TLX Incorporated v. JetBlue Airways Corporation

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 TLX, Inc., No. CV-19-04734-PHX-SMB

10 Plaintiff, ORDER

11 v.

12 JetBlue Airways Corporation,

13 Defendant. 14 15 Pending before the Court is Plaintiff TLX, Inc.’s (“TLX”) Motion for Partial 16 Summary Judgment (the “Motion”), (Doc. 136), along with its corresponding Statement of 17 Facts, (Doc. 137). Defendant JetBlue Airways Corporation (“JetBlue”) filed a Response, 18 (Doc. 188), and a Controverting and Separate Statement of Facts, (Doc. 189). TLX replied, 19 (Doc. 212), and the Court heard oral argument on March 24, 2022. The Court has 20 considered the briefing, facts, and relevant law and will deny TLX’s Motion for the reasons 21 explained below. 22 I. BACKGROUND 23 TLX engaged as a vendor in the airline crew reservation industry. (Doc. 137 ¶ 3.) 24 In or around 2001, TLX created a travel management layover solutions software. (Id. ¶ 1.) 25 In 2010, JetBlue invited TLX and several other competitors to bid on a Request for 26 Proposal (“RFP”) issued for JetBlue’s business related to its crew reservation needs. (Id. 27 ¶ 11.) TLX was engaged in a similar RFP process for crew related services by United 28 Parcel Service (“UPS”), which was TLX’s client at the time. (Id. ¶ 12.) Prior to TLX 1 submitting a response to JetBlue’s RFP, JetBlue and TLX entered into a Non-Disclosure 2 Agreement (“NDA”). (Id. ¶ 13.) The NDA provided in relevant part as follows: 3 4 Receiving Party acknowledges that all material and information which has 5 or will come into its possession or knowledge in connection with business discussions, conferences or other activities with the Disclosing Party (i) is 6 proprietary to the Disclosing Party, having been designed, developed or 7 accumulated by the Disclosing Party at a great expense and over lengthy periods of time, (ii) is secret, confidential and unique and the exclusive 8 property of the Disclosing Party …. Receiving Party further acknowledges 9 that any use or disclosure of Confidential Information other than for the sole benefit of the Disclosing Party will be wrongful and will cause irreparable 10 damage to the Disclosing Party and, therefore, agrees to hold Confidential Information in strictest confidence and not to make use of it other than for 11 the benefit of the Disclosing Party. 12 13 Receiving Party shall not communicate Confidential Information in any in 14 any form to any third party without the prior written consent of the Disclosing Party, and shall use its best efforts to prevent inadvertent disclosure of 15 Confidential Information to any third party. 16 17 (Id. ¶ 14.) 18 TLX and its competitor, Accommodations Lodging Solutions (“API”), were 19 competing against one another in both the UPS and JetBlue RFP process. (Id. ¶ 17.) 20 JetBlue was API’s client at the time. (Id. ¶ 18.) JetBlue agreed to provide API the 21 opportunity to match the most competitive last round offer submitted to JetBlue by other 22 bidders. (Id. ¶ 21.) A few weeks after TLX provided JetBlue with its RFP proposal, Angie 23 Gobin, a JetBlue employee, emailed Ramzi Kamel of API the pricing information for all 24 of the competitors in the JetBlue RFP, including TLX. (Id. ¶ 27.) Ramzi Kamel also 25 procured a copy of TLX’s second submission from JetBlue just four days after TLX 26 submitted the information to JetBlue, although it is unclear how he procured this 27 information. (Id. ¶ 31.) TLX argues that API’s knowledge of its pricing provided API 28 with an edge that allowed them to procure the JetBlue contract. (Id. ¶ 34.) Additionally, 1 TLX contends that API’s knowledge of its pricing information allowed API to match 2 TLX’s pricing and procure the UPS contract. (Id. ¶ 35.) 3 II. LEGAL STANDARD 4 Summary judgment is appropriate when “there is no genuine dispute as to any 5 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 6 56(a). A material fact is any factual issue that might affect the outcome of the case under 7 the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 8 A dispute about a fact is “genuine” if the evidence is such that a reasonable jury could 9 return a verdict for the nonmoving party. Id. “A party asserting that a fact cannot be or is 10 genuinely disputed must support the assertion by . . . citing to particular parts of materials 11 in the record” or by “showing that materials cited do not establish the absence or presence 12 of a genuine dispute, or that an adverse party cannot produce admissible evidence to 13 support the fact.” Fed. R. Civ. P. 56(c)(1)(A), (B). The court need only consider the cited 14 materials, but it may also consider any other materials in the record. Id. 56(c)(3). Summary 15 judgment may also be entered “against a party who fails to make a showing sufficient to 16 establish the existence of an element essential to that party’s case, and on which that party 17 will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 