BARRY W. ASHE, District Judge.
Before the Court is a motion for summary judgment filed by defendants Christopher Belou ("Belou") and CB Hospitality, LLC ("CBH") (collectively "Defendants"),
This matter concerns the alleged theft of trade secrets and breaches of fiduciary duty and contract by a business's former employee. Ruby Slipper owns and operates a chain of restaurants called "Ruby Slipper Café."
In the autumn of 2008, Ruby Slipper hired Belou as a consultant and general manager in connection with the opening of the South Cortez Street location.
The building that housed Ruby Slipper's first location on South Cortez Street was owned by Sugarland Holdings, LLC (the "Landlord").
In 2015, Ruby Slipper purchased a building on South Broad Street with the intent of relocating its Mid-City restaurant to that building after it was renovated.
In 2017, with the opening of the South Broad Street location and the end of the South Cortez Street lease approaching, Ruby Slipper's executive leadership team, including Belou, discussed how best to utilize the South Cortez Street location during the transition.
On November 14, 2017, the Landlord's attorney sent Ruby Slipper a letter offering an incentive for Ruby Slipper to terminate the lease early that consisted of two months off of the remaining four months of rent due.
On January 2, 2018, Belou resigned from Ruby Slipper.
On February 14, 2018, Ruby Slipper filed this action against Belou and CBH alleging that Belou was improperly using trade secrets he obtained while working for Ruby Slipper to open and operate his new restaurant at the South Cortez Street location and that he breached (and stole the copy of) the confidentiality agreement that Ruby Slipper claims he signed.
On March 7, 2018, the Court
On April 2, 2018, the parties filed a joint motion for preliminary injunction.
On April 24, 2018, Defendants filed the instant motion for summary judgment in which they seek dismissal of all claims raised in Ruby Slipper's complaint.
Thereafter, the Court granted Ruby Slipper leave to file its first amended complaint.
Defendants did not re-file their motion for summary judgment to address the amended complaint. However, after several extensions and additional reply memoranda, on January 25, 2019, the parties finished briefing the Defendants' motion for summary judgment.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R. Civ. P. 56(c)). "Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial." Id. A party moving for summary judgment bears the initial burden of demonstrating the basis for summary judgment and identifying those portions of the record, discovery, and any affidavits supporting the conclusion that there is no genuine issue of material fact. Id. at 323. If the moving party meets that burden, then the nonmoving party must use evidence cognizable under Rule 56 to demonstrate the existence of a genuine issue of material fact. Id. at 324.
A genuine issue of material fact exists if a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1996). The substantive law identifies which facts are material. Id. Material facts are not genuinely disputed when a rational trier of fact could not find for the nonmoving party upon a review of the record taken as a whole. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Equal Emp't Opportunity Comm'n v. Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014). "[U]nsubstantiated assertions," "conclusory allegations," and merely colorable factual bases are insufficient to defeat a motion for summary judgment. See Anderson, 477 U.S. at 249-50; Hopper v. Frank, 16 F.3d 92, 97 (5th Cir. 1994). In ruling on a summary judgment motion, a court may not resolve credibility issues or weigh evidence. See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). Furthermore, a court must assess the evidence, review the facts, and draw any appropriate inferences based on the evidence in the light most favorable to the party opposing summary judgment. See Tolan v. Cotton, 572 U.S. 650, 656 (2014); Daniels v. City of Arlington, 246 F.3d 500, 502 (5th Cir. 2001). Yet, a court only draws reasonable inferences in favor of the nonmovant "when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (citing Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990)).
After the movant demonstrates the absence of a genuine dispute, the nonmovant must articulate specific facts and point to supporting, competent evidence that may be presented in a form admissible at trial. See Lynch Props., Inc. v. Potomac Ins. Co. of Ill., 140 F.3d 622, 625 (5th Cir. 1998); Fed. R. Civ. P. 56(c)(1)(A) & (c)(2). Such facts must create more than "some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. When the nonmovant will bear the burden of proof at trial on the dispositive issue, the moving party may simply point to insufficient admissible evidence to establish an essential element of the nonmovant's claim in order to satisfy its summary judgment burden. See Celotex, 477 U.S. at 322-25; Fed. R. Civ. P. 56(c)(B). Unless there is a genuine issue for trial that could support a judgment in favor of the nonmovant, summary judgment must be granted. See Little, 37 F.3d at 1075-76.
