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AFT Michigan v. Project Veritas

United States District Court, E.D. Michigan, Southern Division

December 27, 2017

AFT MICHIGAN, Plaintiff,
v.
PROJECT VERITAS, a foreign corporation, and MARISA L. JORGE, a/k/a MARISSA JORGE, a/k/a MARISSA PEREZ, Defendants.

          OPINION AND ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION (ECF NO. 7)

          LINDA V. PARKER U.S. DISTRICT JUDGE.

         I. Introduction

         Plaintiff, AFT Michigan, initiated this lawsuit on or about September 28, 2017 in the Third Circuit Court for the County of Wayne, Michigan. (ECF No. 1 at Pg ID 1.) On October 6, 2017, Defendants Project Veritas (“Defendant PV”) and Marisa L. Jorge, a/k/a Marissa Jorge, a/k/a Marissa Perez (“Defendant Jorge”) filed a Notice of Removal to this Court. (Id.) Plaintiff filed an Amended Complaint in state court on October 5, 2017 and, with Defendants' consent, a Second Amended Complaint in this Court on October 17, 2017. (ECF No. 1 at Pg ID 2; ECF No. 6.)

         Plaintiff alleges Defendant Jorge is a political actor for Defendant PV and gained access to AFT Michigan by fraudulently misrepresenting herself as a student at the University of Michigan. Plaintiff believes Defendant Jorge unlawfully accessed and transmitted proprietary and confidential information and engaged in unlawful and unauthorized surveillance of Plaintiff's employees. (ECF No. 6 at Pg ID 91.)

         Presently before the Court is Plaintiff's Motion for Preliminary Injunction, filed on October 17, 2017. (ECF No. 7.) Defendants filed a response on October 24, 2017, and Plaintiff filed a reply on October 30, 2017. (ECF Nos. 24 & 25-1.) On November 30, 2017, the parties filed supplemental briefs in response to the preliminary injunction. (ECF Nos. 39 & 40.)

         II. Background

         According to Plaintiff, Defendant PV is an organization that uses its employees to infiltrate organizations for the purpose of securing proprietary information, which it distorts and publishes in the media. (ECF No. at Pg ID 95.) Plaintiff believes Defendant Jorge is a political operative for Defendant PV and gained access to AFT Michigan to advance Defendant PV's political agenda. (ECF No. 6 at Pg ID 96.)

         In the spring of 2017, Defendant Jorge expressed interest to Plaintiff for a possible internship. (Id. at Pg ID 93.) Defendant Jorge identified herself as Marissa Perez and represented that she was a student at the University of Michigan and interested in teaching the second grade. (Id.) Plaintiff interviewed Defendant Jorge, and she began her internship in May 2017. (Id.) Defendant Jorge was assigned to projects that were aligned with her interests in charter schools. (Id.) Sometime after the start of Defendant Jorge's internship, she began to seek information unrelated to her assignments, including employee grievances. (Id. at Pg ID 94.) Several of Plaintiff's employees witnessed Defendant Jorge sitting, without permission, at the computer terminals of other employees, accessing files and records without authorization, and working late in the office without supervision. (Id.) Also, Defendant Jorge would often ask the staff questions regarding information not available to the general public. (Id. at Pg ID 96.) Plaintiff's employees noticed Defendant Jorge would often carry her cellular phone wherever she went and believed she was recording meetings and Plaintiff's employees. (Id.)

         Due to inconsistent statements Defendant Jorge made to various employees, Plaintiff soon discovered that Defendant Jorge was never a student at the University of Michigan, and Marissa Perez was not her real name. (ECF No. 7 at Pg ID 120.) Believing Defendants to be in possession of proprietary and confidential information, Plaintiff seeks injunctive relief to enjoin Defendants from publishing or disseminating any information Defendant Jorge unlawfully obtained.

         Plaintiff initiated this lawsuit on September 28, 2017 in the Third Circuit Court for the County of Wayne, Michigan. (ECF No. 1.) On September 29, 2017, Third Circuit Court Judge Brian R. Sullivan issued a Temporary Restraining Order enjoining Defendants from publishing or disclosing confidential and/or proprietary information relating to Plaintiff, its employees, officers, or affiliates that was taken from Plaintiff without consent. (ECF No. 23). Defendants filed a Notice of Removal to this Court, and the case was assigned to Judge Paul D. Borman. During a teleconference on October 10, 2017, Judge Borman ordered the parties to brief the Court on the appropriateness of a temporary restraining order in light of the potential First Amendment implications. On October 20, 2017, this matter was reassigned to the undersigned. (ECF No. 10.)

