Case: 22-50034 Document: 00516425929 Page: 1 Date Filed: 08/09/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
August 9, 2022
No. 22-50034 Lyle W. Cayce
Clerk
CAE Integrated, L.L.C.; Capital Asset Exchange and
Trading, L.L.C.,
Plaintiffs—Appellants,
versus
Moov Technologies, Incorporated; Nicholas Meissner,
Defendants—Appellees.
Appeal from the United States District Court for the
Western District of Texas
USDC No. 1:21-CV-00377
Before Higginbotham, Dennis, and Graves, Circuit Judges.
Per Curiam:
CAE sued its former employee Nicholas Meissner and his current
employer, Moov, for misappropriation of trade secrets and then moved for a
preliminary injunction. The district court denied the preliminary injunction
and CAE appealed. As CAE fails to establish a likelihood of success on the
merits of its claims, we affirm the denial of the preliminary injunction.
Case: 22-50034 Document: 00516425929 Page: 2 Date Filed: 08/09/2022
No. 22-50034
I.
For forty years, CAE Integrated L.L.C. and Capital Asset Exchange
and Trading, L.L.C. (collectively CAE) have sold and traded semiconductor
equipment. Moov Technologies Inc. (Moov) is a smaller company in the used
semiconductor market, founded in 2017. Meissner worked at CAE as a
trader, developing relationships with buyers and sellers of semiconductor
equipment. His employment contract included a non-disclosure agreement
protecting CAE’s “propriety information” including its “customers and
suppliers and any other nonpublic information that has commercial value.”
The contract also included a one-year prohibition on Meissner soliciting
CAE’s actual or potential customers with whom he was in contact during the
year preceding any termination.
Through 2016, Meissner used his personal MacBook for work and
used Google Drive to transfer and store large files, such as photographs of
equipment and purchase agreements. The Google Drive account was linked
to Meissner’s personal Google account. Files saved on his MacBook were
placed in a folder that synced to his Google Drive. In 2016, CAE provided all
employees with computers. Meissner gave his MacBook to CAE to wipe it of
CAE files. At that time, CAE took a snapshot of the computer, as it was then
configured, which was stored on the MacBook’s secondary drive. CAE
returned the MacBook to Meissner, and he continued to use it as a personal
computer until it crashed later that year, when he brought the MacBook to
CAE for repair. CAE never again returned the MacBook to Meissner and he
has had no access to the MacBook since 2016.
CAE fired Meissner on May 1, 2018. Meissner signed a separation
agreement, agreeing to be bound by the 2014 non-compete clause for one
year. He warranted that he had returned all company property, including
documents stored in “his personal email or cloud storage accounts, or
2
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elsewhere.” The agreement included a general release of CAE’s claims,
known or unknown, against Meissner as of July 26, 2018. After being fired,
Meissner asked CAE to return his MacBook once any CAE files were
removed. While separating Meissner’s personal files from work files, CAE
moved the contents of the Google Drive to a new untitled folder on the
MacBook’s desktop, effectively moving those files to the Google Drive’s
trash. Weeks later, when looking for a personal document in his Google Drive
(from a different laptop), Meissner discovered that the files been moved to
the trash, rather than permanently deleted, and restored the Google Drive’s
contents. At this point, Meissner could access his Google Drive, but had no
access to the MacBook.
After waiting out his non-compete, Meissner joined Moov on June 24,
2019 as Head of Sales. Meissner believed he had no CAE information in his
possession and verified to Moov that he had not retained and would not use
any CAE data. Before starting at Moov, he again checked his Google Drive
account and deleted any documents he thought could contain CAE data. 1
These files were not in his Google Drive when he started at Moov.
In the year and a half after Meissner joined, Moov secured millions of
dollars in investments and thousands of listings for used semiconductor
equipment, valued at over $1 billion. CAE thought such impressive and quick
growth was “highly implausible” “without some sort of a head start.”
