United States District Court, E.D. Louisiana
ORDER & REASONS
E. Fallon United States District Judge
the Court is Defendant Donald Rulh's motion to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(1). R. Doc.
103. Plaintiff Complete Logistical Services, LLC
(“CLS”) opposes the motion. R. Doc. 113.
Defendant has filed a reply. R. Doc. 123. Having considered
the applicable law, the parties' arguments, and having
held oral argument on the motion, the Court is ready to rule.
provides contract labor to various marine industries. It
alleges its former member, Defendant Rulh, breached his
fiduciary duties to CLS, misappropriated CLS' assets,
damaged CLS' image, and took confidential and proprietary
information after he was removed from the LLC by its
remaining members. R. Doc. 98 at 1-3.
verified complaint, CLS alleges that, as a result of Mr.
Rulh's failure to collect payments from clients; refusal
to reimburse the LLC for money he borrowed to refinance his
private home; arriving intoxicated to company events; and
changing the locks on the CLS office without first discussing
the matter with the other LLC members, the other three
members of CLS voted to treat Mr. Rulh as “an assignee
of the Company, ” thereby revoking his authority to
manage the business or act unilaterally for the business. R.
Doc. 98 at 4-6. CLS alleges that after Mr. Rulh was stripped
of this authority, he stole from CLS confidential information
including financial statements, customer lists, and sales
records while the other members were at a company crawfish
boil. R. Doc. 98 at 8. According to CLS, these documents were
printed, scanned, and then emailed to Mr. Rulh's personal
email account. R. Doc. 98 at 8. CLS further alleges Mr. Rulh
took this information intending to start a competing business
with his co-Defendants. In support of this allegation, CLS
points to a non-disclosure agreement between the Defendants,
which CLS included as an attachment to its complaint. R. Doc.
98-5. Additionally, Plaintiff alleges Mr. Rulh took $222,
000.00 from the LLC's bank account without authorization.
on these allegations, CLS brings claims against Defendants
Donald Rulh, Arnold Baker, Morris Kahn, Michelle Elwell, and
Shawana Harris for violations of the Defend Trade Secrets Act
(“DTSA”); Louisiana Uniform Trade Secrets Act
(“LUTSA”); Computer Fraud and Abuse Act
(“CFA”); Louisiana Unfair Trade Practices Act
(“LUTPA”); and for unjust enrichment; breach of
fiduciary duties, duty of loyalty, and duty of due care;
conversion; conspiracy; and fraud. R. Doc. 98 at 3. CLS also
seeks injunctive relief. R. Doc. 98 at 4. Moreover, CLS
submits that, after it initially filed suit, its remaining
members “availed themselves of their rights in the CLS
Operating Agreement to expel Mr. Rulh from CLS
membership.” R. Doc. 98 at 4. In its amended complaint,
Plaintiff seeks a declaration “that the expulsion
proceedings were proper in all respects and confirming that
Mr. Rulh is no longer a member of CLS.” R. Doc. 98 at
April 12, 2018, pursuant to CLS' request for a temporary
restraining order (“TRO”), the Court held a
telephone hearing with CLS and granted the request. Pursuant
to the TRO, the Court directed Defendants to return materials
taken from CLS, including a computer allegedly purchased with
CLS funds. R. Doc. 8. On April 13, 2018, Defendant moved for
an extension of the deadline to comply with the Court's
order, R. Doc. 10, which the Court granted in part, R. Doc.
April 16, 2018, Defendants moved to dissolve the temporary
restraining order. R. Doc. 13. The Court held oral argument
on Defendants' motion that same day. The Court determined
the TRO should remain in effect as to the prohibitory
elements and ordered the parties to discuss a plan to
determine which information, if any, may be privileged and
which should be returned to Plaintiff. On Wednesday, April
18, 2018, the Court approved the parties proposed order for
mirroring the files on the computer and other devices held by
counsel. R. Doc. 17.
7, 2018, Defendants answered the complaint and filed
counterclaims against CLS and a third party complaint against
CLS members Spencer Sens and Natchez Morice, III. R. Doc. 30.
On August 21, 2018, the Court granted Mr. Sens and Dr.
Morice's motion to strike Defendants' third party
claims against them. R. Doc. 94.
their counterclaim, Defendants claim CLS wrongfully seized
information from them in violation of the DTSA and the LUTPA.
