Pals Group, Inc. v. Quiskeya Trading Corp. et al
Filing
39
ORDER denying 28 Plaintiff's Motion for Preliminary Injunction. Signed by Magistrate Judge Jonathan Goodman on 2/9/2017. (mda)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 16‐23905‐CIV‐GOODMAN
[CONSENT]
PALS GROUP, INC.,
Plaintiff,
v.
QUISKEYA TRADING CORP., et al.,
Defendants.
__________________________________/
ORDER DENYING PLAINTIFF’S PRELIMINARY INJUNCTION MOTION
Plaintiff Pals Group, Inc., doing business as Lakay Foods (“Plaintiff,” “Lakay” or
“Pals Group”), filed a Motion for Preliminary Injunction (“Motion”). [ECF No. 28].
Defendants Quiskeya Trading Corporation (“Quiskeya”) and Patrick Louissaint (“Mr.
Louissaint”) (collectively referred to as “Defendants”) filed an opposition response.
[ECF No. 30]. The Undersigned held an evidentiary hearing on the Motion. For the
reasons outlined below, the Undersigned denies Plaintiff’s Motion.
A. Background
On August 3, 2016, Plaintiff filed an action against Defendants in the Eleventh
Judicial Circuit in and for Miami‐Dade County, Florida. [ECF No. 1]. Plaintiff alleged
the following: misappropriation of trade secrets (count I); violation of Florida’s
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Deceptive and Unfair Trade Practices Act (count II); common law unfair competition
(count III); violation of the Lanham Act, 15 U.S.C. § 1125(a) (count IV); breaches of
contract against individual Defendant Louissaint (counts V and VI); breach of fiduciary
duty against individual Defendant Louissaint (count VII); equitable accounting (count
VIII); and unjust enrichment (count IX). [ECF No. 1]. On September 12, 2016, Defendant
removed the action on the basis of original federal question jurisdiction for the Lanham
Act count and supplemental jurisdiction for the other claims. [ECF No. 1].
On November 4, 2016, Plaintiff filed the instant Motion seeking a preliminary
injunction against Defendants to prevent their allegedly “improper use of [Plaintiff’s]
confidential and trade secret information that was misappropriated by Louissaint, a
trusted fiduciary, while he was still employed by [Plaintiff].” [ECF No. 28, p. 1]. Plaintiff
contends that “Defendants are utilizing Lakay’s trade secrets to unfairly compete with
Lakay’s business causing it irreparable harm.” [ECF No. 28, p. 1].
The Undersigned held an evidentiary hearing on the preliminary injunction
motion which lasted approximately five hours. Four witnesses testified at the hearing:
(1) Christopher Dupuy, who is the owner of Pals Group; (2) Manual Manning Salazar,
who is an information technology (“IT”) professional with an IT sale and services
company used by Plaintiff; (3) Karly Fils‐Aime, who was a previous partner of Pals
Group and was in charge of its marketing and sales; and (4) individual Defendant
Patrick Louissaint, who previously worked for Pals Group.
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B. Factual Background
Mr. Dupuy is the owner of Pals Group, which was started in 2005 or 2006. [ECF
No. 34, p. 27]. Pals Group is a food import/export distributor dealing in products such
as rice, beans, corn meal, tomato paste, and sardines for the Caribbean community
living in the U.S. [ECF No. 34, p. 27]. Mr. Louissaint worked as an employee for Plaintiff
from February 2008 to July 2012. [ECF No. 34, p. 108]. Mr. Louissaint was hired as an
accountant but took on other responsibilities/positions, such as being an assistant,
receptionist, and messenger ‐‐ and making deposits, purchasing food, and performing
IT work. [ECF No. 34, p. 109]. Mr. Louissaint worked for Plaintiff in some capacity
through and including April 2016 with access to clients, client lists, price lists and
accounting records. [ECF No. 34, pp. 109, 134].
