STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
20-357
VESTA HALAY JOHNSTON, ET AL.
VERSUS
SUSAN HALAY VINCENT, ET AL.
**********
APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2015-4153 HONORABLE G. MICHAEL CANADAY, DISTRICT JUDGE
ELIZABETH A. PICKETT JUDGE
Court composed of Sylvia R. Cooks, Chief Judge, Elizabeth A. Pickett, and Shannon J. Gremillion, Judges.
AFFIRMED IN PART; AMENDED IN PART; REVERSED IN PART; AND REMANDED WITH INSTRUCTIONS. J. Michael Veron Turner D. Brumby Veron, Bice, Palermo & Wilson, LLC 721 Kirby Street Lake Charles, LA 70601 (337) 310-1600 COUNSEL FOR PLAINTIFFS/APPELLANTS: Vesta Halay Johnston Lake Charles Rubber and GasketCompany, LLC
Rudie R Soileau, Jr. Hunter W. Lundy Lundy, Lundy, Soileau & South 501 Broad Street Lake Charles, LA 70601 (337) 439-0707 COUNSEL FOR DEFENDANT/APPELLEE: Martin Bryan Vincent
Thomas P. Leblanc Loftin & Leblanc, LLC 410 E. College Street, Suite A Lake Charles, LA 70605 (337) 310-4300 COUNSEL FOR DEFENDANT/APPELLEE: Gulf Coast Rubber and Gasket, L.L.C. PICKETT, Judge.
The plaintiffs appeal the trial court‟s judgment granting it some but not all
relief it sought against the defendants in this litigation concerning competing
businesses. For the following reasons, we affirm in part, amend in part, reverse in
part, and remand with instructions.
FACTS AND PROCEDURAL BACKGROUND
A detailed history of the events leading to this appeal is outlined in Johnston
v. Vincent, 19-55 (La.App. 3 Cir. 5/20/20), __ So.2d __, writ denied, 20-1344 (La.
2/9/21), 310 So.3d 182. In 2015, after buying out her sisters‟ interests in the
family industrial supply business, Lake Charles Rubber & Gasket, Co., L.L.C.
(hereafter LCRG), Vesta Halay Johnston, individually and on behalf of LCRG,1
filed suit against Susan Halay Vincent, Martin Bryan Vincent, and Gulf Coast
Rubber & Gasket Co., L.L.C. (GCRG),2 the business the Vincents started that is in
competition with LCRG, to recover damages allegedly caused by GCRG‟s breach
of contract and violations of the Louisiana Unfair Trade Practices Act (LUTPA),
La.R.S. 15:1401-1430, and the Louisiana Unfair Trade Secrets Act (LUTSA),
La.R.S. 15:1431-39. With regard to the LUTSA and LUTPA claims, LCRG
asserted that GCRG took and used proprietary information and trade secrets of
LCRG to start GCRG and begin competing against LCRG. According to LCRG,
GCRG‟s use of its proprietary information and trade secrets allowed GCRG to
open for business in a matter of weeks, rather than the years it would have taken
GCRG to accumulate that information on its own and successfully compete against
LCRG.
1 . Unless otherwise indicated, the plaintiffs are hereinafter referenced as LCRG. 2 Unless otherwise indicated, the defendants are hereinafter referenced as GCRG. LCRG quickly sought to have the trial court order that GCRG preserve
evidence and quarantine electronic devices until LCRG‟s computer forensic expert
could freely access and copy all data and metadata in GCRG‟s possession. GCRG
initially resisted but ultimately agreed to a preservation order. On November 18,
2015, the trial court signed a judgment recognizing the preservation order.
Pursuant to the preservation order, GCRG hired experts to create and preserve a
digital image of all data existing at the time of the preservation order. Seven
months later, LCRG filed a motion for sanctions asserting GCRG violated the
preservation order. The trial court denied the motion, and this court denied
LCRG‟s writ application in which they argued the trial court abused its discretion
in denying their motion for sanction. Johnston v. Vincent, 17-391 (La.App. 3 Cir.
