United States District Court, N.D. California
H.Q. MILTON, INC., Plaintiff,
JESSY WEBSTER, et al., Defendants.
ORDER GRANTING APPLICATION FOR TEMPORARY RESTRAINING
ORDER Re: Dkt. No. 10
PHYLLIS J. HAMILTON United States District Judge
application for a temporary restraining order
(“TRO”) and an order to show cause re preliminary
injunction came on for hearing before this court on November
22, 2017. Plaintiff appeared by its counsel Nancy E. Harris,
and defendants Jessy Webster and Hidekazu Matsuba appeared by
their counsel Russell Goodrow and Burke Hansen, respectively.
Having read the parties' papers and carefully considered
their arguments and the relevant legal authority, and good
cause appearing, for the reasons stated at the hearing and
summarized below, the court hereby GRANTS plaintiff's
application for a temporary restraining order.
H.Q. Milton seeks an immediate temporary restraining order to
prevent defendants Jessy Webster and Kazu Matsuba from using
allegedly misappropriated trade secrets. Amongst other
claims, the complaint asserts that defendants violated the
Defend Trade Secrets Act, 18 U.S.C. 1836 et seq. (the
“DTSA”), intentionally interfered with H.Q.
Milton's prospective economic advantage, and converted
H.Q. Milton property.Complaint ¶¶ 32-66. The present
TRO application is based only on the DTSA cause of action. In
support of its TRO application, plaintiff submitted
declarations from Scott Kaplan, H.Q. Milton's founder,
Jacek Kozubek, a long-time employee and partner at H.Q.
Milton, and excerpts of over 1200 pages of text messages
between defendants Matsuba and Webster.
Kaplan founded H.Q. Milton, which is one of the world's
leading purveyors of high-value, collectible vintage and
modern timepieces, with a particular focus on Rolex sports
model watches. Dkt. 10-2, Kaplan Decl. ¶ 1, 4; Compl.
¶ 2. H.Q. Milton's business relies upon its
well-earned reputation for honesty, reliability, impeccable
merchandise and its vast knowledge of vintage and antique
timepieces. Compl. ¶ 2. H.Q. Milton has invested time,
energy and resources to build its own proprietary and
invaluable set of customer and vendor contacts. Kaplan Decl.
¶¶ 6-7; Compl. ¶ 4.
Milton protects its client source and lead information and
does not share it with anyone outside its small company that
employed four people in 2017 and currently employs two
people. Kaplan Decl. ¶¶ 7, 10, 11; Compl.
¶¶ 2, 19. Because the market for vintage timepieces
is volatile, H.Q. Milton protects the information it has
acquired about customer interests, pricing, and profit
margin. Kaplan Decl. ¶¶ 4-5, 7-8, 9, 11; Compl.
¶¶ 19-20. Access to that pricing and profit margin
information is invaluable in a fast-moving market where
pricing decisions ultimately determine profitability. Kaplan
Decl. ¶ 4, 5, 7-8, 11; Compl. ¶¶ 19-20.
until November 7, 2017, defendant Matsuba was employed by
H.Q. Milton as a sales person. Compl. ¶ 23. In that
role, Matsuba was given access to H.Q. Milton's customer
information, a “customer wish list, ” and final
pricing and margin information, so that he could adequately
perform his job duties. Compl. ¶ 23; Kaplan Decl. ¶
Webster worked for H.Q. Milton as a professional photographer
for approximately 3.5 years. Compl. ¶ 24; Kaplan Decl.
¶¶ 13-16. H.Q. Milton fired Webster in December
2016. Kaplan Decl. ¶¶ 13-16; Compl. ¶ 24. At
that time, H.Q. Milton was aware that Webster intended to
pursue vintage watch dealing on his own. Kaplan Decl.
¶¶ 15-16; Compl. ¶ 24. A couple of months
after leaving, Webster launched his own vintage watch dealing
website called oysterpalace.com. Compl. ¶ 25.
February and November 2017, Matsuba, still working at H.Q.
Milton, provided Webster with key client information,
including names and contact information. Dkt. 10-3, Kozubek
Decl. ¶¶ 12-31; Compl. ¶¶ 26-29. Matsuba
also provided Webster with H.Q. Milton's proprietary
pricing information. Compl. ¶¶ 3, 5, 23-29; Kozubek
Decl. ¶¶ 26-31. The text messages show that Matsuba
affirmatively steered H.Q. Milton customers to Webster and
Oyster Palace. Kozubek Decl. ¶¶ 23-25; Compl.
¶¶ 26-29. Some of these customers purchased vintage
timepieces from Webster and Matsuba, rather than H.Q. Milton.
Kozubek Decl. ¶ 22; Compl. ¶ 27.
text messages also show that both defendants were aware that
their conduct should be kept hidden from H.Q. Milton. For
example, Matsuba, then still working at H.Q. Milton, rebuffed
Webster's request that he leave H.Q. Milton, stating
“we may be more successful this way, me staying here,
and you doing ur thing . . . I'm a splinter cell for
[Oyster Palace] . . . and we actually have access to more, I
have information at [my] fingertips, and access to all of my
clients, with the credibly [sic] of HQ” Milton. Compl.
¶ 5. Webster responded “Yessir I'm in!
Obviously hahahaha.” Kozubek Decl. ¶ 14. But
Webster then immediately warned Matsuba to “[j]ust be
careful with leaving your messages on your comp:-/.”
Id. In another instance, after Matsuba confirmed
which watch parts Webster wanted from H.Q. Milton, Webster
stated “Yes please;) and delete this convo from your
comp;).” Id. at ¶ 23.
Rule of Civil Procedure 65 provides federal courts with the
authority to issue temporary restraining orders and
preliminary injunctions. Fed.R.Civ.P. 65(a), (b). Generally,
the purpose of a preliminary injunction is to preserve the
status quo and the rights of the parties until a final
judgment on the merits can be rendered, see U.S. Philips
Corp. v. KBC Bank N.V., 590 F.3d 1091, 1094 (9th Cir.
2010), while the purpose of a temporary restraining order is
to preserve the status quo before a preliminary injunction
hearing may be held. See Granny Goose Foods, Inc. v. Bhd.
of Teamsters and Auto Truck Drivers, 415 U.S. 423, 439
for temporary restraining orders are governed by the same
general legal general standards that govern the issuance of a
preliminary injunction. See New Motor Vehicle Bd. v.
Orrin W. Fox Co., 434 U.S. 1345, 1347 n.2 (1977);
Stuhlbarg Int'l Sales Co., ...