Opinion
2019 CA 0744 2019 CW 0515
07-02-2019
CAMSOFT DATA SYSTEMS, INC. v. SOUTHERN ELECTRONICS SUPPLY, INC. AND ACTIVE SOLUTIONS, LLC
Karli Glascock Johnson Vance A. Gibbs Tara M. Madison Baton Rouge, Louisiana and James C. Grant Christopher A. Riley Elizabeth Helmer Michael P. Kenny Atlanta, Georgia Counsel for Defendants/Appellants Dell, Inc. & Dell Marketing, L.P. Jason L. Melancon Robert C. Rimes R. Lee Daquanno, Jr. Frank Tomeny, III Baton Rouge, Louisiana and Marx D. Sterbcow New Orleans, Louisiana and Mark D. Plaisance Marcus J. Plaisance Prairieville, Louisiana Counsel for Plaintiff/Appellee CamSoft Data Systems, Inc. Michael T. Beckers Brent P. Frederick Danielle N. Goren Tiffany T. Kopfinger Baton Rouge, Louisiana Counsel for Defendants/Appellees MMR Constructors, Inc., MMR Group, Inc. & MMR Offshore Services, Inc. Gus A. Fritchie, III New Orleans, Louisiana Counsel for Defendant/Appellee Continental Casualty Company Christine Lipsey Amanda Stout Baton Rouge, Louisiana and Mark J. Chaney New Orleans, Louisiana and Christopher H. Toll Pro Hac Vice Greenwood Village, Colorado Counsel for Defendant/Appellee Ciber, Inc.
NOT DESIGNATED FOR PUBLICATION Appealed from the Nineteenth Judicial District Court
Parish of East Baton Rouge
State of Louisiana
Case No. 582,741
The Honorable Janice Clark, Judge Presiding Karli Glascock Johnson
Vance A. Gibbs
Tara M. Madison
Baton Rouge, Louisiana
and
James C. Grant
Christopher A. Riley
Elizabeth Helmer
Michael P. Kenny
Atlanta, Georgia Counsel for Defendants/Appellants
Dell, Inc. & Dell Marketing, L.P. Jason L. Melancon
Robert C. Rimes
R. Lee Daquanno, Jr.
Frank Tomeny, III
Baton Rouge, Louisiana
and
Marx D. Sterbcow
New Orleans, Louisiana
and
Mark D. Plaisance
Marcus J. Plaisance
Prairieville, Louisiana Counsel for Plaintiff/Appellee
CamSoft Data Systems, Inc. Michael T. Beckers
Brent P. Frederick
Danielle N. Goren
Tiffany T. Kopfinger
Baton Rouge, Louisiana Counsel for Defendants/Appellees
MMR Constructors, Inc., MMR Group,
Inc. & MMR Offshore Services, Inc. Gus A. Fritchie, III
New Orleans, Louisiana Counsel for Defendant/Appellee
Continental Casualty Company Christine Lipsey
Amanda Stout
Baton Rouge, Louisiana
and
Mark J. Chaney
New Orleans, Louisiana
and
Christopher H. Toll
Pro Hac Vice
Greenwood Village, Colorado Counsel for Defendant/Appellee
Ciber, Inc. BEFORE: CRAIN, THERIOT, and HOLDRIDGE, JJ. THERIOT, J.
In this appeal, Dell, Inc. and Dell Marketing, L.P. (sometimes referred to collectively as "Dell") seek review of the trial court's judgment denying their Motion for Partial Summary Judgment on CamSoft's Claims Under Louisiana's Uniform Trade Secrets Act. For the following reasons, we affirm the trial court's judgment. We deny the companion writ application, as well as CamSoft Data Systems, Inc.'s ("CamSoft") motion to dismiss the writ, referred to this panel, as moot.
FACTS AND PROCEDURAL HISTORY
The facts and procedural history are laid out in more detail in this court's opinion in CamSoft Data Systems, Inc. v. Southern Electronics Supply, Inc., 2019-0730 (La. App. 1st Cir. 7/2/19) (unpublished), which is also being issued this date.
Relevant hereto, CamSoft filed a Master Petition for Declaratory Judgment, Supplemental Relief, Damages, and Attorney's Fees, alleging that the defendants, including Dell, engaged in a conspiracy to steal, and did steal, its trade secrets in violation of the Louisiana Uniform Trade Secrets Act ("LUTSA"), La. R.S. 51:1431, et seq.
In response, Dell filed a motion for partial summary judgment seeking to dismiss these claims. After a hearing, the trial court signed a judgment on April 2, 2019, denying Dell's Motion for Partial Summary Judgment on CamSoft's Claims Under Louisiana's Uniform Trade Secrets Act. From this judgment, Dell appeals pursuant to La. R.S. 51:135.
