Opinion ID: 151632
Heading Depth: 3
Heading Rank: 3

Heading: The District Court Applied the Correct Standard

Text: Botticella next argues that an injunction against employment can issue under Pennsylvania law only when it would be virtually impossible for an employee to fulfill his responsibilities for a new employer without disclosing a former employer's trade secrets. Appellant's br. at 23. Accordingly, Botticella contends that the District Court erred as a matter of law when it granted Bimbo an injunction on the basis that Botticella's employment with Hostess would lead to a sufficient likelihood or substantial threat of disclosure of a trade secret, a lesser showing than it would have been virtually impossible to avoid the disclosure of trade secrets during Botticella's employment at Hostess. Appellant's br. at 22. Notwithstanding dictum to the contrary in one of our own recent opinions, see Victaulic, 499 F.3d at 234, we conclude that the District Court applied the correct standard. The trial court in Air Products enjoined the defendant from working in onsite gas sales at his new employer because it concluded it would be impossible for the defendant to work in that field without disclosing his former employer's trade secrets. 442 A.2d at 1122. On appeal the Superior Court affirmed, but noted it was not adopt[ing] the reasoning of the trial court or its use of the term inevitable. Id. at 1124. The Superior Court subsequently has stated that [t]he proper inquiry in determining whether to grant an injunction to prevent the threatened disclosure of trade secrets is whether there is sufficient likelihood, or substantial threat of a defendant disclosing trade secrets. [11] Den-Tal-Ez, 566 A.2d at 1232 (citing Air Prods., 442 A.2d at 1122-25; SI Handling Sys., Inc. v. Heisley, 753 F.2d 1244, 1263-64 (3d Cir.1985)); see also A.M. Skier Agency, Inc. v. Gold, 747 A.2d 936, 942 (Pa.Super.Ct.2000) (citing Den-Tal-Ez, 566 A.2d at 1232). The District Court in this case applied the standard that the Superior Court applied in Den-Tal-Ez. In arguing for a virtual impossibility standard, Botticella understandably relies heavily on our decision in Victaulic. In that case, Tieman, a sales representative, had violated a covenant not to compete with his former employer Victaulic, a mechanical device manufacturer, by working for a competitor. Victaulic, 499 F.3d at 230-31. Victaulic brought a misappropriation of trade secrets claim in addition to asserting several claims based on the covenant not to compete. Victaulic sought injunctive relief in the action. Id. at 231. The District Court dismissed Victaulic's covenant claims and requested additional briefing on the trade secrets claim. Id. But before the trade secrets claim was resolved Victaulic filed an interlocutory appeal, asserting that we had jurisdiction under 28 U.S.C. § 1292(a)(1) on the ground that the District Court's dismissal of the covenant claims effectively denied Victaulic's request for a preliminary injunction. Id. In determining that we had jurisdiction to hear the appeal, we concluded that Victaulic did not request a preliminary injunction on its trade secrets claim, so the District Court's dismissal of the covenant claims left it with no means of receiving preliminary relief. Id. at 232. We then went on to state that [e]ven if we believed that Victaulic requested a preliminary injunction on its trade secrets claim, we would find jurisdiction because any trade secrets injunction potentially available to Victaulic necessarily would be narrower than that requested on the covenant claims. Id. We stated: [S]omething like Victaulic's requested relief (preventing Tieman from selling similar products for [his new employer] for a year) could fit a trade secrets claim, as it is possible for a court to enjoin an employee working in the relevant industry or soliciting customers for some period of time. But such a wide-ranging injunction is atypical; rather, the usual injunction merely prevents the employee from disclosing specified trade secrets. . . . Under Pennsylvania law, a broader injunction only lies when it is `virtually impossible . . . [for the employee] to perform his . . . duties for [his new employer] without in effect giving [it] the benefit of [his] confidential information.' Id. at 234 (quoting Air Prods., 442 A.2d at 1123). Because Victaulic had not alleged or argued inevitable disclosure in its trade secrets claim, we concluded that the District Court lacked the authority to issue a broad injunction based on that claim. Id. In light of the scope of the District Court's injunction in the case now on