Hat World, Inc. v. Kelly

Filing 69

ORDER signed by Judge Lawrence K. Karlton on 8/10/12 GRANTING in part and DENYING in part 35 Motion to Dismiss; GRANTING Plaintiff 21 days to file an amended complaint consistent with this opinion; and DENYING 7 Motion for Preliminary Injunction. (Meuleman, A)

1
2
3
4
5
6
7
UNITED STATES DISTRICT COURT
8
FOR THE EASTERN DISTRICT OF CALIFORNIA
9
10 HAT WORLD, INC., d/b/a
LIDS TEAM SPORTS,
11
Plaintiff,
12
v.
13
KEVIN KELLY,
14
Defendant.
15
16

NO. CIV. S-12-01591 LKK/EFB

/

Plaintiff Hat World, Inc., alleges seven causes of action

17 against

defendant,

who

is

a

former

Hat

World

employee.

The

18 complaint alleges generally that the defendant misappropriated
19 property and confidential information when he left his employment
20 with Hat World.

The information claimed included customer lists,

21 purchase orders, invoices, and spreadsheets. Pending before the
22 court

is

a

motion

by

defendants

to

dismiss

all

but

one

of

23 plaintiff’s claims for relief, and a motion by plaintiff for a
24 preliminary injunction. For the reasons discussed herein, the
25 Motion to Dismiss is GRANTED in part and DENIED in part. The Motion
26 for a Preliminary Injunction is DENIED.
1

1
2

I. Background
The

following

factual

allegations

are

taken

from

the

3 complaint. For the purpose of the pending motions only, they are
4 taken as true.
5

Plaintiff

Hat

World,

through

its

subsidiary

Lids,

sells

6 customized sports uniforms, apparel, footwear, and equipment to
7 institutional sports teams. The company also offers custom screen
8 printing and embroidery. The company owns a license with Nike that
9 allows it to sell products with the Nike “swoosh” logo. Lids
10 operates in all fifty of the United States. Defendant Kelly began
11 working for Hat World in April 2010. Kelly signed a Confidentiality
12 Agreement, which provides in part:
13
14
15
16
17
18
19

Employee [Kelly] acknowledges that during his/her
employment, s/he may have access to and acquire knowledge of
trade secrets and/or confidential information of the
Employer [Hat World], including, but not necessarily limited
to, business plans, financial information, marketing plans,
client or customer information, client or customer lists,
vendor information, and contracts, that have economic value
and/or give the Employer a competitive advantage in the
marketplace. Employee agrees not to use, reproduce,
disclose, or make available the Employer’s trade secrets or
confidential information for his/her own benefit or the
benefit of any person or entity other than the Employer
without express permission or proper authorization from the
Employer.

20
Ex. A to Compl. ECF 1-2.
21
22

Defendant worked as a sales representative for Hat World until

23 February 2012. Kelly worked on 110 accounts throughout Northern
24 California. As part of his job, Kelly cultivated customer goodwill,
25 and maintained information about the company’s purchasers. In
26 addition, Kelly had access to confidential and proprietary business
2

1 information, including customer lists, customer preferences, price
2 lists, costs, revenue data, and pricing and discount structure.
3

During his last week of employment with Hat World, defendant

4 transferred files from his work computer to his personal email
5 account. Also during the tail-end of his employment with Hat World,
6 Kelly

failed

to

final

or

process

purchases

from

customers.

7 Plaintiffs allege on information and belief that Kelly had already
8 been hired by Eastbay while he was working for Hat World, and that
9 he was attempting to set up orders for Eastbay with Hat World
10 customers.
11

Hat World became aware of defendant’s employment with Eastbay

12 in March 2012. Hat World alleges that defendant has targeted Hat
13 World customers identified in the confidential files that Kelly
14 emailed

to

himself

while

working

for

Hat

World.