12/13/17), 258 So.3d 687.
Beginning in January 2018, the trial court conducted a bench trial over the
course of fifty-four days. After LCRG rested its case, GCRG filed a motion for
involuntary dismissal as provided by La.Code Civ.P. art. 1672(B). On August 30,
2018, the trial court granted GCRG‟s motion in part and dismissed with prejudice
LCRG‟s claims for breach of contract as to Susan and Bryan, LUTSA and LUTPA
violations against Susan,3 and treble damages under LUTPA as to all defendants.
Thereafter, pursuant to an application for supervisory writs filed by LCRG,
another panel of this court reversed the trial court‟s dismissal of the claims for
damages against GCRG and Bryan as to LCRG‟s LUTSA and LUTPA claims.
Finding LCRG had an adequate remedy by appeal to review that judgment, the
3 The trial court also dismissed the following claims asserted by LCRG that are not at issue herein: (1) defamation against defendant Moby Goodwin; and (2) violations of the Louisiana Unfair Sales Law against all defendants.
2 panel declined to review the dismissal of Susan. Johnston v. Vincent, 18-691
(La.App. 3 Cir. 9/14/18) (unpublished writ decision).
The trial subsequently resumed on the claims against Bryan and GCRG that
had not been dismissed. Meanwhile, LCRG timely appealed the trial court‟s
judgment dismissing their claims against Susan, which this court reversed in
Johnston, __ So.3d __.
After the trial concluded, the trial court issued Written Reasons in which it
determined GCRG violated provisions of LUTSA and LUTPA and awarded LCRG
$700,000 in lost profits but denied LCRG‟s claims for unjust enrichment, future
damages, treble damages, attorney fees, and all costs, as provided by LUTSA and
LUTPA.
In LCRG‟s prior appeal, this court made the following pertinent findings of
fact:
It became clear that GCRG relied on files that had LCRG contracts, customer information, pricing and cost information, vendor information and other proprietary information. Brian Wilson, Plaintiffs‟ computer forensics expert, testified it was “conclusive that 14,532 electronic business files belonging to Lake Charles Rubber & Gasket are in the possession of the employees and owners of lake - - of Gulf Coast Rubber and Gasket.” He further concluded employees of GCRG “used a variety of means to copy [LCRG] business files, including thumb drives, Dropbox, and Google Drive.” Mr. Wilson also testified in his opinion the Defendants did not comply with the preservation order. Id. at __.
The panel further observed that Susan engaged in vindictive behavior toward
her sisters before she sold her interest in LCRG to Vesta and their sister Kathy,
concluding Susan‟s arguments otherwise “ignored the uncontroverted evidence
[showed] that GCRG was in possession of [through whatever means acquired] and
continually used, both before and after suit was filed, business files, customer lists,
3 pricing, cost[,] and vendor information, which took decades for LCRG to
accumulate.” Id. at __. In closing, the panel observed:
The record is clear GCRG continued . . . to use LCRG‟s proprietary data long after the Act of Sale was signed on January 8, 2015, even regardless of the stated, earlier effective date of October 15, 2014. This is a clear violation of the contracts entered into by the parties[,] and the trial court erred in finding Susan did not breach the contracts at issue on this matter.
Id. at __. ASSIGNMENTS OF ERROR
LCRG assigns five errors with the trial court‟s judgment:
1. The trial court erred in finding that the vast majority of the information the defendants stole and used was not a trade secret.
2. The trial court erred in rejecting the unrebutted damage calculations of LCRG‟s expert.
3. The trial court erred in refusing to award future damages or to enjoin the continued use of the stolen information.
4. The trial court erred in refusing to treble the plaintiffs‟ damages.
5. The trial court erred in refusing to award the plaintiffs their attorney[] fees.
6. The trial court erred in refusing to award the plaintiffs all of their costs.
GCRG and Brian Vincent answered the appeal, asserting:
1. The district court erred in finding that any conduct on the part of Defendants was the cause of any damage to Plaintiffs. Accordingly, the judgment of the district court must be reversed, and all of Plaintiffs‟ claims against Defendants must be dismissed.
