WIT Walchli Innovation Technologies, GMBH et al v. Westrick

Filing 9

TEMPORARY RESTRAINING ORDER. Signed by Judge James I. Cohn on 1/6/2012. (prd)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO.: 12-CIV-20072-COHN/SELTZER
WIT WALCHI INNOVATION TECHNOLOGIES,
GMBH, a Swiss limited liability company, and
WIT AMERICAS, LLC, a Florida limited liability company,
Plaintiffs,
v.
JEROME R. WESTRICK,
Defendant.
__________________________________________/
TEMPORARY RESTRAINING ORDER AND
ORDER TO SHOW CAUSE WHY WRIT OF REPLEVEN SHOULD NOT ISSUE
THIS CAUSE is before the Court upon Plaintiffs’ Emergency Verified
Motion for Temporary Restraining Order and for Temporary Injunction with Prohibitory
and Mandatory Provisions [DE 4] (the “Motion”), the Affidavit of Thomas Walchli [DE 5],
Plaintiffs’ Emergency Motion for Immediate Issuance of Prejudgment Writ of Replevin
[DE 6], Plaintiffs’ Emergency Motion for Immediate Issuance of Writ of Ne Exeat [DE 7],
and Plaintiffs’ Memorandum of Law in Support of their Motions [DE 8]. The Court has
carefully considered the Motions and exhibits, and is otherwise fully advised in the
premises.
I. FACTUAL BACKGROUND
Plaintiffs seek a temporary restraining order without notice against Jerome
Westrick, an employee, minority shareholder and computer programmer, pursuant to
Rule 65(b) of the Federal Rules of Civil Procedure. Plaintiffs’ Complaint alleges four
claims under the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030,
misappropriation of trade secrets under Florida statutory law, trespass to chattel,

conversion, prejudgment writ of replevin, and a writ of ne exeat. The CFAA claims
include unauthorized access to information in a protected computer (§ 1030(a)(2))
(Count I, ¶¶ 34-36); unauthorized access to a protected computer with intent to defraud
and by dishonest methods and for improper purposes, by seeking to obtain a blackmail
payment of $300,000 (§ 1030(a)(4)) (Count II, ¶¶ 39-41); causing transmission of a
program, information, codes or commands that have intentionally caused damage
without authorization to Plaintiff’s protected computer (§ 1030(a)(5)) (Count III, ¶¶ 4446); and with intent to extort from Plaintiff $300,000, transmitted by international
telephone communication a threat to cause and continue to cause damage to Plaintiff’s
protected computer system (§ 1030(a)(7)) (Count IV, ¶ 49).
Plaintiffs, two related companies that sell enterprise content management
software to other businesses, allege that Defendant has hacked into Plaintiffs’ computer
system, changed codes and passwords to lock out Plaintiffs’ employees and its
prospective customers from use of the software, and has stolen a laptop containing the
source codes and programming for Plaintiffs’ proprietary software product. Affidavit of
Thomas Walchli, ¶ 7 [DE 5]. More specifically, Plaintiffs contend by affidavit that on
January 3, 2012, Defendant “took, obtained, used, or exercised control, without
authorization from Plaintiffs, and appropriated or converted to his own use, or to the use
of other persons or entities not entitled to its use, one Sony Vaio VPCF 115FM/B/Core
7 laptop computer, which is the property of WIT Americas, which . . . contained a copy
of the source code of the [Plaintiffs’] Software . . . on the hard drive of the laptop.” Id.,
¶ 6. Plaintiffs further allege that Defendant has telephoned Urs Walchli, a member of
Plaintiff WIT Switzerland’s Board of Directors, and sought payment of $300,000 as the

