Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_10-cv-00202/USCOURTS-cand-5_10-cv-00202-13/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1391 Personal Injury

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Case Number C 10-00202 JF

ORDER DENYING MOTION FOR RECONSIDERATION

(JFEX1)

**E-Filed 7/9/10**

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

TMX FUNDING, INC., a Delaware corporation,

 Plaintiff,

 v.

IMPERO TECHNOLOGIES, INC., A California

Corporation; CLARENCE NICHOLAS

STEIGELMAN, An Individual; RONALD J

LESNIAK, An Individual; MITCHELL A

HEINLEIN, An Individual; JOSEPH ZHANG,

a.k.a. XIANGCHOU ZHANG, An Individual;

MICHELLE DOVER, An Individual; And DAVID

LESNIAK, An Individual,

 Defendants.

Case Number C 10-00202 JF (PVT)

ORDER DENYING MOTION FOR 1

RECONSIDERATION

[re doc. no. 148]

On May 20, 2010, the Court modified the existing preliminary injunction (the

“Injunction”), removing language prohibiting Defendants Ronald and David Lesniak (the

“Lesniak Defendants”) from retaining certain property and carrying out certain business

activities that the Court deemed likely to constitute a misappropriation of trade secrets belonging

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Case Number C 10-00202 JF

ORDER DENYING MOTION FOR RECONSIDERATION

(JFEX1)

to Plaintiff TMX Funding, Inc. (“TMX”). TMX moves for the reconsideration of that order, and

the Lesniak Defendants oppose the motion. The Court has considered the moving and

responding papers and the oral argument of counsel presented at the hearing on July 2, 2010. 

For the reasons discussed below, the motion will be denied, without prejudice.

I. BACKGROUND

On January 14, 2010, TMX filed the instant action against Defendants Impero

Technologies, Inc. (“Impero”), Clarence Steigelman (“Steigelman”), Ronald Lesniak (“R.

Lesniak”), Mitchell Heinlein (“Heinlein”), Joseph Zhang (“Zhang”), Michelle Dover (“Dover”),

and David Lesniak (“D. Lesniak”) (collectively, “Defendants”), asserting several claims for

relief including misappropriation of trade secrets in violation of the California Uniform Trade

Secrets Act (“UTSA”), Cal. Civ. Code § 3426.1; interference with prospective economic

advantage; breach of contract; unfair competition in violation of Cal. Bus. & Prof. Code §

17200, et seq.; and conversion in violation of Cal. Penal Code § 502(e).

A. Factual history

TMX purchased certain assets and collateral of Teledex, LLC (“Teledex”), a designer

and manufacturer of hotel guest room telecommunication solutions, including wireless

broadband internet, analog telephone, and voice-over internet protocol telephone systems. TMX

acquired the assets and collateral of Teledex after the expiration of several forbearance

agreements with respect to a loan on which Teledex was the borrower. R. Lesniak was the

president and chief executive officer (“CEO”) of Teledex, and D. Lesniak was a field service

manager at Teledex. (R. Lesniak Decl. ISO Defs.’ Opp’n to Premil. Injx. ¶ 2; D. Lesniak Decl.

ISO Defs.’ Opp’n to Prelim. Injx. ¶ 2.) In connection with the acquisition, GE Capital

Corporation (“GECC”) confiscated Teledex’s assets, including its funds necessary to pay

employee wages. R. Lesniak claims that he terminated all Teledex employees on December 8,

2009. (R. Lesniak Decl. ISO Defs.’ Opp’n to Premil. Injx. ¶ 9.) R. Lesniak allowed the

Teledex employees, including D. Lesniak, to retain possession of the Teledex laptop computers

they had used while employed. (Id. at ¶ 10.) On December 9, 2009, the Santa Clara Superior

Court appointed a receiver to take possession of Teledex’s property, with the exception of

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ORDER DENYING MOTION FOR RECONSIDERATION

(JFEX1)

“property that relates to membership interests and equity of [Teledex].” (TMX’s Complaint, Ex.

