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Phyllis Schlafly Revocable Trust v. Cori

United States District Court, E.D. Missouri, Eastern Division

November 9, 2016

PHYLLIS SCHLAFLY REVOCABLE TRUST, et al., Plaintiffs,
v.
ANNE CORI, et al., Defendants.

          MEMORANDUM AND ORDER

          JOHN A. ROSS UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Plaintiffs Phyllis Schlafly Revocable Trust ("Trust") and Eagle Trust Fund's ("Eagle Trust") (collectively, "Plaintiffs") emergency motion for temporary restraining order ("TRO") and preliminary injunction, filed with the Court on November 3, 2016. (Doc. No. 7) On November 7, 2016, Defendants Ann Schlafly Cori, Eunie Smith, Cathie Adams, Carolyn McLarty, Rosina Kovar and Shirley Curry ("Defendants") filed a response in opposition to the motion, and the Court held oral argument. Plaintiffs thereafter filed a reply. (Doc. No. 26) For the following reasons, Plaintiffs' motion will be denied.

         I. BACKGROUND

         The procedural history of this case is complex, as the parties (generally) are litigating two other cases in the geographic area. In one of these cases, an Illinois State court entered a TRO in April 2016 restraining Edward Martin, John Schlafly, and Eagle Forum (non-parties in this action) from interfering with Defendants' access to any and all property of Eagle Forum, an organization that competes with Plaintiffs. Cori v. Martin, 2016MR000111 (111. Cir. Ct. Oct. 20, 2016); (Doc. No. 7-6 at 1-2). On October 20, 2016, the Illinois court amended the TRO, and afforded Defendants herein, in their capacities as the majority members of the Eagle Forum Board of Directors, temporary sole control and possession over all Eagle Forum property, including a list of 14, 000 active Eagle Forum members and 41, 000 email addresses, the Eagle Forum domain (eagleforum.org) and email, and financial and deposit accounts. (Doc. No. 7-6 at 6).[1]

         Meanwhile, on October 19, 2016, Plaintiffs filed suit in this Court, asserting causes of action for violations of the Defend Trade Secrets Act, 18 U.S.C. § 1836; the Missouri Uniform Trade Secrets Act, Mo. Rev. Stat. §417.455 et. seq.; the Lanham Act, 15 U.S.C. §§ 1114(1), 1125(a); declaratory judgment under 28 U.S.C. § 2201; and claims under Missouri common law. (Doc. No. 1). Underlying each of Plaintiffs' claims is an allegation that one or more Defendants, or persons acting on behalf of Defendants, have impermissibly accessed, misappropriated, and used Plaintiffs' intellectual property.

         The following relevant facts are set forth in Plaintiffs' complaint and emergency motion for temporary restraining order and preliminary injunction. (Doc. Nos. 1, 7) According to Plaintiffs, two Trust employees, Elizabeth Miller and Ann Bensman, have misappropriated Plaintiffs' trade secrets and are sharing them with Defendants. Plaintiffs assert that Defendants' actions threaten the proprietary nature and confidentiality of a database of contact information (the "Database") which Defendants use for direct mail and fundraising efforts promoting causes supported by Phyllis Schlafly ("Mrs. Schlafly"). Plaintiffs assert that, in the Illinois case, Miller and Bensman have misrepresented themselves as employees of, Missouri Eagle Forum. Plaintiffs further claim that, on October 31, 2016, they directed Miller and Bensman to report to a different office, held a meeting at which they were reminded of the proprietary nature of the Database, directed to return their passwords, and asked to sign an acknowledgement of the confidentiality of the information. Plaintiffs also allege that Miller and Bensman refused, and they have neither returned to work nor relinquished their passwords. Plaintiffs contend that partial lists of the Database were created when these employees had access to the Database, and Plaintiffs express concern that Miller and Bensman may have copied these partial lists.

         On November 3, 2016, Plaintiffs filed the instant emergency motion for temporary restraining order and preliminary injunction. (Doc. No. 7) In their motion, Plaintiffs ask that the Court enjoin Defendants from using the likeness and image of Phyllis Schlafly; enjoin Defendants from distributing, using, or disseminating the Database and any other confidential trade secrets of Mrs. Schlafly; and require Defendants to list and return confidential and proprietary trade secrets of Mrs. Schlafly, including the Database. In response, Defendants argue that the intellectual property at issue belongs to Eagle Forum, and is already subject to the Illinois court's TRO.

