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Hunters Run Gun Club, LLC v. Baker

United States District Court, M.D. Louisiana

July 18, 2019

HUNTERS RUN GUN CLUB, LLC, ET AL.
v.
EDDIE D. BAKER

          RULING

          SHELLY D. DICK, CHIEF JUDGE

         This matter is before the Court on the Joint Motion for Partial Summary Judgment on Louisiana Unfair Trade Practices Act Claim[1] and the Motion for Partial Summary Judgment on Louisiana Unfair Trade Practices Act Claim and Res Judicata and Issue Preclusion[2] filed by Defendants Eddie D. Baker (“Baker”), Sugar-West, Inc. (“Sugar-West”), Bridgeview Gun Club, LLC (“Bridgeview”), and Keith Morris (“Morris” or “Morris Entities”) (collectively, “Defendants”). Plaintiffs, Hunters Run Gun Club, LLC (“HRGC”) and Great International Land Company, LLC (“GILC”)(collectively “Plaintiffs”) have filed Oppositions[3] to the motion, to which Defendants filed a Reply.[4]

         I. FACTUAL BACKGROUND

         This case arises out of claims that the Defendants conspired with the Law Enforcement District of the Parish of West Baton Rouge (“LED”) by terminating a lease previously belonging to a HRGC affiliate for a shooting facility and gun club run by HRGC and then leasing the facility to a HRGC competitor - Bridgeview - which is currently owned and controlled by Morris.[5] Plaintiffs specifically allege that the LED notified HRGC that it would not renew its lease with HRGC as operator of the gun club shortly after HRGC terminated the employment of its former manager, Defendant Baker, in August 2016. About three months after Baker's termination, in November 2016, Plaintiffs contend that the LED, a public entity, tried to lease the gun club to Morris, notwithstanding that Morris did not submit the highest bid to the LED for the lease. Plaintiffs successfully obtained injunctive relief against the LED in state court for the LED's failure to comply with Louisiana's bid law. Thereafter, the LED published a bid request, which resulted in lease of the gun club to Bridgeview. Plaintiffs allege that this conspiracy between Morris, Baker, Bridgeview and the LED resulted in damages to Plaintiffs.[6]

         II. LOUISIANA UNFAIR TRADE PRACTICES ACT (“LUTPA”)

         LUTPA provides a civil cause of action to recover actual damages to “[a]ny person who suffers any ascertainable loss of money or movable property ... as a result of the use or employment by another person of an unfair or deceptive method, act, or practice declared unlawful by R.S. 51:1405.”[7] Section 51:1405(A) declares unlawful “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Courts must determine “on a case-by-case basis” what conduct constitutes an “unfair trade practice” and “have repeatedly held that, under this statute, the plaintiff must show the alleged conduct offends established public policy and ... is immoral, unethical, oppressive, unscrupulous, or substantially injurious.”[8] Further, a trade practice that amounts to fraud, deceit, or misrepresentation is “deceptive” for purposes of LUTPA.[9]

         Additionally, “LUTPA recognizes a claim for breach of fiduciary duty that rests on the misappropriation of information that is confidential but not a trade secret.”[10] An employer may recover under LUTPA when “‘a former employee breaches his duty not to use his former employer's confidential information.'”[11] To prevail on a breach of fiduciary duty claim based on a breach of confidence, a plaintiff must prove: (1) that it possesses knowledge or information that is not generally known; (2) that it communicated the knowledge or information to the defendant under an express or implied agreement limiting the defendant's use or disclosure of the information; and (3) that the defendant used or disclosed the knowledge or information in violation of the confidence, resulting in injury to the plaintiff.[12]

         In support of their motion, Defendants argue that the information listed by HRGC as proprietary is not, in fact, proprietary because it was never documented, and much of it is knowledge that Baker gained as employee.[13] The Defendants further contend that Baker was an experienced shooter and planned and held events for HRGC as a volunteer before he was an employee; thus, the knowledge and skills HRGC now claims are proprietary are not prohibited by LUTPA.[14]

