1. SEEKING IMMEDIATE RELIEF: PRELIMINARY INJUNCTIONS AND TEMPORARY RESTRAINING ORDERS September 1, 2010 Presented by
C. Marshall Lindsay
Smith Moore Leatherwood LLP
Charlotte, NC T: F:
Patti Ramseur
Smith Moore Leatherwood LLP
Charlotte, Greensboro, NC T: T: F:
Rick Coughlin
Smith Moore Leatherwood LLP
Greensboro, NC T: F:

2. FEDERAL RULES OF CIVIL PROCEDURE RULE 65
FEDERAL RULES OF CIVIL PROCEDURE RULE 65. INJUNCTIONS AND RESTRAINING ORDERS
PRELIMINARY INJUNCTION
May be issued only on notice to the adverse party
TEMPORARY RESTRAINING ORDER
May be issued without notice only if verified facts show that immediate and irreparable injury, loss, or damage will result before notice can be given
Movant’s attorney certifies the need to have the hearing without notice
Duration of TRO cannot exceed fourteen days
Hearing on the motion for preliminary injunction will be expedited

3. FEDERAL RULES OF CIVIL PROCEDURE RULE 65
FEDERAL RULES OF CIVIL PROCEDURE RULE 65. INJUNCTIONS AND RESTRAINING ORDERS
ORDERS
Require particularity
TRO’s are required to state the reason notice was not given.
MOTION TO DISSOLVE
On two days notice, the adverse party may move to dissolve the order.
SECURITY
The Court will issue an order ONLY if proper security is given.

4. STANDARDS FOR ISSUANCE OF INJUNCTIONS AND RESTRAINING ORDERS
FEDERAL
Shift from the Blackwelder (1977) standard to the Winter standard in the 4th Circuit (2009)
All Federal courts now have the same standard as set forth by the Supreme Court

5. STANDARDS FOR ISSUANCE OF INJUNCTIONS AND RESTRAINING ORDERS
FEDERAL (Cont.)
Requires that plaintiff establish
Clear showing that it is likely to succeed on the merits
Clear showing that it is likely to suffer irreparable harm in the absence of relief
Balance of equities tips in its favor AND
The injunction is in the public interest
The balancing test of Blackwelder is no longer applicable.

6. STANDARDS FOR ISSUANCE OF INJUNCTIONS AND RESTRAINING ORDERS
NORTH CAROLINA
Requires that plaintiff establish
likelihood of success on the merits; and
likelihood of irreparable harm absent the relief
Some distinctions still remain between the two standards.
During the Blackwelder era, the choice of court was extremely important.

7. GENERAL CONSIDERATIONS RELATED TO INJUNCTIONS
Mandatory vs. prohibitive
Extent of the need for continued Court supervision
Personal services contracts

8. AREAS IN WHICH INJUNCTIONS MAY BE USEFUL
Commercial contracts
Requirements contracts
Distributor contracts
Real estate contracts

9. Questions?

10. Intellectual Property Litigation
Patents
eBay, Inc. v. MercExchange LLC, 547 U.S. 388 (2006)
Trademarks and Trade Dress
Copyrights
Trade Secrets

11. Protecting Your Business When Employees Leave Presented by
Patti Ramseur
Smith Moore Leatherwood LLP
300 N. Greene Street, Suite 1400
Greensboro, NC 27401
(336)

12. Remember…… Protecting your business when employees leave means . . .
Protecting your business before employees leave.

