Motion For TRO - Farrell - Redacted

1 The Honorable ___________________
5 SUPERIOR COURT OF THE STATE OF WASHINGTON

IN AND FOR KING COUNTY
6
7 )
AMAZON.COM, INC., )
8 ) No.
Plaintiff, )
9 ) MOTION FOR TEMPORARY
v. ) RESTRAINING ORDER, ORDER
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) TO SHOW CAUSE, AND
11 GENE FARRELL, ) EXPEDITED DISCOVERY
)
12 Defendant. )
13 I. RELIEF REQUESTED
14 Amazon Web Services, LLC (AWS), is a subsidiary of Amazon.com, Inc. AWS
15 seeks to enforce a former executives agreement not to disclose confidential information or
16 work for a competitor, at least until a preliminary injunction hearing.
17 AWS provides business customers with off-site computer infrastructure (e.g., data
18 storage) and software that customers can essentially rent on-demand (cloud computing).
19 Among other things, AWS offers cloud-based software products used by businesses for
20 functions like project management (e.g., email, calendaring, and messaging applications that
21 facilitate communication, scheduling, and collaboration).
22 Smartsheet, Inc. competes with Amazon. It too offers cloud-based business software,
23 specifically a program (called Smartsheet) for project management that can also be used for
24 budgeting, reporting, resource management, task tracking, and collaboration.
25 Defendant Gene Farrell was a Vice President at AWS. Prior to quitting, he worked on
26 a critical component of a product
27 . Farrell helped develop significant aspects of the

Davis Wright Tremaine LLP
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AMAZONS MOTION FOR TRO - 1 1201 Third Avenue, Suite 2200
Seattle, WA 98101-3045
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1 product and participated in key meetings in which its functions, architecture, strength and
2 weaknesses were demonstrated and discussed. Farrell offered to continue to advise that team
3 even after he took on a new role at AWS.
4 Just three months later, Farrell quit to join Smartsheet as its Head of Product
5 Development. This move is unthinkable:
6 ; he cannot possibly forget everything he
7 knows about AWSs products and plans while he is working to develop products for its
8 competitor.
9 To protect against this kind of risk, Amazon asked Farrell to sign a Confidentiality,
10 Noncompetition and Invention Assignment Agreement. This Noncompetition Agreement
11 prohibits Farrells sharing or using confidential information about AWS and restricts certain
12 post-employment activities for 18-months. Amazon requests a temporary restraining order to
13 delay Farrells employment at Smartsheet, until Amazon may be heard on a motion for a
14 preliminary injunction, and limited expedited discovery.
15 II. STATEMENT OF FACTS
16 A. Before He Quit AWS, Farrell Worked

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Farrell began work for AWS in April 2012. Declaration of Jake Shannon (Shannon
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Decl.), Ex. A. By January 2016, he was Vice President of AWS Enterprise Applications.
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Declaration of Charles Bell (Bell Decl.) 2.
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23 B. Mr. Farrells Promise Not to Disclose Information or Compete.

