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Source Production & Equipment Co., Inc. v. Schehr

United States District Court, E.D. Louisiana

April 4, 2019


         SECTION M (1)

          ORDER & REASONS


         Before the Court is a motion for partial summary judgment filed by defendants-in-counterclaim Richard D. Dicharry (“Dicharry”), Sandra Kusy (“Kusy”), and Source Production & Equipment Co., Inc. (“SPEC”) (collectively “Counter-Defendants”), seeking dismissal of a defamation claim filed by plaintiff-in-counterclaim Kevin J. Schehr (“Schehr”) concerning purported statements made to Keith Frazier (“Frazier”) and Schehr's breach-of-oral-contract claim.[1] Schehr opposes the motion, [2] and Counter-Defendants reply in further support of the motion.[3] Having considered the parties' memoranda and the applicable law, the Court issues this Order & Reasons.

         I. BACKGROUND

         This matter concerns the alleged theft of trade secrets and breaches of fiduciary duty and contract by a business's former employee. The Court explained the factual background of this case in an Order & Reasons ruling on Defendants' motion to dismiss certain claims raised in Plaintiffs' first amended complaint:[4]

Source Production & Equipment Co., Inc. (“SPEC”) and its affiliates bring this trade-secret misappropriation and unfair competition action against Kevin J. Schehr, Isoflex USA, Isoflex Radioactive LLC, and Richard McKannay, Jr. SPEC is a supplier of industrial and medical radiography equipment and radioactive isotope materials. Schehr is a former executive officer at SPEC. According to the complaint, Schehr began working for SPEC in 1995 and held various positions at the company until his termination in July of 2016. Plaintiffs allege that over the course of his employment, Schehr signed several confidentiality agreements regarding SPEC's trade secrets. These trade secrets include technologies used to manufacture containers for shipping radioactive material.
According to the complaint, Schehr unsuccessfully attempted to acquire an ownership interest in SPEC in 2012 and 2014. Plaintiffs further allege that Schehr's resentment toward SPEC and its owner, Richard Dicharry, following these attempts prompted Schehr to engage in conduct intended to undermine SPEC and benefit Schehr and others affiliated with Schehr. To this end, Schehr allegedly made several misrepresentations to Dicharry that he knew to be false, caused SPEC to default on the terms of a sale agreement, negotiated business contracts against Dicharry's wishes, filed for and claimed ownership rights to patents developed using SPEC's resources, and provided false financial information in order to inflate his personal bonuses, among several other alleged transgressions.
SPEC terminated Schehr's employment on July 10, 2016. Plaintiffs allege that after his termination, Schehr did not immediately return his company-issued laptop, despite SPEC's demand that he do so. Plaintiffs further allege that once the laptop was returned, a forensic analysis revealed that Schehr emailed a number of SPEC's confidential and proprietary files to his personal email accounts. According to plaintiffs, the analysis also showed that minutes after his termination, Schehr attached two external hard drives to the laptop and subsequently deleted 5, 086 files from the laptop. Plaintiffs allege that Schehr continues to possess other storage media belonging to SPEC, including thumb drives and CDs.
Finally, plaintiffs allege that both before and after his termination, Schehr conspired with Isoflex USA and McKannay, the managing director of Isoflex USA, to establish Isoflex Radioactive. Plaintiffs allege that in creating Isoflex Radioactive, defendants misappropriated plaintiffs' trade secrets and confidential information. This misappropriation, according to plaintiffs, will allow Isoflex Radioactive to compete with plaintiffs in the market for radioactive materials.
In their amended complaint, plaintiffs assert against all defendants claims for violations of the federal Defend Trade Secrets Act (“DTSA”), the Louisiana Uniform Trade Secrets Act (“LUTSA”), and the Louisiana Unfair Trade Practices Act (“LUTPA”), as well as for conversion. Against Schehr individually, plaintiffs assert claims for violation of the Computer Fraud and Abuse Act (“CFAA”), breach of legal duty, breach of contract, and fraud.

Source Prod. & Equip. Co. v. Schehr, 2017 WL 3721543, at *1-2 (E.D. La. Aug. 29, 2017) (footnotes citing record eliminated). The Court granted the motion as to Plaintiffs' conversion claim against IUSA, IR, and McKanney, as well as Plaintiffs' conversion claim against Schehr to the extent they sought to recover the value of their trade secrets; and otherwise denied the motion. Id. at *7.

         In a subsequent Order & Reasons addressing motion to dismiss Schehr's counterclaim that was filed by SPEC, Dicharry and Kusy, the Court noted the following additional factual allegations:

Schehr's relationship with Dicharry and SPEC deteriorated during the months leading up to Schehr's termination. For example, according to Schehr, Dicharry had promised to give him a 10% ownership interest in SPEC if Schehr facilitated the completion of the design of a new radiography system (Radiography Contract). Schehr alleges that the design was completed, but that two weeks before Schehr's termination Dicharry unreasonably refused to sign off on the new design. SPEC and Dicharry also allegedly agreed to form a new company with Schehr and Dennis Chedraui (NEWCO Agreement). Although the parties to the agreement allegedly signed a letter of intent, and Dicharry and SPEC verbally obligated themselves to the terms of the NEWCO Agreement, Schehr asserts that Dicharry and SPEC failed to fulfill their obligations under the agreement. According to Schehr, Kusy caused Dicharry and SPEC to breach these contracts by providing Dicharry with false information about a conference Schehr attended and a conspiracy between Schehr and Chedraui.
Schehr alleges that upon his termination, SPEC seized a thumb drive and pictures belonging to him. SPEC allegedly obtained the password for Schehr's personal email account from this thumb drive and accessed the account on November 10, 2016. Schehr further alleges that Dicharry and Kusy both made defamatory statements about Schehr after his termination.
On September 12, Schehr answered the amended complaint and filed counterclaims against SPEC. Schehr then amended his counterclaims to add Dicharry, Kusy, and unknown insurers of SPEC as counterclaim-defendants. Schehr asserts counterclaims for defamation, invasion of privacy, and revendicatory relief against all counterclaim-defendants; breach of contract or detrimental reliance against SPEC, Dicharry, and the insurers; unpaid wages against SPEC and the insurers; and intentional interference with a contract against Kusy. SPEC, Dicharry, and Kusy now move to dismiss certain counterclaims.

Source Prod. & Equip. Co. v. Schehr, 2017 WL 6623994, at *1 (E.D. La. Dec. 28, 2017) (footnotes citing record eliminated). The Court granted the motion as to Schehr's claims for revendicatory relief against Dicharry and Kusy and intentional interference with a contract against Kusy; and otherwise denied the motion. Id. at *7.

         II. ANALYSIS

         A. Summary Judgment Standard

         Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the 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.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed.R.Civ.P. 56(c)). “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial.” Id. A party moving for summary judgment bears the initial burden of demonstrating the basis for summary judgment and identifying those portions of the record, discovery, and any affidavits supporting the conclusion that ...

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