Opinion
No. 217-2019-CV-849
03-26-2020
Control Technologies, Inc. v. ENE Systems of New Hampshire, Inc. And Donald Kinnett, Jr.
ORDER
Plaintiff Control Technologies, Inc. ("CTI") has brought an action for preliminary and permanent injunctive relief and monetary damages against the Defendants, ENE Systems of New Hampshire, Inc. ("ENE") and Donald Kinnett, Junior ("Kinnett"). CTI alleges that ENE is a direct competitor of CTI and that ENE has either directly or through its agents Kinnett utilized confidential and proprietary CTI information which was provided to ENE by Kinnett in violation of a Nondisclosure Agreement (the "NDA") he had executed while an employee of CTI. An evidentiary hearing on CTI's request for injunctive relief was held on January 24, 2020 at which the Court took testimony. For the reasons stated in this Order, the Court orders as follows:
1. Defendants are enjoined from using or disclosing any CTI information, or data or documents taken by Kinnett in any way; and
2. Defendants may not use or refer to any CTI information or other proprietary information that Kinnett gained through his employment relationship with CTI to solicit CTI's customers, other employees and/or vendors.The parties shall meet and confer to determine if they can agree to an expedited discovery schedule which will allow CTI to determine what confidential information is in ENE's possession. If they cannot agree, a hearing shall be held. No bond shall be required.
Defendants have also filed a Joint Motion to Strike exhibits filed by CTI after the hearing. The Motion is DENIED.
I
CTI's Complaint alleges that it is a building management solutions provider which designs, installed and maintains heating, ventilation and air conditioning ("HVAC"), video surveillance, elevator, and other energy-related systems to customers in the Northeast. Compl., ¶ 1. Its business is often generated through a bidding process. Compl., ¶ 2. ENE is a direct competitor of CTI. Compl., ¶ 3.
Kinnett is an individual who was employed by CTI as a service technician for approximately 7 years and as a salesman for 2 years. Compl., ¶ 18. Kinnett signed an NDA as a condition of employment on July 19, 2010. Compl., ¶ 10. The NDA prohibited Kinnett from disclosing "Confidential Information" which was defined in relevant part as follows:
[C]onfidential and/or proprietary information of the Company or any Company Customer including, but not limited to, existing and contemplated products, trade secrets, product information, training methods and materials, manuals, research, processes, methods, software, lists of customers and prospective customers, marketing, business and financial plans and information, procedures of selling and marketing, billing and pricing methods and procedures, methods of obtaining customers, proprietary literature and publications including, but not limited to, marketing and technical literature, innovative techniques and other confidential and proprietary information of the Company, all of which are available for not known to the general public or to individuals or entities working in the same or similar industry...NDA § 1.1
The NDA contains a covenant not to compete provision which runs in favor of CTI and provides Kinnett may not:
a. During both the Term [of]and for a period of twelve (12) consecutive month following the termination of his employment, compete with the Company by providing or offering to provide products or services similar to those provided by the Company to any Company Customer for whom [CTI] has provided or offered to provide products or services at any time during the Term of Kinnett's employment.NDA § 2.1 (a) (b)
b. During the Term, except as may be required in the performance of the Employee's duties with the Company, for all times thereafter, using any Confidential Information for any purpose whatsoever, whether said information may be in tangible or intangible form, or in the Employee's memory, and whether for the Employee's own benefit or for that of another.
The NDA also contains a Covenant to Surrender Business Records which provides, among other things, that upon separation of his employment from CTI, Kinnett:
a. Agrees to immediately surrender to the Company possession of all books, records, printed or recorded material, equipment, and lists of any kind, whether written, typed, printed or stored in magnetic media, whether suit applied to Employee by the Company or prepared by the Employee, that contain any information relating to any confidential information or any other aspect of the Company's business;NDA § 2.3
b. Agrees not to retain any copies or summaries of such material; and
c. Agrees to return to the Company any Company property.
