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Wyndham Resort Development Corp. v. Bingham

July 8, 2010

WYNDHAM RESORT DEVELOPMENT CORPORATION AND WYNDHAM VACATION RESORTS, INC., PLAINTIFFS,
v.
ROBERT BINGHAM, DEFENDANT.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER GRANTING PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

Plaintiffs Wyndham Resort Development Corporation ("WRDC") and Wyndham Vacation Resorts, Inc. ("WVR") (collectively, "Wyndham") filed a motion for a temporary restraining order ("TRO") on June 22, 2010, seeking to enjoin Defendant Robert Bingham from "disclosing or using any and all trade secret, proprietary or confidential information belonging to Wyndham[,] . . . including but not limited to all lists, of, and information pertaining to, Wyndham's customers, owners or members." (Not. of Mot. for TRO 1:25-2:2.) On June 22, 2010, a briefing schedule issued and a hearing was set for June 28, 2010 at 1:30 p.m. However, after Bingham failed to file any response, the hearing was vacated, Plaintiffs' motion for a TRO was granted, and a hearing and briefing schedule on Plaintiffs' request for a preliminary injunction issued.*fn1 Defendant was required to file an opposition no later than June 30, 2010 at 4:30 p.m. However, Defendant again did not file any response.

A tentative ruling granting Plaintiffs' motion for a preliminary injunction issued the morning of July 8, 2010, prior to the preliminary injunction hearing scheduled to commence at 1:30 p.m. on the same day. At the July 8 hearing, Margaret Toldeo appeared on behalf of Plaintiffs and Defendant Robert Bingham appeared pro se. Bingham stated at the hearing that he did not oppose the adoption of the Court's tentative ruling. For the following reasons, Plaintiffs' request for a preliminary injunction is GRANTED.

I. LEGAL STANDARD

The purpose of a preliminary injunction is to preserve the relative positions of the parties - the status quo - until a trial on the merits can be conducted. LGS Architects, Inc. v. Concordia Homes of Nev., 434 F.3d 1150, 1158 (9th Cir. 2006) (quoting Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981)). A plaintiff seeking a preliminary injunction must establish that he is (1) "likely to succeed on the merits"; (2) "likely to suffer irreparable harm in the absence of preliminary relief"; (3) "the balance of equities tips in his favor"; and (4) "a preliminary injunction is in the public interest." Sierra Forest Legacy v. Rey, 577 F.3d 1015, 1021 (9th Cir. 2009) (citing Winter v. Natural Res. Def. Council, Inc., --- U.S. ---- , ----, 129 S.Ct. 365, 374, 172 L.Ed 2.d 249 (2008)); see also Am. Trucking Ass'ns, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009) (adopting the preliminary injunction standard articulated in Winter). 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, 129 S.Ct. at 376. "If a plaintiff fails to meet its burden on any of the four requirements for injunctive relief, its request must be denied." Sierra Forest Legacy v. Rey, --- F. Supp. 2d ----, 2010 WL 715846, at *1 (E.D. Cal. 2010) (citing Winter, 129 S.Ct. at 376). "In each case, courts must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief." Indep. Living Ctr. of S. Cal. Inc. v. Maxwell-Jolly, 572 F.3d 644, 651 (9th Cir. 2009) (quoting Winter 129 S.Ct. at 376).

II. BACKGROUND

A. Factual Background

Plaintiff WVR develops, finances, manages and sells timeshare properties. (Compl. ¶ 7.) WVR's sister company, Plaintiff WRDC, is the exclusive developer, marketer and management company of WorldMark The Club ("WorldMark"). (Fry Decl. ¶ 3.) Peggy Fry, the Vice President of Owner Services for WRDC, describes WorldMark as follows:

WorldMark is a credit-based timeshare product that allows the owner to vacation within the WorldMark system of resorts. WRDC does not sell deeded interests in property at a specific resort. Instead, WorldMark owners own points called "vacation credits" that they can use at 70 WorldMark resorts in the United States, Hawaii, Canada, Mexico and Fiji. The timeshare owners purchase an initial quantity of credits and in return they obtain a WorldMark The Club membership. Each year the WorldMark owners receive their annual allocation of credits. WorldMark owners have the opportunity to upgrade their memberships by purchasing additional credits. By upgrading their memberships, WorldMark owners increase their annual allotment of credits which provides them with more access to the WorldMark resorts. (Fry Decl. ¶ 3.)

