Universal Services of America LP v. Mazzon

Opinion

1 WO 2 3 4 5

9 Universal Services of America LP, et al., No. CV-23-00463-PHX-JAT

10 Plaintiffs, ORDER

11 v.

12 Daniel Mazzon,

13 Defendant. 14 15 Pending before the Court is Defendant Daniel Mazzon’s (“Defendant”) Motion for 16 Summary Judgment. (Doc. 80). Plaintiffs Universal Services of America LP, Universal 17 Protection Service LP, and Universal Building Maintenance LP (collectively, “Plaintiffs”) 18 have filed a response. (Doc. 81). Defendant filed a reply. (Doc. 82). The Court now rules. 20 A. Procedural Posture 21 Plaintiffs filed the instant action in Maricopa County Superior Court, alleging three 22 counts: (1) breach of contract, (2) tortious interference with contract, and (3) breach of the 23 duty of loyalty. (See generally Doc. 1-2). The action was subsequently removed to federal 24 court. (Doc. 1). In a previous order, this Court dismissed Plaintiffs’ breach of contract 25 claim, leaving just the tortious interference with contract and breach of duty of loyalty 26 claims remaining. (See generally Doc. 32). 27 B. Facts 28 The following facts are either undisputed or recounted in the light most favorable to 1 the non-moving party. Any fact asserted by one party but left unaddressed by the other 2 party will be considered undisputed for the purposes of the motion. See Fed. R. Civ. P. 3 56(e)(2). 4 Plaintiffs are three related “security, janitorial, and other building maintenance 5 services” companies: Universal Services of America, LP (“Universal”), Universal 6 Protection Service, LP (“UPS”), and Universal Building Maintenance, LLC (“AUJS”). 7 (Doc. 1-2 at 15–16). Defendant was employed at AUJS, a “janitorial services company,” 8 as a Business Development Manager beginning in May of 2016. (Id. at 16; Doc. 34 at 2). 9 Defendant filed articles of organization for his new company, Mazzon Industries, effective 10 December 28, 2022. (Doc. 80-6 at 2). Defendant resigned his employment with AUJS on 11 January 4, 2023, effective January 18, 2023; Defendant’s last day at work was January 5, 12 2023. (Doc. 1-2 at 18). 13 The following is an account of Defendant’s interactions with various other entities 14 before his employment at AUJS ended. 15 i. Ace Building Maintenance 16 On September 9, 2022, Defendant corresponded via text message with an Account 17 Executive for Ace Building Maintenance Company (“Ace”), a competitor of Plaintiffs’.1 18 (Doc. 81-2 at 2; Doc. 81 at 5–6). Defendant met with the same Account Executive in person 19 on September 13, 2022. (Doc. 81-2 at 4). Defendant followed up with the Account 20 Executive via text message on September 14, 2022, and some short time later, the Account 21 Executive responded, stating that one of Ace’s Presidents “would love to chat” with 22 Defendant and advising that Defendant should reach out to the President. (Id. at 6–7). On 23 September 14 and 15, 2022, Defendant texted the President, asking her to call him when 24 she was free. (Id. at 21). 25 Defendant met with the Account Executive and the two Ace Presidents at Ace’s 26 1 Indeed, the contract that Defendant ultimately signed with Ace characterized Ace in the 27 following manner: “Ace is in the business of providing facility and maintenance services to commercial clients, including providing commercial property management clients with 28 janitorial cleaning, green cleaning, and carpet and hard floor care programs.” (Doc. 81-5 at 3). 1 office on or around September 27, 2022.2 (Doc. 81 at 8). Defendant then set up a second 2 meeting with the two Ace Presidents to take place on October 13, 2022, at Ace’s office. 3 (Doc. 81-2 at 16–17). On November 2, 2022, Defendant sent a formal document from 4 Mazzon Industries to both Ace Presidents containing the following categories of 5 information: (1) statement of work (daily, weekly, monthly, and quarterly), (2) quarterly 6 events, and (3) pricing, including fee structures and payment method. (Doc. 81-4 at 2–13). 