Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-06418/USCOURTS-cand-3_07-cv-06418-13/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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 Gallagher objects to the joinders filed by defendants Francis, Hahn, Wally Brown,

Quinn, Cohen, Cohn, Brown, Hause, Wick, Halbleib, Martin, Chua, Petty, Soo Hoo, Dutto,

English, Johnson, Amos, Phillips, Stinson, Ellsworth, Watkins, Wagener, and Middleton. 

The Court OVERRULES such objections. The Court FURTHER ORDERS that Gallagher’s

motion to file a sur-reply is DENIED. 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ARTHUR J. GALLAGHER, & CO., INC., et

al.

Plaintiffs,

 v.

EDGEWOOD PARTNERS INS. CENTER, et

al.

Defendants. /

No. C 07-06418 JSW

ORDER DENYING PLAINTIFF’S

APPLICATION FOR A

TEMPORARY RESTRAINING

ORDER

Now before the Court is plaintiff Arthur J. Gallagher & Co., Inc. and Arthur J.

Gallagher & Co.’s (collectively, “Gallagher”) application for a temporary restraining order

(“TRO”) against defendants Edgewood Partners Insurance Center (“EPIC”), Dan R. Francis,

John G. Hahn, Andrew (“Wally”) Brown, Jr., Brian F. Quinn, Neil R. Cohen, Carolann Cohn,

Michael J. Brown, Stephen Hause, Laura J. Wick, James C. Halbleib, Laurinda (“Laurie”) A.

Martin, Eric Chua, George J. Petty, Linda Soo Hoo, Robert E. Dutto, Susan M. English, Don J.

Johnson, Allen L. Amos, William (“Bill”) Phillips, Jr., Dirck (“Rick”) R. Stinson, Robert

(“Bob”) D. Ellsworth, Robert H. Watkins, Paul H. Wagener, and Shandranette Middleton

(collectively, “Defendants”). Having considered the parties’ arguments, relevant legal

authority, and having had the benefit of oral argument, the Court DENIES the application for a

TRO.1

Case 3:07-cv-06418-JSW Document 157 Filed 01/23/08 Page 1 of 5
United States District Court

For the Northern District of California

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2

 When faced with a motion for a preliminary injunction, the Court “is not required to

make any binding findings of fact; it need only find probabilities that the necessary facts can

be proved.” Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1423 (9th Cir.

1984). The standards for a temporary restraining order and for a preliminary injunction are

substantially the same. Stuhlbarg Int'l Sales Co., Inc. v. John D. Brush & Co., Inc., 240 F.3d

832, 839 n.7 (9th Cir.2001). Accordingly, the facts recited herein are not to be considered

final and binding on the rest of the proceedings. 

2

BACKGROUND2

Gallagher is a company that was established in 1927 and provides brokerage and risk

management services to corporate clients to assist them in obtaining commercial coverage and

employment-benefit related insurance. (Declaration of James G. McFarlane, ¶ 3.) Gallagher

employs over 7,000 employees world-wide. (Id.) In first half of December 2007,

approximately fifty of Gallagher’s employees terminated their employment and began working

for EPIC, a newly formed competitor. (Id., ¶¶ 18, 28.) EPIC was recently founded by

defendants Hahn and Francis.

Gallagher contends that Defendants wrongfully conspired to leave Gallagher and solicit

other employees to leave with them. Gallagher further contends that Defendants have

misappropriated Gallagher’s confidential and/or proprietary data and used such information to

solicit Gallagher’s clients for EPIC. Gallagher now moves for a TRO to enjoin such alleged

conduct. The Court shall address additional facts as necessary to its analysis in the remainder

of this Order. 

ANALYSIS

A. Applicable Legal Standards.

 To prevail on a motion for temporary restraining order or to receive preliminary

injunctive relief, the moving party bears the burden of demonstrating either (1) a combination of

probable success on the merits and the possibility of irreparable injury or (2) the existence of

serious questions as to success on the merits and irreparable injury along with a sharp tipping of 

the balance of hardships in favor of the moving party. Stahlbarg Int’l Sales, 240 F.3d at 839-

840. These alternative standards are “not separate tests but the outer reaches of a single

continuum.” International Jensen, Inc. v. Metrosound U.S.A., 4 F.3d 819, 822 (9th Cir. 1993). 

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United States District Court

For the Northern District of California

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“Because injunctive relief prior to trial is a harsh and extraordinary remedy, it is to be granted

sparingly and only in cases where the issues are clear and well defined and the plaintiff has

established a reasonable certainty of prevailing at trial.” Watermark, Inc. v. United Stations,

Inc., 219 U.S.P.Q. 31, 32-33 (C.D. Cal. 1982) (citing Dymo Industries, Inc. v. Tapeprinter, Inc.,

326 F.2d 141 (9th Cir. 1964)). Moreover, “on application for preliminary injunction the court is

not bound to decide doubtful and difficult questions of law or disputed questions of fact.” 

Dymo Industries, 326 F.2d at 143; see also Mayview Corp. v. Rodstein, 480 F.2d 714, 719 (9th

Cir. 1973) (reversing grant of preliminary injunction based on existence of disputed factual

issues).

As an “irreducible minimum,” the moving party must demonstrate “a fair chance of

success on the merits” or “questions ... serious enough to require litigation.” Sports Form, Inc.

v. United Press Intern., Inc., 686 F.2d 750, 753 (9th Cir. 1982) (citations omitted). If the

moving party fails to show any chance of success on the merits, a court need not determine

whether there is potential injury or balance the hardships. Id.

