United States District Court, D. Kansas
MEMORANDUM AND ORDER
DANIEL
D. CRABTREE UNITED STATES DISTRICT JUDGE.
Plaintiff
Digital Ally, Inc. brings this lawsuit against defendant
Daniel Corum, its former employee. Mr. Corum now works for
plaintiff's competitor, TASER International, Inc.
(“TASER”), [1] asserting claims of tortious
interference, breach of contract, and violation of the Kansas
Uniform Trade Secrets Act. This matter comes before the court
on plaintiff's Motion for Temporary Restraining
Order[2] and for Preliminary Injunction (Doc. 5).
On February 24, 2017, the court conducted an evidentiary
hearing on the motion. After considering the evidence,
submissions, parties' arguments, and parties'
supplemental briefs, the court is now prepared to rule. For
reasons explained below, the court denies plaintiff's
Motion.
I.
Factual Background
Plaintiff
is a 150-employee company that specializes in manufacturing
video recording devices. Plaintiff sells these devices to law
enforcement departments and other commercial users like
taxicab and private ambulance companies. Plaintiff's
cameras can be embedded in its clients' rearview mirrors
or worn on a person's body. According to plaintiff, a
unique feature of some of plaintiff's cameras enables
them to turn themselves on automatically. Plaintiff calls
this technology “VuLink.” The VuLink camera
reacts to a specific triggering event such as an officer
drawing a weapon or turning on a siren. When the triggering
event occurs, the camera begins to record automatically
without any direction by the law enforcement officer.
Plaintiff
employed Mr. Corum from December 7, 2015 to August 16, 2016.
Mr. Corum worked in a sales and support oriented role working
primarily with plaintiff's prospective commercial
clients. Mr. Corum's role never changed during the eight
months he worked for plaintiff. Mr. Corum contends he never
worked with any of plaintiff's law enforcement clients.
Plaintiff
gave Mr. Corum two weeks of general training when he started
working. As part of his employment, Mr. Corum signed an
employment contract that included a covenant not to compete
(“the agreement”). This agreement provided that:
The Employee acknowledges that during Employee's
employment with Digital Ally, Employee, at the expense of
Digital Ally, will be specially trained in Digital Ally's
business, will establish favorable relations with Digital
Ally's customers, clients, accounts and vendors and will
use and have access to Digital Ally's Trade Secret
Information;
In consideration of such training, relations and access, and
to further protect Digital Ally's Trade Secret
Information and other confidential information, Employee
agrees that during the term of Employee's employment by
Digital Ally, and for a period of two years from and after
the voluntary or involuntary termination of such employment,
for any or no reason, employee will not directly or
indirectly, without the express written consent of Digital
Ally, except when and as directed to in the performance of
employee's duties under this agreement:
Own, manage, operate, control or have any interest, financial
or otherwise, in or act as an officer, director, partner,
principal member, manager, shareholder, employee, agent
representative, consultant or independent contractor of, or
in any way assist any person or entity in the conduct of any
business or enterprise which competes with the digital and
electronic products of Digital Ally. Digital Ally sells and
distributes its products throughout the United States and
internationally;
Directly or indirectly solicit or divert, or attempt to
solicit or divert, any customer, clients, or accounts of
Digital Ally;
Directly or indirectly use or disclose to any person, firm,
or corporation, the names or addresses of any of the
customers, clients or accounts of Digital Ally.
Doc. 8 at 4.
In
August 2016, Mr. Corum quit his job with plaintiff to work
for plaintiff's competitor, TASER. Mr. Corum currently
works remotely for TASER from his home in Springfield,
Missouri, as a network technician. As a network technician,
Mr. Corum is responsible for implementing TASER's
“Fleet” system in its law enforcement clients.
The Fleet system is an in-vehicle recording device. Mr. Corum
described his role at TASER as an “advisor to law
enforcement departments who are existing TASER
clients.” Doc. 7 at 4. In other words, Mr. Corum helps
TASER clients increase the number of Fleet systems used in
their department vehicles. Third parties manufacture the
routers that support the Fleet system. In his role, Mr. Corum
also serves as the liaison between the client and the
third-party router manufacturer. Mr. Corum does not make
sales of TASER's products.
Plaintiff
and TASER are involved in a separate lawsuit about
plaintiff's VuLink technology. Plaintiff sued TASER
claiming patent infringement, commercial bribery, and
unfair/anti-competitive acts or practices-all relating to the
auto-activation technology. This case is still pending before
Judge Murguia of our court.
