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Bernhard MCC, LLC v. Zeringue

Court of Appeals of Louisiana, Fifth Circuit

February 27, 2019

BERNHARD MCC, LLC
v.
KURT M. ZERINGUE, ROBERT G. MAYFIELD, SR.; ROBERT G. MAYFIELD, JR.; CECIL PASSMAN; JAMES BRIAN CARLISLE; AND NICHOLAS ZAZULAK

          ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 774-865, DIVISION "G" HONORABLE E. ADRIAN ADAMS, JUDGE PRESIDING

          COUNSEL FOR PLAINTIFF/APPELLEE, BERNHARD MCC, LLC Mark R. Beebe, Timothy M. Brinks, William D. Shea, Kellen J. Mathews

          COUNSEL FOR DEFENDANT/APPELLANT, KURT ZERINGUE, ROBERT MAYFIELD, SR., ROBERT MAYFIELD, JR., CECIL PASSMAN, JAMES BRIAN CARLISLE, AND NICHOLAS ZAZULAK Robert E. Couhig, Jr., Jason A. Cavignac, Jack M. Capella

          Panel composed of Judges Susan M. Chehardy, Fredericka Homberg Wicker, and Hans J. Liljeberg

          SUSAN M. CHEHARDY, CHIEF JUDGE

         This is a suit brought by an employer against several of its former employees alleging violations of the Louisiana Uniform Trade Secrets Act ("LUTSA") and the Louisiana Unfair Trade Practices Act ("LUTPA"). Defendants, the former employees, appeal from a preliminary injunction granted in favor of plaintiff, their former employer. For the reasons that follow, we vacate the trial court's judgment granting the preliminary injunction and remand the matter for further proceedings.

         FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         On August 9, 2017, Bernhard MCC, LLC ("Bernhard")[1] filed a petition for preliminary and permanent injunctions against six of its former employees: Kurt Zeringue, Robert Mayfield, Sr., Robert Mayfield, Jr., Cecil Passman, James Carlisle, and Nicholas Zazulak (collectively "Defendants"). Bernhard alleged that Defendants were long-time employees of MCC entities, whose membership interests and assets were acquired by Bernhard in October 2015.[2] Bernhard asserted that as a part of the acquisition, all of MCC's employees, including Defendants, became employees of Bernhard and continued in their same duties. Bernhard contended that as employees, each of the Defendants had access to confidential materials of the company, including employee wage rates, pricing structure information, bid information, estimates, proposals and other information pertaining to its business operations.

         In May 2017, Defendants resigned their employment with Bernhard and began working with Regional Mechanical Services, LLC ("RMS"), a competitor of Bernhard.[3] According to Bernhard, prior to their departure, Defendants participated in an elaborate scheme to "clandestinely and unlawfully obtain confidential and proprietary information of Bernhard," while still working for Bernhard, solely for the purposes of utilizing that information to compete directly against Bernhard and to benefit RMS, their new employer. Bernhard alleged Defendants failed to return this "unlawfully obtain[ed] confidential and proprietary information" upon their termination and have used the misappropriated information to solicit and bid commercial construction projects on behalf of RMS in direct competition with Bernhard. It asserted Defendants' use of the confidential and proprietary information violates both the LUTPA, in that Defendants' use of the information is an unfair method of competition and constitutes unfair or deceptive acts, and the LUTSA, in that the information and misappropriated data used by Defendants constitutes a trade secret.

         Bernhard alleged Defendants' use of the confidential and proprietary business information has resulted in lost revenues, loss of customers, loss of business goodwill, loss of business opportunities, loss of skilled labor, and loss of market share. Bernhard averred that no remedy at law would compensate it for lost customers, employees, and business goodwill. As such, Bernhard sought preliminary and permanent injunctions against Defendants to prohibit their continued use of its confidential business information.

         Defendants opposed the petition for injunctive relief, arguing the damages alleged by Bernhard were monetarily compensable and, thus, Bernhard would not suffer irreparable injury. Defendants also maintained that the information and documentation Bernhard sought to enjoin was not unique to Bernhard as the information was readily available from other third-party sources and, thus, did not constitute trade secrets.

         A hearing on the preliminary injunction was held on August 23, 2017. During the hearing, Bernhard presented the testimony of its president, Philip Catanzaro, and submitted various exhibits, including confidentiality agreements, the Bernhard Employee Handbook, and various emails. In their defense, Defendants presented the testimony of one defendant, Kurt Zeringue. At the conclusion of the hearing, the trial court took the matter under advisement and subsequently entered judgment on August 31, 2017, without reasons, in favor of Bernhard. Thereafter, the trial court amended its original judgment-once on September 18, 2017, and again on September 27, 2017-also ruling in favor of Bernhard. On May 30, 2018, this Court vacated all three judgments and remanded the matter for further proceedings. See Bernhard v. Zeringue, 18-30 (La.App. 5 Cir. 5/30/18), 250 So.3d 342.[4]

         On remand, without a hearing and without assigning reasons, the trial court issued judgment on July 13, 2018, in favor of Bernhard. Specifically, the judgment granted Bernhard's petition for preliminary injunction, prohibited Defendants from seeking, requesting, soliciting from any person, or utilizing for any purpose, any confidential and/or proprietary business information of Bernhard. The judgment further ordered Defendants to return all of Bernhard's confidential and proprietary business information and any other material constituting a trade secret and to comply with their respective obligations to Bernhard regarding the confidentiality and non-disclosure of confidential and proprietary business information. It is from this judgment that Defendants have timely filed the instant appeal.

         ISSUES ...


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