Integro USA, Inc. v. Crain

Background

Integro USA, Inc. asked the court for a temporary restraining order and preliminary injunction in aid of arbitration against eleven former employees who had resigned and joined Marsh USA, Inc., a competitor. The parties agreed that the underlying dispute would be resolved in arbitration rather than in federal court. Integro sought interim restrictions barring the respondents from soliciting Integro's employees or clients and from disclosing or misappropriating trade secrets.

Integro alleged violations of non-solicitation agreements and misappropriation under the federal Defend Trade Secrets Act and New York common law. The opinion describes computer activity involving some respondents, including connections to USB storage devices, file deletions, and access to documents allegedly containing confidential client information. Integro particularly relied on William McDonough's request for and receipt of a schematic concerning a client on the day he resigned.

Legal Standard

To obtain a preliminary injunction in aid of arbitration, Integro had to show irreparable harm and either a likelihood of success on the merits or sufficiently serious questions supporting litigation combined with a balance of hardships favoring preliminary relief. A likelihood of success required showing that ultimate success was more likely than not.

Trade-Secret Claims

The court denied interim relief on the trade-secret claims because Integro failed to show a likelihood of success. The court explained that the federal statute recognizes misappropriation through acquisition, disclosure, or use of a trade secret. Under New York law, a claimant must show possession of a trade secret and use of that secret in violation of an agreement, confidential relationship, or duty, or through improper discovery.

The court concluded that Integro's evidence did not support an inference that McDonough misappropriated a trade secret. Although the emails showed that he requested and received work product, Integro offered no evidence that he lied about his computer problems to obtain the schematic or that he improperly used or disclosed it. McDonough stated under oath that he requested the schematic for a presentation connected to a routine meeting, and the court found that the evidence supported his account. The court therefore held that, even assuming the schematic was a trade secret, Integro had not shown its improper acquisition, use, or disclosure. Integro also had not identified another specific trade secret that the respondents allegedly misappropriated.

Because this finding was sufficient to deny interim relief, the court did not decide whether Integro had shown irreparable harm. The court also denied Integro's request for expedited discovery because Integro had not shown even a minimal chance of success on its trade-secret claim.

Other Claims and Disposition

The court declined to exercise supplemental jurisdiction, meaning jurisdiction over related state-law claims, over the remaining contract claims. It concluded that the federal trade-secret claims had been eliminated before trial and that the contract claims involved different facts and legal issues, including questions about the enforceability of the client non-solicitation covenants under New York law. The court treated the common-law trade-secret claim differently because its resolution was sufficiently connected to the federal trade-secret analysis.

The court's final order stated that Integro's petition for a preliminary injunction in aid of arbitration was DENIED as to the misappropriation-of-trade-secrets claims and DISMISSED WITHOUT PREJUDICE as to the remaining contract-law claims. The court also granted the unopposed motion to supplement the record, directed the Clerk to close that motion, and directed the Clerk to close the case.