| DK Fabrications, Ltd. v Blaszczynski |
| 2013 NY Slip Op 51590(U) [41 Misc 3d 1205(A)] |
| Decided on September 24, 2013 |
| Supreme Court, Suffolk County |
| Whelan, J. |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be published in the printed Official Reports. |
DK
Fabrications, Ltd., Plaintiff,
against Krzysztof Blaszczynski and COUNTERTOP DESIGN, LLC, Defendants. |
Upon the following papers numbered 1 to11read on this
motion for preliminary injunctive relief; Notice of Motion/Order to Show Cause
and supporting papers 1 - 5 ; Notice of Cross Motion and supporting papers;
Answering papers6-11; Replying papers; Other; (and after hearing counsel in
support and opposed to the motion) it is,
ORDERED that this motion (#001) by the plaintiff
for preliminary injunctive relief is denied; and it is further
ORDERED that a preliminary conference shall be held in this action on November 8, 2013, at 9:30 a.m. in Part 45 at the courthouse located at 1 Court Street - Annex, Riverhead, New York.
Since 2003, plaintiff has been engaged in the production and installation of quartz countertops for builders and kitchen and bath dealers. Defendant, Krzysztof Blaszczynski, was an at will employee of plaintiff who served as Production Manager and General Manager during his tenure with plaintiff. In May of 2013, defendant Blaszczynski announced that he was leaving to start his own business.
The plaintiff claims that at the time defendant Blaszczynski left the employ of the plaintiff, he indicated that his new company would target a different customer base than that of the plaintiff. The plaintiff further claims that defendant Blaszczynski requested the assistance of the plaintiff in the fabrication of vanities and related small items and assured the plaintiff that he would not take one employee or one account of the plaintiff. According to the plaintiff, these representations proved to be false. Allegedly, once defendant Blaszczynski left the employ of the plaintiff, and possibly before, he contacted and took plaintiff's accounts, and also lured away two experienced employees of the plaintiff. Additionally, the plaintiff claims that the plaintiff provided defendant Blaszczynski with a cell phone for use during his employment, which he has not returned, and that he is using the information contained in that cell phone for wrongful purposes. That defendant Blaszczynski's company, defendant Countertop Design, LLC (hereinafter "Countertop"), competes with the business of the plaintiff, is not disputed.
In July of 2013, the plaintiff commenced this action against defendant Blaszczynski and his company, co-defendant Countertop. In the complaint served, the plaintiff advances six causes of action. In the first, the plaintiff seeks injunctive relief permanently enjoining and restraining the defendants from soliciting, contracting or otherwise doing business with the customers and accounts [*2]of the plaintiff on the basis that the actions by defendant Blaszczynski constitute a breach of his fiduciary duty and common law duty of loyalty to the plaintiff and that the continued solicitation of the plaintiff's accounts by defendant Blaszczynski will cause the plaintiff to suffer irreparable harm. In the second, the plaintiff charges defendant Blaszczynski with breach of agreement and representations and seeks money damages. In the third, the plaintiff charges defendant Blaszczynski with breach of fiduciary duty and common law duty of loyalty and seeks money damages. In the fourth, the plaintiff charges the defendants with tortious interference with plaintiff's contracts and seeks money damages. In the fifth, the plaintiff charges defendants with theft of trade secrets and seeks money damages. In the sixth, the plaintiff charges the defendants with engagement in unfair competition and seeks money damages.
By order the show cause dated August 5, 2013, the plaintiff interposed this motion for preliminary injunctive relief restraining and enjoining the defendants from: 1) making use of any of the plaintiff's proprietary and confidential information; and 2) soliciting or attempting to obtain or accept any business of any nature from any customer or account of the plaintiff as of May 20, 2013. The plaintiff also seeks other and further relief as the Court deems just and proper. The motion is supported by an affidavit of the plaintiff's President, an affidavit of the plaintiff's office manager, an affirmation of counsel, the summons and complaint, and other documentary exhibits.
