Experian Marketing Solutions, Inc. v. Lehman et al

Filing 40

MEMORANDUM OPINION AND ORDER granting in part and denying in part 31 motion to modify the injunction; denying defendants' request for a bond in support of the injunction ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb) (Entered: 08/17/2015)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

EXPERIAN MARKETING SOLUTIONS,
INC.,
Plaintiff,
File No. 1:15-cv-476
v.
HON. ROBERT HOLMES BELL
JEREMY LEHMAN,
THORIUM DATA SCIENCE, LLC,
Defendants.
/
MEMORANDUM OPINION AND ORDER
On June 18, 2015, this Court entered a preliminary injunction against Defendants
Jeremy Lehman and Thorium Data Science, LLC (“Thorium”) (ECF No. 28). This matter
is before the Court on Defendants’ motion to modify the preliminary injunction. (ECF No.
31.) Defendants ask that the Court eliminate Paragraph 3 of the injunction and that Experian
be required to post a bond. Plaintiff Experian Marketing Solutions, Inc. (“Experian”) has
filed a response. (ECF No. 38.) The Court finds that oral argument is not necessary to
resolve the motion. For the reasons that follow, the motion will be granted as to modification
of Paragraph 3 of the injunction and denied as to the bond requirement.
I. Paragraph 3
Defendants contend that the Court should eliminate or modify Paragraph 3 of the
preliminary injunction, which enjoins Defendant Jeremy Lehman from “(a) developing,

promoting, or selling . . . any products or services that analyze marketing data, and (b)
soliciting Plaintiff’s employees to develop, market, or sell such products or services for or
on behalf of any entity other than Plaintiff.” (6/18/2015 Order, ECF No. 28.) This portion
of the injunction stems from Experian’s claim that Lehman engaged in competitive activity
and solicited Experian employees in violation of a settlement agreement between the parties.
(See Settlement Agreement & General Release, Ex. 4 to Compl.) Defendants note that the
non-competition and non-solicitation restrictions that are part of the Settlement Agreement
expired twelve months following the termination of Lehman’s employment. As alleged in
the complaint, Lehman’s employment terminated on July 1, 2014. Thus, those covenants
expired on July 1, 2015.
Defendants also note that, according to its terms, the Settlement Agreement is
governed by New York law. In New York, courts enforce contracts according to the intent
of the parties, and generally do not enforce restrictive covenants past the term set forth in the
agreement. See, e.g., Nat’l Survival Game of N.Y., Inc. v. NSG of LI Corp., 169 A.D.2d 760
(N.Y. App. Div. 1991) (denying request to extend term of injunction because the noncompetition clause had already expired); Ross v. Food Specialties, Inc., 160 N.E.2d 618
(N.Y. 1959) (refusing to rewrite a restrictive covenant so as to expand its scope). On the
other hand, where the agreement expressly provides that a restrictive covenant is to be
extended for the period that a violating party is in breach, a court will give effect to that
provision. See, e.g., Delta Enter. Corp. v. Cohen, 93 A.D.3d 411, 412 (N.Y. App. Div.

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2012). The Settlement Agreement does not contain such a provision, however. Moreover,
non-competition restrictions in employment agreements are generally disfavored under New
York law. See A.N. Deringer, Inc. v. Troia, 178 A.D.2d 1023 (N.Y. App. Div. 1991) (citing
cases).
Experian does not dispute that the foregoing covenants have expired, and it offers no
response to Defendants’ assertion that New York courts generally do not enforce such
covenants past their expiration date.1 Thus, the Court agrees with Defendants that, under
New York law, both the intent of the parties expressed in the Settlement Agreement and the
concerns inherent in enforcing a non-competition restriction in an employment agreement
favor eliminating Paragraph 3 of the injunction. Experian is not entitled to greater relief than
it bargained for in its agreement.
Even if New York law permits an injunction to enforce restrictive covenants past their
expiration date in some circumstances, the factors relevant to the grant of a preliminary
injunction do not favor a continuing injunction to enforce those restrictions in this case.
Although Experian demonstrated a substantial likelihood of success on its claim that Lehman
breached these covenants, the existence of ongoing contractual obligations were important
to the Court’s analysis when it considered the other factors relevant to the issuance of an

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For instance, it does not argue that it is entitled to an extension of the restrictive covenants to
account for the period of time that Lehman was in breach. See N.Y. Real Estate Inst., Inc. v. Edelman, 42
A.D.3d 321, 322 (N.Y. App. Div. 2007) (“Where . . . a party unilaterally breaches an agreement not to
compete and the time period during which competition was precluded has since expired, such time period
may be extended for the length of time that the offending party was in violation of the agreement.”) (citing
J.H. Goldberg Co. v. Stern, 53 A.D.2d 246, 252 (N.Y. App. Div. 1975)).

