Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-01534/USCOURTS-caed-2_07-cv-01534-3/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:2201 Injunction

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

INTERLOC SOLUTIONS, )

INC., )

 )

 Plaintiff, )

 )

 v. )

 )

 )

TECHNOLOGY ASSOCIATES )

INTERNATIONAL )

CORPORATION, WALT )

OLESKY, CHARLES )

JOHNSON, CHRIS RHODES, )

MICHAEL NUTT and )

DOES 1 THROUGH 10, )

inclusive, ) 

 )

 ) 

 Defendants. )

 )

________________________)

CV 07-1534 LEW (GGHx)

ORDER GRANTING

PRELIMINARY INJUNCTION 

 

On August 7, 2007, the Court issued a Temporary

Restraining Order (“TRO”) without notice. On August 14,

2007, the Court Modified the TRO upon Defendant Technology

Associates International Corporation (“TAIC”) and Defendant

Case 2:07-cv-01534-LEW-GGH Document 43 Filed 08/24/07 Page 1 of 7
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1Based on the merits of these claims, the Court declines to

address the remaining claims for for breach of fiduciary duty, breach

of confidence, breach of duty of loyalty, fraud, and conversion.

2

Walt Olesky’s Motion. The Motion for Preliminary Injunction

came before hearing on August 17, 2007. Having considered

the papers and argument submitted on the issue, THE COURT

NOW FINDS AND RULES AS FOLLOWS: 

As a preliminary matter, pursuant to Federal Rule of

Civil Procedure 65(a)(1), this Order shall not apply to

Defendant Charles Johnson as an individual defendant until

he has been given an opportunity to be heard. This Order

may be modified to include him when and if appropriate.

The Court finds that Plaintiff has demonstrated a

sufficient likelihood of success as to at least its

misappropriation of trade secrets and unfair competition

claims, as well as its common law claim for intentional

interference with prospective economic advantage.1

Likewise, Plaintiff has established a threat of sufficient

harm should an injunction not be issued. On balance, the

potential harm to Defendants’ livelihoods and businesses is

addressed in the scope of this Order, and does not outweigh

the hardship facing Plaintiff. Plaintiff’s Motion for

Preliminary Injunction is GRANTED based on the Court’s

consideration of these factors. See Stuhlbarg Int’l Sales

Co. v. Brush & Co., 240 F.3d 832, 839-40 (9th Cir. 2001).

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Regarding the misappropriation of trade secrets claim

under the Uniform Trade Secrets Act, Plaintiff has shown a

likelihood of success in proving that at least the

information on the SugarCRM database, if not the totality of

the customer information downloaded or obtained from

Plaintiff’s computers and laptops, has economic value

derived from not being known to competitors. See ABBA

Rubber Co. v. Seaquist, 235 Cal. App. 3d 1, 19, 21 (1991). 

Through the expenditure of considerable time and money,

Plaintiff has developed customer information beyond that of

mere contact information. See, e.g. Morlife, Inc. v. Perry,

56 Cal. App. 4th 1514, 1523 (1997). 

Plaintiff has also shown probable success in proving

Defendants acquired, disclosed, or used Plaintiff’s

protected information through improper means. For example,

in addition to the quantity of information and software

downloaded by various Defendants, the “TAIC Start Up List”

created by and shared between Defendants Johnson, Nutt, and

Rhodes raises a strong inference of such improper conduct. 

[See Greene Aff. Ex. A]. An actual or threatened

misappropriation may be enjoined. Cal. Civ. Code §

3426.2(a). 

Likewise, while Defendants TAIC and Olesky do not

appear to have actively acquired trade secret information,

they remain included in this Order by association for having

allegedly cooperated in and reaped the benefits of the other

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Defendants’ midsconduct. See PMC, Inc. v. Kadisha, 78 Cal.

