A recent decision by the U.S. Court of Appeals for the Second Circuit serves as a timely reminder of the importance of complying with Rule 65’s requirement that injunctions describe the prohibited conduct “in reasonable detail.” Fail to comply and you could find yourself with an invalid injunction.
That is what happened in ExpertConnect, LLC, v. Parmar, et al., where the district court enjoined defendants generically from using plaintiff’s “confidential and/or proprietary information.” The 2nd Circuit found that the district court was correct to issue an injunction, but nevertheless reversed and remanded to the district court to redraft the injunctive order to be more specific about the information defendants were enjoined from using.
District Court Enjoins Use of “Confidential and/or Proprietary Information and/or Trade Secrets”
Plaintiff ExpertConnect introduces public and private equity investors to industry consultants and subject matter experts. The defendants were account managers at ExpertConnect, in which position they signed a series of contracts with nondisclosure covenants for ExpertConnect’s trade secrets and confidential information.
After the defendants resigned to establish a competing business, ExpertConnect filed a lawsuit claiming the defendants breached their contracts and misappropriated trade secrets. Specifically, ExpertConnect alleged the defendants downloaded and copied confidential information from its computer system, including client lists, client preferences, pricing methodologies, expert databases, and contract terms and details.
Following a hearing, the district court issued a preliminary injunction enjoining defendants from, among other things, using or disclosing any of ExpertConnect’s “confidential and/or proprietary information and/or trade secrets for any purpose.”
2nd Circuit Reverses For Non-Compliance With Rule 65’s “Reasonable Detail” Requirement
On appeal, the 2nd Circuit held that the district court properly granted an injunction in ExpertConnect’s favor. Specifically, ExpertConnect established that the defendants’ actions would impair its good will and reputation.
Nevertheless, the injunction was improper because it lacked the specificity required by Rule 65(d) of the Federal Rules of Civil Procedure, which states that an injunctive order must, among other things, “describe in reasonable detail – and not by referring to the complaint or other document – the act or acts restrained or required.”
The 2nd Circuit noted that the district court’s order enjoined the defendants from using or disclosing any of ExpertConnect’s “confidential and/or proprietary information and/or trade secrets.” But the order did not “specifically describe” the trade secrets or the confidential information covered by the injunction.
The court thus held that the injunction order was defective and it remanded the matter to the district court to redraft the order “more precisely.” The court also instructed the district court to review the defendants’ employment agreements to consider whether the nondisclosure covenants contained time limits that may have expired during the appeal process.
Takeaway: Go Specific Or Go Home
The mistake made by plaintiff in ExpertConnect is an easy one to commit in the rush to prepare court papers for a TRO. It is also a common one. In an informal review of TROs entered by federal courts over the past year enjoining the use of confidential information, we found a surprising number of orders that did not comply with Rule 65’s specificity requirement.
Some TROs repeated the mistake in ExpertConnect by ordering defendant to refrain from using plaintiff’s “confidential information” or “confidential information and trade secrets.” Other TROs tried to be more specific by enjoining defendant from using confidential information “as defined in defendant’s employment agreement.” But this also violates Rule 65, which requires that the order itself describe the prohibited conduct and “not by referring to the complaint or other document.”
Expert Connect shows that an injunction that fails to comply with Rule 65’s specificity requirement is subject to reversal on appeal – perhaps opening plaintiff to a claim of wrongful injunction.
A more immediate risk is that a non-compliant injunction may be unenforceable. Citing ExpertConnect, a defendant could oppose a contempt motion by arguing the TRO did not adequately describe the confidential information that could not be used or disclosed.
Even keeping in mind the teaching of ExpertConnect, a plaintiff firm still must balance the need for specificity with the goal of not divulging confidential information and trade secrets to the public. Companies should work with their attorneys to carefully draft an injunction order that is detailed enough to restrain defendant without publicly disclosing the protected information.
At the end of the day, your injunction is only as good as the language of the order. So next time you are asked to prepare injunction papers, make the proposed order a priority rather than the last thing you turn to. It is key to obtaining injunctive relief that accomplishes the client’s goals.
 Case No. 18-2261-cv, in the U.S. Court of Appeals for the Second Circuit (June 5, 2019).
James L. Komie and Christpher L. Schaeffer are litigators in Howard & Howard’s Chicago office.
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