(April 2, 2020) - Seyfarth Shaw partners Erik Weibust, Marcus Mintz and Jeremy Cohen consider new challenges faced by attorneys practicing during the coronavirus pandemic in the context of a recent opinion chastising a litigant for misrepresenting the urgency of a pending matter.
In the world of trade secret and restrictive covenant litigation, time is often of the essence. Clients need to take immediate steps to prevent the harm that flows from the misappropriation of confidential information.
Lawyers need to move with alacrity, and case commencements are typically accompanied by “emergency” motions for injunctive relief and expedited discovery.
Now, as a result of the COVID-19 crisis, courts across the country are adjourning most appearances, including trials, and hearing only “emergency matters,” often by teleconference or other remote methods.
This presents a new quandary for the trade secret and restrictive covenant lawyer.
At a time when Courts are taking extraordinary measures to protect public health and safety, how far should counsel go to claim an “emergency” deserving of the Court’s immediate attention in these strange times? Should lawyers pursue temporary restraining orders, preliminary injunctions, and expedited discovery? If not, will a normal schedule provide a pathway to adequate relief?
There are no easy answers, and certainly no one-size-fits all answers that will apply in every case.
But, as one recent case illustrates, clients and their counsel should be very judicious in their claims of “emergency” at a time when Courts feel especially burdened by the external emergency now facing the country.
With that in mind, a recent trademark and copyright case involving unicorns provides a perfect example of what not to do.
In Art Ask Agency v. The Individuals, Corporations, Limited Liability Companies, Partnerships, and Unincorporated Associations Identified on Schedule A hereto, C.A. No. 20-cv-1666 (March 9, 2020), the plaintiff, Art Ask Agency, a licensing company, filed a complaint in the U.S. District Court for the Northern District of Illinois, and requested a temporary restraining order preventing the defendants from misappropriating its unicorn designs.
Approximately one week later, the Court issued an order placing all civil litigation on hold as a result of the COVID-19 crisis, so Judge Steven Seeger adjourned a previously-scheduled hearing until April 13. Art Ask Agency was not pleased.
Nor, apparently, could it read the room. In response, it filed a motion for reconsideration and, two days later, an emergency motion that went to the Chief Judge of the Court seeking an earlier hearing.
Judge Seeger was unhappy with this move and issued a scathing order1, which included the following (internal record citations omitted):
This case involves counterfeit unicorn drawings. The complaint includes a few examples of products that allegedly infringe Plaintiff’s trademarks, which offer “striking designs and life-like portrayals of fantasy subjects.” One example is a puzzle of an elf-like creature embracing the head of a unicorn on a beach. Another is a hand purse with a large purple heart, filled with the interlocking heads of two amorous-looking unicorns. There are phone cases featuring elves and unicorns, and a unicorn running beneath a castle lit by a full moon.
Meanwhile, the world is in the midst of a global pandemic. The President has declared a national emergency. The Governor has issued a state-wide health emergency.
As things stands, the government has forced all restaurants and bars in Chicago to shut their doors, and the schools are closed, too. The government has encouraged everyone to stay home, to keep infections to a minimum and help contain the fast-developing public health emergency.
Last week, Plaintiff filed a motion for temporary restraining order against the Defendants (who are located abroad) and requested a hearing. This Court thought that it was a bad time to hold a hearing on the motion.
So, this Court moved the hearing by a few weeks to protect the health and safety of our community, including counsel and this Court’s staff. Waiting a few weeks seemed prudent.
Plaintiff has not demonstrated that it will suffer an irreparable injury from waiting a few weeks. At worst, Defendants might sell a few more counterfeit products in the meantime.
But Plaintiff makes no showing about the anticipated loss of sales. One wonders if the fake fantasy products are experiencing brisk sales at the moment.
On the flipside, a hearing — even a telephonic one — would take time and consume valuable court resources, especially given the girth of Plaintiff’s filings. . . .
Meanwhile, the Clerk’s Office is operating with a “limited staff.” “[P]hone conferencing” is available “in emergency situations and where resources permit.” The Court can still hear emergency motions, but resources are stretched and tie is at a premium.
If there’s ever a time when emergency motions should be limited to genuine emergencies, now’s the time.
Thirty minutes ago, this Court learned that Plaintiff filed yet another emergency motion. They teed it up in front of the designated emergency judge, and thus consumed the attention of the Chief Judge.
The filing calls to mind the sage words of Elihu Root: About half of the practice of a decent lawyer is telling would-be clients that they are damned fools and should stop.” See Hill v. Norfolk and Western Railway Co., 814 F.2d 1192, 1202 (7th Cir. 1987) (quoting 1 Jessup, Elihu Root 133 (1938)).
The world is facing a real emergency. Plaintiff is not. The motion to reconsider the scheduling order is denied.
Ouch. Needless to say in this day in age, the Order went viral (no pun intended), with stories published by Bloomberg Law, Law.com, the Chicago Tribune, TechDirt, and others.
That said, real emergencies continue to exist in civil litigation, in particular in the context of trade secret and restrictive covenant disputes.
If a newly-remote employee takes the opportunity to download sensitive information and attempt to take it to a competitor, or use it to start a competing enterprise, that could be an example of a real emergency.
The same could be true for a business partner who decides to take the current crisis as an opportunity to build a competing product using your company’s trade secrets.
Indeed, as our friend Russell Beck has pointed out, just a few days ago, on March 19, 2020, Office Depot obtained a broad preliminary injunction from the federal court in Florida against a former employee, a “Major Account Manager,” who allegedly had access to “among other things, sales information, sales and marketing strategy information, and the identity and lists of actual and potential customers” and “connected multiple external storage devices to [her] computer and accessed them.”
Situations that are normally considered emergencies, and often are treated as such by the courts, may not be during the current crisis.
As such, prior to filing any request for emergency injunctive relief, companies should consider whether the issue actually is an emergency (and whether the court is likely to treat it as one); whether there are other measures that can be taken to protect information, such as filing a lawsuit without seeking immediate injunctive relief; and how the company would feel if their motion for “emergency” injunctive relief were to end up in the news or going viral on social media like the unicorn case.
As Judge Elizabeth Stong of the federal Bankruptcy Court in the Eastern District of New York recently told Law360:
Truly urgent matters can and will be addressed. But you have to understand that not everything that feels urgent is. Pause before you file that letter or make that phone call. Be sure it’s urgent.
This is good advice for normal times, but it is particularly appropriate these days, which are far from normal.