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McAfee, LLC v. Kinney

United States District Court, E.D. Texas, Sherman Division

August 29, 2019

MCAFEE, LLC
v.
JENNIFER E. KINNEY, et al.

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT UNITED STATES DISTRICT JUDGE

         Pending before the Court is Plaintiff McAfee, LLC’s Emergency Motion for Temporary Restraining Order and Preliminary Injunction (Dkt. #2) (“Motion for Preliminary Injunction”). Having considered the motions, the relevant pleadings, and the evidence and arguments made at the four-day preliminary injunction hearing,[1] the Court finds that the Motion for Preliminary Injunction should be denied.

         BACKGROUND

         Plaintiff McAfee, LLC filed suit against Defendants Jennifer E. Kinney (“Kinney”), Alan P. Coe (“Coe”), Percy O. Tejeda (“Tejeda”) (collectively “Individual Defendants”), and Tanium, Inc. (“Tanium”) (collectively “Defendants”) after the Individual Defendants left their employment with Plaintiff to join Plaintiff’s alleged competitor, Tanium. Each of the Individual Defendants signed an employment agreement, which contained a confidentiality provision and a non-solicitation provision. The Court uses Tejeda’s agreement as an example, but all of the Individual Defendants have substantially similar, if not identical, provisions in their agreements.

3. Confidential Information and McAfee Property During and after my McAfee employment, I will hold in strict confidence and not disclose or use any Confidential Information connected with McAfee business or the business of any McAfee’s suppliers, customers, employees, or contractors unless (i) such disclosure or use is required in connection with my McAfee work, (ii) such information becomes lawfully and publicly known outside McAfee, or (iii) an McAfee officer expressly authorizes such disclosure or use in advance and in writing. For purposes of this Agreement, Confidential Information includes, without limitation: technical information (e.g. roadmaps, schematics, source code, specifications), business information (e.g. product information, marketing strategies, markets, sales, customers, customer lists or phone books), personnel information (e.g. organizational charts, employee lists, skill sets, employee health information, names, phone numbers, email addresses, personnel files, employee compensation except where the disclosure of such personnel information is permissible under local labor law such as the right of employees to discuss compensation and working conditions under the US National Labor Relations Act), and other non-public McAfee data and information of a similar nature. . . . I agree that any violation of this provision will result in immediate and irreparable injuries and harm to McAfee, and that McAfee shall be entitled to all available legal and equitable remedies, including injunctive relief and specific performance, without having to post bond.
. . .
5. Non-Solicitation and Misappropriation of Trade Secrets McAfee’s Confidential Information includes confidential and private information relating to other employees and customers. Additionally, McAfee has a legitimate business interest in its continuing employment and customer relationships and in protecting those relationships from unlawful interference. Accordingly, I agree that during my employment and for twelve (12) months after my employment ends, I will not solicit, directly or indirectly, any employee to leave his/her employment with McAfee. During the twelve (12) months after my employment ends, this applies to any employees that were employed with McAfee as of my separation date from the Company and with whom I had business contact or about whom I had access to Confidential Information during my previous two years of employment with the Company prior to my separation. I further agree that I shall not use or disclose McAfee Confidential Information to aid any third party to target, identify, and/or solicit McAfee customers or McAfee employees to leave McAfee employment and/or misappropriate McAfee trade secrets or assist or aid any third party in any manner to do the same. I agree that any violation of this provision will result in immediate and irreparable injuries and harm to McAfee, and that McAfee shall be entitled to all available legal or equitable remedies, including injunctive relief and specific performance, without having to post bond. I understand that nothing in this Agreement prohibits me from disclosing my compensation information to third parties in accordance with applicable law.

(Dkt. #1, Exhibit 1 at pp. 20–21).

         Tejeda was the first employee to leave work with Plaintiff in October 2018 to take a similar job with Tanium. After his departure, Tejeda reached out to both Coe and Kinney to discuss opportunities for them at Tanium. Both Kinney and Coe eventually left their jobs with Plaintiff and accepted employment with Tanium in March and May of 2019 in positions similar to their jobs with Plaintiff. The Individual Defendants all informed Plaintiff that they were leaving for work at Tanium. The forensic analysis of Kinney and Coe’s McAfee issued computers suggest that they accessed Plaintiff’s confidential documents or documents that contained Plaintiff’s confidential information on their last day.

         Based on these general facts, on June 24, 2019, Plaintiff filed suit against Defendants asserting claims for misappropriation of trade secrets, breach of contract, tortious interference with contract, breach of fiduciary duties, aiding and abetting breach of fiduciary duties, and conspiracy (Dkt. #1). On June 24, 2019, Plaintiff simultaneously asked the Court to enter a temporary restraining order (“TRO”) and a preliminary injunction (Dkt. #2). The Court set the TRO request for a hearing to occur on June 25, 2019 (Dkt. #8). On June 25, 2019, the parties submitted an agreed TRO for the Court to enter (Dkt. #14) and the Court set a preliminary injunction hearing to occur on July 9, 2019. Subsequently, the parties jointly sought to modify the TRO and to reset the preliminary injunction hearing for July 30, 2019 (Dkt. #19), which the Court granted (Dkt. #20).