18 Initially, the movant bears the burden of demonstrating to the Court the basis for the 19 motion and “identifying those portions of [the record] which it believes demonstrate the 20 absence of a genuine issue of material fact.” Id. at 323. If the movant fails to carry its 21 initial burden, the nonmovant need not produce anything. Nissan Fire & Marine Ins. Co. 22 v. Fritz Cos., 210 F.3d 1099, 1102–03 (9th Cir. 2000). If the movant meets its initial 23 responsibility, the burden then shifts to the nonmovant to establish the existence of a 24 genuine issue of material fact. Id. at 1103. The nonmovant need not establish a material 25 issue of fact conclusively in its favor, but it “must do more than simply show that there is 26 some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith 27 Radio Corp., 475 U.S. 574, 586 (1986). The nonmovant’s bare assertions, standing alone, 28 are insufficient to create a material issue of fact and defeat a motion for summary judgment. 1 Liberty Lobby, 477 U.S. at 247–48. “If the evidence is merely colorable, or is not 2 significantly probative, summary judgment may be granted.” Id. at 249–50 (citations 3 omitted). However, in the summary judgment context, the Court believes the nonmovant’s 4 evidence, id. at 255, and construes all disputed facts in the light most favorable to the 5 nonmoving party, Ellison v. Robertson, 357 F.3d 1072, 1075 (9th Cir. 2004). If “the 6 evidence yields conflicting inferences [regarding material facts], summary judgment is 7 improper, and the action must proceed to trial.” O’Connor v. Boeing N. Am., Inc., 311 F.3d 8 1139, 1150 (9th Cir. 2002). 9 III. DISCUSSION 10 The Court’s primary inquiry centers around whether JetBlue breached the NDA 11 when Gobin emailed Ramzi Kamel TLX’s pricing information. This analysis will allow 12 the Court to determine whether JetBlue engaged in unfair competition or breached its 13 contract with TLX. 14 A. Whether JetBlue Breached the Non-Disclosure Agreement 15 1. Authentication 16 As an initial matter, JetBlue argues that Gobin’s email to Ramzi Kamel is not 17 admissible as evidence because the email is not authenticated. Courts in this district require 18 that evidence offered in support of a motion for summary judgment be admissible “both in 19 form and content.” Quanta Indem. Co. v. Amberwood Dev. Inc., No. CV-11-01807-PHX- 20 JAT, 2014 WL 1246144, at *2 (D. Ariz. Mar. 26, 2014). “Accordingly, unauthenticated 21 documents cannot be considered in ruling on a motion for summary judgment because 22 authentication is a ‘condition precedent to admissibility.’” Id. (quoting Orr v. Bank of Am., 23 NT & SA, 285 F.3d 764, 773 (9th Cir. 2002)). Importantly, documents produced by a party 24 opponent during discovery are deemed authenticated. In re Homestore.com, Inc. Sec. 25 Litig., 347 F. Supp. 2d 769 (C.D. Cal. 2004) (citing Orr, 285 F.3d 777 n. 20). 26 JetBlue argues that TLX has failed to authenticate Gobin’s email. TLX has not 27 submitted an affidavit authenticating the email, and JetBlue did not produce the email to 28 TLX. Instead, TLX admitted during oral argument and in its Reply, (see Doc. 212 at 2), 1 that it received the email in a production from API in a prior litigation. Moreover, Gobin 2 testified during her deposition that she did not send the email. (Doc. 189 ¶ 34.) Google 3 also did not have records of the email. (Id. ¶ 35.) 4 TLX argues that API produced the email in its prior litigation with TLX and again 5 in response to a subpoena in this litigation. (Doc. 212 at 2.) In addition, TLX argues that 6 the email contains its confidential information that it submitted directly to JetBlue. (Id.) 7 Thus, it contends, there is no other way API could have received it but from JetBlue. (Id.) 8 The Court need not make a decision on admissibility at this stage because—even if 9 the documents are admissible—summary judgment is not appropriate as there is a factual 10 dispute as to whether Gobin sent the email. Because Gobin testified in her deposition that 11 she did not send the email, (Doc. 189 ¶ 34), the fact that she sent the email is in dispute. 12 Moreover, as discussed below, the Court is precluded from granting summary judgment 13 for reasons unrelated to the email’s authenticity. 14 2. The Content of the Email Fails to Show a Breach of the NDA 15 Even if the Court assumes that the email chain between Gobin, Ramzi Kamel, and 16 Mireille Kamel is admissible and that Gobin sent the email, TLX fails to show a breach of 17 the NDA. The email from Gobin to Ramzi Kamel shows that she merely emailed Kamel 18 TLX’s pricing information, along with the pricing information for other participants in the 19 JetBlue RFP. (Doc. 140-1 at 18–19.) No other information is attached to the email. Before 20 detailing TLX’s pricing alternatives, Gobin wrote, “this is all i [sic] have so far.” (Id.) 21 This is insufficient to show that JetBlue breached the non-disclosure agreement. 