NVR, INC. v. DAVERN
Filing
71
OPINION. Signed by Judge Noel L. Hillman on 12/23/2015. (TH, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
NVR, INC.
Plaintiff,
v.
Civ. No. 15-5059 (NLH/KMW)
JONATHAN DAVERN,
OPINION
Defendant.
APPEARANCES:
JAMES S. YU
BARRY J. MILLER (Pro Hac Vice)
SEYFARTH SHAW, LLP
620 EIGHTH AVENUE
NEW YORK, NY 10018-1405
On behalf of Plaintiff NVR, Inc.
EDWARD T. KANG
DANIEL D. HAGGERTY
KANG HAGGERTY & FETBROYT LLC
123 S. BROAD STREET, SUITE 1670
PHILADELPHIA, PA 19109
On behalf of Defendant Jonathan Davern
HILLMAN, District Judge
This matter comes before the Court by way of Plaintiff NVR,
Inc.’s (“NVR”) Motion for Temporary Restraining Order [Doc. No.
4].1
The Court held oral argument on December 15, 2015.
For the
1
On July 2, 2015, the parties entered into a temporary
restraining order by consent. The order temporarily enjoined
and restrained Defendant Jonathan Davern “and all persons and/or
entities acting on his behalf, for the benefit or in active
concert or participation with him, from directly or indirectly
reasons expressed at the hearing as supplemented in this
Opinion, Plaintiff’s motion will be granted.
I.
BACKGROUND
NVR, one of the nation’s largest homebuilding companies,
seeks injunctive relief to prevent one of its former employees,
Jonathan Davern, from misappropriating alleged confidential and
trade secret information.
Davern worked for NVR for over ten
years, reaching the position of Sales Manager of the New Jersey
South Division.
Importantly, Davern was not subject to a non-
compete agreement.
During his employment with NVR, Davern signed a Human
Resources Policies and Procedures Acknowledgement by which he
agreed to comply with NVR’s Code of Ethics.
The Code of Ethics
contains provisions governing the access and protection of NVR’s
confidential and trade secret information.
To further protect
its sensitive information, NVR employs a web-filtering program
designed to trap emails which contain potentially confidential
information.
accessing, disclosing, reproducing, or using any confidential,
proprietary and/or trade secret information of any kind, nature
or description belonging to NVR” and “from directly or
indirectly soliciting NVR employees by using confidential,
proprietary and/or trade secret information of any kind, nature
of description belonging to NVR.” See July 2, 2015 Consent
Order at 1-2 [Doc. No. 5].
2
On June 15, 2015, Davern tendered his resignation to NVR as
a result of his acceptance of position with a direct competitor,
D.R. Horton (“Horton”).
NVR discovered that before resigning,
Davern forwarded a number of work emails to his personal email
account which contained, according to NVR, confidential and
trade secret information.
NVR additionally alleges Davern
copied his entire NVR email archive (66,000+ files) as well as
other confidential and trade secret documents (30,000+ files) to
flash drives, and then wiped these files from his NVR laptop and
NVR’s servers.
NVR further alleges Davern attempted to facilitate the
recruitment of key NVR employees and sent Horton his business
plan which included a scheme to harm NVR by taking its business.2
NVR asserts Davern sent Horton a list of 40 NVR land deals and
obtained a substantial amount of confidential information
including documents related to pricing strategy and the design
of land purchase agreements.
On June 19, 2015, NVR sent Davern a cease and desist letter
demanding that Davern immediately cease and desist from
accessing, using, or disclosing any of NVR’s confidential and
trade secret information.
Davern contends that after receiving
2
NVR also discovered a text message from Davern to another
individual which states that he intended to “put NVR out of
business in PA/NJ/DE.”
3
this notice he immediately turned over all of the NVR
information he previously procured.
Davern argues he no longer
has access to any NVR information and never used the information
he obtained, thus rendering a preliminary injunction
unnecessary.
For the reasons expressed on the record at oral
argument, the Court finds a narrow injunction is required to
protect the status quo until this case is resolved.
The Court
briefly recounts its reasoning herein.
II.
DISCUSSION
In deciding whether to issue a preliminary injunction, a
district court must weigh four factors: (1) whether the movant
has shown a reasonable probability of success on the merits; (2)
whether the movant will be irreparably injured by denial of the
relief; (3) whether granting preliminary relief will result in
even greater harm to the nonmoving party; and (4) whether
granting the preliminary relief will be in the public interest.
Gerardi v. Pelullo, 16 F.3d 1363, 1373 (3d Cir. 1994).
While NVR asserts a sundry of claims against Davern, the
Court will analyze NVR’s most all-encompassing claim,
misappropriation under the New Jersey Trade Secrets Act,
N.J.S.A. 56:15-1, et seq.
Under this Act, misappropriation is
defined as:
(1) Acquisition of a trade secret of another by a
person who knows or has reason to know that the trade
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secret was acquired by improper means; or (2)
Disclosure or use of a trade secret of another without
express or implied consent of the trade secret owner
by a person who: (a) used improper means to acquire
knowledge of the trade secret; or (b) at the time of
disclosure or use, knew or had reason to know that the
knowledge of the trade secret was derived or acquired
through improper means; or (c) before a material
change of position, knew or had reason to know that it
was a trade secret and that knowledge of it had been
acquired through improper means.
N.J.S.A. § 56:15-2.
The Act further provides that “[a] person
who misappropriates a trade secret shall not use as a defense to
the misappropriation that proper means to acquire the trade
secret existed at the time of the misappropriation.”
N.J.S.A. §
56:15-5.
The Court finds NVR is likely to succeed on its
misappropriation claim because NVR discovered that Davern sent
Horton a list of 40 land deals and obtained a substantial amount
of confidential information including documents related to
pricing strategy and the design of land purchase agreements.
Based on these actions, the Court finds that NVR is likely to
prove that Davern acquired NVR’s trade secrets and knew, or had
reason to know, that the trade secrets were acquired by improper
means.
See N.J.S.A. 56:15-2.
NVR is also likely to prove
Davern intended to use this information for purposes of unfair
competition.
5
To be clear, the Court draws a distinction between
information Davern learned from his many years of employment
with NVR in the homebuilding industry and the information he
took from NVR in anticipation of his resignation.
The Court is
not enjoining Davern from using the generalized industry
knowledge and even company specific information he obtained
through his years of employment.
This Court will not enjoin
Davern’s use of information he retained by memory because NVR
cannot show a likelihood of success on the merits that such
information was obtained through improper means, as required by
the statute.
However, Davern did more than walk out the door with
information he learned through the course of his employment; he
left with thousands of internal NVR documents, downloaded and
copied in violation of NVR’s corporate policy.
The evidence
supports the conclusion that Davern obtained this information
with the intent of benefiting himself financially and harming
NVR commercial interests in favor of his new employer.
Thus, the Court will issue a narrow injunction which
enjoins Davern, and anyone else acting in concert with him, from
directly or indirectly accessing, disclosing, reproducing or
otherwise using the documents and electronic records Davern
obtained and retained improperly or otherwise using any
information derived from those documents and electronic records.
6
The injunction will include related relief to insure the
injunction is complied with.
However, the Court will not bar
Davern from using his general industry knowledge and even
company specific information so long as that information was
disclosed to Davern during the ordinary course of his many years
of employment.
NVR could have precluded Davern from using such
information through a contractually based non-compete agreement
but chose not to do so.
The remaining preliminary injunction factors also resolve
in favor of injunctive relief.
NVR contends that Davern may
have additional confidential or trade secret information that he
has not turned over.
NVR asserts that if it is not protected by
an injunction and such documents are released it is at risk of
suffering irreversible competitive harm.
While Davern argues
that he cannot disclose information he no longer has access to
the Court recognizes NVR does not want to “wait and see” if it
will be further harmed in light of Davern’s alleged “plot” to
harm its business.
A party may not defeat an otherwise proper
application for an injunction by merely abandoning conduct that
if continued or completed would have constituted irreparable
harm.
The improper disclosure and use of the trade secrets
identified in this case would constitute such harm.
Davern additionally argues that he will be harmed if
injunctive relief is granted because it may affect his
7
employment with his current employer, Horton.
NVR contends that
Davern will not be harmed by being forbidden to use information
he has no right to use or disclose.
Horton has no interest in
Davern’s use of improperly obtained information and Davern can
claim no harm by being obligated to compete only by lawful
means.
Clearly, the balance of hardships favors the Plaintiff.
Finally, the Court finds there is a public interest in promoting
fair commercial practices and protecting confidential and trade
secret information.
For these reasons, the Court believes a
narrow injunction is necessary.
While NVR asks the Court to adopt the consent order
previously entered into by the parties, the Court finds the
language of that order too broad, considering that Davern was
not a party to a non-compete agreement.
Accordingly, the Court
finds it is appropriate to enter Plaintiff’s December 17, 2015
proposed order which, in pertinent part, enjoins Davern, and all
persons or entities acting in concert with him, from accessing
or using directly or indirectly NVR’s confidential or trade
secret information contained in the documents and electronic
records downloaded, stored, and removed by Davern by improper
means.
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III. CONCLUSION
For the foregoing reasons, NVR’s Motion for Temporary
Restraining Order [Doc. No. 4] will be granted.3
An Order
consistent with this Opinion will be entered.
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
Date:
December 23, 2015
At Camden, New Jersey
3
Having determined that Plaintiff’s claim under New Jersey
Trade Secrets Act provides a sufficient basis for the requested
interim relief, we need not address Plaintiff’s other asserted
grounds for injunctive relief.
9
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