         On July 29, 2019, Tanium filed a trial brief (Dkt. #44) that appeared to be a response to the motion for preliminary injunction. The Court held the first day of its preliminary injunction hearing on July 30, 2019. At the hearing, the Court discussed the trial brief with Tanium and informed Tanium, this was not the proper way to file a response to the motion. The Court held the second day of the preliminary injunction hearing on July 31, 2019. At the second day, the parties informed the Court that it had made a mistake in the language of its motion to modify the TRO. As a result, the TRO expired on July 30, 2019. Defendants also informed the Court that Kinney had been terminated from her employment with Tanium and requested that the Court modify the TRO as to Kinney. On July 31, 2019, the Court extended the TRO at the request of the parties and modified the TRO as to Kinney (Dkt. #49). On August 1, 2019, Plainitff filed a motion to modify the TRO regarding Coe, in order to allow Coe to return to work for Tanium (Dkt. #56). On August 12, 2019, Tanium filed a motion for leave to file a response to the motion for preliminary injunction (Dkt. #66), filed its response (Dkt. #67), and the Individual Defendants filed a motion for leave to join in that response (Dkt. #68). On August 13, 2019, the Court held the third day of the preliminary injunction hearing. On August 14, 2019, the Court held the fourth and final day of the preliminary injunction hearing. Additionally, on August 14, 2019, the Court extended the TRO for an additional fourteen days, as agreed by the parties (Dkt. #75) and modified the TRO to allow Coe to return to work (Dkt. #74). On August 15, 2019, the Court held a telephone conference to discuss the briefing schedule following the hearing and at that time the Court orally granted Tanium and the Individual Defendants’ request for leave to file and join in the response to the motion for preliminary injunction. On August 21, 2019, Plaintiff filed a reply to its motion for preliminary injunction (Dkt. #91).

         Following the hearing and as requested by the Court, Plaintiff filed its closing arguments in writing on August 16, 2019 (Dkt. #80). On August 20, 2019, Tanium and the Individual Defendants filed their responses to Plaintiff’s closing arguments (Dkt. #85; Dkt. #86). On August 21, 2019, Plaintiff filed its reply to the closing arguments (Dkt. #91).

         Additionally, on August 15, 2019, Plaintiff filed an amended notice of filing original discovery to be used as evidence in connection with Plaintiff’s emergency motion for TRO and preliminary injunction (Dkt. #76). On August 16, 2019, Plaintiff filed a notice of filing declarations, regarding Plaintiff’s Exhibit 161 (Dkt. #78). The Individual Defendants objected to both submissions (Dkt. #79). Further, on August 19, 2019, Plaintiff filed its Brief Regarding Admissibility of Summary Evidence of Voluminous Documents Under Federal Rule of Evidence 1006, regarding Plaintiff’s Exhibit 161 (Dkt. #81). On August 21, 2019, Defendants filed a response to this brief (Dkt. #90).

         LEGAL STANDARD

         A party seeking a preliminary injunction must establish the following elements: (1) a substantial likelihood of success on the merits; (2) a substantial threat that plaintiffs will suffer irreparable harm if the injunction is not granted; (3) that the threatened injury outweighs any damage that the injunction might cause the defendant; and (4) that the injunction will not disserve the public interest. Nichols v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008). “A preliminary injunction is an extraordinary remedy and should only be granted if the plaintiffs have clearly carried the burden of persuasion on all four requirements.” Id. Nevertheless, a movant “is not required to prove its case in full at a preliminary injunction hearing.” Fed. Sav. & Loan Ins. Corp. v. Dixon, 835 F.2d 554, 558 (5th Cir. 1985) (quoting Univ. of Tex. v. Comenisch, 451 U.S. 390, 395 (1981)). The decision whether to grant a preliminary injunction lies within the sound discretion of the district court. Weinberger v. Romero-Barcelo, 456 U.S. 305, 320 (1982).

         ANALYSIS

         Plaintiff requested the Court enter a preliminary injunction after the Court entered the parties’ agreed TRO. The Court held a hearing regarding the preliminary injunction request. In this order, the Court will address the merits of the motion for the preliminary injunction and any objections raised in the briefing or in the hearing that the Court took under advisement.

         I. Merits of the Request for Preliminary Injunction

         Plaintiff asks the Court to enjoin the Defendants in this case based on its causes of action for breach of contract, tortious interreference with contract, and misappropriation of trade secrets. Plaintiff contends that it has sufficiently shown all four elements for each cause of action asserted as a basis to enjoin each Defendant in this case. Defendants disagree. Because there are four different defendants in this case, the Court will address Defendants collectively where possible, but separately when necessary.

         A. Tejeda, Coe, and Tanium

          Plaintiff asserts that it has sufficiently demonstrated the preliminary injunction elements. Tejeda, Coe, and Tanium disagree. The Court will turn to the first element: whether Plaintiff has demonstrated a likelihood of successes on the merits.

