HBA&MFL NY LLC v. Tatiana

Background

HBA&MFL NY LLC, a wholesaler of health and beauty products, alleged that Tatiana and Isaak Goldstein had signed employment restrictions protecting the plaintiff’s confidential information and limiting competition and solicitation of the plaintiff’s suppliers and customers. The plaintiff alleged that Tatiana and Isaak created a competing business while employed by the plaintiff and used the plaintiff’s resources.

On January 25, 2024, Judge David Fried of the Supreme Court of the State of New York issued a temporary restraining order. The order barred the defendants from using or disclosing the plaintiff’s confidential information, improperly competing with the plaintiff, and soliciting the plaintiff’s suppliers or customers. It also directed the Goldsteins to turn over documents and communications containing the plaintiff’s confidential information. After the order was issued, the defendants removed the action to federal court.

The plaintiff alleged that the defendants violated the temporary restraining order by failing to return confidential documents and continuing to solicit the plaintiff’s suppliers.

Motion and Legal Standards

The plaintiff moved to hold the defendants in contempt and to strike their answer. Although the plaintiff did not formally label the request as a motion to strike, the court treated its request to strike the defendants’ “sham Answer” as seeking that relief.

The court explained that contempt is a severe sanction and requires clear and convincing evidence. The moving party must show that the order was clear and unambiguous, that the evidence of noncompliance was clear and convincing, and that the opposing party did not make a diligent and reasonable effort to comply.

The court also explained that motions to strike pleadings are generally disfavored and should be granted only for a strong reason. Striking an answer is a drastic measure because courts generally prefer to resolve cases on their merits.

Ruling

The court held that the requested relief was too severe at this stage. It emphasized that the record did not show the same level of disobedience, repeated violations, warnings, or escalating sanctions that had supported striking a pleading in other cases. The opinion therefore did not grant the requested contempt or pleading-striking sanctions.

Judge Nelson S. Román denied the plaintiff’s motion to strike and to hold the defendants in contempt. The Clerk of Court was directed to terminate the motion at ECF No. 40.