Dorel Juvenile Group v. Dimartinis, Lois ( 2007 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-4012
DOREL JUVENILE GROUP, INC.,
Plaintiff-Appellant,
v.
LOIS DIMARTINIS,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 06 C 1295—David F. Hamilton, Judge.
____________
ARGUED JUNE 1, 2007—DECIDED JULY 26, 2007
____________
Before FLAUM, MANION and ROVNER, Circuit Judges.
ROVNER, Circuit Judge. Lois DiMartinis (“DiMartinis”)
left her job at Dorel Juvenile Group, Inc. (“Dorel”) to work
for a competitor, Summer Infant, Inc. (“Summer Infant”).
Both companies produce products for infants, children
and their parents. Examples of these products are car
seats, strollers, play yards, swings, bassinets, activity
centers, high chairs, and other health, play and safety
related items. By all accounts, the industry is highly
competitive and when DiMartinis began working at Dorel,
the company asked her to sign a non-compete agree-
ment. DiMartinis declined to do so but did sign a confiden-
tiality agreement. She worked for Dorel for more than nine
years, rising to the position of Director of Marketing
2 No. 06-4012
Communications. According to her job description, she
played a key role in establishing the overall corporate
brand strategy, building brand recognition and sales
through advertising, promotions, PR and licensing.
On February 3, 2006, DiMartinis went on maternity
leave from Dorel. That leave was unexpectedly lengthened
when her child was born with medical problems that
required her attention. When the scheduled date for her
return to work approached, she offered to resign but Dorel
put her on unpaid leave instead. Before this extended
leave ended, on August 7, 2006, DiMartinis announced her
departure from Dorel. She had been offered a job at
Summer Infant that provided a schedule that would better
accommodate her parenting responsibilities. Summer
Infant offered DiMartinis the position of Vice President of
Product Marketing. According to Summer Infant, the
primary responsibility of that position is to supervise and
mentor product managers and participate in product
development.
On August 30, 2006, Dorel filed a complaint for injunc-
tive relief and money damages against DiMartinis. The
complaint alleged trade secret misappropriation, unfair
competition, a violation of the Computer Fraud and Abuse
Act, breach of contract and breach of fiduciary duty. On
the same day that Dorel filed the complaint, the company
also filed a motion for a preliminary injunction. The
motion sought to enjoin DiMartinis from providing services
to Summer Infant in any capacity relating to the develop-
ment, sale, or marketing of any juvenile product category
in which Dorel competes, and to prohibit DiMartinis from
using or disclosing any of Dorel’s confidential informa-
tion. The district court allowed the parties to engage in
expedited discovery and then held a hearing on the motion
for a preliminary injunction in October 2006. At the
hearing, Dorel clarified that it was seeking only a six
month injunction because it expected that the products at
No. 06-4012 3
the core of its concerns were going to be introduced to the
public in the second quarter of 2007. In practical terms,
that meant the injunction would stretch from October 20,
2006 through April 20, 2007. At the end of that time, Dorel
expected the information would be public and therefore
could no longer be considered confidential or a trade
secret. Dorel specifically asked that DiMartinis be enjoined
from working on the development, sale or marketing of
a range of juvenile product categories, including activity
centers, bathing products, cribs, car and booster seats,
bouncers, gates and safety items, high chairs, infant
health products, monitors, play yards, potties, ride-ons,
strollers and travel systems, swings, teethers, walkers
and step stools. Dorel also requested that DiMartinis be
enjoined from disclosing any confidential Dorel informa-
tion.
The district court denied the motion. The court noted
that, in order to show entitlement to a preliminary injunc-
tion, the plaintiff was required to demonstrate a reason-
able likelihood of success on the merits and a substantial
threat of immediate irreparable harm if injunctive relief
was not granted. If those two thresholds were met, the
court would consider the balance of harms to both parties
and the public interest. Applying all of those factors, the
court found that the principal information at stake in the
case was brand positioning strategies in certain categories
of the juvenile products industry. The evidence demon-
strated that, although the information was sensitive
and generally treated as confidential by Dorel, the infor-
mation also was fairly general, subject to change and
evolution, and had a very short shelf life. According to the
court, because the industry worked on a cyclical calendar,
DiMartinis’s new employer would be able to do little
with the information before it became public when the
products were released into the marketplace. The court
found that the evidence did not support the defendant’s
4 No. 06-4012
theory of inevitable disclosure and that there was no
evidence of bad faith or purposeful disclosure by
DiMartinis. The court generally credited DiMartinis’s
testimony and noted that she was moving into a signifi-
cantly different position at Summer Infant than she
occupied at Dorel. The court found that the information
DiMartinis possessed on product development at Dorel
was relatively stale, especially because she had not
worked in that area for three years and had been sidelined
by her maternity leave for many months. The court also
concluded that the injunction sought by Dorel was so
broad that it would effectively grant Dorel a non-compete
agreement with DiMartinis even though she had expressly
declined to enter into such an agreement with her em-
ployer. The court determined that there was neither an
imminent nor a great risk of irreparable harm to Dorel,
that the balance of harms between Dorel and DiMartinis
was a draw, and that the public interest factor was not
decisive. Accordingly, the court denied the motion for a
preliminary injunction. Dorel appeals, challenging nearly
every fact-finding and some of the legal standards used
by the district court. DiMartinis, in turn, defends the
district court’s ruling but also contends that the appeal is
moot by virtue of the fact that the April 20, 2007 end date
for the requested injunction has come and gone. According
to DiMartinis, any relief granted by this court will have
no practical impact on Dorel.
