Art And Cook, Inc. v. Haber

Filing 23

MEMORANDUM AND ORDER: For the reasons set forth in the Court's October 3, 2017 Memorandum of Decision and Order, Plaintiff's motion #12 #13 #14 for a preliminary injunction is DENIED. See attachment for details. Ordered by Judge LaShann DeArcy Hall on 10/3/2017. (Nuni, Joshua)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-----------------------------------------------------------------x
ART AND COOK, INC.,

Plaintiff,

MEMORANDUM OF
DECISION AND ORDER
17-cv-1634 (LDH) (CLP)

-againstABRAHAM HABER,
Defendant.
------------------------------------------------------------------x
LASHANN DEARCY HALL, United States District Judge:
Plaintiff Art And Cook, Inc. brings this action against Defendant Abraham Haber,
alleging violations of the Defend Trade Secrets Act (“DTSA”), misappropriation of trade secrets,
breach of fiduciary duty, breach of the duty of loyalty, unfair competition, tortious interference
with prospective advantage, and unjust enrichment. (See Compl., ECF No. 1.) On March 23,
2017, Plaintiff moved for an order to show cause for a temporary restraining order (“TRO”) and
preliminary injunction prohibiting Defendant from: (1) using or disclosing trade secrets or
confidential information taken from Plaintiff; (2) selling to any of the persons or companies
listed on any files or documents Defendant emailed himself or printed out from Plaintiff’s
computers or servers; (3) buying from any of the persons or companies listed on any files or
documents Defendant emailed himself or printed out from Plaintiff’s computers or servers; (4)
using or disclosing information Defendant developed or worked on using Plaintiff’s computers;
(5) using or disclosing information Defendant developed or worked on during the course of his
employment; and (6) using a mark (“Gripps”) for commercial purposes in relation to
homeware/kitchenware/cleaning products. (See Order to Show Cause, ECF No. 6.)

1

At a hearing on March 23, 2017, the Court issued the TRO.1 (See March 23, 2017 Min.
Entry.) On April 5, 2017, the Court held an evidentiary hearing on Plaintiff’s motion for a
preliminary injunction. For the reasons set forth below, the motion was denied. (See April 7,
2017 Order.)
BACKGROUND
Plaintiff is a cookware and kitchenware company that sells its products to a number of
large retailers. (Ben Aff. ¶ 3, ECF No. 13; Haber Aff. ¶¶ 5-6, ECF No. 17.) Plaintiff has
approximately twenty employees and annual revenues in excess of ten million dollars. (Ben Aff.
¶ 2.) Defendant began working for Plaintiff in 2012. (Id. ¶ 4; Haber Aff. ¶ 4.) Until his
termination on January 13, 2017, Defendant served as a salesperson and was responsible for
other aspects of the business, including sourcing, merchandizing, and design. (See Haber Aff. ¶¶
10-11; Apr. 5, 2017 Order to Show Cause Tr. (“Tr.”) 77:4-22.) Defendant was not made to sign
a non-disclosure or non-compete agreement—or any restrictive covenant—as a condition of his
employment. (See Compl. ¶¶ 12-13; Def.’s Mem. 1, ECF No. 16; Tr. 27:24-28:4, 84:8-16.)
Plaintiff allegedly asked Defendant to sign an employee handbook and non-disclosure agreement
approximately three years into his employment, but Defendant refused to sign them. (See Tr.
16:15-23; 84:17-21.)
Prior to Defendant’s termination, Plaintiff conducted a search of Defendant’s work
computer, which revealed that Defendant had emailed certain documents to his personal email
account. (See Ben Aff. ¶ 6; Tr. 51:6-15.) Plaintiff maintains that these documents are trade

1
As per the Court’s March 23, 2017 Order issuing the TRO, Plaintiff was required to post bond in the amount of
$6,500. Plaintiff’s $6,500 security check, however, which was paid to the Court on March 24, 2017, was ultimately
returned as unpaid due to insufficient funds. Accordingly, the TRO was never actually in place. See Fed. R. Civ. P.
65(c) (“The court may issue a preliminary injunction or a temporary restraining order only if the movant gives
security in an amount that the court considers proper to pay the costs and damages sustained by any party found to
have been wrongfully enjoined or restrained.”).

