Opinion

New York Packaging II LLC v. Mustang Marketing Group LLC

Court: District Court, E.D. New York
Filed: Mar 1, 2022
Cited by: 0 cases
Authority: More cited than 26.6%

“We also agree with the district court that the contractual language declaring money damages inadequate in the event of a breach does not control the question whether preliminary injunctive relief is appropriate.”

How later courts described this case

“We also agree with the district court that the contractual language declaring money damages inadequate in the event of a breach does not control the question whether preliminary injunctive relief is appropriate.”
“[T]he civil venue statute permits venue in multiple judicial districts as long as a substantial part of the underlying events took place in those districts”
“A covenant against competition must be construed strictly.”
“[W]e are not persuaded on this record that the European- style shopping bag market is such that the individual defendants’ wrongful diversion of one order would give defendants an unfair competitive edge in connection with subsequent orders from the same customer.”

Written by the judges who cited it.

The opinion

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

--------------------------------------------------------------X For Online Publication Only

NEW YORK PACKAGING II LLC d/b/a REDIBAG

USA,

Plaintiff,

ORDER

-against- 21-cv-01629 (JMA) (ARL)

FILED

MUSTANG MARKETING GROUP LLC and CLERK

JOHN MAIERHOFFER,

2:51 pm, Mar 01, 2022

Defendants. U.S. DISTRICT COURT

---------------------------------------------------------------X EASTERN DISTRICT OF NEW YORK

AZRACK, United States District Judge: LONG ISLAND OFFICE

Before the Court is a motion by Plaintiff New York Packaging II LLC d/b/a RediBag USA

(“Plaintiff” or “RediBag”) for a preliminary injunction against Defendants Mustang Marketing

Group LLC and John Maierhoffer (together, “Defendants” or “Maierhoffer”). (“Pl’s Mem.,” ECF

No. 18.) RediBag requests that the Court enter an order enjoining Maierhoffer from violating a

non-compete agreement and from using RediBag’s pricing, sales, or technical product information

which it alleges are trade secrets. In response, Defendants filed a motion to dismiss for failure to

state a claim and improper venue (“Defs.’ Mot. to Dismiss,” ECF Nos. 16,17), and memorandum

of law opposing Plaintiff’s motion for a preliminary injunction. (“Def.’s Opp’n”, ECF No. 18-4.)

This Order resolves those motions.

For the reasons set forth below, the Court denies Plaintiff’s motion for a preliminary

injunction and denies Defendants’ motion to dismiss.

I. BACKGROUND

RediBag is a Nassau County-based supplier that sells paper and plastic bags, among other

items, to grocery stores, restaurants, delis, and dry cleaners. (Declaration of J. Rabiea in Support

of Plaintiff’s Motion for Preliminary Injunction (“Rabiea Decl.”) ¶¶ 2-3, ECF No. 18-2.)

Maierhoffer owns and operates an independent Florida-based business, Mustang Marketing Group

LLC, that brokers the sales of such products on behalf of suppliers like RediBag. (Rabiea Decl. ¶

3; see also Declaration of John Maierhoffer, (“Maierhoffer Decl.”) ¶¶ 2-5, ECF No. 18-5.)

RediBag and Maierhoffer have conducted business since 2008. (Rabiea Decl. ¶ 4.) From

2008 until February 2016, Maierhoffer worked as an independent sales broker and received a

percentage commission for the sale of RediBag products. (Rabiea Decl. ¶ 6.) During this time

period, Maierhoffer did not have an exclusive relationship with RediBag. (Maierhoffer Decl. ¶

25.)

In or around February 2016, Maierhoffer took on management and training responsibilities

at RediBag, began receiving a monthly salary instead of a commission, and received business cards

identifying him as RediBag’s sales manager. (Rabiea Decl. ¶ 6; Maierhoffer Decl. ¶¶ 26-28.) In

August 2016, Maierhoffer’s role at RediBag transitioned from an outside broker to an inside sales

manager. (Maierhoffer Decl. ¶ 26.) In this role, Maierhoffer assisted in hiring and training

RediBag’s sales team. (Maierhoffer Decl. ¶ 29.) As part of the role, RediBag helped subsidize

Maierhoffer’s health benefits. (Maierhoffer Decl. ¶ 26.)

Thereafter, in August 2016, the parties executed a “Non-Compete and Non-Solicitation

Agreement” (the “August 2016 Agreement” or “Agreement”). (Rabiea Decl. ¶ 10.) The August

2016 Agreement imposed certain limitations on Maierhoffer’s right to solicit certain sales to

RediBag customers, both during and after his relationship with the company. (Rabiea Decl. ¶ 12.)

The Agreement states, in relevant part:

In consideration of the independent contractor opportunity provided by New York

Packaging II, LLC, You, intending to be legally bound, agree to the following:

1. Term of Agreement. This Agreement is effective on the Effective Date, and

shall remain in effect throughout the term of your relationship with the Company

as an independent contractor and for a period of two years thereafter.

****

3. Covenant Not to Compete. You agree that at no time during the term of your

relationship with the Company as an independent contractor will you engage in any

business activity which is directly competitive with the Company nor work for any

company which directly competes with the Company. The only exceptions shall be

with the companies for which You currently represent. You are permitted to market

products that are not directly competitive with Company products on behalf of

Barnes Paper, Omega, IBSffrinity Plastics, Pakpro and Advance Polybag lnc.