22 The NDA is, undisputedly, silent as to pricing. The agreement defines 23 “Confidential Information” as “including, but not limited to, financial statements, business 24 plans and strategies, trade secrets, new products and services, computer software, 25 documentation and specifications, customer and prospect lists, and industry statistics and 26 analysis.” (Doc. 137-1 at 8.) 27 Furthermore, the “Confidentiality of Information” section of the NDA describes 28 “secret and confidential” information as: 1 [I]nclud[ing] but not limited to, trade secrets, systems, software, and 2 hardware, concepts, designs and configurations, schedules, costs, 3 performance features, specifications, techniques, copyrighted matter, patented or patentable inventions, plans, methods, drawings, data, tables, 4 calculations, documents or other paperwork, computer program narratives, 5 flow charts, source and object codes, and also includes business and marketing plans, dealings, arrangements, objectives, locations, and customer 6 information 7 (Id.) The type of information described in this provision is more akin to proprietary 8 business information—not pricing information. The categories of information cover items 9 of internal strategy, not final costs which are typically well known in a competitive bidding 10 process. 11 TLX offers a declaration from an employee wherein the employee avows that “we 12 kept out pricing structure and models secret because TLX could provide significant savings 13 to its clients due to the automation the software provided leading to low overhead.” (Doc. 14 137-1 at 3 ¶ 11.) Yet, the pricing structure disclosed is the same as every other bidder—a 15 price per room or a flat monthly subscription—and only the amount differed. The 16 declaration continues, “[t]hese options and alternatives were secret, confidential, and 17 proprietary.” (Id. at 4 ¶ 16.) However, the declaration does not change the fact that it is 18 unclear whether the definition of confidential information could include pricing 19 information. TLX offers no other evidence to show that its pricing information was 20 confidential pursuant to the NDA. Additionally, while TLX has implied that Gobin also 21 emailed Kamel some sort of attachment which contains an analysis of TLX’s entire system 22 and how it works, (Doc. 207 at 9), that evidence is not before the Court at this time. 23 Nothing in the record shows that Gobin emailed an API employee such information. Thus, 24 without further proof that the terms of the NDA include pricing information—which 25 naturally one would expect to be shared with competitors during a competitive bidding 26 process—the Court finds that there is a material dispute of fact as to whether JetBlue ran 27 afoul of the NDA.1 28 1 The parties have also argued whether Gobin was acting as an agent of JetBlue when she 1 B. TLX’s Claims 2 Although not discussed in TLX’s Motion, the parties submit that Arizona law 3 governs TLX’s claims. (See Doc. 188 at 8–10; Doc. 212 at 4.) 4 1. Unfair Competition 5 “The common law doctrine of unfair competition is based on the principles of 6 equity.” Fairway Constructors, Inc. v. Ahern, 970 P.2d 954, 956 (Ariz. Ct. App. 1998). 7 “The general purpose of the doctrine is to prevent business conduct that is ‘contrary to 8 honest practice in industrial or commercial matters.’” Id. (quoting American Heritage Life 9 Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir. 1974)). To prevail on a claim of 10 unfair competition under Arizona law, a plaintiff must either show that it was “engaged in 11 competitive business” with the defendant or that the defendant’s actions were “likely to 12 produce public confusion.” Joshua David Mellberg LLC v. Will, 96 F. Supp. 3d 953, 983 13 (D. Ariz. 2015) (quoting Sutter Home Winery, Inc. v. Vintage Selections, Ltd., 971 F.2d 14 401, 407 (9th Cir. 1992)) (internal quotation marks and citations omitted). “The Arizona 15 Court of Appeals has held that the common law doctrine of unfair competition 16 encompasses several tort theories, such as trademark infringement, false advertising, 17 palming off, and misappropriation.” Joshua David Mellberg LLC 96 F. Supp. 3d at 983 18 (quoting Fairway Constructors, Inc., 970 P.2d at 956) (internal quotation marks omitted). 19 Palming off consists of “a false representation tending to induce buyers to believe that 20 defendant’s product is that of the plaintiff.” Id. (quoting Fairway Constructors, Inc., 96 F. 21 Supp. 3d at 956). 22 TLX has failed to proffer evidence to prove its unfair competition claim. TLX fails 23 to show that it was competitively engaged with JetBlue or that JetBlue’s actions were likely 24 to produce confusion. TLX is a business that provides “travel management layoff 25 solutions,” (Doc. 155 ¶¶ 1–3), and JetBlue is a commercial airline business, (Doc. 189 ¶ 26 1.) The two businesses are obviously not competitors. See Sutter Home Winery, Inc., 971

