IME WatchDog, Inc. v. Gelardi

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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IME WATCHDOG, INC.,

Plaintiff,

MEMORANDUM & ORDER

- against - 22-CV-1032 (PKC) (JRC)

SAFA ABDULRAHIM GELARDI, VITO

GELARDI, and IME COMPANIONS LLC,

Defendants.

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SAFA GELARDI AND IME COMPANIONS

LLC,

Third-Party Plaintiffs,

- against -

CARLOS ROA AND DANIELLA LEVI,

Third-Party

Defendants.

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PAMELA K. CHEN, United States District Judge:

Plaintiff IME Watchdog, Inc. (“Watchdog” or “Plaintiff”) commenced this action on

February 25, 2022, against IME Companions LLC (“Companions”) and Safa Abdulrahim Gelardi

and Vito Gelardi (“Individual Defendants”) (collectively, “Defendants”), alleging

misappropriation of Watchdog’s confidential information and trade secrets, and seeking monetary

and injunctive relief. Before the Court is Plaintiff’s motion for a preliminary injunction. After

holding a show-cause hearing on April 4, 2022, the Court granted Plaintiff’s motion in part and

preliminarily enjoined Defendants from franchising Companions and having any ongoing or future

communications with Plaintiff’s employees and agents. The Court reserved ruling on the

remainder of Plaintiff’s request for a preliminary injunction and requested the submission of

supplemental briefing on the issue of irreparable harm. For the reasons stated herein, the Court

grants in part and denies in part the remainder of Plaintiff’s motion and issues a separate order

setting forth the requirements of the preliminary injunction.

BACKGROUND

I. Findings of Fact

Pursuant to Federal Rule of Civil Procedure 52(a)(2), the Court makes the following

findings of fact in support of its partial grant of a preliminary injunction against Defendants. The

Court also incorporates by reference its February 28, 2022 and April 5, 2022 Docket Orders ruling

on Plaintiff’s motion for a temporary restraining order and partially ruling on the preliminary

injunction motion. (See 2/28/2022 Docket Order; 4/5/2022 Docket Order.)

Watchdog and Companions are competitors in the area of personal injury cases. When a

plaintiff brings a personal injury lawsuit, the defendant can obtain an independent medical

examination (what the parties refer to as an “IME”) of the plaintiff to evaluate his or her alleged

injuries. (See Declaration of Daniella Levi (“Levi Decl.”), Dkt. 8, ¶¶ 4–8.) Companies like

Watchdog and Companions provide a third-party service to plaintiffs undergoing an IME, by

sending an associate with the plaintiff to the medical examination to observe, take notes, and help

the plaintiff fill out forms. The associate then produces a report that the plaintiff’s counsel can

potentially use in the plaintiff’s personal injury case in court. (Id. ¶¶ 15–16, 27–28.)

Watchdog is a New York corporation (see Complaint (“Compl.”), Dkt. 1, ¶ 4) established

in May 2011 by Daniella Levi, a third-party defendant in this action (see Levi Decl., ¶¶ 1, 14.)

Levi, who is a personal injury attorney, developed “forms of reports” and checklists for

Watchdog’s associates “to complete” after “different types” of medical examinations; “established

price lists” and “recruitment and training procedures”; and “built a customer database” for

Watchdog. (Id. ¶¶ 3, 16–18.) Through years of practice and operation, Watchdog developed

information regarding its customers’ preferences, “such as how soon each customer wants its

report, and whether the [associate] should have a conference with the customer in advance of the”

medical examination.1 (Id. ¶ 30.)

In 2011, Levi hired Adam Rosenblatt as an administrative assistant, and later promoted

him to a Watchdog associate/observer. In 2016, Rosenblatt was again promoted, this time to

president of Watchdog. (Id. ¶¶ 31–32.) As president, Rosenblatt holds the “top executive” position

at Watchdog, along with Levi as the chief operating officer, and has access to the company’s

“entire database, including the identity of all of its customers and clients, their contact information,

their preferences, their pricing and all of the financial details” of the company. (Id.) Watchdog’s

“sensitive documents” and data are password-protected, such that only Levi and Rosenblatt have

access to them. (Id. ¶¶ 34–35.)

Companions is a New York limited liability company (Compl., Dkt. 1, ¶ 5) established in

November 2017 by Defendants Safa Gelardi and Vito Gelardi, a married couple. (See Declaration

of Safa Gelardi (“Gelardi Decl.”), Dkt. 26, ¶¶ 2, 33.) Prior to launching Companions, Safa Gelardi

had no experience in the personal injury field generally or with independent medical examinations

specifically—rather, she worked at a bank in various positions, including as vice president. (See

April 4, 2022 Hearing Transcript (“Tr.”) 24:21–25:10, 29:16–30:7.) However, after meetings with

Rosenblatt and his father in early 2017, Safa Gelardi learned about Watchdog’s business, reviewed

proprietary documents Rosenblatt shared with her, and decided to open Companions. (See Gelardi

Decl., ¶¶ 16–18, 20–22, 28, 33; Tr. 35:19–21, 84:10–85:1, 155:12–14.)