4. Non-solicitation. During the term of your relationship with the Company as an

independent contractor, and for a period of two (2) years immediately thereafter,

You agree not to solicit any employee or independent contractor of the Company

on behalf of any other business enterprise, nor shall you induce any employee or

independent contractor associated with the Company to terminate or breach an

employment, contractual or other relationship with the Company.

5. Soliciting Customers after Termination of Agreement.

****

B. If You voluntarily terminate your relationship with the Company as an

independent contractor: for a period of two (2) years following the

termination of your relationship with the Company as an independent

contractor, You shall not, directly or indirectly, disclose to any person, firm

or corporation the names or addresses of any of the customers or clients of

the Company or any other information pertaining to them. Neither shall you

call on, solicit, take away, or attempt to call on, solicit, or take away any

customer of the Company on whom You have called or with whom You

became acquainted during the term of your relationship with the Company

as an independent contractor, as the direct or indirect result of your

relationship with the Company. There shall be one exception. You may

continue to solicit Company customers with whom you personally have

called on within the last twelve ( 12) months prior to termination, but only

to sell product lines that are not competitive with the Company’s existing

business.

****

6. Injunctive Relief. You hereby acknowledge (1) that the Company will suffer

irreparable harm if You breach your obligations under this Agreement; and (2) that

monetary damages will be inadequate to compensate the Company for such a breach.

Therefore, if You breach any of such provisions, then the Company shall be entitled to

injunctive relief, in addition to any other remedies at law or equity, to enforce such

provisions.

****

8. Modifications. This Agreement may be modified only be a writing executed by both

you and the company.

(August 2016 Agreement).

On February 8, 2019, Maierhoffer resigned, in writing, from RediBag, but informed

RediBag that he would “be happy to continue representing [RediBag] as an ‘independent broker.’”

(Maierhoffer Decl., Ex. C.) That same day, RediBag sent Maierhoffer a letter accepting his

resignation and indicated that the non-compete provisions of the August 2016 Agreement would

apply to Maierhoffer “[f]or the two-year period following [his] voluntary termination.” (Rabiea

Decl., Ex. D.) Maierhoffer subsequently acted as an independent broker for a few RediBag

transactions in 2019 and 2020. (Rabiea Decl., Ex. D.)

In 2020 and 2021, the parties had a variety of disputes related to the payment of

commissions to Maierhoffer. (Rabiea Decl. ¶ 18.) On March 2, 2021, Mustang terminated its

broker relationship with RediBag. (Rabiea Decl. ¶ 21.) Maierhoffer then commenced a state

action in Florida against RediBag alleging unpaid commissions. (Rabiea Decl. ¶ 22.)

On March 26, 2021, RediBag commenced this instant action against Maierhoffer alleging

both federal and state claims, including breach of contract and misappropriation of trade secrets,

under both state and federal law, for which RediBag seeks injunctive relief. On May 19, 2021,

pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(3), and 12(b)(6), Maierhoffer moved

to dismiss the Complaint for failure to state a claim and, in the alternative, for improper venue.

II. DISCUSSION

A. Venue

The Court first turns to Maierhoffer’s motion to dismiss for improper venue then his

motion to dismiss for failure to state a claim. One Techs., LLC v. Amazon.com, Inc., 860 F.

App’x 785, 788 (2d Cir. 2021)(citing Arrowsmith v. United Press Int’l, 320 F.2d 219, 221 (2d

Cir. 1963) in holding that a motion to dismiss for improper venue must be considered before a

motion to dismiss for failure to state a claim.)

1. Venue under 28 U.S.C. § 1391(b)

28 U.S.C. § 1391(b), provides that “[a] civil action may be brought in (1) a judicial district

in which any defendant resides, if all defendants are residents of the State in which the district is

located; (2) a judicial district in which a substantial part of the events or omissions giving rise to

the claim occurred, or a substantial part of property that is the subject of the action is situated; or

(3) if there is no district in which an action may otherwise be brought as provided in this section,

any judicial district in which any defendant is subject to the court’s personal jurisdiction with

respect to such action.” 28 U.S.C. § 1391(b).

Venue is appropriate in any judicial district in which a substantial part of the underlying

events took place and may be appropriate in multiple districts. Bates v. C & S Adjusters, Inc., 980

F.2d 865, 867 (2d Cir. 1992). If the subject of the action is property, venue is also appropriate in

a district in which a substantial part of the property is situated. 28 U.S.C. § 1391(b)(2). When

venue is proper in more than one district, the plaintiff has no obligation to determine the “best

venue,” Bates, 980 F.2d at 867, nor to file in the most convenient forum, Sussman v. Bank of

Israel, 56 F.3d 450, 457 (2d Cir.1995) (quotations omitted). Importantly, the civil venue statute

permits venue in multiple judicial districts as long as “a substantial part” of the underlying events

took place in those districts. See Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353 (2d Cir. 2005)(“[T]he

civil venue statute permits venue in multiple judicial districts as long as a substantial part of the

underlying events took place in those districts”)(internal quotations omitted).

On a motion to dismiss a complaint under Rule 12(b)(3) for improper venue, “the plaintiff

bears the burden of establishing that venue is proper.” French Transit v. Modern Coupon Sys.,

858 F. Supp. 22, 25 (S.D.N.Y. 1994). While the plaintiff bears the burden of establishing that

venue is proper, “[i]f the court chooses to rely on pleadings and affidavits, the plaintiff need only

make a prima facie showing of [venue].” Id. (quoting CutCo Indus. v. Naughton, 806 F.2d 361,

364-65 (2d Cir. 1986)). In determining whether venue is proper, the court “must view all facts in

the light most favorable to the plaintiff.” Cold Spring Harbor Lab., 762 F. Supp. 2d 543, 551

(E.D.N.Y. 2011) (citing Phillips v. Audio Active Ltd., 494 F.3d 378, 384 (2d Cir. 2007)).