A
CTI alleges in its Compl. that Kinnett downloaded confidential and proprietary information belonging to CTI onto a personal USB drive during his final days of employment. Compl., ¶ 6. It alleges that Kinnett and ENE have been using this misappropriated information for their own benefit.( Id.). CTI's Complaint focuses on two HVAC contracts with the New Hampshire Department of Administrative Services, ("Administrative Services") one with the Bureau of Court Facilities which it was first awarded to it in 2009 and another with the Bureau of General services, which was first awarded to it in 2010. Compl., ¶¶ 25-56. The contracts involved providing labor and materials for the maintenance and repair of equipment at the Cheshire County Courthouse. CTI's customer contracts were apparently subject to renewal. Compl. ¶ 27. The contract for the Cheshire County Courthouse was CTI's largest account. Compl., ¶ 30. This contract was set to expire on December 31, 2019. Id. CTI asserts that ENE has been awarded the contract beginning January, 2020. Id. ¶ 55.
CTI alleges that on May 3, 2019 Kinnett provided notice to CTI that he would leave the company's employment on May 17, 2019. Compl., ¶ 39. On May 14, 2019 Kinnett logged onto CTI's network and downloaded confidential information onto a Western Passport USB device ("the USB"). Id., ¶ 30. CTI alleges that Kinnett and ENE used its confidential information to bid for the contract with Administrative Services. Id., ¶¶ 51-55
CTI brings 9 separate counts in its Complaint. It seeks injunctive relief and Specific Performance in Counts I and II and substantively asserts claims of Breach of Contract (Count III), Misappropriation of Trade Secrets, RSA 350-B (Count IV), Intentional Interference with Economic Relationships (Count V), Tortious Interference with Contract, (Count VI), Conversion (Count VII), Intentional Spoliation of Evidence (Count VIII) and Violation of the New Hampshire Consumer Protection Act, RSA 358-A (Count IX).
B
ENE and Kinnett deny CTI's allegations. They filed a Joint Objection to CTI's request for injunctive relief. Defendants recognized that CTI's claims all principally rely on the same factual allegations: that Kinnett downloaded confidential information while a CIT employee and provided it to ENE. Defendants vigorously disputed CTI's claims in their Joint Objection.
In support of its Objection, ENE provided affidavits asserting that "the purported transfer in reliance on this information did not happen" and that any harm CTI suffered in the marketplace for services "does not result from any conduct of either Kinnett or ENE." In support of its Objection, ENE provided an affidavit of Kinnett who asserted that:
15. I gave my voluntary notice of termination of employment at CTI on Monday, May 13, 2019. On May 14, 2019, I did take steps to remove personal and family emails and information as that information had nothing to do with CTI. In this process, I deleted a portion of my personal and family information and at some point copied over my emails on the system to a personal hard drive that I have had since college for later review. I also anticipated concerns with payment of commissions owed to me up on my leaving CTI, and I wanted to preserve information on what I had worked on and therefore saved folders I had on my laptop in case I needed the information. At my exit interview, I noted that I was not accepting the commission number presented until I could further review. (Emphasis supplied).Kinnett Aff., ¶ 15.
Kinnett specifically denied having anything to do with ENE obtaining the Administrative Services contract from the State in his Affidavit:
11. After joining ENE of New Hampshire, I am very limited involvement in ENE of New Hampshire's response to the public bid put out by the State for the contracts. I did ask the State for an extension on submitting the bid for ENE of New Hampshire. I did this solely at the direction of Paul O'Brien. Mr. O'Brien prepared the bids for ENE of New Hampshire. At no time did I use or disclose confidential or proprietary information of CTI to ENE of New Hampshire as part of the State public bidding process. I also understand that prior contract , pricing and documentation for the State are public information and available on the State's website. (Emphasis supplied).Kinnett Aff., ¶ 11. Defendants also provided an Affidavit of an expert in computers, Peter Kohler, Esq. who testified that he had analyzed the materials contained in the USB drive belonging to Kinnett. Kohler Aff., ¶¶ 10-12.
