Another Court Rejects DTSA Ex Parte Seizure–Brunswick Rail v Sultanov

January 12, 2017 · by · in Trade Secrets

You may recall my criticisms of the Defend Trade Secrets Act’s ex parte seizure provision. As far as I know, only two courts have addressed it. Last year, a court declined to grant the seizure without any discussion at all. Dazzle Software II, LLC v. Kinney (E.D. Mich. June 15, 2016). Today’s case, OOO Brunswick v. Sultanov, discusses ex parte seizure in a bit more detail but reaches the same conclusion. Thus, as far as I know, no court has yet used the DTSA’s ex parte seizure provision. [UPDATE: I got an email informing me “On top of the Dazzle and OOO Brunswick, there have been at least four other cases as well analyzing the Ex Parte Seizure provision, and two courts have now granted such applications.” I’m investigating.]

The Brunswick case involves departing employees who allegedly emailed documents to themselves. The employer made several equitable requests ex parte. Regarding the DTSA, the employer asked for seizure of the company-issued computer and phone. The court says no:

the Court finds that seizure under the DTSA is unnecessary because the Court will order that Sultanov must deliver these devices to the Court at the time of the hearing scheduled below, and in the meantime, the devices may not be accessed or modified

To support this, the court issued a preservation order. It ordered the departed employees’ email service providers to preserve evidence and, per FRCP 65, ordered the defendant not to access the company-issued devices and to bring those devices to the order-to-show-cause hearing on January 20.

So the main difference between the DTSA remedy, and the court’s actual remedy, is that the devices will remain in the defendants’ possession for 2 weeks rather than going into the court’s safekeeping. Obviously a plaintiff would prefer to take the devices out of the defendants’ hands to ensure the devices aren’t misused or destroyed (and possibly to get more leverage over the defendants). However, the court’s remedy is eminently sensible given that the plaintiff hasn’t proven anything–not even that the devices were, in fact, company-issued. Meanwhile, in light of the court’s instructions, if the devices magically disappear or leave any evidence of being manipulated in the interim, the court will find out and presumably drop the hammer on the defendant.

The “debates” about the DTSA ex parte seizure provision were surreal because some supporters of the act repeatedly and passionately insisted it was necessary, yet they failed to provide any meaningful examples where immediate ex parte action would be needed that was not already covered by existing legal principles. This case once again found existing legal principles sufficient, which reinforces the exceptional and perhaps unnecessary additional coverage provided by the DTSA ex parte seizure provisions.

UPDATE: When the court finally heard from the defendants, the court dismissed the case for lack of personal jurisdiction. OOO Brunswick Rail Management v. Sultanov, 2017 WL 264047 (N.D. Cal. Jan. 20, 2017).

Case citation: OOO Brunswick Rail Management v. Sultanov, 2017 WL 67119 (N.D. Cal. Jan. 6, 2017)