Oakiwear Outdoor LLC v. Timbee LLC et al

Filing 64

ORDER signed by Judge Benjamin H. Settle denying 41 Motion to Amend, denying 44 Motion for Contempt; denying 60 Motion to strike.(TG)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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OAKIWEAR OUTDOOR, LLC,

CASE NO. C17-5202 BHS

Plaintiff,
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ORDER DENYING PLAINTIFF’S
MOTION TO AMEND, MOTION
FOR CONTEMPT, AND MOTION
TO STRIKE

v.
TIMBEE, LLC, et al.,

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Defendants.

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This matter comes before the Court on Plaintiff Oakiwear Outdoor, LLC’s

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(“Oakiwear”) motion to amend injunction (Dkt. 41), motion for contempt (Dkt. 44), and

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motion to strike the additional evidence or, in that alternative, submit additional briefing

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(Dkt. 60). The Court has considered the pleadings filed in support of and in opposition to

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the motions and the remainder of the file and hereby denies the motions for the reasons

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stated herein.

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I.

PROCEDURAL HISTORY

On March 16, 2017, Oakiwear filed a complaint against Defendants Benjamin

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Brewer, Maura Brewer, Timbee, LLC, and Julie Zimmerman (“Defendants”) asserting

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causes of action for misappropriation of trade secrets, in violation of the Defense of

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Trade Secrets Act and Washington’s Uniform Trade Secrets Act, breach of fiduciary

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duty, tortious interference with business expectancy, conversion, and civil conspiracy.

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Dkt. 1.

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Oakiwear also filed a motion for a temporary restraining order. Dkt. 2. On March

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17, 2017, the Court requested a response and set the matter for oral argument. Dkt. 7.

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On March 22, 2017, the parties filed a stipulated motion for preliminary injunction. Dkt.

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23. Later that day, the Court entered the proposed order as an order of the Court. Dkt.

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24. In relevant part, the injunction provides that (1) Defendants shall not contact

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Oakiwear’s existing or prospective customers, except customers that independently came

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into contact with Timbee through certain channels, including Zulily.com (id. ¶ 2(a)(iv))

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and (2) Defendants shall not use Hangzhou Fushi Import and Export Co., Ltd. to

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manufacture its goods (id. ¶ 2(c)).

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On June 1, 2017, Oakiwear filed a motion to amend the injunction and a motion

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for contempt of the injunction. Dkts. 41, 44. On June 19, 2017, Defendants responded.

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Dkt. 47. On June 23, 2017, Oakiwear replied. Dkts. 51, 52. On July 13, 2017,

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Defendants submitted additional evidence. Dkt. 56. On July 19, 2017, Oakiwear moved

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to strike the additional evidence or, in that alternative, submit additional briefing. Dkt.

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60. 1 On August 16, 2017, the Court held a hearing on Oakiwear’s motions. Dkt. 63.

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The Court denies the motion because Oakiwear had an opportunity to respond to Defendants’
supplemental evidence at the hearing.

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II.
A.

DISCUSSION

Motion to Amend Preliminary Injunction
To prevail on a motion for a preliminary injunction, the movant must show “that

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he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the

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absence of preliminary relief, that the balance of equities tips in his favor, and that an

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injunction is in the public interest.” Am. Trucking Associations, Inc. v. City of Los

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Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009) (quoting Winter v. Nat. Resources Defense

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Council, 555 U.S. 7, 20 (2008)).

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In this case, Oakiwear moves to add four companies to the list of entities that

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Defendants may not contact or use during the pendency of this matter. First, Oakiwear

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moves to add Zulily and Kid to Kid to the list of companies that Defendants may not

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solicit, contact, or communicate with. Dkt. 41 at 1. Oakiwear argues that it is likely to

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succeed on its trade secrets claims, breach of fiduciary duty claim, and/or tortious

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interference with business expectancy claim. There are numerous problems with

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Oakiwear’s position. Regarding the trade secrets claims, the existence of a large retailer

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does not qualify as a trade secret. “For trade secrets to exist, they must not be ‘readily

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ascertainable by proper means’ from some other source, including the product itself.”

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Boeing Co. v. Sierracin Corp., 108 Wn.2d 38, 49–50 (1987) (citing RCW

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19.108.010(4)(a)). Oakiwear has failed to show that it is likely to succeed on the issue of

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whether the existence of Zulily or Kid to Kid could not be readily ascertainable by proper

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means. See, e.g., Dkt. 49, ¶ 6 (“Prohibiting a company from selling on Zulily is like

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prohibiting them from selling on Amazon or Target. Selling products on Zulily, a widely

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known and highly utilized website in the children’s apparel industry, is not proprietary to

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Oakiwear.”).

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Similarly, to succeed on the relevant aspect of its breach of fiduciary duty,

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Oakiwear must show that Defendants obtained confidential information. While

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Oakiwear has submitted evidence of Defendants’ activities that are antithetical to their

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employer’s interests, the knowledge of large retailers in the kid’s clothing industry is

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hardly confidential information. “[T]he former employee, even in the absence of an

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enforceable covenant not to compete, remains under a duty not to use or disclose, to the

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detriment of the former employer, trade secrets acquired in the course of previous

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employment.” Ed Nowogroski Ins., Inc. v. Rucker, 137 Wn.2d 427, 437 (1999).