         Plaintiff filed suit against Tejeda, Coe, and Tanium alleging misappropriation of trade secrets under both 18 U.S.C. § 1836 and the Texas Uniform Trade Secrets Act, and conspiracy to misappropriate trade secrets, tortiously interfere with contracts, and breach of fiduciary duties (Dkt. #1). Plaintiff adds a cause of action for breach of contract against Tejeda and Coe (Dkt. #1). Plaintiff additionally alleges a cause action for tortious interference with contract and aiding and abetting breach of fiduciary duty against Tejeda and Tanium (Dkt. #1). Finally, Plaintiff claims Coe breached his fiduciary duties (Dkt. #1). Plaintiff seeks an injunction using: (1) its misappropriation of trade secrets, tortious interference, and breach of contract causes of action as the basis to enjoin Tejeda; (2) its misappropriation of trade secrets and breach of contract causes of action against Coe; and (3) its misappropriation of trade secrets and tortious interference causes of action to enjoin Tanium. Before delving into an analysis on whether Plaintiff has shown a substantial likelihood of success on the merits on all these claims, the Court must address some preliminary matters.

         Regarding the claims asserts against Tejeda, in an order entered on this same day, the Court dismissed Plaintiff’s claim for breach of contract against Tejeda, finding it lacked personal jurisdiction over that claim. Thus, the Court only looks to misappropriation and tortious interference in determining whether Plaintiff is entitled to a preliminary injunction against Tejeda.

         The Individual Defendants ask the Court to limit that further to only considering misappropriation, arguing that Plaintiff did not initially request to enjoin Tejeda based on tortious interference and that it was a trial by surprise. In its initial motion with the Court, Plaintiff asks the Court to enjoin Defendants, using breach of contract and misappropriation as the basis for the injunction (Dkt. #2). In its closing arguments, Plaintiff uses tortious interference as an additional basis for an injunction in this case, claiming in a footnote that it has “discovered evidence to support a preliminary injunction against further tortious interference by Tanium and Tejeda, and the parties presented such evidence without objection during the preliminary injunction hearing. Accordingly, the issue has been fully litigated by consent for purposes of the injunction.” (Dkt. #80 at p. 12 n.5). The Individual Defendants dispute this contention and counter that the evidence presented at the preliminary injunction hearing that applies to the tortious interference claim also applies to other claims, and thus, there was no clear indication that Plaintiff was raising tortious interference.

         The Court disagrees with the Individual Defendants. Plaintiff made clear in the preliminary injunction hearing that it was seeking an injunction based, not only on breach of contract and its trade secret claims, but also pursuing an injunction on tortious interference. In Plaintiff’s counsel’s opening statement, he stated that “the evidence is going to show a prima facie case for breach of contract, tortious interference, and trade secret claims.” (Dkt. #62 at 29:8–10). The Court finds this claim in opening statements to be clear notice that Plaintiff was pursuing an injunction based on its tortious interference claims. See Humana Ins. Co. v. Tenet Health Sys., No. 3:16-cv-2919, 2016 WL 6893629, at *35 (N.D. Tex. Nov. 21, 2016). As such, the Court addresses the likelihood of success as to Plaintiff’s claims for misappropriation of trade secrets, tortious interference with contract, and breach of contract.

         1. Misappropriation of Trade Secrets against Tejeda, Coe, and Tanium

         Plaintiff claims that it has shown a prima facie case that Tejeda, Coe, and Tanium have misappropriated Plaintiff’s trade secrets. Tejeda, Coe, and Tanium disagree.

         A claim for misappropriation of trade secrets requires: (1) a trade secret; (2) misappropriation; and (3) use in interstate commerce. 18 U.S.C. § 1836(b)(1). A trade secret[2]includes all business information, including compilations, if the owner has taken reasonable measures to keep such information secret, that derives independent economic value from not being generally known to and not being readily ascertainable by another person who can obtain economic value from the disclosure or use of the information. Id. § 1839(3). Plaintiff contends that it has demonstrated a prima facie case that a trade secret exists here. Plaintiff asserts that its trade secrets encompass “McAfee’s particular business processes, best practices, and institutional knowledge for approaching sales, marketing, pricing, and customer relationship”, which Plaintiff further explains “is not in a pricing matrix or off-the-shelf software like Anaplan, but is present in the gatekeeping, shepherding, and advocacy functions that McAfee deal desk employees undertake when serving as trusted advisors to the McAfee sales teams.” (Dkt. #80 at p. 14).

         Instead of focusing on whether Plaintiff can prove the existence of trade secret, for the purposes of this preliminary injunction request, Tejeda, Coe, and Tanium instead challenge that Plaintiff has not sufficiently shown that they have misappropriated any trade secret or used any trade secret. The Court will only address the specific challenges in this case.

         Under DTSA, “misappropriation” means

(A) acquisition of a trade secret by a person who knows or has reason to know that the trade secret was acquired ...

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