Mallet & Co. v. Lacayo - 16 F.4th 364 (3d Cir. 2021)

Rule:

Fed. R. Civ. P. 65(d) mandates that every order granting an injunction set forth the reasons why an injunction is warranted, state its terms specifically, and articulate in reasonable detail the conduct it enjoins. While the degree of particularity required to satisfy the Rule's specificity provisions will depend on the nature of the subject matter, those provisions are not mere technicalities. They are designed to serve two vital functions: first, to prevent uncertainty and confusion on the part of those faced with injunctive orders, and thus to avoid the possible founding of a contempt citation on a decree too vague to be understood; and second, to ensure that sufficient information is placed on the record so that an appellate tribunal will know precisely what it is reviewing. Failure to satisfy the important requirements of Rule 65(d) will typically result in an injunction's vacatur. When reviewing an order that does not adequately support the resolution of a motion for preliminary injunction, the Third Circuit may vacate and remand for additional findings. 

Facts:

In 2019, plaintiff Mallet and Company Inc. learned that defendant Russell T. Bundy Associates, Inc., doing business as Bundy Baking Solutions was becoming its newest competitor in the sale of baking release agents. Release agents were lubricants that allow baked goods to readily separate from the containers in which they are made. Defendant was already well-known for other products it offered to the commercial baking industry when it decided to launch a new subsidiary, defendant Synova LLC to sell baking release agents. The defendant new subsidiary hired two of plaintiff’s employees, both of whom had substantial access to plaintiff’s proprietary information. Taking some of that information with them from plaintiff to defendant, they helped the latter rapidly develop, market, and sell release agents to plaintiff’s customers. Plaintiff then filed a suit, saying such progress would have taken years to accomplish but for the misappropriation of its trade secrets. The district court agreed with plaintiff and issued the preliminary injunction restraining defendants from competing with plaintiff.

Issue:

Was the court’s issuance of preliminary injunction restraining defendants from competing with plaintiff proper?

Answer:

No.

Conclusion:

The court held that in this trade secret and unfair competition case between competitors in the market for baking supplies, the plaintiff's formula disclosed in a patent was not a secret and its very general description of categories did not sufficiently identify the information it claimed as a trade secret. Therefore, the district court erred by issuing a sweeping injunction against defendants under Fed. R. Civ. P. 65(c). The court also held that the injunction order's absence of specific terms inhibited appellate review of the order, Moreover, the district court abused its discretion when it set a bond because that amount was not adequately supported by the court's explanation. In conclusion, the injunction order was problematic because the total production ban against defendants restrained them from engaging in lawful business activities. The court vacated and remanded the case.