The motion is opposed by the defendants in papers consisting of counsel's affirmation, an affidavit of defendant Blaszczynski, three affidavits of current clients of the defendants who are also former clients of plaintiff, and other documentary exhibits. In his affidavit, Blaszczynski avers that his departure from the plaintiff was precipitated by a stop in payment from the plaintiff as a result of a Worker's Compensation issue with New York State. Subsequent to his departure, Blaszczynski started working for Lions Stone Corp. in mid-2012. According to Blaszczynski, he never made an agreement or represented to the plaintiff the nature of his business at the time of his departure. Instead, Blaszczynski asserts that he gave four weeks notice to the plaintiff and advised that he was going to form a company which, in response, prompted the plaintiff to terminate the relationship with Blaszczynski a few days later effective immediately on the basis that Blaszczynski was going to be the plaintiff's biggest competitor. Blaszczynski asserts that the only customers he has in common with the plaintiff are those who contacted him after he had left the employ of the plaintiff. Further, Blaszczynski asserts that these customers expressed to him that they no longer wished to use the plaintiff because service had deteriorated and that in no way did Blaszczynski solicit any of the plaintiff's former customers. This is supported by the three affidavits of defendants' clients who are also former clients of the plaintiff. These factual allegations have gone unchallenged, as the court is without reply papers from the plaintiff.
Upon due consideration of the papers submitted in support of and in opposition to the instant motion, the court denies this motion by the plaintiff.
By statutory fiat, "[a] preliminary injunction may be granted in any action where it appears that the defendant threatens or is about to do, or is doing or procuring or suffering to be done, an act in violation of the plaintiff's rights respecting the subject of the action, and tending to render the [*3]judgment ineffectual, or in any action where the plaintiff has demanded and would be entitled to a judgment restraining the defendant from the commission or continuance of an act, which, if committed or continued during the pendency of the action, would produce injury to the plaintiff" (CPLR 6301). Appellate case authorities have long pronounced that to prevail on a motion for preliminary injunctive relief, the movant must clearly demonstrate a likelihood of success on the merits, the prospect of irreparable harm or injury if the relief is withheld and that a balance of the equities favor the movant's position (see Nobu Next Door, LLC v Fine Arts Hous., Inc., 4 NY3d 839, 800 NYS2d 48 [2005]; Aetna Ins. Co. v Capasso, 75 NY2d 860, 862, 552 NYS2d 918 [1990]; Greystone Staffing, Inc. v Warner, 106 AD3d 954, 965 NYS2d 599 [2d Dept 2013]; Wheaton/TMW Fourth Ave., LP v New York City Dept. of Bldgs., 65 AD3d 1051, 886 NYS2d 41 [2d Dept 2009]; Pearlgreen Corp. v Yau Chi Chu, 8 AD3d 460, 778 NYS2d 516 [2d Dept 2004]). The decision to grant a preliminary injunction is committed to the sound discretion of the court, as the remedy is considered to be a drastic one (see Doe v Axelrod, 73 NY2d 748, 536 NYS2d 44 [1988]; Tatum v Newell Funding, LLC, 63 AD3d 911, 880 NYS2d 542 [2d Dept 2001]). Consequently, a clear legal right to relief, which is plain from facts presented that are generally undisputed, must be established (see Wheaton/TMW Fourth Ave., LP v New York City Dept of Bldgs., 65 AD3d 1051, supra; Gagnon Bus Co., Inc. v Vallo Transp., Ltd., 13 AD3d 334, 786 NYS2d 107 [2d Dept 2004]; Blueberries Gourmet v Avis Realty, 255 AD2d 348, 680 NYS2d 557 [2d Dept 1998]). The burden of showing an undisputed right to the injunction rests with the movant (see Omaakaze Sushi Rest., Inc. v Ngan Kam Lee, 57 AD3d 497, 868 NYS2d 726 [2d Dept 2008]; Doe v Poe, 189 AD2d 132, 595 NYS2d 503 [2d Dept 1993]).