Additionally, Mr. Rulh brings claims against CLS for breach
of fiduciary duties and due care, breach of contract, unjust
enrichment, conversion, and derivative action. Mr. Rulh also
seeks an accounting of CLS. R. Doc. 30 at 18-24. On June 25,
2018, Plaintiff moved to dismiss Defendants'
counterclaims. On August 21, 2018, the Court granted the
motion in part, dismissing Defendants' LUTPA claim and
Defendant Rulh's claims for unjust enrichment,
conversion, and derivative action. R. Doc. 93.
26, 2018, Defendants Harris, Elwell, Baker, and Kahn filed a
motion seeking summary judgment on Plaintiff's claims
against them. R. Doc. 52. The Court denied the motion as
premature on August 21, 2018. R. Doc. 92.
September 13, 2018, Defendant Rulh filed the instant motion
to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(1). R. Doc. 103. Defendants Harris, Elwell, Baker, and
Kahn did not join in the motion. In his motion, Defendant
Rulh argues Plaintiff has failed to state a federal claim
upon which relief may be granted and, as a result, the Court
lacks subject matter jurisdiction over the action.
argues CLS has failed to allege facts that give rise to a
plausible claim for relief under either of Plaintiff's
two federal law-based claims: the DTSA and the
CFAA. With respect to the DTSA, Defendant argues
this cause of action must be dismissed, as Plaintiff: (1)
failed to allege a viable trade secret, as the information it
alleges Defendant took is generally known and readily
ascertainable; (2) does not allege it took reasonable
measures to keep its information secret; (3) has not alleged
facts sufficient to establish any trade secrets were
misappropriated; and (4) fails to allege more than a
conclusory nexus to interstate commerce. With respect to the
CFAA, Defendant argues CLS failed to allege facts that give
rise to a plausible claim for relief, as Plaintiff fails to
allege his actions caused any damage to CLS's computers
or any interruption in service when he allegedly accessed
CLS's confidential information without authority. Rather,
according to Defendant, Plaintiff “merely regurgitates
statutory language without any real factual support, which
cannot support a plausible claim for relief.” R. Doc.
103-2 at 20.
filed its opposition on October 2, 2018. R. Doc. 113. First,
it argues Defendant's motion to dismiss for lack of
jurisdiction should be denied as procedurally improper,
arguing that, because CLS alleged federal causes of action,
the Court must exercise jurisdiction over its complaint.
Second, because Defendant attaches his sworn declaration with
his motion to dismiss, CLS argues Defendant's motion
should be construed as a Rule 56 motion for summary judgment,
which it submits should be denied as premature. R. Doc. 113
at 6. Finally, Plaintiff avers that, to the extent
Defendant's motion is considered one filed pursuant to
Rule 12(b)(6), it has pleaded facts sufficient to state a
claim for relief under both the CFAA and DTSA.
Motion to Dismiss Standard
motion to dismiss for lack of jurisdiction is limited to a
facial attack on the pleadings, as here, it is subject to the
same standard as a motion brought under Rule 12(b)(6).
See Lane v. Halliburton, 529 F.3d 548, 557 (5th Cir.
2008); Benton v. United States, 960 F.2d 19, 21 (5th
Cir. 1992). In either case, the Court must “take the
well-pled factual allegations of the complaint as true and
view them in the light most favorable to the
plaintiff.” Lane, 529 F.3d at 557; In re
Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th
Cir. 2007). The Federal Rules of Civil Procedure permit a
defendant to seek a dismissal of a complaint based on the
“failure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). A complaint should not
be dismissed for failure to state a claim “unless it
appears beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to
relief.” Conley v. Gibson, 355 U.S. 41, 47
(1957). Generally, when evaluating a motion to dismiss
pursuant to Rule 12(b)(6), the court should not look past the
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.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). The district court must construe facts in the light
most favorable to the nonmoving party and must accept as true
all factual allegations contained in the complaint.
Id. at 678. “A claim has facial plausibility
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. A
court “do[es] not accept as true conclusory
allegations, unwarranted factual inferences, or legal
conclusions.” Plotkin v. IP Axess Inc., 407
F.3d 690, 696 (5th Cir. 2005).