7 Defendant created the document using his personal computer. (Doc. 81-1 at 42). However, 8 Defendant used his AUJS-issued computer to “review[]” the document in “middle to end 9 of September to early October [of 2022].” (Id.). 10 On December 14, 2022, Defendant emailed one of the Ace Presidents, asking 11 whether the President had time the following day to discuss “the contract.” (Doc. 81-6 at 12 9). Mazzon Industries and Ace completed a contract at approximately noon on January 4, 13 2023—the same day Defendant gave his two-week notice of resigning his employment to 14 AUJS. (Doc. 81-5 at 2; Doc. 1-2 at 18). The contract was titled a “Sales Service 15 Agreement” and incorporated as a “Statement of Work” the formal document Defendant 16 had previously sent to Ace. (Doc. 81-5 at 3–16). 17 ii. Restoration HQ 18 On September 15, 2022, Defendant sent a similar formal document from Mazzon 19 Industries to the CEO of Restoration HQ, a “restoration company.” (Doc. 81-2 26–32). The 20 document contained the following categories of information: (1) scope of work (daily, 21 weekly, monthly, and quarterly), (2) events and education (keynote speaker events and 22 other social events),3 and (3) pricing model, including fee structures and payment method.

23 2 Plaintiffs cite to a screenshot of a text message conversation between the Account Executive and Defendant, (Doc. 81-2 at 13), to support this allegation; however, the Court 24 was unable to locate any indication of the date on the screenshot to which Plaintiffs cite. The Court examined Defendant’s deposition and located the following testimony: “Q: So 25 one of the meetings would have been on or about the 26th, right—September 26th? A: According to the time line [sic] and the text messages that appears to be close to true, on 26 the—the first meeting date.” (Doc. 81-1 at 40). 3 Plaintiffs assert that at least nine of the events Defendant advertised were scheduled to 27 include speakers from AUJS clients—clients that Defendant “specifically sold to and serviced . . . during his tenure at AUJS.” (Doc. 81 at 7). Plaintiffs further point out that, 28 indeed, Plaintiffs reimbursed Defendant for the costs of entertaining those AUJS clients. (Id.). 1 (Id.). 2 On October 18, 2022, Defendant, through Mazzon Industries, entered into a contract 3 with Restoration HQ. (Doc. 81-5 at 18–23). The contract, by its own terms, was a 4 “Consulting Agreement”; in it, Defendant and Restoration HQ agreed to execute one or 5 more statements of work, and that Defendant would perform the services described in each 6 statement of work. (Id. at 18). 7 iii. Global Roofing Group 8 On December 4, 2022, Defendant sent another similar formal document from 9 Mazzon Industries to a National Enterprise Manager of Global Roofing Group, a “roofing 10 company.” (Doc. 81-6 at 2–7). The document contained the following categories of 11 information: (1) statement of work (daily, weekly, monthly, and quarterly), (2) quarterly 12 events, and (3) pricing, including fee structures and payment method. (Id.). 14 A. Summary Judgment 15 Summary judgment is appropriate when “there is no genuine dispute as to any 16 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 17 56(a). “A party asserting that a fact cannot be or is genuinely disputed must support that 18 assertion by . . . citing to particular parts of materials in the record, including depositions, 19 documents, electronically stored information, affidavits, or declarations, stipulations . . . 