LexJet, LLC v. Big Dog Media Solutions, LLC et al

Filing 97

ORDER adopting in part 69 Report and Recommendations. See Order for further details. Signed by Judge Elizabeth A. Kovachevich on 1/15/2015. (rjm)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

LEXJET, LLC, a Florida limited
Liability company,
Plaintiff,
v.

Case No.: 8:14-CV-538-T-17TBM

BIG DOG MEDIA SOLUTIONS, LLC,
a Colorado limited liability company, et. al,
Defendants.

/
ORDER ADOPTING IN PART THE REPORT AND RECOMMENDATION
This cause is before the Court on the Report and Recommendation (R&R)
Magistrate Judge Thomas B. McCoun issued September 16, 2014.

(Doc. # 69).

Magistrate Judge McCoun recommended the Court deny Plaintiffs Motion for Preliminary
Injunction based on Plaintiffs failure to prove irreparable harm, continuing threat or
imminent injury resulting from the use of certain information, and other elements
necessary to grant injunctive relief.

(Doc. # 5).

Plaintiff objected to the R&R on

September 30, 2014, (Doc. # 72), and Defendants responded to these objections on
October 14, 2014. (Doc. # 77). Defendants also objected to the R&R on September 30,
2014, (Doc. # 73), and Plaintiff responded to those objections on October 14,2014. (Doc.
# 76). For the reasons stated below, the Court ADOPTS in PART the R&R.
STANDARD OF REVIEW
When a party makes a timely and specific objection to a finding in a report and
recommendation—whether factual or legal in nature—the district court should make a de

novo review of the record with respect to that issue. 28 U.S.C. § 636(b)(1); U.S. v.
Raddatz. 447 U.S. 667 (1980); Jeffrey S. v. State Board of Education of State of Georgia.
896 F.2d 507 (11th Cir. 1990). “The district judge may consider arguments not presented
to the magistrate judge” when considering objections. Charlebois-Deubler v. Prudential
Ins. Co. of America. 2013 WL 980260 (M.D. Fla. 2013) (citing Stephens v. Tolbert. 471
F.3d 1173, 1174 (11th Cir. 2006)).
DISCUSSION
A. Plaintiffs Objections
Plaintiff objects to the following: 1) Magistrate Judge McCoun’s failure to consider
the revised and narrowed scope of relief sought; 2) the determination that Plaintiff failed
to establish substantial likelihood of success on its claims for breach of fiduciary duty and
misappropriation of trade secrets; 3) the determination that Plaintiff failed to make a
showing of irreparable harm; and 4) the determination that the balance of harms and
public considerations weigh in Plaintiffs favor. (Doc. # 72).
1. The Revised and Narrowed Scope of Relief Sought
Plaintiff first argues the relief it now seeks was clarified at the hearing before
Magistrate Judge McCoun, and, due to the now-limited scope, alters the injunctive relief
analysis. Defendants agree the scope was limited at the hearing, but contend the scope
is of no consequence to Plaintiffs burden to prove a substantial likelihood of success on
the merits. Defendants further argue the scope would affect the court’s analysis with
respect to the final prong—the balancing harms. Defendants maintain Magistrate Judge
McCoun’s determinations are correct. The Court will undertake its review and analysis
of the R&R with Plaintiffs limited requested relief.

2. Fiduciary Duty and Misappropriation of Trade Secrets
Plaintiff next argues Magistrate Judge McCoun erred twice with respect to
Plaintiff’s claims under Florida’s Uniform Trade Secrets Act (“FUTSA”) when Magistrate
Judge McCoun: 1) found Plaintiff had not sufficiently described its trade secrets at issue,
and what Defendants actually took; and 2) determined Plaintiff failed to demonstrate that
it made reasonable efforts to maintain the secrecy of this information.

(Doc. # 72).

Defendants wholly dispute these contentions, and argue the complete record evidence
demonstrates the insufficiency of Plaintiff’s burden of proof—that the overwhelming
majority of the information was available to the public on the Internet, from customers that
were not bound by confidentiality agreements, or from Plaintiff’s employees not bound by
confidentiality agreements, and that Plaintiff employed lax security measures incapable
of protecting the information from inadvertent dissemination. (Doc. # 77).
The Court has made a de novo review of the record, and upon due consideration,
the Court agrees with Magistrate Judge McCoun’s recommendation and accompanying
analysis that the information is not subject to trade secret protection. While Plaintiff relies
on Aquent LLC v. Stapleton, the facts here are distinguishable. 2014 WL 117095, *1-2
(M.D. Fla. 2014). In Stapleton, the Defendant acknowledged certain information was a
trade secret, and the court determined Stapleton lacked evidence to prove the information
was readily ascertainable to the public.