1 Defendants in personal injury actions have resisted the presence of Watchdog’s third-

party associates at medical examinations. The issue was litigated in New York state courts, which

have held that plaintiffs are entitled to have a nonlegal third-party observer at the examination.

See, e.g., Gonzalez v. Red Hook Container Terminal, LLC, 128 N.Y.S.3d 897, 898 (App. Div.

2020).

Rosenblatt shared many of Watchdog’s highly detailed and proprietary documents with

Defendants over time, including, but not limited to, Watchdog’s: (1) invoices; (2) customer lists

and sales reports; (3) a quarterly report; (4) a memorandum containing profit and loss analyses and

the breakdown of medical examinations by the doctors’ specialties; (5) tables recording how much

(and whether) customers paid, what they paid for (i.e., associate’s travel time), whether they

received discounts, the time spent in the examination, and the doctors’ specialties; and (6) payroll

information that reflects profits made by each associate for Watchdog.2 (Dkt. 45-3, at ECF 93–

193.)

Safa Gelardi used two Watchdog invoices that Rosenblatt provided to pitch the idea of

Companions to an investor—Gregory Elefterakis—who had previously declined to fund a different

idea Safa Gelardi pitched to him. This time, Elefterakis agreed to provide start-up capital for

Companions and brought in two more business partners, Roman Pollak and Anthony Bridda. (See

Gelardi Decl., Dkt. 26, ¶¶ 31–32.) Elefterakis also introduced Safa Gelardi to the clients to whom

these two invoices were issued, which happened to be his nephews’ firms, and whom Safa Gelardi

poached from Watchdog as her first clients. (Tr. 50:11–16 (“THE COURT: Again, but you still

wanted to get from IME Watchdog, one of their customers for your new business venture using --

THE WITNESS: Correct, Your Honor. THE COURT: Okay. The invoice and using Gregory

2 The Court notes that Defendants’ production of these materials, which Defendants were

required to produce pursuant to the Court’s March 30, 2022 Docket Order, appears to have been

incomplete and includes the production of materials without any context or explanation. For

example, Defendants produced a single sheet of paper that includes Levi’s personal information

(e.g., her age, date of birth, home address, phone numbers, her husband’s name, his age, and his

line of business), and four separate links to what appear to be dockets and articles, presumably

linked to Levi in some manner. (Id. at ECF 195.) However, there is no explanation of who created

this document, when, and for what purpose, or the source of the information contained in it. Nor

do Defendants explain why they produced this document without any contextual information.

[Elefterakis]? THE WITNESS: Correct.”); Dkt. 45-3, ECF 2–3, 99–100; Gelardi Decl., Dkt. 26,

¶¶ 34–35.)

Using Watchdog’s misappropriated invoices and a 2016 customer sales summary report,

along with some help from her newly found business partners,3 Safa Gelardi got Companions off

the ground in November 2017.4 (Tr. 40:4–18.) Safa Gelardi also used Watchdog’s website and

Rosenblatt’s knowledge about Watchdog’s business to set up Companions’ website. (See Dkt. 45-

3, ECF 80–81 (“[W]e need a website . . . with a significant amount of content to be taken from

IME Watchdog.”).) Having learned from Rosenblatt that Watchdog’s website would benefit from

certain improvements, and again having no personal knowledge of the industry, Safa Gelardi made

very specific requests for her own company’s website—copying Rosenblatt’s words almost

verbatim. (See, e.g., id. at ECF 81 (Safa Gelardi writing in an email that, “Many of [Watchdog’s]

current clients are baffled by the format and just email [Rosenblatt]. . . . Clients should be able to

log on and book an [associate] . . . Many clients will not want to take these steps and I should be

3 Safa Gelardi bought out her partners in August 2018. (Gelardi Decl., Dkt. 26, ¶ 45.)

4 Safa Gelardi gave conflicting testimony at the April 4, 2022, show-cause hearing

regarding her knowledge of Watchdog’s 2016 customer sales summary report. (Compare 35:24–

36:1 (“Q Adam [Rosenblatt] gave you a Sales by Customer Summary for 2016 in or about April

of ‘17, correct? A No.”) and 36:2–16 (“Q [Adam provided you with contact information for] each

of the customers listed in the Sales by Customer Summary for 2016. A No.”), with 40:16–41:10

(“Q After you opened up your business you ended up obtaining Subin & Associates as a client,

correct? A Yes. . . . Q And you knew that it was highest grossing – highest sales because you saw

the list that Adam provided you, correct? A Correct.”) and 56:24–57:18 (“THE COURT: . . . did

you receive [the 2016 customer sales summary report] . . . from Adam Rosenblatt? THE

