United States: California Federal District Court Grants TRO And Preliminary Injunction To Protect Trade Secret Customer Lists

A California federal district court recently granted a TRO and preliminary injunction against a general manager who allegedly misappropriated customer information from his previous employer in violation of the California Uniform Trade Secrets Act (CUTSA), Defend Trade Secrets Act (DTSA), and his employment agreement. Sun Distributing Company v. Corbett, No. 18-cv-2231, 2018 WL 4951966 (S.D. Cal. Oct. 12, 2018).


Sun Distributing is a distribution company that works with major national logistics companies to provide last-mile distribution to residences and businesses in California. Paul Corbett worked as a general manager at Sun Distributing. While employed, Corbett signed an employment agreement in which he agreed to a confidentiality provision stating that he would not use Sun Distributing's trade secrets, including customer lists, needs, and pricing structures, in order to compete with Sun Distributing after he left the company. Corbett later resigned from Sun Distributing to work for Pacblue, a company that distributes free newspapers and other print media for publishers in California.

After Corbett's resignation, Sun Distributing had all emails sent to Corbett forwarded to Sun Distributing's CEO. In September 2018, Sun Distributing's CEO received an inadvertent email from one of its customers addressed to Corbett. In the email, the customer mentioned that he and Corbett discussed transferring the customer's business, using Sun Distributing's maps and circulation data, to Corbett. The customer specifically mentioned a rate, stating that he would not pay more than what he paid Sun Distributing.

Sun Distributing subsequently filed a complaint for misappropriation of trade secrets under the DTSA and CUTSA, as well as for breach of contract. After weighing the factors, the federal court granted Sun Distributing's motion for a TRO and Preliminary Injunction.

Temporary Restraining Order

As a preliminary matter, the court found it had subject matter jurisdiction over the case. The issue was whether federal question jurisdiction existed under the DTSA, which provides that an owner may bring a trade secret misappropriation action if "the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce." The court stated that Sun Distributing sufficiently pled the jurisdictional element of the DTSA. The court explained that Sun Distributing's complaint pled that it distributes publications for newspapers and magazine publishers across Southern California and Mexico. The complaint further pled that Sun Distributing's trade secrets are related to these publications. The court noted that Sun Distributing was only required to plead that its trade secrets are used or intended for use outside California, and it was irrelevant that Corbett's current employer PacBlue does not distribute products outside of California.

The court then turned to whether the requirements of a TRO had been met for the claims of trade secret misappropriation and breach of contract.

Trade Secret Misappropriation

The court found that Sun Distributing had sufficiently alleged a likelihood of success on the merits for its trade secret misappropriation claim. At issue was whether plaintiff alleged the existence of a trade secret and misappropriation of the trade secret. First, the court found that Sun Distributing had established protectable trade secrets in its customer lists and customer preferences. The court rejected Corbett's argument that some of the trade secret information belonged to the customer, stating that "the value to the customer list is in the completeness and details of the list; the fact that each individual customer has access to its own information does not make Plaintiff's list of customers worthless." The court also rejected Corbett's argument that the publisher information was publically available and therefore not protectable, and reasoned that although publication names and contact information might be public knowledge, it was clear that Sun Distributing had put in time and effort to develop other specific information, including its customer lists, preferences, pricing structures, and "do not deliver" lists.

Second, the court found Sun Distributing adequately alleged misappropriation of its trade secret information. The court explained that, regardless of who first contacted who, Corbett and the customer discussed transferring the customer's business, including specific rates and distribution plans. Accordingly, because Corbett only knew Sun Distributing's rates and distribution plans due to his position as general manager, he therefore "used" the customer and pricing information. Moreover, as Corbett was Sun Distributing's general manager, he had a duty maintain the secrecy of the information even after he left the company. Finally, the court noted that while there was little direct evidence of misappropriation (specifically, one email), when coupled with the circumstantial evidence, Sun Distributing had met its burden of establishing that Corbett acquired trade secret information through improper means.

The court weighed the remaining factors and found Sun Distributing had established it would lose customers and goodwill through Corbett's actions, which suggested in turn that there was a likelihood of irreparable harm if no injunction was granted. Additionally, the balance of equities tipped in Sun Distributing's favor. Finally, the public interest was served in ordering Corbett to abide by trade secret laws and protect trade secrets.

In conclusion, the court held that Sun Distributing met its burden and was entitled to a TRO with respect to its misappropriation claim.

Breach of Contract

As for the breach of contract claim, the court found that the claim was preempted by Sun Distributing's CUTSA claim. Sun Distributing argued that Corbett breached the confidentiality provision of the employment agreement by using trade secrets, including customer lists, needs, and pricing structures, to compete with Sun Distributing. The court reasoned that Sun Distributing's breach of contract claim had no basis other than its misappropriation claim, and therefore it was preempted.

Accordingly, the court denied Sun Distributing's request for a TRO with respect to its breach of contract claim.

Preliminary Injunction

The court subsequently heard oral argument as to Sun Distributing's motion for preliminary injunction. The court reincorporated by reference its findings from its order granting the TRO and, thereafter, granted the preliminary injunction. In a footnote, the court stated that upon further reflection, Sun Distributing's breach of contract claim was not preempted by the CUTSA; however, an injunction prohibiting misappropriation was adequate to protect Sun Distributing's interests, rendering an injunction based on breach of contract duplicative.


This case represents a small victory for employers seeking TROs and preliminary injunctions based on misappropriated customer lists. Interestingly, the court granted the TRO and preliminary injunction based, in large part, on a single email evidencing wrongdoing that was inadvertently sent after the employee's resignation. This case serves as a reminder for employers to ensure they have in place effective termination protocols.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions