Metso Minerals Industries Incorporated v. Oakes

Filing 30

ORDER AND PRELIMINARY INJUNCTION - that Plaintiff's motion for a preliminary injunction (Doc. 14 ) is granted. Signed by Judge David G Campbell on 4/23/2014. (See Order for full details.)(KMG)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Metso Minerals Industries Incorporated,
Plaintiff,

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v.

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No. CV-14-00013-PHX-DGC
ORDER AND PRELIMINARY
INJUNCTION

Patrick Oakes, et al.,

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Defendants.

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Plaintiff Metso Minerals Industries, Inc. (“Metso”) has filed a motion seeking a

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preliminary injunction pursuant to Rule 65. Doc. 14. The motion is fully briefed and

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neither party has requested oral argument. The Court will grant the motion.

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I.

Background.

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Metso develops, manufactures, services, and sells mining and construction

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equipment, including rock crushers for processing ore and resizing rock. Doc. 17, ¶ 5.

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Over the past several years, Metso has made substantial investments to develop a new

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High Pressure Roll Crusher (“HRC”). Id., ¶ 19; Doc. 14 at 3. Metso is currently in the

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process of testing and refining a prototype HRC in Arizona. Doc. 17, ¶ 19. Associated

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with this prototype are many confidential, proprietary, and trade secret documents related

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to the design specifications, performance, installation, maintenance, repair, and assembly

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of the new equipment. Id.

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Plaintiff Patrick Oakes was employed as an Estimator, Sales Support & Project

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Manager for Metso. Id., ¶ 23. Oakes had access to confidential, proprietary, and trade

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secret information about multiple Metso products during his time at Metso. Doc. 17,

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¶ 29, Doc. 14 at 4. As an employee at Metso, Oakes signed a “Creations, Confidentiality,

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Trade Secrets & Company Property Agreement.”

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agreement, Oakes made three commitments: (1) he would not use any of Metso’s

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confidential information for his benefit or the benefit of others during and for a period of

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two years following his employment at Metso; (2) he understood that he had an

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independent obligation under trade secret law to refrain from misappropriating or

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disclosing Metso’s trade secrets; and (3) he would promptly deliver any and all copies of

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company property in his possession to Metso upon termination. Doc. 14-4 at 4-6.

Doc. 14 at 3.

As part of this

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On Friday, September 20, 2013, Oakes submitted his resignation to Metso.

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Doc. 17, ¶ 24. Metso alleges that “contemporaneous with Mr. Oakes’ [resignation], he

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downloaded onto portable USB devices confidential Metso information, that he thereafter

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accessed Metso confidential information on those portable USB devices, and that he

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continues to have at least one of those USB devices in his possession.” Doc. 1, ¶¶ 31-37;

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Doc. 14 at 5. Metso claims that the files Oakes appropriated include “hundreds of

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detailed manufacturing drawings for the HRCs and their components, as well as

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manuals . . . , and several customer quotes and estimating worksheets.” Doc. 14 at 7.

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Metso seeks a preliminary injunction that: (1) enjoins Oakes from accessing,

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copying, distributing, disclosing, or using, directly or indirectly, through any means

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whatsoever, Metso’s confidential information; (2) enjoins Oakes from accessing,

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copying, distributing, disclosing, or using, directly or indirectly, through any means

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whatsoever, electronic files transferred from the Lenovo Thinkpad T430 laptop, serial

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number 1S2349G5UPB05TEN that Metso issued to Oakes during his employment;

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(3) requires Oakes to identify everyone to whom he has disclosed or otherwise made

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available any Metso confidential information or any of the electronic files obtained from

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his work laptop; (4) orders Oakes to return all confidential information and other

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documents or things belonging to Metso or containing Metso’s confidential information;

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and (5) requires Oakes to make his personal computer and any other device to which any

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of the USB devices were attached available for inspection. Doc. 14 at 1-2.

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II.

Legal Standard.

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In order to obtain a preliminary injunction, Metso must establish that it is likely to

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succeed on the merits, that it is likely to suffer irreparable harm in the absence of

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preliminary relief, that the balance of equities tips in its favor, and that an injunction is in

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the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). The

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Ninth Circuit continues to analyze the four elements using a “sliding scale” approach, in

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which “the elements of the preliminary injunction test are balanced, so that a stronger

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showing of one element may offset a weaker showing of another.” Alliance for the Wild

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Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). An injunction may be granted

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when serious questions going to the merits are raised and the balance of hardships tips

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sharply in the plaintiff’s favor. Wild Rockies, 632 F.3d at 1135.

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III.

Analysis.