The parties agreed that the issue of what information was taken by Kinnett would be a critical aspect of CTI's claims. CTI sought to have a forensic expert examine Kinnett's USB. In accordance with the practice of the Superior Court, the preliminary injunction hearing had been scheduled to be heard on offers of proof. The Parties agreed, at the Court's suggestion, that an evidentiary hearing, and expert testimony about the contents of Kinnett's USB drive would likely lead to a better decision. Accordingly, the Court issued an expedited Order providing for minimal discovery, and an evidentiary hearing.
The Court's Order of Jan. 16, 2020 provided:
1. An evidentiary hearing shall be held on Friday, January 24, 2020 at 1:00 PM.
2. ENE shall provide a forensic copy of the USB device taken by Mr. Kennett suitable for forensic examination by CTI's expert.
3. The parties agree that pending the court's order on the motion for Temporary Restraining Order and Preliminary Injunction, ENE will not use or disclose any confidential information belonging to CTI.
4. Any material produced by defendant shall be treated as confidential pending execution of a protective order.
5. If any disputes arise between the parties which will delay the January 24, 2020 hearing, parties shall contact the clerk and arrange for a telephonic hearing.
II
The evidentiary hearing was held on January 24, 2020. CTI called Kenneth Munsey, its Service Operations Manager, and Richard Gurecki, an expert who examined Kinnett's USB drive.
A
Munsey has been employed by CTI for 22 years, and has been its Service Manager for 18 years. Transcript, Preliminary Injunction Hearing, (hereafter "Tr."at 8). He testified that CTI provides service contracts to commercial companies to maintain their HVAC systems. (Id. at. 9). CTI has contracts with the State of New Hampshire for maintaining court HVAC systems.( Id.)
Munsey reviewed a spreadsheet prepared by CTI's forensic computer expert, Richard Gurecki, which detailed the results of what he found on the USB used by Kinnett ("the USB"). (Id. at 10.) Munsey testified that the USB contained Contract Pricing History Documents which are reports that outline contract expiration dates or renewal dates. (Id.). Munsey testified that Contract Pricing History Documents are very useful to competitors. (Id. at 11.) The reports allow CTI to know when to contact a customer. (Id. at 11). They also contain the names of outside vendors which are important in negotiating a fixed-price contract. (Id.) Information about what vendors will be used in a fixed-price contract helps CTI assess cost and manage the risk of the contract. (Id. at 12). The Contract Pricing History Documents contain CTI's quotes which are valuable to competitors. (Id. at 12). Munsey described the Contract Pricing Document as as "all of the answers to the test. You have everything you need in front of you. You have who you need to contact; you have the price; you have the scope of work." (Id. at 13). He described the documents taken by Kinnett as the "keys to the Kingdom." (Id. at 20).
Munsey testified that he learned from the forensic expert review of the USB drive that Kinnett had sent an email to Paul O'Brien, another employee of ENE which provided in relevant part "[T]he 2 service contracts for Cheshire are attached, along with the mechanical attachment... -Let me know if there is anything else you need." (Id. at 14). The email and attachment was included as Plaintiff's Exhibit 1. The email contained a lengthy attachment which included a number of CTI documents related to the State of New Hampshire contract for the Cheshire County Courthouse and administration building that were obviously of value to ENE. The documents had been downloaded on May 14, 2019 while Kinnett was still an employee of CTI. CTI lost the contract with the State of New Hampshire for the Cheshire County administrative building on June 20, 2019, shortly after Kinnett left its employ. (Id. at 16).
Richard Gurecki, a qualified digital forensics expert hired by CTI, testified about his examination of Kinnett's USB. He testified that the USB had been plugged into the CTI owned laptop issued to Kinnett on May 14 and May 15, 2019. (Id. at 36). He also testified that files had been downloaded from both Kinnett's company issued laptop and from CTI's server. (Id.) Gurecki was able to determine that approximately 5000 files and directories were copied by Kinnett. (Id. at 43). He created a printout of the documents which was 130 pages long, and which included a number of documents relating to contracts of unique customers. He testified there was no way to determine whether the files had been accessed again after May 14, 2019. (Id. at 38).
The testimony established that Kinnett downloaded 4872 files and directories.
