Those agreements permit BakeMark to seek "provisional remedies in court in aid of arbitration including temporary restraining orders, preliminary injunctions, and other provisional remedies." Id. ¶ 58. BakeMark states that it will prove its damages case in arbitration. Id. ¶¶ 1, 106, 122.

On March 22, 2023, the Hon. Analisa Torres, United States District Judge, issued an Order to Show Cause (OSC) (Dkt. 25), in which she also directed the parties to work out a schedule for expedited discovery, but declined to issue a TRO. After granting several extensions, the District Judge required all expedited discovery to be concluded by June 1, 2023, with final briefing on the preliminary injunction motion due June 12, 2023. (See Dkts. 34, 38, 41, 54, 62.) On May 10, 2023, the District Judge referred the case to me for general pretrial management (Dkt. 48), and on May 12, 2023, I resolved several discovery disputes and ordered, among other things, that defendants produce additional documents. (Dkt. 50.)

On June 26, 2023 - after briefing concluded - the District Judge determined that certain contested issues of fact required an evidentiary hearing (Dkt. 83), and expanded my reference to include that hearing, as well as a report and recommendation on the preliminary injunction motion. (Dkt. 84.) The hearing was originally scheduled for August 7, 2023 (see Dkt. 85), but in light of the number of witnesses listed by both sides, it was adjourned to Monday, August 28, to be continued on Tuesday, August 29, 2023, if necessary. (See Dkt. 94.) On August 17, 2023, the parties filed a joint stipulation of undisputed facts (Joint Stip.) (Dkt. 95).

At 4:50 p.m. on Friday, August 25, 2023, Bakers Depot filed for bankruptcy protection in the District of New Jersey. See Pet. (Dkt. 1), In re Bakers Depot LLC, 23-BR-17425-VFP (Bankr. D.N.J. Aug. 25, 2023). Defendants then requested that the evidentiary hearing in this Court be adjourned again - as to all four defendants - to avoid "touching on or affecting Bakers Depot's reorganization efforts that are protected by the automatic stay." (Dkt. 98 at 1.) Plaintiff opposed the adjournment request (Dkt. 99), and I denied it on Monday morning, August 28, 2023, at the start of the hearing. See Tr. of Prelim. Inj. Hr'g (Tr.) (Dkts. 108-1, 108-2) at 2:14-14:4.⁴ The hearing then proceeded as to the three non-debtor defendants. On September 1, 2023, plaintiff filed its post-hearing proposed findings of fact (Pl. Prop. Findings) (Dkt. 100), and on September 6, 2023, defendants filed their own proposed findings (Def. Prop. Findings) (Dkt. 103).⁵

4 The hearing transcript is consecutively paginated across Dkts. 108-1 and 108-2.

5 Except where the context requires a different reading, the term "defendants," as used in the remainder of this Report and Recommendation, means the Negron Brothers and JB Freight.

On September 26, 2023, Bakers Depot initiated an adversary proceeding in the Bankruptcy Court against BakeMark, arguing that the trade secrets at issue in this case (referred to as the "District Court Action"), including customer and pricing information, "are the property of the Debtor's estate," rather than the property of BakeMark, and therefore that 11 U.S.C. § 362 (the automatic stay provision of the Bankruptcy Code) "prohibits the continuation by BakeMark of the District Court Action, because the District Court Action implicates property of the Debtor's estate." Ver. Compl. (Dkt. 1) ¶¶ 2-3, Bakers Depot LLC v. Bakemark USA LLC, Adv. Proc. No. 23-01256 (hereafter Bakers Depot v. Bakemark) (Bankr. D.N.J. Sept. 26, 2023). On October 3, 2023, the Hon. Stacy L. Meisel, United States Bankruptcy Judge, temporarily restrained BakeMark, pending a hearing, from "continuing to prosecute the District Court Action or commencing an arbitration against the Debtor[.]" (Dkt. 4, Bakers Depot v. Bakemark.) On November 14, 2023, after a two-day hearing, Judge Meisel denied the debtor's preliminary injunction motion, concluding that, although "the automatic stay imposed by Section 362(a) of the Bankruptcy Code remains in place as to the Debtor," it is "not applicable as to the non-debtor defendants in the District Court Action." (Dkt. 22 ¶ 3, Bakers Depot v. Bakemark.) "Therefore," the Bankruptcy Judge concluded, this action "is not stayed as to any non-debtor defendants." (Id.)

II. FACTS

A. The Sidco Acquisition

Plaintiff BakeMark "manufactures and sells baking products, ingredients, and supplies to customers throughout the continental United States and Canada." Joint Stip. ¶ 1. Its corporate headquarters are in Pico Rivera, California. See Tr. at 207:19-24 (Afonso); Hrg. Ex. P-5 (Brian Emp. Ag.) ¶ 10. On April 2, 2021, BakeMark acquired the assets of Sidco Food Distribution Corp. (Sidco), a smaller, New York-based distributor of baking ingredients, which operated out of leased premises on Bathgate Avenue in the Bronx. Joint Stip. ¶¶ 6-8, 12; see also Hrg. Ex. P-17 (Asset Purchase Ag.). Sidco was owned by Jose Negron Sr. and Wilma Negron, the parents of the Individual Defendants. Joint Stip. ¶ 9; Hrg. Ex. P-16 (Allen Aff.) ¶ 5; Asset Purchase Ag. at 1. Among the assets conveyed to BakeMark were Sidco's inventory; accounts and notes receivable; furniture, fixtures, and equipment; vehicles, trucks, and trailers (with specified exceptions); "all information" regarding Sidco's vendors, suppliers, accounts, and customers; the Sidco names and marks; "all goodwill related to such names," and all of Sidco's "general intangibles," including "trade secrets" and "confidential information." Asset Purchase Ag. ¶¶ 1.1-1.4. Additionally, BakeMark acquired the lease to the Bathgate Avenue premises, id. ¶ 1.5, which became BakeMark's Bronx Warehouse. Joint Stip. ¶ 8. For BakeMark, Sidco's established customer base, consisting primarily of "mom and pop bakeries within the greater New York City area," Hrg. Ex. D-7 (Brian Decl.) ¶ 2, was a "key driver" of the acquisition. Allen Aff. ¶ 6.

At the time of the acquisition, Brian Negron was Sidco's Vice President of Sales, and Jose Negron Jr. was Vice President of Operations. Joint Stip. ¶¶ 9, 11. After the acquisition, Brian and Jose Jr. became the General Manager and Associate General Manager, respectively, of BakeMark's Bronx Warehouse. Id. ¶¶ 1, 13-15. Their job responsibilities covered New York City, New Jersey, Pennsylvania, and Connecticut. Id. ¶ 18.

Many other Sidco employees also made the transition to BakeMark, see Hrg. Ex. P-223 (Brian Dep. Tr.) at 135:21-23, including, as relevant here, Matthew Blauvelt, Xiomara Silva, and Betania Matias. Blauvelt, who was a "good friend" of Brian's, was a buyer at Sidco, where he "would handle all the freight," and became a corporate buyer at BakeMark, with the title Regional Procurement Manager. Tr. at 62:19-20 (Brian); id. at 228:1-8 (Afonso); Brian Dep. Tr. at 239:78; Hrg. Ex. P-161 (Blauvelt email). Silva, who reported to Brian while at Sidco, became the Office Supervisor of the Bronx Warehouse, where she continued reporting to Brian. Joint Stip. ¶¶ 50-51. Matias, who also reported to Brian while at Sidco, became a BakeMark customer service representative, id. ¶ 56, and then a buyer. Tr. at 290:3-4 (Matias).⁶BakeMark also hired Sidco's truck drivers and truck helpers, including Alfredo de Aza Pena, Dionisio Minaya, Paul Ravelo Pichardo, and Rudy Reynoso. Joint Stip. ¶¶ 60-62, 64, 66. Both before and after the acquisition, the drivers and helpers reported to Jose Jr. Id. ¶ 67.

6 As a BakeMark customer service representative, Matias continued reporting to Brian. Joint Stip. ¶ 56; Tr. at 288:23-289:4 (Matias). Once she became a buyer, she reported to Blauvelt. Tr. at 290:13-17 (Matias).

B. The Negron Brothers' Contracts

In addition to their Arbitration Agreements (Hrg. Exs. P-7, P-8), the Negron Brothers entered into identical Employment Agreements and identical (appended) Non-Compete Agreements with BakeMark. Joint Stip. ¶¶ 21-26. The Employment Agreements prohibit them from disclosing BakeMark's Confidential Information without plaintiff's consent or making any use of it for their own purposes. Joint Stip. ¶¶ 11-12; Brian Emp. Ag. § 11; Hrg. Ex. P-6 (Jose Jr. Emp. Ag.) § 11. "Confidential Information" means "information or material that is commercially valuable to BakeMark and not generally known in the industry," including "the identities of past and present clients, customers, vendors and suppliers of [BakeMark] as well as potential clients, customers, vendors and suppliers to which [BakeMark had] made oral or written proposals for business" within the 24 months preceding the signatory's termination date. Joint Stip. ¶¶ 22-23; Emp. Ags. § 7(b).

The Non-Compete Agreements specify that the Negron Brothers' confidentiality obligations apply "at all times during employment with [BakeMark] and for a period of one (1) year[] thereafter, unless such information qualifies as a trade secret, in which case the foregoing obligation shall continue for so long as the trade secret remains protected under applicable law." Joint Stip. ¶ 27; Hrg. Ex. P-5 (Brian Non-Compete Ag.) § 4(a); Hrg. Ex. P-6 (Jose Jr. Non-Compete Ag.) § 4(a). Additionally, sections 6, 7, and 8 of the Non-Compete Agreements prohibit the Negron Brothers, during their BakeMark employment and for one year afterwards, from competing with BakeMark, soliciting its customers, or hiring its employees within "the Territory," meaning New York, New Jersey, Pennsylvania, Connecticut, New York City, Rhode Island, and Massachusetts. See Joint Stip. ¶¶ 31-33; Non-Compete Ags. § 6(d). Specifically, Brian and Jose Jr. agreed that during that period they would not, directly or indirectly:

• "[O]wn, manage, operate, join, control, be employed by or with, or participate in any manner with a Competing Business anywhere in the Territory where doing so will require Employee to engage in Competitive Activities or provide Competitive Products or Services." Non-Compete Ags. § 6.⁷

• "[S]olicit, call upon, or contact any Restricted Customers . . . for the purpose of providing any Competitive Products or Services," "contract with, sell to, or perform services for Restricted Customers," regardless of who solicited whom, "in connection with Competitive Products or Services," or "divert . . . or attempt to divert . . . [BakeMark's] business relationship with any Restricted Customers." NonCompete Ags. § 7(a)-(c).⁸

• "[S]olicit, induce, or encourage any Restricted Employees . . . to terminate their employment or other association with [BakeMark] or to work for a Competing Business," or "hire, cause to be hired, or attempt to hire any Restricted Employees on behalf of a Competing Business." Non-Compete Ags. §§ 8(a)-(b).⁹

7 "Competing Business" means any person or entity "directly engaged in whole or relevant part in any business or enterprise that is competitive with the business conducted by [BakeMark], including the manufacturing, marketing and sale of Baking Products." Non-Compete Ags.§ 6(a). "Baking Products" means "ready-to-use icings, fillings, mixes and bases, frozen dough and batters, donut glazes, icing bases, icing and glaze stabilizers, cake frosting and related products." Id. at 1 (second whereas clause). "Competitive Activities" means "duties or responsibilities that are the same as or functionally similar to those business activities or services Employee performed or supervised on behalf of [BakeMark] within two (2) years prior to Termination." Id. § 6(b). "Competitive Products or Services" means "products or services that are competitive with Baking Products and related services offered or provided by [BakeMark] within two (2) years prior to Termination." Id. § 6(c).