Upon

his

15 resignation, Kelly failed to return a laptop computer, personal
16 digital assistant, product samples, and product catalogs belonging
17 to Hat World. Kelly has now returned the laptop, but not the
18 remaining items.
19

The complaint alleges that while working for Eastbay, Kelly

20 has used proprietary Hat World order forms to send price quotes to
21 customers, that Kelly has fulfilled orders on behalf of Eastbay
22 when those orders were placed with Kelly while he was employed by
23 Hatworld.
24

The complaint also alleges that Kelly has been soliciting

25 other Hat World sales representatives to work for Eastbay, and is
26 using his knowledge about Hat World’s cost structure in order to
3

1 underbid

for

Hat

World

accounts

and

place

Hat

World

at

a

2 competitive disadvantage.
3

After recovering the laptop computer from Kelly, Hat World

4 learned that Kelly had continued to access confidential information
5 and his Hat World email account after his resignation from Hat
6 World.
7

Based on the foregoing allegations, plaintiff’s complaint

8 asserts seven causes of action: (1) Misappropriation of Trade
9 Secrets in violation of the California Uniform Trade Secrets Act
10 (“CUTSA”);
11 Business

(2)

and

12 Conversion;

Unfair

Competition

Professions
(4)

Code

Intentional

in

Violation

Sections

17200

Interference

of
et.

with

California
seq.;

(3)

Contractual

13 Relations; (5) Intentional Interference with Prospective Economic
14 Relations;

(6)

Breach

of

Confidentiality

Agreement;

and

(7)

15 Violation of the Computer Fraud and Abuse Act.
16

Now pending before the court are plaintiff’s motion for a

17 preliminary injunction, and defendant’s motion to dismiss.
18

II. Standards

19 A. Standard for a Motion to Dismiss
20

A dismissal motion under Fed. R. Civ. P. 12(b)(6) challenges

21 a complaint's compliance with the federal pleading requirements.
22 Under Fed. R. Civ. P. 8(a)(2), a pleading must contain a “short and
23 plain statement of the claim showing that the pleader is entitled
24 to relief.” The complaint must give the defendant “‘fair notice of
25 what the ... claim is and the grounds upon which it rests.’”

Bell

26 Atlantic v. Twombly, 550 U.S. 544, 555 (2007), quoting Conley v.
4

1 Gibson, 355 U.S. 41, 47 (1957).
2

To meet this requirement, the complaint must be supported by

3 factual allegations.

Ashcroft v. Iqbal, 556 U.S. 662 (2009).

4 Moreover, this court “must accept as true all of the factual
5 allegations contained in the complaint.”

Erickson v. Pardus, 551

6 U.S. 89, 94 (2007).1
7

“While legal conclusions can provide the framework of a

8 complaint,” neither legal conclusions nor conclusory statements are
9 themselves sufficient, and such statements are not entitled to a
10 presumption of truth.
11 1949–50.

Iqbal, 556 U.S. at ___, 129 S. Ct. at

Iqbal and Twombly therefore prescribe a two step process

12 for evaluation of motions to dismiss.

The court first identifies

13 the non-conclusory factual allegations, and then determines whether
14 these allegations, taken as true and construed in the light most
15 favorable to the plaintiff, “plausibly give rise to an entitlement
16 to relief.”
17

Iqbal, 556 U.S. at ___, 129 S. Ct. at 1949–50.

“Plausibility,” as it is used in Twombly and Iqbal, does not

18 refer to the likelihood that a pleader will succeed in proving the
19 allegations. Instead, it refers to whether the non-conclusory
20 factual allegations, when assumed to be true, “allow[ ] the court
21 to draw the reasonable inference that the defendant is liable for
22
23
24
25
26

1

Citing Twombly, 556 U.S. at 555-56, Neitzke v. Williams, 490
U.S. 319, 327 (1989) (“[w]hat Rule 12(b)(6) does not countenance
are dismissals based on a judge’s disbelief of a complaint’s
factual allegations”), and Scheuer v. Rhodes, 416 U.S. 232, 236
(1974) (“it may appear on the face of the pleadings that a recovery
is very remote and unlikely but that is not the test” under
Rule 12(b)(6)).
5

1 the misconduct alleged.”
2 1949.

Iqbal, 556 U.S. at ___, 129 S. Ct. at

“The plausibility standard is not akin to a ‘probability

3 requirement,’ but it asks for more than a sheer possibility that a
4 defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at
5 557).2

A complaint may fail to show a right to relief either by

6 lacking a cognizable legal theory or by lacking sufficient facts
7 alleged under a cognizable legal theory. Balistreri v. Pacifica
8 Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
9 B. Standard for a Motion for a Preliminary Injunction
10

Fed.

R.

11 preliminary

Civ.

P.

65

injunctions

provides
or

authority

temporary

to

issue

restraining

either

orders.