20 admissions, interrogatory answers, or other materials,” or by “showing that materials cited 21 do not establish the absence or presence of a genuine dispute, or that an adverse party 22 cannot produce admissible evidence to support the fact.” Id. 56(c)(1)(A), (B). Thus, 23 summary judgment is mandated “against a party who fails to make a showing sufficient to 24 establish the existence of an element essential to that party’s case, and on which that party 25 will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 26 Initially, the movant bears the burden of demonstrating to the Court the basis for the 27 motion and the elements of the cause of action upon which the non-movant will be unable 28 to establish a genuine issue of material fact. Id. at 323. The burden then shifts to the non- 1 movant to establish the existence of material fact. Id. 2 A material fact is any factual issue that may affect the outcome of the case under 3 the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 4 The non-movant “must do more than simply show that there is some metaphysical doubt 5 as to the material facts” by “com[ing] forward with ‘specific facts showing that there is a 6 genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 7 586–87 (1986) (quoting Fed. R. Civ. P. 56(e)). A dispute about a fact is “genuine” if the 8 evidence is such that a reasonable jury could return a verdict for the non-moving party. 9 Liberty Lobby, Inc., 477 U.S. at 248. The non-movant’s bare assertions, standing alone, are 10 insufficient to create a material issue of fact and defeat a motion for summary judgment. 11 Id. at 247–48. However, in the summary judgment context, the Court construes all disputed 12 facts in the light most favorable to the non-moving party. Ellison v. Robertson, 357 F.3d 13 1072, 1075 (9th Cir. 2004). 14 At the summary judgment stage, the Court's role is to determine whether there is a 15 genuine issue available for trial. There is no issue for trial unless there is sufficient evidence 16 in favor of the non-moving party for a jury to return a verdict for the non-moving party. 17 Liberty Lobby, Inc., 477 U.S. at 249–50. “If the evidence is merely colorable, or is not 18 significantly probative, summary judgment may be granted.” Id. (citations omitted). 19 III. Plaintiffs’ Tortious Interference Claim 20 Plaintiffs first assert a claim against Defendant for tortious interference with a 21 contract. In Arizona, to state a claim for intentional interference with contractual relations 22 a plaintiff must allege facts showing: “(1) the existence of a valid contractual relationship; 23 (2) knowledge of the relationship” by the interferer; “(3) intentional interference inducing 24 or causing a breach; (4) resultant damage to the party whose relationship has been 25 disrupted; and (5) that the defendant acted improperly.” Snow v. Western Sav. & Loan 26 Ass’n, 730 P.2d 204, 211 (Ariz. 1986) (citation omitted). The impropriety element 27 ordinarily requires that a defendant’s actions be “improper as to motive or means.” Safeway 28 Ins. Co. v. Guerrero, 106 P.3d 1020, 1026 ¶ 20 (Ariz. 2005). Arizona has adopted the 1 approach of the Restatement (Second) of Torts to determining impropriety. Wagenseller v. 2 Scottsdale Mem’l Hosp., 710 P.2d 1025, 1042 (Ariz. 1985). In general terms, this approach 3 involves “weighing the social importance of the interest the defendant seeks to advance 4 against the interest invaded.” Snow, 730 P.2d at 212 (citation omitted). 5 Defendant asserts the following deficiencies pertaining the above elements: (1) that 6 Plaintiffs have not produced any valid contracts that Defendant could have interfered with; 7 (2) that Defendant has not intentionally interfered with any contract; (3) that Defendant has 8 not acted improperly; and (4) that no contracts related to Universal or UPS have been 9 produced. (Doc. 80 at 6–9). Plaintiffs make no arguments in their response concerning the 10 tortious interference with contract claim. (See generally Doc. 81). 11 The Court finds that Defendant has demonstrated that there is an absence of 12 evidence to support Plaintiffs’ tortious interference with contract claim. Specifically, 13 Defendant points out that the only contract Plaintiffs have produced is a contract between 14 AUJS and LBA RV- Company VIII, LP (“LBA RV”), which “was entered into prior to 15 Defendant’s employment with AUJS and terminated during Defendant’s employment with 16 AUJS,” by its own contractual terms. (Doc. 80 at 7). Examination of the contract produced 17 confirms Defendant’s characterization. (See Doc. 80-4). Additionally, Defendant points 18 out that “Plaintiffs have presented no evidence that Defendant induced any party to breach 19 the [contract between AUJS and LBA RV],” or that the contract was breached, or that 20 Defendant acted intentionally—all factual matters crucial to a tortious interference claim. 