WITNESS: Yes. THE COURT: Okay. And when did you receive it? THE WITNESS: This was

sent – this was part of the stuff sent to my e-mail. THE COURT: All right. And when? THE

WITNESS: I would say April 2017.”). The Court finds that Safa Gelardi did receive Watchdog’s

2016 customer sales summary report from Rosenblatt in April 2017 and used it to start

Companions in November 2017.

able to enter the information in manually.”)5 Significantly, Safa Gelardi planned to franchise

Watchdog’s stolen trade secrets as early as September 20, 2017, when she was setting up

Companions. (Id. (“We cannot really franchise and tell people to use Google calendar.”).)

After starting Companions, Safa Gelardi continued to use misappropriated information to

poach clients from Watchdog and grow Companions. Sometime in 2019, Safa Gelardi asked

Rosenblatt for a copy of one of Watchdog’s medical examination reports (see Dkt. 15-1, at ECF

1–24; Dkt. 45-3, at ECF 58–79)—which are extremely detailed—in order to compare it with the

performance of her own associates and advance her business.6 In March 2019, Rosenblatt emailed

a 2016 Watchdog report to Safa Gelardi, with the subject line “sample report.” (Dkt. 15-1, at ECF

1.) In October 2019, Rosenblatt emailed a 2019 Watchdog report to Safa Gelardi, with the subject

line “New Template.” (Dkt. 15-2, at ECF 1.) The top of each report’s first page has a clear

designation that the report is confidential attorney work product.7 Other emails between

Rosenblatt and Safa Gelardi show that on August 21, 2019, Rosenblatt sent a list of six of

Watchdog’s clients and their email addresses to Safa Gelardi, with a note that “all paid full price,”

and that seven days later, Safa Gelardi forwarded this information to Carlos Roa at

“croa@imecompanions.com.”8 (Dkt. 45-3, at ECF 92.)

5 Whether or not Safa Gelardi sought this information from Rosenblatt, or paid for it, is

irrelevant. What matters is that she used this information—which she knew she obtained

wrongfully—to set up her own competing business, Companions.

6 While Safa Gelardi denied that having a copy of Watchdog’s report helped Companions

(see Tr. 51:11–52:9), the Court does not credit that testimony.

7 Records show that Safa Gelardi forwarded both emails (see Dkt. 15-1, at ECF 1; Dkt. 15-

2, at ECF 1), presumably to Carlos Roa, a Companions employee at the time, as with another email

with Watchdog’s customers discussed here.

8 In light of all the evidence before it, the Court finds that the email address

“croa@imecompanions.com” is Carlos Roa’s Companions email address.

Safa Gelardi and Rosenblatt continued to exchange emails with Watchdog’s proprietary

information through 2021. (Id. at ECF 85–90). Thus, the Individual Defendants took “confidential

information through” Rosenblatt about Watchdog’s “business in order to further their own

business, namely,” Companions, and did so “in exchange for money” beginning in at least 2019.9

(Tr. 153:20–23, 154:16–20, 155:12–156:2; Dkts. 15-5, 15-6, 15-7.) Although fully aware that the

information shared by Rosenblatt was proprietary and confidential, the Individual Defendants had

an “ongoing relationship” with Rosenblatt in which they paid him to “get information.” (Tr.

154:21–156:2.) The Individual Defendants even assured Rosenblatt that Levi would not find out

about the scheme because she did not have access to his bank accounts and could not subpoena

him. (See Plaintiff’s Supplemental Anticipated Witness and Exhibit List (“Pl. List”), Exhibit 18A,

audio tape: Recording of a Call Between Adam Rosenblatt, Safa Gelardi, and Vito Gelardi (on file

with the Court).) When Rosenblatt expressed fear about being found out, the Individual

Defendants promised to hire Rosenblatt as a Companions employee and to give him a salary

advance. (Id.)

In addition to using Watchdog’s proprietary information to grow Companions into one of

Watchdog’s competitors (Tr. 156:2–18), Defendants attempted to recruit Watchdog’s clients and

other potential clients by making disparaging remarks about Watchdog and Levi. In a March 2019

email to a Watchdog client, Safa Gelardi stated (in an apparent reference to Levi’s background as

9 Safa Gelardi invoked her Fifth Amendment right against self-incrimination in response

to questions regarding paying Rosenblatt for Watchdog’s confidential and proprietary information

after creating Companions in November 2017, and using it to further Companions’ business. (See

53:9–11, 58:15–19. 60:15–62:16, 122:5–125:4.) As the Court advised Defendants at the show-

cause hearing, the Court draws a negative inference from this invocation and concludes that

