the next case on for me is capstone logistics versus never a please the court your honors my name is michelle ferber i represent the appellants and the defendants navaratri at all as a foundational matter we are here with respect to the extraordinary junction that was issued in this case over a year ago the court reviews this junction for abuse of discretion but it does review the court's conclusions of law dunno about to the extent that the court is able to determine issues of finding and facts that were made by judge daniels below then those issues of fact in law are to be reviewed for clear error and must include whether those facts have been disproven and i would direct your honor's attention to the i wonder verses abrams case where this circuit found that the facts and conclusions of law are required with respect to the issuance of a it's not an optional basis there is a transcript in this hearing but i think made it under delaware law ok well if if that is true then we would submit that that is the in correct conclusion under the substantial relationship test that judge  maybe i've got this wrong but it seemed to me that whether the non competition clauses were in forcible dependent upon whether under caliph if california law applies that it depends on whether these were made in connection with the merger or whether they were in the employment agreement is that the central question under california law i believe that is a central question under both california or delaware a law but particularly with respect to california law which does have the business and professions code and all of the progeny that says that we are immobile state and economy and in less these non solicitation non competition clauses are in connection with the sale of good will of the business tell me what's your best evidence that these were made in connection with an employment in as opposed to a merger the restrictive covenants are in buried within employee issued stock incentive agreements that were signed two months after the merger was completed after the sale of pinnacle to capstone was completed in the merger agreement there was all the listing of who is the seller that's fenway in prevention capital companies they are the only holders of the voting shares of stock in addition there's a second category of class of stock that's all owned by equity companies then there are approximately thirteen individuals who own non voting non ownership equity employee sale stock shares those were paid out when that sale was completed from pinnacle to capstone in may of two thousand and i'm going to get my date wrong and i don't want to do that may of two thousand and fifteen that in july of two thousand and fifteen is when those restrictive covenants are entered into as part of and is required as the continued employment of three of the individual one of the individuals who is bound by the plumber injunction didn't even sign a restrictive covenant was an issued the new employee ownership shares in capstone nor did he profit from the sale from which is made you know a lot of talk about the amount of money that was paid to three of the individuals as a result of the sale from pinnacle to capstone one of those individuals didn't have any employee stock he didn't get any money and yet he's bound by the preliminary injunction so under california law if that's a law that applies the analysis i think ends right there these restrictive co buried in there in the covenants to get employees stock two months after stale as a result of if you want to continue to be employed by your new employer capstone and get these employee stock shares you have to sign this and from those shares there's been virtually no profit from the three individuals can i ask about rojas it sounds to me like rojas is all a texas guy and california texas law well under the if they covenants that the preliminary injunction was based on if those are the three covenants that were signed in july of two thousand and fifteen those say that delaware law applies we believe that the law requires that the new york court sitting in designation under the venue choice has to imply the substantial relationship test so the three that you make that argument that was selected whether it's the proper forum for california or using your choice correct but i would also submit that delaware there are two cases cited by opposing counsel that talk about under whether delaware if you choose the delaware law or if judge daniels had applied delaware law well one case again it's the same test is there the sale of the good will is there a substantial economic factor the second one in delaware said all right well this this covenant is you don't know i don't know your honor but i believe that that the law that we cited which includes the production resources grew out of the southern district of new york and and the t g  ultimate holdings that california law needs to apply that justice rackets decision in t g he ultimate holdings and the cap gemini case and that you  supply apply which state has the most substantial relationship and answer to the previous question the three individuals who signed the restrictive covenants which are at issue all were are always have been residents of california worked from california worked for both pinnacle and capstone in california and entered into these covenants while residence of california has been the principal point of your argument though that you made to us in  whole we don't know what the big three appear don't know the basis for judge daniel's decision and he needs to articulate at least the facts that he relied on with all due respect i believe that's correct based on a review of what's there or does there have to be further proceedings i do not believe there have to be further proceedings because i believe that the record the facts and evidence are unequivocal a clear that the major fact that this both the temporary restraining order and the plumber injunction were issued on was that these restricted covenants were issued in connection with this sale and for consideration large consideration from that goodwill sale that's absolutely incorrect there is no legitimate basis to argue that restrictive covenants enter into two months after the sale well of a company that these individuals didn't have the right to sell they're not the sellers of the company they're not for dental or fenway they didn't have any input right to object to or negotiate price or terms or conditions of that sale that happened two months before they signed restrictive covenants like yours ok i thought you were riginal motion was we don't know enough here there's not enough on this record to support these  vacated but it sounds to me like you want us to make a further finding that these that the on what that these were not part of the merger you want us to make that binding i think the i think if the court would like to go that far it has the ability to do so i certainly would like it to but you are correct ok if that's not in my wheel house then i think at the very minimum that the problem marion junction needs to be vacated and returned final order granting the injunction it doesn't provide the background of the facts but wasn't a part of your you know there of course there was a hearing absolutely and there is a transcript from feelings a bad word from soliciting customer i don't know that he made findings of fact he questioned counsel for capstone it like for example what was the trade secret that wanted to be protected and there