         Alternatively, even if such information was deemed proprietary, Defendants maintain that HRGC has offered no summary judgment evidence that Baker used or shared that information with anyone;[15] rather, it relies only on the language used in Morris' bid proposal (“RFP”) to argue that that Baker and Morris engaged in acts prohibited by LUTPA.[16] HRGC suggests that Morris holding Baker out as knowledgeable of HRGC's customers and vendors and his working knowledge of equipment are “proof positive of misappropriation and improper use of proprietary information.”[17] However, Defendants argue that “the Court cannot read into the RFP words that are simply not there or intended, especially when there is no other evidence of any misappropriation or use of such lists.[18]

         Finally, Defendants point out that a required element of LUTPA is intent, quoting that the “actions must have been taken with the specific purpose of harming the competition. Therefore, only egregious actions involving elements of fraud, misrepresentation, deception, or other unethical conduct will be sanctioned based on LUTPA.”[19] In this case, Defendants maintain that: (1) Baker did not quit his job to go into competition with HRGC but was fired; (2) Baker was never promised a job with Bridgeview, due to the fact that Morris interviewed other candidates for the General Manager position; and (3) there was no guarantee that Morris would win the lease at all.[20]

         HRGC argues that, rather than specific instances of sharing information, the focus of its LUTPA claim is the nature and purpose of Baker's and Morris' conduct, beginning when Baker was still a HRGC employee and continuing today.[21] While the misappropriation of proprietary information is an element of its LUTPA claim, HRGC contends the predominate question is whether Baker's and Morris' “successful conspiracy to eliminate HRGC and ensure that Bridgeview assumed control of the gun club constituted an unfair and deceptive trade practice.”[22]

         HRGC also notes that Defendants acknowledge in their own brief that the LUTPA analysis is a fact-specific one and that “one critical factor is the defendant's motives, ”[23] which is an inappropriate determination at the summary judgment stage.[24] Although Plaintiffs lack documentary evidence demonstrating a conspiracy between Morris and Baker, they argue that the language of the RFP, which states that Morris Entities hired Eddie Baker as General Manager for Bridgeview due, in part, to the fact that he was General Manager of HRGC for the past three years and had “a vast knowledge of every aspect of the business, established vendors and customers, working knowledge of all type of equipment, . . . ” demonstrates that there is at least a genuine factual dispute regarding whether Morris hired Baker to use his experience to replace HRGC and assume operation of the gun club.[25] Plaintiffs also note that Morris has acknowledged that his attorney worked with the LED attorney to prepare the LED's Request for Bid and tailor it to Morris' bid proposal, ensuring that Morris would be awarded the lease, which Plaintiffs maintain calls into question the motives and credibility of the Defendants.[26]

         Considering the foregoing jurisprudence and the arguments and evidence offered by the Parties, the Court finds that resolution of Plaintiffs' LUTPA claim depends in large part on the credibility of the witnesses, which the Court finds can best be determined by the Court during live testimony at trial and after cross-examination.[27] Accordingly, Defendants' Joint Motion for Partial Summary Judgment on Louisiana Unfair Trade Practices Act Claim[28] is DENIED.

         III. PEREMPTION/RES JUDICATA/ISSUE PRECLUSION

         In addition to their substantive motion to dismiss Plaintiffs' LUTPA claims, Defendants have asserted an additional motion arguing that Plaintiffs' LUTPA claims should be dismissed because they are preempted and under the doctrines of res judicata or issue preclusion.

         A. Peremption

         Defendants maintain that private actions under LUTPA are subject to a one-year peremptive period “running from the time of the transaction or act which gave rise to the cause of action.”[29] Defendants argue that Duplessis, and by extension HRGC, had knowledge of the alleged bad acts giving rise to the LUTPA claim in October of 2016.[30]As it is undisputed that Plaintiffs did not file the LUTPA claim against Morris Entities until April 13, 2018, long after the one-year peremptive period had expired, Defendants contend LUTPA claims brought against Morris Entities should be dismissed.[31]Defendants further argue that the continuing tort theory does not apply to peremption; therefore, Plaintiffs' filing suit against Baker is irrelevant to the timeliness of the LUTPA claims asserted against Morris Entities.[32]

