The following papers numbered 1 to 13 were read on this motion by the plaintiff, NYWC, INC., for a preliminary injunction enjoining and restraining defendants, PRO BEAUTY CONCEPTS, INC., BILYANA BOZHINOVA and TSEVETAN IVANOV, from contacting, selling to, or engaging NYWC's customers from advising customers of NYWC to withdraw their business relationship with NYWC, and preventing the defendants from disparaging or defaming NYWC or from disclosing customer lists of NYWC or selling products through misappropriation of trade secrets pending the disposition of the action:

Papers

Numbered

Order to Show Cause-Affirmation-Exhibits-Memo of Law......1 - 6

Affirmation in Opposition-Exhibits-Memo of Law............7 - 13

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Plaintiff commenced this action against the defendants by [*2]filing a summons and complaint seeking injunctive relief and money damages for misappropriation of confidential information and trade secrets, breach of duty of loyalty, conversion and unfair competition.

According to the complaint, the plaintiff, NYWC, is a "virtual company" which conducts its business on eBay and Amazon as a merchant of health, beauty, and electronic products. Nikolay K. Volper is the President of NYWC. In 2008, Volper hired defendant Bilyana Bozhinova as an assistant. The complaint alleges that for four years Bozhinova managed all aspects of NYWC's inventory including purchasing inventory, managing inventory and handling customer inquiries. The complaint states that Bozhinova was entrusted with all of the plaintiff's proprietary and confidential information including the business model, ordering, stocking, and shipping of inventory, client and distributor contact information, website passwords and eBay and Amazon account information. The plaintiff alleges that in July 2011, while Bozhinova was still working as an employee of NYWC she founded and became Chief Executive Officer of PRO BEAUTY CONCEPTS, INC., a company she is alleged to have formed with defendant Tsevetan Ivanov to compete directly with NYWC. The plaintiff alleges that defendants launched a merchant account on eBay and Amazon selling health and beauty products. The plaintiff alleges that the products sold by defendants were stolen directly from the plaintiff's inventory or obtained through illegal use of NYWC's confidential client and distributer lists.

The complaint also alleges that in December 2011, Bozhinova terminated her employment with NYWC and continued to operate Pro Beauty. The complaint alleges that in forming Pro Beauty, Bozhinova applied and implemented information acquired through her employment with NYWC including NYWC's business model and structure, product information, distributor contact information, and client information. The complaint also alleges that the defendants misappropriated products from NYWC.

Based upon the above allegations, the plaintiff seeks to enjoin the defendants from using plaintiff's confidential client and distributor information and cosmetic products which were allegedly taken. Plaintiff alleges that absent injunctive relief, the defendants will continue to use NYWC's confidential information and trade secrets, a violation of the fiduciary duty of loyalty. Counsel also seeks monetary damages for misappropriation of confidential information, conversion and unfair competition.

In support of its motion for a preliminary injunction, the [*3]plaintiff asserts that the use and retention of the plaintiff's confidential information and data is causing irreparable harm in that defendants are using the lists to solicit clients and cause them to sever their relationship with NYWC. Nikolay K. Volper submits an affirmation on behalf of the plaintiff stating that the defendants applied and implemented the information acquired through their employment and training with the plaintiff and thereafter solicited plaintiff's clients. Plaintiff sent a cease and desist letter to the defendants in December 2013 alleging the defendants were in breach of the duty of loyalty and alleging that $10,000 in merchandise was stolen by the defendants and sold on eBay and Amazon

In opposition, defendant Bilyana Bozhinova submits an affidavit stating that she is Chief Executive Officer and founder of Pro Beauty Concepts, Inc., an online beauty and supplement vendor. She states that she formerly worked for plaintiff commencing in 2008. She never signed a contract or a no-compete agreement. She stated that she left her employment with the plaintiff's company in December 2011. She states that she never took any information from the plaintiff's office, and that all of the information regarding the vendors and companies plaintiff deals with is public and can be found online. She denies taking any items to sell. She states that there is no customer list per se and all of the plaintiff's customers are merely online customers. She claims that the company she founded in September 2011 sold products on their own time and did not use plaintiff's resources.

Defendants' counsel contends that at no time did defendant actually solicit any of the plaintiff's customers. Counsel states that the eBay model allows any individual to register on the site and to start selling. The sellers do not solicit buyers, rather the buyers find sellers based upon the products they are seeking online. Counsel contends that the plaintiff has failed to show a probability of success on the merits in that plaintiff has failed to offer any examples of customers who have been solicited by the defendants nor has plaintiff specified what he alleges has been stolen. Counsel states that by using eBay there is no protectable client list since the core of the eBay process is listing the product online so that buyers can locate the product and the seller. Thus, there was no list to appropriate. With respect to breach of duty of loyalty, counsel asserts that despite establishing a competitive business, there was no breach of duty of loyalty because the defendant did not make improper use of the employers time, facilities or proprietary secrets. Counsel also claims the defendants' business which was commenced only weeks before she left plaintiff's employ was done on her own time, on [*4]her own premises, and with her own resources.

Lastly, defendants contend that the plaintiff has failed to show irreparable harm. In this regard, defendants contend that the facts asserted at best only allege loss of sales which are easily compensated in money damages (citing GFI Sec., LLC v Tradition Asiel Sec., Inc., 61 AD3d 586 [1st Dept. 2009][plaintiff failed to show irreparable harm in support of its motion for a preliminary injunction pursuant since it failed to submit evidence showing that its losses were not compensable by money damages] Cohen v LeNoble, 50 AD3d 321 [1st Dept. 2008]). Counsel claims that an injunction is not required at this time as there was no showing of a dissipation of property or loss of clients or good will that would render a judgment ineffectual. Defendants also asserts that a balance of equities favors the denial of the preliminary injunction in that there was no limitation by contract or otherwise preventing the defendant from launching a competing business and because the defendant has been operating her business for over two years before the instant action for an injunction was commenced.

