## Facts

- CDI Energy Services, Inc. sold and serviced oilfield equipment in Dickinson, North Dakota, using a small office staffed by three employees: John Martinson (district manager), Dale Roller (sales/service), and Kent Heinle (service technician).
- CDI entered the Dickinson market by hiring Martinson and Roller from a competitor; they brought client relationships and accounts with them to CDI, including at least one customer that later produced a large share of CDI’s local revenue.
- While still employed by CDI, Martinson, Roller, and Heinle formed a competing company, West River Pumps, Inc.
- Before resigning, they contacted CDI customers, informed them of their plan to operate independently, and sought to obtain business for West River.
- They obtained customer permission to move certain customer equipment from CDI’s shop to West River’s location.
- On October 16, 2007, all three resigned, leaving CDI without a local operational presence.
- CDI asserted that defendants misappropriated trade secrets (primarily customer-related information), breached statutory loyalty duties, and interfered with CDI’s business.
- CDI obtained an ex parte temporary restraining order and sought a preliminary injunction; the district court denied the motion and dissolved the TRO.

## Issues

1. Whether the district court clearly erred in finding CDI failed to show likelihood of success and irreparable harm on trade-secret misappropriation sufficient to warrant a preliminary injunction.
2. Whether the district court abused its discretion by denying a preliminary injunction on CDI’s statutory breach-of-loyalty claim despite finding CDI likely to succeed, based on the remaining equitable factors governing preliminary relief.

## Decision

- The Eighth Circuit affirmed the denial of a preliminary injunction and the dissolution of the TRO.
- On trade secrets, the court held the district court did not clearly err in finding CDI failed to show defendants took protected trade-secret information or that CDI made reasonable efforts to maintain secrecy.
- On breach of loyalty, the court held the district court did not abuse its discretion in concluding that irreparable harm, balance of harms, and the public interest weighed against preliminary injunctive relief, even assuming CDI was likely to succeed on the merits.

## Legal Principles

- Under North Dakota trade-secret law, alleged trade secrets must derive independent economic value from not being generally known and must be subject to reasonable secrecy efforts; absent such proof, preliminary injunctive relief may be denied.
- Customer-related information and relationships may fail to qualify as trade secrets where the information is readily obtainable or the employer does not meaningfully restrict access or confidentiality.
- A preliminary injunction requires consideration of the Dataphase factors: (1) likelihood of success, (2) irreparable harm, (3) balance of harms, and (4) public interest; likelihood of success alone does not justify injunctive relief.
- Appellate review is deferential: factual findings relevant to trade-secret status are reviewed for clear error, and the overall preliminary-injunction ruling is reviewed for abuse of discretion.
- Loss of customers and revenue is often compensable by money damages and may not establish irreparable harm for preliminary injunctive relief in employee-competition disputes.

## Conclusion

The Eighth Circuit upheld the district court’s refusal to enjoin former employees and their new competitor, concluding CDI did not show protectable trade secrets or sufficient irreparable harm, and that equitable factors permitted denial of preliminary relief even where a loyalty breach was likely.


CDI Energy Servs., Inc. v. W. River Pumps, Inc., 567 F.3d 398 (8th Cir. 2009)