CAE’s CEO announced that CAE was “going to war” with Moov 2 and ran a
forensic exam on Meissner’s MacBook. 3 That forensic analysis looked at the
1
The forensic analysis shows that these documents had been deleted from the
Google Drive.
2
Shortly thereafter, CAE learned that Mark Cuban had invested in Moov.
3
The MacBook had been in CAE’s possession for four years.
3
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2016 snapshot of the Google Drive stored on the MacBook’s secondary
drive 4 and showed the folder synced to Google Drive with thousands of
documents from when Meissner worked at CAE. Meissner does not dispute
that he continued to use his Google Drive to store CAE documents
throughout his time at CAE. But, further forensic analysis also showed that
Meissner had not synchronized his Google Drive since he started at Moov
and showed no access to the Google Drive by Meissner or Moov. Meissner
had deleted all CAE information from his active Google Drive and thus did
not have the data that appeared in the snapshot. And months before the
preliminary injunction hearing, Meissner gave up access to his Google Drive
entirely.
CAE sued Moov and Meissner for trade secret misappropriation
under the Defend Trade Secrets Act of 2016 (DTSA) and the Texas Uniform
Trade Secrets Act (TUTSA). 5 CAE moved for a preliminary injunction to
prevent Moov from contacting 200 of its key customers. After nearly six
months of discovery, the district court held a two-day evidentiary hearing.
The district court found that CAE had not shown a likelihood of success on
the merits and denied the preliminary injunction. CAE appealed the denial
with regards only to its DTSA and TUTSA claims.
II.
We review the denial of a preliminary injunction for abuse of
discretion. 6 We review factual findings for clear error and legal conclusions
4
This copy of the Google Drive was no longer associated with an active Google
Drive account and could no longer sync to anything.
5
18 U.S.C. § 1836 et seq; Tex. Civ. Prac. & Rem. Code §§ 134A.001 et seq.
6
Future Proof Brands, L.L.C. v. Molson Coors Beverage Co., 982 F.3d 280, 288 (5th
Cir. 2020).
4
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de novo, 7 giving “due regard to the trial court’s opportunity to judge the
witnesses’ credibility.” 8 Additionally, “[a] preliminary injunction is ‘an
extraordinary remedy which should not be granted unless the party seeking
it has clearly carried [its] burden of persuasion.’” 9 “Only under
‘extraordinary circumstances’ will we reverse the denial of a preliminary
injunction.” 10
III.
A preliminary injunction is warranted only when the movant shows
“(1) a substantial likelihood of success on the merits, (2) irreparable injury if
the injunction is not granted, (3) that the injury outweighs any harm to the
other party, and (4) that granting the injunction will not disserve the public
interest.” 11 The “burden of persuasion on all of the four requirements for a
preliminary injunction is at all times upon the plaintiff.” 12
To succeed on the merits of its misappropriation of trade secrets
claim, CAE must show that “(1) a trade secret existed, (2) the trade secret
was acquired through a breach of a confidential relationship or discovered by
improper means, and (3) the defendant used the trade secret without
7
Atchafalaya Basinkeeper v. United States Army Corps of Engineers, 894 F.3d 692,
696 (5th Cir. 2018).
8
Harm v. Lake-Harm, 16 F.4th 450, 455 (5th Cir. 2021) (quoting Fed. R. Civ.
P. 52(a)(6)).
9
Future Proof Brands, 982 F.3d at 288 (quoting PCI Transp., Inc. v. Fort Worth &
W. R.R. Co.,
418 F.3d 535, 545 (5th Cir. 2005) (alteration in the original)).
10
Anderson v. Jackson, 556 F.3d 351, 355–56 (5th Cir. 2009) (quoting White v.
Carlucci,
862 F.2d 1209, 1211 (5th Cir. 1989)).
11
Brock Servs., L.L.C. v. Rogillio, 936 F.3d 290, 296 (5th Cir. 2019); Winter v. Nat.
