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CleanFish, LLC v. Sims

United States District Court, N.D. California

June 28, 2019

CLEANFISH, LLC, Plaintiff,
v.
DALE SIMS, et al., Defendants.

          ORDER DENYING PLAINTIFF'S TEMPORARY RESTRAINING ORDER AND DENYING PLAINTIFF'S MOTION TO SEAL RE: DKT. NOS. 2, 3

          HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE.

         On June 24, 2019, Plaintiff CleanFish, LLC, f/k/a Sig and Sour LLC (“CleanFish”), filed a complaint against Defendants Dale Sims, Buena Vista Seafood, LLC (“Buena Vista”), Island Sea Farms, Inc. (“ISF”), Nanci Dixon, and Paul Simpson, alleging trade secret misappropriation under federal and California law and breach of contract. Dkt. No. 1 (“Compl.”). The same day, Plaintiff also applied for the immediate entry of a temporary restraining order, order for expedited discovery, and order to show cause why a preliminary injunction should not issue against Defendants. Dkt. No. 2 (“Mot.”). Plaintiff filed an administrative motion to file under seal certain material used in support of its motion.

         The Court has carefully considered the parties' briefs, supporting declarations, and exhibits. The Court finds that this matter is appropriate for disposition without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). For the reasons discussed below, the Court DENIES Plaintiff's motion for temporary restraining order and DENIES Plaintiff's administrative motion to file under seal.

         I. BACKGROUND

         Plaintiff CleanFish is a Delaware limited liability company and is a wholesale and retail distributor of seafood. Compl. ¶ 10. Plaintiff was formerly known as Sig and Sour LLC until approximately April 2018, when it purchased CleanFish, Inc. through an asset purchase agreement with Defendant Sims. Dkt. No. 2-1, Declaration of Michael Moniz (“Moniz Decl.”) ¶¶ 1, 4-6.[1]Mr. Sims was the co-founder and President of CleanFish, Inc. and has been working in the seafood industry for approximately thirty-nine years. Id. ¶ 4; Dkt. No. 17-1, Declaration of Dale Sims (“Sims Decl.”) ¶ 1. After the acquisition, Mr. Sims continued to work for Plaintiff as a “key employee involved in sales and distribution of seafood to Plaintiff's customers.” Mot. at 16.[2] On May 17, 2019, Mr. Sims formed Buena Vista, another seafood distributor company. Mot. at 17; Sims Decl. ¶ 6. In or around May 31, 2019, Mr. Sims resigned from CleanFish. Id. Mr. Sims maintains that after his resignation, Plaintiff attempted to persuade him to reconsider. Sims Decl. ¶ 8. Mr. Sims declined to do so and ceased working at CleanFish by June 5, 2019. Id. ¶ 9. While Mr. Sims returned his company cellphone to Plaintiff, he allegedly still retained the company laptop. Mot. at 17-18. Mr. Sims represents that the laptop is personal property he has owned since 2010. Sims Decl. ¶ 14.

         Plaintiff has both seafood suppliers and customers, including Defendant ISF. See Dkt. No. 17-2, Declaration of Paul Simpson (“Simpson Decl.”) ¶¶ 4-10. ISF is a British Columbia corporation that farms and supplies mussels from Canada. Id. ¶ 1. Defendant Dixon is an employee of ISF, and Defendant Simpson is the President. Id. ¶¶ 1, 3. ISF began working with Mr. Sims and CleanFish, Inc. in 2014 and continued that relationship when Plaintiff acquired CleanFish, Inc. in 2018. Id. ¶¶ 4-5. However, after the acquisition, Mr. Simpson avers that Plaintiff consistently paid ISF's invoices late, which was what eventually led to ISF's decision to terminate its business with Plaintiff. Id. ¶¶ 6-10.

         Plaintiff contends that it was Mr. Sims's unlawful conduct that “disrupt[ed] and usurp[ed] [Plaintiff's] business” with ISF and other customers. Mot. at 12. Specifically, Plaintiff argues that during Mr. Sims's final weeks of employment and immediately after his resignation, he willfully misappropriated Plaintiff's “Confidential Data, ” defined as “detailed customer lists, purchasing data, sales figures and other analysis, and detailed supplier lists, sales data and other analysis.” Id. at 12. Mr. Sims allegedly conspired with Ms. Dixon and Mr. Simpson to use the Confidential Data to fulfill orders to Plaintiff's customers, thereby competing with Plaintiff. Mot. at 19. This thus “divert[ed] business away” from Plaintiff and caused its revenue to drop “precipitously.” Id. at 27-28.

         Plaintiff argues that absent immediate injunctive relief, it will continue to “suffer irreparable injury and key evidence may be lost.” Mot. 2 at 2. Plaintiff's motion seeks an order: (1) enjoining Defendants from altering, destroying, or disposing of evidence that may be related to this litigation; (2) directing a forensics expert to “clone” or “mirror image” Defendants Sims and Buena Vista's business and personal email accounts, computers, mobile devices, and computer drives; (3) directing Defendants to preserve documents related to this litigation; (4) directing Mr. Sims to return the laptop over which Plaintiff claims possession; (5) enjoining Defendants from accessing, using, disclosing, or making available Plaintiff's “confidential, proprietary, or trade secret documents, data, or information”; (6) enjoining Defendants from “directly or indirectly violating or interfering with confidentiality obligations”; (7) enjoining Defendants from “directly or indirectly soliciting, continuing to solicit, initiating contact with, any of Plaintiff's customers as of May 17, 2019”; and (8) directing Defendants to return all other documents or property that contain Plaintiff's “confidential, proprietary, or trade secret information.” Mot. at 3-4. Plaintiff also seeks an expedited discovery request to subpoena non-party witnesses “on an expedited and immediate basis, ” along with other “discovery demands.” Id. at 2.

         II.MOTION FOR TEMPORARY RESTRAINING ORDER

         A. Legal Standard

         A temporary restraining order is intended to preserve the status quo and prevents irreparable harm until a hearing can be held on a preliminary injunction application. See Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers, 415 U.S. 423, 429 (1974). However, a temporary restraining order is an “extraordinary remedy” that the court should award only upon a clear showing that the plaintiff is entitled to such relief. See Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). Such an order may be issued only where the moving party has established: (1) a likelihood of success on the merits; (2) a likelihood of irreparable harm to plaintiff in the absence of preliminary relief; (3) the balance of equities tips in plaintiff's favor; and (4) that an injunction is in the public interest. See id. at 22.

         Under Winter, a court may only grant preliminary relief upon a showing that irreparable harm is likely. See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1132 (9th Cir. 2011). The mere possibility of irreparable harm is insufficient to support issuance of preliminary relief, even where the other Winter factors weigh heavily in favor of the movant. Id. In Alliance, the Ninth Circuit explained that “‘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 1134.

         B. Discussion

         i. Likelihood of ...


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