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Magnesita Refractories Co. v. Mishra

United States District Court, N.D. Indiana, Hammond Division

February 17, 2017

MAGNESITA REFRACTORIES COMPANY, Plaintiff,
v.
SURENDRA MISHRA, Defendant.

          OPINION AND ORDER

          PHILIP P. SIMON, JUDGE.

         Defendant Surendra Mishra wants the ex parte Temporary Restraining Order that I issued in December dissolved. [DE 39.] A hearing on his motion was held on February 1, 2017 at which I denied the motion and said that I would issue an order further explaining the reasons for my decision. [DE 43.] This is that order.

         I think it is helpful to provide some background regarding the issuance of the ex parte Temporary Restraining Order before considering Mishra's motion to dissolve it. Here's what happened. Mishra's employer, Magnesita Refractories Company, filed a complaint alleging violations of the recently enacted Defend Trade Secrets Act, see 18 U.S.C. § 1836, and the Indiana Uniform Trade Secrets Act. It also requested an ex parte TRO. At a hearing on December 20, 2016, I entered an ex parte TRO authorizing, among other things, the seizure of a laptop computer owned by Mishra that he used for both business and personal purposes. I was persuaded that Magnesita had made the requisite showing that there was a strong likelihood that Mishra was conspiring to steal Magnesita's trade secrets contained on the laptop, and that the seizure was necessary to prevent the impending harm. Mishra initially refused to comply with my Order, but subsequently appeared at a hearing on December 22, 2016 and surrendered his laptop to the Court, where it has been housed in Clerk's Office vault ever since.

         At the December 22, 2016 hearing, a date for the preliminary injunction hearing was set and Mishra agreed to the extension of the TRO until that date. [DE 15; DE 49 at 22-23.] I also ordered the parties to brief the issue of what should happen with the laptop, with a focus on whether a Special Master should be appointed to deal with the issue. [DE 19, 20.] I heard from both parties regarding that issue at a January 9, 2017 hearing. The hearing was then sidetracked by a new issue raised for the first time by Mishra. He claimed that Federal Rule of Civil Procedure 64 applied to the seizure of his laptop and this mandated that the procedural requirements of the DTSA, rather than Federal Rule of Civil Procedure 65, applied to the seizure of the laptop, and required the return of the laptop. I asked the parties to brief that issue. [DE 29-31, 33-34.] I moved the preliminary injunction hearing date to allow the parties to brief the issue and, once again, Mishra consented to the extension of the TRO while they did so. [DE 46 at 12-13.]

         I ultimately found in a written opinion that Rule 64 did not apply to the seizure of Mishra's laptop in this action and denied Mishra's request to return the laptop. [DE 37.] I then ordered the appointment of a Special Master to image the laptop so that it may be returned to Mishra, noting that I would issue an Appointing Order establishing duties of the Special Master. [DE 39.]

         It was only after all of this-3 hearings, 2 rounds of briefing issues related to the disposition of the laptop, 2 agreements to the extension of the TRO-that Mishra filed his motion to dissolve the TRO, arguing that the ex parte proceedings were improperly conducted, the scope of the TRO is overly broad, and the TRO is facially defective. [DE 40.] I was surprised to learn that he made the motion without bothering to review the transcript from the hearing on the TRO at which I explained in greater detail than that contained in the actual TRO my reasons for issuing it.

         The decision to grant or deny a TRO, whether it be one made with or without notice, starts with a review of the operative rule, Federal Rule of Civil Procedure 65(b)(1). Here's what the rule says:

The court may issue a temporary restraining order without written or oral notice to the adverse party or its attorney only if:
(A) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and
(B) the movant's attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.

         A temporary restraining order is “an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion.” Mazurek v. Armstrong, 520 U.S. 968, 972 (1992) (per curiam). To warrant a TRO, a plaintiff must demonstrate: (1) a likelihood of success on the merits; (2) no adequate remedy at law exists; and (3) plaintiff will suffer irreparable harm if the TRO is not granted. See Incredible Techs., Inc. v. Virtual Techs., Inc. , 400 F.3d 1007, 1011 (7th Cir. 2005). If these elements are satisfied, the Court must then balance the harm to the plaintiff if the restraining order is denied against the harm to the defendant if the restraining order is granted. Id.

         Along with its motion for an ex parte TRO, Magnesita provided a certification of its attorney declaring that notice should not be required because “it is believed that Defendant will take steps to delete or modify evidence contained on a personal laptop . . . in his possession . . . [and that] [d]estruction of this key evidence will irreparably harm Plaintiff, ” DE 6-1- at ¶2. Magnesita also provided as an exhibit to its complaint, an affidavit from Gustavo Franco, the Vice President Sales & Marketing for Magnesita. [DE 1-1.] Franco explained that a former Magnesita Group[1] Director of Sales and Marketing, Zelber Dettogne do Nasciemento, was suspended and eventually terminated for a pattern of misconduct involving improper financial payments to persons employed by Magnesita Group. He explained that as part of Magnesita's investigation into Dettogne's conduct, Magnesita identified certain emails sent to/from Mishra's personal email account that demonstrated Dettogne and Mishra's intent to create an entity with a Magnesita supplier (Xiangrong) and at least one individual at a company that had a business cooperation agreement with one of the Magnesita Group Companies (that company being ACIS) to compete with Magnesita and the Magnesita Group. [Id. at ¶¶4-9.]

         More specifically, Franco's affidavit quotes a series of emails, attached as exhibits to the affidavit, indicating that Mishra, Dettogne, and representatives from ACIS and Xingrong planned a meeting at a hotel in Hammond, Indiana during the week of December 19, 2016 to discuss potential refractory business ventures independent of Magnesita. [Id. at ΒΆ10.] In an email from Dettogne sent to Wang ...


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