         In opposition, Plaintiffs argue that there has been confusion as to whether LUTPA is subject to a peremptive or prescriptive time period; thus, the Louisiana Legislature issued a clarifying amendment, La. R.S. 51:4109(E), which states: “[t]he action provided by this Section shall be subject to a liberative prescription of one year running from the time of the transaction or act which gave rise to this right of action.”[33] Plaintiffs contend this amendment leaves no doubt that the time period applied to LUTPA is prescriptive and is, therefore, subject to multiple doctrines that delay its commencement and/or running.[34] Further, Plaintiffs maintain that the LUTPA violations include acts committed by Baker and the Morris Entities well after the March 15, 2017 awarding of the lease to Bridgeview, and such violations continue today.[35]

         Because suit against one defendant timely interrupts prescription against all defendants who are solidarily liable, and because Baker and Morris are solidarily liable in this matter, Plaintiffs argue that the suit filed against Baker on March 23, 2017, well within the prescriptive period, is timely against Morris Entities and should not be dismissed.[36]Alternatively, Plaintiffs contend the continuing tort doctrine applies in this case because the LUTPA limitations period is prescriptive, so the prescriptive period may be suspended when a defendant's violations are continuing.[37] The Plaintiffs claim that the Defendants' violative conduct relating to the continued use of HRGC's proprietary information continues today.[38]

         In their Reply, Defendants impugn Plaintiffs' argument that the August 2018 amendment to La. R.S. 51:1409(E) clarifies that LUTPA claims are subject to a one-year prescriptive period, arguing that “Plaintiffs attempt sleight of hand, ”[39] and, citing La. R.S. 24:201, et seq., stating that the Louisiana State Law Institute made only “stylistic changes” rather than substantive changes to the statute.[40] However, this Court recently considered the effect of the August 2018 amendment to the statute and concluded that Plaintiffs' argument is correct.

         In Trinity Medical Services, L.L.C. v. Merge Healthcare Solutions, Inc., [41] this Court considered the same arguments asserted in the present matter regarding the 2018 amendment to La. R.S. 51:1409(E). The Court explained how both Louisiana federal courts and state appellate courts have interpreted this statute prior to the 2018 Amendment:

Classification of the time period imposed on LUPTA claims as a peremptive period instead of a prescriptive period is significant because prescriptive periods may be extended by doctrinal devices, such as contra non valentem and the “continuing tort” theory. According to La. R.S. § 51:1409(E), there is a one year prescriptive period on LUPTA claims.
However, this statute has been interpreted by several Louisiana courts as imposing a peremptive period. See e.g., Glod v. Baker, 899 So.2d 642 (La.App. 3 Cir. 2005); Capital House Pres. Co. v. Perryman Consultants, Inc., 725 So.2d 523 (La.App. 1 Cir. 1998); Canal Marine Supply, Inc. v. Outboard Marine Corp. of Waukegan, Ill., 522 So.2d 1201 (La.App. 4 Cir. 1988). This interpretation of La. R.S. § 51:1409(E) originates in much older case law holding that if a statute creating a right also provides the time period for that right to be exercised, the period is considered a peremptive one. See Guillory v. Avoyelles R.R. Co., 28 So. 899 (La. 1901).[42]

         The Court then noted the recent amendment and explained the distinction between peremptive and prescriptive periods, particularly regarding tolling doctrines:

The Louisiana Legislature has recently revised La. R.S. § 51:1409(E), effective August 1, 2018, to read as follows: “The action provided by this Section shall be subject to a liberative prescription of one year running from the time of the transaction or act which gave rise to this right of action.” 2018 La. Sess. Law Serv. Act 337 (H.B. 759) (West). The change may be an attempt to resolve and clarify the peremptive versus prescriptive dispute among Louisiana courts regarding this statute, which the Louisiana Supreme Court previously declined to resolve in Miller, 991 So.2d at 456. If the time limit imposed by the statute is, in fact, a peremptive period, the doctrine of contra non valentem does not apply to LUPTA claims. See Reese, 684 F.Supp.2d at 801; Dominion Expl. & Prod., Inc. v. Waters, 972 So.2d 350, 362 (La.App. 4 Cir. 2007). On the other hand, if the time limit imposed by La. R.S. § 51:1409(E) is a prescriptive period, as the statute itself indicates (and as the recent legislative changes to this statute indicate), then the doctrine of contra non valentem would apply to LUPTA claims.
With regard to prescriptive periods, the doctrine of contra non valentem includes a “discovery rule, ” which stipulates that prescription does not begin to run until the injured party discovers or should have discovered the facts upon which the cause of action is based through reasonable diligence. See Allstate Ins. Co. v. Fred's Inc., 18 So.3d 172, 178 (La.App. 2 Cir. 2009), rev'd, 25 So.3d 821 (La. 2010) (holding that the Second Circuit erroneously found that the doctrine of contra non valentem applied to the facts of the case because the record of the plaintiff's actions indicated a lack of diligence, which should have precluded the Second Circuit from applying the doctrine).
Additionally, the prescriptive period may be delayed by a “continuing tort” theory. Under this theory, when the cause of the plaintiff's injury is a continuous one giving rise to successive damages, prescription does not begin to run until the conduct which caused the damages ends. See Crump v. Sabine River Auth., 737 So.2d 720, 726 (La. 1999); Bustamento v. Tucker, 607 So.2d 532, 543 n.8 (La. 1992); Reese, 684 F.Supp.2d at 802. In other words, “‘[a] continuing tort is occasioned by unlawful acts, not the continuation of the ill effects of an original wrongful act.'” Miller, 991 So.2d at 456 (citing Crump, 737 So.2d at 728).[43]

         The Court ultimately concluded that La. R.S. 51:1409(E) “contemplates a prescriptive period, ”[44] and explained further that the amended statute should apply retroactively as it is procedural in nature:

Because the change to La. R.S. § 51:1409(E) is only recently effective, and the amendment does not indicate expressly whether the statute applies retroactively, the Court must consider whether the amended statute should apply retroactively. Louisiana Civil Code art. 6 indicates that laws which are procedural in nature apply both prospectively and retroactively, unless there is a legislative expression to the contrary. See also Jacobs v. City of Bunkie, 737 So.2d 14 (La. 1999).
The Fifth Circuit and the Louisiana Supreme Court have noted that, in Louisiana, prescriptive periods are generally treated as procedural laws. See e.g., Holt v. State Farm Fire and Cas. Co., 627 F.3d 188, 192 (5th Cir. 2010) (citing Chance v. Am. Honda Motor Co., 635 So.2d 177, 178 (La. 1994); see also Lott v. Haley, 370 So, 2d 521, 523 (La. 1979). Prescriptive periods are considered remedial, or procedural, in nature, and therefore are generally accorded retroactive application. See Ebinger v. Venus Const. Corp., 65 So.3d 1279, 1285 (La. 2011) (citing Lott, 370 So.2d at 523)). However, there are two exceptions to this general rule. First, when the retroactive application would “strip a party of a vested right, ” or second, when retroactive application would “revive an already prescribed cause of action.” Holt, 327 F.3d at 193 (citing Lott, 370 So.2d at 523-24).
Here, neither of the exceptions to the general rule of retroactivity apply. First, Plaintiffs would not be stripped of a vested right by retroactive application of the statute. The changes to the statute merely clarify the old law rather than change it substantively. Second, the retroactive application of La. R.S. § 51:1409(E) would not revive an already prescribed cause of action. Under both the plain and revised statutory language, Plaintiffs' LUPTA claims would not have prescribed.
The new statutory language does not change the prescriptive period at issue in this case; instead, it simply reiterates that the time period at issue is a liberative prescriptive period rather than a peremptive period (as the old statute had been construed in spite of its plain language). Thus, the general rule of retroactive application for statutes contemplating prescriptive periods is appropriate in this case. As a result, the analysis of the retroactivity of the amended statute weighs heavily in favor of considering the time period as a prescriptive one. Therefore, the Court finds that La. R.S. § 51:1409(E) contemplates a one-year prescriptive period.[45]

