Court Refuses to Issue Preliminary Injunction Against Publication of Trade Secrets on Matters of “Public Concern”

The case is VI 4D LLP v. Crucians in Focus, Inc. (V.I. Super. Ct. Dec. 28, 2012); an earlier Virgin Islands Supreme Court decision in the case is likewise generally quite speech-protective. The facts, from the trial court decision:

VI 4D filed an Application for Economic Development Commission Benefits with the United States Virgin Islands Economic Development Commission proposing to construct a 4D Giant Screen Theater. The EDC is a program contained within the Economic Development Authority, which provides tax benefits to qualified companies. The application process involves the submission of certain confidential, proprietary, trade secret, financial, and investment analysis information, for review by the EDC. VI 4D submitted such documents to the EDC with its application packet. Ultimately, on May 17, 2012, the Governing Board of the EDC approved VI 4D’s application. After the Board’s approval, the final steps in the approval process were for VI 4D to sign off on the Board’s terms of approval and for the Governor of the U.S. Virgin Islands to sign off on the final proposal. [Footnote moved: The Virgin Islands Economic Development Authority defines itself as a semi-autonomous government instrumentality responsible for the promotion and enhancement of economic development in the United States Virgin Islands.]

On July 6, 2012, CIF obtained a copy of the Virgin Islands Economic Development Authority’s Executive Summary of VI 4D’s Application and published a portion of it on its website, and included a link to another website that published the entire Executive Summary and Application. The Executive Summary of the application contains the confidential, proprietary, trade secret, financial, and investment analysis information that VI 4D submitted along with its original application with the EDC. The information that appears on CIF’s website includes confidential financial feasibility studies, personal applicant and owner information, investment analysis and strategy data, marketing material and reports regarding confidential leasing and other business negotiations. The personal owner information revealed that the general partner of VI 4D is co-owned by the PBB Blind Trust, of which a public official is the sole settlor. The other co-owner of the general partner is the official’s husband. The husband is also the sole manager of the general partner and one of the managers of VI 4D. CIF published the documents with its article claiming that there was an ethical violation concerning a public official.

Here’s an excerpt of the Crucians in Focus July 6 post, though it now appears not to include portions of the documents:

Your EDC Dollars At Work? …

The 4D Theater, among whose noted business partners include Governor John deJongh’s Chief of Staff Pamela Berkowsky and her husband, Adam Shapiro, MD, might not be in front of the PFA yet – but they applied for Economic Development Commission benefits last January, before their zoning request was recently approved by the Legislature….

We remember [the] zoning hearing [at which the land on which the theater is to sit was rezoned -EV]. We remember a resident coming to testify to express her concerns about the noise, the congestion, the disruption to residents who live in the area if this complex was built.

We also remember testimony from the developers, assuring everyone that this was really a promotional facility for the Virgin Islands, aimed primarily at cruise passengers visiting the island during the day, and as such would cause no ongoing issues for the nearby residents. The films would be primarily films that showcased the Virgin Islands, and other uses would be the showing of educational films….

[But] according to its own paperwork, the complex that was promoted as an educational and tourist focused facility now states that it will, “not only function as a tourist attraction but also as a movie theater and gaming area” including “first run Hollywood releases.” …

faced with the prospect of a full-scope theater complex, showing first run Hollywood movies and complete with a “gaming” center? …

Attached below are the relevant documents including the Application for EDC Benefits and the Articles of Incorporation. They’re worth the time to review. We’ve separated the page of Job Titles and Salaries –- and you’ll see just how many local Virgin Islanders stand to make any real money from their jobs at the new theater….

The trial court, following the guidance of the Virgin Islands Supreme Court, concludes, after some fairly detailed First Amendment analysis:

The Court finds that issuance of an injunction prohibiting the publication of documents that present a matter of public concern would be an unconstitutional prior restraint on free speech. Plaintiff/Petitioner VI 4D, LLLP seeks to enjoin publication of its trade secret or otherwise confidential information by Defendant/Respondent Crucians in Focus, Inc. as a content-neutral restriction, based on a violation of the Virgin Islands Trade Secret Act and title 3, section 881 of the Virgin Islands Code. However, an injunction based on the alleged violation of these statutes does not deem it content-neutral, and an application of the prior restraint doctrine is proper. Based on the precedents of the U.S. Supreme Court, this Court will deny VI 4D’s request for preliminary injunction because such an injunction would violate the First Amendment.

Sounds generally right to me, for much the same reasons that I generally discussed at pp. 739-48 of my Freedom of Speech and Intellectual Property article.