Ex Parte Seizure Order Under the DTSA
Under the DTSA, a court may issue an ex parte seizure order “only in extraordinary circumstances.” Courts appear to be reluctant to grant ex parte seizure orders and are granting it only in truly extraordinary circumstances. In Mission Capital Advisors LLC v. Romaka, the court awarded the first, and possibly the only, DTSA seizure order in the U.S. to date. In this case, Plaintiff Mission Capital Advisors LLC (“Mission”) accused an employee, Romaka, of downloading confidential company files including contact lists. Forensic examination of Romaka’s personal desktop had revealed that he had indeed downloaded a multitude of company files. Plaintiff requested a seizure order. When the defendant failed to acknowledge service or to show up for hearing, the court ordered the United States Marshals Service (“U.S. Marshal”) to copy onto a storage medium and delete specific files (the Contact Lists of Plaintiff Mission Capital Advisors LLC.) on the Defendant’s computer.
A request for an ex parte seizure order was denied in Balearia Caribbean Ltd., Corp., v. Calvo. Plaintiff Balearia Caribbean Ltd., Corp. (”BCL”) alleged that its former Chief Executive Officer, Hernan Calvo, misappropriated its trade secrets. Just before he left BCL, Calvo had his personal laptop computer reconfigured to access Balearia’s electronic information systems and secretly inserted an electronic command into his BCL email addresses to ensure that all email communications he received would be surreptitiously forwarded in their entirety to his private G-mail account. Nevertheless, the court denied BCL’s request to seize Calvo’s personal computer concluding that the applicant failed to demonstrate the “extraordinary circumstances contemplated by the DTSA.”
In OOO Brunswick Rail Management v. Sultanov, plaintiffs OOO Brunswick Rail Management and Brunswick Rail Group Limited (“Brunswick”) alleged that defendants, former employees, Richard Sultanov and Paul Ostling, misappropriated Brunswick’s confidential information. Plaintiff filed an ex parte application for inter alia a seizure order under the DTSA, a seizure and preservation order under Rule 65, and expedited discovery. The court granted the request for a seizure and preservation order under Rule 65 but denied the request for a seizure order pursuant to the DTSA concluding that seizure under the DTSA was unnecessary because an order under Rule 65 was adequate.
Attorneys appear to be using the DTSA’s ex parte seizure process sparingly and are instead opting for temporary restraining orders (TROs) and orders for expedited discovery. In Henry Schein, Inc. v. Cook, Henry Schein, Inc. (HSI) alleged that defendant and former employee Jennifer Cook looted confidential data, failed to return her laptop for two weeks after she stopped working for HSI, unlawfully accessed HSI’s computer system after her resignation and attempted to erase the e-mails that she sent from her HSI computer. Granting the plaintiff’s request for a TRO, the court ordered the defendant to “immediately preserve all documents, data, tangible things, and other materials relating to th[e] case.” The defendant was also enjoined “from altering, destroying, or disposing of any evidence or other materials, in any form, relating to th[e] action,” and “from directly or indirectly accessing, using, disclosing, or making available to any person or entity other than Plaintiff, any of HSI’s confidential, proprietary, or trade secret documents, data or information.”
So what can we learn from the handful of cases that have addressed the DTSA’s ex parte seizure provisions?
First, courts are reluctant to issue ex parte seizure orders. The only ex parte seizure order under the Act to date is that issued in Mission Capital Advisors LLC v. Romaka.
Second, courts appear to be more willing to allow more common forms of pre-trial relief, such as expedited discovery and TROs. In Dazzle Software II v. Kinney, the court denied plaintiff’s request for civil seizure of computers and computer storage devices pursuant to the DTSA but granted in part a motion for expedited discovery that permitted the plaintiff to take the depositions of several key witnesses.
Third, a lot can be achieved with an “ordinary” TRO under Rule 65. In Earthbound Corporation v. MiTek USA, Inc., the TRO required the defendant to inter alia “immediately deliver to a neutral third-party expert … all flash drives, SD cards, cell phones, and other external drives … that are in Defendants’ possession, custody, or control,” for forensic imaging at defendants’ expense. In Panera, LLC v. Nettles, the court ordered the defendant to provide his personal laptop and any other materials that may have housed plaintiff’s information for review and inspection.
Fourth, even if a plaintiff is successful in getting an ex parte seizure order, such an order is likely to be limited. The DTSA stipulates that ex parte seizure orders shall “provide for the narrowest seizure of property necessary to achieve the purpose of [the statute].” Not surprising, in Mission Capital Advisors LLC v. Romaka, the court only allowed the seizure of a single document, a contact list.