         At least two district judges in the Western District of Louisiana agreed with this Court's holding in Trinity Medical Services. In Tripp v. Pickens, [46] the court addressed the same issue following the 2018 amendment to the statute and noted that this Court “has held that the 2018 amendment is procedural so, under Louisiana retroactivity principles, the clarified prescription period and related doctrine of continuing tort would apply to even claims that preexisted the amendment.[47] That opinion is persuasive.”[48] In Jeanes v. McBride, [49] the court explained:

“In Louisiana, statutes of limitation are generally treated as procedural laws.”
In this case, the legislative history of the 2018 LUTPA amendment sheds no light on whether the amendment was meant to have retroactive effect. As a result, the Court follows the general principle that statutes regarding prescription and peremption are procedural and have retroactive effect. The Court holding the 2018 LUTPA amendment is interpretive and has retroactive effect.
This holding is consistent with the holding of the Louisiana Third Circuit Court of Appeal in Congregation of Immaculate Conception Roman Catholic Church of Par. of Calcasieu v. Sam Istre Constr., Inc. In that case, the court held the 2018 amendment to LUTPA suggests “the legislature always intended the time period to be prescriptive” and that the amendment “merely clarifies and interprets an existing law.” The court found that the amendment did not change the law, but rather clarified that LUTPA claims have always been subject to liberative prescription, not peremption. This holding also is consistent with Judge deGravelles' holding in Trinity Med. Servs., L.L.C. v. Merge Healthcare Sols., Inc.[50]

         This Court noted in Felder's Collision Parts, Inc. v. General Motors Co. that “La. Civ.Code art. 2324 provides the basis for solidary liability under Louisiana law.”[51] This article provides, in pertinent part: “He who conspires with another person to commit an intentional and willful act is answerable, in solido, with that person for the damage caused by that act.” Plaintiffs have alleged that Baker and Morris engaged in a conspiracy to cause their damages;[52] therefore, Plaintiffs' suit filed against Baker interrupted prescription as to Morris as well.[53]

         B. Res Judicata/Issue Preclusion

         Defendants also contend that Plaintiffs are barred, at least in part, from filing certain claims against certain Defendants in this suit because the Defendants prevailed in a state court suit based on the same transactions/occurrence that is the subject of this lawsuit. Plaintiffs previously filed suit against the LED and Sheriff Cazes, and Bridgeview intervened in the suit. Ultimately, judgment was entered against HRGC and GILC finding that the LED properly terminated the GILC/LED lease.[54] The judgment declared “the March 5, 2017 Lease of Commercial Property between the [LED] and [Bridgeview] to be valid and enforceable pursuant to Title 41 of the Louisiana Revised Statutes.”[55]Defendants argue there is no doubt that the judgment is valid and final, and the Parties are not required to have the same physical identity but, rather, must appear in the same “quality or capacity” in both suits.[56] Defendants state that GILC and HRGC were parties to the previous lawsuit, and Bridgeview, a single member LLC owned by Keith Morris -the majority shareholder of Sugar West, Inc. - was a party to the previous lawsuit.[57]Therefore, Defendants claim that the Morris Entities, through Bridgeview, can be considered to have appeared in the prior lawsuit as well as the current one.[58]

         Defendants maintain that this lawsuit arises out of the same transaction/occurrence which was the subject matter of the first action, i.e., bad acts by Baker, Morris, and Sheriff Cazes with respect to the termination of the LED/GILC lease and subsequent award of a lease to Bridgeview.[59] Defendants claim that the allegations cover the same acts over the same relevant time period, and Plaintiffs knew all pertinent facts at the time of the previous trial and, therefore, have no new claims that did not already exist when they filed the state court lawsuit.[60] Because all of Plaintiffs' claims against the Morris Entities arise out of the same transactions and occurrences which occurred prior to the judgment in the previous lawsuit, Defendants argue Plaintiffs' claims are therefore subject to res judicata and should be dismissed.[61] Specifically, Defendants argue that HRGC and GILC “have already had their day in court and lost twice on two key issues: lease termination and public bid process.”[62] ...


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