1-800 Postcards, Inc. v AD Die Cutting & Finishing Inc. |
2010 NY Slip Op 51368(U) [28 Misc 3d 1216(A)] |
Decided on July 9, 2010 |
Supreme Court, New York County |
Ling-Cohan, J. |
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
This opinion is uncorrected and will not be published in the printed Official Reports. |
1-800 Postcards, Inc.
d/b/a WILLIAM VAN WAARDT, Plaintiff,
against AD Die Cutting & Finishing Inc. d/b/a A D DIE CUTTING & FINISHING, HAROLD I. GUTMAN, JULIO E. SANCHEZ and ARALLANCE SOLOMON, XYZ CORPORATION, Defendants. |
Plaintiff is a company which performs printing services and has allegedly
been in business for over thirty (30) years. Individual defendants Harold I. Gutman, Julio E.
Sanchez & Arallance Solomon, former employees of plaintiff, resigned on or about December
2009 and soon thereafter commenced employment with defendant AD Die Cutting & Finishing,
Inc ("AD Die"), a competitor of plaintiff.
On or about February 11, 2010, plaintiff filed the within order to show cause seeking
a preliminary injunction pursuant to CPLR §6301, enjoining defendants from: (1) using any
of the trade secrets of plaintiff; and (2) contacting and/or doing business with any person or
entity listed upon plaintiff's customer list.
Plaintiff's application for a preliminary injunction is premised upon its claim that
defendants have and continue to misappropriate plaintiff's trade secrets and chattel, consisting of
knowledge of plaintiff's operation, pricing strategies, customer base and other pertinent
proprietary [*2]information, as well as various cutting, stamping
and/or embossing "dies"[FN1], which were manufactured by plaintiff and
were allegedly discovered missing after the individual defendants left plaintiff's employ to work
for AD Die.
Plaintiff commenced this action against defendants asserting the following three
causes of action: (1) breach of a fiduciary duty against the individual defendants; (2) permanent
injunction prohibiting the use of the "dies" by defendants and an order of replevin compelling the
returning of the "dies" to plaintiff; and (3) conspiracy against all defendants.
In seeking a preliminary injunction, plaintiff asserts that plaintiff's business
will be irreparably harmed if it does not receive its property back and if defendants are not
enjoined from any further misappropriation of its trade secrets. Plaintiff maintains that following
the individual defendants' termination of employment with plaintiff, plaintiff's revenue dropped
from approximately $25,000.00 per week, to an average of $3,333.00, per week.
In opposition, defendants maintain that there are no "trade secrets" herein and
therefore there can be no misappropriation, nor any irreparable harm. Further, the individual
defendants maintain that they did not take the subject "dies" and that it is the custom and practice
in the industry that the "dies" are actually the property of the customer for which they were
produced and are subject to return to the customer upon demand. According to defendant
Gutman, several of the missing "dies" were in fact returned to the customers, upon demand, as is
common practice in the industry.
Upon review of the submitted papers, plaintiff's motion for a preliminary injunction
is denied, as detailed below.
A preliminary injunction is a drastic remedy which
should only be granted where the movant has demonstrated in the moving papers a clear legal
right to the relief demanded based upon the undisputed facts. See Cohen v. Department of
Social Servs., 37 AD2d 626, affd 30 NY2d 571(1972); William M. Blake
Agency, Inc. v. Leon, 283 AD2d 423, 424 (2nd Dept 2001).Being a provisional remedy, its
function is not to determine the ultimate rights of the parties, but to maintain the status quo until
there can be a full hearing on the merits. Residential Board of Managers of the Columbia
Condominium v. Alden, 178 AD2d 121 (1st Dept 1991). To be entitled to a preliminary
injunction, plaintiff must clearly demonstrate: (1) a likelihood of success on the merits; (2)
irreparable injury absent granting the preliminary injunction; and (3) a balancing of the equities
in their favor. See W.T. Grant Co. v. Srogi, 52 NY2d 496, 517 (1981); Aetna Ins. Co.
v. Capasso, 75 NY2d 860, 862 (1990); Borenstein v. Rochel Props., Inc., 176 AD2d
171, 172 (1st Dept 1991). Irreparable injury has been held to mean an injury for which monetary
damages are insufficient. See James v. Gottlieb, 85 AD2d 572 (1st Dept 1981);
Klein, Wagner & Morris v. Klein, 186 AD2d 631, 633 (2nd Dept 1992). Here, plaintiff
has failed in the moving papers to meet its burden of establishing such requirements.
In particular, plaintiff has failed to establish the likelihood of success on the merits.
To establish a claim of misappropriation of trade secrets where there is no employment
contract expressly restricting the former employees from competing with the prior employer as is
the case herein, plaintiff must demonstrate: (1) it possessed a trade secret; and (2) that
defendants are using such trade secret in breach a duty of loyalty or as a result of discovery by
improper means. See Integrated Cash Mgmt. Servs., Inc. v. Digital Transactions, Inc.,
920 F2d 171, 173 (2nd Cir. 1990); Doubleclick, Inc. v. Henderson, 1997 WL 731413
(New York County, Sup Court1997).
