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Title Trading Services Usa, Inc. v. Kundu

United States District Court, W.D. North Carolina, Charlotte Division

May 2, 2014



ROBERT J. CONRAD, Jr., District Judge.

THIS MATTER comes before the Court on Plaintiff Title Trading Services USA's (Title) Motions for Temporary Restraining Order and Preliminary Injunction (Doc. 5), which was filed on April 29, 2014. Plaintiff also filed a verified Complaint on the same day. (Doc. 1). At present, none of the six named Defendants have been served in this case.


Alleging irreparable harm at the hands of Defendants, Plaintiff seeks a temporary restraining order or preliminary injunction from this Court enjoining Defendants from various actions involving the use of trade secret information obtained illegally from Plaintiff Title. Specifically, Plaintiff has alleged a multitude of state and federal claims against Defendants, including: (1) breach of contract; (2) tortious interference with contract; (3) interference with prospective economic advantage; (4) misappropriation of trade secrets and confidential and proprietary information; (5) breach of fiduciary duty; (6) conversion and theft; (7) fraud by omission and constructive fraud; (8) conspiracy; (9) violation of federal and state racketeering (RICO) statutes; (10) and unfair and deceptive trade practices. Plaintiffs allege that this Court has subject matter jurisdiction under 28 U.S.C. §§ 1331, 1332 and 1367.

Plaintiff has alleged the following facts, which are summarized here in briefest form: Title is a financial technology and principal trading firm located in Charlotte, North Carolina. Plaintiff's business model is based on the creation and utilization of trading technology, namely software programs and hardware configurations, which Plaintiff develops and uses in accordance with various trading strategies. Defendant Arindam Kundu (Kundu), a citizen of India, was employed by Title Trading from July 2009 until March 2014, when he was terminated for allegedly passing proprietary information regarding technology and trading strategies to Defendants, despite having signed an Employment Agreement in which he agreed, among other things, not to reveal trade secrets or confidential information to unauthorized parties. Specifically, Kundu was instrumental in the development of the "RefArb Trading Strategy, " (RefArb Strategy) a trading platform involving a computer program that searches various exchanges for price imbalances between opening and closing prices. Kundu's contribution to the RefArb Strategy involved writing source code that allowed for the execution of transactions (Execution Software) and implementation of the trading platform (Implementation Software). Title alleges that it took reasonable steps to guard the secrecy of confidential information such as the RefArb strategy, including protecting, via passwords, access to such programs and placing restrictions upon its use and disclosure.

Plaintiff alleges learning about Kundu's illicit activity from an anonymous phone call. Immediately following, Plaintiff conducted an internal investigation, which confirmed that Kundu had passed along proprietary information without authorization. Confronted with the allegations, Kundu confessed and noted that he made hundreds of thousands of dollars in profit. Plaintiff alleges that Kundu promised to cooperate, but he has not honored this agreement.

According to the Complaint, Kundu passed confidential information regarding the RefArb Strategy, including copies of Title's code to various computer programmers not associated with Plaintiff. Among those persons to whom Kundu passed information were: Defendant Syed Saif Ashraf, who provided operating capital and physical assets such as servers in order to test and house the technologies obtained from Title;[1] Derek Chiu (Chiu); and Eliot Smith (Smith). This group: Kundu, Ashraf, Chiu and Smith (collectively: Karma Defendants) formed Karma Technologies for the purpose of utilizing Plaintiff's proprietary information. To that end, the Karma Defendants entered into a partnership relationship with Coastal Management, LLC (Coastal) a financial firm that provided upwards of $20, 000, 000 in buying power to place proprietary trades for the Karma Defendants.[2] Plaintiff alleges that Coastal had sufficient information available to it that, even a minimum of due diligence would have alerted it to the fact that the Karma Defendants were utilizing programs and technologies that were protected trade secrets and which they did not have the legal right to use. Plaintiff alleges that Defendants, as a collective group, effected trades by utilizing strategies and technologies developed by Plaintiff, including the RefArb strategy, implementing software and execution software.

Finally, the Complaint contains a Declaration from George Elio, President of Title Trading, stating that he has reviewed the Complaint and attests to the facts contained in it. At present, Defendants have not filed any responses with this Court.


Rule 65(b) provides that, upon a proper showing, a court may issue a temporary restraining order without notice to the adverse party. FED. R. CIV. P. 65(b). Because Defendants have not been provided adequate notice and time to respond, the instant motion will be regarded as one for a temporary restraining order. "[W]hether an interlocutory injunction is labeled a TRO or a preliminary injunction is not of particular moment, so long as the opposing party is given notice and an opportunity to oppose that is commensurate with the duration of the injunction." Ciena Corp. v. Jarrad , 203 F.3d 312, 320 (4th Cir. 2000). A "preliminary injunction preserves the status quo pending a final trial on the merits, [while] a temporary restraining order is intended to preserve the status quo only until a preliminary injunction hearing can be held." Hoechst Diafoil Co. v. Nan Ya Plastics Corp. , 174 F.3d 411, 422 (4th Cir. 1999).

A. Temporary Restraining Order

A temporary restraining order is an "emergency procedure and is appropriate only when the applicant is in need of immediate relief." 11A Charles Wright, Arthur Miller & Mary Kane, Federal Practice and Procedure § 2951 (2d ed). It is an "extraordinary and drastic remedy" never awarded as a matter of right. Munaf v. Geren , 553 U.S. 674, 689-90 (2008) (citations omitted). In each case, courts "must balance the competing claims of injury and must consider the effect on each party of the granting or withholding such request." Amoco Production Co. v. Gambell , 480 U.S. 531, 542 (1987). An injunction is a matter of equitable discretion; it does not follow from success on the merits as a matter of course. Weinberger v. Romero-Barcelo , 456 U.S. 305, 313 (1982) ("[A] federal judge sitting as chancellor is not mechanically obligated to grant an injunction for every violation of law.").

A plaintiff seeking a temporary restraining order must establish four elements, including that: (1) it is likely to succeed on the merits; (2) it is likely to suffer irreparable harm in absence of preliminary relief; (3) the balance of equities tips in its favor; and, (4) an injunction is in the public interest. Winter v. Natural Resources Defense Council, Inc. , 555 U.S. 7, 20 (2008).

Notwithstanding the one-sided nature of the material presented in this matter, the Plaintiff has made a cogent case for success on the merits for several of its eighteen (18) claims, including breach of contract, conversion and federal and state RICO claims. Examining one such claim, the Court finds that Plaintiff has demonstrated a likely success on the merits for as to its claim for misappropriation of trade secrets and confidential information. North Carolina's Trade Secrets Protection Act defines misappropriation as the "acquisition, disclosure, or use of a trade secret of another without express or implied consent, unless such trade secret was arrived at by independent ...

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