Defendants did pay Rosenblatt in exchange for information and documents from Watchdog,

beginning at least in 2019. (See Tr. 6:1–9, 18:4–19); see Baxter v. Palmigiano, 425 U.S. 308, 318–

20 (1976); Brink’s Inc. v. City of New York, 717 F.2d 700, 710 (2d Cir. 1983).

an attorney): “keep in mind WE ARE NOT ATTORNEYS, we are not owned by attorneys, so

your clients are safe. We are there to add value not to take away.” (Pl. List, Exhibit 17, at 2.) In

another email sent to a potential client, Safa Gelardi wrote: “IME Watchdog is owned by a law

firm and attorney Daniella Lev[i].” (Dkt. 56-7, at ECF 1.) Similar statements permeate emails

addressed to potential clients sent by Roa on behalf of Companions: “We are independently owned,

not owned by another law firm.” (Dkt. 51-1, at ECF 2; Dkt 51-3, at ECF 2; Dkt 51-4, at ECF 2).

A different iteration of this email went farther and added: “therefore your clients are safe with us

during their IMEs.” (Dkt. 51-5, at ECF 2.) The inference that Defendants wanted potential

customers to draw from these statements is not hard to decipher: Levi, Watchdog’s owner and a

personal injury attorney, used the medical examinations her company observed to poach personal

injury plaintiffs from Watchdog’s clients and would do the same to the potential clients

Companions was wooing, but that Companions would not.10

As a result of Defendants’ actions, Plaintiff lost many clients and business opportunities,

including its largest account—the law firm of Subin & Associates, which was one of the accounts

for which Rosenblatt shared proprietary information with Safa Gelardi in 2017.11

10 Defendants also sent thinly veiled, disparaging marketing emails to potential customers.

(See Dkt. 45-7). One such email includes an image of an aggressive dog behind what appears to

be a cage, with a message that reads, “You Can Keep the Dog in a Cage and Send a Companion

on your next IME!” (Id. at ECF 2–3.)

11 That some of Plaintiff’s then-existing customers may have been “unhappy” with

Plaintiff’s service and chose to switch to Defendants (see Dkts. 27, 28), and that Defendants “met”

some of the poached clients through events and introductions (see Defs’ Supp. Resp., Dkt. 55, at

1–3), is not material where, as here, Defendants’ business likely would not have existed in the

shape and form it does without Rosenblatt sharing improperly obtained proprietary information

regarding Watchdog’s business with Defendants. In any event, the fact that customers may have

had their own reasons for moving to Companions and were unaware of Defendants’ improper

business practices does not prove that Defendants did not use Watchdog’s proprietary

information—it simply shows that Defendants took steps to recruit certain clients in a targeted

manner after learning about them through Rosenblatt.

II. Procedural History

On February 28, 2022, the Court denied Plaintiff’s motion for a temporary restraining

order, finding that Plaintiff had not established irreparable harm. (See 2/28/2022 Docket Order.)

The Court held a show cause hearing on Plaintiff’s motion for preliminary injunction on April 4,

2022, where it found that Plaintiff had demonstrated likelihood of success on the merits of its

claims against Defendants. (See 4/5/2022 Docket Order). The Court thus granted Plaintiff’s

motion in part and preliminarily enjoined Defendants from (1) franchising Companions and (2)

having any ongoing or future communications with Plaintiff’s employees and agents. (Id.) The

Court reserved ruling on the remainder of Plaintiff’s requests for preliminary relief and requested

the parties to submit supplemental evidence and briefing on the issue of irreparable harm. (See Tr.

153:12–172:25.) Supplemental briefing was completed on April 21, 2022. (See Dkts. 44, 45, 46,

51, 52, 55, 56.)

Plaintiff seeks a preliminary injunction enjoining “Defendants from operating their

business,” and “direct[ing] Defendants to return . . . all confidential information and trade secrets”

and “destroy all electronic information belonging to Plaintiff that is in their possession.”

(Plaintiff’s Supplemental Brief (“Pl. Supp. Br.”), Dkt. 44, at 14.) Plaintiff also seeks access to “all

electronic accounts” in Defendants’ custody or control “on which they stored information

regarding” Watchdog, including “providing relevant passwords.” (Id. at 25). Lastly, Plaintiff

seeks to enjoin Defendants “from contacting . . . any of [Watchdog’s] clients.” (Proposed Order

to Show Cause, Dkt. 6, at 3–4.)

DISCUSSION

I. Legal Standard

“[A] preliminary injunction is ‘an extraordinary remedy never awarded as of right.’”

