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Civil Practice – Preliminary Injunction – Trade Secrets – Labor & Employment

Civil Practice – Preliminary Injunction – Trade Secrets – Labor & Employment

Addison Whitney, LLC v. Cashion (Lawyers Weekly No. 020-033-17, 28 pp.) (Adam Conrad, J.) 2017 NCBC 23

Holding: Although plaintiff has shown that its database of drug information, collection of non-public case studies, and client lists and related information are protectable trade secrets, plaintiff has not identified any instance in which a defendant accessed the drug-information database after December 2016, when defendants reported to others their intent to resign from plaintiff’s employ and create a competing business. By contrast, plaintiff has introduced substantial evidence that defendants accessed protected client information and case studies just prior to resigning. Plaintiff would be irreparably harmed in the absence of an order enjoining defendants from using and disclosing its trade secrets, but defendants will suffer little or no harm if the injunction is issued because they have submitted affidavits stating that they could obtain similar information through other means.

Plaintiff’s motion for a preliminary injunction is granted in part and denied in part.

Plaintiff became the employer of defendants Cashion, Scott, Budd and Cuykendall in June 2007 after an asset purchase. However, these defendants did not sign their “Employee Confidentiality and Non-Compete Agreements” (Confidentiality Agreements) until September 2007. Since these defendants were already employed at the time they entered into the Confidentiality Agreements, the agreements lack consideration and are unenforceable. As a result, plaintiff is not likely to succeed on its claim that these defendants breached the Confidentiality Agreements – including the agreements’ non-solicitation and non-disclosure provisions – and plaintiff is not entitled to a preliminary injunction on that basis.

However, plaintiff has established a likelihood of success on its claim for breach of the “Confidential Information and Unauthorized Disclosure” agreements signed by defendants Scott, Budd, Baynard and Cuykendall, as well as the non-disclosure clause in defendant Rodden’s Confidentiality Agreement. Plaintiff will be irreparably harmed if defendants used or disclosed plaintiff’s confidential information, and the potential harm to plaintiff outweighs any potential harm to defendants that would result from the issuance of an injunction.

Where plaintiff has made no effort to identify any irreparable harm caused by defendants’ alleged breach of fiduciary duty, and where plaintiff has averred that it “is not asking that Defendants be enjoined from pursuing their business,” the court is not convinced that compensation in money cannot atone for any harm caused by the alleged breach of fiduciary duty.

Motion granted in part and denied in part.

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