A

12 preliminary injunction is an "extraordinary remedy." Winter v.
13 Natural Resources Defense Council, Inc., 555 U.S. 7, 22 (2008)
14 (internal citation omitted). When a court considers whether to
15 grant a motion for a preliminary injunction, it balances "the
16
2

17
18
19
20
21
22
23
24
25
26

Twombly imposed an apparently new “plausibility” gloss on
the previously well-known Rule 8(a) standard, and retired the
long-established “no set of facts” standard of Conley v. Gibson,
355 U.S. 41 (1957), although it did not overrule that case
outright. See Moss v. U.S. Secret Service, 572 F.3d 962, 968 (9th
Cir. 2009) (the Twombly Court “cautioned that it was not outright
overruling Conley ...,” although it was retiring the “no set of
facts” language from Conley). The Ninth Circuit has acknowledged
the difficulty of applying the resulting standard, given the
“perplexing” mix of standards the Supreme Court has applied in
recent cases. See Starr v. Baca, 652 F.3d 1202, 1215 (9th
Cir. 2011) (comparing the Court's application of the “original,
more lenient version of Rule 8(a)” in Swierkiewicz v. Sorema N.A.,
534 U.S. 506 (2002) and Erickson v. Pardus, 551 U.S. 89 (2007) (per
curiam), with the seemingly “higher pleading standard” in Dura
Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005), Twombly and
Iqbal), rehearing en banc denied, ___ F.3d ___, 2011 WL 4582500
(October 5, 2011). See also Cook v. Brewer, 637 F.3d 1002, 1004
(9th Cir. 2011) (applying the “no set of facts” standard to a
Section 1983 case).
6

1 competing claims of injury, . . . the effect on each party of the
2 granting or withholding of the requested relief, . . . the public
3 consequences in employing the extraordinary remedy of injunction,"
4 and plaintiff's likelihood of success. Id. at 20, 24 (quoting Amoco
5 Prod. Co. v. Gambell, 480 U.S. 531, 542 (1987); Weinberger v.
6 Romero-Barcelo, 456 U.S. 305, 312 (1982). In order to succeed on a
7 motion for a preliminary injunction, the plaintiff must establish
8 that "he is likely to succeed on the merits, that he is likely to
9 suffer irreparable harm in the absence of preliminary relief, that
10 the balance of equities tips in his favor, and that an injunction
11 is in the public interest." Winter, 555 U.S. at 20.
12

After Winter, the Ninth Circuit modified its “sliding scale”

13 approach which balanced the elements of the preliminary injunction
14 test.

“The

‘serious

questions’

approach

survives

Winter

when

15 applied as part of the four-element Winter test. In other words,
16 ‘serious questions going to the merits’ [rather than a likeliness
17 of success on the merits] and a hardship balance that tips sharply
18 toward

the

plaintiff

can

support

issuance

of

an

injunction,

19 assuming the other two elements of the Winter test are also met.”
20 Alliance For The Wild Rockies v. Cottrell, 632 F.3d 1127, 1132 (9th
21 Cir. 2011).
III. Analysis

22
23 A. Motion to Dismiss
24

Defendant argues that portions of the first, and all of the

25 second through fifth claims for relief are preempted by the
26 California Uniform Trade Secrets Act, California Civil Code §3426
7

1 (“CUTSA”). Defendant also argues that the seventh claim should be
2 dismissed for failure to state a claim.
3 i. CUTSA Preemption
4

CUTSA generally provides remedies, including injunctive relief

5 and damages, for improper acquisition or use of trade secrets that
6 have been the subject of reasonable efforts to maintain secrecy.
7 Cal Civ Code § 3426. The statute has a “comprehensive structure and
8 breadth,” and “occupies the field” with respect to common law trade
9 secret misappropriation claims. K.C. Multimedia, Inc. v. Bank of
10 America Technology & Operations, Inc., 171 Cal. App. 4th 939, 954
11 (Cal. App. 6th Dist. 2009). Thus, CUTSA provides the exclusive
12 civil remedy for trade secret misappropriation under California
13 law. Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210, 236
14 (6th Dist. 2010). See also Cacique, Inc. v. Robert Reiser & Co.,
15 169 F.3d 619 (9th Cir. 1999) (“California courts have held that the
16 common law of trade secrets has been displaced where it conflicts
17 with California's version of the UTSA.”).
18

This preemption applies to all common law claims that are

19 “based on the same nucleus of facts as the misappropriation of
20 trade secrets claim.” K.C. Multimedia, Inc. 171 Cal App. 4th at
21 958. “In other words, preemption generally applies where there is
22 no material distinction between the wrongdoing underlying the CUTSA
23 claim and the non-CUTSA claim.” Ikon Office Solutions, Inc. v.
24 Rezente, 2011 U.S. Dist. LEXIS 40053 (E.D. Cal. 2011).
25