8 "Restricted Customers" means "existing customers with whom [BakeMark] has conducted business within two (2) years prior to Termination and with whom during such time Employee had business-related contact or was privy to Confidential Information." Non-Compete Ags. § 7.

9 "Restricted Employees" means any BakeMark employee or independent contractor who worked for BakeMark within the two-year period preceding the termination of the signatory's employment, "and with whom during such time Employee had supervisory responsibility, work-related contact or was privy to personnel information relating to such persons' compensation, benefits, job duties or performance evaluations." Non-Compete Ags. § 8.

The Negron Brothers stipulated that these restrictions were reasonable, and that BakeMark would "suffer irreparable damage" should they violate any of them. Joint Stip. ¶¶ 35-36; NonCompete Ags. §§ 11-12. Additionally, they agreed that if they breached any of the restrictions, and if BakeMark sued, "the time period applicable to each such restriction shall be tolled and extended for a period of time equal to the period of time during which Employee is determined by a court of competent jurisdiction to be in non-compliance or breach (not to exceed twelve (12) months) commencing on the date of such determination." Joint Stip. ¶ 34; Non-Compete Ags. § 9.

On April 6, 2021, Silva and Matias also signed Non-Compete Agreements, on terms "nearly identical" to the terms set forth above. Joint Stip. ¶¶ 52, 57; see also Hrg. Ex. P-11 (Silva Non-Compete Ag.); Hrg. Ex. P-13 (Matias Non-Compete Ag.).

Brian resigned from BakeMark on September 10, 2021, Joint Stip. ¶ 37, meaning that the one-year period set forth in his Non-Compete Agreement expired - if not tolled - on September 10, 2022. Jose Jr. resigned on April 29, 2022, id. ¶ 38, meaning that the one-year period set forth in his Non-Compete Agreement expired - if not tolled - on April 29, 2023.

C. BakeMark's Confidential Information

The parties agree that during the Negron Brothers' employment with BakeMark they "had access to and became knowledgeable about some of BakeMark's confidential information," such as "current and historical client information; rate and price information for certain items sold by BakeMark; . . . and information about certain BakeMark[] sales, finances, and business, including pricing information." Joint Stip. ¶¶ 39-40. For instance, Brian and Jose Jr. had access to "PowerSell," a password-protected software system that stored BakeMark's "product, pricing, and customer information" and contained "notes about customer preferences, order histories, and quantities, including what customers buy seasonally and when BakeMark regularly reaches out to them, the types of products ordered and the frequency" of orders. Id. ¶ 42. Access to PowerSell was limited to "employees in sales positions, managers, and executives." Id. ¶ 44. The Individual Defendants also had access to another software system, known as "NDS," which "house[d] other confidential information such as BakeMark's landed costs and freight information," and was similarly limited to BakeMark employees with a need to know. Id. ¶¶ 45. Xiomara Silva and Betania Matias also had access to PowerSell and NDS. Id. ¶ 47.

While at BakeMark, Brian and Jose Jr. had supervisory authority over the other BakeMark employees at the Bronx Warehouse. Joint Stip. ¶ 19. They also had access to "employee information" for the employees at the Bronx Warehouse, "including salaries and hiring and recruiting practices." Id. ¶ 40.

D. Brian Forms JB Freight and Approves JB Freight as a BakeMark Vendor

The parties agree that Brian was still an employee of BakeMark when he founded and began operating JB Freight. Joint Stip. ¶¶ 70, 73. The business was formed on June 14, 2021, as a New Jersey LLC, see Joint Stip. ¶ 70; Hrg. Ex. D-13, and over the summer of 2021 it began providing transportation services to customers. Joint Stip. ¶¶ 74-76. JB Freight's largest customer, in its early days, was BakeMark. Id. ¶ 74; Tr. at 127:2-14 (Brian); Brian Decl. ¶ 20.¹⁰ Since at least early 2022, JB Freight has operated out of a warehouse on North Street in Teterboro, New Jersey (the Teterboro Warehouse). Joint Stip. ¶ 91; Brian Decl. ¶ 21. Brian is the sole member, manager, and registered agent of JB Freight. Joint Stip. ¶ 121.

10 Although BakeMark had its own trucks and drivers for deliveries to customers, it relied at least in part on third-party transportation vendors to bring inventory to the Bronx Warehouse. See Tr. at 110:14-111:1 (Brian); Hrg. Ex. P-4 (Afonso Decl.) ¶¶ 9-11. BakeMark also used third-party transportation vendors for outbound trips from its Burlington, New Jersey facility. See Tr. at 111:10-19 (Brian); id. at 202:24-203:2 (Afonso).

The parties disagree as to how JB Freight became a vendor to BakeMark. Brian maintains that he acted in open and transparent manner, making no effort to hide his ownership of JB Freight. According to Brian, the arrangement was intended to "fix the problem at the time that [BakeMark] had no drivers and the shortage of freight carriers," and was "a topic of discussion at the office," including with BakeMark's "regionals," which the Court understands to mean regional managers. Tr. at 88:21-89:2; see also Brian Decl. ¶ 16 ("I generally recall having conversations with people at BakeMark about me forming JB Freight"). However, Brian could not recall the names of any of the "regionals," Tr. at 88:23-24, or "the specifics of those conversations," Brian Decl. ¶ 16, and defendants adduced no other admissible evidence corroborating his testimony, which was not credible on this point.

Plaintiff, on the other hand, presented substantial evidence supporting its assertion that Brian kept his ownership of JB Freight secret from his superiors at BakeMark, using subterfuge to do so. On July 9, 2021, Blauvelt (Brian's good friend and a former Sidco employee) submitted a "Supplier Packet," including a "Vendor Add/Change/Delete Form," to BakeMark's Californiabased Procurement Manager, Bob Nash, to add JB Freight as a BakeMark vendor. In his cover email, Blauvelt falsely stated, "We have used them in the past for all our NYC pickup needs." He explained the need to add JB Freight as new vendor by stating, "I notice I did not have them carried over into the new system." Hrg. Ex. P-161 (Blauvelt email with attached forms). The Add/Change/Delete form listed Blauvelt as the "requestor" and was signed by Brian on the line for "Branch GM Approval." See id. at BAKEMARK-00005619. The Add/Change/Delete form also contained false information, giving JB Freight's address as 532 City Island Avenue, Bronx, New York. Id.¹¹The "Supplier Information" page in the Supplier Packet listed the same false address, and falsely gave the name of JB Freight's contact person as "Danny." Id. at BAKEMARK-00005614; see also Tr. at 92:9-17 (Brian, confirming that the City Island Avenue address was "[m]y accountant's office," and that there was never a JB Freight employee named "Danny"). Nash approved the "vendor add" by email that same day. Hrg. Ex. D-43.

11 JB Freight's "registered office" and "main business address," at the time, was 175 Broad Avenue, Leonia, New Jersey. Hrg. Ex. D-13. 175 Broad Avenue was Jose Jr.'s home address. Tr. at 109:1824 (Brian).

Once JB Freight became a BakeMark vendor, Brian used the email address dispatch@myjbfreight.com to communicate regarding pickups and deliveries. Joint Stip. ¶ 81. But he signed his emails to BakeMark with various false names, including "Bob," "Peter," and "Luis Antonio." Id. ¶ 82; see also Hrg. P-179 (Aug. 4, 2021 email from dispatch@myjbfreight.com to BakeMark, signed "Bob"); Hrg. Ex. P-103 (Aug. 26, 2021 email from dispatch@myjbfreight.com to BakeMark, signed "Peter"). No one with those names worked at JB Freight. See Tr. at 152:10153:18 (Jose Jr.). Asked to explain his use of false names, Brian testified at deposition that he did it "strictly as a joke," and that "the person always knew it was me." Brian Dep. Tr. at 17:6-9.¹²In fact, as discussed in Part II.G, below, BakeMark's management did not then know that JB Freight was owned and operated by Brian. In 2022, before it filed this action, BakeMark spent considerable time and money investigating Brian's connection with JB Freight.

12 Betania Matias - who previously worked for Brian at Sidco, and who later left BakeMark to work for Brian at JB Freight and Bakers Depot - testified that she was aware, while working at BakeMark, that "Brian Negron owned JB Freight." Tr. at 291:3-6. But she could not say how she learned that fact, and when she was asked who else at BakeMark knew that Brian owned JB Freight, she replied, "No one that I know." Id. at 291:7-24. Matias also knew that the "Luis Antonio" who signed a September 10, 2021 JB Freight email addressed to BakeMark, was actually Brian Negron. Id. at 292:24-25. But when asked whether "others at BakeMark knew that Brian used fake names to conduct business," Matias replied, "Not to my knowledge." Id. at 294:1-3. Defendants submitted no documentary evidence that Brian ever used false names other than when communicating with BakeMark on behalf of JB Freight.

E. Brian Forms Bakers Depot and Competes with BakeMark

Brian formed Bakers Depot on June 18, 2021 (four days after he formed JB Freight), and received an Employer Identification Number for the new company from the IRS on July 21, 2021, all while he was still employed at BakeMark. Joint Stip. ¶¶ 85, 86; Hrg. Exs. D-16, D-27. Brian formed JB Freight as a Florida LLC, listing a street address in Miami as its "principal address" and a P.O. Box in Fort Lee, New Jersey as its "mailing address." Hrg. Ex. D-16.

In his declaration, and at deposition, Brian attested that when he left BakeMark in September 2021 he made a "short-lived" move to Florida, where he "got a warehouse in Miami" and began operating Bakers Depot "around October 2021," lawfully selling baking ingredients outside of the Territory. Brian Decl. ¶ 25; Brian Dep. Tr. at 161:24-25, 178:4-15, 253:22-24, 256:11-12. However, his wife could not move with him, due to her own job. Brian Decl. ¶ 25. As a result, Brian "returned North by early 2022," though he continued "making frequent trips to Florida." Id. Knowing that his restrictive covenants would expire on September 10, 2022, Brian caused Bakers Depot to begin "acquiring product," in New Jersey, "in anticipation of its grand opening in mid-September 2022," id. ¶ 26. Brian re-formed Bakers Depot as a New Jersey LLC on September 13, 2022, listing the Teterboro Warehouse as its "registered office" and its "main business address." Brian Decl. ¶ 26; Hrg. Ex. D-17.¹³Brian is the sole member and registered agent of Bakers Depot. Joint Stip. ¶¶ 86, 121; Hrg. Exs. D-17, D-27. He obtained the capital necessary to launch JB Freight and Bakers Depot from his "previous years of working" and from the proceeds of the sale of his home in Leonia, New Jersey, in 2021. Brian Dep. at 17:23-24, 18:2124, 254:9-15; Brian Decl. ¶ 15.

13 Although Bakers Depot and JB Freight share office space in the Teterboro Warehouse, see Joint Stip. ¶ 91; Tr. at 318:20-25 (Matias), Baker's Depot is "the primary user" of the premises, and Bakers Depot pays the rent. Tr. at 60:60:5-9 (Brian).