13. Overview Contracts What can you restrict What must the contracts say
What should you do to improve enforceability
Recent “Dings” from the Courts
Legal duties when there is no contract

14. Contracts
Non-competition
Non-solicitation
Confidentiality

15. Non-compete agreements
Elements:
In writing
Made as part of an employment contract
Based upon valuable consideration
Reasonable as to time and territory (and scope)
Designed to protect a legitimate business need

16. Recent Examples Medical Staffing Network, Inc. v. Ridgway (2009)
MJM Investigations, Inc. v. Sjostedt (2010)
Hejl v. Hood, Hargett & Associates, Inc. (2009)

17. Medical Staffing Network, Inc. v. Ridgway
Upon commencement of employment, Ridgway signed:
“This Agreement is made by and between Thomas Dean Ridgway and Medical Staffing Network, Inc., including any parent, division, subsidiary, affiliate, predecessor, successor or assignee hereof (“MSN”).”

18. Medical Staffing Network, Inc. v. Ridgway
Non-disclosure of confidential information
Non-solicitation of employees and clients
Non-competition within 60-mile radius of Raleigh
Time limit of one year

19. Medical Staffing Network, Inc. v. Ridgway
MSN and Trinity competed placing nurses in Raleigh
Ridgway was a star
Trinity hires former MSN employee who recruits Ridgway
Ridgway suddenly interested in computer records
The Angus Barn Dinner
Ridgway quits and soon recruits other employees
MSN sees revenue drops; Trinity’s increases
WakeMed shifts its business

20. MJM Investigations, Inc. v. Sjostedt
Non-Compete Clause:
From the date of the execution of this Agreement, and for a period of two years from the last date services are performed under this Agreement or any other agreement with MJM, [Defendants] agree[] not to compete, either directly or indirectly, with MJM in its present line(s) of business or in future line(s) of business that may be disclosed to [Defendants] or learned of by [Defendants] through [their] association with MJM.

21. MJM Investigations, Inc. v. Sjostedt
Portion of non-solicitation clause:
[Defendants] will also specifically not solicit any current or prospect client of MJM for the purposes of providing the following services: Insurance Claims Investigations, Insurance Claims Task Service (excluding medical care services), Surveillance, Independent Adjusting, Fire Investigations, International Investigations and any related types of insurance or corporate services.

22. Hejl v. Hood, Hargett & Associates, Inc.
Employee will not, for two years:
directly or indirectly, seek to induce, promote, facilitate, solicit, quote rates for, receive, write, bind, broker, transfer or accept replacement or renewal of insurance or otherwise provide insurance and/or insurance services on behalf of any person, firm or entity to whom [Defendant] has sold any product or service, or quoted any product or service, whether or not for compensation, in the one year prior to the time [Plaintiff] ceases to be employed by [Defendant].

23. Hejl v. Hood, Hargett & Associates, Inc.
With a geographic restriction:
in (1) Charlotte, North Carolina, or (2) in any other city, town, borough, township, village or other place in the State of North Carolina or the State of South Carolina in which city, borough, township, village or other place [Defendant] is engaged in rendering its services or selling its products.

24. Confidentiality Agreements
No new consideration required
No territory limits
No time limit, although timeliness is implicit in what is confidential
Must define what is protected with adequate specificity

25. Trade Secret Protection
What is a trade secret? NCGS § :
business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that:
a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and
b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

26. Trade Secret Protection
How do you prove misappropriation and disclosure?
Courts: inevitable disclosure doctrine
Statute: substantial evidence that the person against whom relief is sought:
Knows or should have known of the trade secret; and
Has had a specific opportunity to acquire it for disclosure or use or has acquired, disclosed, or used it without the express or implied consent or authority of the owner.

27. Trade Secret Protection
What are the remedies?
Injunction
Economic losses
Attorneys fees for willful & malicious misappropriation
Possible: Unfair and Deceptive Trade Practice
Recent example:
Edgewater Services, Ltd. v. Epic Logistics, Inc. (2009)

28. Questions

29. Thank You C. Marshall Lindsay Smith Moore Leatherwood LLP
Charlotte, NC T: F:
Patti Ramseur
Smith Moore Leatherwood LLP
Charlotte, Greensboro, NC T: T: F:
Rick Coughlin
Smith Moore Leatherwood LLP
Greensboro, NC T: F: