Sauer Danfoss US Company v. Luo et al

Filing 8

ORDER granting 4 Ex Parte Motion for TRO as set out. The Plaintiffs shall post a bond in the amount of $5000.00. Signed by Honorable Henry M Herlong, Jr on 12/5/12.(sfla, ) (Main Document 8 replaced on 12/5/2012 with modified document provided by chambers) (sfla, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
ANDERSON DIVISION

SAUER-DANFOSS (US) COMPANY ,

Plaintiff,
vs.
NIANZHU LUO, RUIYONG RUAN,
GUORUI HYDRAULIC a/k/a GRH,
JIANGSU GUORUI HYDRAULIC
MACHINERY CO., LTD., and
SHANGHAI GUORUI HYDRAULIC
TECHNOLOGY CO., LTD.,

Defendants.

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C.A. No. 8:12-3435-HMH

OPINION & ORDER

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This matter comes before the court upon the ex parte motion of Plaintiff Sauer-Danfoss
(US) Company (“Sauer-Danfoss”) for a Temporary Restraining Order to be issued against the
Defendants Nianzhu Luo (“Luo”), Ruiyong Ruan (“Ruan”), Guorui Hydraulic a/k/a GRH
(“Guorui”), Jiangsu Guorui Hydraulic Machinery Co., Ltd. (“JGHM”), and Shanghai
Guorui Hydraulic Technology Co., Ltd. (“SGHT”).
A temporary restraining order is a drastic remedy that serves an exceedingly narrow
purpose. It exists only to preserve the status quo until a preliminary injunction hearing can be
held. Hoechst Diafoil Co. v. Nan Ya Plastics Corp., 174 F.3d 411, 422 (4th Cir. 1999). It may
also be issued with or without notice to the party whose conduct is to be enjoined. Rule 65 of the
Federal Rules of Civil Procedure governs the issuance of a temporary restraining order.
Specifically, Rule 65(b)(1) provides as follows:

The court may issue a temporary restraining order without written or oral notice to
the adverse party or its attorney only if:
(A) specific facts in an affidavit or a verified complaint clearly show that
immediate and irreparable injury, loss, or damage will result to the movant before
the adverse party can be heard in opposition; and
(B) the movant’s attorney certifies in writing any efforts made to give notice and
the reasons why it should not be required .
Fed.R.Civ.P.65(b)(l). The standard for granting a request for a temporary restraining order and
entering a preliminary injunction are identical. See, e.g., Commonwealth of Virginia v. Kelly, 29
F.3d 145, 147 (4th Cir. 1994) (applying preliminary injunction standard to a request for
temporary restraining order). In order for such injunctive relief to be granted, the movant must
establish that “he is likely to succeed on the merits, that he is likely to suffer irreparable harm in
the absence of preliminary relief, that the balance of the equities tips in his favor, and that an
injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20
(2008). All four requirements must be satisfied. Real Truth About Obama, Inc., v. Federal
Election Comm’n, 575 F.3d 342, 346 (4th Cir. 2009), vacated on other grounds, 130 S. Ct. 2371
(2010), reinstated in relevant part on remand, 607 F.3d 355 (4th Cir. 2010). “When analyzing the
irreparable harm element, there are two inquiries: 1) whether the plaintiff is indeed suffering
actual and imminent harm; and 2) whether that harm is truly irreparable, or whether it can be
remedied at a later time with money damages.” First Quality Tissue SE, LLC v. Metso Paper
USA, Inc., C/A No. 8:11-2457-TMC, 2011 WL 6122639, at *2 (D.S.C. Dec. 9, 2011)
(unpublished) (citing Direx Israel, Ltd. v. Breakthrough Med. Corp., 952 F.2d 802, 811 (4th
Cir.1991)).