A at 2:19-20.) The Superior Court also issued a restraining order against Teledex, its agents,

officers, employees, and all persons acting under, in concert with, or for them, forbidding them

to “[e]xpend, disburse, transfer, assign, sell, convey, devise, pledge, mortgage, create a security

interest in, encumber, conceal or in any manner whatsoever deal in or dispose of the whole or

any part of [Teledex’s] assets without prior Court order.” (TMX’s Complaint, Ex. A at 9:18-20,

10:4-7.)

Teledex’s corporate counsel, Deborah Ludewig (“Ludewig”) instructed her IT

professional, Thomas Adler (“Adler”), to copy R. Lesniak’s emails and desktop information,

believing that it was “likely that communications between GECC and Teledex and company

information would be located in those locations.” (Ludewig Decl. ¶ 6.) Ludewig was concerned

about the antitrust implications of TMX’s purchase of Teledex’s assets and was interested in

preserving “any evidence relating to communications by and between GECC and TMX and

information relating to the status of the Teledex entity at the time of the transaction.” (Ludewig

Decl. ¶ 4.) On December 15, 2009, 117 files were copied from R. Lesniak’s desktop computer

onto compact disks (“CDs”). (McKnight Decl. ¶ 9.) On December 16, 2009, an additional file

from R. Lesniak’s computer was copied onto a CD. (Id.) Examples of the names of the files

copied onto the CDs include:

• Chart October Presentation Financial ComparisonBook1.xls

• Confidential follow-up.htm

• Confidentiality agreement(v4).DOC

• Confidentiality agreement(v5).DOC

• Purchase Order Dates.xls

• Sales By Category.rtf

• Terms and Conditions for a Purchase Order..htm [sic]

• Three Buckets Marketing.xls

(Id.) R. Lesniak denies making these copies. (R. Lesniak Decl. ISO Lesniak Defs.’ Opp’n to

Mot. for Reconsideration, ¶ 2). Adler also denies having made these copies or having seen

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anyone make them, (Adler Decl. ¶ 11), and Ludewig does not discuss the CDs in her

declaration. 

It is undisputed, however, that Adler met R. Lesniak at Teledex’s former facilities on

December 16, 2009 in order to copy the files requested by Ludewig. (Adler Decl. ¶ 4.) When

Adler arrived at 10:53 a.m., R. Lesniak already was there. (Id.) While he was copying the files,

Adler noticed that the “CD burner program” on R. Lesniak’s desktop computer was active. (Id.

at ¶ 11.) He attempted to shut down the program, but he was unable to do so, even after

referring to Google for information about the program. (Id.; see also McKnight Decl. ¶ 8

(noting that the following Google searches had been performed on R. Lesniak’s desktop

computer on December 16, 2009: Windows Files to Burn and Windows Remove Files to Burn.)

.) Adler proceeded to copy R. Lesniak’s emails and “desktop information” onto two external

storage devices – a Memorex TD Classic (“Memorex drive”) and a Seagate FreeAgent (“Seagate

drive”) (Adler Decl. ¶¶ 5, 13; McKnight Decl. ¶ 4.) – and then delivered the external storage

devices to Ludewig. (Adler Dec. ¶ 13.) Ludewig claims that R. Lesniak never had access to the

external storage devices. (Ludewig Decl. ¶ 10.)

In February 2010, two months after resigning from Teledex, R. Lesniak began working

for VTech Corporation (“VTech”), a competitor of Teledex. (R. Lesniak Decl. ISO Lesniak

Defs.’ Opp’n to Mot. for Reconsideration, ¶ 6-7.) During 2009, VTech and other entities had

considered acquiring Teledex. (Id. at ¶ 6.) R. Lesniak prepared possible business plans for

VTech and these other entities in connection with the potential acquisition. (Id.) D. Lesniak has

been unemployed since TMX’s acquisition of the assets of Teledex. (D. Lesniak Decl. ISO

Lesniak Defs.’ Opp’n to Mot. for Reconsideration, ¶ 4.)

