1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 EXAMWORKS, a Delaware limited No. 2:20-CV-00920-KJM-DB liability company, 12 Plaintiff, 13 ORDER GRANTING PRELIMINARY v. INJUNCTION 14 TODD BALDINI, an individual, 15 ABYGAIL BIRD, an individual, LAWRENCE STUART GIRARD, an 16 individual, PAMELLA TEJADA, an individual, ROE CORPORATION, and 17 DOES 1 through 10, 18 Defendants. 19 20 Plaintiff ExamWorks, LLC’s (“ExamWorks”) moves for a preliminary injunction 21 to extend until trial the terms of the temporary restraining order (TRO) the court previously 22 entered on May 8, 2020, ECF No. 17, and extended on May 22, 2020, ECF No. 37. See ECF No. 23 4. Plaintiff also requests the court order defendants to bear the costs associated with the forensic 24 analysis plaintiff says is required to complete review of electronic discovery. ECF No. 39 at 11.1 25 Prior to the court’s extending the TRO, defendants filed written opposition to a 26 preliminary injunction, plaintiff filed a reply, and the court heard oral argument. ECF Nos. 26, 27
28 1 The court cites to the page numbers assigned by the court’s ECF system. 1 29-32 (opposition briefing and declarations); ECF No. 27 (reply); ECF No. 35 (hearing minutes). 2 After ordering supplemental briefing, which the parties now have filed, see ECF Nos. 39, 41-43, 3 the court heard argument on plaintiff’s motions on June 3, 2020. The court resolves plaintiff’s 4 motion and request as set forth below, with an order explaining its decision more fully to follow. 5 Preliminary Injunction 6 Injunctive relief is an extraordinary remedy that may only be awarded upon a clear 7 showing that the moving party is entitled to such relief. Winter v. Natural Res. Def. Council, Inc., 8 555 U.S. 7, 22 (2008). As provided by Federal Rule of Civil Procedure 65, a court may issue a 9 preliminary injunction to preserve the relative position of the parties pending a trial on the 10 merits. University of Texas v. Camenisch, 451 U.S. 390, 395 (1981). The party seeking 11 injunctive relief must show it “is likely to succeed on the merits, . . . is likely to suffer irreparable 12 harm in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that 13 an injunction is in the public interest.” Winter, 555 U.S. at 20. 14 Before the Winter decision, the Ninth Circuit employed a “sliding scale” or 15 “serious questions” test, which allowed a court to balance the elements of the test “so that a 16 stronger showing of one element may offset a weaker showing of another.” See Alliance for the 17 Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (citing Clear Channel Outdoor, Inc. 18 v. City of Los Angeles, 340 F.3d 810, 813 (9th Cir. 2003)). Recently, the Circuit has found that its 19 “serious question” sliding scale test survived Winter: a court may issue a preliminary injunction 20 when the moving party raises serious questions going to the merits and demonstrates that the 21 balance of hardships tips sharply in its favor, so long as the court also considers the remaining 22 two prongs of the Winter test. Cottrell, 632 F.3d at 1131–35. 23 The court, having considered the arguments of counsel, the briefs and exhibits 24 submitted with this matter, and for good cause shown as will be explained in its forthcoming 25 order, FINDS that ExamWorks is entitled to a preliminary injunction because it has shown 26 (1) likely success on the merits of its trade secret misappropriation claims based on evidence that 27 defendants transmitted and took such material into their possession in a manner contrary to 28 ExamWorks’ written policies and applicable employment agreements with plans to use the 1 information to compete unlawfully against ExamWorks; (2) use or disclosure of such material by 2 defendants has damaged or will damage ExamWorks; (3) such damage is likely to be irreparable 3 because it will be in the form of lost business, lost customers, loss of goodwill, and similar harms 4 that are difficult or impossible to compensate with damages; (4) such irreparable harm is 5 threatened and imminent such that a preliminary injunction is necessary to preserve the relative 6 positions of the parties until this matter can be fully resolved at trial or through dispositive motion 7 practice; (5) the balance of hardships tips strongly in ExamWorks’ favor because defendants have 8 no legitimate interest in the unlawful use or disclosure of ExamWorks’ trade secrets, and (6) the 9 public interest favors this injunction to protect trade secrets as long as the injunction does not 10 impede defendant employees’ right to engage in lawful work. 11 Accordingly, the court GRANTS the motion for a preliminary injunction as 12 follows: 13 1. Defendants are ordered to continue taking all steps to preserve evidence relevant to 14 the allegations of the complaint and/or their employment with ExamWorks, including, but not 15 limited to, any email or cloud storage accounts, computers, servers, USB thumb drives, and any 16 other electronic devices that contain relevant electronic evidence. 17 2. Defendants are further ordered, at their own expense, to continue making any 18 electronic device or account that contains relevant electronic evidence available immediately to a 19 neutral and mutually agreed-upon third-party forensic expert (the “Forensic Expert”) in order to 20 create a forensically sound image of said device, or, in the alternative, turn over the actual 21 electronic device to the Forensic Expert. 