Sound Around Inc V Friedman
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
SOUND AROUND, INC., : 24cv1986 (DLC)
:
Plaintiff, : OPINION AND
: ORDER
-v- :
:
MOISES FRIEDMAN et al., :
:
Defendants. :
:
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APPEARANCES:
For plaintiff:
Jesus E. Cuza
Rebecca J. Canamero
Annelise Del Rivero
Holland & Knight LLP
701 Brickell Avenue, Suite 3300
Miami, FL 33131
Marisa Marinelli
Holland & Knight LLP
West 52nd Street
New York, NY 10019
For defendants Moises Friedman, Shulim Eliezer Ilowitz, ML
Imports, Inc., CYRF, Inc., LRI Group, LLC, MDF Marketing, Inc.,
and World Group Import, LLC:
Nicholas Fortuna
Megan Jeane Muoio
Han Lin Rong
Allyn & Fortuna LLP
400 Madison Avenue, Suite 10
New York, New York 10017
For defendants Executive Laundry, LLC and Executive Services:
Paul Novak
Michael J. Byrne
Byrne & O’Neill, LLP
26 Broadway, 3rd Floor
New York, NY 10004
DENISE COTE, District Judge:
Sound Around, Inc. (“Sound Around”) has moved for a
preliminary injunction against two former employees, Moises
Friedman and Shulim Eliezer Ilowitz, and other defendants. It
asserts that it is being harmed by the defendants’ operation of
a competing business and seeks to enjoin them from operating
that business pending trial. Sound Around’s motion for a
preliminary injunction is denied.
Background
The following facts are drawn from documents filed in
connection with this motion. Most of the facts recited here are
not disputed. Any disputes material to this motion are noted.
Sound Around is operated by Zigmond Brach and his sons
Jeremiah (“Jerry”) and Abraham (“Abe”). Sound Around locates
products manufactured abroad, principally in China, that it
imports and sells on online retail platforms such as Amazon and
Walmart.
Sound Around hired Friedman, Abe’s brother-in-law, in 2013.
It moved him into a “buyer” role in 2017. Sound Around hired
Ilowitz, Jerry’s friend and the brother of Jerry’s personal
secretary, in 2019. Ilowitz also worked as a buyer. Friedman
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and Ilowitz were both in their twenties and had little work
experience when Sound Around hired them. They learned about the
online retail sales business primarily through their work with
Sound Around.
Friedman and Sound Around memorialized a Hebrew-language
contract on June 6, 2018. It described Friedman as an employee
and included, inter alia, a provision that Friedman would not
compete with Sound Around, “neither during the hours in which he
works as an employee . . . nor if he leaves his job either
involuntarily or voluntarily, or if [Sound Around] will
terminate him -- for 2 years after he leaves the job” (the
“Noncompete”). The contract stated that, if Friedman breached
the Noncompete, he would pay “half the profit he earns from the
goods that he obligated himself not to do business with.” It
also stated that Friedman would not need to abide by the
Noncompete “for goods that [he] brought in” if he was terminated
“for reasons other than misconduct.” Sound Around did not
execute any such document with Ilowitz.
The defendants have submitted evidence that, although
Friedman and Ilowitz were first hired by Sound Around as
employees, Friedman became an independent contractor in December
2018 and Ilowitz became an independent contractor in January
2022. Beginning at those times, they were no longer paid
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salaries and were instead paid exclusively on a commission
basis. Sound Around takes the position that Friedman and
Ilowitz continued to be its employees.
In late 2021 or 2022, Friedman and Ilowitz began to build a
separate online retail sales business that they did not disclose
to Sound Around. Their business operated similarly to Sound
Around, by locating manufacturers in China, buying and importing
their goods, and selling those goods through online retail
platforms. They developed new brands and product lines for sale
on the same platforms that Sound Around used to sell its
products. Some of the defendants’ products were very similar to
products sold by Sound Around. In creating their new business,
Friedman and Ilowitz worked with manufacturers with whom they
had relationships as buyers for Sound Around.
Ilowitz also obtained vendor licenses on Amazon and Walmart
for the new business. He did so by reaching out to the contacts
he used at Amazon and Walmart as a buyer for Sound Around, using
his Sound Around email address and signature block.
By January 2024, Jerry and Abe had discovered that a
competitor was selling certain products online that were similar
to products sold by Sound Around. Ilowitz resigned from Sound
Around on January 30, 2024. Sound Around terminated its
relationship with Friedman on February 3, 2024.