was no answer for that and then came up with the solution well i'm just going to require them to give back all of your information that sufficient he also made a finding if you want to call it that with respect to the one customer that was an issue that went with my clients versus capstone because of a personal relationship with mr paf and berger has been as has been testified to that monetary damages were sufficient morning the morning honors may please the court my name is james you and i will be arguing on behalf of the polies in their briefs on appeal and as continued through this argument the appellant mischaracterized the record below in a number of instances in an effort to propriety of judge daniels decision and i want to address three of these instances in particular that go to the heart of the issues on appeal first the opponents argue that judge daniels did not properly make any findings of fact the conclusions of law as draw  as pointed out there was a transcript of the hearing below and what's interesting is that nowhere in their opening brief do they acknowledge or cite at all to this ninety nine page transcript of the preliminary injunction here you three thirteen ninety something excuse me on i enumerated to the transcript well let me give one example so one example is the judge daniels found that the defendant's communications and the presentations that they had made to capstone customers in their effort to do business with those customers amounted to solicitation the defendants disputed that at the preliminary injunction hearing say oh well we know we just made a general capabilities presentation that's not solicitation and judge daniel specifically gave it transcript the judge daniels found my problem i think judge engaged everyone with a lot of questions and then after this colloquy its over i'm looking for and therefore i conclude and i i didn't often see  point out there was a voluminous record that was submitted to the district court prior to the preliminary injunction hearing literally every single deposition transcript or virtually all the deposition transcripts were submitted to judge daniels prior to the hearing in addition to  half a dozen declarations and i want to point out that from i have with all of this though frankly is that i'm not normally my colleagues can speak for themselves we are not normally in the business of parsing through all of this and saying oh there's a finding there's a finding there's a finding i'm not sure we've been given a particularly good if any roadmap of the findings that are needed to support the issuance of a pull in an area junction where are they what they are in the transcript you honor again you know well that's i'm hearing you say that and i'm not going to search through five hundred pages of transcript looking for little points it seems to me that what happens in a normal situation is the district court lays out the findings of fact on which he or she determines that there's a likelihood of success on the merits of the various other factors for asians a preliminary injunction concludes or points out what the analysis is for deciding what the choice of law is and why we're proceeding under delaware lord or not under california law and then you'll see something that is reviewable for abuse of discretion yeah i understand that your honor and you will agree with me that what's at s p a one and two does not do that and three the order does not correct yes but the order it was clear from the transcript at the end of the hearing judge daniels directed the parties to prepare a proposed forms of order that reflected the judge and conclusions of law have to be set forth in order practical point is that that's preferable preferable but not required let me ask you about the employee restriction although i did find some indication in the transcript that judge daniel found that the solicitation of customers was irreparable harm i didn't find anything about the employees is there something that you can point to about a finding that  one i don't believe that the defendants are challenging the propriety of the that aspect of the order number two i think i have to kind of get into an explanation about capstans business a little bit in order to answer that question  so the way capstone operates is it manages various customer sites distribution centers for a number of their customers including for example the customers identified and complaint home depot unify c v s companies with national businesses with large distribution needs and at each of these distribution centers capstone employs a mobile workforce that are in charge of unload unloading cargo from trucks breaking down the pallets moving the cargo into the warehouses and that is  sentially capstans business model and a lot of times the employees are specifically recruited to work at a piece of the customer site the site managers that manage those employees have specific knowledge about the operations of those customer sites and so one of the things that can happen is if you allow a competitor to take away those associates in them and those employees as what happened in colorado with d p i suddenly there's a vacuum or a capstone is on able to is unable to continue providing logistic services at that specific site and so we had no choice but to transition that site over to d p i prior to the terminations of the official termination of our agreement with d p i that's just one percent what do you think we're arguing about here it seems to me that there is no argument about not using proprietary information that sounds that seemed to me it was off the table that part of the order right well to the extent that they argue that they've returned everything in one we dispute that but secondly yes as far as i understand they're not appealing that aspect of the order and you think they're not appealing anything dealing with the n solicitation of lawyers either they think we're only talking about the solicitation of customers that's correct well they don't raise that in their brief and as far as i and where under california law the not solicitation of employees isn't forcible regardless of whether talking about california law delaware law legitimate business interests of the company for trade secrets is well you know that's off the table in so far as they're not appealing the part of the order where they say they're we're not going to they're not going to use our trade secrets but there doesn't have to be a california law doesn't require that a not solicitation be specifically require the use of trade secrets in other in other words you can have a blanket nonsense attention provision to the extent necessary to protect trade secrets and here what happened is there's ample evidence that we presented to the district court where not only did they have access to our tracers but they in fact used our trade secrets in order to obtain business from customers there was ongoing to go appellant's mentioned one customer that's just not true there are ongoing negotiations with half a dozen customers by the time of the injunction was entered they entered into a contract with d p i but they used a copy of capstone confidential contract with  order to draft a contract with they literally did was they converted that contract from a p d f into a word document and then tried to and they use that as a basis for their contract with d p i and that's just you know one example there are examples where  defendant rojas and this is one of the reasons why we named him as a defendant