2. The district court erred as a matter of law in finding Martin Bryan Vincent personally liable for any conduct alleged against Gulf Coast Rubber on the part of Defendants was the cause of any damage to Plaintiffs. Accordingly, the judgment of the district court must be reversed, and all of Plaintiffs‟ claims against Defendants must be dismissed.
4 3. The district court awarded Plaintiffs $700,000[] for lost profits. The district court erred as a matter of law in awarding any damages for lost profits to Vesta Halay Johnston, individually, as (Vesta Halay Johnston, individually, had no cause/right of action against Defendant; for lost profits. Accordingly, the judgment of the district court must be reversed, and all of Vesta Halay Johnston‟s claims against Defendants must be dismissed.
SCOPE OF REVIEW
LCRG contends we must apply the de novo standard of review to the trial
court‟s judgment because the trial court committed legal error in deciding its
claims. LCRG argues that when the trial court denied GCRG‟s motion for
involuntary dismissal regarding their claims against GCRG and Bryan, the burden
of proof shifted to GCRG to defeat their claims. GCRG urges, however, that the
trial court‟s denial of its motion for involuntary dismissal as to some of LCRG‟s
claims was discretionary and did not shift the burden of proof. Accordingly,
GCRG concludes that the manifest error-clearly wrong standard of review applies
because LCRG‟s claims required the judge to make findings of fact.
Pursuant to La.Code Civ.P. art. 1672(B), a defendant can file a motion for
involuntary dismissal at the close of evidence in a bench trial. In such instances,
the trial court has two options: 1) determine the facts and render judgment against
the plaintiff or 2) decline to render judgment until the close of all the evidence.
The plain wording of Article 1672 shows that “the denial of a motion for
involuntary dismissal is purely discretionary.” Hudson v. AIG Nat’l Ins. Co., 10-
63, p. 4 (La.App. 3 Cir. 6/2/10), 40 So.3d 484, 489.
Whether information or property is a trade secret and whether a party has
engaged in an unfair trade practice is a finding of fact. Pontchartrain Med. Labs,
Inc. v. Roche Biomedical Labs, Inc., 95-2260 (La.App. 1 Cir. 6/28/96), 677 So.2d
1086; Bihm v. Deca Sys., Inc., 16-356 (La.App. 1 Cir. 8/8/17), 226 So.3d 466,
5 respectively. Under the manifest error standard of review, appellate courts can
only reverse a trial court‟s findings of fact if its review of the entire record shows
there is no reasonable factual basis for those factual findings and that the trial court
is clearly wrong. Stobart v. State, Through DOTD, 617 So.2d 880 (La.1993).
As discussed above, another panel of this court reversed the trial court‟s
grant of GCRG‟s motion for involuntary dismissal as to Susan and decided some
of the factual issues presented in this appeal, i.e., GCRG‟s taking and use of
LCRG‟s information. That panel did not consider the specific nature GCRG‟s
actions or whether they violated LUTSA or LUTPA. As a result, the manifest
error standard of review applies to the trial court‟s LUTSA and LUTPA
determinations.
LUTSA and LUTPA
The trial court‟s Written Reasons indicate that because GCRG‟s owners and
many of its employees had long work histories with LCRG, long working
relationships with LCRG‟s customers, as well as extensive familiarity with and
knowledge of LCRG‟s business information, LCRG did not prove all of its claims.
LCRG contends the trial court erred in finding GCRG‟s only violation of LUTSA
was GCRG‟s use of its waterjet drawings and only unfair trade practice was its use
of LCRG‟s thirteen-digit part numbers. LCRG further contends the trial court
erred in not finding the following are trade secrets: its inventory/parts classification
system, its customer list with annual revenues each customer generated, current
and historical contracts, designs, drawings, and other valuable information.