24 When Amazon offered Farrell employment, it conditioned the offer on his willingness
25 to sign an agreement that protects Amazons confidential information and imposes a limited
26 noncompetition obligation. Amazons offer letter explained the Noncompetition Agreement
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1 would restrict Farrells ability to accept certain employment opportunities for a period of 18
2 months. In April 2012 Farrell executed the letter and agreement. Shannon Decl., Ex. A.
3 Section 2(a) of the Noncompetition Agreement emphasized that, to do his job, Farrell
4 needed access to valuable confidential information, specifically defined to include the kinds of
5 technical, business, and strategic information Farrell developed and used at AWS, including
6 information about Amazons plans for expanding into new products or services or any other
7 information that could aid a competitor to infer the nature of Amazons business activities and
8 allow it to compete more effectively. Id. Ex. B. Farrell agreed that he would not use or
9 disclose Amazons Confidential Information after his employment. Section 2(b)(i). Id.
10 In Section 3(c), Farrell agreed to a limited noncompetition restriction, running from the
11 termination of his employment. That covenant provides, in part, that for 18 months after he
12 leaves Amazon, Farrell will not directly or indirectly . . . either on [his] own behalf or as an
13 employee, officer, . . . or in any other capacity do the following:
14 (iii) accept or solicit business from any retail market sector, segment, or
group that [Amazon] has solicited, targeted, or accepted business from prior to
15 the Termination Date, or has actively planned, prior to the Termination Date, to
solicit, target, or accept business from (the Target Market), if the product or
16 service provided or offered by [Farrell] to such Target Market is substantially
the same as a product or service provided or offered by [Amazon] to the Target
17 Market, and such acceptance or solicitation would be competitive with or
otherwise deleterious to [Amazons] own business activities, or anticipated
18 business activities, related to the Target Market; or
19 (iv) enter into or propose to enter into any business arrangement with any
entity with which, prior to the Termination Date, [Amazon] was involved in
20 substantially the same business arrangement, or with which, prior to the
Termination Date, [Amazon] had held discussions regarding the possibility of
21 entering into such an arrangement, if such arrangement would be competitive
with or otherwise deleterious to the interests of [Amazon].
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Id.
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Section 4(a) of the agreement again emphasized (and Farrell acknowledged) that the
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Noncompetition Agreement could seriously limit [Farrells] future flexibility in many ways,
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and specifically that Section 3 will make it impossible for [Farrell] to seek or accept certain
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opportunities for a period of 18 months after the Termination Date, despite the fact that such
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1 opportunities might be highly attractive to [Farrell] and provide greater compensation than any
2 other available opportunities . . . . Id.
3 Farrell acknowledged in the Noncompetition Agreement that the restrictions in Sections
4 2 and 3 were reasonable. He further acknowledged that his compensation (cash, equity, and
5 otherwise) reflected his agreement to the confidentiality and noncompetition provisions of the
6 Noncompetition Agreement. (And that total compensation was substantial: at the time Farrell
7 left,
8 In Section 6, Farrell also agreed that injunctive relief, including a restraining order,
9 would be appropriate to enforce the agreement and prevent irreparable harm. Id.
10 C. Mr. Farrells Employment with Smartsheet.

11 On May 18, 2017, Farrell said he intended to quit effective May 26 to take a Head of
12 Product job at Smartsheet. Amazon informed Farrell this employment would be in direct
13 competition with AWS and in violation of his agreement.
14 To avoid litigation, Amazon contacted Smartsheet to discuss Farrells new position and
15 any steps Smartsheet planned to take to ensure Farrell would not be in a role that would allow
16 him or Smartsheet to use AWSs confidential information. Smartsheet and Farrell agreed to
17 delay Mr. Farrells start date by two days until June 1, 2017, and limit his work to onboarding
18 until June 8, 2017, but would not further delay his employment. Declaration of Harry Korrell
19 (Korrell Decl.) 2-4.
20 In Mr. Farrells role as Head of Product at Smartsheet, he will lead the continued
21 development of Smartsheet and make strategic decisions about financing, product development,
22 and marketing.
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3 III. ISSUES PRESENTED

4 A. Should the Court (1) enter a Temporary Restraining Order barring Farrell from
5 working for Smartsheet until the parties can be heard on a preliminary injunction motion; (2)
6 issue an Order to Show Cause Why a Preliminary Injunction Should Not Issue prohibiting
7 further breaches; and (3) allow limited expedited discovery as provided in the proposed order.
8 IV. EVIDENCE RELIED UPON

9 The Declarations of Charles Bell, Arun Sundaram, Adam Bosworth, Tatyana Mamut,
10 Jake Shannon, Harry Korrell and the exhibits thereto.
11 V. AUTHORITY AND ARGUMENT