In 2009, Mr. Louissaint started a company named Lakay Discount in Orlando,
Florida. It served as a distribution center for Pals Group. [ECF No. 34, p. 110]. Lakay
Discount was originally run by Mr. Louissaint’s wife until Mr. Louissaint moved from
Miami to Orlando to work at Lakay Discount full time. [ECF No. 34, p. 110]. According
to Mr. Louissaint, Lakay Discount was opened with the full approval and endorsement
of Pals Group. [ECF No. 34, p. 111]. Mr. Dupuy testified that Mr. Louissaint used Pals’
Group’s credit line to purchase trucks, a warehouse, and other materials and equipment
to build that distribution business. [ECF No. 34, pp. 37‐39].
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Lakay Discount closed and Louissaint became a full‐time employee for Plaintiff.
[ECF No. 34, p. 117]. A year and a half after working again as an employee of Pals
Group, Louissaint was advised that there was a potential buyout of Plaintiff by a
company named Iberia. [ECF No. 34, p. 118]. Mr. Louissaint testified that he was
advised by an officer of Pals Group that he would not be needed if the Iberia deal went
through because Iberia had its own accountant and its own distribution company in
Orlando. [ECF No. 34, pp. 118, 122]. Mr. Dupuy testified that Mr. Louissaint decided
that he did not want to work for Iberia and instead wanted to run his own business.
[ECF No. 34, p. 76].
Ultimately, Mr. Louissaint started the competing business of Quiskeya in July
2015. [ECF No. 34, p. 123]. Mr. Dupuy testified that Mr. Louissaint indicated that the
new business would act as an exclusive distributor for Lakay. [ECF No. 34, pp. 56‐58].
After starting Quiskeya, Mr. Louissaint continued to do accounting work for Plaintiff
for more than a year, through August 2016. [ECF No. 34, p. 124]. After starting
Quiskeya, Mr. Louissaint continued to distribute products for Plaintiff. [ECF No. 34, p.
126; Defendant’s Hearing Exhibit #7]. Several months after the opening of Quiskeya,
Mr. Louissaint testified, Plaintiff expressed a desire to become the Miami distributor for
Quiskeya and Mr. Louissaint declined that offer. [ECF No. 34, pp. 133‐34].
On October 27, 2016, Defendants sent a Cease and Desist letter to Plaintiff,
demanding that it cease the dissemination of false information to existing clients. [ECF
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No. 34, p. 145; Defendant’s Hearing Exhibit No. 1]. Eight days later, on November 4,
2016, Plaintiff filed its Preliminary Injunction Motion. [ECF No. 28]
C. Legal Standard
Plaintiff’s count I, which alleges misappropriation of trade secrets, sets forth a
cause of action under the Florida Uniform Trade Secrets Act (“FUTSA”). The parties
agree that FUTSA specifically authorizes a party to seek injunctive relief against the
actual or threatened misappropriation of trade secrets or confidential information. See
Fla. Stat. § 688.003. FUTSA provides that the actual misappropriation of trade secrets
may be enjoined and that an injunction may continue for a reasonable period of time in
order to eliminate the commercial advantage that otherwise would be derived from the
misappropriation. Fla. Stat. § 688.003. Plaintiff brings its preliminary injunction request
under this FUTSA provision.
The parties also agree on the legal standard for obtaining a preliminary
injunction. Plaintiff must establish that “(1) there is a substantial likelihood of success
on the merits; (2) a substantial threat of irreparable injury exists if an injunction is not
granted; (3) the threatened injury to the plaintiff outweighs any harm that an injunction
may cause the defendants; and (4) issuing the injunction will not harm the public
interest.” Winmark Corp. v. Brenoby Sports, Inc., 32 F. Supp. 3d 1206, 1218 (S.D. Fla. 2014).
A preliminary injunction is an extraordinary and drastic remedy not to be
granted unless the movant clearly establishes the “burden of persuasion” as to the four
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factors. Siegel v. LePore, 234 F.3d 1163, 1176 (11th Cir. 2000). Here, Plaintiff carries the
burden of persuasion. Granting a preliminary injunction “is the exception rather than
the rule.” Id. (quoting Texas v. Seatrain Int’l, S.A., 518 F.2d 175, 179 (5th Cir. 1975)).