22 3. Defendants and all persons in active concert or participation with them are hereby 23 enjoined from acquiring, accessing, disclosing, or using, or attempting to acquire, access, 24 disclosure, or use any trade secrets or confidential information of ExamWorks, or derivatives 25 thereof, as described in the complaint in this action, including, but not limited to, any documents 26 that discuss, forward, reference, or incorporate the trade secrets or confidential information of 27 ExamWorks. For purposes of this order, the legal definition of “trade secret” is all nonpublic 28 “forms and types of financial, business, scientific, technical, economic, or engineering 1 information, including patterns, plans, compilations, program devices, formulas, designs, 2 prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or 3 intangible, and whether or how stored, compiled, or memorialized physically, electronically, 4 graphically, photographically, or in writing.” See 18 U.S.C. § 1839(3). For purposes of this 5 order, “confidential information” means all other information belonging to or otherwise relating 6 to the business of ExamWorks or its affiliates which is not generally known. 7 4. Defendants and all persons in active concert or participation with them are ordered 8 to continue returning, without delay, all ExamWorks trade secrets and confidential information in 9 their possession, custody, or control to the office of counsel for ExamWorks (Catherine Lui, 10 Orrick, Herrington & Sutcliffe LLP, 400 Capitol Mall # 3000, Sacramento, CA 95814) to the 11 extent there are not materials already turned over to the Forensic Expert. 12 5.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 EXAMWORKS, a Delaware limited No. 2:20-CV-00920-KJM-DB liability company, 12 Plaintiff, 13 ORDER GRANTING PRELIMINARY v. INJUNCTION 14 TODD BALDINI, an individual, 15 ABYGAIL BIRD, an individual, LAWRENCE STUART GIRARD, an 16 individual, PAMELLA TEJADA, an individual, ROE CORPORATION, and 17 DOES 1 through 10, 18 Defendants. 19 20 Plaintiff ExamWorks, LLC’s (“ExamWorks”) moves for a preliminary injunction 21 to extend until trial the terms of the temporary restraining order (TRO) the court previously 22 entered on May 8, 2020, ECF No. 17, and extended on May 22, 2020, ECF No. 37. See ECF No. 23 4. Plaintiff also requests the court order defendants to bear the costs associated with the forensic 24 analysis plaintiff says is required to complete review of electronic discovery. ECF No. 39 at 11.1 25 Prior to the court’s extending the TRO, defendants filed written opposition to a 26 preliminary injunction, plaintiff filed a reply, and the court heard oral argument. ECF Nos. 26, 27
28 1 The court cites to the page numbers assigned by the court’s ECF system. 1 29-32 (opposition briefing and declarations); ECF No. 27 (reply); ECF No. 35 (hearing minutes). 2 After ordering supplemental briefing, which the parties now have filed, see ECF Nos. 39, 41-43, 3 the court heard argument on plaintiff’s motions on June 3, 2020. The court resolves plaintiff’s 4 motion and request as set forth below, with an order explaining its decision more fully to follow. 5 Preliminary Injunction 6 Injunctive relief is an extraordinary remedy that may only be awarded upon a clear 7 showing that the moving party is entitled to such relief. Winter v. Natural Res. Def. Council, Inc., 8 555 U.S. 7, 22 (2008). As provided by Federal Rule of Civil Procedure 65, a court may issue a 9 preliminary injunction to preserve the relative position of the parties pending a trial on the 10 merits. University of Texas v. Camenisch, 451 U.S. 390, 395 (1981). The party seeking 11 injunctive relief must show it “is likely to succeed on the merits, . . . is likely to suffer irreparable 12 harm in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that 13 an injunction is in the public interest.” Winter, 555 U.S. at 20. 14 Before the Winter decision, the Ninth Circuit employed a “sliding scale” or 15 “serious questions” test, which allowed a court to balance the elements of the test “so that a 16 stronger showing of one element may offset a weaker showing of another.” See Alliance for the 17 Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (citing Clear Channel Outdoor, Inc. 18 v. City of Los Angeles, 340 F.3d 810, 813 (9th Cir. 2003)). Recently, the Circuit has found that its 19 “serious question” sliding scale test survived Winter: a court may issue a preliminary injunction 20 when the moving party raises serious questions going to the merits and demonstrates that the 21 balance of hardships tips sharply in its favor, so long as the court also considers the remaining 22 two prongs of the Winter test. Cottrell, 632 F.3d at 1131–35. 23 The court, having considered the arguments of counsel, the briefs and exhibits 24 submitted with this matter, and for good cause shown as will be explained in its forthcoming 25 order, FINDS that ExamWorks is entitled to a preliminary injunction because it has shown 26 (1) likely success on the merits of its trade secret misappropriation claims based on evidence that 27 defendants transmitted and took such material into their possession in a manner contrary to 28 ExamWorks’ written policies and applicable employment agreements with plans to use the 1 information to compete unlawfully against ExamWorks; (2) use or disclosure of such material by 2 defendants has damaged or will damage ExamWorks; (3) such damage is likely to be irreparable 3 because it will be in the form of lost business, lost customers, loss of goodwill, and similar harms 4 that are difficult or impossible to compensate with damages; (4) such irreparable harm is 5 threatened and imminent such that a preliminary injunction is necessary to preserve the relative 6 positions of the parties until this matter can be fully resolved at trial or through dispositive motion 7 practice; (5) the balance of hardships tips strongly in ExamWorks’ favor because defendants have 8 no legitimate interest in the unlawful use or disclosure of ExamWorks’ trade secrets, and (6) the 9 public interest favors this injunction to protect trade secrets as long as the injunction does not 10 impede defendant employees’ right to engage in lawful work. 11 Accordingly, the court GRANTS the motion for a preliminary injunction as 12 follows: 13 1. Defendants are ordered to continue taking all steps to preserve evidence relevant to 14 the allegations of the complaint and/or their employment with ExamWorks, including, but not 15 limited to, any email or cloud storage accounts, computers, servers, USB thumb drives, and any 16 other electronic devices that contain relevant electronic evidence. 