MMR Constructors, Inc. v. JB Group of LA, LLC

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA

MMR CONSTRUCTORS, INC. CIVIL ACTION

VERSUS

JB GROUP OF LA, LLC, ET AL. NO. 22-00267-BAJ-RLB

RULING AND ORDER GRANTING MOTION FOR TEMPORARY

RESTRAINING ORDER AND SETTING STATUS CONFERENCE TO

DETERMINE DATE OF PRELIMINARY INJUNCTION HEARING

In this action, Plaintiff MMR Constructors, Inc. (“MMR”) seeks damages and

injunctive relief against JB Group of LA, LLC d/b/a Infrastructure Solutions Group

CISG”) and former MMR employee David Heroman. (Doc. 1). Now before the Court

is MMR’s Motion For Temporary Restraining Order And To Set Preliminary

Injunction Hearing (Doc. 2), seeking immediate injunctive relief prohibiting

Defendants from accessing, using, disclosing, or disseminating MMR’s trade secrets

and confidential business information. For reasons to follow, MMR’s Motion will be

granted and a temporary restraining order (TRO) will be issued. Further, the Court

will set a telephone status conference for Wednesday, April 27, 2022 at 3:30 p.m. to

determine a date for a preliminary injunction hearing and to discuss what discovery

will be allowed prior to any such hearing.

I. BACKGROUND

A. Allegations

For present purposes the Court accepts as true the following allegations set

forth in MMR’s verified Complaint (Doc. 1):

MMR and ISG are competitors in the telecommunications market. (Doc. 1 at

{| 15, 25). Each provides electrical and instrumentation services to clients in

Louisiana and further afield. (See id.).

MMR is based in Baton Rouge, Louisiana, and is now one of the largest

electrical and instrumentation contractors in the United States, providing services to

public and private customers. Ud. at § 1). To develop and maintain customer

relationships, MMR researches customer needs, develops marketing strategies,

creates financial forecasts and business forecasts, and develops proprietary pricing

structures and estimating tools. Ud. at { 16). These efforts, which are dependent on

the accumulation, application, and secrecy of MMR’s confidential business

information, are crucial to MMR’s success in the competitive market. ([d.). Thus,

MMBR’s confidential information—and particularly its customer lists and customer

pricing information (including costs and labor rates)——has substantial value to MMR.

MMR’s competitive position depends on protecting its confidential business

information, and MMR takes various steps to keep its information out of its

competitors’ hands. (/d. at § 17). Among other things, MMR requires its employees to

sign and agree to various employment policies and procedures designed to protect the

confidentiality of its information. Ud. at { 18). MMR requires employees to sign and

acknowledge its Business Code of Ethics, which requires employees to “protect not

only the assets of MMR, but also its clients, vendors, suppliers and other third

parties[,|” including “tangible assets and intangible assets, such as confidential and

proprietary information.” (/d.). MMR also requires employees to sign and

acknowledge its Rules of Conduct, which prohibits employees from “Theft or

unauthorized removal of any property belonging to @) MMR, (ii) the workplace, (iii)

the job site, Gv) fellow employees, or (v) clients, contractors, suppliers, or vendors of

MMR.” Gd.). Further, MMR requires employees to sign and abide by its “Employer

Loyalty/Confidentiality/Trade Secrets/Conflict of Interest Agreement.” (/d.). Through

this agreement, employees agree that:

[djuring and after the term of his employment, the EMPLOYEE agrees

to hold as confidential all knowledge and information he has acquired in

connection with his/her employment with MMR, and which is not

otherwise generally available to the public or third parties, including

but not limited to customer lists, financial information, pricing

information, marketing material, technical data, drawings, memoranda,

notes, programs, electronic gear, personnel records, policies, other

items, and papers and reproductions (all of which is deemed

“Confidential” and a trade secret) thereof relating the business of MMR.

(Id.).

Defendant ISG is based in Gonzalez, Louisiana, and also provides industrial

electrical and instrumentation services to public and private customers. (Id. at 4 24).