21 (Doc. 80 at 8). Plaintiffs point to no evidence in the record that establishes a genuine issue 22 of material fact regarding these factual issues; indeed, Plaintiffs’ response is silent as to the 23 tortious interference claim. As such, the Court finds it appropriate to grant Defendant’s 24 motion for summary judgment as to Plaintiffs’ tortious interference with contract claim. 25 See Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102–03 (9th 26 Cir. 2000) (on motion for summary judgment, when a moving party has met its initial 27 burden of showing the absence of evidence, the nonmoving party must produce evidence 28 to support its claim or defense). 1 IV. Plaintiffs’ Breach of the Fiduciary Duty of Loyalty Claim 2 In Arizona, “an employee owes his or her employer a fiduciary duty, which includes 3 a duty of loyalty.” Sec. Title Agency, Inc. v. Pope, 200 P.3d 977 ¶ 53 (Ariz. App. 2008) 4 (citing McAllister Co. v. Kastella, 825 P.2d 980, 982–83 (Ariz. App. 1992) (cleaned up)). 5 As a corollary of this duty, although an employee may generally “prepare to compete with 6 a current employer, ‘the tactics that [he] may use . . . are subject to legal limits.’” Taser 7 Int’l, Inc. v. Ward, 231 P.3d 921, 928 ¶ 27 (Ariz. App. 2010) (citing Restatement (Third) 8 of Agency § 8.04 cmt. b (Am. L. Inst. 2006)). One such limit is the agent’s duty “not to 9 use property of the principal for the agent’s own purposes.” Id. (citing Restatement (Third) 10 of Agency § 8.05). “To recover for breach of the fiduciary duty of loyalty in Arizona, a 11 plaintiff must prove proximately caused damages.” Firetrace USA, LLC v. Jesclard, 800 12 F. Supp. 2d 1042, 1052 (D. Ariz. 2010) (citation omitted). For the breach to proximately 13 cause an injury, the wrongful conduct must be a “substantial factor in bringing about the 14 harm.” Id. (quoting Standard Chartered PLC v. Price Waterhouse, 945 P.2d 317, 343 15 (Ariz. Ct. App. 1997)). 16 Defendant raises issues with both (1) whether he indeed breached his duty of loyalty 17 and (2) whether Plaintiffs have shown any evidence of damages proximately caused by the 18 alleged breach. The Court addresses each of these issues in turn. 19 A. Breach of Duty 20 Defendant argues that Plaintiffs have produce no evidence that Defendant “(1) 21 competed with AUJS while employed with them; (2) that they were damaged as a result of 22 any alleged breach; or (3) that Defendant used AUJS property for his own purposes.” (Doc. 23 80 at 10). Regarding Restoration HQ, Defendant argues that Restoration HQ is not a 24 competitor of AUJS and thus any actions concerning Restoration HQ cannot support a 25 claim.4 (Doc. 82 at 7–8). Regarding Ace, Defendant argues that his contract for services

26 4 Because Defendant’s new company, Mazzon Industries, provides consulting and sales services to other companies, (see, e.g., Doc. 81-5), and Defendant’s role at AUJS also 27 involved sales, Defendant would be competing with AUJS by performing the services that Mazzon Industries offers to a competitor of AUJS. However, Defendant argues, providing 28 such services to non-competitors should not constitute competing and thus not support a claim. 1 with Ace did not commence until after his employment with AUJS ended, and any conduct 2 that occurred prior to when his employment ended was permissible preparation to compete. 3 (Id. at 8–10). 