TOYOTA INDUSTRIAL EQUIPMENT MFG., INC. et al v. LAND

Filing 49

ORDER granting Plaintiffs' 35 Motion for Preliminary Injunction. The specific terms of the preliminary injunction will be set forth in a separate order. Signed by Judge Jane Magnus-Stinson on 7/21/2014. (SWM)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
TOYOTA INDUSTRIAL EQUIPMENT MFG., INC.,
et al.,
Plaintiffs,
vs.
DAVID K. LAND,
Defendant.

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1:14-cv-1049-JMS-TAB

ORDER GRANTING PRELIMINARY INJUNCTION
Presently pending before the Court is Plaintiffs Toyota Industrial Equipment Mfg. Inc.,
Toyota Material Handling North America, Inc., and The Raymond Corporation’s (collectively
“Plaintiffs”) Motion for Preliminary Injunction. [Filing No. 35.] Plaintiffs presented evidence at
the June 25, 2014 hearing on their Motion for Temporary Restraining Order (“TRO”), in the
exhibits attached to Plaintiffs’ Brief in Support of Motion for Temporary Restraining Order,
[Filing No. 9-1 to Filing No. 9-8], at the July 8, 2014 hearing to determine whether to extend the
TRO, [Filing No. 45], and in the exhibits attached to Plaintiffs’ Brief and Reply Brief in Support
of Motion for Preliminary Injunction, [Filing No. 36-1 to Filing No. 36-9; Filing No. 47-1 to
Filing No. 47-4].1 Based on that evidence, the Court now GRANTS Plaintiffs’ Motion for
Preliminary Injunction and finds as follows:

1

The Court informed the parties at the hearing about extending the TRO that it did not anticipate
that a hearing on the Plaintiffs’ Motion for Preliminary Injunction would be necessary but that if
a party disagreed, it should move for a hearing as soon as possible. [Filing No. 39 at 2.] No
party moved for a hearing on the pending motion.

Findings of Fact2
1.

Toyota Industrial Equipment Mfg. Inc. (“TIEM”) and The Raymond Corporation

(“Raymond”) are manufacturers of lift trucks.
2.

TIEM manufactures lift trucks at its facility in Columbus, Indiana, and Raymond

manufactures lift trucks at its facility in Greene, New York and Muscatine, Iowa.
3.

Toyota Material Handling North America, Inc. (“TMHNA”) provides

management services to support TIEM and Raymond.
4.

The lift trucks manufactured by TIEM are designed by Toyota Industries

Corporation (“TICO”), which grants TIEM the right to use the designs in the manufacture of the
lift trucks.
5.

TIEM customizes many of the designs to meet specific customers’ needs.

6.

Since 2002, Toyota-brand lift trucks have been the best-selling lift trucks in the

United States.
7.

TIEM hired Land as a manager in its design engineering department in June 1998.

8.

In that position, Land was responsible for the development, testing, and design

maintenance of lift trucks manufactured by TIEM.
9.

Land was also responsible for providing engineering support to Toyota Material

Handling, U.S.A., Inc.’s (“TMHU”) national accounts.
10.

In January 2012, Land became TIEM’s manager of quality assurance.

11.

In that role, Land was responsible for overall product quality, parts inspection,

testing, supplier development, and warranty administration for all products manufactured by
TIEM.

2

Any finding of fact should be deemed a conclusion of law to the extent necessary.
2

12.

TIEM promoted Land to senior manager of quality assurance in January 2014.

13.

Land continued to exercise the same responsibilities for quality assurance and had

additional responsibilities for business planning.
14.

To perform his management roles for both design engineering and quality

assurance, Land needed access to confidential information and documents belonging to TIEM
and its affiliated companies, including TICO, TMHNA, Raymond, and TMHU.
15.

TIEM granted Land access to technical drawings, product specifications, product

design information, and testing protocols.
16.

TIEM also granted Land access to warranty data, information about field

campaigns, information about product performance, inspection data, and information about
TIEM’s suppliers and customers.
17.

As a manager, Land also had access to non-public financial reports and

projections.
18.

