Priority Payment Systems, LLC v. Signapay, Ltd.

161 F. Supp. 3d 1294, 2016 U.S. Dist. LEXIS 70333, 2016 WL 3059836
CourtDistrict Court, N.D. Georgia
DecidedJanuary 25, 2016
DocketCIVIL ACTION NO. 1:15-cv-04140-AT
StatusPublished
Cited by3 cases

This text of 161 F. Supp. 3d 1294 (Priority Payment Systems, LLC v. Signapay, Ltd.) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Priority Payment Systems, LLC v. Signapay, Ltd., 161 F. Supp. 3d 1294, 2016 U.S. Dist. LEXIS 70333, 2016 WL 3059836 (N.D. Ga. 2016).

Opinion

ORDER

Amy Totenberg, United States District Judge

This dispute between business competitors involving the alleged misappropriation of proprietary computer source code is pending before the Court on Plaintiffs’ Motion for an Interlocutory Injunction [Doc. 6]. The Court held a hearing on January 19, 2016, and heard arguments from both parties as well as the testimony of two witnesses on behalf of Plaintiffs.

I. BACKGROUND

Plaintiff Priority Payment Systems1 is a merchant service acquirer company that [1297]*1297contracts with merchants to process, for a fee, card transaction payments. According to the Complaint and Motion for Interlocutory Injunction, Priority is the number 20 merchant acquirer in the United States, processing nearly $20 billion annually for more than 135,000 merchants. Priority acquires its merchants through Independent Sales Organizations (“ISOs”), which are responsible for acquiring, signing up, and managing the merchants. Priority operates its business via a merchant management system, known as the Virtual Merchant Application System, or “VIMAS.”

Defendants SignaPay, LTD, and SignaPay, LLC (collectively, “SignaPay”), are ISOs contracting with Priority. Plaintiffs allege that over the past year, SignaPay, has systematically engaged in a concerted effort to misappropriate the proprietary VIMAS system through improper means. According to Plaintiffs’ motion and attachments, at least four Priority employees have left Priority and joined SignaPay. Each of these ex-employees, including Defendants Ordóñez and Bohan, was engaged in software development activities while employed by Plaintiffs.

On August 28, 2015, Priority discovered that one of its software programming contractors, Defendant Simone, unsuccessfully attempted to grant “file share” access to a ZIP file that contained a copy of the VI-MAS source code to four external e-mail addresses associated with a company called Luma Consultores whose employees currently work as contractors for SignaPay in developing a competing system for SignaPay. On August 28, 2015, Simone also successfully granted file share access to the same ZIP file to his personal Hotmail account. Upon investigating this incident, Priority discovered that Simone had sent e-mails to Ordóñez, Bohan, and other ex-Priority employees who are now working for SignaPay, and that Simone had also been working for SignaPay for many months.

Plaintiffs seek a preliminary injunction (1) enjoining Defendants from restricting the scope of the forensic audit of their computer and e-mail systems for the purpose of determining whether, and to what extent, trade secrets or electronic copies of documents belonging to Plaintiffs remain on Defendants’ computer or email systems; (2) prohibiting Defendants from continuing their development of their own merchant management system that is intended to compete with Priority’s merchant management systems (SAFYER pronounced sapphire) until, at a minimum, the forensic audit is completed; (3) requiring Defendants to return or delete any and all trade secrets and other property, including documents and electronic copies of documents belonging to Plaintiffs; and (4) prohibiting Ordóñez from further breaching his contract with Plaintiffs.

Defendants object to Plaintiffs’ request on the grounds that there is no evidence that Simone acted at SignaPay’s direction or authority, and assert that it is more likely that his conduct was the result of a complete lapse in professional judgment. Defendants assert that they have no way of knowing whether SAFYER contains the VIMAS source code because they do not have access to the data in Simone’s Zipfile.

Defendants oppose the scope of relief sought. According to Defendants Plaintiffs [1298]*1298are attempting to use the preliminary injunction process as a competitive weapon to shut down their business. Halting development of SAFYER will be disruptive to Defendants’ business, would create issues with the Current functioning capacity of SAFYER used to manage 2,000 merchant accounts, and would require Defendants to fire the 4 software developers working on the project.

Defendants object to using PricewaterhoiiseCoopers (PwC), hired by Plaintiff, to conduct the requested forensic audit of their computer system. Defendants propose that if the Court permits an audit it should be (1) limited to a search of the SAFYER system for the VIMAS source code (not a search of all of the SignaPay Defendants’ computer and electronic devices); and (2) conducted by a neutral party appointed under FRE 706.

In Reply, Plaintiffs assert that Defendants’ proposed limitation on the scope of the audit to SAFYER would allow for potentially ridiculous results — (1) SignaPay can delete the VIMAS Source Code from SAFYER until the forensic audit is completed and then replace the code; and (2) SignaPay may not have yet incorporated the VIMAS Source Code, so it can wait to incorporate the VIMAS Source Code until after the forensic audit of SAFYER. Defendants’ desire to avoid a search of their e-mails is unreasonable because of the undisputed evidence that Simone used e-mail to misappropriate Priority’s VIMAS Source Code and that Simone and SignaPay employees regularly emailed each other as part of their work on SAFYER.

II. LEGAL ANALYSIS

A preliminary injunction is “an extraordinary and drastic remedy.” Siegel v. LePore, 234 F.3d 1163, 1176 (11th Cir.2000). To warrant such extraordinary relief, Plaintiffs must establish that: (1) they have a substantial likelihood of success on the merits, (2) they will suffer irreparable injury if the relief is not granted, (3) the threatened injury outweighs the harm the relief may inflict on the Defendants, and (4) entry of relief would not be adverse to the public interest. Bloedorn v. Grube, 631 F.3d 1218, 1229 (11th Cir.2011) (citing Siegel). The purpose of a preliminary injunction is to preserve the positions of the parties as best the Court can until a trial on the merits may be held. Bloedom, 631 F.3d at 1229 (citing Univ. of Tex. v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981)).

Plaintiffs have met these requirements and shown their entitlement to some form of immediate injunctive relief at least with respect to their claim arising under the Georgia Trade Secrets Act (“GTSA”), O.C.G.A. § 10-1-760 et seq.2 The Court addresses first, the basis for [1299]*1299Plaintiffs’ entitlement to preliminary injunctive relief, and second, a reasonable scope of relief to protect Plaintiffs’ interests pending a trial on the merits.

A. Substantial Likelihood of Success on the Merits

To succeed on a claim for misappropriation of trade secrets under the Georgia Trade Secrets Act (“GTSA”), O.C.G.A. § 10-1-760

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

Related

Cite This Page — Counsel Stack

Bluebook (online)
161 F. Supp. 3d 1294, 2016 U.S. Dist. LEXIS 70333, 2016 WL 3059836, Counsel Stack Legal Research, https://law.counselstack.com/opinion/priority-payment-systems-llc-v-signapay-ltd-gand-2016.