ENE presented expert testimony from a qualified forensic expert, Peter Kohler. Kohler examined the USB that belonged to Kinnett and conducted a search for all material created on May 14, 2019. (Id. at 59). He essentially agreed with Gurecki's analysis, and testified that 4872 files and directories that were downloaded on that date. Id. He testified that there were 58 instances when the files on the USB were accessed by the ENE work computer assigned to Kinnett. (Id. at 64).
Kinnett also testified. He began working at CTI in July 2010 as a service technician. (Id. at 77). He was promoted to a sales role in 2017. (Id. at 80). He testified that he was involved in "rollover extension" with contracts for the State of New Hampshire. (Id. at 81). He admitted downloading information at CTI to his USB drive on May 14, 2019. (Id. at 83).
On cross-examination he admitted that the bulk of the 4,872 files and directories he downloaded were the property of CTI. (Id. at 100). He never contacted an attorney and asked how to proceed to protect his interest prior to downloading the documents. (Id. at 101). CTI established that Kinnett downloaded a number of files which contained confidential business information belonging to it, such as the "Somersworth City Hall" folder, the "Bedford Public Library folder and the "Heinz's, bid/rebid" folder. (Id. at 103). He admitted that he received a cease and desist letter from CTI in June 2019, and understood that that letter instructed him to desist from accessing and using information that he had taken from CTI that was not personal to him. (Id. at 107). He nonetheless continued to access that information. (Id. at 108).
In Kinnett's original Affidavit, filed in opposition to CTI's motion for a preliminary injunction, Kinnett stated that "I have not disclosed to ENE of New Hampshire the information I preserved on May 14, 2019." (Id. at 111). In fact, however, when ENE's own expert examined the hard drive he determined that he had not only emailed CTI contracts for the Cheshire County Administrative Building and Courthouse to Paul O'Brien, another ENE employee, and asked him if he wanted any more information.( Id.)
On the morning of the hearing, ENE provided a "Revised Affidavit" of Kinnett to CTI in which Kinnett claimed that he "did not recall" sending the email with the Cheshire County Courthouse documents to O'Brien "until his memory was refreshed." Revised Aff., ¶ 18. Despite the fact that Kinnett had filed an Affidavit in support of ENE's opposition to CTI's request for preliminary injunctive relief, in which he stated stating that the information he downloaded was either family photos or emails or related to his sales division, he admitted at the hearing that he didn't actually know what was in all of the 4872 files. (Id. at 112). He admitted that at least 58 files were open from his USB while he was plugged into the ENE work. (Id.).
B
The evidence at the preliminary injunction hearing established that prior to his final day at CTI Kinnett connected the USB to his CTI issued computer and copied 4872 files, directories and electronic mail messages to the hard drive of his computer or CTI's server. Although Kinnett had filed an affidavit stating that he had only downloaded personal and family data and contracts upon which she had worked so that he could effectively challenge the amount he was paid in commissions, it appears that he downloaded far more information, which was plainly proprietary, and the property of CTI and that he disclosed at least some of it to ENE, which used it to compete with CTI.
In its Memorandum filed on January 31, 2020, 7 days after the Preliminary Injunction hearing, CTI referenced a number of documents which establish that Kinnett and ENE utilized its confidential property and which supported its argument. Exhibits B and C consisted of emails sent from Kinnett to Erica Brisson, an employee of the State of New Hampshire, respecting ENE's bid for contracts with the State of New Hampshire, a contract which CTI held and with which Kinnett was familiar with while employed by CTI. ENE objects to the submission of these documents and moved to strike the Exhibits because they were not introduced at the hearing.
ENE does not respond to the evidentiary import of the documents presented by CTI, but complains that the Exhibits should be stricken because they are "incongruous with the proper scope of the pleading or motion." Pl.'s Joint Mot. to Strike Exhibits, ¶ 6. CTI objects and points out that due to the time constraints of the preliminary injunction hearing it did not present the documents at the hearing. Pl.'s Obj. To Defendants' Joint Mot. to Strike Exhibits, ¶ 8. It points out that the documents, particularly Exhibits B and C, do not challenge affidavits submitted well before the January 24 hearing, but instead challenge the revised affidavit submitted by Kinnett just hours before the hearing. Id, ¶ 8. To that extent, they are in the nature of a rebuttal.