Land knew throughout his employment with TIEM that the documents and

information TIEM granted him access to were the exclusive property of TIEM or its affiliates.
TIEM restricts access to those documents and information to people who require access to
perform their job functions.
19.

The documents and information are stored on secure, password-protected

computer servers, and some documents are marked as confidential.
20.

Section 6-2 of TIEM’s Code of Conduct, which Land acknowledged receiving,

provides that “[t]he Company’s confidential information should not be disclosed to anyone
outside the Company except with prior written approval under a non-disclosure agreement. . . . If

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you leave the Company, you must return all Company property, assets and confidential
information.” [Filing No. 1-1 at 8-9.]
21.

Land entered into a Proprietary Information and Inventions Agreement (the

“Agreement”) with TIEM on June 15, 1998. [Filing No. 36-4.]
22.

In that Agreement, Land acknowledged that his employment with TIEM resulted

in a confidential relationship in which he would receive information about the company, the
company’s suppliers, and the processes, finances, marketing and business plans, and other
proprietary information (collectively the “Company Business”). [Filing No. 36-4 at 1.] Pursuant
to the Agreement, Land agreed that he “shall not disclose to anyone or use at any time, either
during or after [his] employment, any of the Company Business . . . unless [he has] the
Company’s prior written consent.” [Filing No. 36-4 at 1.]
23.

Land also assigned to TIEM all inventions, ideas, written works, conceptions,

designs, and things that he made or conceived of using or incorporating the Company Business.
[Filing No. 36-4 at 1.]
24.

The Agreement further provided that upon termination of Land’s employment, he

would “surrender to the Company all Company property and all records and materials relating to
the Company Business in [his] or [his] agents’ possession . . . .” [Filing No. 36-4 at 2.]
25.

The Agreement expressly acknowledged that “the Company will be irreparably

harmed by [Land’s] breach of this agreement, and that the Company shall be entitled to seek and
obtain injunctive relief . . . to prevent any actual or threatened breach of this agreement by
[Land].” [Filing No. 36-4 at 2.]
26.

Land resigned his position at TIEM at the end of May 2014.

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27.

At the time Land resigned, he did not disclose to TIEM where he planned to work

after leaving TIEM. [Filing No. 9-7 at 2.]
28.

Land continued to have access to confidential information between the time he

announced his resignation and his departure from TIEM on June 10, 2014.
29.

Only after Land’s departure from TIEM did Plaintiffs learn that Land would be

working for Linde Material Handling North America Corporation (“Linde”)—a direct competitor
of TIEM and Raymond. [Filing No. 9-8.] Linde’s corporate parent, Kion Group, has publicly
announced its goal to overtake Toyota as the world’s largest manufacturer of lift trucks by 2020.
[Filing No. 9-5.]
30.

After Land’s departure, TIEM learned that Land had copied numerous documents

belonging to TIEM and its affiliated companies to a Google Drive that Land created using his
Gmail accounts, [e-mail] and [e-mail]. [Filing No. 9-6.]
31.

Gmail is an online email service that provides users with an email account, online

storage, and online office applications. [Filing No. 36-6 at 1.]
32.

Google, the hosting company for Gmail, provides Gmail users with 15 Giga Bytes

(GB) of free online storage space known as “Google Drive.” [Filing No. 36-6 at 2.]
33.

Google Drive has a program named “GoogleDriveSync.exe” that can be installed

and used to synchronize files from a computer directly and automatically to the online Google
Drive account. [Filing No. 36-6 at 2.]
34.

When installed on a Windows computer, GoogleDriveSync.exe creates a folder

named “Google Drive” in the User’s account folder on Windows computers. [Filing No. 36-6 at
2.]

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35.

The GoogleDriveSync.exe program automatically synchronizes files placed in the

Google Drive folder (or other specified folder) on the user’s computer with the online Google
Drive account, and any other computer that the program is installed on for the specific Gmail
account. [Filing No. 36-6 at 2.]
36.

This means that any file placed in a Google Drive folder on a work computer is

automatically copied to an online Google Drive storage account and, if any other computers are
synchronized to that Gmail account, the files will be copied to it as well. [Filing No. 36-6 at 2.]
37.

