Next It Corporation v. Roy et al

Filing 15

ORDER GRANTING TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE; SETTING FURTHER STATUS CONFERENCE FOR HEARING ON PLAINTIFF'S MOTION FOR EXPEDITED DISCOVERY AND ESTABLISHING SCHEDULE FOR HEARING ON PRELIMINARY INJUNCTION; Granting in part (TR O and OSC) and deferring in part (expedited discovery request) 2 Motion for Temporary Restraining Order; A telephonic hearing will be held on 12/7/05 at 2:00 pm to establish a time and place of the preliminary injunction hearing and to hear portions of Plaintiff's motion requesting expedited discovery. Plaintiff shall post a security in the amount of $2,000 no later than 12/5/05 at 5:00 pm. The TRO shall expire on 12/15/05 at 5:00 pm, unless otherwise ordered by the Court or stipulation of the parties. Signed by Judge Lonny R. Suko. (cc: all counsel that appeared at TRO hearing on 12/2/05) (CV, Case Administrator)

Next It Corporation v. Roy et al

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Case 2:05-cv-00380-LRS

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Dockets.Justia.com

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON NEXT IT CORPORATION, a Washington Corporation, Plaintiff, v. SHANTANU ROY and JENNIFER ROY, husband and wife; JOSH KNOWLES, a single person, and NDALL SOLUTIONS, LLC, an Idaho corporation, Defendants. ORDER GRANTING TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE; SETTING FURTHER STATUS CONFERENCE FOR HEARING ON PLAINTIFF'S MOTION FOR EXPEDITED DISCOVERY AND ESTABLISHING SCHEDULE FOR HEARING ON PRELIMINARY INJUNCTION NO. CV-05-380-LRS

Plaintiff is a Washington corporation in the business of software development and services. Plaintiffs have filed a Verified Complaint(Ct. Rec. 1), seeking a preliminary and permanent injunction and other relief, including redress for misappropriation of trade secrets and breach of contract associated with the defendants' alleged creation of a competing enterprise and taking of plaintiff's proprietary information. BEFORE THE COURT is Plaintiffs' Motion for Temporary Restraining Order, Expedited Discovery and Order to Show Cause filed December 1, 2005 (Ct. Rec. 3). On December 2, 2005, a telephonic hearing was held. Todd Reuter

participated on behalf of the Plaintiff, John Guin participated on behalf

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of Defendants Roy and Ndall, Mike McMahon participated on behalf of Defendant Knowles, and Rob Grier participated on behalf of third-party Delex. The Court has reviewed all pleadings contained in the Court file, including the verified complaint and exhibits thereto, the memorandum filed in support of Plaintiff's motion, the Affidavit of Jim Hereford and the motion. In addition, the Court has reviewed the declarations

produced at the time of the hearing, including the Declaration of Garnett "Sandy" Clark (Ct. Rec. 12) and the declaration of Defendant Josh Knowles. Having considered these pleadings and now having received oral

argument and being advised in the premises finds that: a. This Court has jurisdiction of the subject matter of this case

and of all the named parties. b. The Plaintiff has demonstrated a reasonably sufficient

likelihood of ultimate success in establishing that the Defendants have engaged, and are continuing to engage, in acts and practices that violate state and federal law, as well as the parties employment and non-compete agreements. c. There is good cause to believe that an immediate irreparable

injury, loss, or damage will result to the Plaintiff, to wit, the loss of trade secrets and proprietary information, as well as the potential loss of customers and future business contracts, unless Defendants are immediately restrained and enjoined by order of this Court. The trade

secrets and proprietary information includes a valuable computer source code, which is the product of extensive research and development efforts of the Plaintiff. The Defendants have had access to this information and ORDER ~ 2