ISG was not always a direct competitor of MMR, but that changed in July 2021 when

ISG recruited long-term MMR Project Manager Jason Yates away from MMR to join

ISG in a “key management role, with an ownership stake in the company [ISG].” Ud.

at 26). Since landing Yates, ISG has successfully recruited five additional employees

away from MMR: Travis Dardenne, Walter Huffman, Tiffany Medine, Kasey Kraft,

and, most recently, Defendant David Heroman. (id. at 4] 27-28).

In addition to targeting MMR’s personnel, ISG has endeavored to obtain

MMR’s confidential and proprietary information. MMR first learned of these efforts

in late March 2022, when it caught former MMR Project Engineer (and current ISG

employee) Kasey Kraft transferring documents from his MMR work computer to an

external storage device. Ud. at {[ 32). When confronted about the file transfer, Kraft

initially claimed that he was merely transferring personal information, not MMR’s

trade secrets and confidential business information. (/d.). MMR’s own review of the

external storage device showed otherwise: “Kraft had attempted to steal trade secrets

but was thwarted when caught in the act.” (Id.).

Unfortunately for MMR, it was not so lucky when former MMR Project

Manager (and current ISG employee) David Heroman abruptly resigned just days

later, on April 8, 2022. Following his resignation, MMR engaged a third-party

computer forensics firm to determine what, if any, trade secrets Defendant Heroman

took with him. (Ud. at § 36). 38. The forensic analysis revealed that in the month

before his resignation, Heroman downloaded over 1,500 files from MMR’s systems to

several electronic storage devices and personal Google Drive account. (/d. at § 38).1

Included among these are hundreds of files believed to contain MMR’s trade secrets

and confidential business information, specifically including MMR’s “confidential

bids, pricing, and estimating tools.” Ud. at | 43; see generally id. at [9 40-58). “Taken

together, the misappropriated information essentially provides [ISG] with the

blueprints to replicate MMR’s business, without investing any of the substantial

time, money, effort, and manpower needed to create the information,” with

potentially “devastating” consequences to MMR. (/d. at 59).

1Tn total, the initial forensic analysis identified 14 external storage devices that were plugged

into Heroman’s work computer during the March-April, 2022 timeframe. Among these, only

4 external storage devices have since been returned to MMR. (/d. at J 39).

B. Procedural History

On April 25, 2022, MMR initiated this action against ISG and Heroman,

seeking damages and temporary and permanent injunctive relief prohibiting

Defendants from accessing, using, disclosing, or disseminating MMR’s trade secrets

and confidential business information. (Doc. 1). Most relevant here, MMR’s verified

Complaint alleges that Defendants’ usurpation of its trade secrets and confidential

business information violates the Defend Trade Secrets Act, 18 U.S.C. § 1836, et seg.

(“DTSA”), and its Louisiana counterpart, the Louisiana Uniform Trade Secrets Act,

La. B.S. § 51:1431, et seg. “LUTSA”).

Minutes after filing its verified Complaint, MMR filed the instant Motion For

Temporary Restraining Order And To Set Preliminary Injunction Hearing

(Doc. 2). MMR also filed a Motion for Expedited Discovery (Doc. 3), requesting the

opportunity to conduct a forensic analysis of ISG’s computers prior to a preliminary

injunction hearing, to determine whether (and how far) its trade secrets and

confidential business information may have spread.

IL ANALYSIS

A, Standard

Federal Rule of Civil Procedure (“Rule”) 65(b) sets forth what requirements

must be met before the Court may issue a TRO.

(1) Issuing Without Notice. The court may issue a temporary

restraining order without written or oral notice to the adverse party or

its attorney only if:

(A) specific facts in an affidavit or a verified complaint clearly show that

immediate and irreparable injury, loss, or damage will result to the

movant before the adverse party can be heard in opposition; and

(B) the movant's attorney certifies in writing any efforts made to give

notice and the reasons why it should not be required.