B. Likelihood of Success on the Merits.

Gallagher contends that defendants Wally Brown, Quinn, Cohen, Halbleib, and Hause

were officers and thus owed fiduciary duties to Gallagher. Gallagher contends that these

defendants breached such duties by conspiring to leave, soliciting other employees to leave with

them, using Gallagher funds to develop client relationships for EPIC, and delaying the

announcement of their resignations to inflict the most harm upon Gallagher. Gallagher also

contends that the employees who left en masse misappropriated Gallagher’s confidential and/or

proprietary data and used such information to solicit Gallagher’s clients for EPIC.

Gallagher contends that Defendants should be enjoined from using such confidential and

proprietary information and from interfering with existing customer and employment

relationships. Gallagher further contends that the alleged conduct violates the Uniform Trade

Secrets Act (“UTSA”), the Computer Fraud and Abuse Act (“CFAA”), California Penal Code §

502, and the covenants contained in Gallagher’s Executive Agreements. To demonstrate

misappropriation of trade secrets under the UTSA, Gallagher must show actual use or actual

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United States District Court

For the Northern District of California

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 The parties have submitted multiple evidentiary objections. However, on an

application for TRO or preliminary injunction, affidavits need not meet the standards set

forth in Federal Rule of Evidence 56(e) or the Federal Rules of Evidence. Bracco v.

Lackner, 462 F. Supp. 436, 442 (N.D. Cal. 1978); see also Flynt Dist. Co., Inc. v. Harvey, 734 F.2d 1389, 1394 (9th Cir. 1984) (district court may give inadmissible evidence some

weight in consideration of a motion for preliminary injunction “when to do so serves the

purpose of preventing irreparable harm before trial”). Therefore, the Court will not sustain

any of the parties’ objections. Rather, the Court has given weight to the evidence presented

based on the Court’s discretion, and upon consideration of the competence, personal

knowledge and credibility of the affiants. See Bracco, 462 F. Supp. at 442.

4

 Although the Court finds the material facts are disputed, the Court notes that

Defendants have admitted to one incident. In his declaration submitted in opposition to

Gallagher’s application for a TRO, Hause admitted that he kept a document with him that

had been prepared while he was at Gallagher, an insurance quote that had been prepared for

Gallagher’s client, Sun Garden Gangi. (Declaration of Stephen Hause, ¶¶ 11, 12.) He

declared that EPIC had made clear to him that he was not to take or use any document from

Gallagher and he now realizes that he should not have presented this document to Sun

Garden Gangi. (Id.) Sun Garden Gangi has remained a Gallagher client. (Id., ¶ 13.) The

Court finds that this one incident is insufficient to demonstrate a threat of present or future

harm. See Committee of Cent. Am. Refugees v. I.N.S., 682 F. Supp. 1055, 1064 (N.D. Cal.

1988) (“Injunctive relief is designed to deter future misdeeds, not to punish for past

conduct.”); see also Plumley v. Landmark Chevrolet, Inc., 122 F.3d 308, 312 (5th Cir. 1997)

(denying injunction based on past wrong where plaintiff failed to show that there was a real

or present threat that he would be wronged again); ACT-UP v. Walp, 755 F. Supp. 1281,

1285-86 (M.D. Pa. 1991) (denying preliminary injunction based on “isolated incident

performed by a state police officer who had overstepped his authority).

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threat of such use. See Bayer Corp. v. Roche Molecular Sys., Inc. , 72 F. Supp. 2d 1111, 1120

(N.D. Cal. 1999). To prevail on a claim under the CFAA, Gallagher must demonstrate that

Defendants “intentionally accese[d] a computer without authorization or exceed[ed] authorized

access, and thereby obtain[ed] information from any protected computer,” ... or that Defendants

“knowingly cause[d] the transmission of a program ... and ... cause [d] damage without

authorization to a protected computer.” See Ticketmaster L.L.C. v. RMG Technologies, Inc.,

507 F. Supp. 2d 1096, 1113 (C.D. Cal. 2007) (quoting 18 U.S.C. § 1030). 

The Court has carefully examined the voluminous evidence submitted by the parties.3

The Court is not bound to resolve disputed questions of fact, and based on the existence of such

disputed facts,4 finds that Gallagher has not demonstrated a likelihood of success on the merits. 

See Dymo Industries, 326 F.2d at 143; see also Mayview Corp. v. Rodstein, 480 F.2d 714, 719

(9th Cir. 1973) (reversing grant of preliminary injunction based on existence of disputed factual

issues). Defendants have submitted substantial, credible evidence that they did not: (1) conspire

to leave Gallagher and solicit other employees to leave with them; (2) use insider’s information

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about salaries and benefits to lure away employees; (3) take and use or threaten to use

confidential or proprietary information; (4) use Gallagher funds to develop clients for EPIC; (5)

or delay announcing their resignation in order to inflict the most harm on Gallagher. The Court

thus Court finds that Gallagher has not shown that it has a reasonable certainty of prevailing at

trial and therefore DENIES Gallagher’s application for a TRO. Sports Form, 686 F.2d at 753

(holding that a court need not determine whether there is potential injury or balance the

hardships if the moving party fails to show any chance of success on the merits).

CONCLUSION

For the foregoing reasons, the Court DENIES Gallagher’s application for a TRO. 

IT IS SO ORDERED.

Dated: January 23, 2008 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

Case 3:07-cv-06418-JSW Document 157 Filed 01/23/08 Page 5 of 5