United States District Court, N.D. California, San Jose Division
ORDER DENYING EX PARTE APPLICATION FOR TEMPORARY
RESTRAINING ORDER AND ORDER TO SHOW CAUSE FOR PRELIMINARY
INJUNCTION RE: DKT. NO. 4
J. DAVEA UNITED STATES DISTRICT JUDGE
KCG Americas LLC and its indirect parent company, KCG
Holdings, Inc. (collectively, “Plaintiffs”), are
“in the business of trading securities” and
constitute one of the world's largest independent
“market makers.” Compl., Dkt. No. 1, at ¶ 6.
They “write and deploy computer code and algorithmic
models” as part of that business, which are maintained
in a computer operating system as confidential trade secrets.
Id. at ¶¶ 7, 8. Plaintiffs allege in this
action that one of its former employees, Defendant Zhenquan
Zhang (“Defendant”), violated the Federal Defend
Trade Secrets Act, 18 U.S.C. § 1836 et seq., and related
state authorities by improperly accessing and copying its
confidential information before he was terminated.
jurisdiction arises pursuant to 28 U.S.C. § 1331.
Presently before the court is Plaintiffs' ex parte
application for a temporary restraining order
(“TRO”) through which Plaintiffs seek to enjoin
Defendant from, inter alia, retaining, disclosing or
destroying Plaintiffs' confidential information. Dkt. No.
matter is suitable for decision without oral argument. Civ.
L. R. 7-1(b). Having reviewed the relevant pleadings, the
court finds, concludes and orders as follows:
standard for issuing a TRO is the same as that for the
issuance of preliminary injunction. See New Motor Vehicle
Bd. of Cal. v. Orrin W. Fox Co., 434 U.S. 1345, 1347 n.2
(1977). Thus, much like a preliminary injunction, a TRO is
“an extraordinary remedy that may only be awarded upon
a clear showing that the plaintiff is entitled to such
relief.” Winter v. NRDC, Inc., 555 U.S. 7, 22
(2008). “To obtain a preliminary injunction, the moving
party ‘must establish that: (1) it is likely to succeed
on the merits; (2) it is likely to suffer irreparable harm in
the absence of preliminary relief; (3) the balance of
equities tips in its favor; and (4) an injunction is in the
public interest.'” Idaho v. Coeur D'Alene
Tribe, 794 F.3d 1039, 1046 (9th Cir. 2015) (quoting
Pom Wonderful LLC v. Hubbard, 775 F.3d 1118, 1124
(9th Cir. 2014)).
Alternatively, “‘serious questions going to the
merits' and a hardship balance 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). This articulation represents “one alternative on
a continuum” under the “‘sliding scale'
approach to preliminary injunctions employed” by the
Ninth Circuit. Id. at 1131-32. But “[t]he
critical element in determining the test to be applied is the
relative hardship to the parties.” Benda v. Grand
Lodge of the Int'l Ass'n of Machinists &
Aerospace Workers, 584 F.2d 308, 315 (9th Cir. 1978).
“If the balance of harm tips decidedly toward the
plaintiff, then the plaintiff need not show as robust a
likelihood of success on the merits as when the balance tips
less decidedly.” Id.
Whether to grant or deny a TRO or preliminary injunction is a
matter within the court's discretion. See Miss
Universe, Inc. v. Flesher, 605 F.2d 1130, 1132-33 (9th
an initial matter, an ex parte TRO application must satisfy
Federal Rule of Civil Procedure 65(b)(1), which excuses
notice to the opposing party only if “specific facts in
an affidavit or a verified complaint clearly show that
immediate and irreparable injury, loss, or damage will result
to the movant before the adverse party can be heard in
opposition, ” and the “movant's attorney
certifies in writing any efforts made to give notice and the
reasons why it should not be required.” In addition,
Civil Local Rule 65-1(b) requires that notice of an ex parte
TRO application be delivered to the opposing party
“[u]nless relieved by order of a Judge for good cause
Plaintiffs attempt to comply with Rule 65(b)(1) and Civil
Local Rule 65-1(b) is deficient. The declaration of
Plaintiff's counsel provided with the TRO application is
perfunctory; it merely concludes without reference to
specific facts why notice to Defendant would
“jeopardize the objective” of the application or
cause Plaintiffs to suffer irreparable harm. And none of the
other submitted documents assist Plaintiffs in satisfying the
notice rules since, as will be explained, the manner in which
the application is arranged renders it too speculative and
conclusory to justify extraordinary relief on a true ex parte
Turning to the application's substance, the second
Winter factor - which is arguably the “single
most important prerequisite for the issuance of a preliminary
injunction” (Freedom Holdings, Inc. v.
Spitzer, 408 F.3d 112, 114 (2d Cir. 2005) - requires the
moving plaintiff “to demonstrate that irreparable
injury is likely in the absence of an
injunction.” Winter, 555 U.S. at 22 (emphasis
preserved). An injunction ordered on any lesser showing is
“inconsistent” with the “characterization
of injunctive relief as an extraordinary remedy.”
assessing whether Plaintiffs have demonstrated that they are
likely to suffer irreparable harm in the absence of a TRO,
the court is mindful they must make a “clear showing of
irreparable harm.” Garcia v. Google, 786 F.3d
733, 746 (9th Cir. 2015). “Speculative injury does not
constitute irreparable injury sufficient to warrant granting
a preliminary injunction.” Caribbean Marine Servs.
Co. v. Baldrige, 844 F.2d 668, 674 (9th Cir. 1988).
Indeed, “[a] plaintiff must do more than merely allege
imminent harm sufficient to establish standing; a plaintiff
must demonstrate immediate threatened injury as a
prerequisite to preliminary injunctive relief.”
apprehensions and unsupported predictions of revenue loss are
not sufficient to satisfy a plaintiff's burden of
demonstrating an immediate threat of irreparable harm.”
Id. at 675-76.
Here, Plaintiffs' articulation rests on the contentions
that: (1) Defendant could disclose confidential information
to competitors, thereby decreasing the value of
Plaintiffs' trade secrets, and (2) Defendant may destroy
evidence “in an attempt to cover his tracks” and
impair Plaintiffs' ability to prove their claims, since
Defendant allegedly “wiped” his work computer.
These contentions, however, are not adequately supported by
evidence sufficient to satisfy Plaintiffs' burden upon
close inspection. For example, Plaintiffs' Head of
Technology for U.S. Market-Making, Philip Chung, does not
explain how he “became aware that Defendant had deleted
history files and some of his directories, ”
particularly since Defendant was allegedly logged-in to the
system under other employees' accounts at the time.
Moreover, Chung's statement that Defendant deleted files
on March 26, 2017, is reduced to speculation since it is
based only on “information and belief.”
9. Chung's explanation of how Defendant allegedly copied
Plaintiff's confidential files is similarly insubstantial
in the manner presented. Chung states he learned that
Defendant copied and transmitted confidential information to
third-party websites through a backed-up directory, which
somehow “demonstrated” to Chung that Defendant
was involved in certain activity. What is missing from this
description is how a ...