Case Study: Pyro Spectaculars v. Souza
Our recent article on Law360 discusses a recent preliminary injunction issued by the United States District Court, Eastern District of California should give employees further pause before they use a previous employer’s trade secrets and confidential information to compete in their new employment.
On March 21, 2012, in Pyro Spectaculars Inc., Pyro Spectaculars North Inc., and Pyro Events Inc. (PSI) v. Steven Souza, Case No. CIV S-12-0299 GGH, Magistrate Judge Gregory Hollows granted PSI’s motion for preliminary injunction, enjoining defendant and “those acting in concert and in active participation with defendant” for a period of six months from “directly or indirectly initiating contact with any current Northern California and Hawaii PSI customers with whom he had contact or for whose accounts he had responsibility while employed by PSI, for the purpose of encouraging, inviting, suggesting or requesting transfer of their business from PSI.”
The court also required “collection, production and the subsequent destruction of any remnants of PSI documents, databases and information in Defendant’s actual or constructive possessions, or in the actual or constructive possession of those acting in concert or active participation with Defendant.”
This case is notable because it is the first decision to analyze thoroughly the interplay between Business and Professions Code section 16600 and the California Uniform Trade Secrets Act (CUTSA), recognizing that, under certain circumstances, a restrictive covenant can be imposed on a party in litigation.