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Economic Research Services, Inc. v. Resolution Economics, LLC

United States District Court, D. Columbia

October 21, 2015


         Decided October 19, 2015.

          For Economic Research Services, Inc., Plaintiff: Leslie Paul Machado, W. Michael Holm, LEAD ATTORNEYS, LECLAIR RYAN, Alexandria, VA USA; John Paul Leonard, Walter Richard Krzastek, Jr., PRO HAC VICE, MCELROY, DEUTSCH, MULVANEY & CARPENTER, LLP, Morristown, N.J. USA.

         For Resolution Economics, LLC, Ali Saad, Paul White, Defendants: Alta Marlynn Ray, David Barmak, LEAD ATTORNEYS, MINTZ, LEVIN, COHN, FERRIS, GLOVSKY & POPEO, P.C., Washington, DC USA; Peter Van Buren Unger, Stewart S. Manela, LEAD ATTORNEYS, ARENT FOX LLP, Washington, DC USA; Michael Scott Arnold, PRO HAC VICE, MINTZ, LEVIN, COHN. FERRIS, GLOVSKY & POPEO, P.C., Chrysler Center, New York, N.Y. USA.

         MEMORANDUM OPINION [Dkts. #3, #22]

         RICHARD J. LEON, United States District Judge.

         Plaintiff Economic Research Services (" plaintiff" or " ERS" ) commenced the instant action against defendants Resolution Economics LLC (" Resolution" ), Paul White (" White" ), and Ali Saad (collectively, " defendants" ) in August 2015. ERS alleges, in a thirteen-count Verified Complaint, that White, a former employee, violated the terms of his employment agreement by disseminating ERS's confidential information and by luring ERS's clients and employees to its regional competitor, Resolution Economics. See Verified Compl. [Dkt. #1]. Eager to stop the exodus of clients and personnel, ERS sought a preliminary injunction to enjoin defendants from purloining additional information and from further soliciting its client base. See Mot. for TRO & Prelim. Inj. & Br. in Supp. of Economic Research Servs., Inc.'s Appl. for a TRO & a Prelim. Inj. (Pl.'s Mem." ) [Dkt. #3]; Defs.' Mem. of Law in Opp'n to Pl.'s Mot. for a Prelim. Inj. (" Defs.' Mem." ) [Dkt. #19].[1] Upon consideration of the pleadings, the relevant case law, and the entire record herein, the Court DENIES plaintiff's motion in its entirety.[2]


         Plaintiff ERS provides economic research and statistical analysis for corporations and law firms in a variety of disciplines, including employment discrimination, fair lending, insurance coverage, and intellectual property. See Compl. ¶ 19.[3] Although the events at issue here transpired in ERS's Washington, D.C. office, that is not ERS's only, or even principle, place of business. Indeed, ERS, which is a subsidiary of parent corporation SourceHOV, is headquartered in Florida and contains two outposts in California, both of which have sizeable Labor and Employment practices. White Decl. ¶ 3 [Dkt. #19-1]. Defendant Resolution operates in the same Labor and Employment consulting milieu. Since its founding nearly twenty years ago, Resolution has established offices in Los Angeles, Chicago, and Washington, D.C., and has built, moreover, a respected practice furnishing expert witness services in labor and employment disputes, as well as financial consulting in matters concerning " human resource management, wage and hour issues, and accounting." Saad Decl. ¶ 2 [Dkt. #19-2].

         Before his move to Resolution, defendant White was a demonstrably important part of ERS's Washington, D.C. Labor and Employment practice. White began his twenty-two year stint at ERS in 1993, when he was hired as an Economist. Compl. ¶ ¶ 21, 25. He thereafter moved up the ranks, receiving a promotion to Vice President in 1998 before ultimately becoming a Managing Director in the Washington, D.C. office of ERS's Labor and Employment group in 2010. Compl. ¶ ¶ 21, 25. As a condition of his employment, White signed numerous contracts with ERS, the most recent of which was consummated on June 29, 2015 (the " 2015 Employment Agreement" or the " Agreement" ). Compl. Ex. 3 [Dkt. #1-3]; see Compl. ¶ ¶ 28-32; see also Compl. Ex. 1 [Dkt. #1-1]; Compl. Ex. 2 [Dkt. #1-2]. The 2015 Employment Agreement contains several restrictive covenants, only a few of which are relevant here. First, the Agreement bars Directors from disclosing ERS's confidential information to third parties at any time following their departure from ERS.[4] Compl. Ex. 3 § 3(i). Second, it prohibits Directors from soliciting ERS employees or clients for the twelve months following their separation.[5] Compl. Ex. 3 § § 3(k)(i)-(ii). Third, and finally, the Agreement precludes Directors, once again for a period of twelve months after leaving ERS, from performing " any act that [the] Director[s] knew, know[], or reasonably should have known . . . might directly injure ERS or its parents and affiliates in any material respect." Compl. Ex. 3 § 3(k)(iv).