Ruby Slipper alleges that Defendants violated DTSA and LUTSA by misappropriating confidential information that constitutes trade secrets.
DTSA and LUTSA are substantially similar. To prevail on a DTSA claim, a plaintiff must prove: (1) the existence of a trade secret; (2) the misappropriation of the trade secret by another; and (3) the trade secret's relation to a good or service used or intended for use in interstate or foreign commerce. 18 U.S.C. § 1836(b)(1).
LUTSA, Louisiana's enactment of the Uniform Trade Secrets Act, provides for restraining the "actual or threatened misappropriation" of trade secrets. La. R.S. 51:1432(A) & 1438-39. The statute also permits a complainant to recover damages, in addition to or in lieu of injunctive relief, for the actual loss caused by the misappropriation of trade secrets. Id. 51:1433. To prevail on a LUTSA claim, "`a complainant must prove (a) the existence of a trade secret, (b) a misappropriation of the trade secret by another, and (c) the actual loss caused by the misappropriation.'" Computer Mgmt. Assistance Co. v. Robert F. DeCastro, Inc., 220 F.3d 396, 403 (5th Cir. 2000) (quoting Reingold v. Swiftships, Inc., 126 F.3d 645, 648 (5th Cir. 1997)).
DTSA defines "trade secret" as:
18 U.S.C. § 1839(3). LUTSA's definition of "trade secret" is nearly identical.
The "trade secrets" that Ruby Slipper alleges Defendants misappropriated include: (a) Ruby Slipper's second quarter 2017 financial results; (b) Ruby Slipper's confidential business strategy discussions concerning its lease and occupancy of the South Cortez Street location, specifically, whether to terminate the lease early; (c) a detailed supply history report from Alack Refrigeration; (d) a detailed listing of pay rate guidelines for various positions at Ruby Slipper; (e) certain of Ruby Slipper's recipes; (f) sales and scheduling data in Ruby Slipper's HotSchedules system; (g) general manager compensation information; (h) detailed quotes and lists of equipment and supplies purchased for restaurant openings; (i) proposed menu changes; (j) the organization chart; (k) handwritten notes regarding the Orange Beach location; (l) orders for small wares and tables; and (m) numerous unspecified trade secrets contained in the ten gigabytes of emails and electronic files that Belou returned following the Court's entry of the temporary restraining order.
"A trade secret `is one of the most elusive and difficult concepts in the law to define.'" Tewari De-Ox Sys., Inc. v. Mountain States/Rosen, L.L.C., 637 F.3d 604, 613 (5th Cir. 2011) (quoting Lear Siegler, Inc. v. Ark-Ell Springs, Inc., 569 F.2d 286, 288 (5th Cir. 1978)). "Whether something is a trade secret is a question of fact." CheckPoint Fluidic Sys. Int'l, Ltd. v. Guccione, 888 F.Supp.2d 780, 796 (E.D. La. 2012) (citations omitted). "[T]he question of whether certain information constitutes a trade secret ordinarily is best `resolved by a fact finder after full presentation of evidence from each side.'" Tewari De-Ox Sys., 637 F.3d at 613 (quoting Lear Siegler, 569 F.2d at 289). "`The efforts required to maintain secrecy are those reasonable under the circumstances, and courts do not require extreme and unduly expensive procedures to be taken to protect trade secrets.'" CheckPoint Fluidic Sys. Int'l, 888 F. Supp. 2d at 796-97 (quoting Sheets v. Yamaha Motors Corp., U.S.A., 849 F.2d 179, 183 (5th Cir. 1988)). Therefore, it is for the jury to determine whether the HotSchedules documents, or any of the other information cited by Ruby Slipper, qualifies as a "trade secret."
DTSA defines "misappropriation" as:
18 U.S.C. § 1839(5). LUTSA's definition of "misappropriation" is nearly identical.
There are questions of material fact regarding whether the information Belou acquired constitutes trade secrets, and how he acquired it, that preclude summary judgment as to whether he misappropriated the alleged trade secrets. Belou contends that he had access to the alleged trade secrets within the scope of his work with Ruby Slipper and thus he did not misappropriate them.
Moreover, there are disputed issues of material fact regarding whether Belou used or disclosed Ruby Slipper's trade secrets. Defendants argue that there is no proof of disclosure or use.