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As stated in his answer to Metso’s amended complaint, Oakes claims that he took

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Metso’s data with him after his termination because he anticipated calls from Metso

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employees with questions concerning projects he was working on prior to his departure

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from Metso. Doc. 24 at 2. In fact, he did receive calls from Metso employees and he

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used Metso’s information in order to provide helpful responses. Id. Oakes reports that

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he has accommodated Metso’s requests for return of its data and has even given Metso’s

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forensic computer expert access to his personal computers. Id. In addition, Oakes claims

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to have discovered a 16 gigabyte PNY thumb drive in his closet, which he promptly

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mailed to Metso. Id. As such, Oakes argues that there is no need for a preliminary

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injunction to afford Metso access to Oakes’ computers. Oakes does not oppose entry of

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an injunction prohibiting him from accessing, copying, or in any way using Metso’s trade

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secret information. Id. at 1. He does, however, object to an injunction requiring him to

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identify everyone to whom he has disclosed or made available Metso’s confidential

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information because he claims that he has not made such information available to anyone

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except those to whom Metso has approved such disclosure. Id. at 3.

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Metso argues that an injunction is still appropriate because Oakes has not yet

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returned a Staples Relay USB device (the “2005 thumb drive”), which was used to copy

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information from Oakes’ Metso-issued work laptop. Doc. 27 at 2. In addition, Metso’s

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forensic expert analyzed the 16 gigabyte PNY thumb drive returned to Metso and

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discovered that it contained files referencing “HRC” and “hrc pilot.” Id. Those files

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were copied to the thumb drive on October 14, 2013 and November 11, 2013, suggesting

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that Oakes still possesses the files on some other device. Id. Finally, the forensic

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expert’s analysis of the PNY drive revealed that it had not been connected to any of the

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computers that Oakes provided for inspection, suggesting that there is some other device

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onto which Oakes has transferred Metso’s information. Id.

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A.

Likeliness of Success on the Merits.

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Metso is likely to succeed on the merits of its trade secrets claims. At the very

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least, Metso’s claim raises serious questions that go to the merits. Under the Arizona

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Uniform Trade Secret Act, Metso must prove two elements: (1) the existence of a trade

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secret, and (2) actual or threatened misappropriation. See Calisi v. Unified Fin. Servs.,

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LLC, 302 P.3d 628, 631-32 (Ariz. Ct. App. 2012); Miller v. Hehlen, 104 P.3d 193, 201

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(Ariz. Ct. App. 2005). The design drawings and other sensitive documents that Oakes

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copied are protectable as trade secret information, and Metso has provided evidence that

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it has taken adequate measures to protect the documents’ secrecy. Doc. 14 at 11. Oakes

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does not dispute that the documents should be accorded trade secret protection. Further,

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the fact that Oakes has failed to account for the whereabouts of the 2005 thumb drive

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suggests that he misappropriated Metso’s trade secrets.

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B.

Irreparable Harm.

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Under Arizona law, “once a protectable interest is established, irreparable injury is

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presumed to follow if the interest is not protected.” Phoenix Orthopaedic Surgeons, Ltd.

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v. Peairs, 790 P.2d 752, 757 (Ariz. Ct. App. 1989).

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disclosure of trade secrets would cause irreparable injury. Metso has presented evidence

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tending to prove that Oakes still possesses Metso’s trade secrets months after his

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Oakes does not dispute that

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termination, showing a likelihood of irreparable harm.

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C.

Balance of Hardships.

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The hardship that would be placed on Oakes if the preliminary injunction were

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granted is mild – he would be required to abstain from disclosing Metso’s trade secrets

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and he would be required to return the 2005 thumb drive and submit his computers to

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inspection, which he claims he has already done. Metso would suffer considerable harm

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if the Court refused to grant a preliminary injunction – Metso would lose exclusive

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control over confidential information in which it has invested millions of dollars. The

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balance of hardships tips in Metso’s favor.

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D.

Public Interest.

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Courts have held that the public interest is served by protecting a company’s right

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to proprietary information, business operations, and contractual rights.

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Lynch, Pierce, Fenner & Smith, Inc. v. McClafferty, 287 F.Supp.2d 1244, 1249 (D. Haw.

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2003).

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protecting a company’s interest in its trade secrets and confidential information. See

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Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 481 (1974).

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See Merrill

In addition, granting the injunction is consistent with the public policy of

IT IS ORDERED that Plaintiff’s motion for a preliminary injunction (Doc. 14) is

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granted.

Upon payment by Plaintiff of a $500 bond, Defendant is enjoined from

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accessing, copying, distributing, disclosing, or using, directly or indirectly, through any

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means whatsoever, Plaintiff’s confidential information. Defendant is also enjoined from

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accessing, copying, distributing, disclosing, or using, directly or indirectly, through any

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means whatsoever, electronic files transferred from the Lenovo Thinkpad T430 laptop,

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serial number 1S2349G5UPB05TEN that Plaintiff issued to Defendant during his

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employment. Within seven days of Plaintiff’s payment of the bond, Defendant must

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identify everyone to whom he has disclosed or otherwise made available any of

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Plaintiff’s confidential information or any of the electronic files obtained from his work

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laptop. Within seven days of Plaintiff’s payment of the bond, Defendant must return all

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confidential information and other documents or things belonging to Plaintiff or

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containing Plaintiff’s confidential information and must make his personal computer and

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any other device to which any of the USB devices were attached, including the 2005

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thumb drive, available for inspection.

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Dated this 23rd day of April, 2014.

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