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injunction, including the possibility of irreparable harm to Experian in the absence of an
injunction, the possible harm to Lehman as a result of an injunction, and the protection of the
public interest. Now that those obligations have expired, the foregoing factors no longer
weigh in favor of an injunction.
Experian contends that Defendants’ motion is improper because it presents issues that
the Court already ruled upon in its opinion and order. With respect to enforcement of the
restrictive covenants past their expiration date, however, that is not the case. When Experian
sought a preliminary injunction, neither party raised any issue as to whether it would be
appropriate to enforce the restrictive covenants after they expired. To the extent that
Experian refers to Defendants’ new arguments and evidence purporting to establish that
Experian’s asserted confidential information and trade secrets are not confidential (see Defs.
Br. in Supp. of Mot. 2-5, ECF No. 32), that information is not necessary for the disposition
of Defendants’ motion. The Court agrees that Paragraph 3 of the injunction is no longer
warranted, for reasons that are unrelated to Defendants’ new arguments and evidence.
Experian also contends that Defendants’ motion is untimely; however, the Court has
authority to modify any of its orders at any time before entry of judgment. Fed. R. Civ. P.
54(b). In addition, the Court has “inherent” power to modify its injunction. Yolton v. El
Paso Tenn. Pipeline Co., No. 02-75164, 2007 WL 3037709, at *2 (E.D. Mich. Oct. 17, 2007)
(citing Sierra Club v. U.S. Army Corp of Eng’rs, 732 F.2d 253, 256 (2d Cir. 1984)). Indeed,
Experian acknowledges that an injunction can be modified based on a change of facts. In

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this case, the terms in the Settlement Agreement on which Paragraph 3 of the injunction is
based are no longer in effect. Consequently, it is appropriate for the Court to consider
whether or not that portion of the injunction is still warranted. See id. (“‘When modifying
a preliminary injunction, a court is charged with the exercise of the same discretion it
exercised in granting or denying injunctive relief in the first place.’”) (quoting Sierra Club,
732 F.2d at 257). Thus, the Court rejects Experian’s contention that Defendants’ request is
untimely or is otherwise improper.
Experian argues that the non-competition and non-solicitation restrictions in
Paragraph 3 of the preliminary injunction are not based solely on the Settlement Agreement,
they are also based on its claim that Defendants have misappropriated its trade secrets.
However, Paragraphs 1 and 2 of the injunction directly address, and adequately protect,
Experian’s asserted interests in its trade secrets. Consequently, Defendants’ motion will be
granted insofar as it seeks to modify the injunction to eliminate Paragraph 3.
II. Bond Requirement
Next, Defendants contend that Experian should be required to post a bond. See Fed.
R. Civ. P. 65(c) (requiring a preliminary injunction to be accompanied by “security” from the
movant “in an amount proper to pay the costs and damages sustained by any party found to
have been wrongfully enjoined or restrained”). “While this language appears to be
mandatory, ‘the rule in [the Sixth Circuit] has long been that the district court possesses
discretion over whether to require the posting of security.’” Appalachian Reg’l Healthcare,

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Inc. v. Coventry Health & Life Ins. Co., 714 F.3d 424, 431 (6th Cir. 2013) (quoting Moltan
Co. v. Eagle–Picher Indus., Inc., 55 F.3d 1171, 1176 (6th Cir. 1995)). “A court errs when
it ‘fail[s] to . . . expressly consider[] the question of requiring a bond’ when the issue has
been raised.” Id. (quoting Roth v. Bank of the Commonwealth, 583 F.2d 527, 539 (6th Cir.
1978)) (emphasis added). “Otherwise, it has ‘broad discretion in setting the bond amount.’”
Id. (quoting Static Control Components, Inc. v. Lexmark Int’l, Inc., 697 F.3d 387, 400 (6th
Cir. 2012)).
The Court did not expressly consider the question of requiring a bond because the
parties did not raise the issue. The Court now finds that a bond is not necessary. As noted
by the Sixth Circuit, “a party seeking a security bond regularly estimates the damages it will
suffer if it complies with a preliminary injunction.” Appalachian Reg’l Healthcare, Inc., 714
F.3d at 432. Defendants have not done so here. Indeed, at the preliminary injunction
hearing, Defendants’ counsel suggested that the injunction would have a minimal impact on
Lehman, if any, because his day-to-day activities and his business activities would not
change. Defendants now contend that the injunction, as entered, effectively prevents Lehman
from making a living analyzing marketing data; however, the portion of the injunction which
might restrict Lehman in this manner (Paragraph 3) will be eliminated. Consequently, the
Court cannot discern any basis for setting a bond in this matter. Therefore, the Court will
deny Defendants’ motion insofar as it requests a bond.
Accordingly,

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IT IS HEREBY ORDERED that the motion to modify the injunction (ECF No. 31)
is GRANTED in part and DENIED in part.
IT IS ORDERED that the June 18, 2015 preliminary injunction order is MODIFIED
to eliminate Paragraph 3. An amended injunction order will be issued.
IT IS FURTHER ORDERED that Defendants’ request for a bond in support of the
injunction is DENIED.

Dated: August 17, 2015

/s/ Robert Holmes Bell
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE

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