Res. Def. Council, Inc.,
555 U.S. 7, 20 (2008).
12
Canal Authority of Florida v. Callaway, 489 F.2d 567, 573 (5th Cir. 1974).
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authorization from the plaintiff.” 13 If there are trade secrets at issue, they
would have been improperly acquired by Meissner, thus we address the first
two elements of CAE’s misappropriation claim together.
A.
A trade secret is information which derives independent economic
value from being not generally known or readily ascertainable through proper
means. 14 The existence of a trade secret is a question of fact. 15
CAE alleges that Meissner and Moov misappropriated transactional
documents and customer lists. What CAE refers to as the “transactional
documents” are files from the Google Drive with purchase orders, invoices,
customer equipment needs, and pricing history. Meissner has not had access
to his MacBook since 2016 and he testified that the Google Drive contained
none of the transactional documents when he started at Moov. The district
court found Meissner’s testimony credible and the forensic analysis
confirmed that before Meissner began at Moov, he deleted any remaining
transactional documents from his Google Drive. Forensics also showed that
the only overlap between Moov’s files and the 2016 Google Drive snapshot
was two publicly available files from third parties. The district court did not
13
GE Betz, Inc. v. Moffitt-Johnston, 885 F.3d 318, 325 (5th Cir. 2018) (quoting CQ,
Inc. v. TXU Mining Co.,
565 F.3d 268, 273 (5th Cir. 2009)) (emphasis in the original).
14
Under TUTSA a trade secret includes any “compilation,” “financial data,” or
“list of actual or potential customers or suppliers” that derive economic value from “not
being generally known to, and not being readily ascertainable” by another person. Tex.
Civ. Prac. & Rem. Code § 134A.002(6). Under DTSA a trade secret includes any
“compilation[]” or “financial . . . information” that derives economic value from “not
being generally known to, and not being readily ascertainable” by another person. 18
U.S.C. § 1839(3).
15
Gen. Univ. Sys., Inc. v. Lee, 379 F.3d 131, 150 (5th Cir. 2004) (citing
Restatement (Third) Unfair Competition § 39 cmt. d (1995)).
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err in finding that CAE failed to show that Meissner and Moov had access to
trade secrets in the transactional documents.
CAE also argues that Meissner and Moov misappropriated customer
lists.16 But, as Meissner testified and forensics confirmed, the Google Drive
contained no customer lists when he started at Moov. CAE contends that
Moov’s knowledge of some CAE customers shows that Moov
misappropriated trade secrets. Without any evidence that Meissner and
Moov accessed or used data in the Google Drive the remaining potential
sources of customer identities is Meissner’s personal knowledge or public
sources. Any injunctions placing conditions on “employment shall be based
on evidence of threatened misappropriation and not merely on the
information the person knows.” 17 Meissner’s knowledge of whom he worked
with while at CAE, absent other evidence, is insufficient to support a finding
that he misappropriated trade secrets. 18
16
The district court found that while Moov had information for certain CAE
customers, this was not a trade secret because the semiconductor equipment industry was
a “closed system with a limited number of players” so it was “likely that competitors will
have contact with the same potential customers simply by virtue of competing in the
industry.” CAE attacks the district court’s characterization of the semiconductor market,
describing the semiconductor market as “opaque,” where “absent an intermediary” one
would find it quite difficult to compete. However, we need not determine the size of the
market to determine whether Meissner misappropriated trade secrets.
17
18 U.S.C. § 1836(b)(3)(A)(i)(I); see also Tex. Civ. Prac. & Rem. Code
§ 134A.003(a) (restricting injunctions from “prohibit[ing] a person from using general
knowledge, skill, and experience that person acquired during employment”).