12 A. The Injunction Standards
13 CR 65 governs injunctions. Courts are more forgiving in imposing its requirements in
14 the expedited context of a temporary restraining order motion without the benefit of discovery.
15 A movant under CR 65 generally must show:
16 (1) that he has a clear legal or equitable right; (2) that he has a
well-grounded fear of immediate invasion of that right; (3) that
17 the acts complained of are or will result in actual and substantial
injury to [it]; and (4) that the relative equities of the parties [and]
18 the public interest favor granting the injunction. Rabon v. City of
Seattle, 135 Wn.2d 278 (1998); Tyler Pipe Industries, Inc. v. State
19 Department of Revenue, 96 Wn.2d 785 (1982); Washington
Federation of State Employees, Council 28, AFL-CIO v.
20 Washington, 99 Wn.2d 878 (1983).
21 10A Wash. Prac., Civil Procedure Forms 65.1 (3d ed. 2016) (emphasis added).
22 Injunctive relief is uniquely suited to remedy continuing violations of non-competition
23 covenants and to prevent the hard to quantify damages caused by disclosures of trade secrets.
24 E.g. Boeing Co. v. Sierracin Corp., 108 Wash. 2d 38, 63 (1987) (The potential harm to Boeing
25 as trade secrets holder extends beyond a mere calculation of monetary damages. Failure to
26 enjoin present and future copying would be inequitable, allowing Sierracin to profit from use of
27 its ill-gotten gains.).

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1 Injunctive relief is particularly appropriate where, as here, the similarity between the
2 breaching employees former and current employment makes it likely that the employee will
3 use or disclose his former employers trade secrets or other confidential information in the
4 course of his new work, even unintentionally. Branson Ultrasonics Corp. v. Stratman, 921 F.
5 Supp. 909, 913 (D. Conn. 1996).
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All three grounds for injunctive relief are present: (1) Amazon has a right to enforce its
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agreement with Farrell and to protect its confidential information; (2) Farrells employment at
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Smartsheet violates Amazons rights under the agreement; and (3) without relief, Amazon will
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suffer irreparable harm
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B. The Court Should Enjoin Farrell From Violating His Agreement.
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1. The Noncompetition Agreement is Enforceable and Amazon Has a
22 Clear Legal and Equitable Right to Relief.
23 Washington uses a three-part test to determine the enforceability of such covenants,
24 focusing on the necessity to protect the business or its goodwill, the reasonableness of the
25 restraint, and the degree of harm to the public from the loss of the employees services. Perry
26 v. Moran, 109 Wn.2d 691, 698 (1987). Reasonable agreements are enforceable by injunctions,
27 see Armstrong v. Taco Time Intl, Inc., 30 Wn. App. 538, 544-46 (1981), especially where, as

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1 here, the employee acknowledges in his contract that irreparable harm will result from the
2 breach and that Amazon will be entitled to extraordinary relief in court. Ticor Title Ins. Co. v.
3 Cohen, 173 F.3d 63, 69 (2nd Cir. 1999).
4 As detailed above and in the supporting declarations,
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7 Amazon shared this information with Farrell in reliance on his promises.
8 The restrictions in Farrells agreement (nondisclosure and a limited noncompetition
9 obligation) are necessary to protect Amazons business interest in confidential technical and
10 strategy information developed at considerable effort and expense. These covenants reasonably
11 protect such information entrusted to high-level employees by placing narrow restrictions on
12 their post-employment conduct. Washington courts routinely uphold covenants of greater
13 duration. See, e.g., Moran, 109 Wn.2d at 694-97 (three years). During the 18-month non-
14 compete period, Farrell is not prohibited from working or earning a living. He is prohibited
15 from working (for a limited time) for a company,
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18 2. Amazon has a Well-Grounded Fear of Invasion of Its Rights.

19 There is no question Amazon has a reasonable fear Farrell is breaching his obligations
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While unnecessary to a ruling on Amazons motion, injunctive relief is also appropriate because Farrell will
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inevitably trade on his knowledge of Amazons confidential business in forming strategy and developing products
for Smartsheet. Under the doctrine of inevitable disclosure, an employer can prove a threat of misappropriation
26 sufficient to enjoin a former employee from working for a competitor by demonstrating the employees new
employment will inevitably lead him to rely on the [previous employers] trade secrets. PepsiCo, Inc. v.
27 Redmond, 54 F.3d 1262, 1269 (7th Cir. 1995).
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8 3. Mr. Farrells Employment with Smartsheet Will Irreparably Harm

