Robert Half International Inc v Stout
Filing
10
OPINION entered by Judge Sue E. Myerscough on 9/23/2011. Status hearing set for 9/26/2011 at 1:30 p.m. by telephone conference call. The Court will initiate the call. (SEE WRITTEN OPINION) (MAS, ilcd)
E-FILED
Friday, 23 September, 2011 05:31:10 PM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
ROBERT HALF INTERNATIONAL,
INC.,
Plaintiff,
v.
THEODORE M. STOUT,
Defendant.
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No. 2:11-2226
OPINION
SUE E. MYERSCOUGH, U.S. District Judge:
This matter comes before the Court on Robert Half International,
Inc.’s Emergency Ex Parte Motion for Temporary Restraining Order and
Preliminary Injunction (d/e 4) (Motion). For the reasons that follow, the
Motion is GRANTED IN PART.
BACKGROUND
Yesterday, Plaintiff Robert Half International, Inc. filed a Verified
Complaint for Injunctive and Other Relief (d/e 1) (Complaint) against its
former employee, Defendant Theodore M. Stout. The Complaint alleges
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a violation of the Computer Fraud and Abuse Act (CFAA) (18 U.S.C. §
1030), as well as state law claims under the Illinois Computer Crime
Prevention Law (720 ILCS 5/16D-1) and for breach of contract. Plaintiff
seeks a Temporary Restraining Order (TRO) requiring Defendant to
return a laptop computer and security fob assigned to him for work
purposes.
The Complaint (signed under penalty of perjury by its corporate
counsel) explains that Plaintiff is a staffing firm that provides temporary
and permanent professionals in various fields. In June 2011, Defendant
was hired as a consultant by Plaintiff to provide information technology
services to one of Plaintiff's clients, Wells Fargo Services. Defendant
signed an employment agreement, which provided for “at-will”
employment terminable at any time by either party. The agreement also
required Defendant to maintain the confidentiality of trade secret and
prohibit the disclosure of confidential information he received from
Plaintiff or the client during the course of employment. Additionally, the
agreement required Defendant to return, when the assignment ended, all
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"information, data, and other materials supplied by or obtained from
Client," and copies thereof.
On August 29, 2011, Plaintiff placed Defendant on assignment
with Wells Fargo. Wells Fargo issued Defendant a laptop, which
contained “proprietary, confidential[,] and trade secret information.”
The assignment did not last long. On September 9, 2011, Plaintiff
notified Defendant that the assignment was terminated effective
immediately. Since that date, Plaintiff has demanded the return of the
laptop and the security fob, but Defendant has refused. Based on e-mail
exchanges attached to the Complaint, Defendant apparently believes that
Plaintiff and Wells Fargo have committed fraud and discrimination
against him. In the e-mails, Defendant also stated that he has turned
over the computer to an attorney, and Defendant believes that the
computer contains “relevant information for a racial discrimination case.”
What concerns Plaintiff, among other things, is that Defendant also
stated, “I have already sta[r]ted posting [about] this online. All
information and emails will be published online.”
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Plaintiff asks for a temporary restraining order requiring Defendant
to: (1) return the laptop and security fob; and (2) refrain from
disseminating or using any trade secret or confidential information.
Today at 1:30 PM, the Court conducted an ex parte hearing via
telephone. Counsel for Plaintiff was present. Neither Defendant nor
counsel for Defendant were present, even though Plaintiff informed
Defendant via email that the hearing would be taking place and of the
phone number Defendant (or his counsel) could use to call into the
hearing if so desired.
Plaintiff has filed two certifications pursuant to Federal Rule of
Civil Procedure 65(b)(1)(B). The first certification explains that Plaintiff
is unable to obtain a current mailing or physical address for Defendant
because he refuses to provide the address. The first certification also
explains the risk Defendant may divulge or disseminate trade secrets,
proprietary, and confidential information contained on the laptop if he is
notified of the hearing. The second Rule 65(b)(1)(B) certification
explains that Plaintiff’s counsel emailed Defendant a notification of the
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hearing at an email address counsel had previously used to correspond
with Defendant. The Court finds Plaintiff has sufficiently attempted
notice and that at this time notice to Defendant would create the risk
that Defendant would disclose the confidential and proprietary
information which would be irreparable. Once notice is given to
Defendant, he may apply to dissolve the TRO as described below.
JURISDICTION AND VENUE
This Court has subject matter jurisdiction because Plaintiff’s CFAA
claims are based on a federal statute. See 28 U.S.C. § 1331. Section
1030(g) of the CFAA provides for federal civil actions alleging a CFAA
violation, so long as the conduct involves one of the first four subclauses
in § 1030(c)(4)(A)(1). The only possible candidate in this case is
subclause (I), which requires “loss” aggregating at least $5,000 in value.
Under the CFAA, “loss” includes “any reasonable cost to any victim,
including the cost of responding to the offense . . . .” § 1030(e)(11).
Plaintiff alleges over $5,000 in costs “in assessing the scope of the
damages” and in “attempting to recover” the laptop. That is a sufficient
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allegation for jurisdictional purposes, which does not require likelihood of
success on the claim itself. See Back Doctors Ltd. v. Metropolitan
Property and Casualty, 637 F.3d 827, 829 (7th Cir. 2011) (discussing
analogous diversity-jurisdiction issue). The Court has jurisdiction over
the remaining state claims pursuant to its supplemental jurisdiction. See
28 U.S.C. § 1367(a). Personal jurisdiction exists because the
Defendants’ actions took place in Illinois. See World-Wide Volkswagen
Corp. v. Woodson, 444 U.S. 286, 297 (1980) (personal jurisdiction
exists where a defendant “‘purposefully avail[ed] itself of the privilege of
conducting activities’” in the forum state)(quoting Hanson v. Denckla,
357 U.S. 235, 253 (1958)). Venue exists because Defendant resides in
Champaign, Illinois, which is in this judicial district and a substantial
part of the events giving rise to Plaintiff’s claims occurred in this judicial
district. See 28 U.S.C. §1391(b) and (c).