Ruby Slipper alleges that Defendants engaged in unfair competition and deceptive acts by misappropriating Ruby Slipper's trade secrets, improperly accessing Ruby Slipper's computer systems, breaching a fiduciary duty, and committing fraud.
LUTPA provides a civil cause of action to recover actual damages to "[a]ny person who suffers any ascertainable loss of money or movable property . . . as a result of the use or employment by another person of an unfair or deceptive method, act, or practice declared unlawful by R.S. 51:1405." La. R.S. 51:1409. Section 51:1405(A) declares unlawful "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Courts determine "on a case-by-case basis" what conduct constitutes an "unfair trade practice" and "have repeatedly held that, under this statute, the plaintiff must show the alleged conduct offends established public policy and . . . is immoral, unethical, oppressive, unscrupulous, or substantially injurious." Cheramie Servs., Inc. v. Shell Deepwater Prod., Inc., 35 So.3d 1053, 1059 (La. 2010) (quotation and citations omitted). A trade practice that amounts to fraud, deceit, or misrepresentation is "deceptive" for purposes of LUTPA. Total Safety v. Rowland, 2014 WL 6485641, at * 4 (E.D. La. Nov. 18, 2014) (citations omitted).
Additionally, "LUTPA recognizes a claim for breach of fiduciary duty that rests on the misappropriation of information that is confidential but not a trade secret." CheckPoint Fluidic Sys. Int'l, 888 F. Supp. 2d at 795 (citing Defcon, Inc. v. Webb, 687 So.2d 639, 642-43 (La. App. 1997)). An employer may recover under LUTPA when "`a former employee breaches his duty not to use his former employer's confidential information.'" Id. (quoting L-3 Commc'ns Westwood Corp. v. Robichaux, 2008 WL 577560, at *5 (E.D. La. Feb. 29, 2008)); Harrison v. CD Consulting, Inc., 934 So.2d 166, 170 (La. App. 2006) ("historically, an employee's breach of his fiduciary duty to his employer has been contemplated in instances when an employee has engaged in dishonest behavior or unfair trade practices for the purpose of his own financial or commercial benefit"); Restivo v. Hanger Prosthetics & Orthotics, Inc., 483 F.Supp.2d 521, 535 (E.D. La. 2007) ("Thus, the question of breach of fiduciary duty or loyalty as an employee collapses into the question of whether the employee's actions constitute unfair trade practices, which is defined in the [LUTPA]"). To prevail on a breach of fiduciary duty claim based on a breach of confidence, a plaintiff must prove: (1) that it possesses knowledge or information that is not generally known; (2) that it communicated the knowledge or information to the defendant under an express or implied agreement limiting the defendant's use or disclosure of the information; and (3) that the defendant used or disclosed the knowledge or information in violation of the confidence, resulting in injury to the plaintiff. Defcon, 687 So. 2d at 643 (citing Engineered Mech. Servs., Inc. v. Langlois, 464 So.2d 329, 334 (La. App. 1984)).
Essentially, Ruby Slipper alleges that Belou violated LUTPA by improperly accessing confidential information on Ruby Slipper's computers and using that confidential information for his own, and CBH's, benefit. Defendants argue that Ruby Slipper cannot prevail on its LUTPA and breach-of-fiduciary-duty claims because Belou was not subject to a non-compete agreement, and thus did not owe to Ruby Sipper a duty to report his plans to open a competing restaurant.
Ruby Slipper argues that there are disputed issues of material fact that preclude summary judgment on its breach-of-fiduciary-duty and LUTPA claims.
Belou contends that Ruby Slipper has not proved it suffered an ascertainable loss of money or property or specific injury as a result of Belou's actions because Belou's competing restaurant opened at the South Cortez Street location in June 2018, after Ruby Slipper's lease would have expired on April 30, 2018, and Ruby Slipper did not leave any of its kitchen equipment at the South Cortez Street location. However, Ruby Slipper responds that it did forego alternative plans for the South Cortez Street location by terminating the lease early, and it would have foregone salary payments to Belou by firing him had he disclosed his plans to open a competing restaurant.
Ruby Slipper alleges that Belou is liable for breach of contract, bad faith breach of contract, and breach of an implied covenant of good faith and fair dealing in failing to perform under the confidentiality agreement.
