Total Safety U.S., Inc. et al v. Knox

Filing 35

MEMORANDUM AND ORDER denying 26 MOTION Motion to Dissolve the Agreed Preliminary Injunction. (Signed by Judge Charles Eskridge) Parties notified.(jengonzalez, 4)

United States District Court
Southern District of Texas

ENTERED
December 18, 2019
David J. Bradley, Clerk

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
TOTAL SAFETY et al,
Plaintiffs,
vs.
ALICIA KNOX,
Defendant.

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CIVIL ACTION NO.
4:19-CV-02718
JUDGE CHARLES ESKRIDGE

MEMORANDUM AND ORDER
DENYING MOTION TO DISSOLVE
PRELIMINARY INJUNCTION
Before the Court is a motion filed by Defendant Alicia Knox
to dissolve the agreed preliminary injunction. Dkt 26. Upon
consideration, the Court denies the motion.
1. Background
This case concerns alleged misappropriation of confidential
business information and trade secrets. Plaintiffs Total Safety US
Inc and Total Safety Onsite Services Inc (together, Total Safety)
assert that Knox misappropriated their confidential business
information and trade secrets. They also allege that Knox violated
the terms of her nonsolicitation agreement with her former
employer, Airgas On-Site Safety Services Inc. Total Safety Onsite
Services acquired Airgas in May 2019. Dkt 1 at 2.
On July 24, 2019, Total Safety commenced this lawsuit
against Knox, asserting violations of the Trade Secrets Act and
the Computer Fraud and Abuse Act, misappropriation of trade
secrets under Texas law, and breach of contract. Id at 10–16.
Total Safety also sought preliminary injunctive relief. Id at 16–17.
Rather than require hearing, Total Safety and Knox agreed
to a preliminary injunction to avoid unnecessary costs and fees.

Dkt 12-1 at 1. On July 30, 2019, the Court entered the agreed
preliminary injunction. Dkt 13. Broadly, this injunction requires
Knox to:
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Refrain from destroying, disclosing, or accessing
evidence that may be relevant to the lawsuit;

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Refrain from directly or indirectly soliciting any
customer of Total Safety or Airgas in violation of
the nonsolicitation agreement; and

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Produce certain electronic devices for inspection
and forensic analysis.

The parties agree that Knox has complied with the third
requirement.
On November 1st, Knox filed a motion to dissolve
agreed preliminary injunction. Dkt 26. On December 5th,
Court held a status conference and heard argument on
motion. At the conference, the Court ordered Knox to file
reply, which she did on December 12th. Dkt 33.

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2. Legal standard
The parties dispute the correct standard by which to modify
or dissolve a preliminary injunction. Total Safety asserts that
Knox must establish a “significant change in circumstances” to
justify revision. Dkt 29 at 5. To the contrary, Knox asserts that
the same standard applies to review of a motion to dissolve an
injunction as it does to the decision whether to grant one in the
first instance. Dkt 26 at 6. In her recent reply, Knox alternatively
asserts that the Court should reconsider the preliminary
injunction under FRCP 54(b). Dkt 33 at 6.
As to Rule 54(b), a district court may reconsider and revise
its prior decision for any reason deemed sufficient, even in the
absence of new evidence or an intervening change in or
clarification of the substantive law. Austin v Kroger Texas, LP, 864
F3d 326, 336 (5th Cir 2017). This reflects “the ‘inherent power
of the rendering district court to afford such relief from
interlocutory judgments as justice requires.’” Id at 337, quoting
Cobell v Jewell, 802 F3d 12, 25–26 (DC Cir 2015). But here, Knox
voluntarily agreed to the preliminary injunction in the first
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instance, which avoided establishing any factual predicate as to
underlying conduct and circumstances. That Knox may have
reconsidered the wisdom of her agreement does not convince the
Court that justice requires reconsideration of the very injunction
to which she agreed.
As to the larger dispute, Total Safety more closely states the
correct legal standard. Rule 60(b)(5) of the Federal Rules of Civil
Procedure permits a court to “relieve a party or its legal
representative from a final judgment, order, or proceeding”
where “the judgment has been satisfied, released, or discharged;
it is based on an earlier judgment that has been reversed or
vacated; or applying it prospectively is no longer equitable.” The
Supreme Court has determined that Rule 60(b)(5) applies to
motions to dissolve or modify preliminary injunctions. See Horne
v Flores, 557 US 433, 447 (2009); see also PNC Bank, NA v 2013
Travis Oak Creek GP LLC, 2018 WL 6433312, at *2 (WD Tex).
By this Rule, a party can request “a court to modify or vacate
a judgment or order if ‘a significant change either in factual
conditions or in law’ renders continued enforcement ‘detrimental
to the public interest.’” Horne, 557 US at 447, quoting Rufo v
Inmates of Suffolk County Jail, 502 US 367, 384 (1992). The party
seeking relief bears the burden of establishing that the change in
circumstances warrants relief. Horne, 557 US at 447.
The parties lightly debate whether any change is sufficient to
the analysis, or whether a showing of significant change is
necessary. It is plainly the latter. The Supreme Court in Horne
specifically paired its characterization of “the correct legal
standard” with the need for “significant change.” 557 US at 451.
And the Fifth Circuit recently found no abuse of discretion in
refusing to modify an injunction where there was “no showing of
a significant change in circumstances.” Bear Ranch, LLC v
Heartbrand Beef, Inc, 885 F3d 794, 803 (5th Cir 2018). Such
heightened standard is also in line with other persuasive,
considered, and neutral authority. See Wright, Miller & Kane,
Federal Practice and Procedure § 2863 (3d ed): “Because the standard
is an exacting one, many applications for relief on this ground are
denied.”