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price to reveal the changed access codes and passwords to Plaintiffs. Id., ¶ 7.
The software, including its processes and source code, is owned by Plaintiffs
and is “a highly secret, proprietary system, process, program and framework that is
highly confidential and extremely valuable.” Id., ¶ 4. The software “embodies
intellectual processes and know-how that are the products of many thousands of hours
of high-level development. . . and derives its economic value, both actual and potential,
from not being generally known to, and not being readily ascertainable. . . by other
persons who can obtain economic value from its disclosure.” Id. If the source code of
the software is misappropriated, disclosed or otherwise released, it would “destroy” the
market interest in this product. Id. Plaintiffs allege that Defendant knowingly obtained
the laptop and source code therein with the intent to deprive Plaintiffs of the laptop and
its contents. Id., ¶ 8.
II. ANALYSIS
Pursuant to Federal Rule of Civil Procedure 65(b), a temporary restraining order
may be granted without notice to the adverse party only if: (1) it clearly appears from
specific facts shown by affidavit or verified complaint that immediate and irreparable
injury, loss or damage will result before the adverse party can be heard in opposition,
and (2) the applicant’s attorney certified the reasons that notice should not be required.
Upon a review of the record, the Court finds that Plaintiff has clearly
demonstrated that immediate and irreparable injury, loss, or damage will result to the
Plaintiffs before the Defendant can be heard in opposition. Defendant is in possession
of Plaintiffs’ property, a laptop containing confidential and proprietary source code
information of Plaintiffs’ business software product. Plaintiffs reasonably believe that
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release of this information would destroy the market value of its product, causing
irreparable harm for the foreseeable future.
With respect to the issue of notice, Plaintiffs contend that if notice is provided to
Defendant, it believes that Defendant will release the information thus destroying its
commercial value. As evidence of Defendant’s malicious intent, Plaintiffs note that
Defendant has made a demand of $300,000 to release the codes he embedded on
Plaintiffs’ computer system which have caused an interruption of service for Plaintiffs’
employees and prospective customers. The Court concludes that this evidence is
sufficient to warrant issuance of the relief without notice. Therefore, based on the
foregoing preliminary findings of fact and law, the Court finds that Plaintiff will suffer
immediate irreparable injury unless this Order is granted without notice.
Turning briefly to the elements for a preliminary injunction, Church v. City of
Huntsville, 30 F.3d 1332, 1342 (11th Cir. 1994) (which will be subject to further hearing
after notice to Defendant), Plaintiff has initially shown a substantial likelihood that it will
prevail on the merits of their CFAA and trade secret claims. The CFAA authorizes a civil
action by one “who suffers damage or loss by reason of a violation of this section . . .
against the violator to obtain compensatory damages and injunctive relief or other
equitable relief.” 18 U.S.C. § 1030(g). Such loss must be over $5,000, but may consist
of any revenue lost, cost incurred, or other consequential damages incurred because of
interruption of service. 18 U.S.C. § 1030(e)(11). As discussed in the prior section,
Plaintiffs have alleged sufficient facts to support a likelihood of success that a CFAA
claim can be made for the alleged actions of Defendant in this case, particularly the
locking out of Plaintiffs’ employees and prospective customers and extortion demand of

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$300,000. In addition, Plaintiffs have alleged that Defendant has misappropriated a
trade secret (the software source code) and that he wrongfully possesses a company
laptop (conversion and trespass).
With regard to whether the threatened injury to Plaintiffs outweighs the
threatened harm the injunction may do to Defendant, Plaintiffs concede that Defendant
has alleged that he has a monetary claim against Plaintiffs, but that such claim under
the Shareholders’ and Pool Agreement is purely monetary in nature and must be
litigated in Switzerland. See Exhibit B to Motion, pp. 13-23 of DE 4. For purposes of
issuance of this temporary restraining order, the Court agrees that any monetary claim
of Defendant does not justify the unauthorized access to Plaintiffs’ computers and
wrongful taking of the laptop and source codes. As to the public interest, the Court finds
that such interest is not disserved by issuance of this relief to Plaintiffs.1
The Court also concludes that issuance of a writ of replevin and/or a writ of ne
exeat is not warranted at this time. The Court will include return of the laptop as part of
this temporary restraining order.
III. CONCLUSION
Accordingly, it is ORDERED AND ADJUDGED as follows:
1.

Plaintiffs’ Emergency Verified Motion for Temporary Restraining Order [DE
4] is hereby GRANTED;

2.

Plaintiffs shall immediately post a bond in the amount of $5,000, as
payment of damages to which Defendant may be entitled for a wrongful

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As to the requirement for a substantial threat that Plaintiffs will suffer
irreparable injury if the relief is not granted, the Court has already addressed this issue
in the discussion of issuance of an order without notice.
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injunction or restraint;
3.

Defendant Jerome Westrick and any entities and individuals who are
acting in concert or participation with him, is hereby RESTRAINED AND
ENJOINED, pending further Order of this Court, from in any way
disclosing, publishing, transferring, copying, uploading, or in any way
revealing or communicating any part of the Software (source code and
processes for enterprise content management), including without limitation
its source code, or transferring the Laptop, to any party or entity other than
Plaintiffs;

4.

Defendant Jerome Westrick shall return the laptop to Plaintiffs;

5.

If the laptop is returned to Plaintiffs, Plaintiffs shall not delete, remove, or
add any material in any form to the laptop, in order to preserve it for
evidentiary purposes, until further order of this Court;

6.

Plaintiffs shall immediately serve this Order, the Complaint, and all present
filings upon Defendant.

7.

Defendant may move to modify or dissolve this injunction at any time
pursuant to Federal Rule of Civil Procedure 65(b).

8.

A hearing on Plaintiff’s motion for a preliminary injunction is set for
Thursday, January 19, 2011, at 9:30am, before the Honorable Judge
James I. Cohn, in Courtroom 203E, at the United States District Court,
Southern District of Florida, Fort Lauderdale Division, 299 East Broward
Boulevard, Fort Lauderdale, FL 33301.

9.

Defendant’s written response to Plaintiffs’ Motion for Preliminary Injunction,
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Motion for Writ of Replevin, and Motion for Writ of Ne Exeat shall be filed
and served upon Plaintiffs, by 12 noon on Tuesday, January 17, 2012.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,
Florida, this 6th day of January, 2012 at 5:20p.m.

copies to: Plaintiff’s counsel via CM/ECF

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