Benisek v. Lamone, 138 S. Ct. 1942, 1943 (2018) (quoting Winter v. Natural Res. Defense Council,

Inc., 555 U.S. 7, 24 (2008)). “A party seeking a preliminary injunction must demonstrate: (1) a

likelihood of success on the merits . . .; (2) a likelihood of irreparable injury in the absence of an

injunction; (3) that the balance of hardships tips in the plaintiff’s favor; and (4) that the public

interest would not be disserved by the issuance of an injunction.” Khan v. Addy’s BBQ LLC, 419

F. Supp. 3d 538, 552 (E.D.N.Y. 2019) (quoting Benihana, Inc. v. Benihana of Tokyo, LLC, 784

F.3d 887, 895 (2d Cir. 2015)); see also Winter, 555 U.S. at 20; Salinger v. Colting, 607 F.3d 68,

75 (2d Cir. 2010). “The purpose of such interim equitable relief is not to conclusively determine

the rights of the parties, . . . but to balance the equities as the litigation moves forward.” Trump v.

Int’l Refugee Assistance Project, 137 S. Ct. 2080, 2087 (2017) (citations omitted); see also Am.

Civil Liberties Union v. Clapper, 804 F.3d 617, 622 (2d Cir. 2015) (“A preliminary injunction is

an equitable remedy and an act of discretion by the court.”).

“Courts refer to preliminary injunctions as [either] prohibitory or mandatory.” N. Am.

Soccer League, LLC v. U.S. Soccer Fed’n, Inc., 883 F.3d 32, 36 (2d Cir. 2018). While a

“[p]rohibitory injunction[ ] maintain[s] the status quo pending resolution of the case[,] [a]

mandatory injunction[ ] alter[s] it.” Id. at 36–37 (citation omitted). The status quo in the context

of a preliminary injunction is “the last actual, peaceable uncontested status which preceded the

pending controversy.” Mastrio v. Sebelius, 768 F.3d 116, 120 (2d Cir. 2014) (per curiam) (internal

quotation and citation omitted). A party moving for a mandatory injunction, or an injunction that

“will provide the movant with substantially all the relief sought and relief that cannot be undone

even if the defendant prevails at a trial on the merits” must satisfy a heightened legal standard and

both: “(1) make a strong showing of irreparable harm, and (2) demonstrate a clear or substantial

likelihood of success on the merits.” Yang v. Kosinski, 960 F.3d 119, 127–28 (2d Cir. 2020)

(internal quotation and footnotes omitted).

The Court finds that Plaintiff is seeking a status quo injunction that would restore and

preserve the parties’ situation as it existed immediately prior to the events that precipitated the

dispute and applies the general standard for preliminary injunctions, as opposed to the heightened

legal standard.12 The Court reiterates its finding, made at the close of the show-cause hearing, that

Plaintiff has established a likelihood of success, and focuses its analysis on irreparable harm, as

well as the balance of hardships and the public interest.13

II. Plaintiff Has Established Irreparable Harm

“The showing of irreparable harm is perhaps the single most important prerequisite for the

issuance of a preliminary injunction, and the moving party must show that injury is likely before

the other requirements for an injunction will be considered.” Allstate Ins. Co. v. Elzanaty, 929 F.

Supp. 2d 199, 221 (E.D.N.Y. 2013) (alterations omitted) (quoting Kamerling v. Massanari, 295

F.3d 206, 214 (2d Cir. 2002)). “[T]o show irreparable harm, the moving party must establish that

there is a continuing harm which cannot be adequately redressed by final relief on the merits and

for which money damages cannot provide adequate compensation.” Int’l Home Care Servs. of

New York, LLC v. People’s United Bank, Nat’l Ass’n, No. 20-CV-3358 (PKC) (SJB), 2020 WL

12 However, the Court notes that, in light of the overwhelming evidence of irreparable harm

and clear likelihood of success, Plaintiff has met the heightened, mandatory injunction standard as

well.

13 Defendants argue that Plaintiff’s supplemental brief is a “stealth motion for

reconsideration” of the Court’s April 5, 2022 Docket Order because Plaintiff “ignored the narrow

scope of” the Court’s supplemental briefing inquiry. (See Defendants’ Supplemental Response

(“Defs’ Supp. Resp.”), Dkt. 52, at 1; see also id. at 5, 7–10.) Defendants are incorrect. The Court

only made a final determination with respect to preventing Defendants from franchising and

communicating with Plaintiff’s employees and agents. (See 4/5/2022 Docket Order.) The Court

specifically reserved ruling on the remainder of Plaintiff’s requests for preliminary relief, noting

that “the question remains [whether there is] irreparable harm and [what] the scope of the

injunction [should be], if any.” (Tr. 156:21–23.) Moreover, the Court qualified its observations

regarding irreparable harm and the scope of the injunction as preliminary, and thus asked for

supplemental evidence and briefing from the parties. (Tr. 157:2–158:19.)

5752187, at *4 (E.D.N.Y. Sept. 24, 2020) (internal quotation marks omitted). “Where there is an

adequate remedy at law, such as an award of money damages, injunctions are unavailable except

in extraordinary circumstances.” Moore v. Consol. Edison Co. of N.Y., 409 F.3d 506, 510 (2d Cir.