In Bihm, 226 So.3d at 481, the court outlined the purpose and elements of
LUTSA and LUTPA, explaining both acts “regulate and balance the rights of
parties engaged in competitive commerce with the goal of striking a balance
6 between free enterprise and protecting business owners by prohibiting unfair or
deceptive acts or practices in the conduct of trade.” LUTSA is more “specific and
narrow” than LUTPA and “prohibits the theft, bribery, misrepresentation, breach,
or misappropriation of a company‟s „trade secrets.‟” Id. LUTPA is more general
and addresses “unfair methods of competition” and “unfair or deceptive acts or
practices.” La.R.S. 51:1405(A). For example, allegations of acts constituting a
prohibited breach of confidence may not meet the requirements of a trade secret by
definition, yet fall within the scope of prohibited conduct under LUTPA. Bihm,
226 So.3d 466.
LUTSA defines trade secret as:
[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(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.
La.R.S. 51:1431(4).
The plaintiff in a trade secrets case must prove: (1) “a legally protectable
trade secret actually existed” and (2) “an express or implied contractual or
confidential relationship existed between the parties which obligated the party
receiving the secret information not to use or disclose it.” Pontchartrain, 677
So.2d at 1090. Additionally, “the plaintiff must prove the party receiving the
secret information wrongfully breached its duty of trust or confidence by
disclosing or using the information to the injury of plaintiff.” Id.
7 Under LUTPA, “[c]onduct is considered unlawful when it involves “fraud,
misrepresentation, deception, breach of fiduciary duty, or other unethical conduct.”
Nursing Enterprises, Inc. v. Marr, 30,776, p. 4 (La.App. 2 Cir. 8/19/98), 719 So.2d
524, 528. A plaintiff asserting a claim under LUTPA is only required to prove: 1)
it possessed knowledge or information not generally known, 2) it communicated
“this knowledge or information to the defendant under an express or implied
agreement limiting its use or disclosure by the defendant,” and 3) the defendant
used or disclosed the information and caused injury to the plaintiff. Bihm, 226
So.3d at 482.
LCRG argues the trial court erred in failing to find that its customer list is a
trade secret. Pontchartrain, 677 So.2d 1086, held a customer list may be a trade
secret if efforts are made to maintain its secrecy. A plaintiff need only show that
his efforts to maintain secrecy were “reasonable under the circumstances,” which
may include “advising employees of the existence of a trade secret, limiting access
to a trade secret on a „need to know basis‟, and controlling plant access.” La.R.S.
51:1431(4)(b), Comment (f). Courts have also held, however: “Resigning
salesmen who surrendered to their employer their work papers and customer lists
cannot be enjoined from using their memories and knowledge that is generally
available to the public to compete for sales against their former employer on the
allegation of [mis]use of alleged secret information.” Pearce v. Austin, 465 So.2d
868, 871 (La.App. 2 Cir. 1985) (citing Gulf Toy House, Inc. v. Bertrand, 306 So.2d
361, (La.App. 3 Cir.1975)).
When addressing a former employee‟s taking of a customer list, the court in
Bihm, 226 So.3d at 485, observed:
8 Considerations as to the type of protection to be afforded to the employer in a specific case include the manner in which and the purpose for which customer lists are compiled; the conduct and motivation of the employee before and after termination and the nature of the representations made to the customer by the former employee; and the existence of a scheme to take over all or a substantial part of the former employer‟s business, or of an intent to injure the former employer‟s business. Id. A critical factor is a defendant‟s motivation; the actions must have been taken with the specific purpose of harming the competition.
In Bihm, 226 So.3d 466, the court of appeal affirmed the trial court‟s finding that a
former employee‟s secret taking of a customer list developed by his employer over
years of business to compete against the employer constituted a trade secret.
LCRG presented evidence showing it did not share its customer list with
others. Nonetheless, more likely than not, LCRG‟s competitors, including GCRG,
would know the vast majority of LCRG‟s customers on the list, but would not
know LCRG‟s revenue from each. One of GCRG‟s expert witnesses maintained
that the list was not a trade secret because in his role as general manager, Bryan
knew both LCRG‟s customers and the revenue they generated and prepared
LCRG‟s customer list. Lastly, some of the former LCRG salesmen, who now
work for GCRG, testified they regularly monitor revenues their customers
generate.