4 Plaintiffs argue that issues of material fact exist regarding Plaintiffs’ breach of the 5 duty of loyalty claim. (Doc. 81 at 13). Namely, Plaintiffs argue first that Defendant entered 6 into “at least two contracts for services” with Ace and Restoration HQ before his 7 employment with AUJS ended. (Id.). Plaintiffs next assert that “Defendant spent months, 8 and a considerable amount of time during normal AUJS business hours, to solicit AUJS’s 9 direct competitor, Ace.” (Id. at 14). Plaintiff further asserts that Defendant “used his AUJS- 10 issued computer to, at a minimum, access the business proposals that he sent to a potential 11 client” while still working for AUJS. (Id.). Finally, Plaintiffs point to “proposals that 12 Defendant sent to potential customers while still employed by AUJS that list a series of 13 educational podcasts and events with keynote speakers sourced almost exclusively from 14 AUJS clients.” (Id. at 15). 15 First, the evidence establishes that Defendant was an employee of just AUJS, not 16 Universal or UPS. As such, the only appropriate plaintiff in this breach of the duty of 17 loyalty claim is AUJS. Moreover, a breach of fiduciary duty claim is only viable as to 18 conduct that indeed competes with the employer. Thus, any activity by Defendant that was 19 unrelated to “janitorial services” (the industry of AUJS) cannot support a claim for breach 20 of the duty of loyalty. The Court therefore limits the following discussion to Defendant’s 21 conduct related to Ace, as neither Restoration HQ nor Global Roofing Group are in the 22 janitorial services industry. 23 The Court next notes cases in which courts have examined whether summary 24 judgment was appropriate in a breach of the duty of loyalty claim. In Caldwell v. J & J 25 Rocket Co., the court found that the plaintiff failed to set forth sufficient facts to establish 26 a claim because the plaintiff merely stated “[the defendant] emailed or called at least four 27 individuals at [competing entities] to ‘gauge interest’ in having [the defendant] perform 28 instruction services apart from [the plaintiff].” No. CV-13-08043-PCT-PGR, 2014 WL 1 4954413, at *4 (D. Ariz. Sept. 30, 2014). Similarly, in BMO Harris Bank NA v. Corley, the 2 court emphasized the importance of a plaintiff alleging “more details . . ., such as that [the 3 defendants] agreed to begin copying client lists before the resignation date,” noting that the 4 line separating preparation from competition may be difficult to discern. No. CV-22- 5 00547-PHX-DWL, 2022 WL 4781944, at *7 (D. Ariz. Oct. 3, 2022). 6 In Taser Intern., Inc. v. Ward, the court held that a “partial development of a 7 business plan,” interactions with attorneys to obtain legal advice and research existing 8 patents, and “preliminary research and development efforts aimed at assessing the 9 possibility of developing [a competing device]” did not constitute competing with the 10 employer. 231 P.3d 921, 927 (Ariz. Ct. App. 2010). However, the court concluded that 11 summary judgment was improper because the plaintiff had submitted the following 12 evidence: (1) that defendant had “engaged in pre-termination communications with staff at 13 [a product development company] and received its design proposal before resignation,” (2) 14 “a version of [the defendant’s] business plan, completed after his resignation,” and (3) a 15 statement in the business plan that the defendant was in “Phase 3 of the design” of the 16 competing device. Id. at 928. 17 Here, after comparing the facts Plaintiffs allege to the above caselaw, the Court finds 18 that Plaintiffs have alleged sufficient detail regarding a breach such that “a reasonable jury 19 could find the various alleged wrongful acts by [Defendant], taken together, constitute a 20 breach of his fiduciary duties.” Firetrace USA, LLC v. Jesclard, 800 F. Supp. 2d 1042, 21 1053 (D. Ariz. 2010). Indeed, where such detail is provided, “[w]hether an employee’s 22 actions constitute a breach of the fiduciary duty of loyalty ‘is a question of fact to be 23 decided by the trier of fact based on a consideration of all the circumstances of the case.’” 24 Id. (quoting Sec. Title Agency, Inc. v. Pope, 200 P.3d 977, 989 (Ariz. Ct. App. 2008)). 