Accordingly, the “court must accept the facts alleged in the complaint and construe all reasonable

inferences in the plaintiff’s favor.” Id. (quoting Matera v. Native Eyewear, Inc., 355 F.Supp.2d

680, 681 (E.D.N.Y. 2005)).

2. Venue is Proper in the Eastern District of New York

Maierhoffer argues that the Eastern District of New York is an improper venue, because

he and Mustang are residents of Florida and RediBag has not alleged that any significant events

occurred in this District. (Defs.’ Mot. to Dismiss at 9.) In response to Maierhoffer, RediBag

argues, among other things, that “substantial events” such as the development of its trade secrets

and access to its trade secrets occurred from this District, an allegation uncontradicted by

Maierhoffer. (“Pl’s Opp’n” at 15-16, ECF 18-6; see generally Defs.’ Mot. to Dismiss.)

This is a straightforward matter. Plaintiff’s argument that its trade secrets were developed

and accessed from this District, alone, is sufficient for venue. Specifically, “[a]cquiring trade

secrets by accessing a server in New York can be a significant event for venue purposes.” irth

Sols., LLC v. Apex Data Sols. & Servs., LLC, No. 18-CV-6884, 2019 WL 283831, at *4

(W.D.N.Y. Jan. 22, 2019) (finding venue proper based on the location of plaintiff’s server from

where defendant’s alleged misappropriation of trade secrets occurred); see id (“Argent Funds

Grp., LLC v. Schutt, 05-CV-01456, 2006 WL 2349464, at *2 (D. Conn. June 27, 2006) (finding

venue proper where substantial events material to a misappropriation claim occurred in

Connecticut when non-Connecticut defendant allegedly accessed a Connecticut server to steal

confidential information”).

Maierhoffer’s remaining arguments are unpersuasive. In this Circuit, venue may be proper

in multiple judicial districts as long as a substantial part of the underlying events took place in

those districts. See Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353 (2d Cir. 2005). RediBag has pled

facts sufficient to demonstrate that venue is proper in this district. Accordingly, Defendant’s

motion to dismiss for improper venue is denied.

B. Motion to Dismiss

1. Standard of Review

Next, the Court considers Maierhoffer’s motion to dismiss for failure to state a claim under

Fed. R. Civ. P. 12(b)(6). In deciding such a motion, a court should “draw all reasonable inferences

in Plaintiff[‘s] favor, assume all well-pleaded factual allegations to be true, and determine whether

they plausibly give rise to an entitlement to relief.” Faber v. Metro. Life Ins. Co., 648 F.3d 98,

104 (2d Cir. 2011) (internal quotation marks omitted).

The plausibility standard is guided by two principles. Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ); accord Harris v. Mills, 572 F.3d

66, 71–72 (2d Cir. 2009). “First, the principle that a court must accept all allegations as true is

inapplicable to legal conclusions.” Gen. Sec., Inc. v. Com. Fire & Sec., Inc., 17-CV-1194, 2018

WL 3118274, at *3 (E.D.N.Y. June 25, 2018)(quoting Iqbal, 556 U.S. at 678). “Second, only

complaints that state a plausible claim for relief can survive a motion to dismiss.” Id (citing Iqbal,

556 U.S. at 679.) Generally, a district court must confine its consideration “to facts stated on the

face of the complaint, in documents appended to the complaint or incorporated in the complaint

by reference, and to matters of which judicial notice may be taken.” (citing Leonard F. v. Israel

Disc. Bank of New York, 199 F.3d 99, 107 (2d Cir. 1999)). Here, the Court finds the Complaint

sufficiently pleads the trade secrets at issue and that Defendants have misappropriated them.

2. Misappropriation of Trade Secrets

RediBag brings a claim for misappropriation of its trade secrets under the Defend Trade

Secrets Act (“DTSA”). In order to assert a claim of misappropriation of trade secrets under DTSA,

RediBag must show that it is (1) “[a]n owner of a trade secret;” (2) the trade secret was

“misappropriated;” and (3) “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)(1).1

Courts weigh six (6) factors in determining whether the information at issue constitutes a

trade secret: (1) the extent to which the information is known outside of the business; (2) the extent

to which it is known by employees and others involved in the business; (3) the extent of measures

taken by the business to guard the secrecy of the information; (4) the value of the information to

the business and its competitors; (5) the amount of effort or money expended by the business in

developing the information; (6) the ease or difficulty with which the information could be properly

acquired or duplicated by others. 24 Seven, LLC v. Martinez, No. 19-CV-7320, 2021 WL 276654,

at *5 (S.D.N.Y. Jan. 26, 2021) (internal citations omitted).

1 To the extent RediBag brings its misappropriation of trade secrets claim under state law, Plaintiff acknowledges

that the analysis and result is the same. (Pl’s Mem. at 15)

Generally, information that is readily ascertainable through public sources cannot be a trade

secret, nor can even a former employee’s recollection of its former employer’s business operations

be a trade secret. See, e.g., Liberty Power Corp., LLC v. Katz, No. 10-CV-1938, 2011 WL 256216,

at *2 (E.D.N.Y. Jan. 26, 2011); 24 Seven, 2021 WL 276654, at *9.