         II. DISCUSSION

         In determining whether to issue a TRO, the Court must consider the following four factors: (1) the threat of irreparable harm to the movants; (2) the balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movants will succeed on the merits; and (4) the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc). "While no single factor is determinative, the probability of success factor is the most significant." Home Instead, Inc. v. Florance, 721 F.3d 494, 497 (8th Cir. 2013) (citation omitted). The party requesting injunctive relief bears the "complete burden" of proving that an injunction should be granted. Gelco Corp. v. Coniston Partners, 811 F.2d 414, 418 (8th Cir. 1987).

         A. Likelihood of Success on the Merits

         The Court concludes that Plaintiffs have not met their burden of establishing a reasonable likelihood of success on the merits of their claims. In Count I of the Complaint, Plaintiffs bring a trade secret misappropriation claim under the Defend Trade Secrets Act of 2016 ("DTSA"), which creates a private cause of action in favor of the "owner of a trade secret that is misappropriated ... if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce." 18 U.S.C. § 1836(b)(1). In Count V, Plaintiffs bring a trade secret misappropriation claim under the Missouri Uniform Trade Secrets Act ("MUTSA"), V.A.M.S. § 417.450 et seq. The elements of Plaintiffs' trade secret misappropriation claims under the DTSA and MUTSA are essentially the same. In order to prevail on a claim for misappropriation of a trade secret, a plaintiff must show: (1) the existence of a protectable trade secret; (2) misappropriation of those trade secrets by the defendant; and (3) damages.

         A trade secret is defined by the DTSA and MUTSA as "information, " including "compilations, " that meets two qualifications: (a) the owner thereof has taken reasonable measures to keep such information secret; and (b) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from its disclosure or use. See 18 U.S.C. § 1839(3); V.A.M.S. § 417.453(4). A misappropriation occurs when: (1) a person acquires the trade secret while knowing or having reason to know that he or she is doing so by improper means, (2) a person who has acquired or derived knowledge of the trade secret discloses it without the owner's consent, or (3) when a person who has acquired or derived knowledge of the trade secret uses it without the owner's consent. See Mission Measurement Corp. v. Blackbaud, Inc., No. 16 C 6003, 2016 WL 6277496, at *4 (N.D. 111. Oct. 27, 2016) (quoting Syntel Sterling Best Shores Mauritius Ltd. v. Trizetto Grp., Inc., No. 15CV211, 2016 WL 5338550, at *6 (S.D.N.Y. Sept. 23, 2016) (citing 18 U.S.C. § 1839(5)); Cent. Trust & Inv. Co. v. Signalpoint Asset Mgmt., LLC, 422 S.W.3d312, 322 (Mo. 2014).

         In Counts II, III, and IV of the Complaint, Plaintiffs bring claims for trademark infringement, unfair competition, and trademark dilution under the Lanham Act, 15 U.S.C. §§ 1114, 1125. To prevail on a claim of trademark infringement under 15 U.S.C. § 1114(1), a plaintiff must establish that (1) it owns a valid, protectable mark, (2) that defendants have used the mark in commerce without the plaintiffs consent; and (3) that there is a likelihood of confusion between the plaintiffs mark and the defendant's mark. 15 U.S.C. § 1114(1); B & B Hardware, Inc. v. Hargis Indus., Inc., 569 F.3d 383, 389 (8th Cir. 2009); JDR Indus., Inc. v. McDowell, 121 F.Supp.3d 872, 882 (D. Neb. 2015). A claim of unfair competition under 15 U.S.C. § 1125(a)(1) has essentially the same elements. 15 U.S.C. § 1125(a)(1); Davis v. Walt Disney Co., 430 F.3d 901, 903 (8th Cir. 2005).

         In order to prevail on any of these claims, Plaintiffs have to establish the threshold issue of ownership of a protected trade secret or trademark. Here, there are significant factual disputes not only as ...


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