United States District Court, N.D. California
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR
PRELIMINARY INJUNCTION RE: ECF NO. 2
TIGAR United States District Judge.
the Court is Plaintiff Henry Schein, Inc.'s
("HSI") Motion for a Preliminary Injunction against
Defendant and former HSI employee Jennifer Cook. ECF No. 2.
This Court previously granted HSI's application for a
temporary restraining order (TRO), on June 10, 2016, ECF No.
12, and now considers whether to grant an injunction on the
same or similar terms. Cook has opposed the motion, ECF No.
15, and the Court has heard oral argument on the matter, ECF
Court will grant the motion in part and deny it in part.
to Plaintiff's allegations, Plaintiff HSI "is in the
business of marketing, distributing, and selling medical,
dental and veterinary supplies and equipment, and other
healthcare products, to medical, dental, and veterinary
practitioners, and other healthcare professionals and
organizations." ECF No. 2-3 ¶ 2. Defendant Cook was
hired as a "Field Sales Consultant" with HSI in
April 2005, and entered into a Confidentiality and
Non-Solicitation Agreement in 2005, as well as a Letter
Agreement in 2011 that required her to hold "in
strictest confidence" any confidential information
"concerning the products, processes, services, business,
suppliers, and customers of HSI, " and to "neither
copy nor take any such material upon leaving Company's
employ." ECF No. 2-1 at 9-10. It also stated that upon
her separation from HSI, and for twelve months thereafter,
Cook may not "solicit the patronage of any past or
then-current customer of the Company." ECF No. 1 at 24.
Cook resigned from HSI on May 13, 2016, and began working for
one of HSI's competitors, Patterson Dental
("Patterson"). Id. at 7, 11.
alleges that prior to leaving HSI, Cook "began to loot
HSI's confidential, proprietary, and trade secret
documents and information with the apparent goal of diverting
HSI's customers." On May 10, Cook forwarded from her
work email account, to her personal email, "several
comprehensive, confidential HSI customer practice reports
that were produced using HSI's proprietary software,
" which all "contained a wide array of confidential
and trade secret information." Id. at 11. On
May 12, 2016, the day before she resigned, Cook forwarded
"numerous additional customer-related reports, including
an equipment inventory report, price quotations for
prospective customers, and equipment proposals on which HSI
was working." Id. On May 13, Cook "logged
into HSI's system with HSI's proprietary
‘FSC' computer program, " which "had the
effect of ‘updating' onto Cook's laptop,
substantial, specific, customer related sales and ordering
data from the HSI computer system." Id. She
then failed to return her laptop to HSI for two weeks.
Id. On May 14, the day after she resigned, Cook
"unlawfully accessed the HSI computer system, this time
using a web-based ‘iPad app' and her company
credentials." Id. This type of access
"would enable Cook to obtain on her iPad, large amounts
of ordering and purchase data for each of the HSI customers
that had been assigned to her." Id.
also attempted to erase the e-mails that she sent from her
HSI computer. Id. at 12. Before her resignation,
Cook "also attempted to divert HSI customers to
Patterson, " and "visited the offices of certain
HSI customers, deleted the HSI product ordering icon from
their computer systems and destroyed HSI catalogues and
business cards." Id.
9, 2016, the same day HSI applied for a TRO, Plaintiff filed
a complaint alleging eight causes of action: (1)
Misappropriation of Trade Secrets Under the Defend Trade
Secrets Act (DTSA), 18 U.S.C. § 1836, et seq.;
(2) Misappropriation of Trade Secrets Under the California
Uniform Trade Secrets Act (CUTSA), Cal. Civ. Code §
3426, et seq.; (3) Breach of Fiduciary Duty and Duty
of Loyalty; (4) Breach of Written Contract; (5) Breach of
Implied Covenant of Good Faith and Fair Dealing; (6) Tortious
Interference with Prospective Economic Advantage; (7)
Violation of California Unfair Competition Law (UCL); (8)
Violation of California Penal Code § 502. ECF No. 1.
Plaintiff also filed a declaration stating it attempted
service of the complaint and application for TRO by e-mailing
a copy to Cook's personal e-mail address and causing
copies to be hand-delivered to Cook's last known home
address. ECF No. 2-4.
Issuance of TRO and Defendant's Allegations
10, 2016, this Court granted in part HSI's application
for a TRO. ECF No. 12. It granted Plaintiff's request for
a TRO requiring Defendant to "preserve all documents,
data, tangible things, and other materials relating to this
case, " and to refrain from "altering, destroying,
or disposing of any evidence or other materials, in any form,
relating to this action." Id. at 8-9. It also
granted Plaintiff's request to enjoin Defendant from
"directly or indirectly accessing, using, disclosing, or
making available" any of HSI's confidential
documents, data or information, "directly or indirectly
violating or interfering with the confidentiality
obligations" signed with Plaintiff, and "directly
or indirectly, soliciting, continuing to solicit, initiating
contact with, or accepting business from, any HSI customers
whose accounts were assigned to her while she was employed by
HSI." Id. It denied Plaintiff's further
request for early discovery. Id. Finally, the order
set a hearing and briefing schedule to consider
Plaintiff's motion for a preliminary injunction.
filed an opposition to the motion for preliminary injunction.