"A contract is an agreement by two or more parties whereby obligations are created, modified, or extinguished." La. Civ. Code art. 1906. Under Louisiana law, the formation of a valid contract requires: (1) capacity to contract; (2) mutual consent; (3) a certain object; and (4) a lawful purpose. Id. arts. 1918, 1927, 1966 and 1971. "The burden of proof in an action for breach of contract is on the party claiming rights under the contract." Rebouche v. Harvey, 805 So.2d 332, 334 (La. App. 2001). "The existence of the contract and its terms must be proved by a preponderance of the evidence." Id.
Belou argues that he is entitled to summary judgment on Ruby Slipper's contract-based claims because he denies that he ever signed a confidentiality agreement with Ruby Slipper and there is no conclusive evidence that he did.
Defendants argue that they are entitled to summary judgment on Ruby Slipper's unjust enrichment claim because Ruby Slipper has other remedies at law available.
Louisiana Civil Code article 2298 provides the basis for an action based on unjust enrichment, or action de in rem verso. Article 2298 states: "A person who has been enriched without cause at the expense of another person is bound to compensate that person." The Louisiana supreme court has held that the five requirements for establishing a cause of action for unjust enrichment are:
Baker v. Maclay Props. Co., 648 So.2d 888, 897 (La. 1995) (citations omitted). Article 2298 expressly states that the remedy of unjust enrichment "is subsidiary and shall not be available if the law provides another remedy for the impoverishment or declares a contrary rule." La. Civ. Code art. 2298. A plaintiff is precluded from seeking recovery under a theory of unjust enrichment if it pleads another cause of action, regardless of whether the plaintiff is successful on the other theory of recovery. Walters v. MedSouth Record Mgmt., LLC, 38 So.3d 243, 244 (La. 2010). Thus, if the law provides the plaintiff with another remedy, the plaintiff "has failed to state a cause of action in unjust enrichment." Id.
Ruby Slipper has alleged and may continue to pursue claims under DTSA, LUTSA, LUTPA, breach-of-fiduciary-duty, and contract-based theories. Because Ruby Slipper has these remedies at law, it may not proceed with its unjust enrichment claim at this stage of the litigation. As such, Defendants' motion for summary judgment is GRANTED as to Ruby Slipper's unjust enrichment claim, and that claim is DISMISSED WITH PREJUDICE.
Defendants argue that Ruby Slipper's conversion claim is preempted by its LUTSA claim.
LUTSA provides that it "displaces conflicting tort, restitutionary, and other laws of [Louisiana] pertaining to civil liability for misappropriation of a trade secret." La. R.S. 51:1437(A). However, LUTSA "does not apply to duties imposed by law that are not dependent upon the existence of a trade secret." Defcon, 687 So. 2d at 643 (citing La. R.S. 51:4137 cmt.); see also La. R.S. 51:4137(B) ("This Chapter does not affect: . . . contractual or other civil liability or relief that is not based upon misappropriation of a trade secret."). The Fifth Circuit recently held "that LUTSA does not preempt civilian law claims for conversion of information that does not constitute a trade secret under LUTSA." Brand Servs., L.L.C. v. Ibex Corp., 909 F.3d 151, 159 (5th Cir. 2018). Under this holding, the court allowed the plaintiff to pursue its claim for the conversion of confidential information outside the definition of a trade secret. Id.
In this case, Ruby Slipper alleges that Defendants converted "Confidential Information [that] constitutes valuable property belonging to Ruby Slipper."
Under Louisiana law, "fraud" is defined as "a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other" and can also result from silence or inaction. La. Civ. Code art. 1953. "`[T]he refusal to speak in the face of an obligation to do so, is not merely unfair but is fraudulent.'" Lomont v. Bennett, 172 So.3d 620, 629 (La. 2015) (quoting Greene v. Gulf Coast Bank, 593 So.2d 630, 632 (La. 1992)). The elements of a fraud cause of action are: (1) "a misrepresentation of material fact"; (2) "made with the intent to deceive"; and (3) "a reasonable and justifiable reliance by the plaintiff and resulting injury." Riedel v. Fenasci, 2018 WL 6839564, at *9 (La. App. Dec. 28, 2018). A plaintiff must prove fraud by a preponderance of the evidence, and "[c]ircumstantial evidence, including highly suspicious facts and circumstances, may be considered in determining whether fraud has been committed." Lomont v. Bennett, 172 So.3d 620, 629 (La. 2015) (citations omitted).