The Complaint sufficiently identifies the trade secrets at issue. RediBag specifies

compilations of confidential pricing, sales, and product information as its trade secrets. (Compl.

at ¶¶ 44-50, 105-106.) Contrary to Maierhoffer’s assertion, at this stage, this is sufficient.”[T]here

is no heightened pleading requirement on actions brought under the DTSA.” Gen. Sec., Inc., at *4

(citing Telsa Wall Sys. v. Related Companies, L.P., 2017 WL 6507110, at *10 (S.D.N.Y. Dec. 15,

2017)). Further, “trade secrets need not be disclosed in detail” to allege misappropriation. Tesla

Wall Sys., LLC v. Related Companies, L.P., 2017 WL 6507110, at *10 (S.D.N.Y. Dec. 18, 2017)

(denying motion to dismiss a DTSA claim and finding the general categories plead “technical data,

internal pricing information, work product, research, […]” were sufficiently specific.)

The Complaint facially pleads that Plaintiffs took reasonable steps to protect the trade

secrets. RediBag restricted access to its alleged trade secrets to personnel on a need-to-know basis

and required employees and independent contractors to sign confidential agreements and other

contracts. (Compl. at ¶¶ 48-49, 102.) Medidata Sols., Inc., v. Veeva Sys. Inc., 17-CIV-589, 2018

WL 6173349, at *3 (S.D.N.Y. Nov. 26, 2018) (holding that “security measures” such as

“nondisclosure agreements” and “restricted access … by using passwords” are “sufficient” as

reasonable steps.)

The Complaint also plausibly alleges that RediBag’s pricing, sales, and product

information have independent economic value, by being kept confidential, and that RediBag has

expended a great amount of resources to develop and keep them secret. (Compl. at ¶¶ 104, 116-

117.) As to the claim of misappropriation, the Complaint alleges that Maierhoffer misappropriated

its trade secret through of a breach of an agreement or duty. (Compl. at ¶¶ 109.) See Medidata

Sols., Inc., * 4 (“improper means” under DTSA includes contractual agreements not to disclose or

disseminate information.”)

Taken together, these allegations plausibly raise an inference that Maierhoffer

misappropriated RediBag’s trade secrets. To the extent, Maierhoffer disputes “the secrecy of [the]

information,” this is “generally a question of fact [that] not to be resolved at the pleadings stage.”

Gen. Sec., Inc., at *5 (E.D.N.Y. June 25, 2018). Defendants’ motion to dismiss is therefore denied.

C. Preliminary Injunction

1. Legal Standard

RediBag seeks a preliminary injunction for its DTSA claim. In great contrast to the more

lenient plausibility standard a motion to dismiss is reviewed under, “[a] preliminary injunction is

an “extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear

showing, carries the burden of persuasion.” Sussman v. Crawford, 488 F.3d 136, 139 (2d Cir.

2007) (citing Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S.Ct. 1865, 138 L.Ed.2d 162 (1997)).

To successfully seek a preliminary injunction, a moving party must show four elements:

(1) likelihood of success on the merits; (2) likelihood that the moving party will suffer irreparable

harm if a preliminary injunction is not granted; (3) that the balance of hardships tips in the moving

party’s favor; and (4) that the public interest is not disserved by relief. Salinger v. Colting, 607

F.3d 68, 79–80 (2d Cir. 2010). “In performing this analysis courts must be mindful that “[a]

preliminary injunction is an extraordinary remedy never awarded as of right.” Liberty Power

Corp., LLC v. Katz, No. 10-CV-1938, 2011 WL 256216, at *2 (E.D.N.Y. Jan. 26, 2011) (finding

plaintiff did not show irreparable harm and thus, was not entitled to a preliminary injunction).

“A showing of irreparable harm is the single most important prerequisite for the issuance

of a preliminary injunction.” Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118

(2d Cir. 2009)(citing Rodriguez ex rel. Rodriguez v. DeBuono, 175 F.3d 227, 234 (2d Cir.1998)).

Irreparable harm is the “sine qua non for preliminary injunctive relief.” USA Recycling, Inc. v.

Town of Babylon, 66 F.3d 1272, 1295 (2d Cir.1995); see also JBR, Inc. v. Keurig Green Mountain,

-----------------------------

Inc., 618 F. App’x 31, 33 (2d Cir. 2015) (summary order) (same). Accordingly, “[i]f a party fails

to show irreparable harm, a court need not even address the remaining elements of the preliminary

injunction standard.” Intertek Testing Servs., N.A., Inc. v. Pennisi, No. 19-CV-7103, 2020 WL

1129773 (E.D.N.Y. Mar. 9, 2020).

To satisfy the irreparable harm requirement, RediBag must demonstrate that absent a

preliminary injunction they will suffer an injury that is neither remote nor speculative, but actual

and imminent, and one that cannot be remedied if a court waits until the end of trial to resolve the

harm. Faiveley, 559 F.3d 110, 118 (2d Cir. 2009) (quoting Grand River Enter. Six Nations, Ltd.

v. Pryor, 481 F.3d 60, 66 (2d Cir. 2007) (internal citations and quotation marks omitted).

RediBag puts forth two arguments in support of its claim that, absent a preliminary

injunction, it will likely suffer irreparable harm. Namely, RediBag argues that (1) Maierhoffer has

taken and misappropriated its trade secrets, and (2) Maierhoffer has sold competitive products to

RediBag’s customers in breach of the non-compete provision contained in the August 2016

Agreement. RediBag’s arguments are addressed below in turn. On both points, RediBag fails to

bear its burden.