App. 4th 1368, 1383-84 (2000). Misappropriation includes

disclosure or use of a trade secret by one who knows or has

reason to know that the knowledge was “(i) Derived from or

through a person who had utilized improper means to acquire

it; (ii) Acquired under circumstances giving rise to a duty

to maintain its secrecy or limit its use; or (iii) Derived

from or through a person who owed a duty to the person

seeking relief to maintain its secrecy or limit its use." 

Cal Civ Code §3426.1(b)(2)(B) (i)-(iii).

 

Defendants should note that acts of solicitation may be

considered “use” or “misappropriation” of trade secrets. 

American Credit Indemnity Co. v. Sacks, 213 Cal App. 3d 622,

625 (1989). While Defendants may announce their new

affiliation with a new employer, they may not actively

solicit Plaintiff’s customers using any protected

information. Id. at 636; see also, Reeves v. Hanlon, 33

Cal. 4th 1140, 1156 (2004)(using trade secret client data to

directly solicit clients violated the Uniform Trade Secrets

Act). 

Likewise, solicitation of Plaintiff’s current employees

through use of trade secret information downloaded or

obtained from Plaintiff’s computers and laptops would be

improper. However, the employees are not precluded from

seeking new employment on their own initiative. See Reeves,

33 Cal. 4th at 1151 (“The interests of the employee in his

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5

own mobility and betterment are deemed paramount to the

competitive business interests of the employers, where

neither the employee nor his new employer has committed any

illegal act accompanying the employment change.”) 

Additionally, a competitor may be held liable under an

intentional interference with prospective economic advantage

theory for inducing an at-will employee to leave an employer

if that party engaged in an independently wrongful act in

the inducement. Id. at 1152-53. In addition to the use of

trade secrets in any inducement of Plaintiff’s current

employees, unlawful remarks concerning Plaintiff, its

employees, or agents may also constitute wrongful acts. 

Communication with Plaintiff’s current employees based on

personal relationships is not prohibited.

 

Further, unfair competition claims may be premised on

misappropriation of trade secrets or intentional

interference with prospective economic advantage claims. 

Balboa Ins. Co. v. Trans Global Equities, 218 Cal. App. 3d

1327, 1341-42 (1990). 

Therefore, IT IS HEREBY ORDERED THAT:

Defendants are ENJOINED to return to Plaintiff all data

and information that Defendants obtained from Plaintiff's

computer between July 13, 2007 and July 16, 2007, and any

copies Defendants may have made from them. Defendants must

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2Plaintiff submitted a list of current customers, UNDER SEAL,

which was to be disclosed to Defendants for the sole purpose of

complying with this Order. [See Docket Number 29]. 

6

have delivered these files in any and all forms, including

copies of any and all parts, to Plaintiff by August 9, 2007. 

Defendants must thereafter immediately permanently delete

and destroy all copies remaining on any computer systems,

discs, hard drives, etc.

Defendants are FURTHER ENJOINED from using or

disclosing any of the information contained in the

downloaded information or on the Interloc Solutions, Inc.

laptops, to the extent that information is not readily

accessible. 

Defendants are FURTHER ENJOINED from assertively

communicating with Plaintiff Interloc's current customers

regarding contracts for which Interloc and TAIC directly

compete.2 However, any communications in response to those

initiated by Plaintiff’s customers are outside the scope of

this order. Likewise, customers common to both Plaintiff

and Defendant TAIC are excluded.

The Court is in receipt of Plaintiff’s August 16, 2007

Statement of Deposit of the $5,000 bond requirement

previously ordered by the Court pursuant to Eastern District

Local Rules 65.1-151 and 65-231.

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This Order will expire after final judgment, unless

shortened or modified by order of the Court or by consent of

the parties.

IT IS SO ORDERED. 

 

RONALD S.W. LEW

Senior U.S. District Judge

DATED: August 23, 2007

Case 2:07-cv-01534-LEW-GGH Document 43 Filed 08/24/07 Page 7 of 7