ENV Tech v. Suchard

Filing 87

ORDER reconfirming 83 Preliminary Injunction as modified herein. Bond previously posted by EnvTech shall apply to this preliminary injunction and is increased to $50,000. Please see attached for further details. Signed by Judge Howard D. McKibben on 11/29/12. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ENVTECH, INC.,

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Plaintiff,
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vs.
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TALMOR SUCHARD, SENTRO
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TECHNOLOGIES, LTD, and SENTRO
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TECHNOLOGIES, LLC,
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Defendants.
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_________________________________ )

3:11-cv-00523-HDM-WGC
ORDER

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Plaintiff EnvTech (“EnvTech”) has filed an amended complaint
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asserting multiple claims against defendants Talmor Suchard
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(“Suchard”), Sentro Technologies LTD, and Sentro Technologies, LLC
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(“Sentro Nevada”).

Plaintiff has also filed a motion for

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preliminary injunction (#47), proposed interim injunctive relief
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(#73), and on October 31, 2012, a “Request for Urgent Entry of
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Injunctive Relief” (#78).

On October 31, 2012, the court entered a

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temporary restraining order enjoining and restraining Suchard from
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sending out or transmitting any letters or other forms of

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communication to oil refineries disclosing EnvTech’s proprietary

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chemical blends and cleaning processes, or other confidential,

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proprietary, and trade secret information belonging to EnvTech.

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The court thereafter conducted a telephonic hearing on the Request

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for immediate injunctive relief (#78) and issued its order granting

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interim preliminary injunctive relief pending a full hearing on the

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motion for preliminary injunction (#83).

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Factual Background

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EnvTech claims to be the “world’s primary provider” of

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chemical cleaning solutions to oil and gas refineries.

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80 percent of the market for cleaning and neutralization of “HF

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Alkylation” units – accounting for 40-60 percent of its business –

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and with a “significant presence in other types of unit cleaning,”

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EnvTech bases its success on its proprietary chemical formula and

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processes that it claims no other company has been able to

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duplicate.

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refinery process, and they are not in all refineries.

Controlling

HF Alkylation units are a small part of the overall

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Suchard is an Israeli citizen and former EnvTech employee.

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Prior to working for EnvTech from 2005 to 2011, Suchard spent seven

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years in the oil and gas refinery business.

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Suchard’s job responsibilities at EnvTech included visiting

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clients, pitching work, and overseeing the cleaning processes, and

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he had access to EnvTech’s proprietary chemical formula and

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cleaning process.

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time was spent in chemical cleaning of HF Alkylation units.

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Suchard admits he cleaned other types of units, he claims he did so

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only a few times and was not in charge of those projects.

Suchard asserts that the vast majority of his

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While

EnvTech,

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however, produced evidence demonstrating that Suchard was also

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involved in drafting proposals for decontamination of heat

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exchangers, vapor phase cleaning unrelated to HF Alkylation, and

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cleaning of vacuum towers, crude oil units, crude oil exchangers,

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desalters, FCC Units, and heavy oil units. (Pl. Reply to Mot.

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Prelim. Inj. Exs. 4, 7-8; Suchard Decl. in Support of Removal ¶ 3).

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As part of his employment, Suchard signed an at-will

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employment agreement (“EA”) and a “Trade Secrets and

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Non-Competition Agreement” (“TSNCA”).

The agreements required

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Suchard to maintain the confidentiality of EnvTech’s trade secrets

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and proprietary information, to not compete against it, and to not

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solicit EnvTech clients.

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Suchard was terminated from EnvTech in May 2011.

While still

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employed by EnvTech, and after his termination up to the present

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time, Suchard allegedly used and is using EnvTech’s confidential

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and proprietary information to compete against it, including

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soliciting EnvTech’s clients and creating two competing businesses.

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Suchard does not deny that he has created oil and refinery cleaning

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businesses, but denies that they compete with EnvTech, denies that

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he has done any work for EnvTech clients, and denies using any of

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EnvTech’s confidential and trade secret information.

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Preliminary Injunction Standard

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“An injunction is a matter of equitable discretion and is an

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extraordinary remedy that may only be awarded upon a clear showing

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that the plaintiff is entitled to such relief.”

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v. Carlton, 626 F.3d 462, 469 (9th Cir. 2010) (internal quotation

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marks omitted).

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Earth Island Inst.