2. Misappropriation of Trade Secrets

“A plaintiff is not entitled to preliminary relief prohibiting the misappropriation of trade

secrets unless it demonstrates that a defendant likely misappropriated a trade secret.” Liberty

Power Corp., LLC v. Katz, No. 10-CV-1938, 2011 WL 256216, at *2 (E.D.N.Y. Jan. 26, 2011)

See, also, 24 Seven, 2021 WL 276654, at *12 (denying injunctive relief where plaintiff did not

show the information allegedly taken was as a trade secret).

As explained below, RediBag has not established that it is likely to prevail on its argument

that the information allegedly misappropriated by Maierhoffer were, in fact, trade secrets.

On the fuller record, Plaintiff’s proof about its alleged confidential information and trade

secrets is conclusory and lacking in particulars. Plaintiff relies on a declaration from RediBag’s

President, Jeffrey Rabiea, which states:

In his role as RediBag’s broker, Maierhoffer had access to highly confidential

pricing, sales, and technical product information. To sell products, he had to learn

what products RediBag sells to particular customers around the country and the

prices at which RediBag is willing to sell. A distributor’s pricing, sales, and

technical product information takes substantial time and resources to compile, is

extremely valuable, and is widely understood in the industry to be highly

confidential. Such information is also highly valuable to a distributor’s competitors,

who can use it to compete unfairly by slightly undercutting the distributor’s

prices—which is precisely what happened to RediBag. RediBag takes reasonable

steps to keep its information confidential, including restricting access to

information using technical measures, and requiring employees and independent

contractors to sign non-compete agreements and other contracts.

(Rabiea Decl. ¶ 9.) Rabiea never provides any details about what constitutes the “technical product

information.” Similarly, other than referencing information about the specific “products RediBag

sells to particular customers,” Rabiea does not identify what constitutes the allegedly confidential

“sales” information.

In contrast to Plaintiff’s meager and conclusory proof, the declaration submitted by

Maierhoffer provides important details regarding the information that Plaintiff alleges constitute

trade secrets.

Maierhoffer explains that half of his sales are run though a bidding process where the “the

client invites several suppliers (and their representatives) to submit bids” and

“[t]he bids are made public to all parties.” (Maierhoffer Decl. ¶ 6.) Plaintiff did not submit any

evidence with its reply papers and does not offer any proof to refute this specific and persuasive

evidence from Maierhoffer. For any customers who utilized this public bidding process, pricing

information is clearly not confidential and is available to competitors. Relatedly, this public

bidding process suggests that other information in the bids, beyond mere price, is also publicly

disclosed. Furthermore, the ubiquity of this public bidding process and the amount of RediBag

information that is available to competitors through this process also undercuts any claim that

pricing and other information for customers that do not use a public bidding process rises to the

level of trade secret.

Maierhoffer also explains that “[p]ricing information is available through numerous

sources” because “[b]uyers share pricing with their third-party distributors and wholesalers” and

“[b]uyers also share pricing with potential suppliers to achieve maximum value in quality and

service.” (Maierhoffer Decl. ¶ 12.) Again, RediBag does not offer any contrary evidence and

relies on Rabiea’s conclusory statement that “[a] distributor’s pricing, sales, and technical product

information [are] widely understood in the industry to be highly confidential.” Maierhoffer’s

declaration is more persuasive than the conclusory proof offered by Plaintiff. It is not surprising

that buyers would be willing to share the current prices they are paying in an attempt to obtain a

better deal on their next contract or order from a different supplier.

Finally, Maierhoffer’s uncontradicted affidavit explains that, with only one exception, “he

introduced RediBag to every client at issue in this case.” (Maierhoffer Decl. ¶ 23.) Notably,

RediBag does not assert that the identity of its customers constitutes a trade secret.

On the record before the Court, RediBag has not demonstrated that that it is likely to

succeed in establishing that its “pricing, sales, and product information” constitute trade secrets

thereby meriting injunctive relief.

As an initial matter, Plaintiff’s evidence about its alleged trade secrets is simply too

conclusory and lacking in particulars to establish that the information at issue rises to the level of

a trade secret. RediBag has failed to establish, on the fuller record, how the broad and general

categories of information at issue rise to the level of trade secrets. See Sussman v. Crawford, 488

F.3d 136, 139 (2d Cir. 2007) (“A preliminary injunction is an extraordinary and drastic remedy,

one that should not be granted unless the movant, by a clear showing, carries the burden of

persuasion.”) (emphasis added). A plaintiff pleading a DTSA claim cannot “get away” with

“nebulous descriptions at the highest level of generality.” TRB Acquisitions LLC v. Yedid, No.

20-CV-0552, 2021 WL 293122, at *2 (S.D.N.Y. Jan. 28, 2021) (finding “product categories and

markets, including which types of consumers to target, which retail and other channels to enter

and at which price points” as ‘too general’ to be trade secrets”).

Based on the entire record before the Court, without more, RediBag is simply unlikely to

establish the information at issue, including RediBag’s pricing information, constitutes trade

secrets. “Pricing information may constitute a trade secret under certain circumstances.” 24

Seven, 2021 WL 276654, at *8 (citing In re Dana Corp., 574 F.3d 129, 152 (2d Cir. 2009)); see

also Juniper Ent., Inc. v. Calderhead, No. CV072413, 2007 WL 9723385, at *23 (E.D.N.Y. Aug.