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Sound Around filed this action on March 15, 2024. The
defendants consist principally of Friedman, Ilowitz, and
companies they control: ML Imports, Inc., Cyrf, Inc., LRI Group,
LLC, MDF Marketing, Inc., and World Group Import, LLC
(collectively, the “Friedman Defendants”). The two other
defendants are companies that Ilowitz used to deposit money paid
to him by Sound Around, Executive Services and Executive
Laundry, LLC (the “Executive Defendants”). Sound Around brings
claims under federal and New York law. They include claims for
breach of fiduciary duties, diversion of corporate
opportunities, misappropriation of trade secrets, and
misappropriation of confidential information, as well as a claim
against Friedman for breach of the Noncompete.
Sound Around first moved for a preliminary injunction on
April 22, 2024. This action was reassigned to this Court on
April 11, 2025. On April 16, Sound Around’s initial motion for
a preliminary injunction was denied without prejudice to
renewal.
The possibility of a renewed preliminary injunction motion
was addressed at a conference held on June 6. The Court
scheduled a preliminary injunction hearing for July 29 and
explained that the hearing would be necessary if the parties
presented factual disputes that are material to the motion.
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Meanwhile, discovery is scheduled to end on October 31 and any
summary judgment motions are due November 21.
Sound Around filed a renewed motion for a preliminary
injunction on June 27. That motion is supported by declarations
from Abe Brach, Jack Tyberg, Jerry Brach, Mohamed Sadik, and
Ryan Parks, as well as many exhibits. Sound Around requests a
preliminary injunction that would enjoin Friedman, Ilowitz, and
those “acting in concert with them” from:
(1) operating in the same line of business as Sound Around;
(2) selling products online that the defendants developed
while working for Sound Around;
(3) using the brands that the defendants and “their
entities” created while working for Sound Around; and
(4) using the vendor licenses that were procured with Sound
Around’s contacts and resources.
The Friedman Defendants and Executive Defendants filed
separate opposition papers on July 18. The Friedman Defendants’
opposition includes declarations from Friedman, Keith Sterling,
and Rabbi Yakov Markowitz, as well as many exhibits. Sound
Around’s reply is due July 25. The Friedman Defendants also
filed a motion in limine on July 21, arguing that the
declarations and exhibits that Sound Around filed on June 27
should be excluded because they are unreliable. As noted, a
hearing is scheduled for July 29. For the reasons described
below, a hearing is unnecessary.
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Discussion
“A preliminary injunction is an extraordinary and drastic
remedy and should not be granted unless the movant, by a clear
showing, carries the burden of persuasion.” St. Joseph’s Hosp.
Health Ctr. v. Am. Anesthesiology of Syracuse, P.C., 131 F.4th
102, 106 (2d Cir. 2025) (citation omitted). The movant must
show
(1) irreparable harm; (2) either a likelihood of
success on the merits or both serious questions on the
merits and a balance of hardships decidedly favoring
the moving party; and (3) that a preliminary
injunction is in the public interest.
Id. (citation omitted).
“The irreparable harm requirement is the single most
important prerequisite for the issuance of a preliminary
injunction and must therefore be satisfied before the other
requirements for an injunction can be considered.” Id.
(citation omitted). To show irreparable harm, the plaintiff
must “demonstrate that absent a preliminary injunction it will
suffer an injury that is neither remote nor speculative, but
actual and imminent, and one that cannot be remedied if a court
waits until the end of trial to resolve the harm.” State Farm
Mut. Auto. Ins. Co. v. Tri-Borough NY Med. Prac. P.C., 120 F.4th
59, 80 (2d Cir. 2024) (citation omitted). An irreparable harm
must be “a continuing harm.” Id. at 81 (citation omitted).
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Generally, irreparable harm may be found “only where there is a
threatened imminent loss that will be very difficult to quantify
at trial.” Tom Doherty Assocs., Inc. v. Saban Entm’t, Inc., 60
F.3d 27, 38 (2d Cir. 1995). “Where the loss of a product will
cause the destruction of a business itself or indeterminate
losses in other business, the availability of money damages may
be a hollow promise and a preliminary injunction appropriate.”
Id. “Monetary compensation need only be ‘adequate’ for
preliminary relief to be unwarranted, not perfect.” St.
Joseph’s Hosp. Health Ctr., 131 F.4th at 106 (citation omitted).