17 2. Defendants are further ordered, at their own expense, to continue making any 18 electronic device or account that contains relevant electronic evidence available immediately to a 19 neutral and mutually agreed-upon third-party forensic expert (the “Forensic Expert”) in order to 20 create a forensically sound image of said device, or, in the alternative, turn over the actual 21 electronic device to the Forensic Expert. 22 3. Defendants and all persons in active concert or participation with them are hereby 23 enjoined from acquiring, accessing, disclosing, or using, or attempting to acquire, access, 24 disclosure, or use any trade secrets or confidential information of ExamWorks, or derivatives 25 thereof, as described in the complaint in this action, including, but not limited to, any documents 26 that discuss, forward, reference, or incorporate the trade secrets or confidential information of 27 ExamWorks. For purposes of this order, the legal definition of “trade secret” is all nonpublic 28 “forms and types of financial, business, scientific, technical, economic, or engineering 1 information, including patterns, plans, compilations, program devices, formulas, designs, 2 prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or 3 intangible, and whether or how stored, compiled, or memorialized physically, electronically, 4 graphically, photographically, or in writing.” See 18 U.S.C. § 1839(3). For purposes of this 5 order, “confidential information” means all other information belonging to or otherwise relating 6 to the business of ExamWorks or its affiliates which is not generally known. 7 4. Defendants and all persons in active concert or participation with them are ordered 8 to continue returning, without delay, all ExamWorks trade secrets and confidential information in 9 their possession, custody, or control to the office of counsel for ExamWorks (Catherine Lui, 10 Orrick, Herrington & Sutcliffe LLP, 400 Capitol Mall # 3000, Sacramento, CA 95814) to the 11 extent there are not materials already turned over to the Forensic Expert. 12 5. Defendants are ordered, at their own expense, to work with the Forensic Expert to 13 permanently and forensically remove from all of their computers, servers, and other electronic 14 devices any trade secrets or confidential information of ExamWorks, or derivatives thereof, 15 including, but not limited to, any documents that discuss, forward, reference, or incorporate the 16 trade secrets or confidential information of ExamWorks, as defined in paragraph 3 above. 17 6. Defendants are hereby enjoined from conducting business with any individual or 18 entity that did business with ExamWorks before defendants stopped working there to the extent 19 those individuals or entities are identified in the bundle of trade secret materials misappropriated 20 by defendants, including, without limitation, curated lists identifying ExamWorks’ clients, 21 medical providers, and doctors; provided however that defendants are not precluded from 22 lawfully announcing their new employment as long as any announcement does not make use of 23 plaintiff’s trade secrets. 24 This preliminary injunction shall be effective immediately and no bond is required. 25 Discovery Expenses 26 The court also DETERMINES that defendants have not at this point overcome the 27 presumption that, as the responding parties to plaintiff’s discovery requests they must bear the 28 expense of compliance, including the costs to have the forensic expert identify responsive 1 information contained in the voluminous electronic material defendants have produced. See 2 Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 358-59 (1978) (reviewing presumption 3 applicable to discovery practice “that the responding party must bear the expense of complying 4 with discovery requests”). This determination does not preclude defendants’ seeking to rebut the 5 presumption through the filing of a discovery motion under Federal Rule of Civil Procedure Rule 6 26 or other applicable discovery rule before the assigned magistrate judge. 7 Settlement Conference 8 Recognizing the defendant employees’ right to engage in lawful work as long as 9 they are not misappropriating plaintiff’s trade secrets, and the possibility that the parties may be 10 in a position to propose a refinement to paragraph 6 above that clarifies the extent to which 11 defendants here may engage in such work, the court ORDERS the parties to participate in a 12 settlement conference to be convened on an expedited basis by Magistrate Judge Kendall J. 13 Newman. Judge Newman’s courtroom deputy will contact the parties to set the settlement 14 conference, which may be convened by videoconference and/or telephone, at the earliest 15 available date. 16 IT IS SO ORDERED. 17 DATED: June 3, 2020. 18 19 20 21 22 23 24 25 26 27 28