Under the prevailing practice in the Superior Court, the Rules of Evidence, except for claims of privilege, are not strictly applied at preliminary injunction hearings. Most preliminary injunction proceedings are conducted on offers of proof. There are obvious reasons why this is the case. In the first place, preliminary proceedings are conducted long before there is time for full and adequate discovery and disclosure. Second, the findings of fact made in preliminary injunction hearings are not binding on the parties.
The information presented by CTI tends to show that the information presented by Kinnett at the hearing was not accurate. It is helpful to the Court's decision. It follows that the Defendants' Joint Motion to Strike Exhibits is DENIED.
III
CTI seeks both broad equitable relief and expedited discovery. "The issuance of injunctions, either temporary or permanent, has long been considered an extraordinary remedy." New Hampshire Dep't of Envt'l. Servs. v. Mottolo, 155 N.H. 57, 63 (2007) (citation omitted). "A preliminary injunction is a provisional remedy that preserves the status quo pending a final determination of the case on the merits." Id. (citation omitted). In order to obtain preliminary injunctive relief, a party must demonstrate: (1) it is in immediate danger of irreparable harm, (2) there is no adequate remedy at law, and (3) that it would likely succeed on the merits. Id. Moreover, a court must consider whether or not the injunctive relief requested is in the public interest. UniFirst Corporation v. City of Nashua, 130 N.H. 11, 14 (1987).
A
The Court must first address whether CTI has established a likelihood of success on the merits. The public policy of the State of New Hampshire encourages free trade and discourages covenants not to compete. Concord Orthopaedics Prof'l Ass'n v. Forbes, 142 N.H. 440, 443 (1997). Such agreements are narrowly construed. Merrimack Valley Wood Products v. Near, 152 N.H. 192, 197 (2005). However, restrictive covenants are valid and enforceable if they are supported by consideration, and if the restraint is reasonable, given the particular circumstances of the case. Id. Whether a covenant is reasonable is an issue of law. Concord Orthopedics Professional Association v. Forbes, 142 N. H. 40, 443 (1997). The New Hampshire Supreme Court has specifically held that continued employment constitutes consideration for a covenant not to compete. Smith, Batchelder & Rugg v. Foster, 119 N.H. 679, 683 (1979).
To determine the reasonableness of a covenant not to compete, the New Hampshire Supreme Court has applied a three-pronged test: first, whether the restriction is greater than necessary to protect the legitimate interests of the employer; second, whether the restriction imposes an undue hardship upon the employee; and third, whether the restriction is injurious to the public interest. Syncom Indus., Inc. v. Wood, 155 N.H. 73, 79 (2007). This three-part test apparently finds its genesis in the Restatement (Second) of Contracts, § 188. Technical Aid, 134 N.H. at 8.
The first step in determining the reasonableness of a restrictive covenant is to identify the legitimate interests of the employer, and to determine whether the restraint is narrowly tailored to protect those interests. Merrimack Valley, 152 N.H. at 197. Employers also have a legitimate interest in protecting information about their customers gained by employees during the course of their employment. Technical Aid, 134 N.H. at 9.
The noncompete at issue in this case purports to restrict Kinnett from providing products or services similar to those provided by CTI "to any Company Customer for whom the Company has provided or offered to provide products or services at any time during the term." The noncompete is enforceable for only 12 months after Kinnett left CTI's employment. Defendants do not challenge the time period in which the noncompete applies, but do contend that it is overbroad. The New Hampshire Supreme Court has specifically held that when the employer seeks to protect its goodwill with customers, a covenant that restricts the former employee from soliciting business from customers with whom he had no contact may be "greater than necessary" to protect a company's legitimate interests. Merrimack Valley Wood Products v. Near, 152 N.H. 192, 198 (2005). A noncompetition agreement can justify restrictions on competition related to all company customers, including those with which the employee and little or no direct contact "so long as the employee gained significant knowledge or understanding of these customers during the course of his or her employment." Syncom,155 N.H. at 80. But CTI has not made a showing that Kinnett gained such knowledge.