ECF No. 15. She states that she was recruited to HSI from a
previous distributer of dental and medical equipment, and
that HSI "instructed Ms. Cook to bring her clients with
her and to send her clients' account ordering histories .
. . to help her clients make the transition." ECF No. 15
at 7. She also states that "[a]s competitors in the
dental supply industry, HSI and Patterson sell to many of the
same clients, primarily dental practices and laboratories,
" that "[b]oth companies provide the same or
similar products manufactured by the same companies, "
and that "nearly all dental practices purchase
merchandise, equipment and technical support from more than
one company simultaneously." Id. "In fact,
Ms. Cook estimates that the majority of her clients at HSI
also placed orders with Patterson." Id.
contests many of Plaintiff's factual assertions regarding
her conduct. She states that many of the documents and much
of the information asserted by HSI as trade secrets are in
fact "generally available" through HSI's
website or through its distribution of that information to
clients. Id. at 8. She also states that she
"did not intend to access HSI's systems"
through her iPad and "does not believe that she accessed
the system." She also states that while she did visit
the offices of some of her HSI customers on behalf of
Patterson, as alleged by HSI, she only did so after her
resignation, and never removed any HSI documents or ordering
icons, but merely informed them that she was now with
Patterson and hoped for their business. Id. at
Cook states that as a sales representative, her compensation
is "commission-based, " and therefore she has
"worked hard to expand her client base."
Id. at 9. "But because the TRO precludes Ms.
Cook from communicating with any of her previous clients,
including those with whom she worked prior to HSI, her entire
career and livelihood is in jeopardy." Id. at
15. Cook states that during the eight days that the TRO was
in effect, she was "contacted by at least twenty clients
on multiple occasions who were inquiring into, among other
things, previously-placed orders, why she has failed to show
up for regularly scheduled visits with her clients recently,
requests for assistance in placing new orders for supplies
and equipment, and her general well-being." Id.
Because she complied with the TRO, she ignored these
inquiries, "each time risking alienating valued and
longstanding clients and tarnishing her sterling reputation
for excellent customer service." Id.
relief is "an extraordinary remedy that may only be
awarded upon a clear showing that the plaintiff is entitled
to such relief." Winter v. Natural Res. Def.
Council, Inc., 555 U.S. 7, 22 (2008). To obtain
preliminary injunctive relief, the moving party must show:
(1) a likelihood of success on the merits; (2) a likelihood
of irreparable harm to the moving party in the absence of
preliminary relief; (3) that the balance of equities tips in
favor of the moving party; and (4) that an injunction is in
the public interest. Id. at 20. "[S]erious
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." Alliance for
the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th
Cir. 2011) (internal quotation marks omitted).
relief may take two forms: it may be prohibitory or mandatory
in nature. "A prohibitory injunction prohibits a party
from taking action and preserves the status quo pending a
determination of the action on the merits." Marlyn
Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571
F.3d 873, 878 (9th Cir. 2009) (internal alterations and
quotation marks omitted). A mandatory injunction orders a
party to take action. Id. at 879. Because mandatory
injunctions do more than preserve the status quo, they are
"particularly disfavored, " the Ninth Circuit has
observed that "courts should be extremely cautious about
issuing a preliminary injunction" in those
circumstances. Martin v. Int'l Olympic
Committee, 740 F.2d 670, 675 (9th Cir. 1984).
the exigent nature of a preliminary injunction, a court may
consider hearsay and other evidence that would otherwise be
inadmissible at trial. See Johnson v. Couturier, 572
F.3d 1067, 1083 (9th Cir. 2009); see also Flynt Distrib.
Co. v. Harvey, 734 F.2d 1389, 1394 (9th Cir. 1984)
("The trial court may give even inadmissible evidence
some weight, when to do so serves the purpose of preventing
irreparable harm before trial.").
Court's prior order granted a TRO based on the
Court's conclusion that Plaintiff had demonstrated a
likelihood of irreparable injury and a likelihood of success
on the merits; that the balance of equities tips in its
favor; and that the public interest would be served by the
issuance of a TRO. ECF No. 12. Addressing these same factors
again after considering Defendant's opposition and the
parties' arguments, the Court concludes that Plaintiff is
entitled to a preliminary injunction prohibiting Defendant
from accessing or otherwise using the alleged trade secrets
that she e-mailed to herself and downloaded. The Court find,
however, that Plaintiff is not entitled to an injunction
preventing Defendant from contacting or doing business with
former or current HSI customers.
Likelihood of Success on the Merits
prior order, the Court concluded that Plaintiff was likely to
succeed on its trade secret claims, brought under the DTSA,
CUTSA, and UCL, among others, because "customer
information such as sales history and customer needs and
preferences constitute trade secrets." ECF No. 12 at 5.
It also concluded that Plaintiff was likely to succeed on its
breach of contract claims, both in relation to
Defendant's alleged breach of her agreement to keep