17, 2007). However, “‘this is generally where a company uses some type of proprietary formula

that gives it a unique advantage, such as a complex pricing or trading algorithm in a financial

business.’” 24 Seven, 2021 WL 276654, at *8 (quoting Free Country Ltd v. Drennen, 235 F. Supp.

3d 559, 566–67 (S.D.N.Y. 2016). RediBag’s conclusory proof about its compilation of “pricing”

and “sales” information” do not tie to an “algorithm,” “analytic model,” or propriety pricing

approach. Zabit v. Brandometry, LLC, No. 20-CV-555, 2021 WL 1987007 (S.D.N.Y. May 18,

2021) (citing Elsevier Inc., 2018 WL 557906, at *5-6.) Moreover, even assuming arguendo that

RediBag’s pricing information could still potentially qualify for trade secret protection, the totality

of the circumstances here indicate RediBag’s pricing information is not a trade secret.

RediBag has not established that it is likely to succeed on its trade secrets claims about its

pricing, sales, and product information fail because this information is already available to its

competitors. The most important consideration in determining whether information is a trade

secret is whether the information was secret.” Zabit, 2021 WL 1987007, at 422. “Matters of . . .

general knowledge in an industry cannot be appropriated by one as [a] secret.” Ramirez v. Temin

& Co., Inc., No. 20 CIV. 6258, 2020 WL 6781222, at *4 (S.D.N.Y. Nov. 18, 2020)

Not only is RediBag’s proof about its alleged trade secrets conclusory, but Maierhoffer has

submitted persuasive and uncontradicted evidence that includes specifics about the industry,

including the important fact that sales are often conducted through a public bidding process.

Through, both, that public bidding process and the voluntary disclosures of customers themselves,

competitors already have access to much of the information that RediBag claims constitutes trade

secrets, which would defeat RediBag’s claim. See 24 Seven, 2021 WL 276654, at *8 (finding that

the plaintiff failed to establish that pricing information was a trade secret where the plaintiff did

not “raise any facts that contradict Defendants’ description that prices could be obtained by

contacting companies and requesting this information”); Silipos, Inc. v. Bickel, No. 06-CV-02205,

2006 WL 2265055, at *4 (S.D.N.Y. Aug. 8, 2006) (“Silipos’ discount prices are not trade secrets

because they are well known, as customers in this narrow industry liberally ‘talk about discounts

of the different manufacturers with which they work’ in order to negotiate the lowest prices.’”).

Furthermore, not only is a substantial amount of information about RediBag’s pricing and sales

already available and accessible, but, to the extent RediBag is suggesting that it has a confidential

pricing structure, RediBag’s “publicly-available prices” discussed above would also “signal to

competitors some information about the underlying mechanics of the seller’s pricing structure.”

Drennen, 235 F. Supp. 3d at 567.

Plaintiff’s evidence about confidential “technical information” is also conclusory and is

clearly insufficient to establish that this unspecified information constitutes a trade secret. The

Court takes judicial notice that RediBag readily offers certain technical information about its

products on the internet. Christa McAuliffe Intermediate Sch. PTO, Inc. v. de Blasio, 364 F. Supp.

3d 253, 262 (S.D.N.Y.), aff’d, 788 F. App’x 85 (2d Cir. 2019)(citing Fed. R. Evid. 201(c) and

denying preliminary injunction, in part, based on information that the court sua sponte could

accurately and readily determined from an internet search.); see, also, Brainwave Sci., Inc. v.

Arshee, Inc., No. 21-CV-4402, 2021 WL 6211630, at *3 (E.D.N.Y. Dec. 14, 2021) (“When

supposedly secret information is publicly procurable, without some type of reservation of rights,

it cannot be proprietary.”)

Finally, RediBag’s proof about “the extent of measures [it has taken] to guard the secrecy

of the information” is also lacking. While RediBag relies on its confidentiality agreement with

Maierhoffer, that agreement cannot save its trade secret claim. See Zabit, 2021 WL 1987007, at

422 (expressing skepticism that a confidentiality agreement alone can suggest the existence of

trade secret.) Here, eight years passed before RediBag required Maierhoffer to sign an agreement

with confidentiality provisions. Notably, this only occurred in August 2016—approximately six

months after Maierhoffer started his management role at RediBag—which undercuts RediBag’s

claims that it closely protects the alleged trade secrets, The actual confidentiality provisions of the

Agreement are also notable. The Agreement simply provides that, for two years after the

termination of Plaintiff’s relationship, Plaintiff shall not “directly or indirectly, disclose to any

person, firm or corporation the names or addresses of any of the customers or clients of the

Company or any other information pertaining to them.” The Agreement says nothing about

“technical information.”

RediBag’s other proof about the “the extent of measures [it has taken] to guard the secrecy

of the information” is also lacking. Other than Maierhoffer’s agreement, the entirety of the

RediBag’s proof on this point consists of one sentence in Rabiea’s declaration, which states:

“RediBag takes reasonable steps to keep its information confidential, including restricting access

to information using technical measures, and requiring employees and independent contractors to

sign non-compete agreements and other contracts.” (Rabiea Decl. ¶ 9.) This declaration provides

no details about these “technical measures” or about any of the unspecified agreements that

RediBag requires its independent contracts, including its “brokers” to sign. Notably, Rabiea’s

declaration admits that RediBag works with “independent brokers to assist in product sales.”

(Rabiea Decl. ¶ 3.) While RediBag apparently also works with other independent brokers besides

Maierhoffer, the record contains no copies of any agreements between RediBag and these other

independent brokers. Furthermore, whatever agreements RediBag had with Maierhoffer and other

brokers cannot overcome the persuasive evidence in Maierhoffer’s declaration that the customer

information at issue is not a trade secret because it is disclosed through the public bidding process

and by the customers themselves.