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Sauer-Danfoss designs, manufactures, and markets products for the off-road/mobile
equipment industry, including hydraulic valves, hydrostatic transmissions, open circuit piston
pumps, open circuit gear pumps and motors, and low speed high torque motors. (Pl. Mem. Supp.
TRO Ex. A (Daniel Giedd Aff. ¶ 3) and Ex. B (James Douglas Koch, Sr. Aff. ¶ 3).) In the
complaint, Sauer-Danfoss alleges that Luo, a former employee of Sauer-Danfoss and independent
contractor of Comatrol, a division of Sauer-Danfoss, misappropriated Sauer-Danfoss’
confidential information, trade secrets, and patents and disclosed them to the other Defendants
who utilized the information, thereby causing irreparable harm to Sauer-Danfoss.
The court held a hearing earlier today. In support of its motion, Sauer-Danfoss has
submitted the affidavits of Daniel Giedd, Sauer-Danfoss’ Human Resources Director; James
Douglas Koch, Sr., Sauer-Danfoss’ Product Engineering Team Leader for the Proportional Valve
Group; Benjamin J. Schmitt, Sauer-Danfoss’ Global Manager of Information Security and
Compliance; and Ryan Kelch, a Global Information Security Specialist for Sauer-Danfoss.
The court has reviewed the Complaint, Sauer-Danfoss’ motion for a temporary restraining
order, and the memorandum filed in support thereof. The court is mindful of the procedural
status of this case, and more importantly, that it has not yet had an opportunity to hear from the
Defendants. However, upon the strength of the representations made by Sauer-Danfoss, the court
is satisfied that Sauer-Danfoss is faced with the substantial risk of suffering irreparable harm by
the Defendants’ alleged misappropriation and use of its trade secrets if their conduct is not
immediately enjoined. Further, Sauer-Danfoss has established a likelihood of success on the
merits of the claims seeking injunctive relief.

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In this case, the granting of a TRO is mandated because it appears from the evidence
presented by Sauer-Danfoss that Luo provided trade secret information to the other Defendants in
violation of his Agreement with Sauer-Danfoss, and that Guorui, JGHM and/or SGHT have
utilized these trade secrets in developing and manufacturing “their own products for their own
benefit and to compete against Sauer-Danfoss, to the detriment of Sauer-Danfoss.” (Pl. Mem.
Supp. TRO 22.) Moreover, it appears that JGHM has applied for Chinese patents based on the
misappropriated trade secrets. Granting a temporary restraining order in this case also serves the
public interest of protecting the rightful owners of trade secrets.
Consistent with Rule 65, “[t]he court may issue 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.” Fed. R.
Civ. P. 65(c). Upon due consideration, the court has determined that the amount of five thousand
dollars ($5,000.00) shall be sufficient security, and that this amount shall be posted by SauerDanfoss forthwith.
As stated on the record during the hearing, Sauer-Danfoss attempted to notify Defendants
of the hearing, but was unsuccessful. The court is informed that Sauer-Danfoss effected service
of the summons and complaint on an adult present at Luo’s last known address and further left a
telephonic message on the telephone believed to be Luo’s regarding the time and place of the
hearing. However, no Defendants appeared at the hearing.
It is therefore
ORDERED that Luo is temporarily (1) enjoined from altering, erasing, deleting,
destroying, or modifying any computer or computerized device with any internal or external
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storage devices in his possession, custody, or control, or otherwise spoiling any evidence of his
misappropriation of Sauer-Danfoss’ Intellectual Property; (2) prohibited from using or disclosing
Sauer-Danfoss’ Intellectual Property, including all information contained in any documents Luo
sent to his personal email address or otherwise communicated to Ruan, Guorui, JGHM and
SGHT; and (3) prohibited from developing, marketing, selling or exercising any alleged
ownership rights to the First and Second Chinese Patents, or any other products developed from
Sauer-Danfoss’ Intellectual Property. It is further
ORDERED that Ruan, Guorui, JGHM and SGHT are temporarily (1) enjoined from
altering, erasing, deleting, destroying, or modifying any computer or computerized device with
any internal or external storage devices in their possession, custody, or control, or otherwise
spoiling any evidence of their possession of Sauer-Danfoss’ Intellectual Property; (2) prohibited
from using or disclosing Sauer-Danfoss’ Intellectual Property, including all information
contained in any documents Luo communicated to Ruan, Guorui, JGHM and SGHT; and (3)
prohibited from developing, marketing, selling or exercising any alleged ownership rights to the
First and Second Chinese Patents, or any other products developed from Sauer-Danfoss’
Intellectual Property. It is further
ORDERED that the restrictions imposed herein shall remain in full force and effect until
Plaintiff’s motion for a preliminary injunction can be heard. The court will hold a hearing on the
matter of the preliminary injunction on Tuesday, December 18, 2012, at 10:00 a.m. It is further
ORDERED that Sauer-Danfoss shall give security by executing a bond in the amount of
Five Thousand Dollars ($5,000.00) or by depositing cash in said amount with the Clerk of Court
as required by Rule 65(d) of the Federal Rules of Civil Procedure.
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IT IS SO ORDERED.
s/Henry M. Herlong, Jr.
Senior United States District Judge

Greenville, South Carolina
December 5, 2012
Entered at 4:30 p.m.

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