Sound Around’s request for preliminary relief is not
supported by the evidence or arguments it has submitted through
this motion. To begin with, Sound Around has not shown that it
is likely to prevail in demonstrating that Friedman and Ilowitz
remained its employees throughout the period of their ties to
the company. Instead, it appears that Friedman and Ilowitz
became independent contractors for Sound Around and worked in
that capacity for a substantial period of time. As a result,
their legal obligations to Sound Around changed and they were
entitled at the very least to set up their own business.
An even more fatal deficiency in Sound Around’s motion is
that it cannot demonstrate irreparable harm that would warrant
preliminary relief. Accordingly, it is unnecessary to put the
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parties through the additional expense and burden of holding a
hearing.
Specifically, Sound Around has argued that there are three
grounds for a preliminary injunction: Friedman’s violation of
the Noncompete, the defendants’ diversion of corporate
opportunities, and the defendants’ misappropriation of trade
secrets and confidential information. Sound Around fails to
show the existence of irreparable harm from any of these
grounds.
I. Friedman’s Noncompete
Sound Around seeks to enforce Friedman’s Noncompete. It
appears to take the position that the Noncompete runs through
February 3, 2026 (two years after Sound Around severed its
relationship with Friedman). Sound Around seeks a preliminary
injunction on this claim that would bar Friedman and those
“acting in concert” with him from working in any business that
competes with Sound Around pending trial. Sound Around fails to
show that it is entitled to such extraordinary preliminary
relief.
Even if Sound Around can succeed in proving that the
Noncompete is enforceable, its terms do not suggest that any
injunctive relief is appropriate. The Noncompete provides a
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formula to calculate damages arising from a breach, and does not
envision injunctive relief.1
Regardless, Sound Around fails to show that any irreparable
harm will result from Friedman working in a competing business
over the next several months. For instance, while Sound Around
argues that there is a “high chance” that Friedman (along with
Ilowitz) will use Sound Around’s customer information to
“interfere with or affect Sound Around’s relationships with its
customers,” it has offered no evidence to support such a
finding. And although Sound Around suggests that irreparable
harm is analyzed with less rigor if a restrictive covenant has
been breached, there is “no automatic assumption that
irreparable harm must inevitably be assumed in breach of
covenant cases.” JTH Tax, LLC v. Agnant, 62 F.4th 658, 673 (2d
Cir. 2023). A plaintiff must still present “factual
particulars” showing “actual and imminent” harm. Id. (citation
omitted).
II. Diversion of Corporate Opportunities
Sound Around next argues that Friedman and Ilowitz usurped
its business opportunities by developing brands and products for
1 The Friedman Defendants argue that the contract containing the
Noncompete, which was drawn by a rabbi, is a religious contract
and not enforceable under New York law. Sound Around seeks to
enforce it as a valid contract governed by New York law. It is
unnecessary to resolve this issue at this time.
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their own business while working as its buyers. Sound Around
seeks to prove in this litigation that it is entitled to a
constructive trust over that property. In the meantime, it
seeks to prevent the defendants from selling products and using
brands that they developed while Friedman and Ilowitz were
working for Sound Around, and from using the vendor licenses
that were procured with Sound Around’s contacts and resources.
Sound Around fails, however, to show that it is experiencing
ongoing irreparable harm based on the defendants’ current
operation of their business.
To be sure, Sound Around has provided evidence that the
defendants have sold certain products that are very similar to
its own products. But Sound Around does not rely on this
evidence of direct competition as a ground for preliminary
relief. Sound Around also does not offer evidence to show that
the defendants are still selling products that directly compete
with Sound Around’s products, and in what volumes. And Sound
Around provides no meaningful linkage of the defendants’
listings to any of its trade secrets or confidential
information. Overall, there is no basis to conclude that a
damages award at the conclusion of this litigation cannot
adequately compensate Sound Around for any harm it is able to
prove based on directly competing product listings.
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Instead of focusing on similar product listings, Sound
Around argues that it would have achieved greater sales and
growth if Friedman and Ilowitz had given it access to their
brands and products instead of developing those products for
themselves. But this argument does not describe an ongoing harm
for which preliminary relief is appropriate. After all, Sound
Around has not shown that the defendants are currently diverting
any business opportunities. Sound Around will be given an
opportunity at trial to prove the lost sales and growth it
alleges based on diversion of past business opportunities, and
should it succeed in making such a showing it may seek
compensation through monetary damages.
