Chief District Judge Kimberly Mueller (Photo: Jason Doiy)

A federal judge in California ordered former employees of an independent medical exam company embroiled in a trade secret spat to stop doing business with the provider's previous clients.

The order from U.S. Chief District Judge Kimberly Mueller of the Eastern District of California is a particularly punishing ruling to come out of the state, which is known for its employee mobility standards.

On Wednesday, Mueller granted Orrick Herrington & Sutcliffe's motion for a preliminary injunction on behalf of its client ExamWorks. The preliminary injunction extends a temporary restraining order against four former ExamWorks employees who ran its California operations and allegedly stole financial information, client and doctor lists, and business plans to launch a competitor.

The temporary restraining order, which is now extended until the case goes to trial, prevents Todd Baldini, Lawrence Stuart Girard, Abygail Bird and Pamella Tejada from "conducting business with any individual or entity that did business with ExamWorks before defendants stopped working there to the extent those individuals or entities are identified in the bundle of trade secret materials misappropriated by defendants," according to the opinion.

Daniel Chammas, of Ford Harrison in Los Angeles, represents the defendants in the case and did not respond to a request for comment late Thursday afternoon.

California judges tend to stop short of requiring companies to no longer work with clients tangled up in trade secrets disputes in part because of Sec. 16600 of California Business and Professions Code. The pro-competitive statute voids contracts restricting lawful business of any kind.

In addition to halting business with former ExamWorks clients, the preliminary injunction demands that defendants preserve evidence and submit their devices for forensic information, refrain from using the alleged trade secrets and return and destroy any copies of stolen information.

ExamWorks claims the former employees pocketed client and doctor information worth millions of dollars. The motion for a temporary restraining order filed in May asserts that the employees, after devising a plan to launch a competing business and stripping trade secrets, negotiated the best way to inconspicuously leave the company. "Was it best to go 'One at a time vs. together?'" according to the filing. "What would the explanation be for their departures?"

An Orrick team—made up of Robert Shwarts, Catherine Lui, Nathan Shaffer and Johanna Jacob—declined to respond to a request for comment on the record.

In opposition to the preliminary injunction, Chammas and Ford Harrison's Jenny Choi wrote that Baldini and Girard do not dispute that they took ExamWorks information while working for their company and do not oppose an injunction requiring them from disclosing confidential information or completing forensic scans of their devices.

"The proposed injunction, however, goes much farther than the law permits," they wrote, noting that in California, businesses can continue to work with trade secret customers and that defendants can even give notice to trade secrets customers that they are leaving the company to go somewhere else.

"The Conducting Business Provision is impermissibly broad, as it purports to prevent the Individual Defendants from doing business with more than 100,000 potential customers, without any showing that they were ever solicited by the Individual Defendants," they wrote.

Mueller, "[r]ecognizing the defendant employees' right to engage in lawful work as long as they are not misappropriating plaintiff's trade secrets," ordered the parties to participate in a settlement conference led by Magistrate Judge Kendall Newman, which she noted could take place via telephone or videoconference.