TMX appears to have been in possession of R. Lesniak’s desktop computer since TMX

acquired Teledex’s assets in December 2009. TMX’s expert began investigating the contents of

this computer’s hard drive in April 2010, (TMX’s Mot. at 5:20-21), after which TMX

discovered that certain files had been copied, as discussed above. D. Lesniak’s laptop was in the

possession of his attorneys shortly after the instant litigation began, and it was transferred to

TMX in May 2010. (TMX’s Mot. at 4:24-25.) TMX’s expert began to investigate the laptop’s

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hard drive on May 18, 2010. (McKnight Decl. ¶ 10.) The expert discovered that the laptop

contains local copies of D. Lesniak’s Microsoft Outlook emails generated during his

employment at Teledex and D. Lesniak accessed these files on February 6, 2010. (Id.) D.

Lesniak denies having accessed his Teledex emails intentionally after he was terminated. (D.

Lesniak Decl. ISO Lesniak Defs.’ Opp’n to Mot. for Reconsideration, ¶ 2-3.)

B. Procedural history

On January 20, 2010, TMX moved for a temporary restraining order (“TRO”) and an

order to show cause why Defendants should not be enjoined from unlawfully taking, retaining

and utilizing property and confidential, proprietary, and trade secret information allegedly

belonging to TMX. On January 29, 2010, the Court denied the request for a TRO. On February

12, 2010, the Court held a hearing on TMX’s motion for a preliminary injunction. The evidence

proffered by TMX in support of the preliminary injunction included admissions by several

Defendants that they had retained laptop computers belonging to TMX that likely contained

confidential and proprietary information, and that on several occasions Defendants had utilized

specific information obtained during their tenure at Teledex and not known generally by the

public or others in the industry in order to communicate with and generate business from several

TMX/Teledex customers and vendors. 

In an order dated March 18, 2010, the Court found that TMX had satisfied its evidentiary

burden under California law for obtaining a preliminary injunction. The information contained

on the missing laptops and in email communications between Defendants and TMX/Teledex

clients and vendors met the definition for proprietary information or trade secret under the

UTSA, and TMX demonstrated a strong likelihood of misappropriation based on several facts. 

In particular, the evidence showed that Defendants proffered sections of a Teledex contract that

TMX has been unable to locate since its acquisition of Teledex and that Defendants had 

“picked up” the same thread of communications with Teledex clients and vendors – containing

content related to potential business deals and negotiations – that they had managed during their

employment with Teledex. TMX also demonstrated that the alleged misappropriation was

hindering its ability to operate Teledex, even after it had taken steps during and after the

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 Defendants previously have challenge the validity of this presumption, which is 2

discussed below.

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ORDER DENYING MOTION FOR RECONSIDERATION

(JFEX1)

acquisition to preserve the assets it had acquired. The Court found that this showing sufficiently

established a likelihood of irreparable harm, particularly in light of the presumption of

irreparable harm applied by California courts when proprietary information is misappropriated. 

See Western Directories, Inc. v. Golden Guide Directories, Inc, 2009 WL 1625945, at *6 (N.D.

Cal. June 8, 2009) (citing Lillge v. Verity, 2007 WL 2900568, at *7 (N.D. Cal. Oct. 2, 2007)).

2

Finally, because Defendants claimed that they were not utilizing any proprietary information in

their new business, the Court concluded that a narrowly tailored injunction would prevent

further harm to TMX without unnecessarily infringing upon Defendants’ right to work in their

chosen field.

On March 31, 2010, the Court issued the Injunction, enjoining Defendants from, among

other things, failing to return TMX’s confidential, proprietary, and trade secret information. 

Defendants filed a notice of appeal. On May 20, 2010, the Court modified the injunction,

removing the Lesniak Defendants from its scope and clarifying the bounds of the protected

information. For purposes of the Injunction, 

“Confidential, Proprietary, and/or Trade Secret Information” shall include but is not

limited to the following information: (a) business plans and strategies of Teledex,

including any strategic plans that Teledex developed for its future relationships, (b)

“Proprietary Information” and customer information that Teledex sought to protect

through its Proprietary Information and Inventions Agreement and Confidential

Information and Policy Agreements, and (c) past communications and agreements

between Teledex and customer or vendors. 

(Docket No. 141.) With respect to the Lesniak Defendants, the Court found that TMX had

failed to present evidence that they posed any present or future threat to TMX’s interests. 