ANALYSIS
To obtain a TRO, a movant must show that: (1) it is reasonably
likely to succeed on the merits; (2) no adequate remedy at law exists; (3)
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it will suffer irreparable harm which, absent injunctive relief, outweighs
the irreparable harm the respondent will suffer if the injunction is
granted; and (4) the injunction will not harm the public interest. See
Joelner v. Vill. of Washington Park, Illinois, 378 F.3d 613, 619 (7th Cir.
2004)(stating requisite elements for a TRO); Goodman v. Illinois Dep’t
of Fin. and Prof’l Regulation, 430 F.3d 432, 437 (7th Cir. 2005) (internal
citations omitted)(stating that a movant bears the burden of proof).
Here, all the factors weigh in favor of granting a TRO. Plaintiff has
shown a strong likelihood of success on the breach of contract claim.
The laptop belongs to Wells Fargo, and the employment agreement
requires its return upon termination. The agreement also requires the
return and non-disclosure of trade secret and confidential information.
Plaintiff’s refusal to return the laptop and protect confidential
information violates the employment agreement he had with Plaintiff.
Therefore, Plaintiff has shown a likelihood of success on its breach of
contract claim. Plaintiff also adequately shows that the disclosure of
trade secret or confidential information would result in irreparable harm
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and that no remedy at law would suffice. The very nature of trade secret
and confidential information is that its value derives from its secrecy.
In addition to a TRO for the breach of contract claim, Plaintiff is
entitled to injunctive relief under the CFAA. The federal CFAA claim
also provides for injunctive relief. 18 U.S.C. § 1030(g). Plaintiff cites
violations of five statutory sub-sections, but there undoubtedly will be
substantial factual disputes over at least four of the five: § 1030(a)(4)
(does Defendant have intent to defraud?); § 1030(a)(2)(A) (does the
information comprise a "financial record" or a “file of a consumer
reporting agency”?); § 1030(a)(5)(A) (what is the “transmission” that
damaged the computer?); and § 1030(a)(7) (does Defendant have intent
to extort?). Plaintiff’s strongest federal claim is likely § 1030(a)(2)(C),
which bars access to information on any “protected computer,” which
includes a computer “exclusively for the use of a financial institution”
and a computer “used in or affecting interstate” commerce. Perhaps an
adversarial presentation will show otherwise, but the laptop computer
was assigned to Defendant for use at various nationwide locations. In
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any event, as noted above, the breach of contract claim has a strong
likelihood of success.
Defendant’s only interest, as best as can be discerned right now
without notice to him, is that he believes the laptop contains information
that is relevant to his potential fraud and discrimination case against
Plaintiff and Wells Fargo. In light of that concern, the Court will fashion
an order that requires the return of the laptop and protection of trade
secret and confidential information, but also requires that Plaintiff
preserve all of the information on the laptop, including dates, times, and
other meta-data associated with the laptop's files, until further order of
the Court.
Accordingly, the Court GRANTS IN PART Plaintiff’s Motion (d/e
4) and orders as follows:
1. Defendant Theodore Michael Stout, and any of his agents or
attorneys, shall deliver to Officer Jones or Lt. Gallo of the
Champaign Police Department or FBI Task Force Agent Chris
Anglin, the laptop bearing serial number L3BH962 and the
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associated security fob, and shall do so no later than 2 hours after
service of the Order to return the laptop and security fob.
2. Defendant Theodore Michael Stout, and any of his agents or
attorneys, shall neither disclose nor use any trade secret or
confidential information belonging to Plaintiff or Wells Fargo.
Stout, and any of his agents or attorneys, shall return to Plaintiff
any trade secret or confidential information belonging to Plaintiff
or Wells Fargo, and any copies thereof, no later than 2 hours after
service of the Order to return any trade secret or confidential
information belonging to Plaintiff or Wells Fargo, and any copies
thereof.
3. Upon receipt of the laptop, Plaintiff shall preserve all of the
information on the laptop, including dates, times, and other metadata associated with the laptop's files, until further order of the
Court.
4. Defendant Theodore Michael Stout, and any of his agents,
servants, and all those acting in concert with him, shall make
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available for inspection and copying by Plaintiff or a forensic expert
of Plaintiff’s choosing, Defendant’s personal computer hard drives,
including software operating systems and documents and email.
Defendant shall make these items available to any of the
aforementioned officers within two hours of receipt of service of
this Order.
5. This Order's restraints (with the exception of the preservation
order) shall dissolve at 4:30 p.m. on October 7,2011, unless
extended before that date and time.
Stout may apply to dissolve these restraints upon service of notice on
Plaintiff. See Fed.R.Civ.P. 65(b)(4).
If Defendant fails to comply with the terms of this Opinion within
the time restraints set forth above, he will be in contempt of this Court
and subject to sanctions.
Status hearing is set for this matter on September 26, 2011, at 1:30
PM. The hearing will be conducted by telephone and the Court will
initiate the call.
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IT IS SO ORDERED.
ENTERED: September 23, 2011.
FOR THE COURT:
s/ Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATE DISTRICT JUDGE
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