The Gmail account [e-mail] was used on the laptop computer Land

used while employed by TIEM. [Filing No. 36-6 at 2.]
38.

Folders named “Google Drive” and “GoogleDrive2” existed under the

“C:\Users\dland\” folder structure. [Filing No. 36-6 at 2.] The folder GoogleDrive2 contains
over 11,000 files and folders in it. [Filing No. 36-6 at 2.]
39.

Many of the files in the GoogleDrive2 folder appear to be related to Land’s

employment at TIEM, including the contents of folders named “New Product Development,” and
“MyDKL\SC\Keep.” [Filing No. 36-6 at 2.]
40.

The names of the files contained in the GoogleDrive2 folder indicates the files

contain information about customers, financial documents, profitability, processes, executive
reports, organizational charts, and “Nomura” reports, as well as some exported emails dealing
with orders and shipping reports, among other things. [Filing No. 36-6 at 2.]
41.

Of the over 11,000 files and folders present in the GoogleDrive2 folder, 752 were

created on May 27, 2014 and 45 were created on May 28, 2014. [Filing No. 36-6 at 2.]

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42.

The GoogleDriveSync.exe program is not currently installed, and was likely

uninstalled from the Land’s TIEM-issued computer on or after May 30, 2014. [Filing No. 36-6
at 2.]
43.

The files and folders contained in the GoogleDrive2 folder were likely

automatically copied to the Google Drive of the [e-mail] account, or whatever
Gmail account the folder was synchronized to, and could still be present in the online account.
[Filing No. 36-6 at 2.]
44.

A significant number of files identified in Land’s Google Drive contain critical,

confidential information regarding lift trucks manufactured by TIEM. [Filing No. 36-1 at 2;
Filing No. 36-7 at 3.]
45.

Those documents include product specifications, pricing strategies, design and

testing data, warranty data, factory order history, sensitive financial data, and instruction
documents from a senior quality advisor. [Filing No. 36-1 at 2; Filing No. 36-7 at 3.]
46.

TIEM and its affiliates have invested millions of dollars in developing its products

and the disclosure to a competitor of the information Land copied to his Google Drive would
cause TIEM significant harm. [Filing No. 36-1 at 3; Filing No. 36-7 at 3.]
47.

Land began working at Linde as its director of engineering in June 2014. [Filing

No. 36-2 at 1.]
48.

On June 23, 2014, Land accessed his Gmail account using a computer located at

Linde’s office in South Carolina. [Filing No. 44 at 20.]
49.

During the first hearing on Plaintiffs’ Motion for Temporary Restraining Order,

Land confirmed under oath that he “had copied electronic files that [he] should not have.”
[Filing No. 19 at 10-12.] Land testified that he had “no malicious intent,” that he was not

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directed to copy the files by Linde, that the files had not been copied or transmitted to a
secondary location, and that to the best of his knowledge, there were all deleted from his Google
Drive before being served with the Complaint in this action. [Filing No. 19 at 11-12.]
50.

Subsequent investigation revealed that Land deleted documents from his Google

Drive the morning of the TRO hearing on June 25, 2014.
51.

After the TRO extension hearing on July 8, 2014, Land provided Plaintiffs’ expert

with a Western Digital WD 640 GB External Hard Drive that he had attached to his personal
computer. [Filing No. 47-1 at 2.]
52.

Based on his analysis, Plaintiff’s expert identified certain documents that had

matching names to files found in the “GoogleDrive2” folder contained on the laptop that Land
used. Plaintiff’s expert identified 264 files where the words “Toyota” or “TIEM” were present in
either the file name or the names of the folders containing those files. [Filing No. 47-1 at 2.]
53.

Josh Linnemann, TIEM’s Senior Manager of Design and Production Engineering,

analyzed the external hard drives and identified various documents containing Plaintiffs’
confidential information, including, among others, documents created to explain TIEM’s
development process, approach to new product development, production history, daily
production, and objectives for mid-term planning to meet TIEM’s 2016 vision. [Filing No. 47-2
at 3-5.]
54.