three weeks after he left the company is already working for he's already working for human and he literally accesses to you and if i files from a computer that he supposedly deleted that as i mentioned he was instrumental in assisting hugh mano in trying to obtain business from you and if i which is the second largest customer of capstone and he was a dedicated representative on behalf of capstone for  so he is not solicitation employee agreement is off the table well we actually i know this is not on the record but there's actually a pending motion for leave to amend the complaint now to include a breach of contract under his agreement perceived that but that is to him is based effectively on an agency principle correct and his and his access and his access to trade secrets what we're concerned about was that they were using him as a we know what you've just said because it's in the record at least it's in the appendices that we've submitted the declarations and the discovery that was produced by the defendants prior to the program injunction order which is all presented to the district court so essentially we're recreating the policeman or injunction because judge daniels didn't tell us that that's what he did it's not in the transcript that's right so how do we know what judge daniels relied on our weather  well i think ultimately it's not i don't think we have to specifically find whether or not judge daniels relied on those facts or not i think it's just efficient to determine based upon the facts that were present district court and the district cour straighten out something are you challenging the provision relating to employees in the order yes your honor as we have argued under california law under business and professions code section sixteen six hundred that restrains anyone from engaging in a lawful profession trade or business of any kind and that includes if you expand the way that the final order was issued by judge daniels that the solicitation of any employee across the entire united states of america right that effectively impedes your ability to engage in your profession i look at your brief i will see where you specifically challenge that part of the order i believe so your honor in both our bullet brief and in our reply war i believe we still prevail under under delaware law as well your honor because the central argument is worthy use restrictive covenants issued with respect to the sale of good will of the business delaware st recognizes differently in the new york maybe not as strong a public policy of california but still has reasonable limitations on non competition and these restrictive covenants were not issued or in consideration for the sale of the business they also are not limited as we sit here today mr nava ready the sole shareholder of human know his two year restrictive covenant has already expired that expired in may of this year so we're still here restrained even though that time has passed the and the delaware case cited in opposing counsel's brief that was a covenant that they said all right is within fifty miles it's for one year that that's a reasonable restriction even though it's not in can now action with the sale of the business so i believe even under delaware law we would prevail i want to point out one of the the problems with not having the clear findings of fact in law what we're talking about in terms of what these companies do for a lack of a sexier definition they on load trucks it's not secret formulas it's not a complicated technological world they are unload traps and so the definition of customer was important and judge daniels at page fifty five of the transcript he there's a call up with there were he talks about what may be a customer and what may enable them at what point do they stop being capstone customer and he gives an example of well maybe if where there is evidence that they've stopped doing business or write a stop doing business then you might be able to start talking in that you agree  explicitly in the final order granting an injunction i think as you state your honor you are correct even under the i wonder case but certainly not only is it preferable there has to be a way with this extraordinary remedy restraint of trade that there is an easily identifiable way for both sides to know what the conclusions of fact and law are that's great that's preferable but what i'm asking is is is there a legal requirement i believe that this court could find under its prior to the no that is is there i don't know i would agree with you in the way you say it but i do believe that  an individual or a company to comply with this extraordinary remedy right where we where we know judge daniels found that at least with respect to d p i that economic relief was appropriate so why would that not be appropriate for example with respect to any other potential customers there's also evidence in the transcript where judge daniels asked counsel repeatedly tell me what you want what's the trade secret tell me what you want i want to give it to you and not just give back information as counsel talked about in his statements to the court give back our form files give back copies of contracts don't use that tell me what the trade secret is that you want me to protect and there was no answer to that so it's unclear what trademark if any or trade secret excuse me i is being protected here i understand that last week they you know they filed now to amend the complaint in trying to include mr rojas in an independent way registering as late as last week  copyright maybe in recognition that there are no trade secrets here but based upon the record that we have and the transcript and then the order we don't really understand or know what the basis for the extraordinary issuance of this injunction was and why for example monetary goal of these restrictive covenants expired mr nava roddy's has expired the other two expire in the spring of two thousand and nineteen includes rose wrote well rojas is interesting because again they didn't that's not part of the record or what they argued  rojas and toured into an agreement in two thousand and thirteen with road link which is the predecessor to pinnacle so that had a non disclosure agreement so i that's the only agreement i'm aware of so if that's what council's referring to i don't know if if you have confidential information that survives well i think that the argument was that there was an agency principle and through human oh that's so we would look to whatever restrictions are associated with the company well mr nava reddy is one hundred percent shareholder of human now and his covenant has expired think if we're if we're arguing an agency theory then my argument would be that it would flow through mr not variety but i thought rojas signed this nondisclosure non solicitation agreement which all referred to texas law right yes ok and that wasn't in two thousand and thirteen yeah and that was with road link if if if i'm understanding that the same agreement that's the only agreement i'm aware of ok so in this case they were he says they weren't suing under that as it stands before us without amending of the complaint it's just the agency relationship correct and the motion to amend has not been heard and i ask about mr puff and burger ye capstone headquarters are and pinnacles headquarters where mr possum burgers never lived or worked in georgia other than the extent that his working in california and has always done so and lived in california and just fur for