WRDC has two sales forces. (Peterson Decl. ¶ 3.) "The 'frontline' sales force sells WorldMark memberships to prospects that are not current WorldMark members. The 'upgrade' sales force sells upgrades to existing WorldMark members." (Id.) "The upgrades sales force directly competes with third-party brokers for upgrade sales. Third-party brokers seek to sell discounted upgrades to current WorldMark members." (Id. ¶ 5.) The majority of WRDC's sales revenue is generated from upgrade sales. (Id. ¶ 4.) In 2009, WorldMark members purchased 13,257 upgrades from WRDC, accounting for approximately 61 percent of WRDC's total sales for that year. (Id. ¶ 9.)

Bingham was employed by WRDC on four occasions from 1994 to 2009 and held various positions including sales representative, sales manager, and director of site sales. (Haskew Decl. ¶ 3.) Most recently, Bingham was employed from February 2009 until August 14, 2009 as a sales representative. (Id.) In this capacity, Bingham was responsible for selling upgrades to existing WorldMark members. (Id. ¶ 4.) Bingham's employment with Wyndham, however, was terminated on August 16, 2009. (Id. ¶ 9.)

On April 15, 2010, Peggy Fry received an email from Dan Murphy, the President of Timeshare Liquidation Service, LLC, in which he wrote that "'a past Wyndham sales executive' tried to sell him 40,000 names of WorldMark owners." (Fry Decl. ¶ 6.) Fry requested that Murphy tell her the name of the former sales executive; initially, Murphy declined to reveal the former sales executive's identity. (Id. ¶ 7.) Fry contacted Murphy on June 1, 2010, again requesting that he disclose the name of the former sales executive. (Id. ¶ 8.) Murphy responded in an email, writing that he: was offered 40,000 [WorldMark] owners['] names, prequalified for Travel Share, from the N. CA office, by [WorldMark] Owner Robert Bingham, formerly owner of WM 00023005104. He claimed to have worked for Trendwest/Wyndham for 17 years. I declined, stating that [those] names belonged to Wyndham, not Bingham. He concurred, and didn't press me. I have no idea if he was successful selling them elsewhere, or if he even has them to begin with.

(Fry Decl. ¶ 6, Ex. A.) At the July 8 hearing, Bingham admitted that he had taken Plaintiffs' documents and had attempted unsuccessfully to sell them on one occasion.

Prior to commencing his employment with Wyndham, Bingham agreed in writing to abide by the Business Principles of WRDC's parent Company, Wyndham Worldwide Corporation. (Haskew Decl. ¶ 8.) Wyndham Worldwide Corporation's Business Principles identify "client lists, (including phone numbers and postal and e-mail addresses) and/or client or customer contact information" as "confidential and proprietary information" that is the "sole property of Wyndham Worldwide." (Haskew Decl. ¶ 8, Ex. C at 12.) The Business Principles further provide that "[i]information relating to the company and its subsidiaries and affiliates must be kept secure, used solely as authorized by the Company and must not be given to unauthorized outsiders or used for personal interest or profit." (Id. at 13.)

Before beginning his employment with WRDC, Plaintiff also signed a Salesperson Agreement on February 11, 2009, which states the following:

DISCLOSURE OF INFORMATION

Salesperson agrees and acknowledges that, as an employee of WRDC, Salesperson may be given or be privy to certain valuable, proprietary or confidential information, including but not limited to . . . prospect or purchaser lists. Except in the normal course of Salesperson's duties hereunder, Salesperson shall not, while employed by WRDC or at anytime thereafter, copy or disclose any such information to any person or entity for any reason or purpose, nor shall Salesperson utilize such information. Salesperson agrees that all such information, including any copies thereof, is the property of WRDC and that immediately upon termination of Salesperson's employment with WRDC all such property and data, including any copies, recordations (whether in written or electronic form) or abstracts thereof, shall be returned to WRDC. Because WRDC's damages from any violation of this paragraph would be impracticable and extremely difficult to determine, the liquidated amount of damages presumed to be sustained from any such breach will be ...


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