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appear poised to take and use that information, thus causing immediate and irreparable injury, loss or damage to plaintiff. d. Weighing the equities and considering the Plaintiff's

likelihood of ultimate success, a temporary restraining order would be in the public interest. e. Though the Defendants were all contacted in advance of the hearing and participated in the hearing, counsel had very little time to consider the Plaintiff's pleadings by the time of the hearing. The Court considers this Order as granted without meaningful notice because the injury complained of appears imminent and irreparable. Defendants had access to key source code and customers. The Individual They have the

expertise to use that code and have formed a competing enterprise for the apparent purpose of doing so. The loss of control over that code and the

loss of customers cannot be fully compensated for with money damages. Further, Plaintiff has or will post bond to protect the interests of the Defendants in an amount the parties have expressly agreed to. Based upon the above considerations, IT IS THEREFORE ORDERED , that Plaintiff's Motion for Temporary Restraining Order, Expedited Discovery, and Order to Show Cause (Ct. Rec. 3) is GRANTED IN PART . That portion of Plaintiff's motion requesting Expedited Discovery shall be DEFERRED until Wednesday, December 7, 2005. IT IS FURTHER ORDERED, that the Defendants and each of them, including all persons in active concert and participation with them, are hereby:

ORDER ~ 3

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1.

Enjoined from using, disclosing or transferring any Next IT

proprietary information, trade secrets, or other confidential business information obtained during the Defendants' employment with Next IT; 2. Enjoined from soliciting, calling on or providing competing

services for any person or entity for whom Next IT provided services during Defendant's term of employment with Next IT, said services to include the design, coding, testing, installation, service or maintenance of products in Next IT's commercial space, including agent technology, indexing, web scraping, web applications, security, and artificial

intelligence; 3. Enjoined from soliciting, calling or providing competing

services for any person or entity whose name Defendant became aware of during their employment with Next IT; 4. Enjoined from directly or indirectly recruiting or encouraging of Next IT to accept employment or other business

employee

relationship with an employer, person or entity other than Next IT; 5. Enjoined from destroying, altering, erasing, deleting,

fragmenting, disposing or otherwise spoiling any documents, electronic data, computer and related equipment, materials, or other vehicle for information storage that may be relevant to the determination of the issues presented in this lawsuit; and, is further ordered to preserve all written, electronic or other tangible communications created or received during the period Jan. 1, 2004 to present; 6. ordered Ordered to appear before this court at the time and place to be by the Court in a following order and show cause why a

preliminary injunction should not be entered pending final judgment of ORDER ~ 4

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the court in this action.

The Court will establish the time and place

of the preliminary injunction hearing at a follow up telephonic hearing on WEDNESDAY, DECEMBER 7, 2005 AT 2:00 P.M. The parties shall call the

Court's public conference line (509-376-1330) at the time of the hearing. At that time the parties shall be prepared to discuss the

Plaintiff's motion for expedited discovery and the need to preserve all relevant evidence for use in this action. The parties shall also, if

possible, submit a joint proposed scheduling order in advance of the hearing which addresses pre-hearing deadlines including, but not limited to, the filing of any cross-motions and briefing for the preliminary injunction hearing, the exchange of witness and exhibit lists, and the submission of Proposed Findings of Fact and Conclusions of Law. IT IS FURTHER ORDERED that in accordance with the representations made by counsel for third-party Delex, Delex is ordered to comply with paragraph numbers one, five and six set forth above. IT IS FURTHER ORDERED that Next IT shall post security in the amount of $2,000 for the payment of Defendants' costs and damages that may be incurred in the event Defendants are found to be wrongfully enjoined or restrained by this Order. Such security shall be posted no later than

MONDAY, DECEMBER 5, 2005 at 5:00 p.m.. /// /// /// /// /// /// ORDER ~ 5

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The Temporary Restraining Order shall expire on December 15, 2005 at 5:00 p.m., unless otherwise Ordered by the Court. The parties may

stipulate to extend this TRO without filing a motion with this Court, but shall notify chambers of any change. IT IS SO ORDERED. The District Court Executive is directed to file this Order and provide copies to counsel. DATED this 2nd day of December, 2005 at 5:22 p.m.. s/Lonny R. Suko

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ORDER ~ 6 LONNY R. SUKO UNITED STATES DISTRICT JUDGE