IP Law Daily, TRADE SECRETS—M.D. Fla.: Surgery center not entitled to preliminary injunction against former contractor, (Jul 30, 2021)

By Kevin M. Finson, J.D.

It was unclear whether the former contractor had authorization to obtain the surgery center’s customer list.

A preliminary injunction could not be granted against a former contractor who obtained a surgery center’s customer list, the federal district court in Tampa has held because a reasonable jury could credit either side’s account and find that she either did or did not have authorization to copy the file in question. It was equally likely that either party would succeed on the merits and there was no showing of irreparable harm (Castellano Cosmetic Surgery Center, P.A. v. Doyle, July 28, 2021, Mizelle, K.).

Castellano Cosmetic Surgery Center (Castellano) was a professional association in the business of performing cosmetic surgery. Grace Rashae Doyle and her corporation Rashae Doyle, P.A. performed cosmetic procedures for Castellano as an independent contractor. Doyle also maintained her own private practice treating her own clients at Castellano’s facility. The parties signed a contract which included confidentiality and non-solicitation provisions. Doyle retained her own client list on her personal computer, and Castellano kept an electronic medical records system with a cloud-hosted database. When Doyle’s clients received treatments at Castellano’s facility, they were entered into Castellano’s record system, but remained solely Doyle’s clients by agreement of the parties.

In 2018, Doyle’s computer crashed and she lost her client list. She then obtained a copy of Castellano’s client list, including both her own clients she had seen at Castellano’s facility and Castellano’s clients. She converted the list into an Excel spreadsheet and added her new clients to over the next two years. The parties disagreed about how she obtained the 2018 list. Doyle claimed she obtained it with the assistance and permission of Castellano’s office manager, while Castellano maintained that she must have obtained it by contacting Castellano’s records system provider without authorization. Castellano and Doyle eventually parted ways and signed a new contract voiding their original contract, including the non-solicitation provision, and resolving a dispute over client records. In 2021, Doyle opened a new business called BevelUp. Doyle sent an email announcement of the new business to all the emails on the 2018 list, as well as her new clients obtained since then. Castellano sued for a breach of contract, unfair competition, tortious interference, misappropriation of trade secrets, and computer fraud, and sought a preliminary injunction with regard to the trade secrets and computer fraud claims.

Likelihood of success on the merits. Castellano claimed that its customer list was a trade secret misappropriated by Doyle. However, the court held that Castellano did not show it was substantially likely to succeed, even though there was no dispute over the fact that Doyle had used the list, because a reasonable jury could credit either Doyle’s or Castellano’s account of whether she had permission to use the list or not. If Doyle did have permission to obtain the list, she was under no obligation not to use it because the parties had voided the non-solicitation agreement prior to her use of the list to solicit clients for her new business. It was equally likely that either party would prevail, so this factor weighed against an injunction.

Irreparable harm. Castellano argued that there was a presumption of irreparable harm under Florida law. The court held that this was incorrect. A presumption of irreparable harm existed for violation of restrictive covenants, but there were no cases applying a similar presumption to misappropriation of trade secrets. Absent a presumption, Castellano had only speculation of future harm, which would not support an injunction.

Computer fraud. Castellano’s argument that Doyle had exceeded her authorized access to Castellano’s computer system was not supported by any evidence outside the testimony of the parties, and Castellano’s testimony contradicted itself when the owner testified that there were internal controls to limit Doyle’s access and an employee testified there were no such controls. Castellano also presented no evidence of irreparable harm arising from her alleged access or risk of future harm, so the preliminary injunction was denied on the computer fraud claims.

Finding no likelihood of success on the merits or irreparable harm, the court denied the preliminary injunction without review of the remaining elements.

The Case is No. 8:21-cv-01088-KKM-CPT.

Attorneys: Stefan Vaughn Stein (Grayrobinson, PA) for Castellano Cosmetic Surgery Center, P.A. Gregory P. Brown (Hill Ward Henderson, PA) for Rashae Doyle, P.A.

Companies: Castellano Cosmetic Surgery Center, P.A.; Rashae Doyle, P.A.

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