Prior to the evidentiary hearing, Brian adamantly denied that Bakers Depot made any sales in the Territory, or contacted any Restricted Customers, until "the last two weeks of September" 2022. Brian Dep. Tr. at 298:23-299:12; see also id. at 288:5-6 ("Bakers Depot wasn't in business until late September"); Brian Decl. ¶ 26 (Bakers Depot's "first sale to any of the customers identified . . . in the complaint . . . was October 4, 2022."). However, documents produced late in discovery - together with witness testimony at the hearing - show that Brian was using Bakers Depot and JB Freight to do business in the Territory, in direct competition with BakeMark, well before September 10, 2022, and that as part of that business he solicited and made sales of Competitive Products to Restricted Customers. Bakers Depot began ordering baking products and ingredients in bulk, for delivery to the Teterboro Warehouse, as early as May 2022, four months before Brian's contractual restrictions could have expired. See Joint Stip. ¶¶ 90, 92-94; Hrg. Ex. P113 (email dated May 13, 2022, attaching bill of lading dated May 5, 2022, for delivery of cake, bread, brownie and muffin mixes to Bakers Depot in New Jersey). On June 22, 2022, Brian hired Evaristo Diaz, a former Sidco sales representative, to pursue sales for his new business. Joint Stip. ¶¶ 68-69.¹⁴ That was almost three months before Brian's restrictions could have expired. And by July 2022 - two months before those restrictions could have expired - Bakers Depot was taking and filling orders for bakery ingredients from customers throughout the Territory, including Restricted Customers.

14 Diaz retired from Sidco prior to its acquisition by BakeMark, and consequently was not a Restricted Employee. See Brian Dep. Tr. at 121:9-11. However, it is undisputed that his "primary role" at Sidco was "obtaining new business" from customers, id. at 121:23-122:4, and that he was hired to perform the same job for Bakers Depot. See id. at 299:13-16 ("Q. Who contacted [various Restricted Customers]? A. Myself and Evaristo Diaz.").

Those orders are reflected on a Bakers Depot accounts receivable report produced after expedited discovery otherwise closed. Joint Stip. ¶¶ 101-02. The report lists the company's outstanding (that is, unpaid) customer invoices as of October 31, 2022. Id. ¶ 103; Hrg. Ex. P-112 (A/R Report). Among the unpaid invoices on the report are two dating from July 2022 (for sales to Restricted Customers Thomas Star Bakery and Shivram Bakery) and 13 dating from August 2022 or the first nine days of September 2022 (for sales to Restricted Customers Thomas Star Bakery, Shivram Bakery, F&M Bakery, Vellas Cannoli, Cobblestone Bakery, Super Cakes Bakery, and Dominican Ices, among other customers). See Joint Stip. ¶ 104; A/R Report. Bakers Depot also made sales, prior to September 10, 2022, to customers that have not been identified as former BakeMark customers (and thus were not Restricted Customers), including Mandato Fruit and Grocery and Guadalupana Bakery. See A/R Report.¹⁵

15 The AR Report may not reflect all of Bakers Depot's pre-September 10, 2022 sales, because it only lists invoices that remained unpaid (or partially unpaid) as of October 31, 2022. Any invoices that were fully paid prior to that date "wouldn't be on here at all." Tr. at 123:25-124:8 (Brian).

Some of these early sales were substantial. For example, Bakers Depot made two sales to Thomas Star Bakery in July and August 2021, worth $44,125 in the aggregate. During the same period, Bakers Depot made six sales to Shivram Bakery, aggregating $17,762.40. Joint Stip. ¶ 104(a)-(b); A/R Report at DEFS0006626. At the hearing, Brian was shown the A/R Report and confirmed many of the early sales - as well as the fact that some of the customers to whom those sales were made had been BakeMark customers. See Tr. at 23:1-41:14. He then conceded, under cross-examination, that Bakers Depot was in fact "operating before the last two weeks of September, 2022." Id. at 41:20-23. Additionally, Brian acknowledged that he was "making sales of bakery products to customers, some of whom had been Sidco and BakeMark customers before the termination of [his] noncompete." Id. at 42:11-14.

F. Brian Hires Silva, Matias, Jose Jr., and Other BakeMark Employees

Brian relied on former BakeMark employees to help him operate his new business. Xiomara Silva resigned from BakeMark as of January 24, 2022, and started work at the Teterboro Warehouse the next day. Joint Stip. ¶¶ 53-54. Brian, who hired Silva, understood that she was a Restricted Employee, as that term was used in his Non-Compete Agreement. Tr. at 95:5-10 (Brian). Silva was on the JB Freight payroll, but by June 2022 she was performing work for Bakers Depot, including communicating with Bakers Depot customers using the Bakers Depot email address purchasing@bakersusa.com. Joint Stip. ¶¶ 95-96, 100; see also Tr. at 96:11-14 (Brian, agreeing that "in the summer of 2022," Silva was "doing some work for Bakers Depot").¹⁶

16 Bakers Depot apparently had no payroll of its own. Consequently, all of the Bakers Depot employees - including Brian himself - were on the JB Freight payroll. See Hrg. Ex. P-119 (JB Freight Payroll Report). At the hearing, Carlos Afonso agreed that, "in the Negron family collection of companies, the fact that you're on the JB Freight payroll doesn't say much about who you're actually working for[.]" Tr. at 190:3-6.

One of the tasks that Silva undertook for Baker's Depot was "coordinating contact between Bakers Depot and Daisy's Bakery." Hrg. Ex. D-10 (Silva Decl.) ¶ 16. Daisy's Bakery, in Clifton, New Jersey, was a former Sidco customer that "used BakeMark" for a period of time following the Sidco acquisition, id., making it Restricted Customer. According to Silva, she did not solicit Daisy's Bakery on behalf of Bakers Depot until September 2022, when she called the Daisy's Bakery buyer, with whom she had a "good relationship" dating from her time at Sidco, to see if he was "interested in Bakers Depot's prices." Id. However, according to BakeMark sale representative Carmela Andrisani, Silva called the Daisy's Bakery buyer, Ted Tsikorski, in "early August 2022." Hrg. Ex. P-50 (Andrisani Decl.) ¶¶ 4-9.¹⁷Daisy's Bakery began doing business with Bakers Depot in October 2022. Silva Decl. ¶ 16.

17 Andrisani attests that in early August 2022, she was visiting Daisy's Bakery on behalf of BakeMark to "try to get their business back" when Tsikorski received a cellphone call from Silva. Andrisani Decl. ¶ 8. Andrisani knew it was from Silva because Tsikorski showed her the caller ID, which said "Xiomara," and told her that Xiomara was "someone who used to work at BakeMark." Id. When Tsikorski told the caller that "Carmela from BakeMark" was there, the caller quickly responded, "How about we have this conversation later?" and ended the call. Id. ¶ 9. Neither Silva nor Andrisani testified at the hearing.

Betania Matias resigned from BakeMark on October 3, 2022, and began working at the Teterboro Warehouse October 24, 2022. Joint Stip. ¶¶ 58-59. Although Matias, like Silva, was on the JB Freight payroll, see Joint Stip. ¶ 115, she was performing work for Bakers Depot by November 15, 2022, when she used the Bakers Depot email account to communicate with Daisy's Bakery about an order. Id. ¶ 110; see also Hrg. Ex. P-122 (email to Daisy's Bakery); Hrg. Exs. P123, P-124, P-125, P-142, P-204 (additional Matias emails on behalf of Bakers Depot).¹⁸At the hearing, Matias agreed that she "occasionally" performed work for Bakers Depot. Tr. at 298:4-9.

18 Initially, Matias used the email address purchasing@bakersusa.com. See, e.g., Hrg. Ex. P-123. By March 15, 2023, she had her own Bakers Depot email address: betty@bakersusa.com. See, e.g., Hrg. Ex. P-204. Matias never had her own JB Freight email address. Hrg. Tr. at 299:6-67 (Matias, explaining that she uses mydispatch@jbfreight).

As noted above, both Silva and Matias had their own Non-Compete Agreements with BakeMark. Joint Stip. ¶¶ 52, 57. Silva was not free to compete with BakeMark in the Territory, or call upon Restricted Customers, until January 25, 2023. See Silva Non-Compete ¶¶ 6, 7. Matias was not free to do so until October 3, 2023. See Matias Non-Compete ¶¶ 6, 7. At deposition, Brian testified that he knew that the salespeople at BakeMark had non-competes, and "might have assumed" that Silva and Matias did as well. Brian Dep. Tr. at 154:5-20. However, when he hired them, he did not inquire about their non-competes, because JB Freight "wasn't a competing business, so I didn't - I didn't see any liability at the time." Tr. at 96:22-97:2, 98:6-10.

Jose Jr., who displayed a remarkably fuzzy memory for dates throughout his testimony, could not remember when he started working for JB Freight, other than that it was "sometime after I left BakeMark." Tr. at 176:15-16. The JB Freight employee list produced in discovery, see JB Freight Payroll Report, gives him a hire date of May 16, 2022. Jose Jr. testified that after he left BakeMark in April 2022, he "reached out to Brian," Tr. 147:4-6, who agreed to hire him. Id. at 147:23-24. Although Jose Jr. remains on the JB Freight payroll, his work for that company is "very limited." Id. at 185:7-9. He testified:

If - you know, I'm just - sometimes the trucks would break, have problems with lift gates, they give me a call and I kind of just know how to troubleshoot some of the issues. And that's - and if they need to get repaired, I send them there, over to one place or another. That's pretty much my - that's pretty much all I do.

Tr. at 175:21-176:1.

Jose Jr.'s primary responsibilities are to manage the "Miami operations" of Bakers Depot. Tr. at 114:13-14 (Brian); see also Hrg. Ex. D-8 (Jose Jr. Decl.) ¶¶ 9-11. According to Jose Jr., he moved to Florida, with his family, shortly after leaving BakeMark, and "took control of the Florida operations." Jose Jr. Decl. ¶¶ 9-10. In 2023, the Negron Brothers formed a new entity, now known as Bakers Depot Miami LLC, "specific to our work in Florida." Jose Jr. Decl. ¶ 11; see also Tr. at 114:10-16 (Brian, testifying that he initially "operated under one LLC for both locations," but that since Jose Jr. "primarily took over the Miami operations when he left BakeMark, we separated the entities as of early this year."). Brian and Jose Jr. each own 50% of Bakers Depot Miami LLC, Joint Stip. ¶ 117; Tr. at 114:25-115:2 (Brian), but Jose Jr. has no ownership interest in the Bakers Depot named as a defendant herein. Jose Jr. Decl. ¶ 11.

In addition to the Negron Brothers, Silva, and Matias, JB Freight employs a number of former BakeMark drivers and truck helpers. Alfredo Aza de Pena resigned from BakeMark on or around May 16, 2022. Joint Stip. ¶ 60. Even before that, on April 18, 2022, he began to work for JB Freight. Id. ¶ 61. Dionisio Minaya began to work at JB Freight on August 22, 2022. Id. ¶ 63. Raul Ravelo Pichardo joined JB Freight on January 17, 2023. Id. ¶ 65. Rudy Reynoso was hired on March 8, 2023. Id. ¶ 66. Aza de Pena, Minaya, Pichardo, and Reynoso were all hired by Brian. Id. ¶¶ 61, 63, 65-66. Aza de Pena and Minaya were hired less than one year after Brian left BakeMark, during which period he was contractually prohibited from soliciting, inducing, or encouraging Restricted Employees to "terminate their employment . . . with [BakeMark]," whether or not they left to work for a Competing Business. Brian Non-Compete Ag. § 8(a).

