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Brand Services, LLC v. Irex Corp.

United States District Court, E.D. Louisiana

July 17, 2017


         SECTION: “H” (1)



         Before the Court is Defendant's Second Motion for Summary Judgment (Doc. 104) and Plaintiff's Motion for Reconsideration (Doc. 105). For the following reasons, Defendant's Motion is GRANTED, and Plaintiff's Motion is DENIED.


         Plaintiff Brand Services LLC alleges that its former employee, James Stanich, stole files containing confidential and proprietary information belonging to Plaintiff when he left the company to work with Defendant Irex Corporation. Plaintiff's Complaint contends that Irex has acquired its trade secrets and has profited from this information. Plaintiff brought claims under the Louisiana Uniform Trade Secrets Act (“LUTSA”) and for the tort of conversion. On May 3, 2017, this Court granted Defendant's Motion for Summary Judgment on Plaintiff's LUTSA claim, holding that Plaintiff could not show that Irex had been unjustly enriched by the alleged misappropriation. Instead, all of Plaintiff's arguments indicated that Irex's subsidiary, Vertical Access Solutions (“VAS”), had benefited. This Court held that Plaintiff had not provided any facts or argument through which this Court could hold Irex liable for the unjust enrichment of its subsidiary.

         In its Motion for Summary Judgment, Defendant inadvertently failed to move for dismissal of Plaintiff's state law conversion claim. This Court granted Defendant the opportunity to do so. Thereafter, Plaintiff filed the instant Motion for Reconsideration of the dismissal of its LUTSA claim. This Court will consider each Motion in turn.


         A. Motion for Summary Judgment

         Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with 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.”[1] A genuine issue of fact exists only “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”[2]

         In determining whether the movant is entitled to summary judgment, the Court views facts in the light most favorable to the non-movant and draws all reasonable inferences in his favor.[3] “If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial.”[4] Summary judgment is appropriate if the non-movant “fails to make a showing sufficient to establish the existence of an element essential to that party's case.”[5] “In response to a properly supported motion for summary judgment, the non-movant must identify specific evidence in the record and articulate the manner in which that evidence supports that party's claim, and such evidence must be sufficient to sustain a finding in favor of the non-movant on all issues as to which the non-movant would bear the burden of proof at trial.”[6] “We do not . . . in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts.”[7] Additionally, “[t]he mere argued existence of a factual dispute will not defeat an otherwise properly supported motion.”[8]

         B. Motion for Reconsideration

         A Motion for Reconsideration of an interlocutory order is governed by Federal Rule of Civil Procedure 54(b), which states that: “[A]ny order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.” “Under Rule 54(b), ‘the trial court is free to reconsider and reverse its decision for any reason it deems sufficient, even in the absence of new evidence or an intervening change in or clarification of the substantive law.'”[9]“‘[T]he power to reconsider or modify interlocutory rulings is committed to the discretion of the district court, and that discretion is not cabined by the heightened standards for reconsideration' governing final orders.'”[10]


         A. Motion for Summary Judgment

         At this Court's behest, Defendant now moves for summary judgment on Plaintiff's claim for state law conversion. Defendant argues that Plaintiff's conversion claim should be dismissed because (1) it is preempted by LUTSA, (2) Louisiana does not recognize a claim for conversion of incorporeals, and (3) Brand cannot show damages. Because this Court ultimately finds that Plaintiff's conversion claim is preempted by LUTSA, it need not address Defendant's other arguments.

         In its argument that LUTSA preempts Plaintiff's conversion claim, Defendant points to the section of LUTSA, adopted from the Uniform Trade Secret Act (“UTSA”), which states that the Act “displaces conflicting tort, restitutionary, and other laws of this state pertaining to civil liability for misappropriation of a trade secret.”[11] Defendant argues that pursuant to this section, LUTSA provides the exclusive remedy for all claims regarding the misappropriation of business information. Although the Louisiana Supreme Court has not yet addressed this issue, other courts considering similar UTSA statutes have adopted this approach.[12] Indeed, the majority approach is that the UTSA “preempts noncontractual legal claims protecting business information, whether or not the business information is a Uniform Act trade secret”[13] “These courts articulate the standard differently, but the thrust of their interpretation is this: A claim is not preempted if the plaintiff is able to show the claim is based on facts unrelated to the misappropriation of the trade secret.”[14]

         In addition, “[m]ost courts considering whether UTSA preempts a claim for conversion of trade secrets have concluded that it does.”[15] Those courts have further held that claims for conversion of confidential and proprietary information, in addition to trade secrets, are likewise preempted.[16] “Most courts considering this question have determined UTSA was intended to preempt all claims based upon the unauthorized use of information.”[17]Plaintiff has not presented any compelling arguments to the contrary, and this Court is therefore compelled to follow the ...

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