Network Data Rooms, LLC v. Saulrealism LLC
- Lorna Schofield
- 1:22-cv-02299
- U.S. District Court · Southern District of New York
- 4
In Network Data Rooms v. Saulrealism, Judge Schofield denied reconsideration of the request for a mandatory preliminary injunction requiring code turnover.
Network Data Rooms, LLC did not obtain reconsideration of its request for a mandatory preliminary injunction requiring the defendants to turn over specified software code. The previously granted prohibitory relief against destroying, disclosing, transferring, or using the plaintiff’s confidential and trade-secret information was not changed by this order.
What happened
Network Data Rooms, LLC had previously obtained an unopposed order preventing the defendants from destroying, disclosing, transferring, or using its confidential and trade-secret information. The court had denied Network Data Rooms’ separate request for a mandatory preliminary injunction requiring the defendants to turn over copies of specified software code.
Network Data Rooms asked the court to reconsider that denial, arguing that it had overlooked important findings in an expert report and should have found a sufficient likelihood that the company would succeed. The company also challenged the significance of misconduct by its primary witness, David Delorge, who had committed fraud on the court and invoked his right against self-incrimination.
The court denied the reconsideration motion. Judge Schofield found that the motion identified no change in controlling law, new evidence, clear error, or manifest injustice, and concluded that the evidence did not meet the heightened standard for requiring a defendant to produce code that he testified he did not possess.
The detailed version
- Network Data Rooms, LLC v. Saulrealism LLC · No. 1:22-cv-02299
- Lorna Schofield
- Oct. 12, 2022
Background
On September 23, 2022, the court granted in part and denied in part Network Data Rooms, LLC’s motion for a temporary restraining order and preliminary injunction. The court granted unopposed prohibitory relief barring the defendants from destroying, disclosing, transferring, or using the plaintiff’s confidential, proprietary, and trade-secret information, including the codebase of the DealTable Virtual Data Room Platform software and specified decompiled source code. The court denied the plaintiff’s request for a mandatory preliminary injunction directing the defendants to turn over the original and all copies of that code in their possession, custody, or control.
On October 5, 2022, the plaintiff moved for reconsideration of the denial of the mandatory injunction. It argued that the court had overlooked key findings in Mr. Patterson’s expert report and should have found a clear or substantial likelihood of success on the merits regardless of David Delorge’s misconduct. The plaintiff also argued that Microsoft Azure Repositories made it impossible for Delorge to delete code and conceal that deletion.
Court’s Analysis
The court explained that reconsideration is available only when the moving party identifies an intervening change in controlling law, newly available evidence, or a need to correct clear error or prevent manifest injustice. It is not a way to relitigate earlier issues, present new theories, or obtain a second opportunity to argue the motion.
The court found that the motion did not identify any of those grounds. The scope and substance of Mr. Patterson’s reports had already been before the court when it considered the preliminary-injunction motion. The court had previously found that the plaintiff had not presented enough credible evidence to show a clear or substantial likelihood of success and that the balance of hardships favored the defendants if Saul were ordered, under threat of contempt sanctions, to produce code he testified he did not possess.
The court further held that the plaintiff’s arguments did not overcome the problems created by Delorge’s fraud on the court and his assertion of the Fifth Amendment right against self-incrimination. Because the full extent of that fraud remained unknown, and because the plaintiff’s request for a mandatory injunction was subject to a higher standard, the plaintiff had not satisfied the required burden.
Disposition
The court denied the plaintiff’s motion for reconsideration and directed the Clerk of Court to close the motion at Docket Number 105. The opinion does not alter the previously granted prohibitory relief, and it leaves the denial of the mandatory injunction in place.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.