ExpertConnect, L.L.C. v. Fowler

Background

ExpertConnect, L.L.C. alleged violations of the federal Defend Trade Secrets Act and New York state law claims. It asked the court to extend a preliminary injunction first issued in July 2018 against Mayokia Fowler, Dipali Parmar, and Strafluence, L.L.C. ExpertConnect also asked to expand the injunction’s scope and to obtain an injunction based on its unfair-competition and tortious-interference claims.

The court described the history of the existing injunction. At a 2018 hearing, ExpertConnect presented credible evidence that Fowler and Parmar accessed ExpertConnect’s proprietary information and, around the same time, accessed personal computer storage drives. The court previously found this to be powerful circumstantial evidence of trade-secret misappropriation and issued an injunction. After the defendants sought reconsideration, the reconsideration motion was granted, but their request to reverse the injunction was denied. The Second Circuit later directed that the injunction comply with Federal Rule of Civil Procedure 65(d), and the injunction was reissued with an expiration date of November 30, 2019, while allowing ExpertConnect to seek an extension.

Legal standard

The requested relief was at least partly mandatory because it would require the defendants to stop soliciting or accepting business from ExpertConnect’s clients. To obtain a mandatory preliminary injunction, ExpertConnect had to show a clear or substantial likelihood of success, a strong likelihood of irreparable harm, and that the injunction would serve the public interest. Failure to satisfy any one of these requirements required denial of the motion.

Likelihood of success

The court explained that a claim under the Defend Trade Secrets Act requires proof that the plaintiff possessed a trade secret and that the defendant misappropriated it. The court found that ExpertConnect’s evidence showed a clear or substantial likelihood of success. That evidence included testimony that the defendants possessed information nearly identical to ExpertConnect’s data and research about current and potential clients and experts; testimony that Fowler and Parmar extracted the information from ExpertConnect’s computers before leaving; documents showing that Strafluence’s client list contained information also held by ExpertConnect; and evidence that the defendants solicited ExpertConnect clients.

The defendants offered evidence suggesting that some of Strafluence’s information came from public sources. The court found that this evidence did not overcome the circumstantial evidence that the information came from ExpertConnect’s computers.

Irreparable harm

The court held that ExpertConnect failed to show irreparable harm. Irreparable harm is an injury that cannot be adequately remedied if the court waits until trial. ExpertConnect did not show that the defendants had disseminated or intended to disseminate its proprietary information. Instead, its evidence showed that the defendants used, or intended to continue using, the information to compete for business.

The court characterized the resulting lost sales and business injury as harm that could be fully compensated with money damages. Although ExpertConnect argued that the defendants’ conduct damaged its goodwill and reputation, its supporting declarations focused on lost customers and reduced sales. The court found that ExpertConnect did not provide comparable evidence that clients or experts had lost confidence in its ability to protect proprietary information. The court therefore found no strong showing of harm that could not be remedied through damages.

Disposition

Judge Lorna G. Schofield denied ExpertConnect’s application to extend the preliminary injunction. For the same reasons, the court denied the application to expand the injunction’s scope. The court also denied the application to grant an injunction on alternate grounds. The opinion does not state that any of these applications were denied with or without prejudice.