"To find fraud from silence or suppression of the truth, there must exist a duty to speak or disclose information." La. State Univ. Sys. Research & Tech. Found. v. Qyntess Biologics, LLC, 168 So.3d 468, 474 (La. App. 2014) (citations omitted). Whether someone has "a duty to speak depends on the nature of the relationship between the parties and the nature of the information allegedly suppressed." Id. (citations omitted). There is a duty to disclose when the parties have a confidential or fiduciary relationship where one imposes a special relationship of confidence or trust on another "who undertakes to act primarily for the benefit of the principal in a particular endeavor." Id. (citation omitted). "A fiduciary cannot further his own interests and enjoy the fruits of an advantage of such a relationship and must make a full disclosure of all material facts surrounding the transaction that might affect the decision of his principal." Id. (citation omitted).
Defendants argue that none of Belou's statements that Ruby Slipper alleges were fraudulent is an actionable misrepresentation.
Ruby Slipper contends that Belou's failure to speak is actionable as fraud because he had a duty to act in Ruby Slipper's best interest, but instead was engaged in secret negotiations with the Landlord for his own benefit while still employed by Ruby Slipper.
Ruby Slipper alleges that Belou committed fraud by telling the Ruby Slipper executive leadership team that Ruby Slipper should terminate the lease early and vacate the South Cortez Street location by the end of 2017; it would be "crazy" to remain at the South Cortez Street location through the end of the lease term; it was "stretched too thin" to remain at the South Cortez Street location though the end of the lease term while also operating the restaurant on South Broad Street; and the restaurant equipment at the South Cortez Street location had little or no value.
The statements that Belou made to the Ruby Slipper executive leadership team regarding whether Ruby Slipper should terminate the lease early and the value of the equipment at the South Cortez Street location are merely opinions, not statements of fact. A cause of action for fraud requires a statement of fact. Riedel, 2018 WL 6839564, at *4. Further, although Belou's statement to Ruby Slipper that he did not know what he was going to do after his resignation was a false statement of material fact, Ruby Slipper has not shown how it relied on that statement. The statement was made after Ruby Slipper had already terminated the lease early. Thus, Ruby Slipper could not have relied on the statement to make that decision. Therefore, none of Belou's alleged statements that are referenced in the complaint is actionable as fraud.
However, Ruby Slipper also alleges that Belou committed fraud by failing to reveal that, while he was employed at Ruby Slipper, he was negotiating with the Landlord to operate his own restaurant at the South Cortez Street location once Ruby Slipper's lease terminated.
CFAA prohibits unauthorized access to protected computers for the purpose of obtaining information, causing damage, or perpetrating fraud. 18 U.S.C. § 1030(a)(2), (a)(4) & (a)(5). A "protected computer" is "a computer . . . which is used in or affecting interstate or foreign commerce or communication." Id. § 1030(e)(2)(B). Any computer connected to the internet qualifies as a "protected computer." Complete Logistical Servs., LLC v. Rulh, 2018 WL 4963571, at *6 (E.D. La. Oct. 15, 2018) (collecting cases). CFAA provides a civil cause of action to obtain compensatory damages and injunctive or other equitable relief to "[a]ny person who suffers damage or loss by reason of a violation of [the CFAA]" if the conduct involves one of the factors set forth in subclauses (I), (II), (III), (IV), or (V) of subsection (c)(4)(A)(i). 18 U.S.C. § 1030(g). Those factors include "loss to 1 or more persons during any 1-year period . . . aggregating at least $5,000 in value." Id. § 1030(c)(4)(A)(i)(I).
Ruby Slipper alleges that Belou improperly violated CFAA by accessing Ruby Slipper's computers to take confidential electronic data to start a competing business, deleting Ruby Slipper's computer files before resigning, and accessing HotSchedules after his resignation.
Belou argues that Ruby Slipper cannot prevail on this claim because there is no evidence that he signed a confidentiality agreement, disclosed any of Ruby Slipper's trade secrets to anyone, breached a fiduciary duty, or intended to defraud.
Defendants raise counterclaims for attorney's fees under DTSA, 18 U.S.C. § 1836(b)(3)(D), and LUTSA, La. R.S. 51:1434, alleging that Ruby Slipper brought the trade secrets claims in bad faith.