To obtain a preliminary injunction, EnvTech must show: (1) it
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will probably prevail on the merits; (2) it will likely suffer

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irreparable injury if relief is denied; (3) the balance of equities

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tips in its favor; and (4) an injunction is in the public interest.

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Winter v. Natural Res. Defense Council, Inc., 555 U.S. 7, 129 S.

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Ct. 365, 374 (2008).

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Alternatively, an injunction may issue under the “sliding

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scale” approach if there are serious questions going to the merits

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and the balance of hardships tips sharply in EnvTech’s favor, so

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long as EnvTech still shows a likelihood of irreparable injury and

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that an injunction is in the public interest.

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Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011).

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“Serious questions are those which cannot be resolved one way or

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the other at the hearing on the injunction.”

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Angeles County, 339 F.3d 920, 926-27 (9th Cir. 2003) (internal

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quotation marks omitted) (citing Republic of the Philippines v.

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Marcos, 862 F.2d 1355, 1362 (9th Cir. 1988)).

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promise a certainty of success, nor even present a probability of

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success, but must involve a ‘fair chance of success on the

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merits.’”

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I. Likelihood of Success/Serious Questions

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Alliance for the

Bernhardt v. Los

They “need not

Marcos, 862 F.2d at 1362.

While employed by EnvTech, Suchard signed agreements to not

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disclose EnvTech’s confidential, proprietary, and trade secret

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information, (TSNCA §§ 1.3, 1.4, 1.6, 1.7; EA ¶ 18), and to not

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“engage or participate in any competitive activity relating to the

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subject matter of his ... hiring by” EnvTech, (TSNCA § 1.8).

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review of the record indicates that these agreements are likely

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enforceable.

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that the EA and TSNCA were signed in bad faith to avoid application

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At this juncture, Suchard has failed to establish

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of California law, that Nevada lacks a substantial relationship to

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the agreements, or that the agreements are contrary to Nevada

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public policy.

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the court concludes the noncompete and trade secret provisions

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contained in the TSNCA are likely enforceable, and the noncompete,

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trade secret, and nonsolicitation agreements in the EA are likely

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enforceable if modified as follows.

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barring Suchard from providing any service to any EnvTech client is

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too broad to be enforceable; the scope must be limited to acts that

Applying Nevada law, as selected by the agreements,

The EA noncompete provision

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compete with EnvTech in a manner related to the work Suchard

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performed for EnvTech.

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modified in a similar way, to prevent Suchard from soliciting

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EnvTech business associates to do business related to work Suchard

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performed for EnvTech.

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secret provision must be limited to a definable term.

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The nonsolicitation provision must be

Finally, the duration of the EA trade

The record also indicates that Suchard is likely violating the

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enforceable agreements.

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and after his employment with EnvTech, Suchard solicited EnvTech

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clients and associates with respect to services that compete with

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EnvTech and relate to work Suchard performed for EnvTech.

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does not deny that he has established entities that engage in the

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oil and gas refinery cleaning business, though he denies that they

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directly compete with EnvTech because they do not engage in

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cleaning of HF Alkylation units and because his technologies are

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different from EnvTech’s.

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and decontamination of HF Alkylation units – and there is evidence

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in the record that he has at least attempted to do so – is not

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particularly relevant.

The evidence establishes that, both during

Suchard

Whether Suchard has engaged in cleaning

Competition with EnvTech can encompass more
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than just cleaning HF Alkylation units, and Suchard has clearly

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engaged or attempted to engage in other types of cleaning,

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including heavy oil and vapor phase, which he was involved in while

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employed by EnvTech and which competes with EnvTech.

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competition with EnvTech is not limited to competition using the

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same technologies and processes.

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technologies differ from EnvTech’s, he is competing with EnvTech if

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he attempts to clean and/or decontaminate the same units in oil and

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gas refineries that EnvTech cleans and decontaminates.

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Similarly,

Even assuming Suchard’s

Recent filings by EnvTech present evidence demonstrating

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threats by Suchard to immediately disclose confidential,

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proprietary and trade secret information belonging to EnvTech to at

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least 100 refineries.

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evidence that Suchard has engaged and continues to engage in

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competitive activities relating to the subject matter of his hiring

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– that is, Suchard is competing or attempting to compete with

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EnvTech in the cleaning of oil and gas refinery units.

