Court Opinion

ID: 213262
Source: CourtListenerOpinion
Date Created: 2011-03-25 14:35:12+00
Date Added: 2024-06-11T17:28:14.850525
License: Public Domain

10-3405-cv (L)
     IDG USA, LLC v. Schupp

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Daniel Patrick Moynihan
 3       United States Courthouse, 500 Pearl Street, in the City of
 4       New York, on the 25th day of March, two thousand eleven.
 5
 6       PRESENT: DENNIS JACOBS,
 7                              Chief Judge,
 8                ROSEMARY S. POOLER,
 9                PETER W. HALL,
10                              Circuit Judges.
11
12       - - - - - - - - - - - - - - - - - - - -X
13       IDG USA, LLC,
14
15                    Plaintiff-Counter-Defendant-
16                    Appellee,
17
18                    -v.-                                        10-3405-cv (L)
19                                                                10-3955-cv (Con)
20       KEVIN J. SCHUPP,
21
22                Defendant-Counter-Claimant-
23                Appellant.
24       - - - - - - - - - - - - - - - - - - - -X
25
26       FOR APPELLANT:            Linda H. Joseph
27                                 Schroder, Joseph & Associates LLP
28                                 Buffalo, NY

                                                  1
 1
 2   FOR APPELLEE:     Kevin Joseph English
 3                     Christopher L. Hayes (on brief)
 4                     Phillips Lytle LLP
 5                     Buffalo, NY
 6
 7
 8        Appeal from the grant of a preliminary injunction by
 9   the United States District Court for the Western District of
10   New York (Skretny, J.).
11
12        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
13   AND DECREED that the district court’s decision is AFFIRMED
14   in part, VACATED in part, and REMANDED in part.
15
16        The Appellant, Kevin Schupp, appeals the district
17   court’s grant of a preliminary injunction preventing him
18   from: (1) working for competitors of the Appellee, IDG USA,
19   LLC (“IDG”), in a capacity similar to the one he had while
20   at IDG; (2) soliciting IDG customers that he managed while
21   at IDG; and (3) disclosing IDG’s trade secrets and
22   confidential information. We assume the parties’
23   familiarity with the underlying facts, the procedural
24   history, and the issues presented for review.
25
26        We review a district court’s grant of a preliminary
27   injunction for abuse of discretion. Metro. Taxicab Bd. of
28   Trade v. City of New York, 615 F.3d 152, 156 (2d Cir. 2010).
29   A grant of preliminary relief is an abuse of discretion
30   when: (1) the decision rests on an error of law; (2) the
31   decision rests on a clearly erroneous factual finding; or
32   (3) the decision, though not the product of a legal error or
33   clearly erroneous factual finding, cannot be located within
34   the range of permissible decisions. Sec & Exch. Comm’n v.
35   Dorozhko, 574 F.3d 42, 45 (2d Cir. 2009).
36
37        To obtain a preliminary injunction, a party must
38   establish both “irreparable harm absent injunctive relief,
39   and either a likelihood of success on the merits, or a
40   serious question going to the merits to make them a fair
41   ground for trial, with a balance of hardships tipping
42   decidedly in [its] favor.” Almontaser v. N.Y.C. Dep’t of
43   Educ., 519 F.3d 505, 508 (2d Cir. 2008) (quoting Louis
44   Vuitton Malletier v. Dooney & Bourke, Inc., 454 F.3d 108,
45   113-14 (2d Cir. 2006)). The district court was well within
46   its discretion to conclude that IDG had shown a likelihood
47   of success on the merits and irreparable harm. Therefore,

                                  2
 1   the district court properly issued a preliminary injunction
 2   against Schupp.
 3
 4        Schupp argues that IDG cannot show a likelihood of
 5   success on the merits because (i) the non-compete agreement
 6   (“NCA”) with him is inherently unenforceable, (ii) he never
 7   breached the NCA, and (iii) IDG breached the NCA thereby
 8   making it unenforceable against him. An NCA is enforceable
 9   if its restrictions are reasonable. BDO Siedman v.
10   Hirshberg, 93 N.Y.2d 382, 388 (1999). A restriction is
11   reasonable if it is no more than is needed to protect the
12   employer’s legitimate interests, it imposes no undue
13   hardship on the employee, and it does not injure the public.
14   Id. at 388-89. Under New York law, an employer has a
15   legitimate interest in both its relationships with its
16   customers and its trade secrets. Id. at 389, 391. The
17   limited term and scope of the NCA at issue here do not
18   offend public policy. Therefore, the district court did not
19   abuse its discretion in concluding that the NCA is
20   enforceable.
21
22        The district court was within its discretion to
23   conclude on the evidence presented at the preliminary
24   injunction proceedings that Schupp breached the NCA. IDG
25   presented substantial evidence that, immediately after he
26   left IDG, Schupp began working nearby for one of IDG’s
27   competitors, soliciting IDG’s clients, and disclosing IDG’s
28   confidential information. This evidence is sufficient to
29   reasonably conclude that Schupp violated the non-compete,
30   non-solicit, and non-disclosure provisions of the NCA.
31
32        The district court was also within its discretion to
33   conclude on the record of the preliminary proceedings that
34   IDG did not breach the NCA. Schupp’s sole consideration for
35   signing the NCA was a one-time payment of $3,000 by IDG,
36   which IDG paid and Schupp accepted. Schupp’s constructive
37   termination claim fails because he did not establish that
38   IDG intentionally created a work environment so unpleasant
39   that a reasonable person in Schupp’s position would feel
40   compelled to resign. See Morris v. Schroder Capital Mgmt.
41   Int’l, 7 N.Y.3d 616, 622 (2006) (“[T]he atmosphere in the
42   workplace must be so intolerable as to compel a reasonable
43   person to leave.”). In any event, Schupp was employed “at
44   will.”
45
46        To establish irreparable harm, a plaintiff must
47   establish both that an injury is likely absent the