25 Therefore, as to Defendant’s conduct involving Ace, summary judgment on the breach 26 element of Plaintiffs’ claim of breach of the fiduciary duty of loyalty is denied. 27 B. Damages 28 The Court next turns to issues regarding whether Plaintiffs established damages. As 1 the Court sees it, the issues Defendant raises are twofold: (1) whether (and to what extent, 2 if any) Plaintiffs should be sanctioned under Rule 37 for failure to comply with Rule 26’s 3 disclosure requirements, and (2) whether, as a matter of law, Plaintiffs’ claim of breach of 4 duty of loyalty should fail because Plaintiffs have failed to produce any evidence that 5 Plaintiffs were damaged by an alleged breach. The Court addresses each issue in turn. 6 i. Disclosure of Computation of Damages Pursuant to Rule 26(a) 7 The Federal Rules of Civil Procedure require generally that 8 a party must, without awaiting a discovery request, provide to the other parties . . . a computation of each category of damages 9 claimed by the disclosing party—who must also make 10 available for inspection and copying . . . the documents or other evidentiary material . . . on which the computation is based. 11 Fed. R. Civ. P. 26(a)(1)(A)(iii). A plaintiff “should provide its computation of damages in 12 light of the information currently available to it in sufficient detail so as to enable the 13 defendant[] to understand the contours of their potential exposure and make informed 14 decisions regarding settlement and discovery.” Allstate Ins. Co. v. Nassiri, No. 2:08-cv- 15 00369-JCM-GWF, 2010 WL 5248111, at *4 (D. Nev. Dec. 16, 2010). 16 The Rules further provide the Court the following guidance regarding a party’s 17 failure to disclose or to supplement: 18 (1) Failure to Disclose or Supplement. If a party fails to provide 19 information or identify a witness as required by Rule 26(a) or 20 (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless 21 the failure was substantially justified or is harmless. In addition to or instead of this sanction, the court, on motion and after 22 giving an opportunity to be heard: 23 (A) may order payment of the reasonable expenses, including attorney's fees, caused by the failure; 24 (B) may inform the jury of the party’s failure; and 25 (C) may impose other appropriate sanctions, including any of the orders listed in Rule 37(b)(2)(A)(i)–(vi). 26 Fed. R. Civ. P. 37(c)(1)(A)–(C). “Implicit in Rule 37(c)(1) is that the burden is on the party 27 facing sanctions to prove harmlessness [or that the failure was justified].” Yeti by Molly, 28 Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1107 (9th Cir. 2001). The Court need not 1 find bad faith before imposing the evidence preclusion sanction in general. Id. at 1106. 2 However, “if a Rule 37(c)(1) sanction will ‘deal[] a fatal blow’ to a party’s claim, a district 3 court must consider (1) ‘whether the claimed noncompliance involved willfulness, fault, 4 or bad faith’ and (2) ‘the availability of lesser sanctions.’” Merchant v. Corizon Health, 5 Inc., 993 F.3d 733, 740–41 (9th Cir. 2021); see also Liberty Ins. Corp. v. Brodeur, 41 F.4th 6 1185, 1192 (9th Cir. 2022) (noting that “even when a party clearly violates Rule 7 26(a)(1)(A),” the court should still consider these other factors). 8 Defendant correctly argues that the plain language of Rule 26 requires parties to 9 disclose a computation of damages and evidentiary material on which the computation is 10 based without awaiting a discovery request. As such, Plaintiffs’ argument that Defendant 11 needed to have “timely submitted an appropriate discovery request for evidence related to 12 damages” for Plaintiffs to have “responded in kind” is unavailing. (See Doc. 81 at 16). 13 Defendant asserts that Plaintiffs have failed entirely to provide any computation of 14 damages or any supporting evidentiary material on which the computation is based. (Doc. 15 80 at 14–15; Doc. 82 at 5). Plaintiffs’ response does not address the disclosure issue in 16 particular. (Doc. 81 at 16–17). 