Here, while plaintiff alleges that defendants are using plaintiff's trade secrets, it has
not been established that defendants in fact possess trade secrets of plaintiff.
"There is no generally accepted definition of a trade secret but that found in section
757 of Restatement of Torts, comment b, has been cited with approval...It defines trade secret as
any formula, pattern, device or compilation of information which is used in one's business, and
which gives him an opportunity to obtain an advantage over competitors who do not know or use
it'".
Ashland Mgmt. Inc.v. Janien, 82 NY2d 395 (1993)(citations omitted).
Significantly, trade secret protection does not attach to information which is "readily
ascertainable". See Leo Silfen, Inc. v. Cream, 29 NY2d 387, 392 (1972). Pricing
information and customer lists are generally not considered to be trade secrets. See Ken J.
Pezrow Corp. v. Seifert, 197 AD2d 856, 857 (4th Dept 1993)("where an employer's
customer lists are readily ascertainable from sources outside its business, trade secret protection
will not attach and their solicitation by the employee will not be enjoined'"(citations omitted);
Richard M. Krause, Inc. v. Gardner, 99 NYS2d 592, 595 (Sup Ct, New York County
1950)(holding that plainttiffs' prices were learned in the ordinary course of business and will
therefore not be enjoined); Price Paper & Twine Co. v. Miller, 182 AD2d 748 (2nd Dept
1992)(the court refused to enjoin the use of an employer's customer list and pricing information).
Even when a plaintiff asserts that defendants took confidential customer lists, injunctive
relief will not be granted unless those customers could only have been found through plaintiff's
business, which is not alleged herein. See Metal & Salvage Ass'n v. Siegel, 121 AD2d
200, 201 (1st Dept 1986). Moreover, "it is the general rule that an employee may solicit an
employer's customers...when the employment relationship has been terminated". Catalogue
Service of Westchester, Inc. v. Wise, 63 AD2d 895 (1st Dept 1978). Here, plaintiff failed to
establish the existence of trade secrets and their misappropriation by defendants, to warrant
injunctive relief. Moreover, in opposition, defendants allege that many of the customers at issue,
were already longstanding customers of defendant AD Die, prior to the
employment of the individual defendants herein.
Further, it is unclear whether plaintiff may prevail on its claims for replevin and the
granting of a permanent injunction, as defendants maintain that the "dies" at issue, are not in fact
the property of plaintiff, but rather belong to the customers for which they were created. Nor has
plaintiff established a likelihood of success on its conspiracy claim, as it has been held that
"conspiracy to commit a [tort] is never a cause of action". Alexander & Alexander, Inc. v.
Fritzen, 68 NY2d 968 (1986); see also Riverbank Rlty. Co., v. Koffman, 179 AD2d
542 (1st Dept 1992).
[*3]
Moreover, plaintiff has not demonstrated that it
will suffer irreparable injury if defendants are not enjoined from using any of the alleged trade
secrets of plaintiff, nor contacting and/or doing business with any person or entity listed upon
their customer. Throughout the moving papers, plaintiff makes references to the economic harm
it has and will be suffering - including a reduction in weekly sales revenue; however, financial
harm is not considered to be "irreparable" and therefore does not warrant the granting of an
injunction. See Hoppmann v. Sargent Stein, Inc., 141 AD2d 332 (1st Dept 1988).
Additionally, plaintiff has not sustained its burden of demonstrating that a balance of
the equities favors the granting of injunctive relief it seeks. See W.T. Grant Co. v. Srogi,
52 NY2d at 51 7; Hoppmann v. Sargent Stein, Inc., 141 AD2d at 334; Borenstein v.
Rochel Props., Inc., 176 AD2d at 172. There has been no showing that defendant AD Die
lured plaintiff's former employees, or did anything improper to obtain their employment. Further,
it appears that AD Die is merely involved in routine competition in the industry. Notably, no
employment contracts exist between plaintiff and the individual defendants, which might have
limited the individual defendants' actions after leaving plaintiff.
Additionally, since the granting of an injunction is part of the ultimate relief being
sought by plaintiff herein (plaintiff's second cause of action seeks a permanent injunction
prohibiting the use of the dies by the defendants), the granting of a preliminary injunction as to
such ultimate relief at this time is improper. See New York City Police Officers v. City of New York, 34 AD3d
392 (1st Dept 2006)("[t]he purpose of a provisional remedy is to maintain the status quo,
pending a hearing on the merits, rather than to determine the parties' ultimate rights" [citations
omitted]).
Preliminary injunctions are drastic remedies which should be used sparingly. See
67A NY Jur2d, Injunctions §49. Thus, this Court declines to issue a preliminary
injunction.
Accordingly, it is
ORDERED that plaintiff's motion for a preliminary injunction is denied; it is further
ORDERED that any and all stays issued by the signing of plaintiff's order to show cause dated February 11, 2010 are hereby vacated forthwith; and it is further
ORDERED that, within thirty days of entry of this decision/order, defendants shall serve
upon plaintiff a copy with notice of entry.
This constitutes the decision and order of the Court.
Dated: July 9, 2010
Doris Ling-Cohan, JSC