The party asserting mootness, in this case DiMartinis,
bears the burden of persuasion. Wisconsin Right to Life,
Inc. v. Schober, 366 F.3d 485, 491 (7th Cir. 2004).
DiMartinis meets that burden here in demonstrating
that the appeal is moot. Federal courts may not give
opinions on moot questions or abstract propositions.
Calderon v. Moore, 518 U.S. 149, 150 (1996). An appeal
should “be dismissed as moot when, by virtue of an
intervening event, a court of appeals cannot grant ‘any
No. 06-4012 5
effectual relief whatever’ in favor of the appellant.”
Calderon, 518 U.S. at 150. See also Powell v. McCormack,
395 U.S. 486, 496 (1969) (“Simply stated, a case is moot
when the issues presented are no longer ‘live’ or the
parties lack a legally cognizable interest in the outcome.”);
Worldwide Street Preacher’ Fellowship v. Peterson, 388
F.3d 555, 558 (7th Cir. 2004) (a court should dismiss an
appeal as moot when it can no longer affect the rights of
the litigants in the case); Stotts v. Community Unit Sch.
Dist. No. 1, 230 F.3d 989, 990 (7th Cir. 2000) (when a
court’s decision would have no practical impact on the
parties, the case is moot); Orion Sales, Inc. v. Emerson
Radio Corp., 148 F.3d 840, 842 (7th Cir. 1998) (the court
of appeals is without power to decide questions which
cannot affect the rights of litigants in the case before the
court). In this case, Dorel asked for an injunction that
would expire on April 20, 2007 because it expected that
its trade secrets would become public at that time when
the products were released into the marketplace. This
appeal was heard on June 1, 2007, more than a month
after the requested injunction would have expired. We
cannot grant Dorel any meaningful relief related to that
injunction, and the appeal is therefore moot. See World-
wide Street Preachers, 388 F.3d at 557-58 (the appeal of
a preliminary injunction related to a particular parade
became moot after the parade was over because the court
could do nothing to alter what took place during the
parade); Stotts, 230 F.3d at 990-91 (the appeal of the
denial of a preliminary injunction aimed at allowing a
student to play basketball during his senior year of high
school became moot when the student graduated); Orion
Sales, 148 F.3d at 842 (when a party seeks in its appeal
dissolution of an injunction after that injunction has
expired, the appeal is moot); Henco, Inc., v. Brown, 904
F.2d 11, 13 (7th Cir. 1990) (when a preliminary injunction
from which a party appeals has expired by its own terms
6 No. 06-4012
by the time the appeal is heard, the issues pertaining to
the propriety of a preliminary injunction have lost their
character as a present, live controversy, and the appeal
is moot).
We are not persuaded by any of Dorel’s responses to this
straightforward conclusion. Dorel argues that its trade
secrets are entitled to protection so long as they retain
secrecy and competitive value, and that there is no evi-
dence that the trade secrets are now public. But Dorel
itself limited the term of its injunction to that six month
period, representing to the court that it expected the
information to be released to the public when the relevant
products went on the market in April 2007. There is no
evidence in this record to the contrary and we cannot
engage in additional fact-finding at this stage of the
proceedings.1 If, contrary to Dorel’s expectations and
representations, the information was not released to the
public by April 20, 2007, that is an issue to raise in the
ongoing action in the district court, not in the court of
appeals.
Dorel also argues that its trade secrets are entitled to
protection for an additional period after disclosure to
eliminate the unfair competitive advantage that could be
gained from misappropriation. We have no quarrel with
the general proposition that a court may grant an injunc-
tion that would stretch beyond the public release of trade
1
Indeed, in a motion for an expedited briefing schedule in this
court, Dorel emphasized that the injunction was limited in scope
to a period of approximately six months. Dorel argued that “the
issue of an injunction potentially will be moot if the Court rules
after DiMartinis and her new employer have had the oppor-
tunity to use the information to develop competing strategies
for launch in 2007, and the information is released into the
public domain.” See Plaintiff-Appellant’s Motion for Expedited
Briefing Schedule, ¶¶ 4, 6.
No. 06-4012 7
secret information in order to prevent a wrongdoer from
gaining the advantage of a head start. See BondPro Corp.
v. Siemens Power Generation, Inc., 463 F.3d 702, 708 (7th
Cir. 2006) (a trade secret injunction may be extended past
the time the information becomes public, to a time when
the advantage conferred by a wrongfully acquired lead
time has dissipated); 3M v. Pribyl, 259 F.3d 587, 609 (7th
Cir. 2001) (a court should continue an injunction against
a person who has misappropriated a trade secret only
for a period of time reasonable to eliminate commercial
advantage which the wrongdoer would otherwise derive
from the violation). But again, this is not what Dorel
requested in the district court. Dorel proposed April 20,
2007 as the date that would adequately protect its inter-
ests. If in hindsight Dorel believes that date was inade-
quate, that is a matter to raise in the ongoing litigation
in the district court, not in the court of appeals.
In a slight variation of this same argument about tim-
ing, Dorel argues that even if the district court had
granted the requested injunction, Dorel intended to ask
the district court to extend the injunction if the informa-
tion remained secret at the end of the six month period.
We do not have this hypothetical extended injunction
before us. The only injunction on appeal is the six month
injunction that was set to expire on April 20, 2007. Be-
cause we cannot grant any meaningful relief in regards to
the injunction that Dorel requested, the appeal must be
dismissed as moot. Stotts, 230 F.3d at 990-91; Orion Sales,
148 F.3d at 842; Henco, 904 F.2d at 13. We do not intend
for our opinion to be construed as a judgment on the
merits of the underlying dispute between Dorel and
DiMartinis.
DISMISSED.
8 No. 06-4012
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—7-26-07