To establish entitlement to a preliminary injunction, a movant must establish (1) a likelihood or probability of success on the merits, (2) irreparable harm in the absence of an injunction, and (3) a balance of the equities in favor of granting the injunction" (Stockley v Gorelik, 24 AD3d 535 [2d Dept. 2005] (see Brach v. Harmony Servs., Inc., 93 AD3d 748 [2d Dept. 2012] Matter of Advanced Digital Sec. Solutions, Inc. v Samsung Techwin Co., Ltd., 53 AD3d 612 [2d Dept. 2008] Montauk-Star Is. Realty Group v Deep Sea Yacht & Racquet Club, 111 AD2d 909 [2d Dept. 1985]). "A court evaluating a motion for a preliminary injunction must be mindful that the purpose of a preliminary injunction is to maintain the status quo, not to determine the ultimate rights of the parties (Masjid Usman, Inc. v Beech 140, LLC, 68 AD3d 942 [2d Dept. 2009] also see Matter of Wheaton/TMW Fourth Ave., LP v New York City Dept. of Bldgs., 65 AD3d 1051 [2d Dept. 2009] Coinmach Corp. v Alley Pond Owners Corp., 25 AD3d 642 [2d Dept. 2006]). Further, "a party seeking the drastic remedy of a preliminary injunction must establish a clear right to that relief under the law and the undisputed facts" (Omakaze Sushi Rest., Inc. v Ngan Kam Lee, 57 AD3d 497, 497 [2d Dept. 2008] also see Peterson v Corbin, 275 AD2d 35[2d Dept. 2000]).

Here, this court finds that the plaintiff has failed to show a likelihood of ultimate success on the merits by clear and convincing evidence (see Gluck v Hoary, 55 AD3d at 668 [2d Dept. 2008] Apa Sec., Inc. v Apa, 37 AD3d 502 [2d Dept. 2002]). The [*5]plaintiff has failed to provide any documentary evidence that the defendant was not permitted to compete with the plaintiff or that there were any specific client lists that were used or taken by the defendants Further, Further, the plaintiff has not provided any examples of clients that were solicited by the defendants or business relationships that were severed as a result of the actions of the defendants. As stated by the defendants, the eBay and Amazon sales model is not a trade secret and is open to any individual who registers with the website. Under the eBay model there is no solicitation by the sellers and it is actually the buyers who seek the sellers based upon their desire to purchase a particular product. In addition, there has been an insufficient showing that the defendants breached a duty of loyalty. Plaintiff failed to show that the defendants were under any employment agreement or covenant not to compete and failed to state in other than a conclusory manner what trade secrets, confidential materials or merchandise was taken. In cases involving a claim of unfair competition, the courts have held that in the absence of a restrictive covenant not to compete, an employee is free to compete with his or her former employer unless trade secrets are involved or fraudulent methods are employed. Plaintiff has failed to demonstrate how defendant's selling products on eBay or Amazon involves the use of plaintiff's trade secrets. Trade secret protection does not attach where customer lists and other information maintained by the plaintiff can be acquired from non-confidential sources (see Leo Silfen, Inc. v Cream, 29 NY2d 387[1972] Island Sports Physical Therapy v Kane, 84 AD3d 878 [2d Dept. 2011] 1 Model Mgt., LLC v Kavoussi, 82 AD3d 502 [1st Dept. 2011] Copart of Connecticut, Inc. v Long Island Auto Realty, LLC, 42 AD3d 420 [2d Dept. 2007]).

The plaintiff has also failed to shows irreparable harm without the granting of a preliminary injunction in that the plaintiff has not demonstrated whether he has actually lost customers as a result of the defendants' actions or that the plaintiff cannot be fully recompensed by a monetary award or other adequate remedy at law (see 306 Rutledge, LLC v City of New York, 90 AD3d 1026 [2d Dept 2011] DiFabio v Omnipoint Communications, Inc., 66 AD3d 6358 [2d Dept 2009]). Moreover, a preliminary injunction will not issue in cases wherein the irreparable harm claimed is remote or speculative or purely economic in nature (see Family-Friendly Media, Inc. v Recorder Tel. Network, 74 AD3d 738 [2d Dept 2010]). Here, as stated above, the plaintiff has not provided some proof of actual loss of customer accounts or loss of trade secrets or shown how his business has been harmed two years after the plaintiff left the plaintiff's employ. [*6]

Furthermore, a balancing of the equities does not favor restraining the defendants from selling their products on eBay or Amazon. The plaintiff has not shown that any injury it is likely to sustain will be more burdensome to it than the harm likely to be caused to the defendants by interfering with defendants' sales. Here, the defendant left the employ of the plaintiff two months after she formed her own corporation and the plaintiff waited over two years to seek a restraining order. The record is devoid of proof that the plaintiff sustained any losses and devoid of any proof that a balance of the equities favors towards the plaintiff. A restraining order would impose an undue burden on the defendants and unnecessarily restrict its right to do business. Therefore, the harm that would be caused to defendant by granting the injunctive relief requested clearly outweighs the harm as alleged by plaintiff.

Accordingly, it is hereby

ORDERED, that plaintiff's motion for a preliminary injunction is denied.

Dated: March 25, 2014

Long Island City, NY

___________________

ROBERT J. MCDONALD

J.S.C.