SI Handling Systems v. Heisley

SI Handling Systems, Inc. (SI) (plaintiff) manufactured industrial materials-handling systems. SI sued its rival, Heico, Inc., several Heico employees, and Heico’s founder, Michael Heisley (the Heico group) (defendants), for trade-secret misappropriation. All of the individual defendants had formerly worked for SI, where they became privy to confidential information related to SI’s Cartrac system for moving material in automobile factories. Seven months after filing its complaint, SI moved for preliminary injunctive relief. Based on several findings of fact, the federal district court concluded that (1) SI would probably prevail on the merits of its case; (2) SI faced immediate, irreparable harm at the hands of former workers who inevitably would apply their Cartrac knowledge to work on Heico’s competing system, called Robotrac; (3) the Heico group did not face comparable harm; and (4) the balance of interests between promoting economic mobility and preventing unfair competition tipped in SI’s favor. The district court granted SI’s motion and entered a preliminary injunction temporarily barring the ex-SI employees from working on Robotrac. The Heico group appealed to the Third Circuit, contending that (1) SI’s delay in seeking injunctive relief proved that SI did not face immediate, irreparable harm; (2) stopping Heico’s employees from working on Robotrac burdened them with an economic hardship equivalent to capital punishment; and (3) the district court improperly balanced the public’s interest in preventing unfair competition against the public interest in encouraging economic mobility. As a threshold matter, the Third Circuit overruled some of the district court’s factual findings.