Here,
plaintiff claims Mr. Corum breached the employment contract
he signed when he began working for plaintiff. Plaintiff
seeks a preliminary injunction preventing Mr. Corum from
providing TASER services. Specifically, plaintiff seeks an
injunction: (1) prohibiting Mr. Corum from using any
confidential information he learned working for plaintiff to
compete with plaintiff unfairly; (2) requiring Mr. Corum to
return all the confidential information he has in his
possession; (3) prohibiting Mr. Corum from selling or
attempting to sell TASER products similar to its products to
plaintiff's customers; and (4) prohibiting Mr. Corum from
continuing to work for TASER.
II.
Legal Standard
Federal
Rule of Civil Procedure 65(a) authorizes district courts to
issue preliminary injunctions. The relief afforded under this
rule has a limited purpose-a preliminary injunction is
“merely to preserve the relative positions of the
parties until a trial on the merits can be held.”
Univ. of Tex. v. Camenisch, 451 U.S. 390, 395
(1981). To prevail on a motion for preliminary injunction,
the movant must demonstrate that: (1) it is substantially
likely to succeed on the merits; (2) it will suffer
irreparable injury if the injunction is denied; (3) its
threatened injury outweighs the injury the opposing party
will suffer under the injunction; and (4) the injunction, if
issued, will not be adverse to the public interest.
Winter v. Nat'l Res. Defense Council, Inc., 555
U.S. 7, 20 (2008); Verlo v. Martinez, 820 F.3d 1113,
1126 (10th Cir. 2016).
Whether
to grant a preliminary injunction rests within the
court's sound discretion. Beltronics USA, Inc. v.
Midwest Inventory Distrib., LLC, 562 F.3d 1067, 1070
(10th Cir. 2009). But, a preliminary injunction is an
extraordinary remedy. Winter, 555 U.S. at 24. So,
the right to such relief must be “clear and
unequivocal.” Petrella v. Brownback, 787 F.3d
1242, 1256 (10th Cir. 2015) (quoting Beltronics, USA,
Inc., 562 F.3d at 1070). “In general, ‘a
preliminary injunction . . . is the exception rather than the
rule.'” Gen. Motors Corp. v. Urban Gorilla,
LLC, 500 F.3d 1222, 1226 (10th Cir. 2007) (quoting
GTE Corp. v. Williams, 731 F.2d 676, 678 (10th Cir.
1984)).
III.
Analysis
Plaintiff
seeks an injunction that: (1) prohibits Mr. Corum from using
confidential information he learned working for plaintiff to
compete with plaintiff unfairly; (2) requiring Mr. Corum to
return any of plaintiff's confidential information in his
possession; (3) prohibiting Mr. Corum from selling or
attempting to sell similar products to plaintiff's
customers; and (4) prohibiting Mr. Corum from continuing to
work for TASER.
“[C]ourts
have consistently noted that ‘[b]ecause a showing of
probable irreparable harm is the single most important
prerequisite for the issuance of a preliminary injunction,
the moving party must first demonstrate that such injury is
likely before the other requirements for the issuance of an
injunction will be considered.'” Dominion Video
Satellite v. Echostar Satellite Corp., 356 F.3d 1256,
1260-61 (10th Cir. 2004) (quoting Reuters Ltd. v. United
Press Int'l, Inc., 903 F.2d 904, 907 (2d Cir.
1990)). The court thus begins the analysis by asking whether
plaintiff will suffer irreparable harm without the injunction
it seeks.
A.
Irreparable Harm
Irreparable
harm “‘does not readily lend itself to
definition.'” Id. at 1262 (quoting
Prairie Band of Potawatomi Indians v. Pierce, 253
F.3d 1234, 1250 (10th Cir. 2001)). And proving irreparable
harm is not “‘an easy burden to
fulfill.'” Id. (quoting Greater
Yellowstone Coal. v. Flowers, 321 F.3d 1250, 1258 (10th
Cir. 2003)). So, to “constitute irreparable harm, an
injury must be certain, great, actual ‘and not
theoretical.'” Heideman v. S. Salt Lake
City, 348 F.3d 1182, 1189 (10th Cir. 2003) (quoting
Wisc. Gas Co. v. F.E.R.C., 758 F.2d 669, 674 (D.C.
Cir. 1985)). “Irreparable harm is not harm that is
merely serious or substantial.” Id. (citations
and internal quotation marks omitted).
Instead,
a plaintiff establishes irreparable harm by demonstrating
“‘a significant risk that he or she will
experience harm that cannot be compensated after the fact by
monetary damages.'” RoDa Drilling Co. v.
Siegal, 552 F.3d 1203, 1210 (10th Cir. 2009) (quoting
Greater Yellowstone, 321 F.3d at 1258). A claim of
“purely speculative” harm will not suffice;
instead, a plaintiff must show that “significant risk
of irreparable harm” is present to meet the burden.
Id. (quoting Greater Yellowstone, 321 F.3d
at 1260)). Moreover, wholly conclusory statements do not
amount to irreparable harm. Dominion Video, 356 F.3d
at 1261. The court must determine if the irreparable harm
theorized by plaintiff's injunction motion is likely to
take place before a ruling on the merits. RoDa Drilling
Co., 552 F.3d at 1210 (quoting Greater
Yellowstone, 321 F.3d at 1260)).
A
plaintiff may establish irreparable harm by “such
factors as the difficulty in calculating damages, the loss of
a unique product, and existence of intangible harms such as
loss of goodwill or competitive market position.”
Dominion Video, 256 F.3d at 1264; see also
Hill's Pet Nutrition, Inc. v. Nutro Prod., Inc., 258
F.Supp.2d 1197, 1205 (D. Kan. 2003) (“[L]oss of
customers, loss of goodwill, and threats to a business'
viability can constitute irreparable harm.” (citations
and internal quotation marks omitted)).
Here,
plaintiff asserts it will suffer irreparable harm without an
injunction because it will lose its competitive market
position. As support, plaintiff relies on Advisors Excel,
LLC v. Zagula Kay Consulting, LLC, No. 15-4010-DDC-KGS,
2015 WL 736344, at *1 (D. Kan. Feb. 20, 2015). In
Zagula, this court issued a preliminary injunction,
in part, because the plaintiff produced sufficient evidence
to show that it would suffer an irreparable harm if the
injunction did not issue. Zagula, 2015 WL 736344, at
*1, *3-*4. Like plaintiff in this case, the Zagula
plaintiff asserted that they would lose competitive market
position. Id. at *4. The Zagula plaintiff
demonstrated that the defendant planned to recruit some of
its employees to a new competing business. Id. And
the Zagula plaintiff also cited specific examples in
its industry where a company recruited one of its
competitor's employees and the recruitment
“snowballed, ” causing other employees to follow
suit. Id. By citing examples, the Zagula
plaintiff demonstrated that the snowballing threat was real,
“not just a theoretical or speculative
possibility.” Id. (citing Heideman v. S.
Salt Lake Cty., 348 F.3d 1182, 1189 (10th Cir. 2003)).
In
contrast, plaintiff here relies just on a theoretical or
speculative possibility that it will suffer loss of
customers, goodwill, and threats to business viability if the
injunction does not issue. Unlike Zagula, plaintiff
has produced no evidence that Mr. Corum planned to recruit
any of plaintiff's employees. Nor has plaintiff produced
evidence that leads the court to conclude that a real threat
of snowballing exists. In its supplemental brief, plaintiff
asserts that Mr. Corum admits he was recruited to TASER by a
“head hunter” while working for plaintiff. Doc.
17 at 5. But at the February 24 hearing, Mr. Corum testified
that he sought out the third party recruiter who sent him to
TASER. At the February 24 hearing, Stanton Ross,
plaintiff's CEO, testified that some of plaintiff's
employees have been contacted by TASER. But Mr. Ross's
testimony did not identify any specific examples when other
employees have left plaintiff to work for TASER-other than
Mr. Corum. So, no evidence of a real threat of
“snowballing” exists in the record.
Plaintiff
also attempts to show irreparable harm by emphasizing the
tight competition between it and TASER. In its supplemental
brief, plaintiff contends this “is not a case in which
a former employee has chosen to work [for] another entity,
” but one where an employee has “change[d]
uniforms” in a “war.” Id. 17 at
16. Plaintiff asserts that TASER has managed to make itself
competitive in the market only by infringing on two of its
patents (the issue being litigated before Judge Murguia).
And, plaintiff asserts Mr. Corum knows of its trade secrets
that he could divulge to TASER and provide it with an unfair
competitive edge. Id. at 15. It appears plaintiff is
trying to establish irreparable harm by suggesting that Mr.
Corum's employment with TASER is part of the reason TASER
has excelled quickly in the body camera market. But plaintiff
has adduced no evidence linking Mr. Corum's work for
plaintiff to the devices at issue in the patent litigation.
Mr. Corum worked in a sales role for commercial clients while
employed by plaintiff, and he now works as a networking
technician for TASER's law enforcement
clients.[3] Plaintiff cannot demonstrate the
irreparable harm necessary to enforce a preliminary
injunction merely by asserting that Mr. Corum left to work
for its competitor. Wholly conclusory and speculative
statements, no matter how vividly argued, do not amount to
irreparable harm.
The
fact that plaintiff and TASER are marketplace competitors
might have justified a preliminary injunction that prohibits
Mr. Corum from using confidential information to compete
unfairly with plaintiff or ordering Mr. Corum to return
confidential information that he has in his possession. But
plaintiff has not sustained its burden to show that Mr. Corum
possesses any confidential information, or that he is using
that confidential information to compete with plaintiff. In
sum, plaintiff has not met its burden to demonstrate that it
will suffer irreparable harm without an injunction.
B.
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