Mr. Linnemann also found that e-mail messages in Land’s Gmail accounts

contain Plaintiffs’ confidential information, including TIEM’s key performance indicators,
strategies, pricing and costs, and strategic initiatives. [Filing No. 47-2 at 3.]
55.

Plaintiffs have recently discovered that Land’s Gmail accounts contain messages

reflecting that he utilizes at least four additional e-mail addresses not previously disclosed:

8

[e-mail]; [e-mail]; [e-mail]; and a
hotmail address. [Filing No. 47-3.] Land’s emails also indicate that he uses various online
storage services, including Dropbox, Ubuntu, and JustCloud. [Filing No. 47-3 at 2.]
56.

Plaintiffs served four interrogatories on Land, asking him to identify: (1) all

electronic storage devices in his possession, custody, or control since January 1, 2014; (2) all
tablet computers, laptop computers, desktop computers, servers, PDAs, and mobile phones in his
possession, custody, or control since January 1, 2014; (3) all communications he had with Linde
regarding Toyota; and (4) all communications he had with Trace Staffing Solutions (the
company that recruited Land to Linde) regarding Toyota. In response, Land provided the same
objection to each interrogatory, invoking the federal and state privilege against selfincrimination. [Filing No. 47-4.]
Conclusions of Law
57.

The Court may issue a preliminary injunction under Federal Rule of Civil

Procedure 65.
58.

“A party seeking to obtain a preliminary injunction must demonstrate: (1) its case

has some likelihood of success on the merits; (2) that no adequate remedy at law exists; and (3) it
will suffer irreparable harm if the injunction is not granted.” Ty, Inc. v. Jones Grp., Inc., 237
F.3d 891, 895-96 (7th Cir. 2001). “If the court is satisfied that these three conditions have been
met, then it must consider the irreparable harm that the nonmoving party will suffer if
preliminary relief is granted, balancing such harm against the irreparable harm the moving party
will suffer if relief is denied.” Id. “Finally, the court must consider the public interest (nonparties) in denying or granting the injunction.” Id.

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59.

The Court evaluates the balance on a sliding scale so that “the more likely it is the

plaintiff will succeed on the merits, the less balance of irreparable harm need weigh towards its
side.” Kraft Foods Grp. Brands LLC v. Cracker Barrel Old Country Store, Inc., 735 F.3d 735,
740 (7th Cir. 2013). “[I]f the plaintiff has a strong likelihood of prevailing in the full trial, and
the costs to him if the preliminary injunction is denied are at least as great as the costs to the
defendant if it is granted, and the plaintiff's costs could not be fully recouped by him in a final
judgment in his favor, the injunction should be issued.” Id.
60.

Plaintiffs assert a claim for Misappropriation of Trade Secrets under the Indiana

Uniform Trade Secrets Act (the “Act”). [Filing No. 1 at 11-12.] The Act defines “trade secret”
as “information, including a formula pattern, compilation, program, device, method, technique,
or process, that: (1) Derives 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 (2) Is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.” Ind. Code § 24-2-3-2.
61.

The Act defines “misappropriation” in relevant part as the “[a]cquisition of a trade

secret of another by a person who knows or has reason to know that the trade secret was acquired
by improper means.” Ind. Code § 24-2-3-2.
62.

The Act further provides that “actual or threatened misappropriation may be

enjoined” and that “the injunction may be continued for an additional reasonable period of time
in order to eliminate commercial advantage that otherwise would be derived from the
misappropriation.” Ind. Code. § 24-2-3-3(a).
63.

Plaintiffs also assert a claim for Breach of Contract based on the Proprietary

Information and Inventions Agreement that Land signed. [Filing No. 1 at 5; Filing No. 1 at 12;

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Filing No. 1-2.] That Agreement is governed by Indiana law. [Filing No. 1-2 at 2.] The
elements of a breach of contract action are the existence of a contract, the defendant’s breach
thereof, and damages. Rice v. Hulsey, 829 N.E.2d 87, 89 (Ind. Ct. App. 2005).
64.