2005). The moving party must also demonstrate that irreparable harm is “actual and imminent,

not remote or speculative.” Allstate Ins. Co., 929 F. Supp. 2d at 221 (alterations omitted and

internal quotation marks omitted).

“[L]oss of reputation, good will, and business opportunities” may constitute irreparable

harm. Rex Med. L.P. v. Angiotech Pharm. (US) Inc., 754 F. Supp. 2d 616, 621 (S.D.N.Y. 2010)

(quoting Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 404 (2d Cir. 2004)). Good will is defined

as the “expectancy of continued patronage[.]” Singas Famous Pizza Brands Corp. v. N.Y. Adver.

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

App’x. 43 (2d Cir. 2012) (summary order); see also Nat’l Elevator Cab & Door Corp. v. H & B,

Inc., No. 07-CV-1562 (ERK) (RML), 2008 WL 207843, at *5 (E.D.N.Y. Jan. 24, 2008) (noting

that good will “typically includes not only the likelihood that customers will return to the old place

of business, but the competitive advantage of an established business”), aff’d, 282 F. App’x. 885

(2d Cir. 2008) (summary order). “[G]ood will constitutes the intangible qualities of a business

that attract customers . . .” Id. “[C]onclusory statements of loss of reputation and goodwill

constitute an insufficient basis for a finding of irreparable harm.” Singas, 2011 WL 497978, at *6

(internal quotation and citation omitted).

Here, as discussed in detail in the Court’s factual findings, Plaintiff has demonstrated that

Defendants established their business partly by (1) misappropriating information they obtained

from Rosenblatt, Plaintiff’s president, in 2017, (2) poaching and diverting clients from Plaintiff,

and (3) disparaging Watchdog and its owner, Daniella Levi, to Watchdog’s clients. It is undisputed

that before Safa Gelardi started Companions, she had no background in law, medicine, personal

injury lawsuits, or independent medical examinations. Instead, she improperly obtained and used

Plaintiff’s proprietary information to jump-start Companions and continued, over the next several

years, to use the misappropriated trade secrets to grow Companions into a competing business that

diverted Watchdog’s longtime customers, as well as potential new business for Plaintiff. While

the Court credits Safa Gelardi’s testimony that she also received help in setting up Companions

from her former business partner Elefterakis, who helped recruit his nephews’ law firms away

from Watchdog as Companions’ first clients, there is no doubt that Companions’ existence and

growth is based in part on Watchdog’s misappropriated trade secrets, customers, and business

opportunities.

When Defendants engaged in this conduct, they were well aware that Rosenblatt was

violating his duties to Watchdog by divulging this information to Defendants, even cavalierly

reassuring Rosenblatt that Levi would not find out about this breach of duty.14 Defendants went

as far as paying Rosenblatt for this information, in regular installments, and offering him

employment with Companions, in the event Levi discovered the scheme and fired him.

Based on this evidence, it is clear that, without an injunction, Plaintiff will continue to

suffer substantial harm to its goodwill and reputation, and that Defendants will continue to divert

clients from Plaintiff. See QBE Am., Inc. v. Allen, Nos. 22-CV-756, 22-CV-757 (JSR), 2022 WL

14 The Court notes that in their allegations against Roa, Defendants allege that Roa

“breached his duty of loyalty to Companions when he went to Watchdog with damaging

information in January 2022.” (Defs’ Supp. Resp., Dkt. 52, at 2; Dkt. 25, ¶¶ 1, 36–41.) This

statement further confirms that Defendants well understand an employee’s duty of loyalty to its

employer and regard such loyalty as important, and yet took no issue with taking information about

Watchdog from Rosenblatt for years, to Watchdog’s detriment and their own benefit. The Court

also notes that glaringly lacking from this statement is any pronunciation that the information Roa

shared with Watchdog is incorrect—Defendants simply complain that it is “damaging.”

889838, at *15 (S.D.N.Y. Mar. 15, 2022) (“Even if QBE could reliably measure and obtain

damages for poached customers at the end of this litigation, it would be very difficult to precisely

quantify the harm caused by having its trade secrets misappropriated and used to jump-start a new

competitor.”); see also Coastal Distrib., LLC v. Town of Babylon, No. 05-CV-2032 (JS) (ETB),

2006 WL 270252, at *3 (E.D.N.Y. Jan. 31, 2006), aff’d as modified, 216 F. App’x. 97 (2d Cir.

2007) (“Loss of goodwill and injury to reputation are injuries that are difficult to measure in

dollars, and thus, these types of injuries are irreparable harm. . . . Furthermore, loss of business

opportunities and relationships with clients who could produce an indeterminate amount of

business over years to come are also hard to measure in dollars and are properly considered

irreparable harm.” (internal quotation marks excluded).) Thus, Plaintiff has met its burden of

demonstrating that, absent a preliminary injunction, it will suffer imminent irreparable harm.15