appeal before us, we acknowledge that after one reads Victaulic it is possible to conclude that the District Court erred by granting the injunction without requiring Bimbo to show that it would be virtually impossible for Botticella to work at Hostess without disclosing Bimbo's trade secrets. But that reading would leave the following questions: (1) did Victaulic correctly interpret Pennsylvania law, and (2) if not, are we nevertheless bound by that interpretation in the present case because Victaulic is a precedential opinion issued by a prior panel of this Court? Our review of Victaulic leads us to conclude that in that case we did not interpret Air Products in a way precisely consistent with Pennsylvania state precedents. The Court in Air Products took the passage that Victaulic quoted and containing the virtually impossible language directly from a decision of a United States District Court in Ohio in a case under Ohio law that had facts very similar to those in Air Products. See 442 A.2d at 1123 (quoting Emery Indus., Inc. v. Cottier, 202 U.S.P.Q. 829 (S.D.Ohio 1978)). The Superior Court in Air Products found the reasoning of the Emery decision persuasive and held that the trial court in Air Products acted reasonably by granting a preliminary injunction based on precisely the reasoning of the court in Emery.  Id. at 1124-25. Nevertheless, the Superior Court explicitly chose not [to] adopt the reasoning of the trial court. Id. at 1125. It follows that the Superior Court also chose not to adopt the reasoning of the Emery court, it being precisely the same as that of the trial court in the case on appeal before the Superior Court. The Superior Court subsequently stated that the proper inquiry in determining whether to grant an injunction to prevent the threatened disclosure of trade secrets is not whether a defendant inevitably will disclose a trade secret in the absence of injunctive relief, but instead whether there is sufficient likelihood, or substantial threat, of defendant doing so in the future. Den-Tal-Ez, 566 A.2d at 1232 (citing Air Prods., 442 A.2d at 1122-25; SI Handling Sys., 753 F.2d at 1263-64). We therefore conclude that Air Product's repetition of the phrase virtually impossible in describing the Emery holding should not be interpreted as a statement of Pennsylvania's standard for granting injunctions in trade secrets cases, our suggestion to the contrary in Victaulic notwithstanding. Inasmuch as we have concluded that Victaulic questionably interpreted Pennsylvania law, we next must determine whether we nevertheless are bound by its statement of that law. In this regard we start by recognizing that it is the tradition of this court that the holding of a panel in a precedential opinion is binding on subsequent panels and cannot be overruled absent consideration en banc. [12] Internal Operating Procedure 9.1. It is also well established, however, that we are not bound by dictum in an earlier panel opinion. Abdelfattah v. Dept. of Homeland Sec., 488 F.3d 178, 185 (3d Cir.2007) (citing Mariana v. Fisher, 338 F.3d 189, 201 (3d Cir.2003)). We conclude that the Victaulic panel's discussion of Air Products and the interplay between virtual impossibility and the inevitable disclosure doctrine was dictum and does not bind us in the present case. That discussion was not necessary to the panel's jurisdictional holding that Victaulic had failed to request a preliminary injunction on its trade secrets claim. On the contrary, the discussion occurred only in the context of a counterfactual hypothetical in which the Victaulic panel posited that, even if Victaulic had requested a preliminary injunction on its trade secrets claim, the Court nevertheless would have had jurisdiction. While we recognize that where a decision rests on two or more grounds, none can be relegated to the category of obiter dictum, Philadelphia Marine Trade Ass'nInt'l Longshoremen's Ass'n. Pension Fund v. Comm'r, 523 F.3d 140, 147 n. 5 (3d Cir. 2008) (quoting Woods v. Interstate Realty Co., 337 U.S. 535, 537, 69 S.Ct. 1235, 1237, 93 L.Ed. 1524 (1949)), we do not consider the Victaulic decision on jurisdiction to have rested on its interpretation of Pennsylvania's law of trade secrets with respect to its actual holding because with or without discussion of the counterfactual hypothetical, we would have held that we had jurisdiction. At bottom we merely held that the District Court had denied Victaulic all preliminary relief and thus we had jurisdiction. Accordingly, Victaulic does not prevent us from concluding that the District Court in this case applied the correct legal standard. [13]