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Oakiwear has failed to show that it is likely to succeed on the issue of whether the

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existence of Zulily or Kid to Kid was confidential business contact. Moreover, Oakiwear

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has failed to submit sufficient evidence of harm related to Timbee’s contacts with these

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businesses. There must be more than an assumption that Timbee’s contacts with certain

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entities resulted in lost sales to Oakiwear.

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Regarding the tortious interference claim, the competing evidence raises numerous

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questions of fact. For example, “a cause of action for tortious interference arises from

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either the defendant’s pursuit of an improper objective of harming the plaintiff or the use

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of wrongful means that in fact cause injury to plaintiff’s contractual or business

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relationships.” Pleas v. City of Seattle, 112 Wn.2d 794, 803–04 (1989). Intent and

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motive are hard to prove, and this is especially true at the preliminary stage of a

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proceeding. Therefore, the Court concludes that Oakiwear has failed to meet its burden

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on this requirement.

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Even if reasonable minds could differ on the Court’s assessment of the merits,

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Oakiwear has failed to show that the balance of equities tips in its favor. Oakiwear

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repeatedly assured the Court that it was not trying to put Timbee out of business, but the

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uncontested evidence in the record is that “Timbee would likely be out of business if it

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could not sell on Zulily.” Dkt. 49, ¶ 6. Putting Timbee out of business is an inequitable

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preliminary remedy based on the current record. Therefore, the Court denies Oakiwear’s

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motion to amend the injunction to add Zulily and Kid to Kid to the list of prohibited

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sellers.
Second, Oakiwear moves to add Hangzhou Centralstar Sporting Goods Co. Ltd.

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(“Hangzhou Centralstar”) and Hangzhou Fujie Outdoor Products Inc. (“Hangzhou Fujie”)

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to the list of manufacturers that Timbee is prohibited from utilizing. Dkt. 41 at 1.

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Similar to the analysis above, Oakiwear has failed to show a proprietary interest in “using

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manufacturers that can be found in three clicks on the world’s largest website.” Dkt. 47

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at 12. Preventing Timbee from using these manufacturers does not “level the playing

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field.” Dkt. 52 at 7. Instead, it would tip the equities sharply in Oakiwear’s favor by

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preventing Timbee from essentially using any manufacturer in Hangzhou, China.

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Moreover, Oakiwear has failed to show how knowledge of its manufacturing pricing,

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terms, and order history has resulted in an unfair advantage on Alibaba.com, wherein the

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manufacturers provide quotes for desired products. Even if an established client like

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Oakiwear receives some discount over a new client like Timbee, Oakiwear can be

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properly made whole with damages instead of preventing Timbee from utilizing

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manufactures in one city in China. Therefore, the Court denies Oakiwear’s motion to

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amend the injunction to include these manufacturers.

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B.

Motion for Contempt

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“Civil contempt . . . consists of a party’s disobedience to a specific and definite

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court order by failure to take all reasonable steps within the party’s power to comply.”

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Inst. of Cetacean Research v. Sea Shepherd Conservation Soc’y, 774 F.3d 935, 945 (9th

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Cir. 2014) (quoting In re Dual–Deck Video Cassette Recorder Antitrust Litig., 10 F.3d

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693, 695 (9th Cir.1993). “The party alleging civil contempt must demonstrate that the

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alleged contemnor violated the court’s order by ‘clear and convincing evidence,’ not

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merely a preponderance of the evidence.” Id.

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In this case, Oakiwear alleges that Defendants have violated the injunction by

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contacting certain customers and by failing to turn over contact lists and sales leads. Dkt.

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44 at 1–2. Regarding the latter item, Defendants assert that they have turned over every

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list in their possession. Dkt. 47 at 12–13. Oakiwear has failed to provide clear and

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convincing evidence that Defendants’ assertions are false. In other words, the Court is

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unable to force Defendants to deliver something that they do not possess unless it is

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established that their assertions regarding what they actually possess are untrue.

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Therefore, the Court denies Oakiwear’s motion on this issue.

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Regarding Oakiwear’s allegations that Timbee is improperly contacting certain

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clients and manufacturers, Oakiwear has failed to meet its burden. It appears that the

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parties failed to have a meeting of the minds as to whether Zulily and Kid to Kid were

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included in the injunction. Such a disagreement as to the intent of the injunction and

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competing reasonable interpretations of the language of the injunction precludes a finding

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that one party has violated the injunction by clear and convincing evidence. Similarly,

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Timbee asserts that “Green Path Baby, Ya Ya Children’s Boutique, and Little Kid Star

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independently contacted Timbee and placed orders at a trade show.” Dkt. 47 at 13.

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Oakiwear has failed to produce clear and convincing evidence to the contrary. Finally,

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Timbee has provided evidence to show that it has severed ties with Hangzhou Fushi and

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one picture from the factory showing Timbee boots is not clear and convincing evidence

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to the contrary. Therefore, the Court denies Oakiwear’s motion for contempt.

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III.

ORDER

Therefore, it is hereby ORDERED that Oakiwear’s motion to amend injunction

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(Dkt. 41), motion for contempt (Dkt. 44), and motion to strike the additional evidence or,

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in that alternative, submit additional briefing (Dkt. 60) are DENIED.

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Dated this 25th day of August, 2017.

A

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BENJAMIN H. SETTLE
United States District Judge

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