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Significantly, while employed by EnvTech, he cleaned and/or drafted

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proposals for cleaning for several different types of units.

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Accordingly, pending further order of the court, the court

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concludes that EnvTech has shown at least serious questions going

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to, if not a likelihood of success on, the merits of its claim that

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Suchard is violating his employment agreements.

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II. Likelihood of Irreparable Harm

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In addition, the record contains persuasive

The disclosure of confidential trade secret information would

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cause immediate and irreparable harm to EnvTech.

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the evidence of Suchard’s conduct, the court also concludes that

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Suchard’s competitive activities threaten to undermine EnvTech’s
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Further, given

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goodwill and market share and would also therefore result in

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irreparable harm.

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III. Balance of Hardships

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EnvTech’s potential loss of confidential, proprietary, and

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trade secret information and of market share greatly outweighs

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Suchard’s inability to work in the field of oil and gas refinery

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cleaning insofar as it relates to work he performed for EnvTech,

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particularly in light of the most recent filing reflecting efforts

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by Suchard to disclose confidential, proprietary and trade secret

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information that belongs to EnvTech.

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the balance of hardships tips in EnvTech’s favor.

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IV. Public Interest

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Accordingly, the court finds

“The public interest inquiry primarily addresses impact on

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non-parties rather than parties.”

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Dist. Court, 303 F.3d 959, 974 (9th Cir. 2002).

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potentially impacted by an injunction would be clients and

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potential clients of EnvTech and Suchard.

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fewer options for chemical cleaning and may have to pay more for

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such services.

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chemical cleaning services exist and are able to thrive in part

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because of trade secret protection.

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secrets would greatly undermine EnvTech’s business, would

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discourage innovation in the field, and could eventually reduce the

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number of businesses engaged in the cleaning of oil and gas

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refineries.

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interest favors the protection of EnvTech’s confidential and trade

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secret information and therefore favors the issuance of a

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preliminary injunction.

Sammartano v. First Judicial
The nonparties

Those clients would have

On the other hand, the businesses that provide

Failure to protect trade

On balance, the court concludes that the public

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Conclusion
EnvTech has shown a likelihood of success on, or at the very

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least serious questions going to, the merits of its contractual

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claims, that it faces likely irreparable harm in the absence of an

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injunction, that the balance of hardships tips sharply in its

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favor, and that the public interest favors an injunction.

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Accordingly, a preliminary injunction is properly issued pending

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further order of the court.

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of Civil Procedure 65 the court hereby reconfirms its preliminary

Accordingly, pursuant to Federal Rule

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injunction of November 1, 2012 as herein modified, and the

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defendant and the defendant’s agents, assigns, and affiliates are

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restrained and enjoined from the following:

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Using in any way, or disclosing to anyone, any of

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EnvTech’s confidential and proprietary information and

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trade secrets, including but not limited to EnvTech’s

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strategic planning information, the chemical formulas it

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has developed to service its customers, identities or

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information on its customers including attributes and

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preferences, and the unique processes and procedures

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EnvTech has developed to service its customers;

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Sending out or transmitting any letters or other forms of

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communication to oil refineries stating that EnvTech’s

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chemicals contain unspecified carcinogens;

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Holding himself out to anyone as affiliated with EnvTech

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or use EnvTech’s name, trademarks, literature or

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documents for any purpose whatsoever;

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4.

Engaging in any type of chemical cleaning business
related to activities Suchard participated in while
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employed by EnvTech, for a period not to exceed two years

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or until further order of the court, including:

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a. HF Alkylation Unit Cleaning;

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b. Decontamination of Heat Exchangers;

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c. Cleaning of Vacuum Towers;

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d. Cleaning of Crude Oil Units;

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e. Cleaning of Crude Oil Exchangers;

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f. Cleaning of Desalters;

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g. Cleaning of FCC Units;

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h. Vapor Phase Cleaning;

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i. Cleaning of Heavy Oil Units; and

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Soliciting or encouraging any person or entity with whom

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EnvTech has done business while Suchard was employed with

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EnvTech to cease doing business with EnvTech or to do any

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business with defendants, that is the business described

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in paragraph 4 above.

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The bond previously posted by EnvTech shall apply to this
preliminary injunction and is increased to $50,000.

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IT IS SO ORDERED.

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DATED: This 29th day of November, 2012.

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____________________________
UNITED STATES DISTRICT JUDGE

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