27 sent the email in question. However, in light of the Court’s finding that there is a dispute 28 of material fact as to whether the email ran afoul of the NDA, the Court finds it unnecessary to analyze that issue. 1 F.2d at 408 (parties must “solicit the same trade” or “solicit the same customers” to be 2 competitors) (quoting Lininger v. Desert Lodge, 160 P.2d 761, 764 (Ariz. 1945)). 3 TLX argues that the evidence in this case shows that JetBlue misappropriated TLX’s 4 confidential information. (Doc. 207 at 4–5.) This argument doesn’t support a claim for 5 unfair competition for two reasons. First, as explained above, there is a dispute of fact as 6 to whether TLX’s pricing information can be classified as confidential information. 7 Second, TLX fails to explain how misappropriation of confidential information supports a 8 claim for unfair competition when the competitor is an uninvolved third party—API. TLX 9 fails to provide any case law supporting a claim of unfair competition against a company 10 that is not a competitor but a customer. Accordingly, TLX’s request for summary judgment 11 on their unfair competition claim is denied. 12 2. Breach of Contract 13 To state a cause of action for breach of contract in Arizona, a plaintiff must plead 14 facts alleging “(1) a contract exists between the plaintiff and defendant; (2) the defendant 15 breached the contract; and (3) the breach resulted in damage to plaintiff.” Dylan 16 Consulting Servs. LLC v. SingleCare Servs. LLC, No. CV-16-02984-PHX-GMS, 2018 WL 17 1510440, at *2 (D. Ariz. Mar. 27, 2018). 18 The Court must deny summary judgment on TLX’s breach of contract claim 19 because, as discussed above, there is a dispute of fact as to whether pricing information 20 was covered by the NDA. With this fact disputed, the Court cannot find that JetBlue 21 breached the agreement with TLX. Therefore, TLX’s request for summary judgment on 22 its breach of contract claim must be denied.2 23 /// 24 /// 25 /// 26 /// 27

28 2 Having denied Plaintiff’s request for summary judgment on both of Plaintiff’s claims, the Court need not address the parties’ causation arguments. IV. CONCLUSION 2 Accordingly, 3 IT IS ORDERED denying Plaintiff’s Partial Motion for Summary Judgment. 4|| (Doc. 136.) 5 Dated this 31st day of March, 2022. 6 7 = . 8 SO te 9 ned States District Mudge, 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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