The fact that the noncompete may be overbroad is not the end of the matter in New Hampshire. A noncompetition agreement which is overbroad, may, in some circumstances, be enforced. To give the employer an incentive to avoid overreaching, courts adopting this approach impose a general requirement of good faith on the employer. Merrimack Valley; Restatement (Second) of Contracts § 184 (2).
In Merrimack Valley the Court found that a noncompete which purported to prohibit the defendant from selling materials to any customers whom the plaintiffs had sold to within 12 months prior to the date of termination for a period of one year from the date of termination was unreasonable. 152 N.H. at 198. The Court found reformation unwarranted, because it found that the Plaintiff had not acted in good faith. Id. at 200. The trial court emphasized that the defendant was not asked to sign a noncompetition agreement until after he had begun work. Id. The plaintiff argued on appeal that good faith and advance notice are not one and the same. Id. The Court agreed, but upheld the trial court's finding. Id. at 201.
Similarly, in Syncom one of the defendants argued that the restrictive covenant was unenforceable because he was first shown the contract and required to sign it on the first day of work, after he had left his previous employment. 155 N.H. at 84. The trial court did not consider this issue and the Supreme Court remanded, noting that "duress of the sort claimed by [the defendant] is the kind of bad faith that would allow the trial court to decline to reform the restrictive covenant". Id. at 84-85.
In this case, Kinnett was presented with a noncompetition agreement on the day he joined CTI, while he was still a college student. The agreement was never modified even when he received a promotion to a sales job. Under these circumstances, it is questionable whether or not the Court would have authority to modify the agreement.
However, the Court need not decide the issue of whether or not the noncompetition agreement can be modified for purposes of the preliminary injunction. CTI's focus is not on time periods in employment but the use of its confidential agreement. In its post-hearing Memorandum it specifically seeks only to enjoin the use of its confidential information, requesting:
(i) an injunction prohibiting the defendants from using or disclosing any CTI information, data, or documents of the hard drive in any way; and (ii) an order requiring the Defendants to comply with expedited discovery requests pursuant to which CTI may gain access to, among other things, (a) the ENE issued computing devices of Kinnett, Paul O'Brien, Mike Bolt and any other individual believed by the Defendants to have viewed or had access to any of the CTI information on the Hard Drive at any time; (b) any personal computing device[s] and email accounts of Kinnett; and (c) the ENE server for the purpose of reviewing electronic mail sent between the relevant parties. CTI also seeks to enforce its NDA with Kinnett and his new employer so that they may not use the information he stole from CTI and other proprietary information that Kinnett gained through his employment relationship with CTI to solicit CTI's customers, other employees and/or vendors.Mem. in Support of Plff.'s Mot. for Prelim. Inj., pp. 2-3.
Where a noncompetition agreement is overbroad on its face, the court need not consider whether it could be narrowed where the relief requested is enforcement of misappropriation of confidential information. Vention Medical v. Pappas, 2015 N.H. Super. LEXIS *16 (N.H. Super. Jan.8, 2015), aff'd, 171 N.H. 13 (2018). Accordingly, the Court considers whether or not CTI is entitled to equitable relief prohibiting Kinnett and ENE from using its confidential information.
In ACAS Acquisitions (Precitech, Inc.) v. Hobert, 155 N.H. 381, 395 (2007) the Court assumed that the three-part test applicable to a noncompetition agreements applies to nondisclosure agreements. See also PC Connection, Inc. v. Mereos, 2017 WL 1078121 (D.Md. Mar. 22, 2017) ("The Supreme Court of New Hampshire has analyzed the enforceability of nondisclosure agreements under the same test that the state's courts use to assess the enforceability of noncompetition agreements.")
The first step in the analysis is to determine whether the agreement is narrowly tailored to protect the owner's interest. Here, CTI had a significant and legitimate interest in preventing its employees from appropriating its goodwill to its detriment. ACAS Acquisitions , 155 N.H at 396; see also Technical Aid, 134 N.H. at 9 (" the employer has a legitimate interest in preventing its employees from appropriating its goodwill to its detriment."). Moreover, as in ACAS Acquisitions, the agreement was narrowly tailored to protect CTI's legitimate interest. As in ACAS Acquisitions the NDA "specifically defined information that the defendant could not disclose" and only prohibited Kinnett from disclosing information which belonged to CTI, which was confidential and proprietary and which is unavailable or not known to the general public or to individuals or entities working in the same or similar industry..." Id. at 396; Compl. Ex. A at 1.
