Free Country Ltd. v. Drennen
235 F. Supp. 3d 559
S.D.N.Y.2016Background
- Free Country, an apparel manufacturer, sought a TRO/PI after two former sales executives, Drennen and Vander Wyden, left to work for a competitor (Mountain and Isles/Rousso) and transferred company files to personal accounts/devices.
- Drennen installed Dropbox on his work computer, linked personal devices, and copied a large number of files (disputed quantity) shortly before resigning; he later uninstalled Dropbox and (per his testimony and a forensic report) deleted most Free Country files.
- Vander Wyden emailed Free Country documents (including the Master Contact List and four old product designs) to his personal account shortly before resigning.
- Free Country alleged misappropriation of trade secrets (customer lists and pricing information) under New York law and the DTSA and initially obtained a TRO; after an evidentiary hearing the court amended the TRO to bar use/dissemination of confidential information but refused to bar solicitation of customers for fall 2017.
- The court found no evidence Rousso or Santa Fe possessed or knew of the allegedly misappropriated materials and denied likelihood of success as to those corporate defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Free Country possessed protectable trade secrets (customer list) | Customer list is proprietary and developed via substantial effort; its disclosure would harm business | Customer identities and contact info are publicly ascertainable; list not secret | Denied: customer list not a trade secret (readily ascertainable) |
| Whether Free Country possessed protectable trade secrets (pricing information) | Pricing information is confidential and competitors could undercut prices | Pricing derived from routine industry sourcing; not a unique formula | Denied: pricing not shown to be trade secret (no proprietary formula) |
| Whether defendants misappropriated and will use trade secrets (inevitable disclosure/solicit customers) | Transfers and access create high risk of misuse and inevitable disclosure to new employer | Defendants deleted/copied files but forensic evidence shows lack of current possession; cannot have memorized massive data in short time | Denied for Vander Wyden and Drennen: plaintiff failed to show likelihood of misuse or inevitable disclosure; solicitation ban for fall 2017 denied |
| Whether injunctive relief (TRO restraining solicitation) and irreparable harm warranted | Loss of customers and pricing advantage for fall 2017 season would cause irreparable harm | Harm is quantifiable, limited to a discrete season; defendants' employment and future prospects weigh against injunction | Denied: irreparable harm not shown; balance of hardships favors defendants; TRO limited to prohibiting use/disclosure of confidential info |
Key Cases Cited
- JBR, Inc. v. Keurig Green Mountain, Inc., [citation="618 F. App'x 31"] (2d Cir.) (TRO/preliminary injunction are extraordinary remedies requiring clear showing)
- Sussman v. Crawford, 488 F.3d 136 (2d Cir. 2007) (standard for preliminary injunctive relief)
- Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) (injunctive relief not awarded as of right)
- JSG Trading Corp. v. Tray-Wrap, Inc., 917 F.2d 75 (2d Cir. 1990) (district court discretion in injunctions)
- N. Atl. Instruments, Inc. v. Haber, 188 F.3d 38 (2d Cir. 1999) (customer lists may be trade secrets if not readily ascertainable)
- A.F.A. Tours, Inc. v. Whitchurch, 937 F.2d 82 (2d Cir. 1991) (question whether customer list is trade secret is factual)
- In re Dana Corp., 574 F.3d 129 (2d Cir. 2009) (pricing data can be a trade secret where tied to proprietary formula)