Factors militating against the granting of preliminary injunctive relief include: 1) the absence of a jurisdictionally proper predicate claim for injunctive relief (see CPLR 6301; BSI, LLC v Toscano, 70 AD3d 741, 896 NYS2d 102 [2d Dept 2010]); 2) that the movant can be fully recompensated by a monetary award or other adequate remedy at law (see Di Fabio v Omnipoint Communications, Inc., 66 AD3d 635, 636-637, 887 NYS2d 168 [2d Dept 2009]; Mar v Liquid Mgt. Partners, LLC, 62 AD3d 762, 880 NYS2d 647 [2d Dept 2009]; Dana Distr., Inc. v Crown Imports, LLC, 48 AD3d 613, 853 NYS2d 111 [2d Dept 2008]; White Bay Enter. v Newsday, Inc., 258 AD2d 520, 685 NYS2d 257 [1999]); 3) that the granting of the requested injunctive relief would confer upon the plaintiff the ultimate relief requested in the action (see Wheaton/TMW Fourth Ave., LP v New York City Dept of Bldgs., 65 AD3d 1051, supra; SHS Baisley, LLC v Res Land, Inc., 18 AD3d 727, 795 NYS2d 690 [2d Dept 2005]); 4) that the relief would disturb, rather than maintain the status quo, except where it is necessary to restore the status quo that was disturbed by action undertaken immediately prior to suit so as to prevent the dissipation of assets that could render the judgment ineffectual (see 1650 Realty Assoc., LLC v Golden Touch, 101 AD3d 1016, 956 NYS2d 178 [2d Dept 2012]).
In cases involving a claim of unfair competition, appellate case authorities have long recognized that, in the absence of a restrictive covenant not to compete, an employee is free to compete with his or her former employer where remembered information as to specific needs and business habits of particular customers is not confidential or otherwise proprietary in nature (see Reed, Roberts Assoc. v Strauman, 40 NY2d 303, 386 NYS2d 667 [1976]; Island Sports Physical [*4]Therapy v Burns, 84 AD2d 878, 923 NYS2d 156 [2d Dept 2011]; Pearlgreen Corp v Yau Chi Chu, 8 AD3d 460, 778 NYS2d 516 [2d Dept 2004]; Falco v Parry, 6 AD3d 1138, 775 NYS2d 675 [2d Dept 2004]). Although an employee owes fiduciary duties of good faith and loyalty to an employer, the employee may incorporate a business prior to leaving the employer without breaching any fiduciary duty (see Island Sports Physical Therapy v Burns, 84 AD3d 878; supra; Schneider Leasing Plus v Stallone, 172 AD2d 739, 569 NYS2d 129 [2d Dept 1991]). An employee may not, however, solicit his or her employer's customers or otherwise compete during the course of his or her employment by the use of the employer's time, facilities or proprietary information (see 30 FPS Prods. Inc. v Livolsi, 68 AD3d at 1102, 891 NYS2d 162 [2d Dept 2009]; Schneider Leasing Plus v Stallone, 172 AD2d 739, supra; cf, A & Z Scientific Corp. v Latmoire, 265 AD2d 355, 696 NYS2d 495 [2d Dept 1999]).
An employee who has left the employ of a former employer is also free to compete and he or she may solicit the former employer's customers unless it is shown that customer lists or like material belonging to the employer constitute trade secrets or that there was other wrongful conduct including the employment of fraudulent methods or the engagement in a physical taking or copying of the employer's customer lists or files (see Reed, Roberts Assoc. v Strauman, 40 NY2d 303 supra; ; Island Sports Physical Therapy v Kane, 84 AD3d 879, surpa; Beverage Mktg., USA Inc. v South Beach Beverage Company Co., Inc. 58 AD3d 657, 873 NYS2d 84 [2d Dept 2009]). Knowledge of the intricacies of a business operation does not necessarily constitute a trade secret and, absent any wrongdoing, it cannot be said that a former employee "should be prohibited from utilizing his knowledge and talents in this area" (Reed, Roberts Assoc. v Strauman, 40 NY2d 303, 309, supra; see also Buhler v Michael P. Maloney Consulting, Inc., 299 AD2d 190, 749 NYS2d 867 [1st Dept 2002]). Information that is garnered by the defendant's casual memory and knowledge does not constitute actionable wrongdoing (see Leo Silfen, Inc. v Cream, 29 NY2d 387, 328 NYS2d 423 [1972]; Levine v Bochner, 132 AD3d 532, 517 NYS2d 270 [2d Dept 1987]). Where the information at issue is public knowledge or could be acquired easily and duplicated, it is not a trade secret (see Starlight Limousine Serv. Inc. v. Cucinella, 275 AD2d 704, 713 NYS2d 195 [2d Dept 2000]).