Sound Around also argues that there is a risk of
irreparable harm because the defendants’ use of diverted brands
and products during the pendency of the case “could” devalue
that property. But this theory of irreparable harm is entirely
speculative and unsupported by any evidence.
Sound Around also seeks to preliminarily enjoin the
defendants’ use of the vendor licenses that Ilowitz obtained
from Amazon and Walmart. This is not an appropriate request for
interim relief pending trial. Sound Around has its own vendor
licenses, and it has provided no evidence that the defendants’
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use of their vendor licenses is currently causing harm to its
business.
III. Misappropriation of Trade Secrets and Confidential
Information
Finally, Sound Around argues that the defendants are using
its trade secrets and confidential information. It seeks to
enjoin Friedman and Ilowitz from operating in the same line of
business as Sound Around pending trial. This is another
inappropriate request for interim relief that is unsupported by
the record.
An employer’s right to protect its trade secrets is
balanced against an employee’s right to use his “knowledge,
training, and experience” and “to carry on his trade or
profession after he leaves his employer.” Vermont Microsystems,
Inc. v. Autodesk, Inc., 88 F.3d 142, 150 (2d Cir. 1996)
(citation omitted). There is no automatic presumption of
irreparable harm from a former employee’s use of trade secrets.
Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d
Cir. 2009). The Second Circuit has explained as follows:
A rebuttable presumption of irreparable harm might be
warranted in cases where there is a danger that,
unless enjoined, a misappropriator of trade secrets
will disseminate those secrets to a wider audience or
otherwise irreparably impair the value of those
secrets. Where a misappropriator seeks only to use
those secrets -- without further dissemination or
irreparable impairment of value -- in pursuit of
profit, no such presumption is warranted because an
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award of damages will often provide a complete remedy
for such an injury.
Id. at 118-19.
Sound Around does not identify with clarity or specificity
what trade secrets and confidential information are at issue
here, or how their use by the defendants creates ongoing
irreparable harm. Instead, it lists as its trade secrets broad
categories of information that encompass essentially its entire
business -- “data relating to pricing, costs, systems, and
methods”; “[c]ustomer lists and pricing information; and
“[b]usiness strategies, advertising data analytics, customer
preferences, and vendor relationships.” Sound Around also
explains that Friedman and Ilowitz had access to internal
software and analytics containing large amounts of proprietary
information, including two systems known as Power BI and Go
Flow. According to Sound Around, it gave Friedman and Ilowitz
access to almost all information of significance to its
business.
As already noted, it remains to be seen whether Sound
Around will prevail at trial in showing that Friedman and
Ilowitz were its employees during the entirety of their
relationship with Sound Around and therefore breached duties of
fidelity that accompany such a relationship. If they were
instead independent contractors when Sound Around shared its
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confidential information with them, then the legal ramifications
of the defendants’ use of that information for their independent
business opportunities will have to be analyzed under the legal
obligations that pertain to independent contractors.
In any event, Sound Around’s motion does not include
evidence that the defendants are, today, misappropriating any
specific trade secrets or confidential information in a way that
is causing irreparable harm to Sound Around. Sound Around has
not shown, for example, that the defendants are currently using
any specific trade secrets or confidential information in a way
that devalues them. Nor has Sound Around shown that the
defendants are likely to disseminate any specific trade secrets
or confidential information.
Instead, Sound Around makes a vague and general argument of
irreparable harm, claiming that disclosure of its trade secrets
and confidential information is inevitable because they have
been incorporated by the defendants into “the very fabric of
their business.” There are many problems with this argument.
Again, Sound Around does not identify any of its trade secrets
or confidential information that is currently integral to the
defendants’ business such that its disclosure is inevitable in
the course of their conduct of their separate business. Sound
Around also makes no attempt to distinguish protectable trade
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secrets and confidential information from the kinds of ordinary
knowledge, training, and experience that Friedman and Ilowitz
obtained at Sound Around and were entitled to continue using
after they left their employment. And Sound Around does not
account for the likelihood that many of its purported trade
secrets are publicly available or have become stale since
Friedman and ftlowitz stopped working with Sound Around in early |
2024,
Conclusion
Sound Around’s June 27 motion for a preliminary injunction
is denied. The Friedman Defendants’ July 21 motion in limine is
terminated as moot. The preliminary injunction hearing
scheduled for July 29 is cancelled.
Dated: New York, New York
July 22, 2025
United Stdtes District Judge
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