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3. Analysis
Neither party asserts any change in legal circumstances. And
so the Court solely addresses whether Knox has met her burden
to show a significant change in factual circumstances that justifies
dissolution of the preliminary injunction.
Knox argues that the Court should vacate the preliminary
injunction because all obligations imposed on Knox have either
been mooted by her compliance or are obligations independently
imposed on her by law or contract. This is both insufficient and
incorrect.
Total Safety does not dispute that Knox provided the
electronic devices for forensic examination and analysis in
compliance with part of the preliminary injunction. But the
preliminary injunction enjoins two other aspects of potential
future conduct—thus preventing her from both destroying or
disclosing evidence and soliciting customers in alleged violation
of the nonsolicitation agreement. Intervening events have not
mooted those concerns. To the contrary, those aspects of the
injunction are still in service. See PNC Bank, 2018 WL 6433312,
at *3 (noting that “the key question is whether the objective of
the preliminary injunction is still being served”).
Beyond this, Knox contends that the forensic evidence
obtained from the examination of her devices forecloses any
argument that she misappropriated Total Safety’s trade secrets.
Dkt 26 at 8. Total Safety disagrees, asserting that the forensics
confirm Knox accessed sensitive business information
concerning Total Safety’s customers while on her new employer’s
devices. Dkt 29 at 8. Which of these contentions is true goes to
the heart of the parties’ dispute, and the Court does not resolve
it here. In the meantime, the preliminary injunction—again, being
the agreed preliminary injunction—will continue to preserve the
status quo until that final determination on the merits.
Knox asserts that the preliminary injunction is redundant of
obligations independently imposed on her by law or by contract.
Dkt 26 at 7–8. This is not a change in circumstance and was fully
part of the agreed preliminary injunction in the first instance. And
violations of those obligations as preserved in an injunction bring
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quite different penalties than those for simple violation or breach.
See Hutto v Finney, 437 US 678, 690–91 (1978) (citations omitted):
“A criminal contempt prosecution for ‘resistance to [the court’s]
lawful . . . order’ may result in a jail term or a fine. Civil contempt
proceedings may yield a conditional jail term or fine. Civil
contempt may also be punished by a remedial fine, which
compensates the party who won the injunction for the effects of
his opponent’s noncompliance.”
Knox also asserts that the language of the preliminary
injunction mirrors her nonsolicitation agreement, which she
asserts is itself ambiguous. Dkt 26 at 8. This, too, is not a change
in circumstance and was just as apparent when agreeing to the
preliminary injunction at the outset. The Court declines to
entirely dissolve the preliminary injunction as requested by
Knox’s motion. But such denial is without prejudice to Knox’s
ability to bring a later motion to modify or clarify the preliminary
injunction, if believed necessary.
The Court DENIES the motion to dissolve the agreed
preliminary injunction. The preliminary injunction remains in
effect.
SO ORDERED.
Signed on December 18, 2019, at Houston, Texas.

Hon. Charles Eskridge
United States District Judge

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