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Pure Air Daigle, LLC v. Stagg

United States District Court, W.D. Louisiana, Lafayette Division

September 15, 2017

PURE AIR DAIGLE, LLC, ET AL.
v.
CHARLES STAGG, II, ET AL.

          MEMORANDUM RULING

          PATRICK J. HANNA UNITED STATES MAGISTRATE JUDGE.

         Currently pending is the plaintiffs' motion for partial summary judgment with regard to their claim against defendants Charles Stagg, II, Michael Scott Lanclos, Phillip Courville, Jr., and Brad Guidry for breach of fiduciary duty. (Rec. Doc. 65). The motion is opposed. Considering the evidence, the law, and the arguments of the parties, and for the reasons fully explained below, the motion is DENIED.

         Background

         Defendants Stagg, Lanclos, Courville, and Guidry (“the Employee Defendants”) were all formerly employed by Daigle Welding Supply. The plaintiffs are the successors of that company. Defendant Capitol Welders Supply Co. Inc. was a long-time supplier of the plaintiffs. In 2016, Capitol formed defendant St. Landry Gas & Supply, L.L.C., which is a competitor of the plaintiffs. The Employee Defendants left their employment with the plaintiffs and all of them went to work for St. Landry Gas.

         In their complaint, the plaintiffs asserted claims against the defendants for breach of contract, violation of the Louisiana Unfair Trade Practices and Consumer Protection Law, breach of fiduciary duties, conversion, conspiracy, tortious interference with contractual relationships, and tortious interference with business relationships.

         The instant motion relates solely to the plaintiffs' breach of fiduciary duty claim against the Employee Defendants. In the complaint, the plaintiffs contend that the Employee Defendants breached the fiduciary duties that they owed to the plaintiffs when they disclosed the plaintiffs' confidential and proprietary information, including customer and supplier lists, delivery schedules, and customer requires during their employment with the plaintiffs. (Rec. Doc. 1 at 15). In the briefing, the plaintiffs expanded the scope of the breach of fiduciary duty claim, arguing (1) that Stagg breached his fiduciary duty to the plaintiffs by seeking to benefit himself and St. Landry Gas and by transacting St. Landry Gas's business while Stagg remained employed by the plaintiffs, (2) that Stagg breached his fiduciary duty to the plaintiffs by knowingly involving himself in an undisclosed conflict of interest while employed by the plaintiffs, (3) that Lanclos, Courville, Guidry, and Stagg breached their fiduciary duties to the plaintiffs while still employed by the plaintiffs by encouraging each other and others to take actions that injured the plaintiffs; (4) that Stagg breached his fiduciary duty to the plaintiffs by lying to his superiors and by concealing information from them, and (5) that St. Landry Gas is vicariously liable for the Employee Defendants' breaches of fiduciary duty.

         Law and Analysis

         A. The Applicable Summary Judgment Standard

         Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is appropriate when there is no genuine dispute as to any material fact, and the moving party is entitled to judgment as a matter of law. A fact is material if proof of its existence or nonexistence might affect the outcome of the lawsuit under the applicable governing law.[1] A genuine issue of material fact exists if a reasonable jury could render a verdict for the nonmoving party.[2]

         The party seeking summary judgment has the initial responsibility of informing the court of the basis for its motion and identifying those parts of the record that demonstrate the absence of genuine issues of material fact.[3] If the moving party carries its initial burden, the burden shifts to the nonmoving party to demonstrate the existence of a genuine issue of a material fact.[4] All facts and inferences are construed in the light most favorable to the nonmoving party.[5]

         If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by pointing out that there is insufficient proof concerning an essential element of the nonmoving party's claim.[6] The motion should be granted if the nonmoving party cannot produce evidence to support an essential element of its claim.[7]

         B. The Applicable Law

         A federal court sitting in diversity must apply state substantive law and federal procedural law.[8] Because this is a diversity case, Louisiana's substantive law must be applied.[9] To determine Louisiana law, federal courts look to the final decisions of the Louisiana Supreme Court.[10] When the state's highest court has not decided an issue, the court must make an “Erie guess” as to how the state supreme court would decide the issue.[11] In making such a guess, the federal court may rely upon state appellate court decisions, unless persuasive data convinces the court that the state supreme court would decide the issue differently.[12] When making an Erie guess concerning Louisiana law, the Fifth Circuit In making an Erie guess, relies upon “(1) decisions of the [Louisiana] Supreme Court in analogous cases, (2) the rationales and analyses underlying [Louisiana] Supreme Court decisions on related issues, (3) dicta by the [Louisiana] Supreme Court, (4) lower state court decisions, (5) the general rule on the question, (6) the rulings of courts of other states to which [Louisiana] courts look when formulating substantive law and (7) other available sources, such as treatises and legal commentaries.”[13]

         C. Breach of Fiduciary Duties

         The elements of a claim for breach of fiduciary duty under Louisiana law include: (1) the existence of a fiduciary duty, (2) a violation of that duty by the fiduciary, and (3) damages resulting from the violation of duty.[14] “[W]hether a fiduciary duty exists, and the extent of that duty, depends upon the facts and circumstances of the case and the relationship of the parties.”[15] Employees and mandataries owe duties of fidelity and loyalty to their employers and principals.[16]“An employee owes his employer a duty to be loyal and faithful to the employer's interest in business.”[17] An employee is duty-bound not to act in antagonism or opposition to the interest of his employer.[18]

         Louisiana courts have determined that, under circumstances where an employee solicited customers and copied confidential customer lists of his employer while still employed, ...


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