]d. at 2 (holding that Plaintiff presented

“substantial, uncontested evidence regarding the vast amount of information [defendant]
downloaded and the subsequent spoliation of some evidence” and, therefore,
Defendant’s readily-ascertainable argument was not compelling).

Here, Defendants

presented ample record evidence to suggest the information was readily available,

obsolete, and not subject to trade secret protection, including, but not limited to:
employees were not subject to non-compete agreements; the customers were not bound
to non-disclosure or confidentiality agreements; the information was not marked with
“confidential” or similar language; customers often shared the information with
competitors; and employees were capable of easily disseminating the information. As a
matter of law, Plaintiff has not carried its burden of proving the information is subject to
trade secret protection, and therefore the requested relief must be denied.
3. Irreparable Harm
Plaintiff next argues Magistrate Judge McCoun erroneously determined Plaintiff
failed to prove irreparable harm. Plaintiff contends binding legal authorities create a
presumption of irreparable harm, and that Plaintiff carried any burden associated with
proving irreparable harm. Defendant opposes Plaintiffs objection, and distinguishes the
legal authorities Plaintiff cites for presumptions of irreparable harm. The Court has made
a de novo review of the record, and upon due consideration, the Court agrees with
Magistrate Judge McCoun’s R&R—Plaintiff has failed to present sufficient evidence to
conclude it will suffer irreparable harm. The lists are outdated, contain unreliable contact
information, and have not resulted in any cognizable gained business to Defendants or
loss of business to Plaintiff. To that end, Plaintiffs requested relief must be denied.
4. Balance of Harms and Public Considerations
Plaintiff finally argues Magistrate Judge McCoun erroneously balanced the harms
and public interest considerations, and should have recommended the balance in favor
of Plaintiff because the ceased use and return of the supposedly confidential information
would not cause any burden to Defendant, and would serve the public interest to

encourage enforcement of contractual obligations. Defendant opposes this argument,
and contends the information is readily available, and the burden to remove the broadlyreferenced material would be “insuperable.” The Court has made a de novo review of the
record, and upon due consideration, the Court agrees with Magistrate Judge McCoun’s
R&R. Any damages Plaintiff may have suffered as a result of Defendants’ alleged
misappropriation of confidential or trade secret information is more appropriately left to
monetary damages, rather than injunctive relief.
B. Defendant’s Objections
Defendant objects to the following emphasized portions of a specific sentence in
the R&R: “In short, while LexJet demonstrates that it is substantially likely to prevail on its
claim of breach of contract by Simms in that Mr. Simms and his company, Big Dog, have
possession of some LexJet customer information which Simms obtained during his
employ with LexJet and the retention and use of such is in breach of the terms of the
Employee Guidebook....” (Doc. # 73) (quoting from (Doc. # 69)). Defendants object
insofar as this sentence is either a finding of fact—and therefore clearly erroneous on the
record submitted; or a conclusion of law—and therefore contrary to law. (Doc. # 73).
Plaintiff opposes these objections and exceptions to the R&R, arguing that Magistrate
Judge McCoun properly analyzed the conflicting evidence and determined in favor of
Plaintiffs. (Doc. # 76). Although Defendants disputed the authenticity and applicability
of the Employee Guidebook, Magistrate Judge McCoun recognized that conflict and
made a determination that Defendant Simms “signed an Employee Guidebook which did
contain restrictions on use of customer and pricing information during and after
employment.” (Doc. #69, n.10).

The Court has made a de novo review of the record, and upon due consideration,
the Court agrees with the practical resolution conveyed in the language—that no matter
the substantial likelihood of Plaintiffs success on the merits for breach of contract, Plaintiff
still failed to establish the requisite irreparable harm. Therefore, the Court revises the
language to which Defendants object to read as follows:
In short, while LexJet might demonstrate that it is substantially
likely to prevail on its claim of breach of contract by Simms in
that Mr. Simms and his company, Big Dog, have possession
of some LexJet customer information which Simms obtained
during his employ with LexJet and the retention and use of
such could be in breach of the terms of the Employee
Guidebook, LexJet fails to establish the requisite irreparable
harm from such breach to support entry of a preliminary
injunction.
Accordingly, it is ORDERED that Defendants’ Objection to the report and
recommendation is SUSTAINED in PART, and the report and recommendation is revised
consistent with this Order. It is further ORDERED that Plaintiffs Objections to the report
and recommendation are OVERRULED.

It is further ORDERED that the report and

recommendation, (Doc. # 69), is ADOPTED in PART and INCORPORATED by
REFERENCE consistent with this Order. It is further ORDERED that Plaintiffs Motion for
Preliminary Injunction, (Doc. # 5), is DENIED.
DONE and ORDERED in Chambers, in Tampa, Florida, this X ^ dav of January,
2015.

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Copies to:
All parties and counsel of record
Assigned Magistrate Judge