Rodo Inc. v. Guimaraes

Background

Rodo Inc. sought a temporary restraining order, an emergency order intended to preserve the existing situation and prevent immediate, irreparable harm, against its former employees Talles Guimaraes and Ari Cohen. Rodo alleged that the defendants were sharing trade secrets or working for ExactCar, which Rodo described as a competitor, in violation of their employment agreements. Rodo also sought a preliminary injunction, but this opinion ruled on the temporary restraining order issues described below.

The court held a hearing on Rodo’s initial request on November 18, 2022. It denied the request as to Guimaraes and postponed a ruling on the request as to Cohen. The court ordered declarations about the defendants’ use of Rodo’s trade secrets and confidential information. Rodo later renewed its request for a temporary restraining order against Cohen and asked the court to reconsider its denial involving Guimaraes. Cohen moved for oral argument if the court considered issuing an order against him. The parties also submitted supplemental letters based on evidence obtained in discovery.

Legal standards

To obtain a temporary restraining order, Rodo had to make a clear showing of immediate and irreparable harm—harm that cannot be adequately repaired later with money damages—before the opposing party could be heard. The court stated that the temporary restraining order standard is otherwise the same as the standard for a preliminary injunction. That standard generally requires irreparable harm and either a likelihood of success on the merits or serious legal questions combined with hardships strongly favoring the requesting party.

A motion for reconsideration has a strict standard. The moving party generally must identify an intervening change in controlling law, newly available evidence, or a clear error or manifest injustice. Reconsideration is not a chance to relitigate old issues or present arguments that could have been made earlier.

Cohen

The court held that Rodo had not clearly shown immediate, irreparable injury from Cohen’s alleged conduct. Rodo identified three alleged injuries: breach of a noncompetition covenant based on Cohen’s work with ExactCar; breach of a nonsolicitation covenant based on an alleged effort to recruit Guimaraes; and misuse of confidential information or trade secrets to take business from Rodo’s dealer network.

As to the alleged noncompetition violation, Rodo’s explanation changed during the proceedings. It initially argued that ExactCar competed with Rodo in the online automobile marketplace, but later argued that Cohen could violate the agreement regardless of whether his automobile deals occurred online, by telephone, or in person. Rodo also initially reported an 80-percent decline in business among dealers who had worked with Cohen, then corrected that figure to 50 percent. The court found that the evidence involved only a small number of dealers, varied substantially among them, and did not clearly connect Cohen to Rodo’s lost business. Rodo did not provide communications between Cohen and the dealers or explain what it meant by Cohen “doing business” with them. It also did not rule out other explanations, such as a general decline in car sales during 2022.

The court found the nonsolicitation evidence insufficient because it consisted of a declaration stating that the declarant believed Cohen had solicited Guimaraes. The stated basis was that the two men had worked together and left Rodo three months apart. The court considered that connection too weak to support the requested order.

The court likewise found the evidence of confidential-information misuse inadequate. Of the cited portions of the Rodo chief executive’s declaration, the court found that only one paragraph addressed alleged misuse of confidential data. That paragraph described a decline in business and an unspecified automobile deal between Cohen and one dealer that had stopped working with Rodo. The court said this did not clearly show irreparable harm or establish that the decline resulted from Cohen’s use of confidential information. Cohen denied misusing or misappropriating Rodo’s information.

The court therefore denied Rodo’s motion for a temporary restraining order against Cohen.

Guimaraes

The court also denied Rodo’s request for reconsideration of the earlier denial of a temporary restraining order against Guimaraes. Rodo argued that Guimaraes had admitted taking proprietary documents and working for ExactCar. The court noted that Rodo had already argued that Guimaraes worked for a competitor and misappropriated confidential information in its original request.

Guimaraes’s declaration denied that he possessed certain key information, including information about Rodo’s car-pricing algorithm. He also stated that he had not misused or misappropriated any information he might have incidentally retained after leaving Rodo. The court found that this evidence did not fundamentally change the factual picture presented at the November 18 hearing and did not identify controlling decisions or data that the court had overlooked.

Disposition

The court ordered that Rodo’s motion for a temporary restraining order against Ari Cohen was denied. It further ordered that Rodo’s motion for reconsideration of the denial of a temporary restraining order against Talles Guimaraes was denied. Cohen’s motion for oral argument was denied as moot, and the clerk was directed to terminate that motion.