(2) Contents; Expiration. Every temporary restraining order issued

without notice must state the date and hour it was issued; describe the

injury and state why it is irreparable; state why the order was issued

without notice; and be promptly filed in the clerk's office and entered in

the record,

Fed. R, Civ, P. 65(b)(1)-(2). Additionally, the party requesting the TRO must provide

“security in an amount that the court considers proper to pay the costs and damages

sustained by any party found to have been wrongfully enjoined or restrained.” Fed.

R. Civ. P. 65(c).

B. Discussion

i. MMR has satisfied the procedural requirements for

obtaining a TRO

As an initial matter, the Court. finds that MMR has satisfied the procedural

requirements for obtaining a TRO. Specifically: (1) MMR has submitted a verified

complaint establishing a substantial likelihood of immediate and irreparable injury

if injunctive rehef is not granted (for reasons explained below), (see Doc. 1 at pp. 27-

30); (2) MMR’s counsel has submitted a detailed certification establishing that he has

undertaken reasonable efforts to provide copies of the verified Complaint and the

Motion for Temporary Restraining Order to MMR through its registered agent, as

well as through MMR’s member-manager Jason Yates, and to Defendant Heroman

personally, (Doc. 2-2); and (8) the Court is satisfied that MMR’s proposed security of

$1,000.00 is sufficient to protect Defendants’ interests during the pendency of the

TRO, in the event the Court ultimately determines that the TRO was improperly

issued (see Doc. 2-3 at 8).

ii. MMR has satisfied the substantive requirements for

obtaining a TRO

A TRO is simply a highly accelerated and temporary form of preliminary

injunctive relief, requiring that movant establish the same four clements for

obtaining a preliminary injunction: (1) a substantial likelihood of success on the

merits, (2) a substantial threat of irreparable injury if the injunction is not issued, (3)

that the threatened injury if the injunction is denied outweighs any harm that will

result 1f the injunction is granted, and (4) that the grant of an injunction will not

disserve the public interest. See Garza v. Starr Cty., 309 F. Supp. 3d 454, 456 (S.D.

Tex. 2018) (Crane, J.) (quotation marks and citations omitted). The Court examines

each element in turn.

a. Likelihood of success on the merits

To establish a likelihood of success on the merits, a plaintiff “need not show

that success is an absolute certainty. He need only make a showing the probability of

her prevailing is better than fifty percent.” Eng v. Smith, 849 F.2d 80, 82 (2d Cir.

1988). For reasons set forth below, MMR has satisfied its burden for its claims under

the DTSA and the LUTSA because MMR’s verified Complaint shows that ISG and

Heroman misappropriated MMR’s trade secrets.

The DTSA states that an “owner of a trade secret that is misappropriated may

bring a civil action” in federal court “if the trade secret is related to a product or

service used in, or intended for use in, interstate or foreign commerce.” 18 U.S.C. §

1836(b). The DTSA defines “misappropriation” as “(A) acquisition of a trade secret of

another by a person who knows or has reason to know that the trade secret was

acquired by improper means; or (B) disclosure or use of a trade secret of another

without express or implied consent by a person who,” among other things, “used

improper means to acquire knowledge of the trade secret.” 18 U.S.C. § 1839(5)(A)-(B).

Under the DTSA, prohibited “misappropriation” includes the acquisition of a trade

secret by improper means, as well as its use or disclosure. See id. at § 1839(5)(A)-(B).

The D'TSA defines “improper means” as including “theft bribery, misrepresentation,

breach or inducement of a breach of a duty to maintain secrecy, or espionage through

electronic or other means.” Id. at § 1839(6)(A). Significantly, “the definitional sections

of the DTSA and [the LUTSA] are very similar.” Source Prod. & Equip. Co. v. Schehr,

No. 16-17528, 2017 WL 3721548, at *2 (E.D. La. Aug. 29, 2017) (comparing 18 U.S.C.

