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Electro-Motive Diesel, Inc. v. Wi-Tronix

June 7, 2006

ELECTRO-MOTIVE DIESEL, INC., PLAINTIFF,
v.
WI-TRONIX, LLC, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Plaintiff Electro-Motive Diesel, Inc.'s ("EMD") motion for a preliminary injunction and on Defendants' motion for sanctions. For the reasons stated below, we deny the motion for a preliminary injunction and we deny the motion for sanctions.

BACKGROUND

EMD alleges that General Motors-Electromotive Division ("GM-EMD") developed a computer system called the Functionally Integrated Railroad Electronics ("Fire") system. According to EMD, the Fire system is a network of one or more computers that are used in the operation of a locomotive and for interfacing with the electrical components on the locomotive. EMD claims that all of the individual Defendants worked as engineers on the Fire system as employees of GM-EMD. EMD also claims that the individual Defendants worked with GM-EMD on obtaining a contract with the Federal Railroad Administration ("FRA") on a project called the Advanced Concept Train ("ACT") project. EMD alleges that Defendants Lawrence B. Jordan, Jr. ("Jordan") and Michael D. Heilmann ("Heilmann") developed the Defendant company Wi-Tronix, LLC ("WT") while they were employed by GM-EMD. EMD also claims that Jordan and Heilmann quit their employment with GM-EMD in order to work full-time for WT. Jordan and Heilmann also allegedly recruited Defendants Lisa Matta and Duane D. Hong to come work for WT.

EMD states that in 2005, it purchased essentially all of the assets of GM-EMD from General Motors Corporation. EMD also contends that after purchasing GMEMD it pursued the contract for the ACT project, but that WT was ultimately awarded the contract instead of EMD. EMD claims that WT cannot satisfy its obligations under the ACT contract without using information regarding the Fire system that the individual Defendants acquired while working for GM-EMD.

Defendants argue that EMD declined to enter into a contract with the FRA for the ACT project and that EMD has reduced the scope of its previously proposed work on the project. According to Defendants, the FRA solicited public bids to complete the tasks on the ACT project that EMD has refused to perform and WT was awarded the contract based on its bid. Defendants also contend that EMD has issued software called a Fire Developer's Kit ("FDK") to Science Applications International Corporation ("SAIC"), which is a participant in the ACT project. Defendants claim that they plan to use the FDK to complete their required tasks on the ACT project. EMD moved in this action for an entry of a preliminary injunction and this court held a preliminary injunction hearing ("Hearing") in this action on March 13, 2006. Defendants also now move for sanctions based on EMD's filing of the motion for a preliminary injunction.

LEGAL STANDARD

A preliminary injunction "should not be granted unless the movant, by a clear showing, carries the burden of persuasion." Goodman v. Illinois Dept. of Financial and Professional Regulation, 430 F.3d 432, 437 (7th Cir. 2005)(stating that "[a] preliminary injunction is an extraordinary and drastic remedy")(quoting Mazurek v. Armstrong, 520 U.S. 968, 972 (1997)). In order to obtain a preliminary injunction, a plaintiff must show that: "(1) [the plaintiff] ha[s] a reasonable likelihood of success on the merits; (2) no adequate remedy at law exists; (3) [the plaintiff] will suffer irreparable harm which, absent injunctive relief, outweighs the irreparable harm the respondent will suffer if the injunction is granted; and (4) the injunction will not harm the public interest." Goodman, 430 F.3d at 437.

DISCUSSION

I. Motion for Preliminary Injunction

EMD requests that the court enter a preliminary injunction preserving the status quo during the pendency of this action.

A. Likelihood of Success on the Merits Factor

EMD argues that it has a strong likelihood of success on the merits.

To determine whether a plaintiff has a likelihood of success on the merits, the court must assess whether the plaintiff has "a greater than negligible chance of winning . . . ." AM General Corp. v. DaimlerChrysler Corp., 311 F.3d 796, 804 (7th Cir. 2002)(stating that "[a] party with no chance of success on the merits cannot attain a preliminary injunction"). In addition, the court should use a "sliding scale" approach when considering potential harms to the parties, and the required showing by the plaintiff for the likelihood of success on the merits can be lessened if there is "a greater predominance of the balance of harms." Id. (stating that "[i]n performing this balancing, the court bears in mind that the purpose of a preliminary injunction is 'to minimize the hardship to the parties pending the ultimate resolution of the lawsuit'"). In the instant action, EMD ...


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