(Docket No. 140 at 19:9-11.) Defendants subsequently dismissed their appeal. TMX argues

that its newly-discovered evidence demonstrates that the Injunction should be modified once

again to include the Lesniak Defendants.

//

//

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ORDER DENYING MOTION FOR RECONSIDERATION

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II. DISCUSSION

A. Legal standard

A preliminary injunction is “an extraordinary remedy that may only be awarded upon a

clear showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council,

Inc., 129 S.Ct. 365, 376 (2008). A party seeking a preliminary injunction must show, “[1] that

[it] is likely to succeed on the merits, [2] that [it] is likely to suffer irreparable harm in the

absence of preliminary relief, [3] that the balance of equities tips in [its] favor, and [4] that an

injunction is in the public interest.” Indep. Living Ctr. of S. Cal., Inc. v. Maxwell-Jolly, 572 F.3d

644, 651 (9th Cir. 2009), quoting Winter, 129 S.Ct. at 374. “To the extent that our cases have

suggested a lesser standard, they are no longer controlling, or even viable.” Am. Truckin Ass’ns,

Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009). The issuance of a preliminary

injunction is committed to the discretion of the district court. Indep. Living Ctr., 572 F.3d at 651.

Generally, a court may exercise its “‘inherent procedural power to reconsider, rescind, or

modify an interlocutory order for cause seen by it to be sufficient.’” City of L.A. v. Santa Monica

BayKeeper, 254 F.3d 882, 885 (9th Cir. 2001) (quoting Melancon v. Texaco, Inc., 659 F.2d 551,

553 (5th Cir. 1981)). However, Civ. L.R. 7-9 controls motions for reconsideration, such as the

instant motion. Under Civ. L.R. 7-9(b)(1), TMX must show both that there is a material

difference between the current facts and the facts presented to the court before entry of the order

and that it has exercised reasonable diligence to discover such facts.

B. Reasonable diligence under Civ. L.R. 7-9(b)(1)

TMX did not gain possession of D. Lesniak’s laptop until May 2010, and TMX began to

investigate the contents of that laptop’s hard drive on May 18, 2010. (McKnight Decl. ¶ 10.) 

Accordingly, TMX has demonstrated reasonable diligence in pursuing the facts regarding its

claims against D. Lesniak. At the same time, TMX has suspected at least since January 14, 2010

that R. Lesniak engaged in the theft of proprietary information. TMX does not dispute that it has

had possession of R. Lesniak’s desktop computer since its acquisition of Teledex’s assets in

December 2009, yet TMX’s expert did not begin reviewing the desktop computer’s hard drive

until May 2010. (McKnight Decl. ¶ 4.) TMX’s expert was able to analyze the hard drive of D.

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Lesniak’s laptop in a matter of weeks. While TMX submitted a significant amount of evidence in

connection with its original motion for a preliminary injunction, (see Docket No. 13), TMX does

not offer any explanation as to why it took months for its expert to begin reviewing the hard drive

of R. Lesniak’s desktop computer. 

C. Misappropriation of trade secrets

1. Likelihood of success on the merits

Under the Uniform Trade Secrets Act (“UTSA”), “misappropriation” is the: “(1)

[a]cquisition of a trade secret of another by a person who knows or has reason to know that the

trade secret was acquired by improper means; or (2) [d]isclosure or use of a trade secret of

another without express or implied consent by a person who: (A) [u]sed improper means to

acquire knowledge of the trade secret; or (B) [a]t the time of disclosure or use, knew or had

reason to know that his or her knowledge of the trade secret was: (i) [d]erived from or through a

person who had utilized improper means to acquire it; (ii) [a]cquired under circumstances giving

rise to a duty to maintain its secrecy or limit its use; or (iii) [d]erived 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).

a. TMX’s claim against R. Lesniak

The Injunction defines TMX’s confidential, proprietary, and trade secret information as:

(a) business plans and strategies of Teledex, including any strategic plans that Teledex

developed for its future relationships, (b) “Proprietary Information” and customer

information that Teledex sought to protect through its Proprietary Information and

Inventions Agreement and Confidential Information and Policy Agreements, and (c) past

communications and agreements between Teledex and customer or vendors.” 

