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CDI Energy Servs. v. W. River Pumps, Inc. - 567 F.3d 398 (8th Cir. 2009)

Rule:

The relevant factors to consider when assessing the propriety of preliminary injunctive relief include: (1) the likelihood of success on the merits; (2) the presence or risk of irreparable harm; (3) the balancing of the harms of granting or denying an injunction; and (4) the public's interest. The party seeking injunctive relief bears the burden of proving these factors. 

Facts:

Plaintiff CDI Energy Services, Inc. ("CDI") sold and serviced equipment for use in the oil field industry. Defendants John Martinson, Dale Roller and Kent Heinle ("Employees") worked in CDI's North Dakota field office. CDI filed a lawsuit in federal district court against the Employees and their new company, defendant West River Pumps, Inc. ("West River"), claiming that the Employees stole proprietary information and solicited business from CDI's clients while still employed by CDI. The complaint asserted, among other claims, state-law claims of breach of loyalty, trade-secret misappropriation, and business interference. CDI obtained an initial, ex parte temporary restraining order and then sought preliminary injunctive relief. The district court denied the motion for a preliminary injunction and dissolved the temporary restraining order. CDI appealed.

Issue:

Did the district court err when it denied CDI's motion for a preliminary injunction with respect to its trade-secret claim?

Answer:

No.

Conclusion:

The district court's judgment was affirmed. The court of appeals held that the district court properly found no likelihood of success on the merits of CDI's trade secrets claim, as CDI did not establish that any of the information allegedly stolen by the Employees qualified as a trade secret under N.D. Cent. Code § 47-25.1-01(4), i.e., information that had economic value by virtue of having been kept secret and that could not ascertained by proper means. Additionally, CDI did not establish that it took reasonable steps to protect any purported trade secrets. Although a likelihood of success had been found on the breach of loyalty claim, as § 34-02-14 prohibited solicitation of an employer's customers while working for the employer, the district court properly found that any harm could be addressed through an award of damages. Also, the balance of harms weighed against injunctive relief as an injunction would have put the Employees and West River out of business.

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