         After the conclusion of the parties' briefing, on November 15, 2017, this Court held a hearing on Plaintiff's request for a preliminary injunction. After hearing testimony from Plaintiff's forensic computer examiner, Kevin Smith, about the documents Defendant Jorge allegedly misappropriated, the Court ordered the parties to file supplemental briefs. On November 30, 2017, the parties filed supplemental briefs addressing whether the 221 documents Plaintiff produced were trade secrets under the Michigan Uniform Trade Secrets Acts (“MUTSA”). (ECF Nos. 37, 39 & 40.) Defendants further supplemented their brief on December 12, 2017, and Plaintiff filed a response, also, on December 12, 2017. (ECF Nos. 43 & 44.)

         III. Preliminary Injunction Standard

         A court must balance four criteria in deciding whether to issue a preliminary injunction:

(1) whether the movant has a strong likelihood of success on the merits; (2) whether the movant would suffer irreparable injury without the injunction; (3) whether the issuance of the injunction would cause substantial harms to others; and (4) whether the public interest would be served by the issuance of the injunction.

Bailey v. Callaghan, 715 F.3d 956, 958 (6th Cir. 2013) (quoting Hunter v. Hamilton Cnty. Bd. of Elections, 635 F.3d 219, 233 (6th Cir. 2011)) (brackets omitted).

         IV. Applicable Law & Analysis

         A. Plaintiff's Likelihood of Success on the Merits

         Plaintiff states that it has a strong likelihood of success with respect to violations of MUTSA, the Michigan Eavesdropping Act, and Defendant Jorge's breach of fiduciary duty[1]. (ECF No. 7 at Pg ID 132-33.)

         1. MUTSA

         MUTSA protects against the misappropriation of trade secrets by improper means. Plaintiff seeks injunctive relief pursuant to MUTSA, Mich. Comp. Laws § 445.1903(1), which provides injunctive relief for actual or threatened misappropriation. MUTSA defines “misappropriation” as

(i) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means.
(ii) Disclosure or use of a trade secret of another without express or implied consent by a person who did 1 or more of the following:
(A) Used improper means to acquire knowledge of the trade secret.
(B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was derived from or through a person who had utilized improper means to acquire it, acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use, or derived from or through a person who owed a duty to the person to maintain its secrecy or limit its use.
(C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

         Mich. Comp. Laws § 445.1902(b). “Improper” is defined as “theft, bribery, misrepresentation, breach, or inducement of a breach of a duty to maintain secrecy or espionage through electronic or any other means.” Mich. Comp. Laws § 445.1902(a).

         Before a court can grant injunctive relief under MUTSA, Plaintiff must show the alleged misappropriated information is a “trade secret.” MUTSA defines “trade secrets” as

information, including a formula, pattern, compilation, program, device, method, technique, or process, that is both of the following:
(i) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
(ii) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Mich. Comp. Laws § 445.1902(d). Michigan courts apply the following factors when determining if information is a trade secret under MUTSA:

(1) extent to which information is known outside of owner's business,
(2) extent to which information is known by employees and others involved in business, (3) extent of measures taken to guard secrecy of information, (4) value of information to owners and competitors, (5) amount of effort and money expended in developing information, and (6) ease or difficulty with which information could be properly acquired or duplicated by other.

PrimePay, LLC v. Barnes, No. 14-11838, 2015 WL 2405702, at *21 (E.D. Mich. May 20, 2015) (quoting Dura Global Techs., Inc. v. Magna Donnelly Corp. 662 F.Supp.2d 855, 859 (E.D. Mich. 2009)); see e.g., GeoLogic v. Comput. Sys. v. MacLean, No. 10-13569, 2015 WL 5460644, at *2 (E.D. Mich. Sept. 17, 2015); Stryker Corp. v. Ridgeway, No. 13-cv-1066; 14-cv-889, 2015 WL 8759220, at *10 (W.D. Mich. Dec. 14, 2015); Ajuba ...


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