Liberty American Ins. v. Westpoint Underwriters

• Court: U.S. District Court — Middle District of Florida
• Writing for the Court: Kovachevich
• Citation: Liberty American Ins. v. Westpoint Underwriters, 199 F.Supp.2d 1271 (M.D. Fla. 2001)
• Decision Date: 15 March 2001
• Docket Number: Case No. 8:01-CV-573-T-17-EAJ.
• Parties: LIBERTY AMERICAN INSURANCE GROUP, INC., et al., Plaintiffs, v. WESTPOINT UNDERWRITERS, L.L.C., et al., Defendants.

199 F.Supp.2d 1271

LIBERTY AMERICAN INSURANCE GROUP, INC., et al., Plaintiffs, v. WESTPOINT UNDERWRITERS, L.L.C., et al., Defendants.

Case No. 8:01-CV-573-T-17-EAJ.

United States District Court, M.D. Florida, Tampa Division.

March 15, 2001.

COPYRIGHT MATERIAL OMITTED

Margaret Diane Mathews, Akerman, Senterfitt & Eidson, P.A., Tampa, FL, David E. Landau, Adam H. Cutler, Wolf, Block, Schorr and Solis-Cohen, LLP, Philadelphia, PA, for Liberty American Ins. Group, Inc., Mobile Homeowners Ins. Agencies, Inc.

Brian A. McDowell, Scott Justice, Holland & Knight, LLP, Orlando, FL, Griffith J. Winthrop, III, Alvarez, Sambol, Winthrop & Madson, P.A., Orlando, FL, for Westpoint Underwriters, L.L.C., Modern Service Ins. Co., Lyle Vincent, T. John Jerger, Jr.

Lee H. Rightmyer, Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., St. Petersburg, FL, for American Strategic Ins. Corp.

William Donald Cox, Richard G. Salazar, Nestor J. Rivera, Fowler White Boggs Banker, P.A., Tampa, FL, for Sandra Jerger.

Sandra Jerger, Pinellas Park, FL, pro se.

ORDER

KOVACHEVICH, Chief Judge.

THIS CAUSE comes before the Court for consideration of Plaintiffs' Motion for Preliminary Injunction and Memorandum of Law in support thereof (Dkt.Nos.2-3); Defendants' Response in Opposition (Dkt.Nos.49-50); Report and Recommendation from United States Magistrate Judge Elizabeth A. Jenkins (Dkt. No. 75); Supplemental Memorandum of Law in Support of Plaintiffs' Motion for Preliminary Injunction (Dkt. No. 77); Defendants' Response to Liberty American's Objections to Magistrate's Report and Recommendation (Dkt. No. 84); Plaintiffs' Amended Objections to Report and Recommendation (Dkt. No. 88); Defendants' Objections to Magistrate's Report and Recommendation (Dkt. No. 79); and Amended Plaintiffs' Response to Defendants' Objections to Report and Recommendation and Motion to Strike (Dkt. No. 89).

Procedural Background

Plaintiffs, Liberty American Insurance Group, Incorporated and Mobile Homeowners Insurance Agencies (Plaintiffs), filed a Motion for Preliminary Injunction on March 15, 2001, in which they petition this Court to enjoin Defendant Westpoint Underwriters, L.L.C. (Defendant Westpoint) from using Liberty American's rating software and park file information; and Defendants Lyle Vincent (Defendant Vincent) and T. John Jerger, Jr. (Defendant Jerger) from working for Defendant Westpoint. The Honorable James S. Moody, Jr. United States District Judge, referred the motion to the Honorable Elizabeth A. Jenkins, United States Magistrate Judge, by Order of Referral, dated March 16, 2001 (Dkt. No. 5) under authority of Title 28, United States Code, Section 636(b)(1)(B); Federal Rule of Civil Procedure 72(b); and Rule 6.02 of the Local Rules of the Middle District of Florida. On May 4, 2001, Judge Moody recused himself, and the case was reassigned to this Court. (Dkt.Nos.27-28).

After considering the parties' submissions and oral arguments, Judge Jenkins filed a Report and Recommendation (R & R) on October 17, 2001, wherein she recommends that this Court deny Plaintiffs' motion. Judge Jenkins determined that Plaintiffs are not likely to succeed on the merits of their copyright infringement claim; that they are likely to succeed on the merits of their claims against Defendant Vincent for trade secret misappropriation and breach of the confidentiality agreement; that Plaintiffs are unlikely to succeed on the merits of their claims against Defendant Jerger for breach of the confidentiality agreement and duty of loyalty; that they are unlikely to succeed on the merits of their claims against Defendant Westpoint and Defendant Jerger for trade secret misappropriation; that Plaintiffs have not demonstrated that they will be irreparably harmed if injunctive relief is not granted; and, finally, that they have not demonstrated that the harm that they would suffer outweighs the harm that Defendants would suffer if injunctive relief was granted.