G. BakeMark Investigates - Slowly

After Brian left BakeMark, Carlos Afonso became General Manager of the Bronx Warehouse, Joint Stip. ¶ 48, overlapping with Jose Jr. for approximately seven months. See Afonso Decl. ¶¶ 2, 4. On June 3, 2022 (approximately five weeks after Jose Jr. left BakeMark), Afonso emailed Rosemarie Gomez, BakeMark's Director of Human Resources, with a "cc" to Jeff Allen, a BakeMark Senior Vice President and Afonso's supervisor, with the subject line "Contract Clause," stating:

Was speaking with Jeff and I brought up that I'm hearing rumors about certain employees that left us and went to work For Jose & Brian.. We had a driver Alfredo Pena that went on vacation a few weeks back, and then called and said he wasn't coming back. Then I heard that he went to work for them.. Few days ago, I heard that our old office supervisor (Xiomara Silva) is working for them also.. These are things that I'm hearing and I don't have proof.. I remember Jose telling me once that they [sic] some truck or equipment trucks. I'm doing some investigating to see if I can find out more..

Hrg. Ex. D-41.

Allen explained at the hearing that "[t]he suspicion was they were being recruited," Tr. at 261:7-9, because "people usually don't leave in pairs," and "two drivers, [and] the office supervisor" represented "unusual turnover for us at any one time." Id. at 261:16-19. Asked what Afonso's "investigating" consisted of, Allen testified: "Talking with employees, asking, calling employees that left, seeing if we could get them back," and "driving to the location that we had on record [for] JB Freight to see if employees were working there[.]" Id. at 263:1-23. Afonso provided Allen with updates on his investigation "as he had time." Id.

In June or July 2022, Allen "called Matt [Blauvelt] in," in Afonso's presence, and "asked Matt straight out" whether Brian and Jose were behind JB Freight. Tr. at 216:18-19 (Afonso). They asked Blauvelt because Afonso understood that he was "childhood friends or high school friends for a long time" with Brian and Jose. Id. at 228:7-8. Blauvelt responded, falsely, that "he was not aware of them having a company or having any - any kind of freight or delivery company." Id. at 216:19-21 (Afonso). Allen generally corroborates this account, see id. at 266:24-267:1 (Allen, testifying that Blauvelt said "[t]hat the Negrons would not do that and they were not doing that"), but places the conversation with Blauvelt later in the year, "in the October time frame." Id. at 267:6.¹⁹

19 Blauvelt knew that JB Trucking was Brian's company. Not only did he submit the JB Freight Add/Change/Delete form with Brian's signature on it, see Hrg. Ex. P-161; on July 16, 2021, Blauvelt received an email from dispatch@myjbfreight.com confirming pickups scheduled for the following week. Hrg. Ex. P-174. The JB Freight email bore the typed signature "Brian Negron." Id. at BAKEMARK00005637. Blauvelt responded, "Get rid of the signature sir lol." Id.

If the conversation with Blauvelt took place early in the summer, as Afonso testified, he clearly did not believe Blauvelt's denials. On August 1, 2022, Afonso sent an email to Jermaine Poitier, the Operations Manager at the Bronx Warehouse, with the subject line "JB Freight vendor #1601." Hrg. Ex. D-40. The email read:

This is the company I believe (Know) that belongs to the old owners.. I was told they come pick up orders from us at will call.. I told Pedro to tell me the next time they come, and we should follow them..

Hrg Ex. D-40 (punctuation as in the original).²⁰Afonso attached an image of a handwritten note listing the website "myJBFreight.com," along with a phone number and "vendor # 1601."

20 By "the old owners," Afonso meant Brian and Jose Negron. See Tr. at 214:2-8 (Afonso).

Up until this point, Afonso's primary concern was that the Negrons were using JB Trucking to poach BakeMark's personnel. But not long thereafter, BakeMark's "[s]ales reps started getting involved," Tr. at 218:10-11 (Afonso), raising concerns that defendants were poaching BakeMark's customers as well. Afonso explained in his declaration that "around the early Fall of 2022," he "had noticed that some accounts, like Daisy's Bakery in New Jersey, had stopped ordering [from BakeMark] entirely, and internally my sales representatives were telling me that the Individual Defendants had set up their own Sidco and were poaching our customers, and had been doing so for some time." Afonso Decl. ¶ 52 (emphasis added). The sales representatives started "showing [Afonso] . . . things that were being left behind, [like] invoices that had no logo on it." Tr. at 218:11-13 (Afonso). This indicated to Afonso not only that the Negron Brothers were selling baking products to BakeMark customers, but that they "were trying to keep it hidden as long as they could." Id. at 218:13-15.

If so, they did not keep it hidden for long. "[A]round the fall of 2022," the BakeMark sales representatives told Afonso that their customers were "getting price lists, including a price list "that said Bakers Depot and a phone number[.]" Tr. at 224:12-15.²¹In an email dated October 11, 2022, Afonso again raised his concerns to Allen and Gomez. His email of that date bore the subject line "JB Freight LLC vendor #1601," and stated:

21 Afonso's testimony about when he learned that defendants were selling baking products to BakeMark customers under the name Bakers Depot was somewhat variable. In his pre-hearing declaration, he stated that his was told by his sales representatives in the "early Fall of 2022" that the Negron Brothers "had set up their own Sidco and were poaching our customers." Afonso Decl. ¶ 52. At the hearing, he stated that he first became aware of a "potential connection" between the Individual Defendants and "a company called Bakers Depot" in "August or September, around there," Tr. at 223:21-24, and that he first saw a Bakers Depot price list "around the fall of 2022." Id. at 224:11-17. On redirect examination by BakeMark's counsel, he was asked when he first learned "that the Negrons were soliciting and delivering to BakeMark customers," and replied, "September, October, I would think around there." Id. at 224:23-25.

[W]anted to see if we can have someone investigate this company. Hearing rumors that this is Brian's company.. I think I may have mention this before.. They are covering it up pretty well.. Looks like they have invoices with no names on it. Got a copy from one of our customers.. Today, we had 2 of our drivers that left us show up in 2 of their trucks.. We also just had our Buyer give her notice, and I'm hearing rumors she is going there.. Not sure, but hoping we can have someone look further into this company?

Hrg. Ex. D-37. The "2 drivers" were de Aza Pena and Minaya. Id. The buyer was presumably Matias, who had resigned from BakeMark a week earlier. See Joint Stip. ¶ 58.

Despite Afonso's request, BakeMark did not take any steps, at that time, to "have someone investigate this company." Perhaps for this reason, in early November 2022, Afonso himself asked Andrisani (the sales representative who had called on Daisy's Bakery in early August) if she could "stop by and see what she saw" at the Teterboro Warehouse. Hrg. Ex. P-86 (Afonso Dep. Tr.) at 145:17. Afonso had gotten the Teterboro address "from one of the sales reps." Id. at 145:13-16.

On November 9, 2022, Andrisani sent Afonso a lengthy email with the subject line "Concerned on past employ." Hrg. Ex. D-35 (Andrisani Email). In her email, Andrisani noted the "continuous rumors" that the Negron Brothers were "creating a bakery distribution company again. And what is most concerning is that they are contacting 'our' customers. (the old Sidco customers)." Id. at BAKEMARK00003613. She then described, in detail, her visit to Daisy's Bakery, which took place "[o]n or about the 1st week of August 2022," id. at BAKEMARK00003614, before reporting on what she saw at the Teterboro Warehouse, which she visited on November 7 and 8, 2022. Id.

On November 7, Andrisani saw three cars, two of which she recognized as belonging to Silva and Matias, and a pickup truck "believed to belong to ex owner Brian." Andrisani Email at BAKEMARK00003614. On November 8, Andrisani returned later in the day, and on this occasion saw Brian and Matias exiting the office and driving off in their respective vehicles. Id. at BAKEMARK00003615. Andrisani was "confident that the location is a distribution center because between 4pm and 5pm delivery trucks began returning to the parking lot." Id. The delivery drivers exited the trucks and "entered the same office door that Brian and Betania [Matias] exited from." Id. Andrisani took pictures, which she forwarded to Afonso, including pictures of the delivery trucks, which bore the logo "JB Freight." Id. Andrisani concluded:

I am informing you in hopes we can protect the company we work for (Bakemark) and in hopes that something can be done to stop the former owners and former employees from contacting our current active Bakemark customers.

Id.

Afonso promptly forwarded Andrisani's report - and the pictures - to Gomez, BakeMark's HR Director, writing "FYI," and marking the email as having "high" importance. Andrisani Email at BAKEMARK00003613. Gomez responded that day, but the content of her response (as well as the content of Afonso's reply on November 15, 2022) was redacted by BakeMark. See Hrg. Ex. D-39. Six weeks later, on December 21, 2022, plaintiff retained Nardello & Co. LLC (Nardello), "an international research and investigative firm," to "conduct an investigation into rumors of a potential competing business being run by Defendants Brian Negron and Jose Negron Jr." Hrg. Ex. P-18 (Feeney Aff.) ¶¶ 3-4.

During his testimony, Afonso frequently characterized the information he received about defendants' activities as "rumors," for which he had no "solid proof." See, e.g. Tr. at 206:25, 208:14, 209:14-17, 210:13 215:11-12, 215:19-10, 218:24-25, 229:25. He also testified, however, that looking into the Negron Brothers was not at the top of his "priority list," because he was busy with the other demands of his job, and was "shorthanded." Id. at 232:3-9. Afonso's superior, Allen, knew that Afonso didn't "have a lot of time to do an investigation," since he was "trying to get his job done on top of this." Id. at 263:8-16 (Allen). However, Allen did not provide any assistance. Id. at 263:18-23 (Allen).

Afonso never reviewed JB Freight's formation documents to see who owned it. Tr. at 230:13-231:6.²²Nor did he contact either of the Negron Brothers directly, Tr. at 231:13-232:25, or call Xiomara Silva to ask where (and for whom) she was working. Id. at 232:23-233:7.

22 The New Jersey Certificates of Formation for JB Freight and Bakers Depot, which are publicly available, list Brian Negron as both companies' sole registered agent, member/manager, and authorized representative. Hrg. Exs. D-13 (JB Freight), D-17 (Bakers Depot). The Bakers Depot certificate lists the company's business purpose as "wholesale food distributor." Hrg. Ex. D-17.

H. Nardello

The Nardello team, led by Thomas F. Feeney, reviewed public records relating to JB Freight and Bakers Depot, conducted surveillance at the Teterboro Warehouse (where they observed automobiles belonging to Brian, Jose Jr., Silva, and Matias), and followed JB Freight trucks as they delivered products to customers. Id. ¶¶ 7-8, 23. For example, on January 24, 2023, Nardello's surveillance team observed a JB Freight truck make deliveries to five bakeries in New York City: Panaderia La Autentica Ambatenita, Vallecito Bakery, La Autentica Ambatenita/La Abundancia, El Manantial Baker, and El Panadero Bakery. Feeney Aff. ¶ 9 n.1. Afonso, who reviewed Nardello's investigation notes and photographs in January 2023, recognized these bakeries as "our customers." Afonso Decl. ¶ 63.²³Nardello "continued to investigate until March 9, 2023." Joint Stip. ¶ 132.

