First Western Capital Management Co. v. Malamed
874 F.3d 1136
| 10th Cir. | 2017Background
- First Western Capital Management (FWCM) acquired FMA (founded by Kenneth Malamed); Malamed worked for FWCM until his termination on Sept. 1, 2016.
- Shortly before termination Malamed printed his client book (~5,000 contacts; 331 current FWCM clients) and spreadsheets with client holdings and fees.
- First Western sued under the DTSA and CUTSA (and for contract/fiduciary claims) and sought a TRO/PI to bar Malamed from soliciting FWCM clients.
- The district court issued a preliminary injunction restraining Malamed from soliciting or accepting business from FWCM clients, but excused First Western from proving irreparable harm based on Star Fuel precedent.
- The district court also stated that, absent the presumption, it would have denied relief because monetary damages were quantifiable.
- On appeal the Tenth Circuit considered whether DTSA/CUTSA permit presuming irreparable harm and reversed the PI because First Western had not shown irreparable harm.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a movant seeking a preliminary injunction under DTSA/CUTSA may be excused from proving irreparable harm | Star Fuel allows excusal when a statute provides injunctive relief to prevent statutory violations; thus First Western need not show irreparable harm | Fish v. Kobach and later Supreme Court authority limit the presumption to statutes that mandate (not merely authorize) injunctive relief; DTSA/CUTSA only authorize relief | No — DTSA and CUTSA authorize but do not mandate injunctions; movant must show irreparable harm |
| Whether the district court’s finding that monetary damages were adequate defeats injunctive relief | Injunction justified under trade-secret statutes despite damages | District court found money damages quantifiable and adequate; on appeal court relied on that finding to deny injunction absent presumption | Where district court finds monetary damages adequate, absence of irreparable harm precludes preliminary injunction |
| Whether the appellant forfeited the argument requiring irreparable-harm showing | First Western says Malamed failed to raise the mandatory-authority distinction below | Malamed argued the ordinary four-factor test; appellee contends forfeiture but court exercises discretion to reach the pure legal question | Court declined to find forfeiture dispositive and considered the legal issue because it is a pure question of law resolved by Fish |
| Whether judicial estoppel or stare decisis preclude reversal | First Western relied on Star Fuel and argues reliance should bar reversal | Malamed did not assert inconsistent positions; Fish post-dated the PI and changed the law | Judicial estoppel not warranted; appellate plain-error review applies and Fish made reversal appropriate |
Key Cases Cited
- Star Fuel Marts, LLC v. Sam’s East, Inc., 362 F.3d 639 (10th Cir. 2004) (earlier Tenth Circuit decision permitting presumption of irreparable harm where statute provided injunctive relief)
- Fish v. Kobach, 840 F.3d 710 (10th Cir. 2016) (clarifies presumption of irreparable harm applies only where statute mandates injunctive relief)
- Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008) (Supreme Court on standards for preliminary injunctions)
- Schrier v. University of Colorado, 427 F.3d 1253 (10th Cir. 2005) (articulates preliminary injunction factors)
- Atchison, Topeka & Santa Fe Ry. Co. v. Lennen, 640 F.2d 255 (10th Cir. 1981) (earlier precedent cited regarding injunctive relief under statutes)
- Siegel v. LePore, 234 F.3d 1163 (11th Cir. 2000) (absence of irreparable harm alone defeats preliminary injunction)