Unlike the cases cited above, GCRG employees did not surrender their work
lists or LCRG‟s customer list, and GCRG did not rely on the knowledge and
memory of its long-time employees. Instead, Bryan obtained a copy of LCRG‟s
list of 374 customers and circulated it to GCRG employees the first day GCRG
was online for business in order to compete against LCRG. There is no evidence
GCRG employees had sufficient knowledge and memory of LCRG‟s customer list
to recreate it. Moreover, while the customers on the list may have been known to
9 LCRG‟s competitors, their generated revenue was not. Accordingly, the trial court
manifestly erred in not holding the customer list is a trade secret.
LCRG also argues the trial court erred in holding that its part numbers and
inventory system were not trade secrets. LCRG‟s inventory system includes long
and short descriptions for each part, vendor sources and pricing for the parts, as
well as cross referencing parts to customers, their usage, inventory counts, part
specifications, and customer pricing information with LCRG‟s profit margins.
LCRG established it does not share the information contained in its integrated
inventory system with third parties.
More than one witness testified customers sometimes share one vendor‟s bid
information, including the vendor‟s part numbers and pricing, with another vendor
to negotiate a lower price, and LCRG employees acknowledged this fact. This fact
alone does not substantiate the trial court‟s conclusion that LCRG part numbers are
separate from its inventory system. This conclusion ignores the significant
importance of LCRG part numbers to the integrated system: they provide access to
the extensive information contained in the inventory system and were likened to
the combination to a safe. As a result, a part number provided to a customer who
does not have access to LCRG‟s inventory system is just a number. Such is not the
case with GCRG, which substantially copied LCRG‟s inventory system.
Furthermore, LCRG‟s inventory system includes special customer pricing which
may also be a trade secret. Bihm, 226 So.3d 466; Pontchartrain, 677 So.2d 1086.
The trial court manifestly erred in holding that LCRG‟s inventory system,
including its part numbers and special customer pricing, is not a trade secret and/or
an unfair trade practice.
10 The trial court also determined that LCRG‟s inventory and usage lists for
stocking the self-service centers (SSCs) of one of LCRG‟s major customers, Sasol,
are not trade secrets and that GCRG‟s use of them was not an unfair trade practice.
In 2015, Sasol invited GCRG and LCRG to bid on a contract to stock the inventory
for Sasol‟s SSCs, which included more than 240 items in varying quantities that
were specific to individual SSCs within Sasol‟s facility. GCRG won the contract.
After awarding the contract, Sasol gave GCRG one week to stock the SSCs.
GCRG did not know how much inventory each SSC required, and Sasol could not
produce that information. GCRG‟s Sasol account representative had Sasol‟s
purchasing assistant procure a copy of LCRG‟s inventory list. Each page of the
inventory list LCRG provided to Sasol identified the document as being LCRG‟s
“work product and privileged information” that was not to be shared with LCRG‟s
competitors. Upon receiving the lists from Sasol, GCRG‟s employee notified
Sasol that GCRG could not use the lists with LCRG‟s notice on it. The account
representative copied the lists without the notice and resent them to GCRG.
GCRC then used the modified lists to stock Sasol‟s SSCs.
Sasol did not have inventory information for its SSCs, and GCRG could not
replenish the SSCs‟ inventory without LCRG‟s inventory lists or LCRG‟s
inventory in place, which LCRG had removed when it lost the contract. LCRG
never shared the information with anyone and only shared it with Sasol when its
purchasing department demanded it at GCRG‟s request. Before sharing the lists,
LCRG notified Sasol they were a trade secret, confidential, and not to be shared
with anyone else.
11 Misappropriation of a trade secret is defined, in part, by LUTSA as:
(a) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(b) . . . use of a trade secret of another without express or implied consent by a person who:
(i) used improper means to acquire knowledge of the trade secret; or
(ii) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was:
.... (bb) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
(cc) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use[.]