The text of the statute identifies three categories of claims

26 that it does not preempt: contractual remedies, whether or not
8

1 based on misappropriation of trade secrets, other civil remedies
2 not based on trade secret misappropriation, and criminal remedies
3 whether or not based on misappropriation of a trade secret. Cal Civ
4 Code § 3426.7.
5

With respect to plaintiff’s first claim the parties agree that

6 “reference to the common law claim for misappropriation of trade
7 secrets would be preempted by CUTSA.” Pl.’s Opp’n 4, ECF No. 48.
8 Accordingly, the first claim for relief is DISMISSED with leave to
9 amend.
10

Defendant argues that claims two, three, four, and five “are

11 predicated entirely on the factual allegation that Mr. Kelly
12 misappropriated Hat World’s trade secrets.” Def.’s Mot 4, ECF No.
13 35. Plaintiff appears to concede that the claims are preempted
14 insofar as they are based on misappropriation of trade secrets, but
15 argues that there is a basis for each claim even setting aside
16 references to trade secrets. For example, the complaint’s second
17 claim alleges that Kelly violated California’s Unfair Competition
18 Law (“UCL”) by “misappropriation of Hat World’s trade secrets and
19 other

confidential

and

proprietary

information,

unlawful

20 solicitation of Hat World customers and employees, and unlawful
21 conversion of purchase orders for Hat World products,” Compl. ¶61.
22 Plaintiff’s opposition argues that the claim is not preempted
23 because the alleged conduct “clearly constitutes an unlawful or
24 fraudulent business act or practice sufficient to state a claim
25 under the UCL and is not premised on the misappropriation of
26 Plaintiff’s confidential information,” Pl.’s Opp’n 5.
9

1

Similarly, the complaint’s fourth claim alleges that defendant

2 interfered with Hat World’s contractual relationships by “unlawful
3 use of Hat World’s confidential information and misappropriation of
4 its

trade

secrets

to

solicit

Hat

World

customers

and

sales

5 representatives.” Compl. 14. In the opposition, plaintiff argues
6 that the claim should not be dismissed because it alleges tortious
7 interference by additional methods beyond misappropriation of trade
8 secrets.
9

Because plaintiff appears to concede that its claims are

10 preempted insofar as they are based on misappropriation of trade
11 secrets, but argues that the claims remain viable because of
12 conduct falling outside of CUTSA’s scope, the court DISMISSES the
13 complaint, and GRANTS plaintiff leave to amend the complaint to
14 disentangle claims that are preempted by CUTSA from those that are
15 premised on a separate nucleus of facts.
16 ii. Computer Fraud and Abuse
17

Plaintiff’s seventh claim alleges that defendant violated the

18 Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030 when he
19 “knowingly

and

with

the

intent

to

defraud

accessed

without

20 authorization, and/or exceeded his authorization in accessing,
21 Plaintiff’s computers, computer systems, and databases in an effort
22 to

damage

and/or

misappropriate

Hat

World’s

confidential

and

23 protected information.” This claim arises from the allegation that
24 during his employment, defendant accessed Hat World’s computers and
25 servers for purposes other than company business, and that he
26 accessed the computers and servers on February 15 and February 16,
10

1 after

all

authorization

to

access

the

computers

“would

have

2 terminated” following Kelly’s resignation. Compl. ¶ 47. Defendant
3 argues that plaintiff has failed to state a claim because the
4 complaint does not allege that defendant accessed any information
5 that he was not authorized to access.
6

In the Ninth Circuit, “the plain language of the CFAA targets

7 the unauthorized procurement or alteration of information, not its
8 misuse or misappropriation. . . the phrase ‘exceeds authorized
9 access’

in

the

CFAA

does

not

extend

to

violations

of

use

10 restrictions.” United States v. Nosal, 676 F.3d 854, 860 (9th Cir.
11 2012). In short, the CFAA is an “anti-hacking” statute and not a
12 misappropriation statute. Id.
13

Here, plaintiff’s CFAA claim has two independent components:

14 one is that defendant accessed computers and servers for purposes
15 other than company business. Compl. ¶ 82. The second is that he
16 accessed those computers after he resigned. As to the first
17 component, the court agrees with defendant that the alleged conduct
18 does not violate the CFAA because defendant was authorized to
19 access the information. As to the second components, the court
20 concludes that plaintiff has stated a claim under the CFAA by
21 alleging facts from which the court can plausibly conclude that
22 defendant exceeded his authorized access by continuing to access
23 information stored on company computers and servers after his
24 resignation.
25

Accordingly, the motion to dismiss is GRANTED in part and

26 DENIED in part. Plaintiff’s first claim for relief is DISMISSED
11

1 insofar

as

it

refers

to

violations

of

the

common

law

of

2 misappropriation of trade secrets. Plaintiff’s second, third,
3 fourth, and fifth claims are DISMISSED with leave to amend.
4 Plaintiff’s seventh claim for relief is DISMISSED with respect to
5 defendant’s accessing of Hat World computers during his employment,
6 but it is not dismissed with respect to access to the computers
7 after his resignation.
8 B. Motion for a Preliminary Injunction
9

The court will consider plaintiff’s motion for a preliminary

10 injunction

insofar

11 confidentiality

as

it

agreement3

rests

on

claims,

the

which

CUTSA

and

breach

of

this

order

does

not

12 dismiss. Plaintiff’s motion seeks a preliminary injunction to
13

prevent Defendant Kelly from directly or indirectly,
individually or in concert with others: (a) using or
disclosing any of Hat World's confidential information and
trade secrets; (b) using Hat World's confidential
information and trade secrets to solicit Hat World
customers; (c) soliciting any Hat World customers identified
in materials previously misappropriated by Defendant (as
described in more detail in documents filed herewith under
seal), until the earlier of the trial date or the one-year
anniversary of the Court's order; (d) using Hat World's
confidential information and trade secrets to solicit Hat
World employees; (e) using Eastbay products to fill, or
otherwise filling on behalf of Eastbay, any customer
purchase orders previously placed with Hat World; and (f)
otherwise breaching the Confidentiality Agreement identified
in Plaintiff's Complaint.

14
15
16
17
18
19
20
21

22 Mot. for Preliminary Injunction 20, ECF No. 7.
23 ////
24
25
26

3

As noted, contract claims are not preempted by CUTSA, and
defendant did not seek to dismiss claim six (breach of
confidentiality agreement).
12

1 i. Likelihood of Success on the Merits
2 a. CUTSA Claim
3

Plaintiff alleges that defendant misappropriated customer

4 lists containing customer preferences, pruchasing history, price
5 quotes, and product specifications, and that he has used this
6 information to benefit himself and Eastbay by targeting customers
7 based on their past purchasing history.
8

Under CUTSA, a “trade secret” is “information, including a

9 formula, pattern, compilation, program, device, method, technique,
10 or process, that: (1) Derives independent economic value, actual or
11 potential, from not being generally known to the public or to other
12 persons who can obtain economic value from its disclosure or use;
13 and (2) Is the subject of efforts that are reasonable under the
14 circumstances to maintain its secrecy.” Cal Civ Code § 3426.1(d).
15

Customer lists may be considered trade secrets “where the

16 employer has expended time and effort identifying customers with
17 particular needs or characteristics.” Morlife, Inc. v. Perry, 56
18 Cal. App. 4th 1514, 1521 (Cal. App. 1st Dist. 1997). The customer
19 list must have economic value in order to qualify as a trade
20 secret. This means that the secrecy of the list provides a business
21 with a substantial advantage. Id. The ability of a former employee
22 to “solicit both more selectively and more effectively” is a
23 substantial advantage. Id.
24

Plaintiff here has submitted a declaration by a Hat World

25 executive that explains that the customer lists contain detailed
26 information that is “integral to the successful operation and
13

1 growth of Hat World’s business.” Moldander Decl. ¶ 8, ECF No. 8.
2 Further, the declaration states that the customer information is
3 not readily available to the public, and describes the efforts put
4 in place by Hat World to preserve the secrecy of the customer
5 lists.

The

employee

6 confidential

handbook

information,

prohibits

employees

disclosure

are

required

of

to

this

execute

7 confidentiality agreements, and employees are regularly instructed
8 that the information is confidential. Further, access to the
9 information on company computers is restricted to employees with
10 passwords. Molander Decl.
11

Defendant

counters

that

much

of

the

information

on

the

12 customer lists, such as the identity of the customers and the
13 individuals in charge of purchasing, is readily available to the
14 public, as most of the customers are local high school athletic
15 teams.