D. Analysis
Plaintiff has the burden of establishing the four factors. The Undersigned finds
that Plaintiff has failed to satisfactorily demonstrate a substantial likelihood of success
on the merits and irreparable harm. Because the Undersigned finds that Plaintiff has
failed to establish two of the four factors, it is not necessary to evaluate the remaining
two factors.
i.
Substantial Likelihood of Success on the Merits
The party claiming trade secret protection has the burden to show how the
information qualifies as a trade secret. Hennegan Co. v. Arriola, 855 F. Supp. 2d 1354,
1360 (S.D. Fla. 2012). To prove a claim under FUTSA, a plaintiff must show that “(1) the
plaintiff possessed secret information and took reasonable steps to protect its secrecy
and (2) the secret it possessed was misappropriated, either by one who knew or had
reason to know that the secret was improperly obtained or by one who used improper
means to obtain it.” Del Monte Fresh Produce Co. v. Dole Food Co., 136 F. Supp. 2d 1271,
1291 (S.D. Fla. 2001) (citing Fla. Stat. § 688.002).
“To qualify as a trade secret, the information that the plaintiff seeks to protect
must derive economic value from not being readily ascertainable by others and must be
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the subject of reasonable efforts to protect its secrecy.” Id. (citing Am. Red Cross v. Palm
Beach Blood Bank, Inc., 143 F.3d 1407, 1410 (11th Cir. 1998) (applying Florida law);
Bestechnologies, Inc. v. Trident Envt. Sys., Inc., 681 So.2d 1175, 1176 (Fla. 2d DCA 1996)
(defining trade secret)); see also Fla. Stat. § 688.002(4). But “if the information in question
is generally known or readily accessible to third parties, it cannot qualify for trade
secret protection.” Del Monte Fresh Produce Co., 136 F. Supp. 2d at 1291.
FUTSA defines a “trade secret” as information that “[d]erives independent
economic value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; and . . . [i]s the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.” Fla. Stat. § 688.002(4). Thus, if a trade secret is
either readily ascertainable or the plaintiff fails to take reasonable efforts to maintain the
secrecy of its trade secret, then a misappropriation claim will fail. See, e.g., Warehouse
Sols., Inc. v. Integrated Logistics, LLC, 610 F. App’x 881, 885–86 (11th Cir. 2015) (granting
summary judgment for the defendant on a trade secret misappropriation claim where
the plaintiff did not take adequate steps to maintain the secrecy of its product).
Here, Plaintiff provided insufficient evidence to satisfy its burden of proof to
demonstrate that the relevant information qualifies as a trade secret. For instance,
Plaintiff in its motion and during its opening statement at the hearing asserted that its
trade secrets include, among other things, its supplier list and customer list. [ECF Nos.
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28, p. 8; 34, pp. 10‐11]. However, Plaintiff, at this stage, has not demonstrated that its
supplier list has even been obtained and used by Defendants or that the information
comprising his supplier list and customer list was not generally known or easily
ascertainable.
Concerning Plaintiff’s suppliers, Plaintiff provided testimony that it has
suppliers from around the world and that they are selected depending on the quality of
products it seeks. Plaintiff’s witness, Mr. Dupuy, who is the owner of Pals Group Inc.,
testified that formulating the supplier list took time and research to find the right
balance between quality and price. [ECF No. 34, pp. 28‐29]. Further, Mr. Dupuy
explained that the company also needed to find the “right suppliers” to grow with
Plaintiff. [ECF No. 34, p. 29]. He testified that finding the “right supplier of jasmine
rice” took “approximately 10 years.” [ECF No. 34, p. 30].
Mr. Dupuy asserted that Defendants have “been going after all of [his] suppliers
as well to buy the same products to compete against [Plaintiff].” [ECF No. 34, p. 87].