Amazon.
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Irreparable injury may be presumed in cases involving breach of a noncompete or
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disclosure of confidential information because the loss of customers and market share cannot
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always be fully compensated by an award of damages. Rent-A-Center, Inc. v. Canyon
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Television and Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991).
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Amazon has satisfied its burden of showing its entitlement to injunctive relief.
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Amazons rights are being violated by Farrell, resulting in a well-grounded fear of further
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substantial injuries to AWS. Immediate, temporary injunctive relief is the only remedy that
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will provide the necessary protection to Amazon until a preliminary injunction is in place.
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4. The Equities of the Parties and the Public Interest Favor a TRO.
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AWS is entitled to enforce its contractual rights and no countervailing considerations
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militate against enforcement. Public policy supports the protection of trade secrets,
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1 Progressive Animal Welfare Soc. v. Univ. of Wash., 125 Wn.2d 243, 263 (1994), and the
2 enforcement of contracts, Snohomish Cty. Pub. Transp. Benefit Area Corp. v. FirstGroup Am.,
3 Inc., 173 Wn.2d 829, 854 (2012) (The highest public policy is found in the enforcement of the
4 contract which was actually made.) (internal citations omitted).
5 C. The Court Should Allow Limited Expedited Discovery

6 In advance of this motion, Amazon notified Farrell and Smartsheet it intended to issue
7 limited, expedited discovery and provided an advance copy of the requests. By rule,
8 depositions are not normally permitted until 30 days after service of process, CR 30(a), and
9 document requests need not be answered for 40 days. CR 34(b)(3)(A). Both periods can be
10 shortened by leave of court.
11 In order to make a more complete presentation at the preliminary injunction hearing on
12 this matter, Amazon requests an order allowing it to take limited, expedited discovery from
13 Farrell and Smartsheet to be completed in the next 14 days as follows:
14 Deposition of defendant Gene Farrell.
15 Responses to the document requests to Farrell (Korrell Decl., Ex. A).
16 A CR 30(b)(6) deposition and subpoena duces tecum to Smartsheet in the form
17 (Korrell Decl., Ex. B).
18 Amazon seeks limited discovery focused on Smartsheets hiring of Farrell and his new role and
19 responsibilities. Neither Farrell nor Smartsheet will suffer any hardship in responding to the
20 discovery, and to the extent there is any inconvenience, it is the result of Farrells violation of
21 his agreement with Amazon and the refusal of Farrell and Smartsheet to delay his start date
22 until after resolution of this dispute.
23 D. Amazon Should Not be Required to Post Substantial Security

24 CR 65(c) requires a bond sufficient to pay costs and damages incurred by a party who is
25 found to have been wrongfully enjoined. Here, there will be no damage suffered by Farrell
26 from a short restraining order. Farrell terminated his employment with Amazon as of May 26,
27 2017. He voluntarily delayed his start at Smartsheet two days to June 1, 2017, and then limited
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1 his work to on-boarding until June 8, 2017. The requested injunction will impose only a slight
2 additional delay. And Farrell agreed in the Noncompetition Agreement that an injunction could
3 be entered without the posting of any security. Shannon Decl. Exs. B-C. In the event the Court
4 requires security for the requested restraining order, it should be no more than $5,000.
5 VI. CONCLUSION
6 Defendant Farrell was a highly paid Vice President who signed a Noncompetition
7 Agreement. Shortly before he left AWS, he worked on a critical component of and
8 received extensive confidential information about how
9 . He cannot be allowed to take that knowledge and work for
10 Smartsheet as its head of product development and CEO. The Court should grant Amazons
11 Motion for Temporary Restraining Order enjoining Farrells employment until the parties can
12 be heard on a preliminarily injunction motion and issue an Order to Show Cause as to why a
13 preliminary injunction should not enter. The Court should also order limited expedited
14 discovery.
15 DATED this 1st day of June, 2017.
16 KCLCR 7(B)(5)(B)(vi) Certification:

17 I certify that this memorandum contains 4,200 words, in compliance with the Local Civil Rules.
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1 Davis Wright Tremaine LLP
2 Attorneys for Plaintiff Amazon.com, Inc.
4 By s/
Brad Fisher, WSBA #19895
5 Harry Korrell, WSBA #23173
6 Zana Bugaighis, WSBA #43614
1201 Third Avenue, Suite 2200
7 Seattle, WA 98101-3045
Telephone: 206-622-3150
8 Facsimile: 206-757-7700
E-mail: bradfisher@dwt.com
9 E-mail: harrykorrell@dwt.com
10 E-mail: zanabugaighis@dwt.com
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CERTIFICATE OF SERVICE
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2 The undersigned certifies under the penalty of perjury under the laws of the State of
3 Washington that I am now and at all times herein mentioned, a citizen of the United States, a
4 resident of the state of Washington, over the age of eighteen years, not a party to or interested
5 in the above-entitled action, and competent to be a witness herein.
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On ______________, I caused a true and correct copy of the attached to be served upon
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the following individual(s) in the manner indicated below.
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Executed this ___ day of June, 2017, in Seattle, Washington.
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Zana Bugaighis, WSBA #43614
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Motion For TRO - Farrell - Redacted

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1 The Honorable ___________________

5 SUPERIOR COURT OF THE STATE OF WASHINGTON

15 seeks to enforce a former executives agreement not to disclose confidential information or

16 work for a competitor, at least until a preliminary injunction hearing.

21 facilitate communication, scheduling, and collaboration).

24 budgeting, reporting, resource management, task tracking, and collaboration.

26 a critical component of a product

27 . Farrell helped develop significant aspects of the

3 even after he took on a new role at AWS.

5 Development. This move is unthinkable:

6 ; he cannot possibly forget everything he

10 Noncompetition and Invention Assignment Agreement. This Noncompetition Agreement

12 post-employment activities for 18-months. Amazon requests a temporary restraining order to

14 preliminary injunction, and limited expedited discovery.

15 II. STATEMENT OF FACTS

16 A. Before He Quit AWS, Farrell Worked

23 B. Mr. Farrells Promise Not to Disclose Information or Compete.

26 noncompetition obligation. Amazons offer letter explained the Noncompetition Agreement

13 employee, officer, . . . or in any other capacity do the following:

2 other available opportunities . . . . Id.

3 Farrell acknowledged in the Noncompetition Agreement that the restrictions in Sections

10 C. Mr. Farrells Employment with Smartsheet.

13 competition with AWS and in violation of his agreement.

19 (Korrell Decl.) 2-4.

3 III. ISSUES PRESENTED

8 IV. EVIDENCE RELIED UPON

10 Jake Shannon, Harry Korrell and the exhibits thereto.

11 V. AUTHORITY AND ARGUMENT

15 A movant under CR 65 generally must show:

22 Injunctive relief is uniquely suited to remedy continuing violations of non-competition

27 its ill-gotten gains.).

5 Supp. 909, 913 (D. Conn. 1996).

23 Washington uses a three-part test to determine the enforceability of such covenants,

Davis Wright Tremaine LLP

3 Cohen, 173 F.3d 63, 69 (2nd Cir. 1999).

4 As detailed above and in the supporting declarations,

7 Amazon shared this information with Farrell in reliance on his promises.

8 The restrictions in Farrells agreement (nondisclosure and a limited noncompetition

11 protect such information entrusted to high-level employees by placing narrow restrictions on

12 their post-employment conduct. Washington courts routinely uphold covenants of greater

15 from working (for a limited time) for a company,

18 2. Amazon has a Well-Grounded Fear of Invasion of Its Rights.

20 under the Agreement.

8 3. Mr. Farrells Employment with Smartsheet Will Irreparably Harm

4 contract which was actually made.) (internal citations omitted).

5 C. The Court Should Allow Limited Expedited Discovery

10 shortened by leave of court.

11 In order to make a more complete presentation at the preliminary injunction hearing on

13 Farrell and Smartsheet to be completed in the next 14 days as follows:

14 Deposition of defendant Gene Farrell.

15 Responses to the document requests to Farrell (Korrell Decl., Ex. A).

16 A CR 30(b)(6) deposition and subpoena duces tecum to Smartsheet in the form

17 (Korrell Decl., Ex. B).

22 until after resolution of this dispute.

23 D. Amazon Should Not be Required to Post Substantial Security

7 Agreement. Shortly before he left AWS, he worked on a critical component of and

8 received extensive confidential information about how

9 . He cannot be allowed to take that knowledge and work for

15 DATED this 1st day of June, 2017.

16 KCLCR 7(B)(5)(B)(vi) Certification:

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