RediBag has simply failed to establish that it is likely to succeed on its trade secrets claim.

3. Breach of Covenant

RediBag’s argument that the Court should grant a preliminary injunction based on its

breach of covenant claim also fails. RediBag has not established irreparable harm. Nor has

RediBag shown that it is likely to succeed on the merits of its claim.

a. Irreparable Harm

It is “very difficult to calculate monetary damages that would successfully redress the loss

of a relationship with a client that would produce an indeterminate amount of business in years to

come.” Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 69-70 (2d Cir.1999). As such, an “employer

may suffer irreparable harm when a former employee violates a non-compete clause and thereby

causes the former employer to lose client relationships and customer good will that the employer

had built up over years.” Int’l Creative Mgmt., Inc. v. Abate, No. 07 CIV. 1979, 2007 WL 950092,

at *3 (S.D.N.Y. Mar. 28, 2007) (finding no irreparable harm despite contractual provision

acknowledging “great and irreparable injury and damage” in the event of a breach)

RediBag accuses Maierhoffer of breaching the August 2016 Agreement, in part, because

“one of [RediBag’s] competitors” made sales of competitive products to one of its customers.”

(Pl.’s Mem. at 7.) RediBag argues that Maierhoffer’s “explicit[] acknowledge[ment]” in the

agreement that RediBag would suffer irreparable harm, alone, “is enough to show irreparable

harm.” (Pl.’s Mem. at 19-20.) Defendants argue that RediBag cannot establish irreparable harm,

because the non-compete is unenforceable. (Def.’s Opp’n at 14.)

RediBag has failed to make a showing of irreparable harm, because its principal argument

is that irreparable harm must be assumed based on an alleged breach of the non-compete. Courts

have soundly rejected this argument. See, e.g., Singas Famous Pizza Brands Corp. v. New York

Adver. LLC, No. 10-CV-8976, 2011 WL 497978, at *6 (S.D.N.Y. Feb. 10, 2011), aff’d, 468 F,

App’x (2d Cir. 2012) (“this Court has rejected the proposition that irreparable harm must inevitably

be assumed in breach of covenant cases”) (internal citations omitted); Baker’s Aid, Div. of M.

Raubvogel Co. v. Hussmann Foodservice Co., 830 F.2d 13, 16 (2d Cir. 1987) (“We also agree

with the district court that the contractual language declaring money damages inadequate in the

event of a breach does not control the question whether preliminary injunctive relief is

appropriate.”); see also Intertek Testing Servs., N.A., Inc. v. Pennisi, 19-CV-7103, 2020 WL

1129773 (E.D.N.Y. Mar. 9, 2020) (“in determining whether the plaintiff demonstrated irreparable

harm, the court must not adopt a categorical or general rule or presume that the plaintiff will suffer

irreparable harm […])(internal citations omitted).

RediBag has not sufficiently demonstrated any actual or imminent loss of client

relationships and customer good will. It points to no specific long-term or recurring client

relationships that are threatened or offered evidence of goodwill that will be lost. Int’l Creative

Mgmt., 2007 WL 950092, at *3 (finding no irreparable harm where plaintiff did not provide

evidence of “goodwill it ha[d] built up with individual clients over the course of several

representations.”). Further, Maierhoffer’s declaration indicates that some of the alleged sales

activity was one-off activity. For example, Maierhoffer no longer markets or sells hand sanitizer

products. (Maierhoffer Decl. ¶ 23.) see, also, Elpac, Ltd. v. Keenpac North America, Ltd., 186

A.D.2d 893, 895 (N.Y. App. Div. 1992) (“[W]e are not persuaded on this record that the European-

style shopping bag market is such that the individual defendants’ wrongful diversion of one order

would give defendants an unfair competitive edge in connection with subsequent orders from the

same customer.”); Liberty Power Corp., LLC v. Katz, No. 10-CV-938, 2011 WL 256216, at *7

(E.D.N.Y. Jan. 26, 2011) (finding that harm was not irreparable where plaintiff alleged that

defendant’s misappropriation would result in lost contracts with a “finite-albeit large-number of

customers”). In sum, RediBag has not borne its burden of demonstrating that it requires

preliminary injunctive relief to protect it from imminent, irreparable harm.

b. Likelihood of Success

Plaintiff has also failed to establish likelihood of success. Plaintiff insists that the two-year

non-compete period in the Agreement began when the parties severed their relationship in March

2021. Defendants, however, insist that this two-year period began to run in February 2019 and,

thus, expired in February 2021 prior to Plaintiff’s institution of this action. Defendants assert that:

(1) there was a break in the parties’ relationship when Maierhoffer submitted his resignation letter

in February 2019; and (2) under the Agreement, this break triggered the Agreement’s two-year

post-termination non-compete period, which Defendants maintain expired in February 2021.

According to Plaintiff, although the parties’ relationship changed in February 2019 after

Maierhoffer’s resignation letter, there was no break in the parties “independent contractor

relationship.” Plaintiff also contends that—even if there was a clear break in the relationship in

early 2019— under the terms of the Agreement, a two-year post-termination non-compete period

would still run from March 2021 to March 2023 because, after Maierhoffer’s February 2019

resignation, Plaintiff and Maierhoffer subsequently resumed their independent contractor

relationship later that year.

Plaintiff has failed to establish that a likelihood of success on its breach of covenant claim.