Defendants subsequently called individual Defendant Louissaint to testify at the
hearing. When asked on cross‐examination whether he used the same supplier as
Plaintiff for five pounds of jasmine rice and twenty pounds of jasmine rice, Mr.
Louissaint explained that he did not obtain his jasmine rice from the same supplier as
Plaintiff. [ECF No. 34, p. 164]. When asked “where did [he] learn of his supplier,” Mr.
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Louissaint stated that he went to a food show “where all the suppliers were present.”
[ECF No. 34, p. 164].
Although Plaintiff expressed its suspicion that Defendants were using the
identical suppliers Plaintiff had been using for several years, it did not introduce any
actual evidence to confirm that theory. In fact, the only evidence about the identity of
Defendants’ suppliers arose during the cross‐examination of Mr. Louissaint, who
testified, when asked about the source of certain specific products listed on an invoice
[Plaintiff’s Hearing Exhibit #29], that he used different suppliers than the ones used by
Plaintiff. So Plaintiff failed to present any evidence demonstrating that Defendants
indeed were using the same suppliers (and ordering the same products) as Plaintiff.
Instead, there is evidence indicating Mr. Louissaint attended a food show where many
suppliers also attended and that he obtained his suppliers there. [ECF No. 34, p. 164].
Accordingly, Plaintiff has failed to demonstrate that Defendants even possess
and/or are using its alleged trade secret supplier list. Moreover, Plaintiff has also failed
to show, even if they both use the same suppliers, that the information is not readily
ascertainable, as Defendants encountered many suppliers at a food show.
Concerning Plaintiff’s customers, Plaintiff similarly failed to meet its burden of
persuasion and demonstrate that the customer lists are also trade secrets. Plaintiff
initially presented testimony describing how creating its customer lists required
consistent work. This included visiting each store, sometimes selling small quantities of
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its products, providing samples of different products, and preparing packaging. [ECF
No. 34, p. 30]. Plaintiff maintains a list of its customers in its QuickBooks program and
the list includes the customers, their contact information, and their history of business
with Plaintiff. [ECF No. 34, pp. 30‐31]. Mr. Dupuy testified that Mr. Louissaint prepared
the list. [ECF No. 34, p. 45].
Mr. Dupuy stated that the primary customers consist of supermarkets that sell
products from the Caribbean. [ECF No. 34, p. 69‐70]. He testified that “a lot” of these
supermarkets can be located by conducting an internet search. [ECF No. 34, p. 70]. Mr.
Dupuy stated that this is the case for the larger supermarket chains, but claimed that
this cannot be done for his “niche client[s]” that “only buy[] a very specific product
from [Plaintiff].” [ECF No. 34, p. 70].
Mr. Fils‐Aime testified that he originally brought to Pals Group his customer list
when he joined the company. [ECF No. 34, pp. 98‐99]. Mr. Fils‐Aime said that ten years
ago ‐‐ back when Pals Group was created in 2006 ‐‐ the list was not easily ascertainable
through online research. However, he explained that it is presently easily ascertainble
because “[t]oday you go Google online and get the information you need.” [ECF No. 34,
pp. 99‐100]. Mr. Fils‐Aime noted that, although the actual customers are easily
ascertainable, the particular items purchased and prices paid by those customers are not
found on the internet. [ECF No. 34, pp. 105‐106].
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Additionally, Mr. Fils‐Aime testified that Plaintiff did not use any strategy,
specialized training, or system to develop or create a separate customer list. [ECF No.
34, p. 99]. He does not recall any steps or procedures taken by Plaintiff to make Pals
Group’s customer list a trade secret. [ECF No. 34, p. 101].
Mr. Louissaint testified that the customers can be determined by using the
internet. He stated that anyone could go to manta.com or yelp.com and look for
Caribbean grocery stores in a particular city and find relevant supermarkets that are
potential customers. [ECF No. 34, p. 135]. He also testified that supermarket websites
and store flyers include their other locations and contact information. [ECF No. 34, pp.