La.R.S. 51:1431(2). “Improper means” is defined to include “inducement of a
breach of a duty to maintain secrecy.” La.R.S. 51:1431(1).
The evidence established no one at GCRG had independent knowledge of
the inventory stocked in each Sasol SSC, the information was not readily available
to Sasol or GCRG, and LCRG‟s lists had value as they were necessary to fulfill
GCRG‟s contract with Sasol. Accordingly, the trial court committed manifest
error in failing to hold that LCRG‟s inventory lists for Sasol‟s SSCs were not a
trade secret and that GCRG misappropriated them.
LUTSA and LUTPA overlap to some extent. Bihm, 226 So.3d 466.
GCRG‟s misappropriating LCRG trade secrets and taking and using all other
LCRG business information was deceptive and unethical conduct and a breach of
12 Bryan‟s fiduciary duty as former general manager of LCRG. Accordingly, GCRG
committed unfair trade practices in this regard against LCRG. Id. For these same
reasons, GCRG‟s first and second assigned errors lack merit.
DAMAGES
LCRG contends the trial court erred in awarding it only $700,000 in
damages because GCRG failed to rebut its expert‟s damage calculations. The trial
court refused LCRG‟s damage claims for diminished value and unjust enrichment,
finding any contracts LCRG lost “would have eventually gone to GCRG, which
would still have led to an increase in market competition, a loss in profit margin,
and ultimately a decrease in ownership value.” LCRG‟s evidence as to the dollar
amount of its damages was unrebutted by GCRG. Instead, GCRG‟s experts
critiqued LCRG‟s expert‟s methodology in calculating damages and identified
factors, other than GCRG‟s actions, that contributed to LCRG‟s loss of revenues.
Appellate review of a damage award requires a determination of whether the
damages awarded constitute a clear abuse of the trial court‟s great discretion in
light of the particular injuries the defendant‟s actions caused and their effects upon
the particular injured party before the court. Rando v. Anco Insulations Inc., 08-
1163, 08-1169 (La. 5/22/09), 16 So.3d 1065. Only if a detailed analysis of the
facts shows the award to be an abuse of discretion can the award be considered
either excessive or insufficient. Id. We review the trial court‟s exercise of
discretion; we do not decide the damage award we believe would be appropriate.
Youn v. Maritime Overseas Corp., 623 So.2d 1257 (La.1993), cert. denied, 510
U.S. 1114, 114 S.Ct. 1059 (1994).
GCRG argues the trial court recognized that GCRG‟s success is due
primarily to its experienced personnel, not to its use of LCRG‟s information, such
13 that LCRG has not proved its taking and use of LCRG information caused LCRG
damages that exceed the trial court‟s award. GCRG contends LCRG‟s expert
failed to take into account factors unrelated to its behavior that greatly reduced any
damage it caused to LCRG. These factors include the cyclical nature of the
petrochemical industry related to turnarounds, new construction, and major repairs;
LCRG‟s loss of contracts to competitors other than GCRG; a loss of income due to
a manufacturing error, which resulted in LCRG reimbursing a customer $120,000,
discounting sales 5% on the existing contract, and providing free hose testing for
three years; LCRG won four of five contracts it competed against GCRG for; the
only contract LCRG lost to GCRG was due to GCRG‟s acceptance of conditioned
prices proposed by Sasol, which LCRG refused to accept; and LCRG lost its
contract with another client because that client did not invite LCRG to bid on the
contract. GCRG further argued LCRG‟s expert failed to take into account the
impact of losing a long-time general manager and numerous long-term employees,
including salesmen who allegedly accounted for 90% of LCRG‟s prior earnings.
GCRG also pointed out that after GCRG began operating, one of LCRG‟s major
vendors also experienced losses of hundreds of thousands of dollars in the Lake
Charles market. The vendor‟s representative acknowledged that those losses were
due, at least in part, to GCRG‟s relationship with Sasol, which led Sasol to begin
using gaskets manufactured by a company other than his company employer.