(Docket No. 141.) At least some of the information copied from R. Lesniak’s desktop computer

appears to come within this definition. Adler admits copying the email files of R. Lesniak, (Adler

Decl. ¶ 8), who was the president and CEO of Teledex, which likely contain some discussions of

TMX’s business plans and strategies, protected customer information, and past communications

between Teledex and its customers or vendors.

R. Lesniak claims that it was not improper for him to acquire the trade secrets and that he

was under no duty to maintain the secrecy of that information. The Superior Court’s restraining

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order excluded property that relates to the membership interests and equity of Teledex, and

Ludewig contends that this exclusion covers evidence relating to the communications between

GECC and TMX. Even accepting Ludewig’s characterization as accurate, it is clear that Adler

copied R. Lesniak’s emails and other documents on the desktop computer indiscriminately. 

(Adler Decl. ¶ 8-10.) While Adler claims that he targeted documents that might contain

communications and corporate information, he did not sort or review the documents. (Id. at ¶

10.) Not all communications and corporate information could have related to membership

interests and equity in Teledex, and many of them were likely to encompass confidential,

proprietary, and trade secret information as defined by the Injunction.

Ludewig asserts that she was directed by “the authorities” to preserve “any evidence

relating to communications by and between GECC and TMX and information relating to the

status of the Teledex entity at the time of the transaction.” (Ludewig Decl. ¶ 4.) While she

claims that she contacted the United States Department of Justice (the “DOJ”), the California

Attorney General’s Office, and “several other federal and state government agencies, (Ludewig

Decl. ¶ 4), she does not identify which specific authority instructed her to preserve this

information. Ludewig does refer to a Civil Investigative Demand (“CID”) from the DOJ, seeking

“all documents relating to, and communications between GE Capital and Teledex, but not limited

to communications relating to Teledex debt owed to GE Capital and any acquisition of Teledex

debt, assets, or equity by any person.” (Ludewig Decl. Ex. A.) However, the CID was dated

April 21, 2010, months after Adler copied the Teledex files. Moreover, Ludewig does not claim

that she received a court order allowing her to copy Teledex documents other than those relating

to the membership interests and equity of Teledex.

R. Lesniak claims that he did not actually acquire the files because he never had access to

the external storage devices used by Adler. Adler declares that he delivered the storage devices to

“DJL Corporate Law,” (Adler Decl. ¶ 13), which is Ludewig’s law firm, (see Ludewig Decl. Ex.

A (letter from the DOJ to Deborah J. Ludewig, DJL Corporate Law).) However, the address

listed for DJL Corporate Law, 17349 Parkside Court, Monte Sereno, California 95030, (Ludewig

Decl. Ex. A), also is the address of R. Lesniak, (see Dwyer Decl. Ex. 2 (results of an advanced

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people search, showing R. Lesniak’s address).) Ludewig claims that she delivered the Seagate

device to the DOJ, but the DOJ did not confirm receipt of the hard drive until June 16, 2010. 

(Ludewig Decl. Ex. B.) Thus, it is likely that R. Lesniak at least had access to the Seagate device

from December 16, 2010 to June 2010. Moreover, Ludewig provides no information as to the

current whereabouts of the Memorex device, which presumably remains at the shared address of

Ludewig and R. Lesniak. R. Lesniak also has not provided a credible explanation for the files

copied from his desktop computer to CDs on December 15 and 16, 2009. While R. Lesniak

claims that he did not copy these files, his computer is password protected, (Ludewig Decl. ¶ 6),

Adler noticed that the CD burner program was active when he arrived at the former Teledex

facility on December 16, 2009 at 10:53 a.m., (Adler Decl. ¶ 4), and R. Lesniak already was at the

facility when Adler arrived. (Id.) At least some of the files copied to the CDs appear to be

information protected by the Injunction. Accordingly, TMX has demonstrated that it is likely to

succeed on the merits of its claim that R. Lesniak has misappropriated its trade secrets.

b. TMX’s claim against D. Lesniak

TMX alleges that D. Lesniak’s laptop contained local copies of his Teledex emails. D.