18
E.g. Marek Brother Sys., Inc. v. Enriquez, No. 3:19-CV-01082, 2019 WL 3322162,
at *4 (N.D. Tex. July 24, 2019) (denying injunction where plaintiff “failed to persuade the
court that the customer information [defendant] sent to his personal e-mail address ‘[was]
not generally known or readily ascertainable by independent investigation’”); BCOWW
Holdings, LLC v. Collins, No. SA-17-CA-00379,
2017 WL 3868184, at *15 (W.D. Tex. Sept.
5, 2017) (denying injunction because “[c]ustomer relationships do not qualify as trade
secrets,” even if a company “invests time and money to cultivate those relationships”).
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Furthermore, CAE has not identified a single contact whose
information was not publicly available or ascertainable through proper
means. Semiconductor industry participants are available in third-party
directories, meet at conventions and trade shows, and can be found through
online searches. Of the 200 contacts that CAE requested the district court
enjoin Meissner and Moov from contacting, the majority were listed in
Moov’s database before Meissner joined Moov. The district court did not
clearly err in finding that neither Meissner nor Moov misappropriated trade
secrets.
B.
Even if CAE had established that Meissner or Moov misappropriated
trade secrets, it failed to show the use or potential use of trade secrets. 19 CAE
contends that Moov could never have succeeded without CAE’s data,
claiming that “the ‘use’ of this data can reasonably be inferred from Moov’s
results.” This inference is insufficient to support a finding that Moov used
CAE’s trade secrets.
Months before the preliminary injunction hearing, Meissner
relinquished access to his personal Google Drive. Meissner cannot access
anything saved in his Google Drive, nor can Moov. “The critical question in
issuing the injunction and also the ultimate test on review is whether
defendant’s past conduct indicates that there is a reasonable likelihood of
19
CAE need not show actual use of trade secrets; however it must show that
Meissner or Moov is “in a position to use” trade secrets. TFC Partners, Inc. v. Stratton
Amenities, LLC, No. 1:19-CV-58, 2019 WL 369152, at *3 (W.D. Tex. Jan. 30, 2019); see
Cardoni v. Prosperity Bank,
805 F.3d 573, 590 (5th Cir. 2015); Malone v. PLH Grp., Inc., No.
01-19-00016-CV,
2020 WL 1680058, at *4–5 (Tex. App.—Houston [1st Dist.] Apr. 7,
2020, pet. denied).
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further violations in the future.” 20 As there is no continued access to the
MacBook or Google Drive, there is no threatened future use of trade
secrets. 21 CAE did not present sufficient evidence that Meissner or Moov
used CAE’s files or are in a position to do so.
CAE cannot show a likelihood of success on its trade secrets claim as
it cannot show that Meissner or Moov are in a position to use its trade
secrets. 22 We affirm the district court’s denial of the preliminary injunction.
IV.
Moov alternatively argues that we could affirm because CAE released
its right to bring this suit entirely. Although Meissner’s post-separation
agreement included a general release of claims that CAE had against
Meissner as of July 26, 2018, this argument has no purchase. By its terms, the
release does not cover “any claims relating to or arising from [Meissner’s]
willful or wanton misconduct, fraud, or criminal conduct.” As
misappropriation of trade secrets is a felony under Texas and federal law,
these claims were not released. 23 Moreover, the release only covers
Meissner, not Moov. The separation agreement has no bearing on this suit.
…
20
SEC v. Blatt, 583 F.2d 1325, 1334 (5th Cir. 1978).
21
E.g. Embarcadero Techs., Inc. v. Redgate Software, Inc., 1:17-CV-444-RP, 2017 WL
5588190, at *6 (W.D. Tex. Nov. 20, 2017) (where defendant relinquished access to Google
Drive, “a preliminary injunction is not necessary to prevent potential harm”).
22
CAE argued that should this Court find it had shown a likelihood of success, that
we should look to the remaining preliminary injunction factors. As CAE must carry the
burden on all four elements, its failure to show a likelihood of success alone is sufficient to
justify a denial. PCI Transp., 418 F.3d at 545.
23
Tex. Penal Code § 31.05; 18 U.S.C. § 1832.
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We AFFIRM the denial of the preliminary injunction.
10