23 There is no evidence in the preliminary injunction record that Bakers Depot sold goods to the customers named in the Nardello report prior to September 10, 2022.

Although Afonso had the authority to terminate JB Freight as a BakeMark vendor, see Tr. at 203:16-24 (Afonso), he never did so, even after he knew "for sure" that JB Freight was "making deliveries to several alleged BakeMark customers and was "operated by one or both of the Negron Brothers." Id. at 204:9-17. Afonso explained that he retained JB Freight as a vendor in order "to keep our product and be able to sell to customers." Id. at 210:19-211:2. Consequently, JB Freight remained "an approved vendor and provided delivery services for BakeMark" until plaintiff initiated this litigation. Joint Stip. ¶ 83.

I. The Memo History Report

On Wednesday, March 22, 2023, at 12:28 p.m., Xiomara Silva sent Betania Matias a 300-plus-page Memo History Report pulled from BakeMark's password-protected NDS system. Hrg. Ex. P-136, 137; Tr. at 270:22-271:25 (Allen). Although Silva and Matias were both working at the Teterboro Warehouse at the time, where they routinely used JB Freight and Bakers Depot email addresses for business purposes, Silva sent the Memo History Report from her personal "live.com" email address to Matias's personal "gmail.com" email address. Hrg. Ex. P-137.

The Memo History Report was run on August 5, 2022 - seven months earlier - and shows, for each BakeMark customer serviced by the Bronx Warehouse, every order placed by that customer during the period July 24-August 4, 2022, including the specific items and quantities purchased, the prices charged for those items, and BakeMark's cost. Joint Stip. ¶ 137. Allen explained that the Memo History Report is "one of our most confidential documents," Tr. at 272:1, because it provides "a lot of insight into the customer." Id. at 282:23-25. The price and cost data, in particular, is "highly competitive information" because it reveals BakeMark's margin, and therefore tells a salesperson "how to go in and sell a customer" without "giv[ing] the farm away." Id. at 279:22-24, 282:12-15.

BakeMark's IT department determined that the employee who ran the Memo History Report on August 5, 2022, was Matthew Blauvelt. See Tr. at 274:11:13; 280:15-19 (Allen). Thereafter, BakeMark terminated Blauvelt's employment. Id. at 281:14-15.

Xiomara Silva was unavailable to testify at the hearing.²⁴ Betania Matias, who received the report from Silva, testified that she had no idea why Silva sent it to her or how Silva obtained it. Tr. at 307:5-6, 3:07:12-13, 309:11-13, 310:22-24. Matias further testified that, upon receiving Silva's email, she recognized the attachment to be a BakeMark report, permanently deleted the email "right away" (which is why she did not produce it in discovery), and made no use of it on behalf of Bakers Depot or JB Freight. Tr. at 307:7-3:08:5, 308:25-309:3, 309:11-13, 311:18-20. Although Matias was friends with Silva, id. at 307:3, and although the two women worked in the same room at the Teterboro Warehouse, id. at 319:9-10, Matias insisted that she never asked Silva about the email, id. at 307:14-15, 308:13-21, 319:17-23, 321:9-16, and never discussed it with Brian or Jose Jr. Id. at 309:20-310:4. Matias's testimony regarding the Memo History Report was not credible.

24 In her pre-hearing declaration, Silva attested carefully that she "did not take any BakeMark documents with [her] after leaving the company" and "never sent any BakeMark documents to [her] personal email or mobile device in anticipation of leaving the company and/or for non-work related purposes." Silva Decl. ¶ 14. She did not address whether, after leaving BakeMark, she arranged to obtain confidential BakeMark documents from Blauvelt (or others), and share them with her colleagues at JB Freight and Bakers Depot.

III. LEGAL STANDARD

"A plaintiff seeking a preliminary injunction must establish that [it] is likely to succeed on the merits, that [it] is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that an injunction is in the public interest." JTH Tax, LLC v. Agnant, 62 F.4th 658, 667 (2d Cir. 2023) (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). The same standard applies where, as here, the plaintiff seeks an injunction "to preserve the status quo pending arbitration." Benihana, Inc. v. Benihana of Tokyo, LLC, 784 F.3d 887, 895 (2d Cir. 2015).

Ordinarily, to establish a likelihood of success on the merits, "a plaintiff 'need not show that success is an absolute certainty. He need only make a showing that the probability of his prevailing is better than fifty percent.'" Broker Genius, Inc. v. Volpone, 313 F.Supp.3d 484, 497 (S.D.N.Y. 2018) (quoting Eng v. Smith, 849 F.2d 80, 82 (2d Cir. 1988)). "Further, Plaintiffs need not demonstrate a likelihood of success on the merits of every claim - rather, they need only 'show a likelihood of success on the merits of at least one of [their] claims.'" 725 Eatery Corp. v. City of N.Y., 408 F.Supp.3d 424, 459 (S.D.N.Y. 2019) (quoting L.V.M. v. Lloyd, 318 F.Supp.3d 601, 618 (S.D.N.Y. 2018)).

To establish irreparable harm, the moving party must demonstrate that "absent a preliminary injunction [it] will suffer 'an injury that is neither remote nor speculative, but actual and imminent,' and one that cannot be remedied 'if a court waits until the end of trial to resolve the harm.'" Grand River Enter. Six Nations, Ltd. v. Pryor, 481 F.3d 60, 66 (2d Cir. 2007) (quoting Freedom Holdings, Inc. v. Spitzer, 408 F.3d 112, 114 (2d Cir. 2005)). "Where there is an adequate remedy at law, such as an award of money damages, injunctions are unavailable except in extraordinary circumstances." Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009) (quoting Moore v. Consol. Edison Co. of N.Y., 409 F.3d 506, 510 (2d Cir. 2005)). Irreparable harm is "the single most important prerequisite for the issuance of a preliminary injunction." Rodriguez v. DeBuono, 175 F.3d 227, 234 (2d Cir. 1999). If the moving party cannot demonstrate that it will be irreparably injured in the absence of a preliminary injunction, the court need not even consider the other factors. Id.

In certain circumstances, "a plaintiff seeking a preliminary injunction must satisfy a heightened standard by 'show[ing] a clear or substantial likelihood of success on the merits, and [by] mak[ing] a strong showing of irreparable harm.'" JTH Tax, 62 F.4th at 667 (quoting New York ex rel. Schneiderman v. Actavis PLC, 787 F.3d 638, 650 (2d Cir. 2015) (alterations in original)). The heightened standard applies where the plaintiff "seeks an injunction that provides [it] substantially all the relief [it] seeks in the litigation, and that cannot be meaningfully undone in the event that the enjoined party prevails at trial on the merits." Id.; see also Schneiderman, 787 F.3d at 650 ("We have held the movant to a higher standard where . . . the injunction 'will provide the movant with substantially all the relief sought and that relief cannot be undone even if the defendant prevails at a trial on the merits.'") (quoting Tom Doherty Assocs., Inc. v. Saban Ent., Inc., 60 F.3d 27, 34-35 (2d Cir. 1995)).

The Second Circuit approved the use of the heightened standard in JTH Tax, which involved competing income tax preparation businesses. Plaintiff JHT, which operated nationwide under the name "Liberty Tax," terminated defendant Agnant's local franchise agreements and sought a preliminary injunction to enforce her non-compete and non-solicit covenants, which prohibited her, for two years, from "preparing income tax returns for profit within twenty-five miles of the boundaries of her former geographic territories" and from "soliciting any client that she had served within twelve months prior to termination." 62 F.4th at 664. Although Agnant stopped using Liberty's names and marks, she refused to move her business premises or comply with the no-solicitation covenant. Id. At the preliminary injunction hearing, she testified that she had "used her home as collateral for a loan to open her business," and would be unable to provide for her family (or pay her lawyers) if it were shut down. Id. at 668. Applying the heightened standard, the district court denied Liberty's preliminary injunction motion, see id. at 667, and the Second Circuit affirmed, agreeing that the preliminary relief sought would provide plaintiff with "substantially all the relief that it seeks in the litigation," and that the "injunction could not meaningfully be remedied in the event that Agnant prevails on the merits." Id. at 668-69.

Here too, plaintiff seeks a preliminary injunction that would provide it with substantially all the relief it seeks in the litigation. Compare Compl. at 42-44 (prayer for relief) with OSC at 24 (proposed preliminary injunction). Moreover, that injunction would, in all likelihood, put defendants out of business. In theory, the Negron Brothers could continue selling baking products in Florida, or elsewhere outside of the Territory, to customers they never serviced at BakeMark, using employees who never worked at BakeMark. However, they would be prohibited, during the pendency of the anticipated arbitration (which, insofar as the record reflects, has not yet been initiated) from "directly or indirectly owning, managing, operating, joining, controlling, being employed by or with, or participating in any manner with a Competing Business anywhere in the Territory," and from "directly or indirectly . . . contacting any person or entity who is or has been a BakeMark customer in the past two years; [and] contacting any person or entity who is or has been a BakeMark employee or independent contractor in the past two years[.]" OSC at 2-4 ¶¶ iii, viii. As a practical matter, this would shut down most if not all of the current operations of Bakers Depot and JB Freight, which Brian capitalized by selling his home.²⁵This is an injury that "could not meaningfully be remedied" in the event defendants prevailed on the merits in arbitration, JTH Tax, 62 F.4th at 668-69. Plaintiff must therefore must "show a 'clear' or 'substantial' likelihood of success on the merits" and "make a 'strong showing' of irreparable harm[.]" Schneiderman, 787 F.3d at 650 (citations omitted).

25 See also Compl. ¶ 9 (recognizing that the relief sought in this Court would enjoin JB Freight and Bakers Depot "from operating").

IV. LIKELIHOOD OF SUCCESS ON THE MERITS

As to defendant Brian Negron, plaintiff has demonstrated a clear likelihood of success on the merits of at least three of its claims: for breach of contract, violation of the DTSA, and common law misappropriation of trade secrets. As to defendant JB Freight, it is likely to succeed on at least the trade secret claims. As to defendant Jose Negron Jr., however, plaintiff has not made the required merits showing as to any of its claims.

A. Breach of Contract (Count I)

"To recover on a breach of contract claim under New York law, a plaintiff must demonstrate '(1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of the contract by the defendant, and (4) damages.'" Goat Fashion Ltd. v. 1661, Inc., 2020 WL 5758917, at *6 (S.D.N.Y. Sept. 28, 2020) (quoting Eternity Glob. Master Fund Ltd. v. Morgan Guar. Tr. Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004)).²⁶ In this case, defendants do not seriously contest the first two elements, but vigorously denied, in their pre-hearing papers, that the Negron Brothers breached any provisions of their Employment Agreements or Non-Compete Agreements. They argued: (i) that JB Freight is "strictly a freight trucking and logistics company" that does not compete with BakeMark, see Def. Mem. at 18-20; (ii) that although Bakers Depot does compete with BakeMark, it did not do so until after September 10, 2022, see id. at 20-21; (iii) that no Restricted Customers were solicited until after September 10, 2022, see id. at 21-22; and (iv) that although Brian hired Restricted Employees, they all "reached out to Brian directly," without any solicitation from him. See id. at 22-23.