A forensic examination of the computer Land used while employed by TIEM

shows that he copied confidential information and documents, including trade secrets and
confidential information, onto a Google Drive he controls. Many of those documents are marked
as confidential and as being the property of one or more of the Plaintiffs, and Plaintiffs took
reasonable actions under the circumstances to maintain their secrecy.
65.

Land testified at the Court’s first TRO hearing that he “copied electronic files that

[he] should not have.” This confirms that he knew that the trade secrets were acquired by
improper means. Ind. Code § 24-2-3-2.
66.

Forensic examination of Land’s WD 640 GB External Hard Drive since the

Court’s July 8, 2014 TRO extension hearing confirms that Land transferred files from his Google
Drive account to the external hard drive containing Plaintiffs’ confidential information and trade
secrets. Forensic examination of Land’s email also confirms that it contains attachments with
Plaintiffs’ confidential information and trade secrets.
67.

In response to Plaintiffs’ Motion, Land argues that there is no evidence that he has

transmitted Plaintiffs’ trade secrets to any third party. [Filing No. 46 at 2.] He further contends
that his transmission to a Google or other drive was not prohibited by Toyota’s policies or
procedures. [Filing No. 46 at 3.] The Court rejects these arguments because the Agreement that
Land signed expressly provides that upon his termination he “will surrender to the Company all
Company property and all records and materials relating to the Company Business in my own or
my agents’ possession.” [Filing No. 9-4 at 2.] The evidence Plaintiffs have submitted, as well as

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Land’s own admissions, establish that at the very least, he did not comply with that provision of
the Agreement upon his termination.
68.

Based on the evidence in the record, the Court concludes that Plaintiffs are likely

to succeed on the merits of at least their Misappropriation of Trade Secrets and Breach of
Contract claims.
60.

Turning to the second and third factors for obtaining a preliminary injunction, the

Court concludes that Plaintiffs will suffer irreparable harm for which there is no adequate
remedy at law if the requested injunction does not issue. Specifically, an ongoing threat of
potential or actual misappropriation continues, given that the Court cannot conclude that Land no
longer possesses or has access to Plaintiffs’ confidential information and trade secrets.
61.

Since the Court’s TRO extension hearing on July 8, 2014, Plaintiffs have

discovered that Land has at least four additional email addresses and three online storage
services that he did not previously disclose. [Filing No. 47-3.] Plaintiffs have also served
interrogatories on Land, asking him to identify the electronic storage devices in his possession,
custody, or control since January 1, 2014. In response, Land has asserted his federal and state
privilege against self-incrimination. As it is entitled to do, the Court draws an adverse inference
from Land’s refusal to answer. See In re High Fructose Corn Syrup Antitrust Litigation, 295
F.3d 651, 663 (7th Cir. 2002).
62.

Moreover, Land’s Agreement with Plaintiffs expressly acknowledged that “the

Company will be irreparably harmed by [Land’s] breach of this agreement, and that the
Company shall be entitled to seek and obtain injunctive relief . . . to prevent any actual or
threatened breach of this agreement by [Land].” [Filing No. 36-4 at 2.]

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63.

For these reasons, the Court concludes that without the requested injunction,

Plaintiffs will suffer irreparable harm for which there is no remedy at law. Despite Land’s
representations that he “has been entirely cooperative with Plaintiffs,” [Filing No. 46 at 2], the
Court cannot conclude that he no longer possesses or in any way has access to Plaintiffs’
confidential documents and trade secrets. If those documents are acquired by a competitor,
Plaintiffs will face the irreparable harm of being placed at an unfair competitive disadvantage for
which monetary damages will be very difficult to quantify. Until the Court is satisfied that Land
no longer possesses or has access to the documents at issue, Land’s actual or threatened
misappropriation of Plaintiffs’ trade secrets causes irreparable harm to Plaintiffs for which there
is no adequate remedy at law.
64.

Based on the foregoing, the Court has concluded that Plaintiffs have established

the first three conditions for obtaining a preliminary injunction. The Court must now consider
any irreparable harm that Land will suffer if the injunction is granted and balance that harm
against the irreparable harm that the Plaintiffs will suffer if the injunction is denied.
65.