Lesniak was a field service manager at Teledex. Neither TMX nor D. Lesniak attempts to explain

the job functions of a field service manager. Thus, it is not clear necessarily that D. Lesniak’s

email would include:

(a) business plans and strategies of Teledex, including any strategic plans that Teledex

developed for its future relationships, (b) “Proprietary Information” and customer

information that Teledex sought to protect through its Proprietary Information and

Inventions Agreement and Confidential Information and Policy Agreements, and (c) past

communications and agreements between Teledex and customer or vendors.”

Accordingly, TMX has not demonstrated that it is likely to succeed on the merits of its claim that

D. Lesniak has misappropriated confidential, proprietary, or trade secret information.

2. Irreparable harm

In its original order granting injunctive relief, the Court observed that irreparable harm

may be presumed upon a showing of the likelihood of success on the merits of a trade-secretmisappropriation claim. See Western Directories, 2009 WL 1625945 at *6 (presuming

irreparable harm following a conclusion that the plaintiffs were likely to succeed on the merits of

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a trade secret infringement claim). The continuing viability of this presumption appeared to be in

question following Winter and the Supreme Court’s prior decision in eBay Inc. v. MercExchange,

L.L.C., 547 U.S. 388, 393-94 (2006) (concluding that district courts must apply traditional

principles of equity – including assessing the likelihood of irreparable harm – when applying a

permanent injunction in the context of patent infringement). Post Winter, the Ninth Circuit has

reaffirmed the ability of a district court to presume irreparable harm upon a showing of the

likelihood of success on the merits of a trademark infringement claim. Marlyn Nutraceuticals,

Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 877 (9th Cir. 2009) (concluding, in a

trademark infringement action, that “[b]ecause the court found a likelihood of success on the

merits, it reasonably presumed irreparable injury.”). While the Ninth Circuit has not addressed

the presumption of harm in a trade secret action, it follows reasonably that the presumption

remains valid in this circuit following Marlyn Nutraceuticals.

Nonetheless, while the presumption of irreparable harm was informative, the Court issued

the original Injunction in part based on an actual showing of the likelihood of irreparable harm. 

TMX has not demonstrated how it will be harmed irreparably by D. Lesniak’s previous access to

his Teledex emails. D. Lesniak no longer possesses the laptop, and Teledex has not shown that

D. Lesniak possesses a copy of these emails or is in any position to use the information in the

emails to the detriment of TMX. 

The evidence is much closer with respect to R. Lesniak. TMX contends that R. Lesniak is

using or plans to use its trade secret information for the benefit of his current employer, VTech. 

However, although it claims that R. Lesniak was creating VTech business plans while still

employed at Teledex, TMX has not provided a copy of such a business plan to the Court, nor

does its expert identify documents related to VTech on the hard drive of R. Lesniak’s desktop

computer. R. Lesniak admits preparing documents in connection with VTech’s inquiries into

acquiring Teledex, but TMX does not explain how these documents present the possibility of

irreparable harm. TMX alleges conclusorily that VTech plans to “launch a new line of

telecommunication products and services to the hospitality industry by using Teledex

confidential, proprietary, and trade secret information that it obtained from [R. Lesniak].” 

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(noting that “[o]nce the plaintiff in an infringement action has established a likelihood of

confusion, it is ordinarily presumed that the plaintiff will suffer irreparable harm if injunctive

relief does not issue,” but declining to apply the presumption based on the record in that case

because the plaintiff “ha[d] made no independent showing of irreparable harm.”)

12

Case Number C 10-00202 JF

ORDER DENYING MOTION FOR RECONSIDERATION

(JFEX1)

(TMX’s Mot. At 2:2-3.) At oral argument, TMX represented that VTech entered the hospitality

market only after hiring R. Lesniak. However, TMX does not identify the new products or

services, much less explain how Teledex’s protected information is utilized in them. While R.

