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Integrated Practice Solutions, Inc. v. Wilson

United States District Court, Ninth Circuit

May 31, 2013

INTEGRATED PRACTICE SOLUTIONS, INC., a Washington corporation, Plaintiff,
v.
DEREK WILSON, an individual; FUTURE HEALTH ACQUISITION, INC., a South Dakota corporation; and DOES 1-20, inclusive, Defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTIONS

BARRY TED MOSKOWITZ, Chief District Judge.

On May 24, 2013, the motion for a preliminary injunction by Plaintiff Integrated Practice Solutions, Inc. ("Plaintiff" or "IPS") (ECF No. 5) was taken under submission. Pursuant to the joint motion of Plaintiff and Defendant Future Health Acquisition, Inc. ("Future Health"), the motion was denied without prejudice as withdrawn solely as to Future Health. (See ECF No. 37.) The remaining defendant for the purposes of the motion, Derek Wilson, has not filed an opposition. For the reasons below, Plaintiff's motion is hereby GRANTED as to Defendant Wilson.

I. BACKGROUND FACTS

IPS is a Washington corporation with its principal place of business in San Diego County, California. IPS designs, sells, and services practice management computer software for chiropractors and other healthcare professionals, including features to aid with billing, scheduling patient visits, managing patient records, and tracking inventory.

At issue in this case is IPS' customer lists. IPS maintains lists of current and prospective customers that it alleges would be extremely valuable to competitors. One of the key ways in which it gathers information regarding potential customers is by inviting them to participate in a free demonstration of IPS's software and services. Through the demonstration, IPS obtains their contact information. IPS also gathers information about potential customers through referrals, trade organizations, and its website.

Defendant Derek Wilson worked for IPS as a Sales Representative and Vice President of Sales from approximately January 2010 to August 20, 2012. Soon after leaving IPS, he began working for Future Health, a competitor of IPS. IPS alleges that, according to a former employee of Future Health named David Fink, within a few days of starting at Future Health, Defendant Wilson said that he had found about 6, 000 "leads" from trade shows since 2010 that had not yet been put into Future Health's database as potential customers. Compl. ¶ 18. Mr. Fink provided IPS with the list of 6, 000 names. IPS then ran a random test on 50 of the names to determine whether they were from IPS' Customer Lists. IPS alleges that the 50 names "matched word-for-word the data IPS possessed in its Customer Lists, " Compl. ¶ 24, and contained identical customer input dates and times as the Customer Lists.

IPS brought this suit on January 11, 2013, alleging the following causes of action: 1) breach of contract/specific performance; 2) breach of duty of loyalty; 3) misappropriation of trade secrets; and 4) violation of California Business & Professional Code § 17200 et seq. Notwithstanding the four separate causes of action, IPS's essential claim is that Defendant Wilson misappropriated its customer lists.

II. STANDARD

A plaintiff seeking a preliminary injunction or temporary restraining order must establish that (1) he is likely to succeed on the merits; (2) he is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in his favor; and (4) an injunction is in the public interest. Winter v. Natural Resources Defense Council , 555 U.S. 7, 129 S.Ct. 365, 374 (2008).

The Ninth Circuit has held that the "sliding scale" approach to preliminary injunctions survives Winter when applied as part of the four-element Winter test. Alliance for the Wild Rockies v. Cottrell , 632 F.3d 1127, 1131 (9th Cir. 2011). In other words, "serious questions going to the merits and a balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest." Id. at 1135.

III. DISCUSSION

The Court finds that IPS is entitled to a preliminary injunction against Defendant Wilson. As discussed below, IPS has established that it is likely to succeed on the merits, it is likely to suffer irreparable harm in the absence of preliminary relief, the balance of equities tip in its favor, and an injunction is in the public interest.

A. The Merits

Based on the evidence before the Court, it appears that IPS is likely to succeed on the merits of its legal claims. The essence of IPS's claims is that Wilson misappropriated its customer lists and provided this proprietary information to its competitor, Future Health. IPS has provided the Court with a copy of Wilson's non-disclosure agreement, see Ex. A to Compl. (ECF No. 1-1), and has otherwise alleged sufficient facts to indicate that it is likely that Wilson did in fact misappropriate IPS's customer lists. See Cal. Civil Code § 3426.1(b) (defining "misappropriation"). As Wilson has not filed any opposition despite having signed declarations in this action acknowledging that he is a defendant (see ECF Nos. 12-2 & 20-1), ...


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