Land does not argue that he will suffer irreparable harm if Plaintiffs’ requested

injunction is granted and he continues to be prohibited from working for Linde. [Filing No. 46.]
Even assuming that Land will be harmed, the Court concludes that it is not irreparable harm
because Land holds the keys to his release from the injunction. Once the Court is satisfied that
Land no longer possesses or has access to Plaintiffs’ confidential information and trade secrets,
upon the proper showing, the Court will grant Land relief from its injunction prohibiting him
from working for Linde. Until that time, however, the Court concludes that the irreparable harm
that Plaintiffs will suffer because of actual or threatened misappropriation if the injunction is
denied greatly outweighs any harm that Land will suffer by not being able to working for Linde.

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66.

The Court rejects Land’s argument that it cannot prohibit him from working for

Linde. [Filing No. 46 at 3-4.] In Ackerman v. Kimball International, Inc., the Indiana Supreme
Court rejected an argument that the Act, “which permits a court to enjoin ‘actual or threatened
misappropriation’ of trade secrets, does not permit a court to enjoin the acceptance of
employment with a competitor who might benefit from the misappropriation.” 652 N.E.2d 507,
510 (Ind. 1995) (quoting Ind. Code § 24-2-3-3(a)). Land attempts to distinguish Ackerman
because unlike the employee in that case he did not have a non-compete agreement with
Plaintiffs, [Filing No. 46 at 3-4], but as the Plaintiffs point out in reply, the Indiana Supreme
Court emphasized that it was affirming the trial court’s grant of the “statutory claim for
injunctive relief under Indiana Code § 24-2-3-3,” Ackerman, 652 N.E.2d at 510 (original
emphasis). In doing so, the Indiana Supreme Court confirmed that the Act “grants a trial court
broad discretion to fashion injunctive relief ‘to eliminate commercial advantage that otherwise
would be derived from the misappropriation [of trade secrets].’” Id. (quoting Ind. Code § 24-23-3(a)); see also PepsiCo, Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995) (affirming district court
decision to grant preliminary injunction against employee to prevent him from divulging trade
secrets and confidential information in his new job).
67.

Here, like the former employee in Ackerman, Land engaged in “pre-departure

harvesting of [his former employer’s] property.” 652 N.E.2d at 510-11. Given the significant
amount of confidential information and trade secrets to which Land had access, and his failure to
convince the Court that he no longer has that access, the Court concludes that this case presents
similar circumstances to Ackerman. Specifically, given the significant threat of misappropriation
and the inadequacy of Plaintiffs’ remedy at law should such misappropriation occur, the Court

14

finds it appropriate to enjoin Land from working for Linde at this time. Ind. Code. § 24-2-3-3(a)
(permitting court to enjoin “actual or threatened misappropriation”).
68.

As for the final factor, because Land does not have a right to possess, use, or

disclose Plaintiffs’ confidential information or trade secrets, the public will not be harmed as a
result of the requested injunction.
69.

For these reasons, the Court concludes that the balance of harms significantly

weighs in favor of entering Plaintiffs’ requested preliminary injunction. Accordingly, the Court
GRANTS Plaintiffs’ Motion for Preliminary Injunction. [Filing No. 35.] The specific terms of
the preliminary injunction will be set forth in a separate order.
07/21/2014
_______________________________
Hon. Jane Magnus-Stinson, Judge
United States District Court
Southern District of Indiana

Distribution via ECF only:
J. Walker Coleman, IV
[e-mail]
Mark R. Waterfill
BENESCH, FRIEDLANDER, COPLAN, & ARONOFF, LLP
[e-mail]
Darren Andrew Craig
FROST BROWN TODD LLC
[e-mail]
James Dimos
FROST BROWN TODD LLC
[e-mail]
Michele Lorbieski Anderson
FROST BROWN TODD LLC
[e-mail]
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Peter G. Rush
K & L GATES LLP
[e-mail]
Jennifer H. Thiem
K&L Gates LLP
[e-mail]

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