26 The Negron Brothers' contracts contain Georgia choice of law provisions. See Emp. Ags. ¶ 18; Non-Compete Ags. ¶ 18. However, plaintiff's complaint asserts that the Individual Defendants "breached their contracts under both Georgia and New York law," Compl. ¶ 110, and its moving brief cites only New York law, explaining that "elements of a breach of contract claim are substantially similar in both jurisdictions." Plaintiff's Memorandum of Law (Pl. Mem.) (Dkt. 9) at 19 n.17. Defendants, who argue that the Georgia choice of law provisions in their contracts are unenforceable, also rely on New York law. See Defendants' Memorandum of Law (Def. Mem.) (Dkt. 73) at 17-23. Since both sides are content to rely on New York law - and since plaintiff affirmatively states that New York law and Georgia law are "substantially similar" - this Court applies New York law as well. "Under New York choice-of-law rules," which this Court must apply to plaintiff's state-law claims, the "first step" is "to determine whether there is an 'actual conflict' between the rules of the relevant jurisdictions.” Kinsey v. New York Times Co., 991 F.3d 171, 176 (2d Cir. 2021) (citation omitted). If not, "no choice of law analysis need be undertaken." Park Place Ent. Corp. v. Transcon. Ins. Co., 225 F.Supp.2d 406, 408 (S.D.N.Y. 2002). As long as "New York law is among the relevant choices," the court is "free to apply it." Int'l Bus. Machs. Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir. 2004).

As to Brian Negron, these arguments all fail, particularly in light of the evidence adduced late in discovery and at the hearing. Within the first year after his departure from BakeMark, Brian used Bakers Depot to offer and sell Competitive Products in the Territory, in violation of § 6 of his Non-Compete Agreement, and used JB Freight to deliver them. During that same period, he contacted and solicit Restricted Customers for the purpose of providing those Competitive Products and Services, and sold those Competitive Products and Services to Restricted Customers, thereby diverting business from BakeMark, in violation of § 7(a), (b), and (c) of the Non-Compete Agreement. Additionally, Brian violated § 8(a) and (b) of the Non-Compete Agreement by hiring Restricted Employee Silva in January 2022, Restricted Employee Aza de Pena in April 2022, and Restricted Employee Minaya in August 2022, and then - before September 10, 2022 - putting them to work for Bakers Depot, selling or delivering Competitive Products in the Territory (including to Restricted Customers), in direct competition with plaintiff BakeMark.

It is irrelevant whether Brian "solicited" Silva or whether Silva called Brian to ask for a job. Section 8(b) prohibited him, for at least one year after he left BakeMark, from hiring any Restricted Employee "on behalf of a Competing Business," regardless of who solicited whom. Within that year, Brian hired Silva, a Restricted Employee, and put her to work for Bakers Depot, a Competing Business, thereby violating § 8(b). Similarly, it is irrelevant that Brian hired Aza de Pena and Minaya for JB Freight rather than Bakers Depot. He hired them less than one year after he left BakeMark, during which period he was contractually prohibited, by § 8(a) of his NonCompete Agreement, from soliciting, inducing, or encouraging Restricted Employees to "terminate their employment . . . with [BakeMark]," whether or not they left to work for a Competing Business. Brian hired Aza de Pena on April 18, 2022, while the latter was still on the BakeMark payroll, Joint Stip. ¶¶ 61-62, thereby "inducing" and "encouraging" Aza de Pena to leave his job at BakeMark.

Plaintiff argues, with some force, that Bakers Depot and JB Freight are "one and the same." Pl. Reply Mem. (Dkt. 81) at 10. Not only are they both wholly-owned and managed by Brian; they operate out of the same premises and - until recently - shared a single pool of employees, paid through a single payroll, regardless of what services, for which entity, those employees performed. Therefore, according to plaintiff, hiring an employee for JB Freight constitutes hiring that employee on behalf of a Competing Business. Id. at 10-11. Alternatively, plaintiff argues, even if Brian's business are treated as two distinct companies, hiring an employee for JB Freight constitutes hiring that employee on behalf of a Competing Business because of "JB Freight's assistance in Bakers Depot's competitive activities." Id. at 12.

This Court need not determine, for purposes of the pending preliminary injunction motion, whether Bakers Depot and JB Freight are "one entity" or "alter egos," as plaintiff urges. See Reply Mem. at 11. Plaintiff has, however, made a strong showing that once Bakers Depot was up and running as a Competing Business in the Territory - which, as discussed above, was prior to September 10, 2022 - its affiliate JB Freight became, for all practical purposes, its delivery arm.²⁷Thus, when Brian put Aza de Pena and Minaya to work making deliveries for Bakers Depot in the Territory, he violated § 8(b) of his Non-Compete Agreement.

27 While JB Freight had customers other than Bakers Depot, there is no evidence that Bakers Depot used any freight service other than JB Freight for deliveries to its New York City-area customers.

Lastly, plaintiffs have made a strong showing that Brian violated § 11 of his Employment Agreement and § 4(a) of his Non-Compete Agreement by using BakeMark's Confidential Information to compete against it during the one-year period following his departure from BakeMark. The circumstantial evidence presented at the preliminary hearing suggests that BakeMark's August 5, 2022 Memo History Report was used by him, or by other sales personnel at his direction, to assist Bakers Depot in wooing Restricted Customers. Moreover, even if Brian never saw the Memo History Report, his own detailed knowledge of BakeMark's "current and historical client information; rate and price information for certain items sold by BakeMark," as well as his knowledge of "certain BakeMark[] sales, finances, and business, including pricing information," constituted Confidential Information, see Joint Stip. ¶¶ 39-40, that he was contractually prohibited, for at least one year, from using to compete against his former employer.

As to Jose Negron Jr., however, plaintiff has not shown a substantial likelihood of success on its contract claim. Jose Jr. does not own or manage either Bakers Depot or JB Freight, and plaintiff presented no evidence that he personally hired any Restricted Employees, called upon any Restricted Customers (or, indeed, any customers or prospective customers in the Territory), or directed anyone else to do so. Thus, plaintiff has not shown that Jose Jr. violated §§ 7 or 8 of his Non-Compete Agreement.

Nor has plaintiff made a clear showing that Jose Jr. violated § 6, even though he was an employee of JB Freight, for which he performed "limited" services, and a de facto employee of Bakers Depot, for which he managed its Florida operations prior to the creation of a separate entity for that purpose. Section 6, by its terms, prohibits Jose Jr. for one year from "join[ing]," being "employed by," or "participat[ing] in any manner with a Competing Business anywhere in the Territory, where doing so [would] require [him] to engage in Competitive Activities or provide Competitive Products or Services." Jose Jr. Non-Compete Ag. § 6. Jose Jr.'s work for Bakers Depot in Florida does not come within the proscription, because it was not within the Territory.

Jose Jr.'s work for JB Freight (which, insofar as the current record shows, was limited to troubleshooting mechanical issues with the company's trucks, see Tr. at 175:21-176:1) presents a closer question. On the one hand, the trucks were in New Jersey, which is within the Territory, and were used in that Territory to deliver Competing Products to customers on behalf of Bakers Depot, which - at least by July 2022 - was a Competing Business. However, § 6 demands a showing that the employee's work required him "to engage in Competitive Activities or provide Competitive Products or Services." Plaintiff did not present any evidence that Jose Jr. had the same troubleshooting responsibilities at BakeMark, and therefore did not show that he engaged in Competitive Activities for Bakers Depot. Moreover, Jose Jr.'s truck repair consultation services (according to his hearing testimony) were both de minimis and somewhat peripheral to the actual provision of Competitive Products or Services by Bakers Depot. Thus, while the matter is not entirely free from doubt, I conclude that, as to its contract claim against Jose Jr., plaintiff has failed to establish - even under the ordinary, "better than fifty percent" standard, see Broker Genius, 313 F.Supp.3d at 497 - that it is likely to succeed on the merits.

B. Misappropriation of Trade Secrets (Counts III and IV)

The DTSA defines a "trade secret" to include "all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes," as long as (i) "the owner thereof has taken reasonable measures to keep such information secret," and (ii) "the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information." 18 U.S.C. § 1839(3). To state a claim for misappropriation under the DTSA:

[A] party must show an unconsented disclosure or use of a trade secret by one who (i) used improper means to acquire the secret, or, (ii) at the time of the disclosure, knew or had reason to know that the trade secret was acquired through improper means, under circumstances giving rise to a duty to maintain the secrecy of the trade secret, or derived from or through a person who owed such a duty.

Medidata Solutions, Inc. v. Veeva Sys. Inc., 2018 WL 6173349, at *4 (S.D.N.Y. Nov. 26, 2018) (quoting Elsevier Inc. v. Doctor Evidence, LLC, 2018 WL 557906, at *3 (S.D.N.Y. Jan. 23, 2018)). The act's "complete and disjunction definition of 'misappropriation'" makes clear that either "disclosure" or "use" of the trade secret provides a sufficient basis for liability. AUA Private Equity Partners, LLC v. Soto, 2018 WL 1684339, at *4 (S.D.N.Y. Apr. 5, 2018)

"The elements for a misappropriation claim under New York law are fundamentally the same." Iacovacci v. Brevet Holdings, LLC, 437 F.Supp.3d 367, 380 (S.D.N.Y. 2020). New York courts rely on the following factors to determine whether information qualifies as a trade secret:

(1) the extent to which the information is known outside of [the] business; (2) the extent to which it is known by the 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 to [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.

Iacovacci, 437 F.Supp.3d at 380 (quoting Integrated Cash Mgmt. Servs., Inc. v. Digital Transactions, Inc., 920 F.2d 171, 173 (2d Cir. 1990)) (alterations in original). "These factors are guideposts, not elements, and it is not necessary to plead every single factor to state a claim[.]" LivePerson, Inc. v. 24/7 Customer, Inc., 83 F.Supp.3d 501, 514 (S.D.N.Y. 2015).

Here, plaintiff claims that its "pricing and customer information" qualifies as a trade secret (not merely as contractually-protected Confidential Information) because BakeMark "takes measures to ensure confidentiality of the foregoing information, including by keeping it in a confidential, password protected database, limiting which employees can access it, and requiring employees with access to sign confidentiality agreements." Pl. Mem. at 24. The information is "inherently valuable," BakeMark asserts, "because if a competitor were to access the information, the competitor "could then use that information to undercut BakeMark's market share by offering BakeMark's customers lower prices on the baking goods that BakeMark sells." Id. at 25.

In its opening memorandum, BakeMark argues that defendants misappropriated its trade secrets when they "used Xiomara Silva, a Restricted Employee, to obtain BakeMark's confidential pricing information from Daisy's Bakery, a Restricted Customer[.]" Pl. Mem. at 25. This claim is founded on a series of speculative inferences by Carmela Andrisani and would not - standing alone - satisfy plaintiffs burden of demonstrating that it is likely to succeed on is trade secrets claims.²⁸

28 Andrisani attested that after she called on Daisy's Bakery in August 2022, its buyer, Tsikorski, strung her along for months, asking for BakeMark's prices on various goods, but never actually placing an order. Andrisani Decl. ¶¶ 10-17. Andrisani "grew concerned that Mr. Tsikorski could be giving BakeMark's information to Xiomara [Silva] given their longstanding relationship." Id. ¶18. However, BakeMark has no actual evidence that Tsikorski was serving as an agent of Baker's Depot (as opposed to simply attempting to find the lowest prices for Daisy's Bakery). Moreover, Andrisani limited the information she gave to Tsikorski, providing only the "narrow pricing information asked for by [the] customer." Id. ¶ 16. She did not give Tsikorski "our entire price list." Id.

