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10-3405-cv (L) IDG USA, LLC v. Schupp UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 1 At a stated term of the United States Court of Appeals 2 for the Second Circuit, held at the Daniel Patrick Moynihan 3 United States Courthouse, 500 Pearl Street, in the City of 4 New York, on the 25th day of March, two thousand eleven. 5 6 PRESENT: DENNIS JACOBS, 7 Chief Judge, 8 ROSEMARY S. POOLER, 9 PETER W. HALL, 10 Circuit Judges. 11 12 - - - - - - - - - - - - - - - - - - - -X 13 IDG USA, LLC, 14 15 Plaintiff-Counter-Defendant- 16 Appellee, 17 18 -v.- 10-3405-cv (L) 19 10-3955-cv (Con) 20 KEVIN J. SCHUPP, 21 22 Defendant-Counter-Claimant- 23 Appellant. 24 - - - - - - - - - - - - - - - - - - - -X 25 26 FOR APPELLANT: Linda H. Joseph 27 Schroder, Joseph & Associates LLP 28 Buffalo, NY 1 1 2 FOR APPELLEE: Kevin Joseph English 3 Christopher L. Hayes (on brief) 4 Phillips Lytle LLP 5 Buffalo, NY 6 7 8 Appeal from the grant of a preliminary injunction by 9 the United States District Court for the Western District of 10 New York (Skretny, J.). 11 12 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED 13 AND DECREED that the district court’s decision is AFFIRMED 14 in part, VACATED in part, and REMANDED in part. 15 16 The Appellant, Kevin Schupp, appeals the district 17 court’s grant of a preliminary injunction preventing him 18 from: (1) working for competitors of the Appellee, IDG USA, 19 LLC (“IDG”), in a capacity similar to the one he had while 20 at IDG; (2) soliciting IDG customers that he managed while 21 at IDG; and (3) disclosing IDG’s trade secrets and 22 confidential information. We assume the parties’ 23 familiarity with the underlying facts, the procedural 24 history, and the issues presented for review. 25 26 We review a district court’s grant of a preliminary 27 injunction for abuse of discretion. Metro. Taxicab Bd. of 28 Trade v. City of New York,
615 F.3d 152, 156 (2d Cir. 2010). 29 A grant of preliminary relief is an abuse of discretion 30 when: (1) the decision rests on an error of law; (2) the 31 decision rests on a clearly erroneous factual finding; or 32 (3) the decision, though not the product of a legal error or 33 clearly erroneous factual finding, cannot be located within 34 the range of permissible decisions. Sec & Exch. Comm’n v. 35 Dorozhko,
574 F.3d 42, 45 (2d Cir. 2009). 36 37 To obtain a preliminary injunction, a party must 38 establish both “irreparable harm absent injunctive relief, 39 and either a likelihood of success on the merits, or a 40 serious question going to the merits to make them a fair 41 ground for trial, with a balance of hardships tipping 42 decidedly in [its] favor.” Almontaser v. N.Y.C. Dep’t of 43 Educ.,
519 F.3d 505, 508 (2d Cir. 2008) (quoting Louis 44 Vuitton Malletier v. Dooney & Bourke, Inc.,
454 F.3d 108, 45 113-14 (2d Cir. 2006)). The district court was well within 46 its discretion to conclude that IDG had shown a likelihood 47 of success on the merits and irreparable harm. Therefore, 2 1 the district court properly issued a preliminary injunction 2 against Schupp. 3 4 Schupp argues that IDG cannot show a likelihood of 5 success on the merits because (i) the non-compete agreement 6 (“NCA”) with him is inherently unenforceable, (ii) he never 7 breached the NCA, and (iii) IDG breached the NCA thereby 8 making it unenforceable against him. An NCA is enforceable 9 if its restrictions are reasonable. BDO Siedman v. 10 Hirshberg,
93 N.Y.2d 382, 388 (1999). A restriction is 11 reasonable if it is no more than is needed to protect the 12 employer’s legitimate interests, it imposes no undue 13 hardship on the employee, and it does not injure the public. 14
Id. at 388-89.Under New York law, an employer has a 15 legitimate interest in both its relationships with its 16 customers and its trade secrets.