Defendant

also

argues

that

defendant

has

produced

no

16 evidence that defendant forwarded to himself the portions of the
17 customer lists that could be deemed “trade secrets.” Defendant
18 states in a declaration that he did not forward to himself “any
19 compilation

of

20 customers.

Lids

never

21 reflecting

each

customer’s

22 information

information

about

any

created

provided

history

particular

Lids

with

me

by

any

of

regarding
detailed

purchases

habits,

general

or

Lids
report

summary

needs,

or

23 preferences.” Kelly Decl. ¶ 22. Plaintiff has not submitted to the
24 court an example of a customer list that it claims constitutes
25 “trade secrets.”
26

Although Hat World’s preliminary injunction motion focuses
14

1 entirely on customer lists, defendant has provided copies of emails
2 and other documents that appear to indicate that activity directed
3 from his private email account in the last weeks of his employment
4 and during the days after his resignation was not for the benefit
5 of himself or Eastbay. For example, in an email chain spanning from
6 February 20, 2012 to February 24, defendant communicated with
7 Lids/Hat World employee Thomas Moore from his personal email
8 account. In the email exchange, defendant appears to be assisting
9 Mr. Moore in completing an order placed with Lids by one of
10 defendant’s former clients. Ex. 4 to Kelly Decl. Likewise, on
11 February 16, 2012, after defendant’s resignation, he sent an email
12 to Hat World/Lids employee Taylor Gorman directing Mr. Gorman to
13 “make sure that this late Hypercool Jersey is shipping overnight to
14 the customer when it arrives.” It appears to the court that in
15 these communications, defendant was tying up loose ends from the
16 end of his employment with Hat World.
17

Reviewing the evidence submitted by both parties, the court

18 concludes that plaintiff has not shown a strong likelihood of
19 success on the merits because it has not provided any evidence that
20 defendant

misappropriated

detailed

customer

information

that

21 qualifies as “trade secret,” while defendant has provided evidence
22 in the form of a declaration that he did not obtain any such
23 information.
24

In their motion for a preliminary injunction, plaintiffs focus

25 solely on the customer lists but have not provided the court with
26 an example of the lists, which it claims are “trade secrets.”
15

1 Plaintiffs do not cite other trade secrets that defendant is
2 alleged to have misappropriated in violation of CUTSA. Similarly,
3 in

their

discussion

of

defendant’s

alleged

breach

of

the

4 confidentiality agreement, plaintiffs refer only to customer lists.
5 Accordingly, the court finds that plaintiffs have not shown a
6 likelihood of success on the merits of the breach of contract
7 claim.
8 ii. Irreparable Harm
9

Plaintiffs argue that they will suffer irreparable harm in the

10 absence of an injunction because defendant’s conduct is damaging
11 plaintiff’s “goodwill” in the eyes of its customers. It is true
12 that harm to good will may be considered irreparable.
13 Rent-A-Center, Inc. v. Canyon Television & Appliance Rental, Inc.,
14 944 F.2d 597 (9th Cir. 1991). Plaintiff asserts in its motion that
15 many customers have ceased doing business with Hat World since
16 Kelly’s departure, but provides no evidence that injunctive relief
17 will prevent that harm. By contrast, defendant has submitted
18 declarations by himself and other former employees and customers of
19 Hat World which indicate that customers left Hat World due to
20 dissatisfaction with products and service. See, e.g., Decl. Don
21 Borges (“there was a problem with virtually every order.”).
22

Accordingly,

plaintiff

has

not

shown

the

court

that

23 defendant’s conduct is causing any irreparable harm that would be
24 prevented by a preliminary injunction.
25

Considering the evidence and arguments currently before it,

26 the court concludes that a preliminary injunction is not warranted
16

1 because plaintiff has not shown irreparable harm, and has not shown
2 a likelihood of success on the merits. As an injunction may not
3 issue without a showing of irreparable harm, the court need not
4 proceed to the final two factors.
5

IV. Conclusion

6

For the foregoing reasons, the court ORDERS as follows:

7

[1]

8
9

in part and DENIED in part.
[2]

10
11
12

Defendant's motion to dismiss, ECF No. 35, is GRANTED

Plaintiff is GRANTED twenty-one (21) days to file an
amended complaint consistent with this opinion.

[3]

Plaintiff's motion for a preliminary injunction, ECF
No. 7, is DENIED.

13

IT IS SO ORDERED.

14

DATED:

August 10, 2012.

15
16
17
18
19
20
21
22
23
24
25
26
17