In its reply brief, however, plaintiff points to the Memo History Report, dated August 5, 2022, that Silva furtively emailed from her personal email address to Matias's personal email address on March 22, 2023, when both worked for Brian, on behalf of JB Freight and Bakers Depot, at the Teterboro Warehouse. See Pl. Reply Mem. at 16. I agree that the Memo History Report constitutes a BakeMark trade secret. It does not merely reflect a few prices, for a few products, which could have been gathered from individual BakeMark customers; rather, it "lists all of the NY facility customers, the items and quantities those customers ordered, BakeMark's costs, and what it charged each customer." Id.; see also Tr. at 272:1-6, 273:9-24, 282:4-283:1 (Allen, explaining the value of the information contained in the Memo History Report). No one customer had all of that information, or any way of obtaining it. Moreover, the document was generated from a restricted, password-protected software program designed to keep it out of the hands of anyone other than the BakeMark sales and executive personnel who used it to further BakeMark's business - and who were themselves contractually obligated to keep it confidential. See Tr. at 83:17-84:81-8 (Brian, agreeing that the NDS system was password protected and limited to certain personnel, and that the information it contained was "confidential"). The courts routinely protect similar customer lists, as well as customer order history and pricing and cost information, as trade secrets.²⁹

29 See, e.g., Cont'l Indus. Grp., Inc. v. Altunkilic, 788 Fed.Appx. 37, 41 (2d Cir. 2019) (summary order) (cost information, "customer and supplier lists," and "pricing and payment terms" are "routinely afforded trade secret protection"); N. Atl. Instruments, Inc. v. Haber, 188 F.3d 38, 44 (2d Cir. 1999) (client list revealing "the identities and preferences of [plaintiff's client contacts" was "a protectable trade secret"); Defiance Button Mach. Co. v. C & C Metal Prods. Corp., 759 F.2d 1053, 1063 (2d Cir.) (customer list "developed by a business through substantial effort and kept in confidence may be treated as a trade secret and protected at the owner's instance against disclosure to a competitor, provided the information it contains is not otherwise readily ascertainable")), cert. denied, 474 U.S. 844 (1985); Heyman v. AR. Winarick, Inc., 325 F.2d 584, 590 (2d Cir. 1963) (holding that data identifying "the monthly orders of three or four customers in each of eight areas throughout the country" was a trade secret, in part because the identities of the customers, and "the data concerning the amount of the product each customer purchased, compiled on a monthly basis," was not available or obtained from public sources).

Unsurprisingly, there is no direct evidence that Brian personally received or used the Memo History Report on behalf of JB Freight or Bakers Depot. See Tr. at 84:16-85:7 (Brian, denying that he saw any NDS or PowerSell reports after he left BakeMark, and specifically denying that he saw the August 5, 2022 Memo History Report). "[M]isappropriation and misuse can rarely be proved by convincing direct evidence." Stanacard, LLC v. Rubard, LLC, 2016 WL 462508, at *19 (S.D.N.Y. Feb. 3, 2016) (quoting Q-Co Indus., Inc. v. Hoffman, 625 F.Supp. 608, 618 (S.D.N.Y. 1985) (citation omitted)). In most cases, a plaintiff "must construct a web of perhaps ambiguous circumstantial evidence from which the trier of fact may draw inferences which convince him that [misappropriation] is more probable than not." Q-Co Indus., 625 F.Supp. at 618.

Here, the web is not particularly ambiguous. There is direct evidence that a valuable BakeMark trade secret made its way, surreptitiously, to at least two of Brian's direct reports at JB Freight. Moreover, Matias's insistence that she immediately deleted both the email and its attachment - without even speaking about it with Silva, who sent it to her, or Brian, for whom she worked - was wholly unconvincing. Thus, as in Q-Co Indus., 625 F.Supp. at 618, I conclude that plaintiff has met its burden on this motion for a preliminary injunction of establishing a likelihood of success on the merits of its trade secret misappropriation claims against both Brian Negron and his wholly-owned company, JB Freight, through which he employed and paid Silva and Matias at the time. See Judith M. v. Sisters of Charity Hosp., 693 N.Y.S.2d 67, 68, 715 N.E.2d 95, 96 (1999) (under New York law, employers are "vicariously liable for torts committed by an employee acting within the scope of the employment ....so long as the tortious conduct is generally foreseeable and a natural incident of the employment," and not "for solely personal motives unrelated to the furtherance of the [employer's] business"); SolarCity Corp. v. Pure Solar Co., 2016 WL 11019989, at *5 (C.D. Cal. Dec. 27, 2016) (where plaintiff alleged that individual's misappropriation "was intended, at least in part, to benefit [his employer]," the employer could be vicariously liable under the DTSA). Once again, however, there is no corresponding evidence as to Jose Jr., who had no personal involvement with the Memo History Report and no ownership or management role at either JB Freight or Bakers Depot.

V. IRREPARABLE HARM

"Generally, when a party violates a non-compete clause, the resulting loss of client relationships and customer good will built up over the years constitutes irreparable harm." Johnson Controls, Inc. v. A.P.T. Critical Sys., Inc., 323 F.Supp.2d 525, 532 (S.D.N.Y. 2004); see also Mercer Health & Benefits LLC v. DiGregorio, 307 F.Supp.3d 326, 347 (S.D.N.Y. 2018) ("It is well established in this Circuit that the loss of client relationships and customer goodwill that results from the breach of a non-compete clause generally constitutes irreparable harm.").

However, the Second Circuit "has rejected the proposition" that "irreparable harm must inevitably be assumed in breach of covenant cases." Singas Famous Pizza Brands Corp. v. New York Advertising LLC, 468 Fed.Appx. 43, 46 (2d Cir. 2012) (summary order) (quoting Baker's Aid, Inc. v. Hussmann Foodservice Co., 830 F.2d 13, 15 (2d Cir. 1987)). In Baker's Aid, the district court found that "although plaintiff was likely to prevail on the merits, it had not shown a likelihood of suffering irreparable harm, due, inter alia, to its strong position in a highly competitive market and the quantifiable nature of any loss it might suffer," 830 F.2d at 15, and the Second Circuit affirmed, noting that where a plaintiff has established a likelihood of success on the merits in a covenant-not-to-compete case, the grant of a preliminary injunction "is not an automatic process, but instead depends upon the factual particulars in each case." Id. at 15-16; see also Uni-World Cap. L.P. v. Preferred Fragrance, Inc., 73 F.Supp.3d 209, 236 (S.D.N.Y. 2014) ("conclusory statements of loss of reputation and goodwill constitute an insufficient basis for a finding of irreparable harm") (citation omitted).

Here, plaintiff offers four arguments as to why its injuries cannot be remedied with money damages. First, it asserts, the Negron Brothers have "disregarded their covenants not to compete and not to solicit or service the Restricted Customers," have already "cost BakeMark hundreds of thousands of dollars in lost customer revenue and relationships," and unless enjoined will continue to poach plaintiff's customers. Pl. Mem. at 15. Second, absent an injunction, "the Individual Defendants will continue to poach BakeMark employees." Id. at 16-17. Third, they "will continue to misappropriate BakeMark's confidential and trade secret information in furtherance of their scheme to improperly compete with BakeMark." Id. at 17. Finally, "the Individual Defendants agreed in Section 12 of the Non-Compete Agreements that BakeMark "[would] suffer irreparable damage" if the Individual Defendants violated the non-compete, non-solicitation, or confidentiality provisions." Id. at 18. Plaintiff reiterates these arguments in its reply brief, adding that it recently learned of "two more customers that Defendants unlawfully solicited." Pl. Reply Mem. at 6-7.

A. Contractual Language

Taking plaintiff's last point first, I place little weight on "the contractual language declaring money damages inadequate in the event of a breach," which "does not control the question whether preliminary injunctive relief is appropriate." Baker's Aid, 830 F.2d at 16; accord JTH Tax, 62 F.4th at 674 (collecting cases); see also Hodnett v. Medalist Partners Opportunity Master Fund II-a, L.P., 2021 WL 535485, at *8 (S.D.N.Y. Feb. 12, 2021) ("Parties may not contractually circumvent an independent judicial determination of irreparable harm."); Ardis Health, LLC v. Nankivell, 2011 WL 4965172, at *3 (S.D.N.Y. Oct. 19, 2011) ("A conclusory contract provision alone cannot establish irreparable harm.").

B. Continued Misappropriation

It is true, as plaintiff points out, that courts "routinely find irreparable harm 'where there is a danger that, unless enjoined, a misappropriator of trade secrets will disseminate those secrets to a wider audience or otherwise irreparably impair the value of those secrets.'" Pl. Mem. at 17 (quoting Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009)). But plaintiff makes no claim that the Negron Brothers have disseminated or will disseminate the customer and pricing information at issue here to "a wider audience." Where, as here, "a misappropriator seeks only to use [trade] secrets - without further dissemination or irreparable impairment of value - in pursuit of profit, no such presumption [of irreparable harm] is warranted because an award of damages will often provide a complete remedy for such an injury. Indeed, once a trade secret is misappropriated, the misappropriator will often have the same incentive as the originator to maintain the confidentiality of the secret in order to profit from the proprietary knowledge." Id. at 118-19; accord Hodnett, 2021 WL 535485, at *9 (holding that plaintiffs could be compensated with money damages where they did not show "that Defendants are disseminating any confidential information, or that there is even a risk of such dissemination," but complained only of "Defendants' use of the alleged trade secrets").

C. Loss of Customer Relationships and Goodwill

It is also true that courts frequently find that damage to customer relationships stemming from disregard of non-compete or non-solicit covenants will cause irreparable harm. See, e.g., Mercer, 307 F.Supp.3d at 347 (finding irreparable harm where defendants - who had signed noncompete agreements - met with representatives of a competing business while still employed by plaintiff, sent plaintiff's existing clients "targeted announcements" of their move to the competitor, and once working for that competitor met with several of plaintiff's clients and persuaded them to move their business to the competitor); Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 69 (2d Cir. 1999) ("[I]t would be very difficult to calculate monetary damages that would successfully redress the loss of a relationship with a client that would produce an indeterminate amount of business in years to come."). Similarly, the loss of employees can constitute irreparable harm, not only because their departure deprives an employer of "its investment and developing those employees," but also, for those in customer-facing roles (like Silva), because their departure may cause the employer to lose "clients who follow the employees because of the relationships developed with them at [the employer's] expense." Marsh USA Inc. v. Karasaki, 2008 WL 4778239, at *14 (S.D.N.Y. Oct. 31, 2008).

As noted above, however, the grant of a preliminary injunction is neither automatic nor inevitable, in breach-of-covenant cases, "but instead depends upon the factual particulars in each case." Baker's Aid, 830 F.2d at 15-16; see also JTH Tax, 62 F.4th at 673 ("[N]othing in our precedents compels a district court to find irreparable harm to goodwill and client relationships in covenant-not-to-compete or -solicit cases simply because irreparable harm is often found in such cases."). Rather, a court "must actually consider the injury the plaintiff will suffer if he or she loses on the preliminary injunction but ultimately prevails on the merits, paying particular attention to whether the 'remedies available at law, such as monetary damages, are inadequate to compensate for that injury.'" Salinger v. Colting, 607 F.3d 68, 80 (2d Cir. 2010) (quoting eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006)).