As set forth in La. R.S. 51:135, all interlocutory judgments in cases involving antitrust claims shall be appealable within five days and shall be heard and determined within twenty days after the appeal is lodged.
SUMMARY JUDGMENT AND THE STANDARD OF REVIEW
A motion for summary judgment is a procedural device used to avoid a full scale trial when there is no genuine issue of material fact. M/V Resources LLC v. Louisiana Hardwood Products LLC, 2016-0758, p. 8 (La. App. 1st Cir. 7/26/17), 225 So.3d 1104, 1109, writ denied, 2017-1748 (La. 12/5/17), 231 So.3d 624. A motion for summary judgment is properly granted if, after an opportunity for adequate discovery, the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. La. Code Civ. P. art. 966(A)(3). The burden of proof rests with the mover. La. Code Civ. P. art. 966(D)(1). Nevertheless, if the mover will not bear the burden of proof at trial on the issue that is before the court on the motion for summary judgment, the mover's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court the absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. The burden is on the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. In determining whether summary judgment is appropriate, appellate courts review evidence de novo under the same criteria that govern the trial court's determination of whether summary judgment is appropriate. M/V Resources LLC, 2016-0758 at p. 9, 225 So.3d at 1109.
A fact is material if it potentially ensures or precludes recovery, affects a litigant's ultimate success, or determines the outcome of the legal dispute. A genuine issue of material fact is one to which reasonable persons could disagree. If reasonable persons could reach only one conclusion, there is no need for trial on that issue and summary judgment is appropriate. Doyle v. Lonesome Development, Limited Liability Company, 2017-0787, p. 6 (La. App. 1st Cir. 7/18/18), 254 So.3d 714, 718-19, writ denied, 2018-1369 (La. 11/14/18), 256 So.3d 291, quoting Jackson v. City of New Orleans, 2012-2742, pp. 5-6 (La. 1/28/14), 144 So.3d 876, 882, cert. denied, — U.S. —, 135 S.Ct. 197, 190 L.Ed.2d 130 (2014). Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is material can be seen only in light of the substantive law applicable to the case. Succession of Hickman v. State Through Board of Supervisors of Louisiana State University Agricultural and Mechanical College, 2016-1069, p. 5 (La. App. 1st Cir. 4/12/17), 217 So.3d 1240, 1244.
Although summary judgments are now favored, factual inferences reasonably drawn from the evidence must be construed in favor of the party opposing the motion, and all doubt must be resolved in the opponent's favor. See Quality Environmental Processes, Inc. v. Energy Development Corporation, 2016-0171, p. 14 (La. App. 1st Cir. 4/12/17), 218 So.3d 1045, 1059.
DISCUSSION
In its Master Petition, CamSoft described its trade secrets as:
...the compatibility of networking and camera equipment, the use of various equipment settings and features, the proper distances for transmitting the signals, the proper method of powering the devices, the proper arrangement of network nodes, the proper data backhaul routing methods for live video signals, the method of controlling public and private access to the wireless network, the design of custom software to access the Crime Camera System, marketing plans for governmental agency presentations, pricing information, and strategic business development plans.
In its first set of interrogatories propounded to CamSoft, Dell asked CamSoft to:
[i]dentify and specifically describe any alleged trade secret that forms the basis of any allegation in your Master Petition, including, but not limited to, the allegations that form the basis of your claim for Conspiracy to Violate Louisiana's Uniform Trade Secrets Act, La. R.S. 51:1431, et seq.
In response, CamSoft identified five trade secrets. Trade secret #1 was described as a "Backend Authentication System for a TROPOS Mesh Network." In its discovery response, CamSoft contended that, after researching and testing, it "compiled a proprietary best of breed list of wireless networking equipment" and designed and constructed one of the world's first fully functioning public/private municipal wireless networks, which was deployed in the City of Baton Rouge in the summer of 2003. As part of this endeavor, CamSoft wrote a customized authentication software system to permit dual public and private use of the Tropos network.
In opposition to Dell's motion, CamSoft identified trade secret #1 as a "best of breed list." According to CamSoft, this trade secret outlines the company's first step in developing a municipal wireless network: "purchasing and testing multiple manufacturers' wireless networking products to compile performance statistics and develop a proprietary 'best of breed' list." In its reply, Dell asserted that trade secret #1 has never before been identified as a "best of breed list" but, instead, has always been a "Backend Authentication System." This confusion regarding trade secret #1 does not affect our conclusion that a genuine issue of material fact exists regarding the relationship between CamSoft's trade secrets.
Trade secret #2 was described as a "Multi-Level Registration and Authentication System." According to CamSoft, this computer program allowed municipal wireless users to register new accounts to log into the public/private municipal wireless network. The program enabled both private and public users to access the system with both free and paid services and "permitted a single unitary networking system for simultaneous private and public safety purposes."