On November 5, 2001, Plaintiffs filed their Objections to Report and Recommendation (Dkt. No. 80), and on January 24, 2002, they filed Amended Objections to Report and Recommendation (Dkt. No. 88). Additionally, Defendants filed their Objections to Magistrate's Report and Recommendation (Dkt. No. 79) on November 5, 2002. After reviewing Judge Jenkins' findings in light of Plaintiffs' amended objections and Defendants' objections, this Court agrees with Judge Jenkins' recommendation that Plaintiffs' motion for injunctive relief be denied.

Factual Background¹

The Jerger Company, a Florida insurance company, founded in 1946 and owned until 1999 by the Jerger family, introduced the first homeowners' policy for mobile homes in Florida in 1964 and eventually became a niche insurance company in the mobile-home market. The Jerger family founded Mobile Homeowners Insurance Agencies (Plaintiff MHIA) in 1964 as a licensed Florida managing general agency (MGA) and provided the operational support for The Jerger Company's personal lines product.

In July 1999, the Philadelphia Insurance Companies acquired The Jerger Company, Plaintiff MHIA, and other affiliated companies that the Jerger family owned, including the intellectual property of The Jerger Company. On March 10, 2000, The Jerger Company changed its name to Liberty American Insurance Group. On March 31, 2000, Defendant Jerger resigned from Liberty American and participated in the startup of Westpoint Underwriters, L.L.C., a MGA for Modern Service Insurance Company (Modern), a Minnesota insurance company that was about to start doing business in Florida.

Plaintiff Liberty American developed rating software in 1998, and the leading employee in its development was Defendant Vincent. Plaintiff Liberty American is the owner of the copyright in its software and has received copyright registration for four key aspects of its software that Defendant Vincent developed: Rating Engine, registration number TXU945848; the Glossary of Terms, registration number TXU945849; the Javascripts used to operate the Rating Engine, registration number TXU945850; and the HTML generator that operates the website, registration number TXU945851. Liberty American required all of its employees to sign confidentiality agreements to protect the confidentiality and secrecy of its software.

Defendant Vincent left Liberty American on April 7, 2000 and eventually began working for Defendant Westpoint. On March 15, 2001, Plaintiffs filed suit against Defendants, alleging copyright infringement, misappropriation of trade secrets, and breach of the confidentiality agreements and duties of loyalty. They also filed a motion for preliminary injunction, requesting that Defendants Jerger and Vincent be enjoined from working for Defendant Westpoint and requesting that Defendant Westpoint discontinue use of its rating software.

Review of Report and Recommendation

This Court must first determine the standard to be applied in reviewing the magistrate judge's findings of fact and law. Under the appropriate standard, this Court must then review: (1) the law that the magistrate judge followed in recommending to grant or deny the motion for preliminary injunction; (2) the law that the magistrate judge followed which forms the basis of the cause of action; and (3) the magistrate judge's findings in light of Plaintiffs' and Defendants' objections.

A. Standard of Review

Under the Federal Magistrate's Act, Congress vested Article III judges with the power to authorize a United States Magistrate Judge to conduct evidentiary hearings. 28 U.S.C. § 636. A district court judge may designate a United States Magistrate Judge to conduct hearings, including evidentiary hearings, in order to submit proposed findings of fact and recommendations (R & R) for the disposition of motions for injunctive relief. Id. § 636(b)(1)(B). Within ten days after being served with a copy of the R & R, any party may file written objections to the proposed findings and recommendations. Id. When a timely objection is made, the determination is subject to a de novo review by the district court. However, the district court will review those portions of the R & R that are not objected under a clearly erroneous standard. Gropp v. United Airlines, Inc., 817 F.Supp. 1558 (M.D.Fla.1993); see Thomas v. Arn, 474 U.S. 140, 150, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985) (holding that the de novo standard of review applies to both a factual and legal conclusions to which a party objects).

B. Preliminary Injunction

In determining whether a preliminary injunction should be granted, the Court must look at four factors: 1) whether a substantial likelihood exists that the movant will ultimately prevail on the merits; 2) whether the movant will suffer irreparable injury if the injunction is not issued; 3) whether the threatened injury to the movant outweighs the potential harm to the opposing party; and 4) whether the injunction, if issued, would be adverse to the public interest. Chase Manhattan Bank v. Dime Savings Bank of New York, 961 F.Supp. 275, 276 (M.D.Fla. 1997) (quoting Haitian Refugee Center, Inc. v. Nelson, 872 F.2d 1555, 1561 (11th Cir.1989)).

The plaintiff has the burden of persuasion as to each of these four factors. Failure to sustain this burden with regard to any one of these elements will cause the motion to be denied. U.S. v. Jefferson County, 720 F.2d 1511, 1519 (11th Cir. 1983). The issuance of the injunction is within the discretion of the trial court and is an "extraordinary and drastic remedy" not to be granted unless the movant clearly carries the burden of persuasion on all four factors. Gibson v. Lee County Sch. Bd., 1 F.Supp.2d 1426, 1427 (M.D.Fla.1998) (citing U.S. v. Jefferson County, 720 F.2d 1511, 1519 (11th Cir.1983) (quoting Canal Authority v. Callaway, 489 F.2d 567, 572 (5th Cir.1974))).

In this case, Judge Jenkins found that: (1) Plaintiffs are not likely to succeed on the merits of their copyright infringement claim, their...