III. The Balance of Hardships and Public Interest Tip In Plaintiff’s Favor

The Court finds that the balance of hardships decidedly tips in Plaintiff’s favor. As the

Court previously found and now reiterates, “Plaintiff has demonstrated sufficient hardship given

that Defendants’ ‘actions, if not enjoined will likely result in irreparable harm to the Plaintiff’ and

‘Plaintiff is likely to succeed as to the merits of its case.’” (4/5/2022 Docket Order (quoting Home

It, Inc. v. Wen, No. 19-CV-7070 (MKB) (VMS), 2020 WL 353098, at *6 (E.D.N.Y. Jan. 21,

2020)). “At the same time, Defendants cannot ‘demonstrate any hardship based upon [their]

15 Defendants argue that the cases cited by Plaintiff, some of which the Court relies on here,

are inapplicable because they dealt with trademark issues and non-compete clauses. (See Defs’

Supp. Resp., Dkt. 52, at 18.) However, loss of goodwill and injury to reputation are not narrowly

confined to trademark and non-compete cases and, in any event, while the circumstances of trade

secret loss and customer misappropriation in such cases may not be factually identical to the issues

presented here, the legal analysis from those cases regarding the imposition of preliminary

injunctive relief is relevant and applicable here.

inability to rely on [trade secrets they have], more likely than not, obtained fraudulently.’”16 (Id.

(citing Pearson Educ., Inc. v. Labos, 19-CV-487 (CM), 2019 WL 1949820, at *6 (S.D.N.Y. Apr.

23, 2019) (“[I]t is axiomatic that an infringer of copyright cannot complain about the loss of ability

to offer its infringing product.” (internal quotation marks omitted)).)

The Court also finds that the public interest will be served by an injunction prohibiting

Defendants from further using “what clearly and convincingly appears to be wrongfully obtained

trade secrets” to poach clients from Plaintiff. (4/5/2022 Docket Order.) It goes without saying

that ensuring fair play in the commercial arena and protecting consumers from dishonest

competitive practices serve the public interest.

IV. No Bond Is Required

Pursuant to Rule 65(c), a court may “issue a preliminary injunction . . . only if the movant

gives 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).

“[W]here a bond is posted, it serves as security for the ‘costs and damages’ incurred by the

wrongfully restrained party.” Nokia Corp. v. InterDigital, Inc., 645 F.3d 553, 558 (2d Cir. 2011).

District courts are “vested with wide discretion” to determine the appropriate amount of the bond,

see Doctor’s Assocs., Inc. v. Stuart, 85 F.3d 975, 985 (2d Cir. 1996) (internal quotation and

citations omitted), and, “despite the seemingly mandatory nature of Rule 65(c), a district court in

its discretion may deny a bond altogether if there is no proof of likelihood of harm to the non-

16 The Court has considered Defendant Safa Gelardi’s testimony that the money she

receives from Companions is the primary source of income for the Individual Defendants, but

notes that Safa Gelardi could return to her banking career if necessary. (Tr. 115:9-11 (“Q If the

Court grants the relief requested by the plaintiff, you could go on and work for a bank again,

correct? A I don’t want to.”).) In any event, as discussed below, this testimony is not material

because the Court denies Plaintiff’s request to completely shut down Companions.

movant, see Golden Krust Patties, Inc. v. Bullock, 957 F. Supp. 2d 186, 202 (E.D.N.Y. 2013)

(internal quotation marks omitted). If the district court decides that a bond is not necessary, it must

“make this determination before it enter[s] the preliminary injunction.” Corning, Inc. v. PicVue

Elecs., Ltd., 365 F.3d 156, 158 (2d Cir. 2004) (per curiam).

Here, Defendants have not requested a security bond and Plaintiff similarly has not raised

the issue. Nevertheless, the Court makes an independent determination that a security bond is not

necessary in this case. The Court has already concluded that Plaintiff is highly likely to prevail on

the merits in this litigation and that the hardship to Defendants, if any, thus would be minimal.

Golden Krust, 957 F. Supp. 2d at 203 (“Some courts have considered the strength of a movant’s

case in analyzing the likelihood of harm to a potentially wrongfully enjoined nonmovant.”

(collecting cases)); see also Eastman Kodak Co. v. Collins Ink Corp., 821 F. Supp. 2d 582, 590

(W.D.N.Y. 2011) (“The greater plaintiff’s likelihood of success on the merits, the lower the

probability that an injunction in plaintiff’s favor will later be determined to have been issued in

error, and consequently that [the defendant] will be found to have wrongfully suffered harm.”).

This is especially true in light of the Court’s denial, as discussed below, of Plaintiff’s request to

shut down Companions entirely for the duration of this litigation. Accordingly, the Court finds

that no bond is required here.

