American Airlines, Inc. v. Imhof

• Decision Date: 03 June 2009
• Docket Number: No. 09 Civ. 4535(LAK).,09 Civ. 4535(LAK).
• Citation: American Airlines, Inc. v. Imhof, 620 F.Supp.2d 574, 2009 WL 1531098 (S.D. N.Y. 2009)
• Parties: AMERICAN AIRLINES, INC., Plaintiff, v. Charles F. IMHOF and Delta Airlines, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

620 F.Supp.2d 574

AMERICAN AIRLINES, INC., Plaintiff, v. Charles F. IMHOF and Delta Airlines, Inc., Defendants.

No. 09 Civ. 4535(LAK).

United States District Court, S.D. New York.

June 3, 2009.

Gayle Rosenstein Klein, Mark S. Raskin, John P. Cooney, Jr., Lindsay Martin, McKool Smith, P.C., for Plaintiff.

Paul J. Fishman, Lance J. Gotko, Philip A. Wellner, Friedman, Kaplan, Seiler & Adelman, LLP, for Defendant Charles F. Imhof.

Harlan A. Levy, Boies, Schiller, & Flexner, LLP, for Defendant-Intervenor Delta Airlines, Inc.

MEMORANDUM OPINION

LEWIS A. KAPLAN, District Judge.

Charles F. Imhof, who was the senior-ranking employee of the New York Sales Division of American Airlines, Inc. ("American"), recently left to join Delta Airlines, Inc. ("Delta") in a comparable position. While at American, he had access to—and, in preparation for leaving, took copies of some—information that American contends constitutes trade secrets and, in any case, is both confidential and competitively sensitive. American now claims that he effectively should be barred from assuming his new position with Delta, at least for some time, in order to protect that information. The Court granted a temporary restraining order, and the matter now is before it on American's motion for a preliminary injunction.

Facts

Mr. Imhof's Role at American

Mr. Imhof had a 22-year career at American, where he served most recently (from May 2005 until April 2009) as managing director for the greater New York region and reported to the vice president and general sales manager.¹ His position was four rungs below the senior management of the company that consists of the chief executive, operating and financial officers.² In other words, he was a member of American's middle management—a skilled and valued employee with considerable experience and important responsibilities, but not one of the company's top executives.

As managing director for sales in the greater New York region, Mr. Imhof's principal responsibility was to improve ticket sales on American flights out of JFK, La Guardia and Newark airports.³ Among other duties, he managed the New York division sales organization and participated in the development of sales strategy under the supervision of Kurt Stache, the vice president and general sales manager of American, whose approval was required for significant initiatives.⁴ His responsibilities required familiarity with American's travel agency compensation policies, contracts with and strategies toward major customers, and competitive conditions.⁵

Events Associated With Mr. Imhof's Job Change

By April 2008, Mr. Imhof had begun to feel frustrated with his prospects at American. So when the prospect of a job at Delta arose in mid-March 2009, he was interested. No doubt he would have benefitted from legal advice on how to pass through the difficult period during which he spoke with Delta while still employed by American, as he did not do very well on his own.

The first contact between Mr. Imhof and Delta occurred on March 17, 2009,⁶ and the first meeting apparently on March 19, 2009.⁷ Following the initial discussions, he forwarded his communications with Delta to Tom Gleason at HRG Worldwide, one of American's travel agency clients in the New York market,⁸ presumably because he was interested in Mr. Gleason's advice.

On March 25, 2009, Mr. Imhof's contact at Delta informed Mr. Imhof that he wanted him to speak with Delta human resources "to help better understand [the proposed] financial package" and inquired whether Mr. Imhof would be available to meet with Delta's chief financial officer, Ed Bastian, and its senior vice president for sales.⁹ By March 28, the meeting with Bastian had been set for April 17, and arrangements for the discussion with human resources had been made.¹⁰ It appears also that Mr. Imhof met Ms. Grimmet, who runs Delta's New York operation, at about this time, although the precise date is not clear.¹¹

While Mr. Imhof's discussions with Delta progressed, Mr. Stache of American conducted a corporate account review with Mr. Imhof on April 6, 2009. During that four hour session, the two reviewed a binder prepared by Mr. Imhof and his staff that identified key accounts and routes and contained additional data. They discussed also American's account strategies.¹² Mr. Imhof did not then disclose that he was in discussions with Delta.

On April 16, 2009, Mr. Imhof attended American's sales board meeting in Dallas. The meeting included discussion of what American claims was sensitive competitive information.¹³ American has not, however, identified exactly what was discussed or explained why it believes that it is competitively sensitive.