Lesniak may possess TMX’s trade secret information in the form of the CDs and the Memorex

device, TMX has not shown that R. Lesniak is likely to use that information in a way that would

result in present or future harm to TMX’s interests. When he was hired by VTech, R. Lesniak

signed an agreement stating that he would not disclose or use any Teledex confidential

information in his work for VTech. (Delany Decl. ¶ 7 and Ex. 1.) VTech already has

demonstrated its willingness to enforce the agreement by suspending R. Lesniak after the Court

issued the original injunction. (Id. at ¶ 8.)

The Court previously granted the Injunction upon TMX’s showing that other Defendants,

after they were terminated from Teledex, had resumed conversations with Teledex customers by

using email chains they started while working at Teledex. TMX also offered concrete evidence

that other Defendants possessed copies of contracts between Teledex and Accor, a Teledex

customer, and signed a contract with Accor a mere ten days after they were terminated from

Teledex. In contrast, in the context of the instant motion for consideration, TMX has

demonstrated only that VTech has hired a person with experience in the hospitality industry and

then entered the hospitality industry. This is insufficient to demonstrate the likelihood of

irreparable harm. While Marlyn Nutraceuticals apparently permits the Court to presume

irreparable harm, the Court concludes that the application of the presumption against R. Lesniak

is unwarranted under the circumstances. 

3

//

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Case Number C 10-00202 JF

ORDER DENYING MOTION FOR RECONSIDERATION

(JFEX1)

3. Balance of equities and the public interest

The balance of equities also tips in favor of the Lesniak Defendants. TMX has not shown

how an injunction against the Lesniak Defendants would create significant benefit to it, while the

livelihood of the Lesniak Defendants would be severely impacted by once again making them

subject to the Injunction. Nick Delany, the president of VTech, declares that he suspended R.

Lesniak from employment after learning that the original Injunction included him. (Delany Decl.

¶ 8.) R. Lesniak was reinstated only after the Injunction was modified, (id.), and it is likely that R.

Lesniak would be suspended if the Injunction once again was to include him. Similarly, though

D. Lesniak is unemployed, his employment prospects would be severely damaged if he again was

subject to the Injunction. While the public interest favors the protection of legitimate trade

secrets, “public policy and natural justice require that equity should also be solicitous for the right

inherent in all people . . . to follow any of the common occupations of life.” Continental Car-NaVar Corp. v. Moseley, 24 Cal. 2d 104, 110 (1944).

C. TMX’s remaining claims

TMX asserts several claims for relief, including breach of contract; unfair competition in

violation of Cal. Bus. & Prof. Code § 17200, et seq.; and conversion in violation of Cal. Penal

Code § 502(e). Regardless of its likelihood of success on the merits of these claims, TMX has

not demonstrated that the Lesniak Defendants pose any present or future threat of irreparable

harm to TMX’s interests in connection with these claims, and no authority exists for presuming

irreparable harm in the context of the claims. D. Lesniak has returned the laptop computer, and

TMX has not presented evidence that he threatens harm to its interests, given that he is not

competing currently against TMX. Nor, as discussed above, has TMX shown that R. Lesniak

poses any present or future threat to its interests. While it is likely that R. Lesniak has at least

confidential information that belongs to TMX, TMX has not shown that R. Lesniak is using or

plans to use that information. Under Winter, a party seeking a preliminary injunction must show

that it is likely to suffer irreparable harm absent the entry of a preliminary injunction. See Am.

Truckin, 559 F.3d at 1052.

//

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Case Number C 10-00202 JF

ORDER DENYING MOTION FOR RECONSIDERATION

(JFEX1)

III. CONCLUSION

While TMX has demonstrated its likelihood of success on the merits with respect to its

claim that R. Lesniak has misappropriated trade secrets, its showing of irreparable harm as a

result of R. Lesniak’s alleged wrongdoing is factually deficient. With respect to its claims against

D. Lesniak, TMX has demonstrated neither a likelihood of success nor a likelihood of irreparable

harm. Accordingly, the motion will be denied without prejudice. TMX may move for

reconsideration if it obtains more specific evidence with respect to its claims. TMX must show

that it exercised reasonable diligence to discover such evidence.

IT IS SO ORDERED

DATED: 7/8/2010 

JEREMY FOGEL

United States District Judge

Case 5:10-cv-00202-JF Document 167 Filed 07/09/10 Page 14 of 14