§§ 1836, 1839, with LUTSA § 1).

The DTSA, moreover, defines a “trade secret” as:

all forms and types of financial, business, scientific, technical, economic,

or engineering information, including patterns, plans, compilations,

program devices, formulas, designs, prototypes, methods, techniques,

processes, procedures, programs, or codes, whether tangible or

intangible, and whether or how stored, compiled, or memorialized

physically, electronically, graphically, photographically, or in writing if

(A) the owner thereof has taken reasonable measures to keep such

information secret; and (B) the information derives independent

economic value, actual or potential, from not being generally known to,

and not being readily available through proper means by, another

person who can obtain economic value from the disclosure or use of the

information.

18 U.S.C. §1839(8). And, again, the LUTSA defines the term “Trade Secret”

similarly. La. R.S. 53:1431(4).

The allegations of MMR’s verified Complaint, accepted as true, establish that

Defendant Heroman’s actions shortly before leaving MMR qualify as a

“misappropriation” that was achieved through “improper means.” Specifically, with

knowledge that MMR’s customer pricing, financial, estimating, and employee

information was confidential and not to be disseminated other than to authorized

employees of MMR, Heroman transferred this information to external storage devices

and to his personal cloud-based storage account and then took steps to hide this

activity. See AUA Private Equity Partners, LLC v. Soto, No. 17-8035, 2018 WL

1684339, at *7 (S.D.N.Y. Apr. 5, 2018) (explaining that, like here, improper

acquisition through downloading information establishes lability and collecting

cases where “[mlisappropriation by acquisition has been found under other state

UTSAs in similar circumstances”). Further, Heroman—now an ISG employee—

maintains dominion and control over this information, making it highly likely that

MMR’s trade secrets and confidential information will be transmitted to ISG.

Additionally, the misappropriated information qualifies as trade secret under

the DTSA and LUTSA. The copied files and folders identified through MMR’s third-

party forensic investigation contain highly sensitive business information that is not

generally known and gives MMR a competitive edge. Further, MMR took reasonable

efforts to maintain the secrecy of this information by requiring employees to sign

agreements and acknowledging policies protecting the confidentiality of the

information; by limiting employee access to certain confidential business information

and password protecting that information; and by monitoring transfer of confidential

information through data loss prevention software. See Unif. Trade Secrets Act §

1(4)G1) emts. (drafters of Uniform Trade Secret Act, on which the LUTSA is based,

explain that “reasonable efforts to maintain secrecy” may include advising employees

of the existence of a trade secret or limiting access to a trade secret on a “need to know

basis”).

Finally, MMR’s efforts to maintain the confidentiality of this information gives

it “independent economic value.” A direct competitor would benefit greatly if it had

access to the information that Heroman allegedly misappropriated, particularly with

respect to customer-specific pricing information and estimating tools.

In sum, MMR has carried its burden of establishing a high likelihood of success □

on the merits of its DTSA and LUTSA claims because Heroman misappropriated, by

improper means, MMR’s information and data, which qualify as trade secrets.

b. Likelihood of irreparable injury

MMR has also carried its burden of showing that it has suffered, and will

continue to suffer, irreparable harm if the requested relief is not granted. Irreparable

injury is harm that “cannot be undone through monetary damages” ~~ that is, harm

for which money damages are inadequate or for which money damages are “especially

difficult” to compute. Deerfield Med. Ctr. v. City of Deerfield Beach, 661 F.2d 328, 338

(5th Cir. 1981); Allied Marketing Group, Inc, v. CDL Marketing, Inc., 878 F.2d 806,

810 n,1 (5th Cir. 1989).

