United States District Court, N.D. California, San Jose Division
ORDER DISCHARGING ORDER TO SHOW CAUSE FOR PRELIMINARY
J. DAVILA United States District Judge
UCAR Inc. and UCAR Technology (USA) Inc. (collectively
“UCAR”) comprise “one of the largest
chauffeured car service providers in China, ” offering
ride-hailing services much like those of Uber and Lyft in the
United States. Compl. ¶ 1, Dkt. No. 1. UCAR considers
some of its most critical projects to be its ride-hailing
software and its analysis of large data sets related to
vehicles in transit. Id. UCAR brings this action
against four of its former employees, Yan Li, Hua Zhong, Da
Huo, and Zhenzhen Kou (collectively,
“Defendants”),  for violation of the Defend Trade
Secrets Act, Misappropriation of Trade Secrets, and related
claims arising from Defendants' recent resignation and
departure from UCAR. See id.
March 28, 2017, UCAR filed an Ex Parte Application for a
Temporary Restraining Order (“TRO”) seeking to
enjoin Defendants from (1) keeping or using UCAR's
proprietary information, and (2) denying UCAR administrative
level access to its servers. See Dkt. No. 6-1
(“TRO App.”) at 14. UCAR's TRO Application
alleged that upon their resignation from the company on March
14, 2017, Defendants each “reformatted” their
company-issued laptops, effectively deleting any data and
information previously stored on the computers. Id.
at 2. The TRO Application further alleged that even after
their resignation, Defendants accessed, downloaded, and
retained UCAR's trade secrets and intellectual property;
denied UCAR administrative access to its own Amazon Web
Services (“AWS”) servers; and used or intended to use
UCAR's proprietary information to set up and benefit a
competing venture of their own. Id. at 2, 3, 6, 8;
see also Dkt. No. 34 (“Pl. Response”) at
2-3. UCAR asserted that Defendants had “effectively
admitted” their intent to use UCAR's property. TRO
App. at 2.
on these allegations, the court found that UCAR's ex
parte allegations justified the relief requested and issued a
TRO and Order to Show Cause (“OSC”) to
Defendants. See Dkt. No. 17. Defendants filed a
timely response to the OSC, opposing the issuance of an
injunction. Dkt. No. 31 (“Opp.”).
now carefully reviewed the relevant pleadings filed by the
parties, the court finds, concludes, and orders as follows:
preliminary injunction 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); Lopez v.
Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012) (“A
preliminary injunction is ‘an extraordinary and drastic
remedy, one that should not be granted unless the movant, by
a clear showing, carries the burden of
persuasion.”'). “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, a preliminary injunction is also appropriate
if “serious questions going to the merits were raised
and the balance of the hardships tips sharply in the
plaintiff's favor.” Alliance for the Wild
Rockies v. Cottrell, 622 F.3d 1045, 1049 (9th Cir.
2010). “These formulations are not different tests but
represent two points on a sliding scale in which the degree
of irreparable harm increases as the probability of success
on the merits decreases.” Big Country Foods, Inc.
v. Board of Educ. of the Anchorage Sch. Dist., 868 F.2d
1085, 1088 (9th Cir. 1989). But “[u]nder either
formulation, the moving party must demonstrate a significant
threat of irreparable injury, irrespective of the magnitude
of the injury.” Id. 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 preliminary injunction is a matter
within the court's discretion. See Miss Universe,
Inc. v. Flesher, 605 F.2d 1130, 1132-33 (9th Cir. 1979).
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
in original). An injunction ordered on any lesser showing is
“inconsistent” with the “characterization
of injunctive relief as an extraordinary remedy.”
assessing whether a plaintiff has demonstrated that it is
likely to suffer irreparable harm in the absence of
injunctive relief, the court is mindful that the plaintiff
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.” Id.
“Subjective 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, UCAR contends that it has shown irreparable harm under
either of two theories: (1) “Defendants admit that
[they] destroyed company property on multiple
occasions” and therefore may continue to do so as part
of a “pattern of destruction” unless the court
enjoins such actions (the preservation theory); and (2)
Defendants “planned” to take and disclose
UCAR's confidential information to a competing company,
which would irreparably damage the “competitive
advantage” UCAR's proprietary data has given it in
the current market (the disclosure theory). Pl. Response at
5. These contentions are too speculative and are not
sufficiently supported by evidence to satisfy UCAR's
burden of establishing irreparable injury.
to the preservation theory, there is no dispute that
Defendants reformatted their laptops when they left UCAR,
effectively erasing the data and records contained on the
computer. However, UCAR fails to identify any data or records
that were actually lost as a result of the reformat.
Defendants each affirm in their respective declarations that
it was their practice to store their work on UCAR's
servers - either the Phabricator or a server located in
UCAR's California office - and regularly uploaded their
completed work product to such servers. Zhong Decl.
¶¶ 45-56, Dkt. No. 30-19; Huo Decl. ¶¶
26-30, Dkt. No. 30-21; Kou Decl. ¶¶ 30-34, Dkt. No
30-23; Li Decl. ¶¶ 51-69, Dkt. 30-3. All Defendants
further attest that it was not their practice to store work
on their local hard drive, and none of them are aware of any
relevant work that would have still been located on the
UCAR-issued laptop at the time of their resignations.
Id. UCAR does not provide any reason to doubt the
accuracy or truthfulness of Defendants' statements in
Mr. Li admits that he deleted certain UCAR files after having
downloaded them to his wife's computer, but explains that
he did so because he realized that the files may actually be
UCAR's work product, which he contends were inadvertently
downloaded. Li Decl. ¶¶ 136-139. Again, UCAR does
not allege specific facts or provide evidence to suggest that
Mr. Li's actions permanently erased any data that UCAR
does not have stored elsewhere, or that Mr. Li remains in
possession of additional data that is now at imminent risk of
to UCAR's disclosure theory, the court acknowledges that
UCAR has a legitimate interest in protecting its proprietary
information from disclosure and that some of Defendants'
conduct raises valid concerns in this regard. Specifically,
Mr. Li admits to having logged on to UCAR servers after
formally resigning from the company, admits to having
downloaded (even if inadvertently) certain UCAR files, and
admits to having deleted this information after realizing
what it was. See Li Decl. ¶¶ 136-139.
There is also some evidence to suggest that Defendants may
have retained or otherwise had in their possession (even if
inadvertently) other UCAR data after having resigned from the