2

secrets. (See Ben Aff. ¶ 6.) Specifically, on January 4, 2017, a colleague emailed Defendant a
spreadsheet containing the names, phone numbers, and email addresses of the buyers for
seventy-two companies, some of which were Plaintiff’s customers. (See Ben Aff. ¶ 15, Ex. D.)
Defendant then forwarded the email with the spreadsheet attached to his personal email account.
(See Ben Aff. Ex. D.) In addition, on January 5, 2017, Defendant emailed himself a second
spreadsheet containing logos, branding/marketing strategies, target customer lists, and sales
projections for an anticipated line of cleaning supplies called “Gripps”. (See Ben Aff. ¶ 20, Ex
J.) Finally, at the April 5, 2017 evidentiary hearing, Plaintiff produced a PowerPoint
presentation that Defendant allegedly emailed to himself. (See Tr. 22:22-24:21.) This final
document contained a marketing business plan for an anticipated line of cleaning supplies related
to “Gripps”. (See id.)
Following Defendant’s termination, Plaintiff alleges that Defendant contacted the owner
of one of Plaintiff’s Chinese suppliers, Hope Sun, requesting that he supply Defendant with
products similar to those supplied to Plaintiff. (See Ben Aff. ¶ 21.) Hope Sun did not comply,
but instead notified Plaintiff’s president, Alon Ben-Ishai,2 of Defendant’s request. (See id.)
STANDARD FOR A PRELIMINARY INJUNCTION
A preliminary injunction is an “extraordinary and drastic remedy, one that should not be
granted unless the movant, by a clear showing, carries the burden of persuasion.” Sussman v.
Crawford, 488 F.3d 136, 139 (2d Cir. 2007) (quoting Mazurek v. Armstrong, 520 U.S. 968, 972,
117 S.Ct. 1865, 138 L.Ed.2d 162 (1997)). To obtain a preliminary injunction, a moving party
must show four elements: (1) likelihood of success on the merits; (2) likelihood that the moving
party will suffer irreparable harm if a preliminary injunction is not granted; (3) that the balance

2

Mr. Ben-Ishai filed his affidavit using the shorthanded name “Allen Ben,” but clarified during the preliminary
injunction hearing that his full name is actually Alon Ben-Ishai. (See Tr. 48:11-49:2.)

3

of hardships tips in the moving party’s favor; and (4) that the public interest is not disserved by
relief. JBR, Inc. v. Keurig Green Mountain, Inc., 618 F. App’x 31, 33 (2d Cir. 2015) (summary
order) (citing Salinger v. Colting, 607 F.3d 68, 79-80 (2d Cir. 2010)).
DISCUSSION
Although the complaint alleges various claims under both federal and state law,
Plaintiff’s instant motion is premised exclusively on its claim under the DTSA. (See Pl.’s Mem.
2-3, ECF No. 14.) The DTSA expanded the provisions of 18 U.S.C. § 1831 et seq., providing a
federal cause of action to the owner of a trade secret that is misappropriated and is related to a
product or service used in, or intended for use in, interstate or foreign commerce. See Defend
Trade Secrets Act of 2016, ch. 90, 130 Stat. 376 (2016) (codified as amended at 18 U.S.C. §
1831 et seq.). A trade secret is defined under the DTSA as, inter alia, “business information,”
including “plans,” “compilations,” and “designs,” if (A) “the owner thereof has taken reasonable
measures to keep such information secret;” and (B) “the information derives independent
economic value . . . from not being generally known . . . [or] readily ascertainable . . . [to]
another person who can obtain economic value from the disclosure or use of the information[.]”
18 U.S.C. § 1839(3)(A)-(B). Here, Plaintiff seeks DTSA protection over two categories of
material: its customer contact list and its designs and branding/marketing strategies.
I.

Likelihood of Success on the Merits
A.

Customer Lists

The Second Circuit, applying New York law, has long recognized that, under certain
circumstances, a customer contact list may be deemed a trade secret. Specifically, a customer
list “developed by a business through substantial effort and kept in confidence may be treated as

4

a trade secret . . . provided the information it contains is not otherwise readily ascertainable.”3 N.
Atl. Instruments, Inc. v. Haber, 188 F.3d 38, 44 (2d Cir. 1999) (quoting Defiance Button Mach.
Co. v. C & C Metal Prods. Corp., 759 F.2d 1053, 1063 (2d Cir. 1985), cert. denied, 474 U.S. 844
(1985)). That is, the list derives independent economic value from not being generally known.
Cf. 18 U.S.C. § 1839(3)(B) (requiring trade secrets under the DTSA to “derive[] independent
economic value . . . from not being generally known”). This is particularly true where the
customer list contains individual customer preferences or represents the list owner’s work to
create a market for a new service or good. See N. Atl. Instruments, Inc., 188 F.3d at 46
(“Numerous cases applying New York law have held that where . . . it would be difficult to
duplicate a customer list because it reflected individual customer preferences, trade secret
protection should apply.”); Leo Silfen, Inc. v. Cream, 29 N.Y.2d 387, 393-94, 278 N.E.2d 636,
640 (1972) (discussing Town & Country House & Home Serv., Inc. v. Newbery, 3 N.Y.2d 554,
147 N.E.2d 724 (1958), in which the defendant was enjoined from soliciting plaintiff’s
customers because they had been “screened by respondent at considerable effort and expense,
without which their receptivity and willingness to do business with [the plaintiff’s] kind of a
service organization could not be known”). Where, however, the contact list contains little more
than publicly available information, even if it takes considerable effort to compile, it is not
accorded protection under the DTSA. See Free Country Ltd v. Drennen, 235 F. Supp. 3d 559,
566 (S.D.N.Y. 2016) (finding plaintiff’s customer list of well-known apparel retailers not to be a
trade secret under DTSA or state law because the contact information for the companies was
readily ascertainable via phone calls, the internet, and directories of buyers in the apparel