The agreement did not impose an undue hardship upon the Defendants. Under the agreement, Kinnett was not permitted to reveal or use CTI's proprietary information to a company but he could use information in the public domain and information that was not subject to confidentiality obligations. Again, as in ACAS Acquisitions (Precitech, Inc.) v. Hobert, "because the defendant has spent a great deal of time in the industry, he was aware of the public sources of information on companies and individuals with interest in the products he was attempting to sell, and he did not need to rely upon the confidential information of [CTI ] to make a living." 134 N.H. at 396-397. Third, the agreement is not injurious to the public interest. Kinnett's agreement merely prevented him from using CTI's proprietary information for his own gain or for the benefit of another person or entity. Permitting a business to protect its proprietary information does not in any way burden the public. Id. at 397. Thus, the Court finds that the NDA is reasonable, valid and enforceable, and CTI has established a likelihood of success on the merits.
C
Kinnett agreed in his employment agreement that CTI would be entitled to injunctive relief to restrain any breach of the NDA. Employment Agreement, Ex A to NDA, ¶ 5.3. Courts often find irreparable injury will occur if misappropriation of trade secrets such as confidential information is not enjoined because it is difficult to quantify in dollar terms the impact of lost sales and diminished customer relationships. Imi-Tech Corp. v. Gaglani, 691 F. Supp. 214, 226 (S.D. Ca. 1986). In deciding whether to grant injunctive relief, courts also consider whether or not it is likely that a damage award will ever be collectible. Apollo Tech. Corp. v. Centrosphere Indus. Corp., 805 F. Supp. 1157, 1210 (D.N.J. 1992). Some courts have taken the view that loss of trade secrets cannot be measured in money damages, because where the secret is lost, it is lost forever. Ivy Mar Corp. v. C.R. Seasons Ltd., 907 F. Supp. 547, 567 (E.D.N.Y. 1995). Considering all of the circumstances, CTI has established that it will suffer irreparable harm which is not amenable to money damages and injunctive relief is not granted.
Finally, a grant of injunctive relief is in the public interest. The public policy of the State of New Hampshire cannot countenance theft of confidential information by a former employee.
IV
For purposes of the preliminary injunction hearing, the Court finds that the noncompetition agreement is overbroad. Because CTI has not established that it acted in good faith in drafting in presenting the agreement to Kinnett, the Court declines to modify it on a preliminary basis. However, the NDA is reasonable valid and enforceable, and the Court orders as follows:
1. Defendants are enjoined from using or disclosing any CTI information, or data or documents taken by Kinnett in any way; andCTI also seeks expedited discovery in order to ensure that information taken by Kinnett is not utilized by other ENE employee such as Paul O'Brien, and Mike Bolt. CTI seeks expedited discovery pursuant to which it may obtain access to computing devices of these individuals and other individuals believed by the Defendants to have viewed or have had access to any of CTI's confidential information, and ENE's server.
2. Defendants may not use or refer to any CTI information or other proprietary information that Kinnett gained through his employment relationship with CTI to solicit CTI's customers, other employees and/or vendors.
While CTI's request for expedited discovery is reasonable the Court believes that expedited discovery should be accomplished by agreement between counsel if at all possible. Accordingly, the Court orders that the parties shall meet and confer and present and expedited discovery schedule for the Court's approval. If the parties cannot agree within 2 weeks from the date of the Clerk's notice of this Order, then CTI shall inform the Clerk, and a hearing shall be held. Neither party has addressed the issue of bond, and in light of the relief requested, which simply prohibits Defendants from using CTI's confidential information, no bond is required.
SO ORDERED
3/26/2020
DATE
s/Richard B . McNamara
Richard B. McNamara,
Presiding Justice RBM/