Court Opinion

ID: 9492396
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:40:29.560663+00
Date Added: 2024-06-11T17:55:17.401165
License: Public Domain

VAN GRAAFEILAND, Circuit Judge,
dissenting:
Perhaps the best approach in deciding the legality of an order is to determine exactly what the order says. This is particularly true where disobedience of the order is punishable as a contempt of court. Every order granting an injunction must be specific in its terms, Fed.R.Civ.P. 65(d). The party enjoined “must be able to ascertain from the four corners of the order precisely what acts are forbidden.” Sanders v. Air Line Pilots Ass’n, Int’l., 473 F.2d 244, 247 (2d Cir.1972). “Basic fairness requires that those enjoined receive explicit notice of precisely what conduct is outlawed.” Schmidt v. Lessard, 414 U.S. 473, 476, 94 S.Ct. 713, 38 L.Ed.2d 661 (1974). “The judicial contempt power is a potent weapon. When it is founded upon a decree too vague to be understood, it can be a deadly one.” International Longshoremen’s Ass’n. Local 1291 v. Philadelphia Marine Trade Ass’n, 389 U.S. 64, 76, 88 S.Ct. 201, 19 L.Ed.2d 236 (1967). For these reasons, so-called “obey the law” injunctions cannot be sustained. See Schine Chain Theatres, Inc. v. United States, 334 U.S. 110, 125-26, 68 S.Ct. 947, 92 L.Ed. 1245 (1948), overruled on other grounds by Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984); American Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407, 1412 (11th Cir.1998); City of Mishawaka v. Am. Elec. Power Co., Inc., 616 F.2d 976, 991 (7th Cir.1980), cert. denied, 449 U.S. 1096, 101 S.Ct. 892, 66 L.Ed.2d 824 (1981); 11A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2955 (2d ed.1995).
When I examine the order in the instant case with the foregoing admonitions in mind, I am troubled with the very first sentence which enjoins the defendants “from using any of plaintiffs trade secrets or proprietary information.” There is no clear and readily understandable definition of the term “trade secret.” See Ashland Management, Inc. v. Janien, 82 N.Y.2d 395, 407, 604 N.Y.S.2d 912, 624 N.E.2d 1007 (1993). In determining whether a trade secret exists, the New York courts have considered the following factors to be relevant:
*50(1) the extent to which the information is known outside of [the] business; (2) the extent to which it is known by employees and others involved in [the] business; (3) the extent of measures taken by [the business] to guard the secrecy of the information; (4) the value of the information to [the business] and [its] competitors; (5) the amount of effort or money expended by [the business] in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
Id. (quoting Restatement of ToRts § 757 cmt.b).
A defendant enjoined from using a “trade secret” thus is confronted with an obey-the-law injunction. He does not know precisely what he is forbidden from doing. To avoid contempt, he has to follow the same process as do the courts, with no assurance of reaching the same result. It follows that when as here there is any ambiguity about what constitutes a trade secret, we should not affirm an injunction order that forbids its “use.” Indeed, the word “use” itself is troublesome. Ordinarily, a trade secret is violated by its disclosure, not its use. The two words are not synonymous. One may use information without disclosing it.
This brings us to the term “customer contact” as used in the injunction order. Plaintiff contends that its customer contacts were few in number, i.e., a mere “handful.” However, Exhibit 18 in evidence contains a list of NAI’s active customers as of November 17, 1997, and Exhibit 19 contains a list of customers “booked” as of that date. Both lists contain the names of NAI’s customers and their “contacts.” The almost 600 names in these contact lists are more than a mere “handful.” It is true that some customers have only one or two “contacts.” Figures for other customers vary as follows: 24, 13, 20, 8, 5,10, 8, 8,19, 7, 14,10, 79,14, 36, 25, 44, 30, 5, 6, 4, 11, 12, 10, 18, 8, 8, 7, 18, 19, 35, 9, 13, 15, 7, 14. The only way in which Haber and Apex could be assured of avoiding all of these “contacts” would be to go out of business — to discontinue building a “better mousetrap” than was being built by plaintiff. Obviously, therefore, the term “customer contacts” refers to only those with whom Haber was familiar. Moreover, this familiarity was not something that came into existence after Haber became an employee of NAI. Haber had strong business and personal relationships with these “contacts” before he entered into NAI’s employ. Indeed, it was for the purpose of making the benefit of these relationships available to NAI that Haber was employed. See S.W. Scott & Co. v. Scott, 186 A.D. 518, 527, 174 N.Y.S. 583 (1919). However, a man who changes employers does not “wipe clean the slate of his memory.” Peerless Pattern Co. v. Pictorial Review Co., 147 A.D. 715, 717, 132 N.Y.S. 37 (1911).
Identification of customer contacts fall, therefore, within the scope of Haber’s covenant not to compete. The issue of non-competition was addressed directly in the Asset Purchase Agreement covering NAI’s purchase of TMI, which limited the ban on competition to a period of two years. The two-year period, during which Haber strictly complied with his promise not to compete, expired prior to the institution of this litigation. The law is clear that unlimited implied restrictions against competition arising out of the sale of goodwill are inapplicable where the parties specifically negotiate and expressly agree to impose a less onerous restriction. See MGM Court Reporting Serv., Inc. v. Greenberg, 74 N.Y.2d 691, 693, 543 N.Y.S.2d 376, 541 N.E.2d 405 (1989); Goldome Corp. v. Wittig, 221 A.D.2d 931, 933, 634 N.Y.S.2d 308 (1995); Titus & Donnelly, Inc. v. Poto, 205 A.D.2d 475, 614 N.Y.S.2d 10 (1994)(mem.); Anchor Alloys, Inc. v. Non-Ferrous Processing Corp., 39 A.D.2d 504, 507, 336 N.Y.S.2d 944 (1972). Because an unrestricted implied covenant not to compete would be “neither limited by time nor subject to the test of reasonableness.” Chev*51ron U.S.A. Inc. v. Roxen Serv., Inc., 813 F.2d 26, 29 (2d Cir.1987), it is a far stretch to believe that the parties intended that Haber carry secretly to his grave the identity of NATs pre-1977 customer contacts.
My colleagues see no need to discuss the foregoing issues. See n.7, supra. They rely instead upon Haber’s November 7, 1994 Employment Agreement which they say is so clear and unambiguous as to preclude any oral clarification. In that contract Haber agreed to keep and retain in strictest confidence all NAI’s confidential matters and not to “disclose” any such matter to anyone outside the Company. The contract does not preclude Haber from “using” this information. Although my colleagues apparently do not agree, the words “use” and “disclose” are not synonymous. A preliminary injunction which ignores this distinction should not be permitted to stand.