         On July 6, 2015, shortly after signing the 2015 Employment Agreement, White resigned his position at ERS and, effective July 17, 2015, left to manage Resolution's nascent Washington, D.C. office. Compl. ¶ ¶ 38-39; Compl. Ex. 4 [Dkt. #1-4]. After apprising ERS of his resignation, but shortly before leaving ERS, White generated a list of the clients he had serviced during his tenure at ERS. White Decl. ¶ 43. While ERS contends that White's actions were tantamount to misappropriation, defendants maintain that there is nothing untoward about reverse-engineering, as White purportedly did here, a client list from memory. Indeed, White avers that he compiled the offending list " one evening at home" by jotting down the " contacts that [he] had at [client] law firms, public agencies and in-house legal and human resources departments." White Decl. ¶ 43. Where his memory failed, White supplemented the list by combing through his LinkedIn contacts and performing targeted Internet searches. White Decl. ¶ 43. For a number of the clients on his list, White included email addresses that he either recalled from memory or located through publicly-available sources. White Decl. ¶ 43. White then tendered the list to Resolution, which conducted its own searches to find, and catalogue, the email addresses of the remaining clients whose contact information White was unable to independently verify. Hurtado Decl. ¶ 5 [Dkt. #19-3]. Thereafter, on July 17, 2015, Resolution emailed the individuals on White's reconstructed list, announcing that White would be joining Resolution as a Partner and furnishing his updated contact information. Compl. ¶ ¶ 42, 46; Compl. Ex. 5 [Dkt. #1-5]. According to ERS, the announcement had its desired effect. Shortly after Resolution sent the email, ERS began to receive formal notices from its clients requesting that their files be transitioned to Resolution. See Compl. ¶ 46.

         This exodus was not limited to ERS's clients. In the wake of White's resignation, several other members of ERS's Washington, D.C. Labor and Employment group, all of whom had worked for White, quit their jobs at ERS and joined Resolution.[6] See Compl. ¶ 52. By August 10, 2015, nine of the ten employees in the practice group had resigned their posts. Compl. ¶ ¶ 53-62. ERS places the blame for this defection squarely at White's feet, asserting that " White either actively solicited the Washington, D.C. [Labor and Employment] Group to join Resolution or, at the least, influenced Resolution to hire them in breach of his non-solicitation obligations." Compl. ¶ 63. ERS contends, in short, that defendants " decimated" its Washington, D.C. office. Compl. ¶ ¶ 64-65.

         ERS commenced this suit on August 10, 2015, alleging breach of contract in addition to numerous commercial torts. See generally Compl. That same day, eager to stymie the torrent of client and personnel defections, ERS moved to enjoin defendants from " the use [of] ERS's confidential information" and from " recruiting ERS employees or soliciting business from ERS's clients." Mot. for TRO & Prelim. Inj.; Pl.'s Mem. Defendants timely opposed this request. See Defs.' Mem. I heard oral argument on ERS's Motion on August 31, 2015, see August 31, 2015 Minute Entry, and received supplemental briefing from both sides on September 14, 2015, see Plaintiffs Supplemental Memorandum of Law in Further Support of Plaintiffs Motion for a Preliminary Injunction [Dkt. #27]; Defendants' Supplemental Brief in Further Opposition to Plaintiffs Motion for a Preliminary Injunction (" Defs.' Suppl. Mem." ) [Dkt. #28]


         I. Legal Standard

         A preliminary injunction is an " extraordinary remedy" that " should be granted only when the party seeking the relief, by a clear showing, carries the burden of persuasion." Cobell v. Norton, 391 F.3d 251, 258, 364 U.S.App.D.C. 2 (D.C. Cir. 2004) (citation omitted). Ordinarily, a plaintiff seeking such a remedy must demonstrate " that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Winter v. NRDC, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008) (citations omitted). Courts considering these factors typically do so on a " sliding scale" that balances the relative strengths of each prong. Davis v. Pension Benefit Guar. Corp., 571 F.3d 1288, 1291-92, 387 U.S.App.D.C. 205 (D.C. Cir. 2009). Despite this flexibility, it remains incumbent on the movant to demonstrate a quantum of irremediable injury. SeeCityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 747, 313 U.S.App.D.C. 178 (D.C. Cir. 1995). Indeed, because irreparable harm has " always" been the touchstone of injunctive relief, Sampson v. Murray, 415 U.S. 61, 88, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974), a movant's failure to demonstrate the requisite injury is grounds for denying a motion for a ...

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