The Federal Rules of Civil Procedure require a complaint to contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Rule 8 "does not require `detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The statement of the claim must "`give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A pleading does not comply with Rule 8 if it offers "labels and conclusions," "a formulaic recitation of the elements of a cause of action," or "`naked assertion[s]' devoid of `further factual enhancement.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555-57).
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a party to move to dismiss for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). A claim is plausible on the face of the complaint "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (quoting Twombly, 550 U.S. at 556). Plausibility does not equate to probability, but rather "it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (citing Twombly, 550 U.S. at 556). "Where a complaint pleads facts that are `merely consistent with' a defendant's liability, it `stops short of the line between possibility and plausibility of "entitlement to relief."'" Id. (quoting Twombly, 550 U.S. at 557). Thus, if the facts pleaded in the complaint "do not permit the court to infer more than a mere possibility of misconduct, the complaint has alleged — but it has not `show[n]' — `that the pleader is entitled to relief.'" Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). Motions to dismiss are disfavored and rarely granted. Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009)).
In considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court employs the two-pronged approach utilized in Twombly. The court "can choose to begin by identifying pleadings that, because they are no more than conclusions [unsupported by factual allegations], are not entitled to the assumption of truth." Id. However, "[w]hen there are wellpleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id.
A court's review of a Rule 12(b)(6) motion to dismiss "is limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint." Lone Star Fund V. (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000)). A court may also take judicial notice of certain matters, including public records and government websites. Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2007); see also Hawk Aircargo, Inc. v. Chai., 418 F.3d 453, 457 (5th Cir. 2005). Thus, in weighing a Rule 12(b)(6) motion, district courts primarily look to the allegations found in the complaint, but courts may also consider "documents incorporated into the complaint by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint whose authenticity is unquestioned." Meyers v. Textron, Inc., 540 F. App'x 408, 409 (5th Cir. 2013) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).
18 U.S.C. § 1836(b)(3)(D). Similarly, LUTSA states that, "[i]f a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney's fees to the prevailing party." La. R.S. 51:1434. Rule 54(d)(2) of the Federal Rules of Civil Procedure provides that "[a] claim for attorney's fees and related nontaxable expenses must be made by motion unless substantive law requires those fees to be proved at trial as an element of damages."
The parties dispute whether a defendant's claims for attorney's fees under DTSA and LUTSA can be raised as counterclaims. The parties have not cited, and the Court's independent research has not revealed, any dispositive jurisprudence on the issue. Rather, there are two cases that suggest such claims can be raised as counterclaims. In Wright's Well Control Servs., LLC v. Oceaneering Int'l, Inc., 2017 WL 5572616, at *3 (E.D. La. Nov. 20, 2017), without discussing the propriety of such claims, the court dismissed the defendants' counterclaims for attorney's fees brought under LUTSA finding that the defendants did not allege sufficient facts to support a finding of bad faith. Further, in Olympia Minerals, LLC v. HS Resources, Inc., 123 So.3d 281, 306 (La. 2013), the Louisiana supreme court suggested that a claim for attorney's fees under LUTSA can be raised as a counterclaim or in a post-trial motion when it stated such a claim was not before the court because the defendant "neither specifically plead the issue of attorney fees for defending the LUTSA and LUTPA claims, nor raised the issue in the trial court after the trial court issued its Reasons for Judgment and prior to renditions of the Final Judgment." Considering the lack of clear authority on the issue, the Court will permit Defendants to maintain their counterclaims for attorney's fees under DTSA and LUTSA at this stage of the case. Further, Defendants' counterclaims are adequately pleaded because they place Ruby Slipper on sufficient notice of the claims by alleging that Ruby Slipper brought the DTSA and LUTSA claims in bad faith. As such, Ruby Slipper's motion to dismiss is DENIED.
Accordingly,
IT IS ORDERED that Defendants' motion for summary judgment (R. Doc. 58) is GRANTED as to Ruby Slipper's unjust enrichment claim. The motion is otherwise DENIED.
IT IS FURTHER ORDERED that the Ruby Slipper's motion to dismiss Defendants' amended counterclaims (R. Doc. 91) is DENIED.
La. R.S. 51:1431(4).
La. R.S. 51:1431(2).