135‐36]. Mr. Louissaint also noted that Plaintiff did not take measures to protect its
customer list and the list was emailed regularly to its employees and salespeople. [ECF
No. 34, p. 136].
Mr. Louissaint said that prices offered to customers are not available on the
internet, but they can easily be calculated by factoring in the knowledge that
supermarkets’ sale prices are approximately 35% higher than the cost. [ECF No. 34, p.
158].
The Undersigned finds that Plaintiff has failed to establish that the customer list
is a trade secret. Instead, the evidence presented shows that customer lists similar to
Plaintiff’s are easily ascertainable. In fact, each hearing witness who works or worked
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for Plaintiff testified that the customers could be identified by simply conducting an
internet search ‐‐ this even includes Mr. Dupuy, the owner of Pals Group.
Plaintiff has not established a likelihood of success on the merits because it failed
to demonstrate that Defendants misappropriated its trade secrets. In fact, Plaintiff at
this stage has failed to demonstrate that it even had a valid trade secret for Defendants
to misappropriate.
Because the Undersigned finds that Plaintiff has not established a likelihood of
success on the merits, I am compelled to deny its request for a preliminary injunction.
See Dawson v. Ameritox, Ltd., 571 F. App’x 875, 879‐80 (11th Cir. 2014) (agreeing with
district court’s order denying the request for a preliminary injunction because the party
failed to demonstrate a substantial likelihood of success on the merits and stating that,
because the party failed to meet likelihood of success, the district court did not need to
address the other requirements for obtaining injunctive relief). Although, the
Undersigned’s analysis could end here, I have chosen to also evaluate the irreparable
harm prong.
To be sure, Plaintiff “may very well prevail in the present action in the end,” but
its failure to establish likelihood of success necessarily means it has failed to carry its
burden of demonstrating that the extreme remedy of a preliminary injunction is
appropriate here. Oce N. Am, Inc. v. Caputo, 416 F. Supp. 2d 1321, 1325 (S.D. Fla. 2006).
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ii.
Irreparable Harm
“[P]reventing irreparable harm in the future is the sine qua non of injunctive
relief.” Alabama v. U.S. Army Corps of Engineers, 424 F.3d 1117, 1133 (11th Cir. 2005)
(internal quotation omitted). Plaintiff’s delay in moving for a preliminary injunction
significantly undermines any finding that it might suffer irreparable injury if an
injunction does not issue. Plaintiff waited one year after finding out that Quiskeya was
a competing business and three months after filing its Complaint before filing its
preliminary injunction motion. [ECF Nos. 1; 28; 34, pp. 80‐81]. Plaintiff presented no
evidence to justify this delay. Rather, Plaintiff stated that when it learned of the
competition by Quiskeya, “I had another client and issues I needed to take care of in
Miami. I decided I can choose my battles.” [ECF No. 34, p. 80].
“A delay in seeking a preliminary injunction of even only a few months – though
not necessarily fatal – militates against a finding of irreparable harm.” Wreal, LLC v.
Amazon.com, Inc., 840 F.3d 1244, 1248 (11th Cir. 2016). “Indeed, the very idea of a
preliminary injunction is premised on the need for speedy and urgent action to protect a
plaintiff’s rights before a case can be resolved on the merits.” Id. (citations omitted). An
“unexplained delay undercuts any sense of urgency” and can lead a court to find that
the plaintiff “has failed to demonstrate sufficient need for a preliminary injunction.” See
Seiko Kabushiki Kaisha v. Swiss Watch Intern., Inc., 188 F. Supp. 2d 1350, 1355‐56, (S.D. Fla.
2002).
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Other courts (both in and outside the Eleventh Circuit) have held that
unexplained delays of a few months negate any claim of irreparable harm on a
preliminary injunction motion. Id. As one court stated: “[C]ourts typically decline to
grant preliminary injunctions in the face of unexplained delays of more than two
months.” Gidatex, S.r.L. v. Campaniello Imports, Ltd., 13 F. Supp. 2d 417, 419 (S.D.N.Y.