                                  3
 1   injunction and that the injury cannot be adequately remedied
 2   with money damages. Grand River Enter. Six Nations, Ltd. v.
 3   Pryor, 481 F.3d 60, 66 (2d Cir. 2007); Moore v. Consol.
 4   Edison Co., 409 F.3d 506, 510 (2d Cir. 2005). Threatened
 5   dissemination of trade secrets generally creates a
 6   presumption of irreparable harm. See FMC Corp. v. Taiwan
 7   Tainan Giant Indus. Co., 730 F.2d 61, 63 (2d Cir. 1984) (per
 8   curiam). IDG presented substantial evidence that Schupp was
 9   disseminating IDG’s secrets, including to IDG’s customers
10   and one of IDG’s primary competitors. The district court
11   was within its discretion to conclude that IDG satisfied the
12   irreparable harm requirement and that a preliminary
13   injunction was justified.
14
15        However, while the district court was within its
16   discretion to issue a preliminary injunction, the terms of
17   the injunction fail to meet the specificity requirement of
18   Federal Rule of Civil Procedure Rule 65(d) for two reasons.
19
20        First, the district court’s injunction insufficiently
21   specified the trade secrets and confidential information
22   that Schupp is forbidden to disclose. To satisfy Rule
23   65(d), “the party enjoined must be able to ascertain from
24   the four corners of the order precisely what acts are
25   forbidden.” Sanders v. Air Line Pilots Ass’n Int’l, 473
26 F.2d 244, 247 (2d Cir. 1972). An injunction that simply
27   prohibits the disclosure of trade secrets or confidential
28   information, with no additional description of what secrets
29   or confidential information are to be protected, is
30   insufficiently specific to satisfy Rule 65(d). Corning Inc.
31   v. PicVue Elecs., Ltd., 365 F.3d 156, 157-58 (2d Cir. 2004).
32   Because with respect to trade secrets and confidential
33   information, the district court’s injunction here is no more
34   specific than the one rejected in Corning, we vacate that
35   portion of the preliminary injunction and remand to the
36   district court to add additional specificity. The district
37   court may consider tracking the words of the NCA, which
38   defines trade secrets and confidential information. While
39   an order granting a preliminary injunction may not
40   incorporate extrinsic documents by reference, it can track
41   language from such documents in order to add specificity to
42   the injunction. The language in the NCA should be
43   sufficient to satisfy Corning and Rule 65(d).
44
45        Second, the district court’s injunction does not
46   specify the duration of any of its prohibitions. We remand
47   for that amendment. The district court should consider that

                                  4
 1   the non-compete and non-solicit clauses of the NCA--but not
 2   the non-disclosure clause--have a one-year limit. The
 3   district court therefore should consider whether the
 4   prohibitions of these two clauses remain current. If on
 5   remand the district court determines that any of the time
 6   limits have expired, the district court should further
 7   modify the terms of the preliminary injunction to
 8   accommodate such circumstances.
 9
10        Finally, we reject Schupp’s argument that the district
11   court’s preliminary injunction is somehow invalid because
12   the court failed to require IDG to post a bond until after
13   Schupp specifically requested one almost a month after the
14   preliminary injunction first issued. While the bond should
15   have been required sua sponte at the time the injunction
16   first issued (or the district court should have explained
17   when issuing the injunction why no bond was being imposed),
18   such error is harmless because the district has now required
19   such a bond.
20
21        We hereby AFFIRM the district court’s grant of a
22   preliminary injunction, but we VACATE in part and REMAND the
23   district court’s specific injunctive order with instructions
24   to further specify the nature of the confidential
25   information and trade secrets that the Appellant is enjoined
26   from disclosing and duration of each of the injunction’s
27   prohibitions.
28
29
30                              FOR THE COURT:
31                              CATHERINE O’HAGAN WOLFE, CLERK
32

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