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Home Line Furniture Indus., Inc. v. Banner Retail Marketing

April 30, 2009

HOME LINE FURNITURE INDUS., INC. B/D/A HOME LINE INDUS., PLAINTIFF,
v.
BANNER RETAIL MARKETING, LLC, DEFENDANT.



The opinion of the court was delivered by: Joel H. Slomsky, J.

OPINION

Slomsky, J.

I. INTRODUCTION

The underlying state court action, which gave rise to the current diversity action, was filed by Plaintiff Home Line Furniture Industries, Inc. ("Home Line") against Defendant Banner Retail Marketing, LLC ("Banner") for an alleged breach of confidentiality agreements entered into by the parties. Plaintiff is a furniture manufacturer and wholesale distributor. Defendant is in the business of marketing products such as those sold by Plaintiff.

At the same time Plaintiff filed its Complaint in the Philadelphia Court of Common Pleas on April 21, 2009, Plaintiff also filed a Petition for Preliminary Injunction, which was granted the next day, April 22, 2009, by the state court Emergency Judge. Although Plaintiff's Petition sought a preliminary injunction, the state court Emergency Judge titled his order a "Temporary Ex Parte Restraining Order" ("TRO"), which also contained a rule upon Defendant to show cause why the TRO should not be made permanent pending disposition of the underlying Complaint. The TRO set a hearing date of April 30, 2009 in the Philadelphia Court of Common Pleas.

Under Pennsylvania Rule of Civil Procedure 1531(a), a court may issue a preliminary or special injunction only after written notice and a hearing "unless it appears to the satisfaction of the court that immediate and irreparable injury will be sustained before notice can be given or a hearing held, in which case the court may issue a preliminary or special injunction without a hearing or without notice." Pa. R.C.P. 1531(a). Although the terms "preliminary injunction" and "special injunction" are not defined in the Rule, it appears that when an order is issued ex parte and without notice that the order is analogous to the entry of a "special injunction." Steel City Group v. Global Online Direct, Inc., 2006 U.S. Dist. LEXIS 86831, at **5-6 (W.D. Pa. Nov. 30, 2006). A "special injunction" usually seeks relief that is auxiliary to the main relief requested in the complaint. In re Franklin Township Bd. Of Supervisors, 379 A.2d 874, 879 (Pa. 1977). The state court Emergency Judge in this case titled his order a Temporary Ex Parte Restraining Order, a term not used in the Pennsylvania injunction statute. It appears, however, that the TRO is in the nature of a "special injunction," and will so be considered by this Court in reviewing the propriety of the issuance of the TRO on April 22, 2009, and whether it should be dissolved.

Defendant removed this action to this Court on the morning of April 23, 2009. On the same day, Defendant filed a Motion to Reconsider State-Court Ordered Temporary Injunction (Doc. No. 3). After a telephone conference with counsel for the parties on the afternoon of April 23, 2009, this Court granted Defendant's Motion for Reconsideration and ordered that the TRO issued by the state court Judge was dissolved, vacated and set aside.*fn1 A written Order confirming this ruling was filed April 24, 2009 (Doc. No. 4). This Opinion sets forth the reasons for granting Defendant's Motion to Reconsider State-Court Ordered Temporary Injunction and for dissolving the injunction.

II. FACTS

Plaintiff instituted this action in the Philadelphia Court of Common Pleas on April 21, 2009. (Def. Memo. of Law in Support of Mot. for Reconsideration at 1 [hereinafter "Def. Reconsideration"].) In its Complaint, Plaintiff alleges that Defendant solicited Plaintiff as a client. (Pl. Compl. at 7.) Once Plaintiff hired Defendant, but before revealing any confidential information, Plaintiff required Defendant to enter into Independent Contractor Agreements, which Plaintiff styles as "Confidentiality Agreements." (Id.) Plaintiff and Defendant eventually entered into two such agreements. (Id.) After entering into these agreements, Plaintiff alleges that it disclosed to Defendant information about Plaintiff's proprietary Web Partner Program ("WPP"), an internet marketing program that Plaintiff developed at considerable expense. (Id. at 3-6, 8; Verification of David Bregler, Exh. A to Pl.'s Petition for Preliminary Injunction at ¶ ¶5-7 [hereinafter "Bregler Verif."].) Plaintiff alleges that after reviewing Plaintiff's WPP, Defendant copied the program and began marketing a nearly identical program to Defendant's other clients, including Ashley Furniture Industries, Inc. ("Ashley"), one of Plaintiff's main competitors. (Pl. Compl. at 8-9; Bregler Verif. ¶ ¶ 28, 30-31.) This allegation is made in the affidavit of Plaintiff's Director of Marketing, David Bregler, without providing any documentation or other evidentiary support in the Petition or Memorandum. (Pl. Compl. at 8-9; Bregler Verif. ¶ ¶ 28, 30-31.)

