Free Country Ltd. v. Drennen

235 F. Supp. 3d 559, 2016 WL 7635516, 2016 U.S. Dist. LEXIS 180755
CourtDistrict Court, S.D. New York
DecidedDecember 30, 2016
Docket16 CV 8746 (JSR)
StatusPublished
Cited by53 cases

This text of 235 F. Supp. 3d 559 (Free Country Ltd. v. Drennen) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Free Country Ltd. v. Drennen, 235 F. Supp. 3d 559, 2016 WL 7635516, 2016 U.S. Dist. LEXIS 180755 (S.D.N.Y. 2016).

Opinion

OPINION

JED S. RAKOFF, United States District Judge. ' -

This dispute comes before the Court after Plaintiff Free Country LTD (“Free Country”) moved ex parte for. an order to show cause for a preliminary injunction and temporary restraining order (“TRO”) against defendants Brian Drennen, Matthew Vander Wyden, Rousso Apparel [563]*563Group, Inc. (“Rousso”), and Santa Fe Apparel, LLC (“Santa. Fe”) (collectively, the “defendants”). In brief, plaintiff alleges that its former employees, defendants Drennen and Vander Wyden, have misappropriated plaintiffs, trade secrets in order to establish a competing product line for defendants Rousso and Santa Fe.- Initially, the Court granted the plaintiffs motion by Order dated November 10, -2016, which it amended on November 17, 2016. Subsequently, however, after counsel for defendants had appeared, the Court held a three-day evidentiary hearing to put the TRO-to the test of the adversary, system. Thereafter, oñ the basis of the Court’s assessment of the evidence presented at that hearing (including its assessment of the witnesses’ demeanor and credibility), the Court by Order dated December 9, 2016 granted in part plaintiffs motion for a renewed TRO by prohibiting defendants from using or disseminating plaintiffs confidential information, but denied plaintiffs request that defendants be prohibited from soliciting Free Country’s customers in connection with the fall 2017 season. This Opinion explains the reasons for these post-hearing rulings.

Plaintiff Free Country is an apparel manufacturer and wholesaler with approximately 65 employees. See transcript of evidentiary hearing (“Tr.”) 172:5-10. Plaintiff maintains a wide variety of business information on a shared network system, id. at 177-178, and provides email accounts to its employees, id. at 178:7-9. Employees access these systems by logging in to password-protected computers provided by Free Country, id. at 267:20-23, and plaintiff generally requires new hires to sign a confidentiality agreement and an acknowl-edgement of the company’s handbook. Id. at 179:19-25. By signing the documents, the employees agree to not disseminate Free Country’s proprietary information. Id. at 180-181; 190-191.

In August 2014, plaintiff hired defendant Drennen, who had 20 years of experience in the apparel industry, to oversee Free Country’s Men’s and Ladies’ active wear as Vice President of Sales. Id. at 173:22-174:11; 382:13-25. In November 2015, plaintiff hired defendant Vander Wyden, who had 30 years of industry éxperience, as a director of sales for Men’s outerwear. Id. at 176:2-6; 282:9-23.1

Both Drennen and Vander Wyden had a practice of transferring materials from Free Country’s server during their employment. In or around March 2015, Dren-nen installed on his company computer a file-sharing program called “Dropbox,” id. at 345:25-346:3, which allows users to transfer information among “linked” devices using an online “cloud” account. Id. at 85:2-86:2; 21:22-22:10. Drennen testified that he used the program to aid his work while he was on the road or at home, and linked three personal devices to his Dropbox account while at Free Country: an Android phone, an iPad, and an iMac. Id. at 3.46:6-16. Defendant Vander Wyden, in turn, frequently emailed to himself Free Country’s “Master Contact List,’’ id at 327:16-23, which contained the contact information for the company’s clients, id. at 231:17-19. Vander Wyden testified that he used the list while traveling on Free Country’s behalf. Id at 334:12-20.

Neither Drennen nor Vander Wyden were happy at Free Country. Id at 290:14-17; 430:9-16. In late September 2016, Drennen and Vander Wyden began [564]*564employment negotiations with defendant Rousso.2 Id. at 315:10-20. Vander Wyden subsequently resigned from Free Country on October 13, 2016, after receiving an offer to create a competing product line for Rousso’s newly-formed division, “Mountain and Isles.” Id. 279:2-3; 316:11-15. Prior to his departure, however, Vander Wyden emailed to his personal address on October 10 and 11, 2016 copies of several documents, including Free Country’s Master Contact List and an email containing four product designs dating from the mid-1990s. Id. at 291-293.

The same day that Vander Wyden resigned, Drennen began transferring a substantial quantity of information from Free Country’s server into his Dropbox account, including customer orders and design information for the fall 2017 season.3 Id at 89:21-90:5; 201:3-21. Drennen made an additional transfer on October 18, 2016, id. at 126:8-17, and resigned from Free Country three days later on October 21, 2016 to join Mountain and Isles, id. at 111:9-12. Drennen uninstalled Dropbox from his Free Country computer the same day. Id at 115:15-20. During the evidentiary hearing, Drennen testified that he transferred the materials so that he could review the files for personal information, id. at 353:1— 10, and that he deleted any Free Country documents by October 22, 2016, id. at 358:10-15. The Court entirely discredits the first statement, but is inclined to credit the second statement.

Free Country discovered the document transfers after reviewing Drennen’s laptop and issued cease and desist letters to defendants Drennen and Vander Wyden on October 27, 2016.4 Id. at 199:17-200:17; 415:15-416:3; 417:12-24. On November 10, 2016, plaintiff moved ex parte for an order to show cause for a preliminary injunction and temporary restraining order, alleging among other causes of action that defendants had misappropriated Free Country’s trade secrets in violation of New and the Defend Trade Secrets Act York law (“DTSA”), 18 U.S.C. § 1831. See ECF No. 1. The Court granted plaintiffs motion, see ECF No. 9, and held a hearing on the order to show cause on November 15, 2016. On November 17, 2016, the Court extended and amended its order to prohibit defendants Drennen and Vander Wyden from soliciting Free Country’s customers unless defendants could show that such customer contact information was in their possession prior to their employment at Free Country. See ECF No. 17. The amended order also required that defendant Drennen permit inspection of his Dropbox account by a neutral forensic expert agreed upon by the parties or appointed by the Court. Id. By consent orders dated November 20 and 21, 2016, the Court appointed Robert Knudsen as the neutral forensic expert and established a protocol for his examination of the account. See ECF No. 18, 19. Mr. Knudsen submitted his report to the Court on November 29, 2016, which the Court provided to the parties the following day. The Court subsequently held an evidentiary hearing on the temporary restraining order on December 5, 7, and 8, 2016, the key issue of [565]*565which was whether the Court should prohibit defendants Drennen and Vander Wy-den from soliciting Free Country’s customers in connection with the fall 2017 season. By order dated December 9, 2016, the Court granted in part plaintiffs motion for a renewed TRO, but denied the proposed non-solicitation provision.

The standard for an entry of a TRO is essentially the same as for a preliminary injunction. Andino v, Fischer, 555 F.Supp.2d 418, 419 (S.D.N.Y. 2008).

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Bluebook (online)
235 F. Supp. 3d 559, 2016 WL 7635516, 2016 U.S. Dist. LEXIS 180755, Counsel Stack Legal Research, https://law.counselstack.com/opinion/free-country-ltd-v-drennen-nysd-2016.