Trade secret #3 was described as the "Design of IP Based Surveillance Cameras and Multi-Purpose Muni-Wireless Network." CamSoft sometimes refers to this trade secret as its "wireless Security Canopy system," which, it appears the parties have also referred to as the "Crime Camera System." For ease of reference and consistency, trade secret #3 is referred to herein as the "Crime Camera System." CamSoft provided substantial details regarding its efforts to develop the Crime Camera System in response to Dell's interrogatory.
Trade secret #4 was described as a "Customized Web Based Mug Shots [sic] Database." CamSoft developed a mugshot database program to promote the potential public safety features of the municipal wireless network.
Finally, trade secret #5 was described as a "Telemedicine Solution." Using its prior municipal wireless network designs, CamSoft developed this "solution" to provide a wireless data communications network capable of relaying in-field medical information from ambulances to hospital doctors and staff. CamSoft met with hospital officials to discuss the project but, ultimately, was not awarded the contract to deploy the solution. Instead, NetMethods, LLC ("NetMethods") secured the deal.
To succeed on a LUTSA claim, the plaintiff must establish: (1) the information at issue is a legally protected trade secret; (2) an express or implied contractual or confidential relationship existed between the parties which obligated the party receiving the secret information not to disclose it; and (3) the party receiving the secret information wrongfully disclosed the information to the injury of the plaintiff. Bihm v. Deca Systems, Inc., 2016-0356, p. 20 (La. App. 1st Cir. 8/8/17), 226 So.3d 466, 483, citing B & G Crane Service, L.L.C. v. Duvic, 2005-1798, p. 4 (La. App. 1st Cir. 5/5/06), 935 So.2d 164, 167, writ denied, 2006-1820 (La. 10/27/06), 939 So.2d 1280.
LUTSA defines "trade secret" as:
information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
La. R.S. 51:1431(4).(a) derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and
(b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
In its motion, Dell asserts that CamSoft's purported trade secrets are "separate." Dell maintains this argument on appeal, alleging that CamSoft's purported trade secrets are "separate and distinct." According to Dell, trade secrets #1, #2, #4, and #5 "had nothing to do" with CamSoft's Crime Camera System, trade secret #3. As a result, Dell contends that, for purposes of its motion for partial summary judgment, each trade secret must be analyzed individually. When this is done, the evidence, according to Dell, shows that CamSoft's claims under LUTSA fail as a matter of law.
CamSoft does not directly address Dell's assertion that the trade secrets are separate and distinct and should be analyzed individually. Instead, CamSoft primarily focuses on trade secret #3 and how, based on this trade secret, it will satisfy all of the elements of its LUTSA burden of proof at trial. In doing so, CamSoft explained how and why its trade secrets came to exist and culminated in the development of trade secret #3 or complimented that technology. According to CamSoft, the trade secrets identified in its discovery responses "chronicled the company's research and development into municipal Wi-Fi networks."
CamSoft did not specifically address trade secret #5 in its opposition.
We find that Dell, as mover, failed to satisfy its burden of proving that no genuine issues of material fact remain for trial. Dell's motion hinges on its argument that CamSoft's trade secrets are separate and distinct and must be analyzed individually; yet, Dell's evidence does nothing to prove this threshold fact. To the contrary, it appears to this court, upon our de novo review of the evidence, that each purported trade secret concerns CamSoft's creation of a wireless network that lead to the development of the Crime Camera System. It is not evident, and Dell failed to establish, that the wireless network and the Crime Camera System are separate and distinct.
Dell cites CQ, Inc. v. TXU Mining Company, L.P., 565 F.3d 268 (5th Cir. 2009) and Aspen Technology, Inc. v. Kunt, No. 10-1127 (S.D. Tex. Apr. 9, 2012), 2012 WL 13042575, at *1, and argues that "[c]ourts have indicated that where there is more than one alleged trade secret, it is proper for a court to grant partial summary judgment dismissing the claim as to any trade secret for which the plaintiff has failed to meet its burden." However, whether the trade secrets were separate and distinct was not at issue in these cases, so the resolution of the issue presented in Dell's motion was not discussed.
As stated in CamSoft's discovery response wherein it identified its trade secrets, "In June 2003, CamSoft was approached by Active Solutions[, LLC] and Southern Electronics [Supply, Inc.] to help design a wireless network for a very large scale, municipal video surveillance system proposed by the City of New Orleans." Trade secrets #1 and #2 are software programs developed by CamSoft to authenticate and register users on a wireless network. During CamSoft's corporate deposition, Carlo MacDonald ("MacDonald") explained that trade secret #1 was step 1, getting users onto the network, and trade secret #2 was step 2, managing users once they were inside the municipal wireless network by limiting each user's access to certain parts of the network. MacDonald testified that "authentication systems on the back end" are needed in a municipal wireless system. According to CamSoft, the Crime Camera System, trade secret #3, combined "Wi-Fi networking and video surveillance capabilities all in one."