As noted above, the Petition for Preliminary Injunction and Complaint were filed on April, 21, 2009. Defendant was not properly served with the Complaint. Rather, Defendant was informed via email on April 21, at approximately 4:40 p.m. Pacific Daylight Time (PDT),*fn2 that Plaintiff intended to file its Complaint and Petition for Preliminary Injunction. (Def. Reconsideration at 2). Plaintiff's email stated that it would file the Complaint and seek the Preliminary Injunction at 10:00 a.m. EST the following morning, April 22, 2009. (Def. Reconsideration at 2; Verification of Joyce Johnson, Exh. B to Def. Resconsideration at 1 [hereinafter "Johnson Verif."].) The next morning at 5:30 a.m PDT, after Defendant had an opportunity to consult with its corporate counsel in Washington, James Kalamon, Esquire, counsel called Plaintiff's counsel to inform him that Defendant objected to a hearing on such short notice and that Defendant did not believe it could obtain local counsel to appear at the TRO hearing at the designated date and time. (Johnson Verif. at 1.) Plaintiff's counsel would not agree to a short continuance to afford Defendant enough time to secure counsel in Philadelphia so that it could be represented at the TRO hearing.*fn3 Rather, Plaintiff sought the TRO from the state court Emergency Judge on April 22, 2009, before Defendant could be heard in person.

In order to provide at least some communication with the Emergency Judge, Defendant's counsel emailed Plaintiff's counsel a list of Defendant's objections regarding the Petition for Preliminary Injunction, and asked Plaintiff's Counsel to give the email to the Emergency Judge when he considered Plaintiff's Petition. (Email from Kalamon to Mattioni, April 22, 2009, Exh. D. to Def. Reconsideration [hereinafter "Kalamon Email"].) Plaintiff's Counsel informed this Court that Defendant's email was given to the Emergency Judge prior to his decision. (Transcript of Telephone Hearing at 7, 14, Home Line v. Banner, No. 09-1713 (E.D. Pa. filed April 22, 2009) [hereinafter "Telephone Hearing"].)*fn4

Nonetheless, the state court Emergency Judge granted Plaintiff's Petition for Preliminary Injunction and enjoined Defendant from: using the subject information in violation of the Confidentiality Agreement and from copying, disclosing or using or allowing any other person to use the Trade Secrets and Confidential Information or any other product, information, program or device derived from such information, and specifically prohibiting any use of the Web Partners Program and related forms, templates, images, programs, devices, methods, techniques, processes or other related information and data or any other part thereof or any similar program which has been or might reasonably have been derived from Home Line's Trade Secrets and Confidential Information. (Temporary Ex Parte Restraining Order at 2, Exh. A. Def. Reconsideration [hereinafter "Ex Parte TRO"].)

Both parties were scheduled to appear and market their products at a furniture trade show in High Point, North Carolina ("High Point Show"), which was scheduled to begin on April 24 or 25, 2009. (Telephone Hearing at 5-6.) This is a major trade show, one of the largest of its kind, where retail presentations are made for the furniture business. Defendant claims that the show was to begin on April 24, two days after the TRO was issued, and Plaintiff claims that the show was to begin on April 25. (Id.) The date the show will end is April 30, the date set for the hearing in the Ex Parte TRO. Both parties claimed that the TRO would have a significant impact on their businesses at the High Point Show. Plaintiff alleged in its Complaint and Petition that allowing Defendant to market its web program, which was allegedly stolen from Plaintiff, would cause irreparable injury to Plaintiff's business. (Pl. Compl. at ¶33.) Defendant claimed that preventing it from marketing its materials at the High Point Show would cause tremendous negative financial consequences for Defendant. (Def. Reconsideration at 3.) With the Motion for Reconsideration, Defendant submitted in support of its claims the affidavit of Joyce Johnson, Defendant's Director of Human Resources and Planing (Exhibit "C"). Mr. Johnson explicitly denies the allegations contained in Plaintiff's Complaint and denies that Defendant violated the Confidentiality Agreements.

Given the circumstances presented in the Complaint, the Petition for Preliminary Injunction, and the Motion for Reconsideration, this Court held an expedited telephone conference with the parties on April 23, 2009 and ordered that the TRO ...


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