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Miller v. Norris

United States District Court, W.D. Washington, Seattle

October 30, 2019

ERIC MILLER, an individual; and VIDBOTZ, LLC, a Washington limited liability company, Plaintiffs,
v.
DEVIN NORRIS, an individual; and JUNE BUG LABS LLC, a Delaware limited liability company, Defendants.

          ORDER DENYING PLAINTIFFS' MOTION FOR A TEMPORARY RESTRAINING ORDER

          Honorable Richard A. Jones United States District Judge.

         This matter comes before the Court on Plaintiffs' Motion for a Temporary Restraining Order. Dkt. # 3. Defendant opposes the Motion (Dkt. # 18). Having considered the submissions of the parties, the relevant portions of the record, and the applicable law, the Court finds that oral argument is unnecessary.[1] For the reasons that follow, the Court DENIES the Motion.

         I. BACKGROUND

         Vidbotz LLC, is a Washington-based company that “designs, develops, and produces video and media content.” Dkt. # 1 at ¶ 7. The company was formed in April 2016 by Plaintiff Eric Miller (“Mr. Miller”) and Defendant Devin Norris (“Mr. Norris”). Id. On August 25, 2016, Mr. Miller and Mr. Norris entered into a Founders' Agreement, which purportedly established their rights and responsibilities to Vidbotz and to one another. Id. at ¶ 8. The Founders' Agreement includes, among other things, non-compete and confidentiality clauses, along with provisions assigning ownership in intellectual property related to Vidbotz's work to Vidbotz. Id.

         Plaintiffs allege that Mr. Norris violated the Founders' Agreement when he formed a new competitor company, June Bug Labs, in December 2018 and began pitching its services to Vidbotz's clients. Dkt. # 1 at ¶ 28. According to Plaintiffs, the products and services being offered by June Bug Labs and Mr. Norris (collectively the “Defendants”) are directly competitive with Vidbotz in violation of the Founders' Agreement. Id. at ¶ 30. For example, Plaintiffs allege that June Bug Labs is marketing a “QR code solution” that is “strikingly similar” to a QR code interface solution that Mr. Norris had previously pitched to Mr. Miller. Id. at ¶ 29. In addition, Plaintiffs claim that Mr. Norris refuses to return proprietary Vidbotz property in his possession, including the passwords and access codes to Defendants' Electronic Storage System containing Vidbotz intellectual property. Dkt. # 1 at ¶¶ 60-61.

         Plaintiffs filed this action on October 14, 2019 alleging misappropriation of trade secrets, violation of the Computer Fraud and Abuse Act (“CFAA”), violation of the Stored Communications Act (“SCA”), violation of the Washington Consumer Protection Act (”CPA”), and breach of contract. Dkt. # 1. The following day, Plaintiffs filed the instant Motion for a Temporary Restraining Order. Dkt. # 3. Defendants oppose the Motion. Dkt. # 18.

         II. LEGAL STANDARD

         Temporary restraining orders (“TRO”) are governed by the same standard applicable to preliminary injunctions. Stuhlbarg Int'l Sales Co. v. John D. Brush & Co., Inc. 240 F.3d 832, 839 n. 7 (9th Cir. 2001) (noting that preliminary injunction and temporary restraining order standards are “substantially identical”). A TRO is an “extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). To obtain a TRO, Plaintiffs must show that they are (1) likely to succeed on the merits, (2) likely to suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in their favor, and (4) an injunction is in the public interest. Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009).

         III. DISCUSSION

         Plaintiffs ask the Court to issue a TRO enjoining Defendants from accessing or using Vidbotz's trade secrets and other confidential information, and from violating the non-compete terms of the Founders' Agreement. Dkt. # 3. Plaintiffs also ask the Court to require Defendants to return Vidbotz's company property, including all access codes and passwords to Vidbotz's accounts. Id.

         A. Likelihood of Success on the Merits

         The parties' moving papers reveal numerous disputes of fact that preclude the Court from determining Plaintiffs are likely to prevail on the merits of their claims. With respect to Plaintiffs' trade secrets and CPA claim, the parties offer competing evidence regarding the existence of Vidbotz's intellectual property. Plaintiffs claim that Mr. Norris misappropriated Vidbotz intellectual property, including the eBooks program and QR interface. Dkt. # 4 at ¶ 13. Defendants' view is that Vidbotz does not have any intellectual property and that the technology referred to by Plaintiffs is either publicly available or maintained by third party vendors. Dkt. # 19 at ¶ 8. Similarly, with respect to Plaintiffs' CFAA and SCA claim, the parties dispute whether Mr. Norris' access to Vidbotz's computer systems was “unauthorized.” Plaintiffs argue that Mr. Norris was not “authorized to access or download Vidbotz's data, files, records, or other information onto any of Defendants' devices or accounts” (Dkt. # 3 at 18), while Defendants argue that Mr. Norris is a co-founder of Vidbotz, and as such “has as much right as anyone to access Vidbotz's computer system.” Dkt. # 18 at 12.

         Finally, there are significant factual disputes regarding the competitive nature of June Bug Labs, and whether Defendants are “directly” competing with Vidbotz in violation of the Founders' Agreement. Plaintiffs argue that Mr. Norris and June Bug Labs are offering products and services directly competitive with Vidbotz in violation of the Founders' Agreement, including the QR interface solution and eBooks technology. Dkt. # 4 at ¶ 13. Defendants contend that June Bug Labs is not “directly competing” with Vidbotz because it is offering a different product, the eBooks platform rather than eBooks content. Dkt. # 19 at ¶¶ 19-23. In addition, even if June Bug Labs and Vidbotz are in direct competition, Defendants argue that Mr. Norris satisfied his contractual obligation when he disclosed June Bug Labs to Mr. Miller and invited him to participate in the new entity. Dkt. # 18 at 9; Dkt. # 19 at ¶¶ 24-25.

         “In deciding a motion for preliminary injunction, the district court is not bound to decide doubtful and difficult questions of law or disputed questions of fact.” Int'l Molders' and Allied Workers' Local Union No. 164 v. Nelson, 799 F.2d 547, 551 (9th Cir. 1986) (internal citations omitted). In addition, if substantial factual disputes are presented, it may be inappropriate to grant injunctive relief. See United Tactical Sys., LLC v. Real Action Paintball, Inc., 2014 WL 6788310, at *8 (N.D. Cal. Dec. 2, 2014) (“Perhaps UTS will ultimately be able to demonstrate that it is the rightful owner of the registered PepperBall mark, but claims under Section 32 of the Lanham Act are reserved for ‘registrants' of the mark, and at this point there are too many unresolved issues and factual disputes for the Court to find that UTS has demonstrated a likelihood of success that it is the ‘registrant' within the meaning of the Lanham Act.”); Occupy Fresno v. Cty. of Fresno, 835 F.Supp.2d 849, 862 (E.D. Cal. 2011) (“To the extent that there is a dispute of fact about this issue, it ...


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