Mr. Imhof then met with Mr. Bastian and other Delta officials on the following day. By April 20, 2009, he and Delta began negotiating a term sheet.¹⁴ A deal was struck, and Mr. Imhof resigned from American on April 28, 2009.¹⁵ He joined Delta on May 1, 2009. But there is more to the story than the fact that Mr. Imhof negotiated to join Delta while continuing to do his job at American.

As the chances of his departure from American rose in mid-April, Mr. Imhof began to send e-mails to himself at his family e-mail address that attached documents relating to American's business and/or his work at American.¹⁶ These included an April 2, 2008 presentation entitled New York Passenger Sales that was used to brief Mr. Stache shortly after he assumed his present position (the "PowerPoint").¹⁷ On April 23, 2009, moreover, Mr. Imhof bought an external hard drive to which he copied both personal and American documents that were stored in the "My Documents" folder on his American laptop computer.¹⁸ A few days later, he purchased a Blackberry for the purpose, he says, of transferring the contacts on his American-issued Blackberry to his own.¹⁹

Subsequent Events

As noted, Mr. Imhof resigned from American on April 28, 2009, and told American that he was going to Delta.²⁰ American's reaction at first was relaxed. On the following day, for example, Messrs. Stache and Imhof participated in a conference call with Mr. Imhof's team during which Mr. Stache expressed American's sorrow at Mr. Imhof's departure.²¹ But American's attitude soon changed. For reasons not apparent from the record, it reviewed e-mails that Mr. Imhof had sent on American's e-mail system and copies of documents that had been stored on his American-issued laptop.²² It discovered (1) e-mails between Mr. Imhof and Delta that revealed the course of their discussions, (2) the e-mails Mr. Imhof had sent to his family e-mail address, including most notably that which included the PowerPoint, i.e., the April 2008 New York Passenger Sales presentation, and (3) that Mr. Imhof had copied some American documents to a personal hard drive.²³ This prompted a demand by American that Mr. Imhof cease working for Delta,²⁴ which put him on something akin to administrative leave on May 6.²⁵

Delta, faced with the imminent prospect of litigation, immediately conducted an internal investigation concerning whether Mr. Imhof had conveyed any American confidential and proprietary information to it. The investigation concluded that he had not done so, and American does not contend otherwise.²⁶ Mr. Imhof, for his part, now confesses that the transmission of American documents to his family e-mail address and his downloading of other American documents to his personal hard drive were errors.²⁷ He has undertaken to destroy or return these materials to American, at American's option.²⁸

The Lawsuit

American commenced this action on May 13, 2009. The complaint seeks a declaration as to the enforceability of confidentiality provisions contained in American's standards of business conduct²⁹ and an injunction effectively barring Mr. Imhof from continuing in Delta's employment, the latter on breach of contract and fiduciary duty, misappropriation of trade secrets and unfair competition theories as well as alleged violation of the Computer Fraud and Abuse Act.³⁰

American promptly moved for a temporary restraining order and a preliminary injunction. The parties conducted expedited discovery, and the Court heard argument³¹ on May 20, 2009.

Discussion

"A party seeking a preliminary injunction must demonstrate: (1) `either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant's favor,' and (2) `irreparable harm in the absence of the injunction.'"³² The threat of irreparable injury is a sine qua non.³³ "[I]f there is no irreparable injury, there can be no preliminary injunction."³⁴ Moreover, "a clear showing of the threat of irreparable harm" is essential to justify a preliminary injunction.³⁵ The threatened irreparable harm "must be ... actual and imminent, not remote or speculative."³⁶ In other words, a possibility of irreparable injury is not enough; a likelihood is required.³⁷

A. Threatened Irreparable Injury

As a sufficient threat of irreparable injury is indispensable to a successful preliminary injunction motion, that is the logical starting point for analysis of American's application. But it is well to deal first with two related matters.

First, American claims that Mr. Imhof misappropriated trade secrets and that this automatically gives rise to a presumption of irreparable injury.³⁸ It is striking, however, that it could make this argument without even citing Faiveley Transport Malmo AB v. Wabtec Corp.,³⁹ in which the Second Circuit recently made clear that this "reading [of its prior decisions] is not correct."⁴⁰ Suffice it to say that, in light of Faiveley, no such presumption arises on the facts of this case.⁴¹

Second, it is virtually impossible in a case like this one to separate neatly the assessment of the threat of irreparable injury from that of the likelihood of an applicant's ultimate success on the...