The U.S. Fifth Circuit Court of Appeals instructs that irreparable harm can be

established where “the rights are economic, but because of their nature or the

circumstances of the case, establishment of the dollar value of the loss is especially

difficult or speculative.” Mississippi Power & Light Co. v. United Gas Pipe Line Co.,

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760 F.2d 618, 630 n. 12 (th Cir. 1985) (citing State of Texas v. Seatrain Int'l, S.A.,

518 F.2d 175, 179 (6th Cir. 1975)).

Both the United States Congress and the Louisiana legislature recognize that

irreparable injury arises from the misappropriation of trade secrets. It is clear under

the DT'SA and LUTSA, that even the threat of misappropriation may be enjoined. 18

U.S.C. § 1836 (b)(8)(A)@); La. R.S. § 51:1432(A).

Accordingly, to satisfy the irreparable injury element, MMR need only show

that the ““defendant possesses the trade secrets and is in a position to use them.”

Lifesize, Inc. v. Chimene, No. 1:16-cy-1109-RP, 2017 WL 8751921, at *1 (W.D. Tex.

Apr. 27, 2017).2.

Here, MMR has established that it faces a substantial threat and actual

irreparable harm ifthe Court does not enter a temporary restraining order. Heroman

improperly took and retained MMR’s trade secrets, at the very least, on external

storage devices and through a cloud-based storage platform, shortly before

2 See also Newsouth Comme □□ Corp. v. Universal Tel. Co., No. 02-2722, 2002 WL 31246558,

at *21 (E.D. La. Oct. 4, 2002) (citing Union Carbide Corp. v. UGI Corp., 731 F.2d 1186, 1191—

92 (th Cir. 1984) and FMC Corp. v. Varco Intl, Inc., 677 F.2d 500, 503 (5th Cir. 1982))

(recognizing that using or disclosing even one trade secret to a competitor of the employee’s

former employer may create a substantial threat of irreparable injury); Picker Int'l, Inc. v.

Blanton, 756 F. Supp. 971, 983 (N.D. Tex. 1990) Gnjunctive relief is the “only way use of the

[trade] secret by the former employee can be prevented”); Computer Mgmt. Assistance v.

Robert F. deCastro, inc., 220 F.3d 396, 408 (5th Cir. 2000); Reingold v. Swiftships, Inc., 126

F.3d 645, 648 (5th Cir. 1997)); Am. Express Fin. Advisors, Inc. v. Scott, 955 F. Supp. 688, 693

(N.D. Tex. 1996) (when, as in this action, “trade secrets and goodwill are involved, the threat

is significant that the harm experienced by the misappropriation or misuse of trade secrets

will be irreparable”); TransPerfect Translations, Inc. v. Leslie, 594 F. Supp. 2d 742, 757 (S.D.

Tex. 2009) (The use of an employer's confidential information and the possible loss of

customers is sufficient to establish irreparable harm.” (citing Unisource Worldwide, Inc. v.

Valenti, 196 F. Supp. 2d 269, 280 (E.D.N-Y. 2002); Ecolab Ine. v. Paolo, 753 F. Supp. 1100,

1110 (E.D.N_Y, 1991)),

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terminating his employment. ISG is now in a position to use the trade secrets to

MMR’s detriment. With MMR’s trade secrets and proprietary information readily

accessible, ISG and Heroman can unfairly compete against and harm MMR, resulting

in injuries that will prove difficult to measure with monetary precision.

c. Balance of harms

MMR seeks narrowly tailored relief designed to protect its legitimate business

interests and to ensure misappropriated information cannot be used further to

unfairly compete. If the Court does not intervene, MMR stands to lose its valuable

trade secrets, confidential business information, and intellectual property to ISG. In

contrast, ISG and Heroman will suffer no undue hardship, as they merely need to

comply with their legal and contractual obligations not to disclose MMR’s confidential

information and to comply with trade secret law. See Dish Network L.L.C. v. Ramirez,

No. 15-04712, 2016 WL 3092184, at *7 (N.D. Cal. Jun. 2, 2016) (balance of hardships

tips in favor of plaintiff seeking injunction when it would “do no more than require

Defendant to comply with federal and state laws”). Thus, the Court finds that the

equities favor issuing the requested relief.

d. Public interest

Finally, enjoining ISG and Heroman from using MMR’s trade secrets will not

disserve the public interest. Instead, the requested relief will promote fair

competition, ethical behavior, honest work, and innovation. Bank of Am., N.A. v. Lee,

No. 08-5546, 2008 WL 4851348, at *7 (C.D. Cal. Sept. 22, 2008) (finding that public

interest is served by enabling the protection of trade secrets).