3

This standard, derived from New York state common law, is instructive for deciding the instant motion because of
its similarity to the DTSA’s definition of a trade secret, which also requires that information be “[kept] . . . secret”
(via reasonable measures) and not be “readily ascertainable.” See 18 U.S.C. § 1839(3)(A)-(B).

5

industry); cf. Ivy Mar Co. v. C.R. Seasons Ltd., 907 F. Supp. 547, 557-58 (E.D.N.Y. 1995)
(finding customer list of retail merchants not to be a trade secret under state law where the
customers were “openly engaged in business and known generally in the trade”); see also
Kadant, Inc. v. Seeley Mach., Inc., 244 F. Supp. 2d 19, 36 (N.D.N.Y. 2003) (finding specific
names of individuals key to the purchasing chain of command not to be a trade secret under state
law where customer companies’ general contact information was readily available and “followup questions to the company in general would reveal the specific names, e-mail addresses, or
phone numbers of individuals involved in the purchasing process”).
The contact lists at issue in this case contain buyer information for approximately
seventy-two companies. Notably, many of the companies on Plaintiff’s lists cannot fairly be
called customers. Mr. Ben-Ishai admitted during testimony that a number of the companies on
the lists are companies to whom Plaintiff is merely “trying to sell.” (See Tr. 78:12-79:10.) Even
where the company is a customer, the lists do not include information, such as customer
preferences, that would be difficult to duplicate. To the contrary, the lists are little more than a
compilation of publically available information: emails and phone numbers for buyers at wellknown retailers whose identities are not protected. (See Ben Aff. Exs. D, J.) Indeed, Mr. BenIshai testified that the contacts on Plaintiff’s customer lists are generally known in the industry
and may be obtained by hiring representatives, attending trade shows, and meeting buyers from
various companies. (See Tr. 86:9-18, 87:9-23.) He also acknowledged that a portion of the
contacts on the lists could be found using simple internet searches. (See Tr. 86:4-10.). That the
compilation of these lists may be an arduous task, involving “tens if not hundreds of hours” of
research (Ben Aff. ¶ 15), is not alone sufficient to confer protection under the DTSA. Cf.
Webcraft Techs., Inc. v. McCaw, 674 F. Supp. 1039, 1044-45 (S.D.N.Y. 1987) (finding a

6

customer list of prospective customers “put together from easily available sources” may not have
constituted a trade secret despite the fact that “considerable work [went] into compilation of the
list, which include[d] some 10,000 names”).
The fact that the contacts on Plaintiff’s customer lists are generally known within
Plaintiff’s industry is fatal. Simply put, knowledge that is generally known within an industry
cannot be said to constitute the trade secret of one industry participant. Accordingly, Plaintiff’s
customer lists are not trade secrets under the DTSA. As such, Plaintiff has failed to demonstrate
a likelihood of success on the merits as to its customer lists.
B. Designs and Branding/Marketing Strategies
Unlike the customer lists, the designs and branding/marketing strategies developed in
connection with the “Gripps” brand are the sort of business information that the DTSA was
designed to protect: they derive independent economic value from not being generally known.
In order to prevail on this motion, however, Plaintiff must not only show that the information
derives independent economic value from not being generally known, it must show that it took
“reasonable measures” to keep the information secret. See 18 U.S.C. § 1839(3)(A).
Here, Mr. Ben-Ishai testified that Plaintiff utilized some protective measures to safeguard
its business information. For example, Mr. Ben-Ishai stated that he spoke to Defendant many
times about confidentiality, and Plaintiff allegedly asked Defendant to sign an employee
handbook and non-disclosure agreement two years before Defendant’s termination, though
Defendant refused to sign them. (See Tr. 16:15-23, 62:2-4.) The Court struggles to find that
these efforts constitute “reasonable measures” to protect valuable trade secrets. Tellingly,
Plaintiff did not ask Defendant to sign the employee handbook and non-disclosure agreement
until three years into his employment. (See Tr. 16:15-23.) Furthermore, when Defendant