1998); see, e.g., Magnet Commc’ns, LLC v. Magnet Commc’ns, Inc., No. 00‐civ‐5746, 2001
WL 1097865, at *1 (S.D.N.Y. Sept. 19, 2001) (denying preliminary injunction in face of
three‐month delay); Greenpoint Fin. Corp. v. Sperry & Hutchinson Co., 116 F. Supp. 2d 405,
408‐09 (S.D.N.Y. 2000) (denying preliminary injunction in face of four‐month delay).
“[P]reliminary injunctions are generally granted under the theory that there is an
urgent need for speedy action to protect the plaintiff’s rights.” Seiko Kabushiki, 188 F.
Supp. 2d at 1355. Therefore, a plaintiff concerned about a harm truly believed to be
irreparable would and should act swiftly to protect itself. Here, however, Plaintiff sat on
its rights for three months. Further, Plaintiff has failed to offer any explanation for its
three‐month delay and the Undersigned cannot discern from the record any valid
justification for the delay. See Wreal, 840 F.3d at 1248. Accordingly, Plaintiff’s delay is by
itself sufficient grounds to deny its request for an injunction.
In any event, Plaintiff has shown no risk that it will suffer any compensable harm
(much less the required irreparable harm) if a preliminary injunction does not issue. In
fact, the evidence presented by Plaintiff at the evidentiary hearing demonstrated the
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exact opposite scenario. Mr. Dupuy testified that the business, rather than suffering any
compensable or irreparable harm, has in fact been “profitable all year long.” [ECF No.
34, pp. 85‐86]. This testimony is even more striking after hearing that Plaintiff was not
profitable in 2014 and 2015. [ECF No. 34, p. 86]. Mr. Dupuy further cemented the lack of
necessity for an injunction by confirming that the business had been profitable through
2016 even with Quiskeya “doing business competing against [Plaintiff] in Orlando and
Miami.” [ECF No. 34, p. 86].
When asked what damages Defendants have caused to Plaintiff, Mr. Dupuy
stated that Defendants have kept his Orlando clients’ information, gone after his
distributors, presented themselves as Plaintiff, offered lower prices than Plaintiff to gain
business, sought his suppliers, and bought the same products. [ECF No. 34, p. 87].
However, Plaintiff already established that these alleged actions have not caused
compensable or irreparable harm. Instead, Plaintiff has seen a profit during the last
year, when it experienced loses the previous two years. Moreover, Plaintiff did not
present evidence of a loss in customers, clients or revenue. Even if it had presented this
type of evidence, then its remedy would be money damages. As such, as currently
presented by Plaintiff, any injury is compensable and therefore not irreparable. Fla.
Chapter of Ass’n of Gen. Contractors of Am. v. City of Jacksonville, Fla., 896 F.2d 1283, 1285
(11th Cir. 1990) rev’d on other grounds 508 U.S. 656 (1993) (“An injury is ‘irreparable’ only
if it cannot be undone through monetary remedies”); see also United States v. Jefferson
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Cty., 720 F.2d 1511, 1520 (11th Cir. 1983) (affirming denial of preliminary injunction and
noting that plaintiff firefighters, even if they were to prevail, would not have suffered
an injury that could not be adequately compensated through an award of back pay and
seniority points along with compelled future promotion).
Accordingly, the Undersigned finds that Plaintiff also failed to satisfy the
irreparable harm factor (in addition to not meeting the likelihood of success on the
merits requirement).
E. Conclusion
Plaintiff failed to satisfy two of the four factors required for a preliminary
injunction. Accordingly, the Undersigned denies Plaintiff’s preliminary injunction
motion.
DONE AND ORDERED in Chambers, in Miami, Florida, on February 9, 2017.
Copies furnished to:
All Counsel of Record
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