Yesterday, the Sixth Circuit reversed the denial of a preliminary injunction sought by an employer against a former employee who allegedly absconded with trade secret information for the benefit of his new employer, a competitor. PCC Airfoils LLC v. Daughterty, No. 25-3794 (6h Cir. 5-19-26). The Court found that the employer need not prove each element of its claim by clear and convincing evidence in order to obtain preliminary injunctive relief. “Rather than requiring clear and convincing evidence for each preliminary injunction factor, a court should consider all four factors to determine whether, taken together, they clearly weigh in favor of granting injunctive relief.”
According to the Court’s opinion, a long time employee who had designed turbine
airfoils was promoted to director in 2020 and then demoted a year later during
a restructuring. Frustrated, he later resigned
to become a director at a competitor. He
did not have a non-compete agreement.
After his resignation, the employer discovered that he had prepared
to print four confidential documents two days before leaving and that he
had not left those documents in his office upon his departure. The
employer alleged that he “printed several documents containing trade secrets on
his way out the door,” but it could not
prove that he actually printed them. It sued him and his new employer to prevent
him from disclosing trade secrets or working on similar products for the competitor. The trial court denied the requested
injunction on the grounds that the employer had failed to prove each element by
clear and convincing evidence.
When faced with requests for a
preliminary injunction, district courts consider four factors: (1) the
plaintiff’s likelihood of success on the merits; (2) the risk of irreparable
harm to the plaintiff in the absence of an injunction; (3) the risk that an
injunction will harm others; and (4) the broader public interest. . . .
. . . Courts, generally speaking, should
engage with all four factors in a sliding-scale inquiry. A strong showing as to
one factor may “outweigh[]” a weaker showing as to another factor. Winter, 555
U.S. at 23–24. After weighing the four factors against one another, a court may
grant a preliminary injunction only if a plaintiff has made “a clear showing
that [it] is entitled to such relief.” Id. at 22. All of this means that a
movant does not need to establish a quantum of proof, whether a preponderance
or clear and convincing evidence, with respect to each factor to be eligible
for preliminary relief.
Two qualifications exist. If the
plaintiff has “no likelihood of success on the merits,” there is nothing left
to balance and the plaintiff’s request for a preliminary injunction must fail
regardless of its showing on the other factors. Higuchi Int’l Corp. v. Autoliv
ASP, Inc., 103 F.4th 400, 409 (6th Cir. 2024) (quotation omitted). Likewise, a
court must reject a plaintiff’s request for a preliminary injunction if it
fails to show any risk of irreparable injury.
Measured by these requirements, the
district court erred in requiring [the employer] to establish “clear and
convincing evidence” with respect to each of the four factors in order to be
eligible for preliminary relief. . . . While a court should “consider” all four
factors, it is a sliding-scale inquiry that turns “as much on the equities of a
given case as the substance of the legal issues it presents.” . . . The necessary showing for any one factor turns
on the strength of the plaintiff’s showings for the other factors. Because
generalizations are dangerous when it comes to equity, and because the Supreme
Court has cautioned that the clear and convincing evidence standard applies in
only a few rare circumstances, . . . a
court may not require every plaintiff to meet a heightened standard of proof
for every preliminary injunction factor to qualify for injunctive relief. The
district court erred in reaching a contrary conclusion.
. . . .
. . . Requiring a “clear showing” to obtain a
preliminary injunction—because it is an extraordinary form of relief—is not the
same thing as requiring “clear and convincing evidence” to establish each of
the four factors to establish eligibility for this relief.
Instead of creating a heightened
standard of evidentiary proof for each factor individually, the “clear showing”
phrase clarifies that, on balance, the four preliminary injunction factors must
clearly weigh in the plaintiff’s favor to qualify for injunctive relief.
The Court agreed that an unpublished Sixth Circuit had
applied the clear and convincing evidence standard to all four factors, but was
not bound by that precedents or later decisions that relief on it. The Court also agreed that Ohio state court
apply the clear and convincing standard to all four elements, but the federal
court procedural rules apply to claims brought in federal court, even if the
substantive law is governed by Ohio law. Further, there was no substantive statute
requiring use of a higher standard of proof.
Ohio’s rules of equity generally
apply the clear and convincing evidence standard to the four preliminary
injunction factors. . . . Because one of his claims seeks relief under
an Ohio statute, [the defendant employee] contends that Ohio’s preliminary
injunction rules should apply. But a federal court applies federal procedural
rules, even when deciding cases under state law. See Erie R.R. Co. v.
Tompkins, 304 U.S. 64, 78 (1938). The preliminary injunction inquiry falls
on the procedural side of the line, . .
. requiring us to apply federal, not Ohio, rules. And we treat the preliminary
injunction considerations as equitable factors to be weighed, not elements to
be proved by clear and convincing evidence.
. . . .
The clear and convincing evidence
standard thus had no role to play in this case. Indeed, as it pertains to the
plaintiff’s likelihood of success on the merits, it seems particularly odd to
require the plaintiff to prove its case by a higher standard than will be
required at trial even before the parties have had the benefit of discovery. . . . .
. . .
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