In its motion, Dell cites MacDonald's testimony that the software codes for trade secrets #1 and #2 were not disclosed to the defendants and argues that this "admission" forecloses any finding that it misappropriated these trade secrets. For reasons discussed herein, we disagree and are unpersuaded by Dell's effort to oversimplify the facts, the evidence, and the issues presented. Contrary to Dell's argument, and considering the record before us, we find that these "admissions" further demonstrate the existence of genuine issues of material fact to be decided by the trier of fact.
Furthermore, Mark St. Pierre attested in his affidavit filed in opposition to Dell's motion that, "The municipal wireless network and video surveillance application eventually sold through Dell's WSCA Contract replicated the wireless networking equipment and design methodologies learned from the Crime Camera Project in New Orleans..."
Similarly, CamSoft's mugshot database program, the subject of trade secret #4, was developed to demonstrate to law enforcement the "power of the muni-wireless network." It appears, based on the evidence before this court, that this database relied upon and complimented CamSoft's municipal wireless network and the Crime Camera System. CamSoft used the mugshot database as a marketing tool to demonstrate the value of the wireless network and the Crime Camera System. Finally, although trade secret #5 does not appear to be directly related to the development and deployment of the Crime Camera System, CamSoft contends that NetMethods, Dell's alleged co-conspirator, was awarded the related wireless networking contract and that Dell sold equipment that contained the telemedicine solution.
In its appellate brief, CamSoft asserts that four of its five alleged trade secrets are at issue for misappropriation by Dell and makes no argument concerning trade secret #5. Nevertheless, partial dismissal of CamSoft's LUTSA claim as to trade secret #5 is not warranted in light of our finding that Dell failed to establish that CamSoft's five purported trade secrets should be analyzed individually. --------
Considering the complex and technical issues involved in this case, we find that it is unclear, from the record before us, whether CamSoft's alleged trade secrets are separate and distinct such that each may be analyzed individually, effectively creating multiple LUTSA causes of action. Based on the summary judgment record, reasonable persons could disagree regarding whether these trade secrets are separate and distinct. Dell bore the burden of proving that no genuine issues of material fact remained and that it was entitled to dismissal of CamSoft's LUTSA claim as a matter of law. Having failed to do so, the burden never shifted to CamSoft. See Kasem v. State Farm Fire and Casualty Company, 2016-0217, p. 7 (La. App. 1st Cir. 2/10/17), 212 So.3d 6, 12, citing LeBlanc v. Bouchereau Oil Company, Inc., 2008-2064, p. 4 (La. App. 1st Cir. 5/8/09), 15 So.3d 152, 155, writ denied, 2009-1624 (La. 10/16/09), 19 So.3d 481 ("If, however, the mover fails in his burden to show an absence of factual support for one or more of the elements of the adverse party's claim, the burden never shifts to the adverse party, and the mover is not entitled to summary judgment."). Upon the record before us, we find that genuine issues of material fact remain concerning the interdependency and relationship between CamSoft's purported trade secrets. Therefore, the trier of fact must consider all facts that form the basis of CamSoft's LUTSA cause of action, including the history and details of each purported trade secret identified by CamSoft, to determine the liability of Dell and the remaining defendants for an alleged misappropriation of CamSoft's trade secret(s).
CONCLUSION
For the above and foregoing reasons, the April 2, 2019 judgment denying Dell, Inc. and Dell Marketing, L.P.'s Motion for Partial Summary Judgment on CamSoft's Claims under Louisiana's Uniform Trade Secrets Act is affirmed. We deny the companion writ application, as well as CamSoft Data System, Inc.'s motion to dismiss, referred to this panel, as moot. Costs of this appeal are to be assessed against appellants, Dell, Inc. and Dell Marketing, L.P.
AFFIRMED; WRIT AND MOTION TO DISMISS DENIED AS MOOT. CRAIN, J., concurring.
I concur the mover failed to point out an absence of factual support for one or more elements essential to the plaintiff's claim. See La. Code Civ. Pro. art. 966D(1). For the additional reasons stated in my dissent in CamSoft Data Systems, Inc. v. Southern Electronics Supply, Inc., 19-0730 (La. App. 1 Cir. 7/2/19) (unpublished), also issued this date, I believe CamSoft Data Systems, Inc.'s claims under LUTSA prescribed. HOLDRIDGE, J., concurring.
I concur and further add that in accordance with La. Code Civ. P. art. 966(D)(1), Camsoft has produced sufficient factual support to create the existence of genuine issues of material fact which would preclude the granting of a motion for summary judgment. Whether the burden on the motion for partial summary judgment remained with Dell or shifted to Camsoft, there are sufficient factual issues that are in dispute which would preclude the granting of a partial summary judgment and necessitate a full trial on the merits.