Erie Technological Products, Inc. v. Centre Engineering, Inc.

52 F.R.D. 524, 170 U.S.P.Q. (BNA) 463, 1971 U.S. Dist. LEXIS 13442, 1971 Trade Cas. (CCH) 73,576
CourtDistrict Court, M.D. Pennsylvania
DecidedMay 5, 1971
DocketCiv. No. 70-642
StatusPublished

This text of 52 F.R.D. 524 (Erie Technological Products, Inc. v. Centre Engineering, Inc.) is published on Counsel Stack Legal Research, covering District Court, M.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Erie Technological Products, Inc. v. Centre Engineering, Inc., 52 F.R.D. 524, 170 U.S.P.Q. (BNA) 463, 1971 U.S. Dist. LEXIS 13442, 1971 Trade Cas. (CCH) 73,576 (M.D. Pa. 1971).

Opinion

OPINION

MUIR, District Judge.

Plaintiff seeks a preliminary injunction to prevent the defendants from inducing plaintiff’s employees to leave plaintiff’s employment and from inducing plaintiff’s employees to disclose trade secrets or confidential information. Evidence adduced at five days of hearings on the preliminary injunction has covered the broader claims for relief set forth in plaintiff’s complaint. That complaint alleges a conspiracy, in violation of the Sherman Anti-trust Act, to eliminate plaintiff from competition by wrongful enticement of plaintiff’s employees from employment and by misap[526]*526propriation of trade secrets. The complaint also alleges common law claims for trade secret violation and misappropriation of confidential information, and wrongful inducement of plaintiff’s employees to leave their employment with plaintiff.

Prerequisite to the grant of a preliminary injunction, the plaintiff must show (1) that it will be irreparably injured pendente lite if the preliminary injunction is not granted and (2) that there is a reasonable probability of eventual success in the litgation. A. L. K. Corp. v. Columbia Pictures, 440 F.2d 761 (3rd Cir.1971)

1. Irreparable and Immediate Harm. The essence of plaintiff’s claim is that the defendants threatened to entice away plaintiff’s key employees, that such threat is immediate, and that the damage to be incurred from realization of that threat is irreparable. The evidence showing the claimed threat consists in (1) the departure of five people other than the defendants from Erie’s employment between February and October, 1970, and (2) two discussions about possible employment, the first between defendant Zuravleff and Erie’s West Coast salesman Robert Jones; the second between defendant McCrea and an Erie production supervisor, Charles Rallis. It is argued that these facts show the pattern of enticing away key employees. The court has heard testimony of all the five employees; counsel have explored the circumstances under which these five employees left Erie and also the conversations between defendants McCrea and Zuravleff and other Erie management personnel.

Each of those five employees (Hill, Kolbe, Port, Lingle and Schindler) gave reasons for leaving Erie. In each instance, the stated reasons related to personal dissatisfaction with his job and a preference for working under the supervision of those individual defendants who left Erie to form Centre. Some of the circumstances are most suspicious and evidence an intent to cover a prior plan of employment.

The Court notes the relative size of plaintiff and defendant companies: Erie currently employs 600 persons at its State College operations and produces more than 5 million dollars in gross sales out of its State College capacitor operations. Centre now employs 60 people and projects gross sales of $200,000 for the current year. The loss of several managerial people (Kolbe and Hill), one foreman (Schindler), a draftsman-equipment repairman (Port) and a secretary (Lingle) does not convince me that there is presently a danger of immediate and irreparable harm or a present pattern of wrongful enticement of key employees. In the six months preceding the hearing, only one employee (Schindler) directly left Erie to go to Centre.

2. Probability of Success. The second area of inquiry on a request for preliminary injunction is to determine whether plaintiff has shown a reasonable probability of success on the merits of its action. Plaintiff has set forth three distinct theories for ultimate relief against defendants:

2.1. Improper use of “Proprietary information” constituting trade secrets belonging to plaintiff;
2.2. Violation of the Sherman Act, Section 1, in conspiring to eliminate plaintiff as a competitor by enticing and hiring away valued employees of plaintiff; and
2.3 Tortious interference with plaintiff’s employment contracts with employees. These claims are discussed below.

2.1. Trade Secrets. Much technical information has been submitted to the Court and the parties have made many claims as to confidential information and trade secrets. At this stage in the proceedings, the Court will make only a few and limited rulings with respect to these claims. Some part of the process [527]*527by which Erie easts ceramic slurry into thin ceramic film has been admitted by defendants' witnesses to be a trade secret or proprietary information. The process, known as P-8000, is known to defendants and they claim they are not using it. A similar trade séeret claim has been made by plaintiff, and acknowledged by defendants’ witnesses, as to parts of the process of placing a finished coat on the Erie product. This process is known as “jetseal”. Again, the defendants know the process and claim they are not using it in the operations of Centre Engineering, Inc. Aside from these two limited areas, the plaintiff claims, and defendants deny, that there are many formulae, steps in the process, equipment specifications and operating procedures used by plaintiff, and known to defendants, which are entitled to protection as trade secrets.

The controlling consideration in ruling on these trade secret claims is that on the present record plaintiff has no evidence that its trade secrets are in fact being used by defendants. This is not sufficient to support any injunctive relief:

“A trade secret will not be protected by the extraordinary remedy of injunction on mere suspicion or apprehension of injury. There must be a substantial threat of impending injury before an injunction will issue.” Allis-Chalmers Mfg. Co. v. Continental Aviation & Engineering Corp., 255 F.Supp. 645, 654 (E.D.Mich.1966).

Plaintiff’s motion for temporary injunction does not request specific relief against appropriation of trade secrets ; however, to the extent that temporary relief is sought to prevent defendants from enticing employees for the purpose of soliciting trade secret information, the plaintiff has failed to produce sufficient evidence to support such injunctive relief.

2.2. Merits of the Antitrust Claim. The trade secret claims, reviewed above, arise under state law and are enforceable by action in state court. See Vogue Instrument Corp. v. Lem Instruments Corp., 40 F.R.D. 497 (S.D.N.Y.1966). Jurisdiction in this court is based upon defendants’ alleged violations of the Sherman Antitrust Act, subject to enforcement by a private action under Section 16 of the Clayton Act, 15 U.S.C.A. § 26. Defendants have moved for partial summary judgment and to dismiss the complaint on the theory that no federal claim can be proved in this case and that the remaining claims raise issues cognizable in state court.

The essence of plaintiff’s claim under the Sherman and Clayton Acts is in defendants’ alleged conspiracy to restrain trade by eliminating plaintiff from competition by the unfair means of enticing away plaintiff’s key employees and inducing such employees to reveal trade secrets. Several cases support the proposition that the Sherman Act is violated when a competitor conspires with plaintiff’s employees to destroy plaintiff and subverts their loyalty to plaintiff by enticement away of plaintiff’s key employees, among other acts. See Perryton Wholesale, Inc. v. Pioneer Distributing Co.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
52 F.R.D. 524, 170 U.S.P.Q. (BNA) 463, 1971 U.S. Dist. LEXIS 13442, 1971 Trade Cas. (CCH) 73,576, Counsel Stack Legal Research, https://law.counselstack.com/opinion/erie-technological-products-inc-v-centre-engineering-inc-pamd-1971.