First, the evidence indicates that there was a break in the parties’ independent contractor

relationship after Maierhoffer’s February 8, 2019 resignation.

On February 8, 2019, Maierhoffer tendered a resignation letter to RediBag, which stated

that the letter served as “formal notice of the termination” of Maierhoffer’s “current ‘employment

agreement with [RediBag].” (Maierhoffer Aff., Ex. C.) In the letter, Maierhoffer indicated that

he “will be happy to continue representing [RediBag] as an ‘independent broker’ with a 4%

commission rate to be paid monthly at mutually agreed upon accounts.” (Id. (emphasis added).)

In response to that letter, RediBag sent Maierhoffer a letter acknowledging his resignation,

and indicating that RediBag “valued our past relationship with you and any potential future

relationship we may have.” (Rabiea Decl., Ex. 2 (emphasis added).) RediBag requested that

Maierhoffer provide certain “necessary transition information,” including information on “pending

matters.” (Id.) RediBag indicated that, after it received this information, it would “begin the

process of account analysis to determine, which, if any, accounts we wish Mustang Marketing to

handle for us and the price we are willing to pay for such an agreement.” (Id. (emphasis added).)

RediBag’s letter also attached a copy of the August 2016 Agreement and indicated that “[f]or the

two year period following your voluntary termination, you are prohibited,” by the Agreement,

from using company information or soliciting customers. (Id.)

That same day, an email exchange between Maierhoffer and a RediBag employee occurred

between 11:03 AM and 1:25 PM.2 In one email, Maierhoffer wrote:

Now I’m not obligated to BS company projects; I can focus on relationship building

again. If you want to be part of that moving forward great, if NOT, I will move on.

I’m confident this decision is the best and only decision for me as well as Redi-

Bag. At the end of the day, the only thing that has changed is that I’m responsible

for my own expenses, I get paid a commission, I don’t manage Rich/Darrell and I

continue to promote Redi-Bag.

(Maierhoffer Decl. Ex. 3.)

Rabiea’s declaration asserts, in conclusory fashion, that, “Maierhoffer continued to serve

as sales broker for RediBag after February 8.” (Rabiea Decl. ¶ 17.) However, Rabiea’s declaration

does not provide any details about how and when the relationship continued. And, the email

2 The timing of these emails in relationship to the parties’ February 8, 2019 letters is not identified in the record.

exchange above does not clearly establish that an independent contractor relationship between the

parties continued, uninterrupted, after February 8, 2019. By contrast, Maierhoffer’s affidavit states

that “it took months before Mustang and RediBag reached an understanding as to particular

Mustang clients RediBag wanted to hire Mustang to represent.” (Maierhoffer Decl. ¶ 36.)

Maierhoffer also explains that, after his resignation in February 2019, he did not broker another

sale for RediBag until December 2019.3 (Id. ¶ 40.)

Contrary to Plaintiff’s argument, the Court finds, based on the record above, that the

parties’ independent relationship terminated in February 2019 and then resumed sometime later in

2019 when Maierhoffer began to act again as an “independent broker” for RediBag—as he had

done previously between 2008 and February 2016. The Court now turns to the impact of this

termination and break in the relationship under the August 2016 Agreement.

The remaining question is whether, given these facts and the termination in February 2019,

the Agreement’s two-year period of post-termination restraints began in February 2019 and ended

in February 2021 or, as Plaintiff contends, a two-year period of post-termination restraints runs

from March 2021 to March 2023.

Defendants insist that once the relationship was terminated, the two year non-compete

period began to run. Defendants contend that, under the Agreement, if the parties then re-establish

an independent contractor relationship at some point in the future, the two-year non-compete does

not reset.

By contrast, Plaintiff asserts that:

Had there been a temporary break in the relationship, the rules that governed that

relationship would have resumed when the relationship resumed. There is nothing

3 According to Defendants’ opposition brief, “RediBag refused to make any business-related commitments with

Mustang until June 2019.” (Defs.’ Opp’n at 6.) RediBag’s reply brief cites this factual allegation and does not dispute

it. (Pl.’s Reply Br. at 5.) It is also notable that, according to a March 10, 2021 letter from Maierhoffer’s attorney,

RediBag asked Maierhoffer to sign another non-compete agreement in December 2020. (Rabiea Decl., Ex. 5.)

unusual about such an arrangement, and the fact that [the Agreement] could be

modified only by a mutually executed writing shows that renegotiations of

compensation arrangements and the like, or temporary suspensions of work, were

not supposed to vitiate the agreement.

(Pl.’s Reply Br. at 4.) Under Plaintiff’s reading of the Agreement, if the parties terminate their

relationship and then subsequently re-enter the relationship at later point in time, they are back at

square one and, after a second termination, Plaintiff is then entitled to a new two-period beginning

from the date of the second termination.

As an initial matter, Plaintiff’s contention that that the events of February 2019 are

analogous to “a temporary suspension of work or a mere renegotiation of compensation” are not

persuasive. The record before the Court shows that, in February 2019, the relationship terminated

and that there was a break in the relationship before the parties re-established their relationship

later that year.

Most importantly, the Court finds that the August 2016 Agreement is, at the very least,

ambiguous as to how it applies when the parties’ independent contractor relationship is terminated

and then subsequently begins again at a later point in time. As explained below, because restrictive

covenants are construed narrowly under both Delaware and New York law, the narrower

construction of these ambiguous provisions of the Agreement controls. Accordingly, the two-

period of post-termination restrains likely expired in February 2021.