That which constitutes a trade secret has been defined as a formula, pattern, device or compilation of information which is used in one's business and which gives the owner an opportunity to obtain an advantage over competitors who do not know or use it (see Ashland Mgt. Inc. v Janien, 82 NY2d 395, 407, 604 NYS2d 912 [1993]; see also Restatement of Torts § 757, comment [b]). An essential requisite to legal protection against misappropriation of such a formula, process, device or compilation of information is the element of secrecy. Secrecy has been defined in accordance with the § 757 Restatement of Torts as: (1) substantial exclusivity of knowledge of the formula, process, device or compilation of information; and (2) the employment of precautionary measures to preserve such exclusive knowledge by limiting legitimate access by others (see Delta Filter Corp. v Morin, 108 AD2d 991, 485 NYS2d 143 [3d Dept 1985]).
Here, there has been no showing of any of the elements necessary for the granting of preliminary injunctive relief pursuant to CPLR 6301 enjoining and restraining the defendants from soliciting, contacting or otherwise doing business with the customers and accounts of the plaintiff. [*5]A likelihood of success on the merits is absent from the record here, as it is devoid of any evidence that during the course of his employment with the plaintiff, defendant Blaszczynski, used the plaintiff's time, facilities or proprietary information while forming his new company. There is no evidence that defendant Blaszczynski took, stole, or converted any documents, files or other business records of the plaintiff or that he otherwise breached his fiduciary duties including those of loyalty during the course of his employ.
Nor was there any evidence tending to establish that the defendants are subject to liability due to their engagement in wrongful conduct following the Blaszczynski's departure. The moving papers failed include proof of the existence of facts tending to establish that the defendants' misappropriated and/or misused confidential information or trade secrets belonging to plaintiff. In this regard, the court notes that no customer lists, contact lists or contract accounts have been shown to be trade secrets as there is ample proof that they are readily ascertainable from non-confidential sources. Moreover, the record contains undisputed evidence that the plaintiff took few, if any, precautionary measures to preserve any exclusive knowledge of pricing, contact or customer lists by limiting legitimate access thereto by defendant Blaszczynski or by securing his agreement to a restrictive covenant or other non-compete agreement. A likelihood of success on the merits has thus not been shown.
Nor was there a showing of irreparable harm absent the granting of the preliminary injunction requested. In cases, such as the instant one wherein the plaintiff charges a former with unfair competition due to his or her start up of a competing business, the plaintiff was required to adduce some proof of actual loss of customer accounts (see IVI Envt., Inc. v McGovern, 269 AD2d 497, 707 NYS2d 107) or a loss of good will (see BDO Seidman v Hirshberg, 93 NY2d 382, 690 NYS2d 854 [1999]), or a loss of trade secrets (see Invesco Inst. (N.A.), Inc. v Deutsche Inv. Mgt. Am., Inc, 74 AD3d 696, 904 NYS2d 46 [1st Dept 2010]). The record is devoid of proof that the plaintiff sustained any such loss due to misconduct on the part of the defendants. Finally, a balance of the equities has not been shown to tip in favor of the plaintiff.
Accordingly, the instant motion (#001) by the plaintiff is, in all respects, denied.
DATED: ____September 24,
2013__________________________________________
THOMAS F. WHELAN, J.S.C.