Id. at 389,391. The 17 limited term and scope of the NCA at issue here do not 18 offend public policy. Therefore, the district court did not 19 abuse its discretion in concluding that the NCA is 20 enforceable. 21 22 The district court was within its discretion to 23 conclude on the evidence presented at the preliminary 24 injunction proceedings that Schupp breached the NCA. IDG 25 presented substantial evidence that, immediately after he 26 left IDG, Schupp began working nearby for one of IDG’s 27 competitors, soliciting IDG’s clients, and disclosing IDG’s 28 confidential information. This evidence is sufficient to 29 reasonably conclude that Schupp violated the non-compete, 30 non-solicit, and non-disclosure provisions of the NCA. 31 32 The district court was also within its discretion to 33 conclude on the record of the preliminary proceedings that 34 IDG did not breach the NCA. Schupp’s sole consideration for 35 signing the NCA was a one-time payment of $3,000 by IDG, 36 which IDG paid and Schupp accepted. Schupp’s constructive 37 termination claim fails because he did not establish that 38 IDG intentionally created a work environment so unpleasant 39 that a reasonable person in Schupp’s position would feel 40 compelled to resign. See Morris v. Schroder Capital Mgmt. 41 Int’l,
7 N.Y.3d 616, 622 (2006) (“[T]he atmosphere in the 42 workplace must be so intolerable as to compel a reasonable 43 person to leave.”). In any event, Schupp was employed “at 44 will.” 45 46 To establish irreparable harm, a plaintiff must 47 establish both that an injury is likely absent the 3 1 injunction and that the injury cannot be adequately remedied 2 with money damages. Grand River Enter. Six Nations, Ltd. v. 3 Pryor,
481 F.3d 60, 66 (2d Cir. 2007); Moore v. Consol. 4 Edison Co.,
409 F.3d 506, 510 (2d Cir. 2005). Threatened 5 dissemination of trade secrets generally creates a 6 presumption of irreparable harm. See FMC Corp. v. Taiwan 7 Tainan Giant Indus. Co.,
730 F.2d 61, 63 (2d Cir. 1984) (per 8 curiam). IDG presented substantial evidence that Schupp was 9 disseminating IDG’s secrets, including to IDG’s customers 10 and one of IDG’s primary competitors. The district court 11 was within its discretion to conclude that IDG satisfied the 12 irreparable harm requirement and that a preliminary 13 injunction was justified. 14 15 However, while the district court was within its 16 discretion to issue a preliminary injunction, the terms of 17 the injunction fail to meet the specificity requirement of 18 Federal Rule of Civil Procedure Rule 65(d) for two reasons. 19 20 First, the district court’s injunction insufficiently 21 specified the trade secrets and confidential information 22 that Schupp is forbidden to disclose. To satisfy Rule 23 65(d), “the party enjoined must be able to ascertain from 24 the four corners of the order precisely what acts are 25 forbidden.” Sanders v. Air Line Pilots Ass’n Int’l, 473
26 F.2d 244, 247 (2d Cir. 1972). An injunction that simply 27 prohibits the disclosure of trade secrets or confidential 28 information, with no additional description of what secrets 29 or confidential information are to be protected, is 30 insufficiently specific to satisfy Rule 65(d). Corning Inc. 31 v. PicVue Elecs., Ltd.,
365 F.3d 156, 157-58 (2d Cir. 2004). 32 Because with respect to trade secrets and confidential 33 information, the district court’s injunction here is no more 34 specific than the one rejected in Corning, we vacate that 35 portion of the preliminary injunction and remand to the 36 district court to add additional specificity. The district 37 court may consider tracking the words of the NCA, which 38 defines trade secrets and confidential information. While 39 an order granting a preliminary injunction may not 40 incorporate extrinsic documents by reference, it can track 41 language from such documents in order to add specificity to 42 the injunction. The language in the NCA should be 43 sufficient to satisfy Corning and Rule 65(d). 44 45 Second, the district court’s injunction does not 46 specify the duration of any of its prohibitions. We remand 47 for that amendment. The district court should consider that 4 1 the non-compete and non-solicit clauses of the NCA--but not 2 the non-disclosure clause--have a one-year limit. The 3 district court therefore should consider whether the 4 prohibitions of these two clauses remain current. If on 5 remand the district court determines that any of the time 6 limits have expired, the district court should further 7 modify the terms of the preliminary injunction to 8 accommodate such circumstances. 9 10 Finally, we reject Schupp’s argument that the district 11 court’s preliminary injunction is somehow invalid because 12 the court failed to require IDG to post a bond until after 13 Schupp specifically requested one almost a month after the 14 preliminary injunction first issued. While the bond should 15 have been required sua sponte at the time the injunction 16 first issued (or the district court should have explained 17 when issuing the injunction why no bond was being imposed), 18 such error is harmless because the district has now required 19 such a bond. 20 21 We hereby AFFIRM the district court’s grant of a 22 preliminary injunction, but we VACATE in part and REMAND the 23 district court’s specific injunctive order with instructions 24 to further specify the nature of the confidential 25 information and trade secrets that the Appellant is enjoined 26 from disclosing and duration of each of the injunction’s 27 prohibitions. 28 29 30 FOR THE COURT: 31 CATHERINE O’HAGAN WOLFE, CLERK 32 5
Document Info
Docket Number: 10-3405-cv (L), 10-3955-cv (Con)
Citation Numbers: 416 F. App'x 86
Filed Date: 3/25/2011
Precedential Status: Non-Precedential
Modified Date: 10/19/2024