Mass. high court hears dispute over trade‑secret injunction and denied non‑solicit in Daikin appeal
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Summary
At oral argument in Daikin Applied Americas v. Russo et al., the justices questioned whether a presumption of irreparable harm should apply in trade‑secret cases and whether a one‑year non‑solicit preliminary injunction was an impermissible end‑run around bargaining and equitable principles.
BOSTON — The Massachusetts Supreme Judicial Court heard oral argument over whether a company whose confidential HVAC bidding data was copied by former employees is entitled to a presumption of irreparable harm and a narrow one‑year non‑solicitation order.
Stephen Melnick, counsel for plaintiff Daikin Applied Americas Inc., told the court the superior court erred by denying the final part of a preliminary injunction that would have barred defendants from soliciting a limited list of Daikin customers for one year. "Once a trade secret is disclosed, it is lost forever," Melnick said, arguing that "you can never get it back no matter how many dollars you get." He described the materials taken as "hundreds of pages" containing bid prices, supplier costs, profit margins and customer preferences — a "road map" that could enable a competitor to undercut Daikin.
The panel pushed back, probing whether the alleged harm would be fully remedied by money damages if Daikin ultimately prevailed. One justice asked why the loss of access to a discrete customer list would not be compensable with damages, noting that the preliminary injunction record included orders that the defendants return confidential materials and refrain from using them.
Defense counsel Ronald Dunbar said the superior court did not abuse its discretion when it declined to enjoin solicitation, calling the requested relief "an end run around a non‑solicit provision that they did not negotiate." Dunbar pointed to the Massachusetts Uniform Trade Secret Act and equitable principles distilled in the U.S. Supreme Court's eBay decision, saying, "You really can't get around eBay," and arguing that any presumption of irreparable harm would be a legislative, not judicial, step.
The justices also examined evidentiary questions the trial court cited — whether the materials were sufficiently secret and whether Daikin took adequate protective measures — and whether the requested non‑solicit was appropriately narrow. Counsel acknowledged the request targeted a subset of known Daikin customers rather than every potential New England account. The bench asked whether the record showed a realistic risk of broader public disclosure that would transform the materials from confidential to publicly known.
Justices and advocates discussed related precedent, including cases (cited in argument) where courts weighed senior‑employee loyalty and implied duties even in the absence of explicit non‑compete or non‑solicit contracts. The panel also noted testimony that collective‑bargaining rules limited the parties' ability to impose separate non‑solicit agreements on union employees.
Arguments concluded with both sides resting on their briefs. The court did not issue a decision from the bench; the case remains under advisement.