7

refused to sign either document, Plaintiff nonetheless gave him access to what it contends is
valuable and confidential information.4 (See Tr. 16:24-17:25, 62:10-15, 82:19-25.) According
to Mr. Ben-Ishai, Plaintiff’s failure to take this imminently reasonable measure to protect its
information was not limited to Defendant. Rather, all of Plaintiff’s employees refused to sign the
handbooks and/or non-disclosure agreements. (See Tr. 81:14-20; 84:8-23.) Yet, their access to
Plaintiff’s information was not limited accordingly. (See Tr. 81:16-82:2; 84:8-23.)
The Court recognizes that Plaintiff took other steps to secure its information, such as
utilizing a password-protected server, password-protected folders, and a third-party internet
security company to protect its servers from outside hacking. (See Tr. 53:14-25, 57:11-58:16,
60:18-23.) These measures certainly provide an argument that Plaintiff took reasonable
measures to protect its purported trade secrets such that they should be afforded DTSA
protection. However, absent more—and in the face of the failings discussed above—the Court
cannot conclude that Plaintiff is likely to succeed on any such argument. Cf. Wrap-N-Pack, Inc.
v. Eisenberg, No. 04-cv-4887, 2007 WL 952069, at *9 (E.D.N.Y. Mar. 29, 2007) (finding that
the plaintiff implemented “significant safeguards” to protect trade secret information and
conferring trade secret protection under New York state law where the plaintiff utilized not only
password-protection, but also restrictive covenants, an employee manual with confidentiality
provisions, litigation to prevent disclosure of confidential information, and memoranda
concerning confidentiality); Syntel Sterling Best Shores Mauritius Ltd. v. Trizetto Grp., Inc., No.
15-cv-211, 2016 WL 5338550, at *6 (S.D.N.Y. Sept. 23, 2016) (finding the owner of a trade
secret to have taken reasonable measures to keep the information secret under the DTSA where

4

Plaintiff has not produced its employee handbook or the non-disclosure agreement that it maintains it asked
Defendant—along with all of its other employees, (see Tr. 80:7-14)—to sign two years before Defendant’s
termination.

8

the owner utilized “strictly controlled servers” and “confidentiality provisions and limitations”).
Accordingly, Plaintiff has failed to demonstrate a likelihood of success on the merits with regard
to its designs and branding/marketing strategies.5
CONCLUSION
For the foregoing reasons, Plaintiff’s motion for a preliminary injunction is DENIED.
Furthermore, given the lack of a likelihood of success on the merits as to the DTSA claim,
Plaintiff’s only federal cause of action may be susceptible to a motion to dismiss. Plaintiff’s
state claims, however, may persist—particularly those claims related to the duty of loyalty,
which requires neither the existence of a restrictive covenant nor the misappropriation of a trade
secret.
Dated: Brooklyn, New York
October 3, 2017

SO ORDERED:
/s/LDH
LASHANN DEARCY HALL
United States District Judge

5

Plaintiff has similarly failed to demonstrate irreparable harm. As discussed above, the only trade secrets Defendant
could arguably be said to have misappropriated are Plaintiff’s designs and branding/marketing strategies developed
in connection with the “Gripps” brand. Because Defendant is starting his own business, the reasonable inference is
that he would have wanted the “Gripps” designs and strategies for his own purposes. Indeed, Plaintiff has not
alleged that Defendant has or will disseminate the information to any of Plaintiff’s competitors, as doing so would
impair its value for Defendant in connection with his own venture. Irreparable harm thus could not be presumed in
this case. See Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118-19 (2d Cir. 2009) (“A rebuttable
presumption of irreparable harm might be warranted in cases where there is a danger that, unless enjoined, a
misappropriator of trade secrets will disseminate those secrets to a wider audience or otherwise irreparably impair
the value of those secrets. Where a misappropriator seeks only to use those secrets—without further dissemination
or irreparable impairment of value—in pursuit of profit, no such presumption is warranted because an award of
damages will often provide a complete remedy for such an injury.”) Put differently, “where there is no danger that a
misappropriator will disseminate proprietary information, ‘the only possible injury that [the] plaintiff may suffer is
loss of sales to a competing product . . . [which] should be fully compensable by money damages.” Id. (citation
omitted). Plaintiff has thus failed to demonstrate “an injury that is neither remote nor speculative, but actual and
imminent and that cannot be remedied by an award of monetary damages.” Shapiro v. Cadman Towers, Inc., 51
F.3d 328, 332 (2d Cir. 1995) (quotation marks and citation omitted).

9