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Sussmann v. Financial Guards, LLC

United States District Court, E.D. Louisiana

October 30, 2017


         SECTION: “H” (4)



         Before the Court is Plaintiffs' Motion for Summary Judgment (Doc. 55). For the following reasons, the Motion is GRANTED IN PART.


         Plaintiffs Eddie Sussmann, Sr. and Leading Edge Financial Services, LLC (“Leading Edge”) bring this action against former employee Daniel Dragan (“Dragan”) and his company, Financial Guards, LLC (“Financial Guards”). In their Complaint, Plaintiffs allege that Dragan worked as an independent contractor managing IT and marketing for Leading Edge for many years before he was terminated on May 15, 2015. They allege that shortly after his termination, Dragan formed Defendant Financial Guards. Plaintiffs allege that Defendants then converted Plaintiffs' assets and confidential information and refused to return them. Plaintiffs allege that Defendants accessed and manipulated Plaintiffs' websites, email, and telephone system with the intention of confusing customers of Leading Edge and attracting customers to Financial Guards. Plaintiffs bring claims for damages and injunctive relief against Defendants under the Computer Fraud and Abuse Act (CFAA), the Lanham Act, the Louisiana Uniform Trade Secrets Act (LUTSA), Louisiana Unfair Trade Practices Act (LUPTA), and for state law conversion.

         After Defendant Financial Guards failed to make an appearance in this matter, this Court entered a default judgment against it on each of Plaintiffs' claims. The default judgment enjoined Financial Guards as follows:

1. Financial Guards, LLC is hereby enjoined from utilizing Plaintiffs' trade secrets or other confidential and proprietary information; enjoined from accessing Plaintiffs' website platforms, email systems, and telephone systems; ordered to return any and all trade secrets, property, and information belonging to Plaintiffs in their possession, custody, or control, including all login credentials and passwords to any database, web portal, or web domain belonging to Plaintiffs; and ordered to delete and destroy any and all copies of confidential and proprietary information belonging to Plaintiffs, including, but not limited to, files maintained on any computer, drive, or email account in their possession or to which they have access or over which they have control, whether in hard copy or in electronic format;
2. Financial Guards, LLC, together with its officers, directors, agents, partners, employees and related companies, and all persons acting in concert with them, are enjoined from copying, reproducing, distributing, advertising, promoting, or displaying the infringing website and content described in the Complaint and First Amended Complaint;
3. Financial Guards, LLC, together with its officers, directors, agents, partners, employees and related companies, and all persons acting in concert with them, are ordered to destroy all materials or articles infringing Leading Edge Financial's trade dress.

         The Court also ordered that Plaintiffs move for a hearing on damages. Having obtained a default against Financial Guards, Plaintiffs now move for summary judgment against Dragan.[1] They argue that the undisputed material facts establish that Dragan has converted their confidential information, as well as violated the CFAA, the Lahnam Act, LUTSA, and LUPTA. Plaintiffs seek permanent injunctive relief, as well as damages, against Dragan.


         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.”[2] A genuine issue of fact exists only “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”[3]

         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.[4] “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.”[5] 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.”[6] “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.”[7] “We do not . . . in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts.”[8] Additionally, “[t]he mere argued existence of a factual dispute will not defeat an otherwise properly supported motion.”[9]

         LAW & ANALYSIS

         Before addressing each of Plaintiffs' claims, this Court takes note of Defendant Dragan's pro se status. It is well-settled that pro se briefs are afforded a liberal construction.[10] Even so, pro se litigants “must still comply with the rules of procedure and make arguments capable of withstanding summary judgment.”[11] Plaintiffs point out that Defendant has failed to respond to their requests for admission or their statement of uncontested facts. Failure to respond to either ordinarily renders those facts admitted.[12] The Court notes, however, that Plaintiffs have not provided any competent evidence showing that Defendant failed to respond to their requests for admission.

         Even so, Defendant's untimely opposition to Plaintiffs' Motion also did not include any competent evidence. “Hearsay evidence and unsworn documents that cannot be presented in a form that would be admissible in evidence at trial do not qualify as competent opposing evidence.”[13]Notwithstanding these technical failures, however, Defendant also has not identified any material issues of fact necessary to defeat Plaintiffs' Motion for Summary Judgment as outlined below.

         A. The Computer Fraud and Abuse Act (CFAA)

         First, Plaintiffs bring an action for violation of the CFAA. “An individual may bring a civil cause of action for damages or loss arising from CFAA violations under 18 U.S.C. § 1030(g).”[14] Section 1030(g) states that “[a]ny person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief.”[15] A civil action for a violation of this section may be brought if it involves loss to one or more persons during any one-year period of at least $5, 000 in value.[16] A claim brought pursuant to 18 U.S.C. § 1030(a)(4) requires the plaintiff to prove the following elements: “(1) defendant has accessed a protected computer; (2) has done so without authorization or by exceeding such authorization as was granted; (3) has done so ‘knowingly' and with ‘intent to defraud'; and (4) as a result has ‘further[ed] the intended fraud and obtain[ed] anything of value.”[17]

         Plaintiffs allege that Dragan violated the CFAA by (1) accessing Plaintiffs' computer network, internet, email, and telephone systems subsequent to his termination, (2) without authorization from Plaintiffs, and (3) for the purpose of stealing Plaintiffs' confidential information for his own personal gain. In his declaration, Plaintiff Sussman states that when Dragan returned his Leading Edge computers after his termination, they had been wiped and two were restored with outdated data. Sussman claims that Dragan then refused to return Leading Edge's customer contact information. Data recovery software was unable to retrieve any of the missing information.

         In addition, Sussmann states that Dragan accessed Leading Edge's internet-based telephone system after his termination and redirected incoming calls to Financial Guards. Sussmann's technical consultant, Sheila Keller, confirmed in a declaration that Dragan had accessed Leading Edge's telephone system after he was terminated.

         Sussmann also states that Dragan accessed Leading Edge's email marketing service after his termination and used it to email Leading Edge's customers with promotional materials directing them to contact Dragan. Plaintiffs have attached a copy of the email, which appears to advertise Leading Edge's insurance products but includes contact information and website links to Financial Guards. Keller confirmed that Dragan had accessed Leading Edge's email marketing service using its credentials after his termination.

         Keller further testified that a forensic analysis of Leading Edge's websites revealed that after Dragan was terminated he manipulated certain hyperlinks to redirect to his own website.

         In response, Dragan disputes the date of his termination. While Plaintiffs allege he was terminated on May 15, 2015, Dragan contends that he resigned on May 19, 2015. He admits though that the computers at issue were not returned until after his resignation. He does not submit any evidence disputing Plaintiffs' claims that the computers had been wiped and that he refused to return Plaintiffs' customer lists. Dragan likewise does not provide any evidence-competent or otherwise-tending to show that he did not access Plaintiffs' phone lines, website, or email service after his termination to redirect ...

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