D. Adequacy of Money Damages

BakeMark, like the plaintiff in Baker's Aid, occupies a "strong position in a highly competitive market," 830 F.2d at 15, selling baking products "throughout the continental United States and Canada." Joint Stip. ¶ 1.³⁰ It purchased Sidco - a much smaller business, limited to a local market - to "expand its footprint in New York [C]ity and enable it to reach new categories of customers." Allen Aff. ¶ 6. Moreover, as to each Restricted Customer that defected to Bakers Depot, BakeMark possesses the records showing that customer's sales history both before and after the Sidco acquisition, dating back to 2018. See Asset Purchase Ag. ¶ 1.4(a)-(b). BakeMark is thus in a relatively good position to quantify its losses resulting from Brian's breach of his non-compete and non-solicit covenants. See Baker's Aid, 830 F.2d at 15 (affirming denial of preliminary injunction due to plaintiff's "strong position in a highly competitive market and the quantifiable nature of any loss it might suffer because of [defendant's] entry into the market"); Dexter 345 Inc. v. Cuomo, 663 F.3d 59, 63 (2d Cir. 2011) (affirming denial of preliminary injunction where "[t]he long history of operation by both Appellants ensures that they will be able to calculate money damages for any loss of goodwill they may have suffered").

30 According to PR Newswire, BakeMark has approximately 19,000 customers in North America, including "retail bakery, in-store bakery, wholesale bakery, foodservice operators, and beyond," and is "the recognized market leader in the baking industry, as a manufacturer and distributor of bakery ingredients, products, and supplies." See https://www.prnewswire.com/news-releases/clearlake-to-acquire-bakemark-a-leading-manufacturer-and-distributor-of-bakery-ingredients-products-and-supplies-from-pamplona-capital-301337102.html (last visited Jan. 12, 2024). BakeMark operates though "five manufacturing plants and 29 distribution centers located across North America." Id. In 2021, BakeMark was purchased by the private equity firm Clearlake Capital Group. Id.

E. BakeMark's Delay

Plaintiff's claim of irreparable injury is further undercut by its delay in seeking injunctive relief. Such delay "'may, standing alone, preclude the granting of preliminary injunctive relief, because the failure to act sooner undercuts the sense of urgency' upon which the availability of the remedy is predicated." Hodnett, 2021 WL 535485, at *6 (quoting Gidatex, S.r.L. v. Campaniello Imports, Ltd., 13 F.Supp.2d 417, 419 (S.D.N.Y. 1998) (citation omitted)); see also Coscarelli v. ESquared Hosp. LLC, 364 F.Supp.3d 207, 222 (S.D.N.Y. 2019) (delay "may 'preclude the granting of preliminary injunctive relief' because it 'suggests that there is, in fact, no irreparable injury'") (quoting Tough Traveler, Ltd. v. Outbound Prods., 60 F.3d 964, 968 (2d Cir. 1995)). "Preliminary injunctions are generally granted under the theory that there is an urgent need for speedy action to protect the plaintiffs' rights. Delay in seeking enforcement of those rights, however, tends to indicate at least a reduced need for such drastic, speedy action." Citibank, N.A. v. Citytrust, 756 F.2d 273, 276-77 (2d Cir. 1985) (citations omitted). Courts may excuse delays, however, "[i]f the movant can provide a credible explanation for its inactivity." Gidatex, 13 F.Supp.2d at 419; see also Marks Org., Inc. v. Joles, 784 F.Supp.2d 322, 333 (S.D.N.Y. 2011) (a plaintiff's "good faith efforts to investigate" may justify a delay in seeking relief).

"There is no bright-line rule for how much delay is too much, but courts in this Circuit 'typically decline to grant preliminary injunctions in the face of unexplained delays of more than two months.'" Coscarelli, 364 F.Supp.3d at 222 (quoting Gidatex, 13 F.Supp.2d at 419); see also Weight Watchers Intern., Inc. v. Luigino's, Inc., 423 F.3d 137, 144 (2d Cir. 2005) ("We have found delays of as little as ten weeks sufficient to defeat the presumption of irreparable harm that is essential to the issuance of a preliminary injunction."); Livery Round Table, Inc. v. New York City FHV and Limousine Comm'n, 2018 WL 1890520, at *9 (S.D.N.Y. Apr. 18, 2018) (inadequately explained three-month delay "undercut[] a showing of immediate and irreparable injury"); Life Techs. Corp. v. ABX Sciex Pte. Ltd., 2011 WL 1419612, at *7 (S.D.N.Y. Apr. 11, 2011) (same).

In this case, plaintiff has failed to provide a "credible explanation" for the more than nine month that elapsed between June 3, 2022, when Afonso alerted BakeMark's headquarters about "rumors" that three of its recently-departed employees, including Silva, "went to work for Jose and Brian," Hrg. Ex. D-4, and March 20, 2023, when it filed this action and sought injunctive relief. Perhaps these were only "rumors" in June, but a few weeks later, on August 1, 2022, Afonso told his Operations Manager that JB Freight was "the company I believe (Know) that belongs to the old owners," meaning Brian and Jose Jr., Hrg. Ex. D-40, and by the "early Fall of 2022," Afonso's sales representatives "were telling me that the Individual Defendants had set up their own Sidco and were poaching our customers, and had been doing so for some time." Afonso Decl. ¶ 52. At this point, plaintiff was on notice that the Negron Brothers were violating §§ 6, 7, and 8 of their Non-Compete Agreements, and the rumors "could no longer be ignored." Pl. Reply Mem. at 4. Moreover, in short order Afonso also had the name and phone number of Brian's competitive business: Bakers Depot. Tr. at 224:12-15 (Afonso). But BakeMark did nothing.

On October 11, 2022, Afonso advised BakeMark headquarters that he had lost two more drivers and a buyer, and practically begged to "have someone investigate this company," to no avail. Hrg. Ex. D-37. One month later, on November 9, 2022, Andrisani reported to Afonso - and Afonso reported to Gomez, at BakeMark's headquarters - that the Negron Brothers were "contacting 'our' customers. (the old Sidco customers)." Andrisani Email at BAKEMARK00003613. Andrisani explained that Brian, Matias, and Silva (who had called the Daisy's Bakery buyer in August) were working together at the Teterboro Warehouse, where they were operating a "distribution center" and delivering goods in JB Freight trucks. Id. at BAKEMARK00003613-15. Andrisani attached photographs, and expressed the hope that "something can be done to stop the former owners and former employees from contacting our current active Bakemark customers." Id. at BAKEMARK00003615.

Still, BakeMark dawdled. It took another six weeks - until December 21, 2022 - to engage a professional investigator. Feeney Aff. ¶ 3. Nardello quickly "uncovered" the Certificates of Formation for JB Freight and Bakers' Depot (confirming that Brian owned both companies and that Bakers Depot was a wholesale food distributor), see id. ¶¶ 5-6, surveilled the Teterboro Warehouse, see id. ¶ 8, and by late January 2023, had photographic evidence that goods from the Teterboro Warehouse were being delivered, by JB Freight, to seven Restricted Customers in New York and New Jersey. See id. ¶¶ 9-17 & Exs. D-Y; Afonso Decl. ¶ 63 (identifying all seven as "our customers"). The latest photographs attached to the Feeney Affidavit were taken on January 24, 2023. Feeney Aff. ¶¶ 9, 13-17. But BakeMark waited another two months before filing this action and seeking a TRO (which it did not obtain). Meanwhile, it continued to use JB Freight as a vendor. Joint Stip. ¶ 83.

A court may excuse a delay "where there is a good reason for it, as when a plaintiff is not certain of the infringing activity," Weight Watchers, 423 F.3d at 144-45, or is still investigating the "extent" of the harm. Juicy Couture, Inc. v. Bella Int'l Ltd., 930 F.Supp.2d 489, 504 (S.D.N.Y. 2013). That was not the case here. Plaintiff's claim that it would have been "premature" to act before late March 2023, see Pl. Reply Mem. at 3, flies in the face of the mounting evidence it amassed throughout summer and fall of 2022. And plaintiff does not even attempt to explain the six weeks it took to hire Nardello, or the two additional months - from January through March 2023 - during which it had Nardello's evidence in hand but did nothing to curb defendants' allegedly unlawful conduct. Plaintiff has thus failed to supply a "good reason" for its delay. See Life Techs. Corp., 2011 WL 1419612, at *7 (declining to excuse three-month delay that plaintiff "explained only in general terms," stating that during those months it "continued its investigation and conducted internal meetings to formulate a response").

It is not just the length of the unexplained delay that cuts against plaintiff's claim of urgency; it is the disconnect between its dilatory conduct and the ongoing, concrete nature of the harm it alleged when it did finally file. By the "early Fall of 2022," BakeMark sales representatives told Alfonso that the Individual Defendants had been "poaching our customers" for "some time." Afonso Decl. ¶ 52. By November 9, 2022, Andrisani observed defendants' business in full swing and wondered what could be done to "stop" the Negron Brothers "from contacting our current active BakeMark customers." Andrisani Email at BAKEMARK00003615. Four and a half months later - when plaintiff finally sought injunctive relief on March 20, 2023 - it argued that the Negron Brothers' disregard of their non-compete and non-solicitation covenants had already "cost BakeMark hundreds of thousands of dollars in lost customer revenue and relationships." Pl. Mem. at 15. "Courts will excuse a delay . . . where 'the harm largely is prospective and will arise from a discrete future event.'" Metro. Taxicab Bd. of Trade v. City of New York, 2008 WL 4866021, at *6 (S.D.N.Y. Oct. 31, 2008) (quoting Million Youth March, Inc. v. Safir, 18 F.Supp. 334, 340 (S.D.N.Y. 1998). But where, as here, "the harm [is] immediately apparent," courts expect a plaintiff to conduct itself with some urgency. Id.

VI. CONCLUSION

For the reasons set forth above, I conclude that plaintiff has shown a substantial likelihood of success on the merits as against Brian Negron and JB Freight. However, its lack of urgency in protecting its customer and employee relationships, coupled with its strong position in the market and its possession of records detailing its historical earnings from all of the Restricted Customers "poached" by defendants, suggest "that there is, in fact, no irreparable injury" here. Coscarelli, 364 F.Supp. at 222. Consequently, I recommend, respectfully, that plaintiff's motion for a preliminary injunction be DENIED.

Because the parties filed portions of their motion papers under seal, and because their requests for continued sealing of those materials are not yet fully resolved, the Clerk of Court is respectfully directed to file this Report and Recommendation under seal, at the "selected parties" viewing level, such that only the attorneys appearing for the parties, and court personnel, may view it. By separate order, the Court will give the parties an opportunity to submit proposed redactions before this Report and Recommendation is filed in public view.

NOTICE OF PROCEDURE FOR FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION

The parties shall have 14 days from this date to file written objections to this Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1) and Fed.R.Civ.P. 72(b). See also Fed.R.Civ.P. 6(a) and (d). A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Any such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the Hon. Analisa Torres, United States District Judge, at 500 Pearl Street, New York, New York 10007. Any request for an extension of time to file objections must be directed to Judge Torres. Failure to file timely objections will result in a waiver of such objections and will preclude appellate review. See Thomas v. Arn, 474 U.S. 140, 155 (1985); Frydman v. Experian Info. Sols., Inc., 743 Fed.Appx. 486, 487 (2d Cir. 2018) (summary order); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).