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TI. CONCLUSION

Accordingly,

IT IS ORDERED that MMR’s Motion For Temporary Restraining Order

And To Set Preliminary Injunction Hearing (Doc. 2) be and is hereby

GRANTED, and that a temporary restraining order be and is hereby ENTERED,

ENJOINING AND PROHIBITING Defendants JB Group of LA, LLC d/b/a

Infrastructure Solutions Group (“ISG”) and David Heroman, and those persons or

entities in active concert or participation with them, from:

1. Disclosing, disseminating, or using MMR’s trade secrets and confidential

business information, including, but not limited to, all files (and the

information contained therein) that reside on any electronic storage device,

cloud-based file repository or file-sharing account, and/or email account used

by Mr. Heroman, or any other former MMR employee that now works for ISG,

during their employment with MMR or in their possession, custody, or control

during his employment with MMR or in his possession, custody, or control;

2. Accessing, studying, copying, or taking notes about MMR’s trade secrets and

confidential business information, including, but not limited to, all files (and

the information contained therein) that reside on any electronic storage device,

cloud-based file repository or file-sharing account, and/or email account used

by Mr. Heroman, or any other former MMR employee that now works for ISG,

during their employment with MMR or in their possession, custody, or control;

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3. Destroying, altering, erasing, secreting, or failing to preserve any and all of

MMnR’s trade secrets, business materials, property, proprietary information,

confidential information, and/or any and all record or documents that may be

relevant to this lawsuit; wherever located, and in whatever form, including but

not limited to any document, email, report, software, files, electronic data,

tangible evidence, financial records, and any and all communications between

Heroman and any employee, member, investor, or consultant of ISG and its

parent companies, subsidiaries and affiliates;

4, Failing to return the information and external storage devices identified in the

verified Complaint (Doc. 1), and any other documents/devices that contain

MMW’s confidential business information.

IT IS FURTHER ORDERED that the issuance of this temporary restraining

order be and is hereby conditioned upon MMR promptly furnishing ONE

THOUSAND AND NO/100 ($1,000.00) DOLLARS in security, and that MMR,

through its counsel, be and is hereby authorized to deposit into the Registry of the

Court, associated with the above captioned matter, the sum of ONE THOUSAND

AND NO/100 ($1,000.00) DOLLARS, pending further orders of this Court.

IT IS FURTHER ORDERED that this temporary restraining order, unless

extended for good cause and/or by the agreement by the parties, shall EXPIRE by its

terms fourteen days from the date and hour of its issuance.

IT IS FURTHER ORDERED that MMR’s counsel shall (1) immediately

provide notice of this Order to Defendants and/or Defendants’ counsel; and (2)

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therewith, shall provide Defendants and/or Defendants’ counsel copies of this Order;

and (3) not later than April 27, 2022 at 11:00 a.m., shall file a certification into the

record setting forth what efforts have been made to provide notice and copies of this

Order to Defendants and/or Defendants’ counsel.

IT IS FURTHER ORDERED that a telephone status conference be and is

hereby SET for Wednesday, April 27, 2022 at 3:30 p.m. for the purpose of selecting a

date for a preliminary injunction hearing, and to discuss MMR’s Motion for Expedited

Discovery (Doc. 3) in advance of said hearing. Dial-in instructions will be provided to

counsel prior to the status conference. Plaintiff's counsel shall provide notice of

the telephone conference and the dial-in information to Defendants and/or

Defendants’ counsel.

Baton Rouge, Louisiana, this 26th day of April, 2022

Be

JUDGE BRIAN A: KSON

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA

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