Centennial Lending Group v. Seckel Capital
822 EDA 2016
| Pa. Super. Ct. | Oct 26, 2017Background
- Centennial Lending sued Seckel Capital alleging misappropriation of trade secrets (customer lists), conversion, tortious interference, aiding/abetting breach of fiduciary duty, and unfair competition after Seckel hired six of Centennial’s 22 loan officers (~30%) in 2015 and allegedly received Centennial customer data from former employee Spadaccini’s laptop.
- At a two-day preliminary injunction hearing, evidence included: recruitment communications, recovered e-mails/spreadsheets showing customer data sent to Seckel, and threatening communications by a former Centennial employee now at Seckel.
- Centennial sought a preliminary injunction to stop Seckel from soliciting Centennial employees, to prevent further acquisition/use of Centennial confidential information, and to require return/destruction of confidential data.
- The trial court granted a preliminary injunction enjoining Seckel from soliciting Centennial employees and ordering notification to counsel if Centennial employees were hired, but did not order return/destruction of records in the injunction itself.
- On appeal, the Superior Court upheld the grant of the preliminary injunction (finding irreparable harm and likelihood of success on Centennial’s unfair competition claim) but vacated the order because the trial court failed to require the plaintiff to post the bond mandated by Pa.R.C.P. 1531(b); the case was remanded for reissuance of the injunction with a bond requirement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether injunction was necessary to prevent immediate and irreparable harm | Centennial: loss of customer relationships, market advantage, and threatened misappropriation (via employee hires and retrieval of customer list) causes irreparable injury beyond money damages | Seckel: monetary losses are ascertainable and not existential; injunction did not require return/destruction of documents, so harm is compensable by damages | Court: Irreparable harm shown — disruption of customer relationships and threatened misappropriation under PUTSA suffice to support injunction |
| Whether Centennial showed likelihood of success on unfair competition claim | Centennial: Seckel systematically induced employees to leave to cripple Centennial and obtained confidential customer data (unfair competition actionable beyond trade-secret theory) | Seckel: info not shown to be confidential/trade secret; no enforceable confidentiality agreement; no proof Seckel hired employees to obtain documents or knew of wrongdoing | Court: Likelihood of success established — hiring ~30% of sales force plus evidence of data acquisition and threats supports unfair competition theory |
| Whether injunction could issue without plaintiff posting a bond (Pa.R.C.P. 1531(b)) | Centennial: concedes no bond posted but asks remand to set a reasonable bond rather than automatic vacatur | Seckel: Rule 1531(b) is mandatory; failure to require bond invalidates the injunction | Court: Rule 1531(b) mandatory; injunction vacated and remanded for reissuance with bond requirement |
Key Cases Cited
- WMI Grp., Inc. v. Fox, 109 A.3d 740 (Pa. Super. 2015) (standard of appellate review for preliminary injunctions)
- Synthes USA Sales, LLC v. Harrison, 83 A.3d 242 (Pa. Super. 2013) (prima facie right and showing for preliminary injunction)
- Three County Servs., Inc. v. Phila. Inquirer, 486 A.2d 997 (Pa. Super. 1985) (monetary loss must threaten business existence for irreparable harm in certain contexts)
- Kessler v. Broder, 851 A.2d 944 (Pa. Super. 2004) (loss of business opportunity/market advantage can be irreparable)
- Reading Radio, Inc. v. Fink, 833 A.2d 199 (Pa. Super. 2003) (systematic inducement of employees to cripple a competitor is actionable unfair competition)
- B.G. Balmer & Co. v. Frank Crystal & Co., Inc., 148 A.3d 454 (Pa. Super. 2016) (hiring essentially all sales staff indicates intent to induce clients to move business)
- SEIU Healthcare Pa. v. Commonwealth, 104 A.3d 495 (Pa. 2014) (statutory violations can establish irreparable injury for injunctive relief)
- Walter v. Stacy, 837 A.2d 1205 (Pa. Super. 2003) (failure to require bond mandates vacatur of preliminary injunction)
- Christo v. Tuscany, Inc., 454 A.2d 1042 (Pa. Super. 1982) (same: injunction must be vacated if bond not required)
- Nolan v. West Penn Specialty MSO, Inc., 737 A.2d 295 (Pa. Super. 1999) (disruption of customer relationships supports irreparable injury)