V. The Preliminary Injunction Plaintiff Seeks Is Overbroad

Plaintiff requests a broad preliminary injunction that not only would prevent Defendants

from continuing to use Plaintiff’s trade secrets and require them to turn over all improperly

collected information back to Plaintiff but would also effectively shutter Companions for the

remainder of this litigation. (See Dkt. 6, at 3–4.) Plaintiff’s request for preliminary relief is overly

broad. While it is undisputed that Plaintiff did, in fact, lose trade secrets and customers to

Defendants, at this stage of the proceeding, before discovery or forensic analysis has been

conducted, the Court cannot make a finding that Companions is built entirely on misappropriated

information and poached clients. For similar reasons, the Court declines to order Defendants to

grant Plaintiff unlimited access to all of their electronic accounts, including the sharing of

passwords.17 “In all cases, the relief should be ‘narrowly tailored to fit specific legal violations’

and to avoid ‘unnecessary burdens on lawful commercial activity.’” Faiveley Transp. Malmo AB

v. Wabtec Corp., 559 F.3d 110, 119 (2d Cir. 2009) (quoting Waldman Pub. Corp. v. Landoll, Inc.,

43 F.3d 775, 785 (2d Cir. 1994)). The Court therefore denies Plaintiff’s request to shut down

Companions during the pendency of this litigation.

The Court grants the following preliminary injunctive relief to Plaintiff:

a. Defendants are preliminarily enjoined from using in any manner whatsoever

Plaintiff’s trade secrets and confidential and proprietary information.

b. Defendants are directed to return to Plaintiff all originals and copies of documents,

records, and information, whether in hard copy and/or computerized and/or other

electronic media form, that contain Plaintiff’s trade secrets and confidential and

proprietary information.

c. Defendants are preliminarily enjoined from contacting Plaintiff’s current clients,

employees, and agents.

d. Defendants are preliminarily enjoined from franchising Companions.

e. Defendants are preliminarily enjoined from destroying documents, whether in hard

copy and/or computerized and/or other electronic media format, that are presently

in Defendants’ personal or corporate possession relating to Companions,

Watchdog, and or any other matter relevant to this case.18

17 However, as ordered below, Defendants must permit unfettered access to these records

and electronic accounts to the independent forensic analyst.

18 The Court recognizes that this non-destruction requirement is a standard requirement for

all ongoing litigation, see Warren v. City of New York Dep’t of Correctional Med. Staff, No. 17-

CV-1125 (PKC) (LB), 2021 WL 1163105, at *14 (E.D.N.Y. Mar. 26, 2021) (“FRCP 37(b)(2)

allows a district court to impose sanctions when a party spoliates evidence in violation of a court

order, but even without a discovery order, a district court may impose sanctions for spoliation

under its inherent power to manage the litigation.”), but the Court specifically reiterates this

requirement in light of its concerns about Defendants’ candor and conduct thus far in this matter.

f. Within fourteen (14) days of this Memorandum and Order, the parties are directed

to meet and confer regarding the retention of an independent forensic analyst who

will conduct an analysis of all of Defendants’ records and electronic accounts.

Defendants will provide complete and unrestricted access to their records and

electronic accounts to the forensic analyst. The parties will share equally the cost

of the forensic analysis. The parties shall file a joint report within thirty (30) days

of this Memorandum and Order regarding the status of the forensic analysis, and

every sixty (60) days thereafter. The forensic analyst’s final findings shall be filed

with the Court promptly upon the completion of the analysis.

Because “an injunction that prohibits the use or disclosure of trade secrets or confidential

information must also specifically describe the nature of the secrets or confidential information to

be protected,” see ExpertConnect, LLC v. Parmar, 773 F. App’x. 651, 653 (2d Cir. 2019)

(summary order), the Court attaches a separate order to this Memorandum and Opinion that sets

forth the terms of the preliminary injunction with specificity, as required by Rule 65(d). See

Capstone Logistics Holdings, Inc. v. Navarete, 838 F. App’x. 588, 590 (2d Cir. 2020) (summary

order) (“[W]e conclude that the form of the permanent injunction entered by the District Court

fails to satisfy the specificity requirements of Rule 65(d) because it is ‘not possible to ascertain

from the four corners of the order precisely what acts are forbidden’ without resorting to extrinsic

documents.” (quoting Corning, 365 F.3d at 158)).

CONCLUSION

For the reasons stated herein, the Court grants in part and denies in part Plaintiff’s request

for a preliminary injunction. The Court attaches the preliminary injunction order, which sets forth

the specific terms of the injunction, to this Memorandum and Order.

SO ORDERED.

/s/ Pamela K. Chen

Pamela K. Chen

United States District Judge

Dated: May 13, 2022

Brooklyn, New York