17 The Court notes that, in the abstract, precluding Plaintiffs from relying on any 18 evidence of damages at trial or in this motion would deal a fatal blow, as Plaintiffs’ sole 19 remaining claim requires proof of proximately caused damages (see below). However, in 20 this case, Plaintiffs do not attempt to rely on any evidence of damages that was not properly 21 disclosed. As discussed below, Plaintiffs do not allege with any specificity what damages 22 Defendant caused, nor do Plaintiffs attempt to present any specific (previously 23 undisclosed) evidence of such damages. (See id.). Because Plaintiffs do not attempt to rely 24 on evidence that Rule 37 sanctions would preclude, the Court finds it unnecessary to rule 25 on whether to issue sanctions under Rule 37 for Plaintiffs’ failure to disclose a computation 26 of damages. 27 // 28 // 1 ii. Evidence of Damages to Sustain a Breach of Fiduciary Duty of 2 Loyalty Claim 3 As discussed above, a plaintiff in a breach of fiduciary duty of loyalty claim “must 4 prove proximately caused damages.” Firetrace, 800 F. Supp. 2d at 1052. “For the breach 5 to proximately cause an injury, the wrongful conduct must be a ‘substantial factor in 6 bringing about the harm.’” Id. (quoting Standard Chartered PLC v. Price Waterhouse, 945 7 P.2d 317, 343 (Ariz. Ct. App. 1997)). Put differently, Plaintiffs have the burden of proving 8 that Defendant’s alleged conduct involving Ace was a substantial factor in bringing about 9 Plaintiffs’ alleged damages, whatever those alleged damages may be. 10 Defendant asserts that Plaintiffs have failed to disclose “any evidentiary material to 11 support damages in the year since they filed their complaint,” pointing out that Plaintiffs’ 12 Rule 26 disclosure lists just “categories of damages.”5 (Doc. 80 at 15). In response, 13 Plaintiffs argue that “there is substantial evidence that Defendant harmed Plaintiffs and 14 breached his duty of loyalty” and proceed to restate the relevant facts discussed above. 15 The Court finds that Plaintiffs have failed to allege facts or provide any evidence 16 sufficient to establish a genuine issue of material fact as to causation and damages. Whether 17 or not Defendant took the actions discussed in the “breach” section above is a separate 18 inquiry from that of whether the alleged actions actually caused any injury to Plaintiffs. 19 Plaintiffs may not simply restate their allegations as to breach and vaguely conclude that 20 “this matter [of damages] should be left to a jury.” Plaintiffs have the burden of establishing 21 a prima facie case; as such, they have the burden of showing some evidence of causation 22 and damages from which a jury could possibly conclude Defendant indeed caused any 23 alleged damages to Plaintiffs. Because Plaintiffs have failed to do this, the Court finds that 24 Plaintiffs’ breach of fiduciary duty of loyalty claim fails as a matter of law.

25 5 The categories of damages listed are as follows: “all salaries, bonuses, allowances, and other remuneration paid to defendant during any time period Defendant was in breach of 26 his duty of loyalty,” “Costs and attorneys’ fees incurred by Plaintiffs,” “[r]ecission of any moneys received by Defendant that were a result o his breach of his duty . . . or his misuse 27 of Plaintiffs’ confidential information,” “profits lost by Defendant’s diversion of work away from Plaintiffs as a result of Defendant’s breach of his duty of loyalty,” and “award 28 of pre-judgment and post-judgment interest at the legal rate under applicable law.” (Doc. 80-5 at 5–6). 2 For the foregoing reasons, 3 IT IS ORDERED that Defendant’s Motion for Summary Judgment, (Doc. 80), is GRANTED. 5 IT IS FURTHER ORDERED that the Clerk of the Court shall enter judgment in || favor of Defendant and against Plaintiffs; Plaintiffs shall take nothing. 7 Dated this 7th day of June, 2024. 8 ? '

ll _ James A. Teil Org Senior United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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