LCRG‟s expert, Jason McMoran, explained in detail the methodology he
used to calculate LCRG‟s damages. He also acknowledged he assumed that all
losses LCRG experienced after October 2014 were caused by GCRG‟s “bad acts.”
Mr. McMoran testified on rebuttal and recalculated LCRG‟s losses to incorporate
information presented at trial. He concluded LCRG‟s lost profits for November 1,
14 2014, through June 30, 2017, totaled $3,850,046. He further testified that LCRG‟s
claim for unjust enrichment was $8,024,746 for the period ending December 31,
2016. Lastly, Mr. McMoran testified the value of Vesta‟s interest in LCRG was
diminished by $2,702,157 through June 30, 2015. GCRG did not present any
expert evidence on the amount of damages its actions caused LCRG.
The trial court‟s conclusion that the only benefit GCRG derived from its
taking and use of LCRG‟s extensive business information was getting it up to
speed more quickly to successfully compete against LCRG completely disregards
GCRG‟s continuous and extensive use of LCRG information when soliciting
business from LCRG‟s competitors and that GCRG personnel regularly requested,
shared, and used LCRG‟s contract bid and pricing information, including its bids
on contracts it won with Sasol and the contract LCRG was not invited to bid on, as
well as the inventory information to satisfy its contractual obligations for Sasol‟s
SSCs and sales GCRG made to other LCRG customers.
GCRG contends the trial court did not err in rejecting LCRG claim for
unjust enrichment damages, noting a plaintiff “may recover for the unjust
enrichment caused by misappropriation that is not taken into account in computing
damages for actual loss.” La.R.S. 51:1433. It also points out that the word “may”
is permissive; therefore, such an award is discretionary. La.R.S. 1:3; Brumley v.
Med Express Ambulance Serv., 96-197, p. 5 (La.App. 3 Cir. 6/5/96), 676 So.2d
662, 665.
The entirety of the evidence shows the trial court‟s award of $700,000 is
unreasonable and is an abuse of discretion. After finding that a trial court‟s
damage award is abusively low, an appellate court “can only increase the award to
the lowest amount which is reasonably within the court‟s discretion.” Ryan v.
15 Zurich Am. Ins. Co., 07-2312, p. 7 (La. 7/1/08), 988 So.2d 214, 219. In view of the
unrebutted expert testimony, we increase the trial court‟s damage award to LCRG,
individually, $3,850,046 for lost profits and $8,024,746 for unjust enrichment. We
also award Vesta $2,702,157 for the diminished value of her ownership interest in
LCRG next asserts the trial court erred in refusing to allow it to present
evidence of future damages GCRG‟s acts will cause it and denying its claim for
future damages. LCRG seeks future damages in the form of a 5% royalty from
GCRG for its continued use of its intellectual property, relying on the testimony of
a defense expert who testified he pays a 5% royalty for the right to use intellectual
property of another.
GCRG counters that LCRG is protected by an order the trial court signed
December 11, 2018. In that order, the trial court lifted the November 18, 2015,
preservation order “provided [GCRG] shall maintain the collected data . . . only to
be accessed or deleted by Court order” and ordered that GCRG “immediately take
all reasonable steps to identify and destroy any and all information, documents,
files, data generated by [LCRG] in the possession of [GCRG], if any.” The order
further granted LCRG “the right to seek sanctions for any willful violation of this
Order by [GCRG].” Finding LCRG can pursue an award for future damages in the
trial court, we will not award future damages at this time.
TREBLE DAMAGES If after being notified by the attorney general to cease such action, a party
knowingly commits an unfair trade practice which causes “any person . . . any
ascertainable loss of money,” “the court shall award [the person] three times the
actual damages sustained.” La.R.S. 51:1409(A). GCRG received notices from the
16 attorney general in June 2016 and June 2017. At trial, GCRG employees testified
GCRG‟s inventory system had never been changed, and they had never been
instructed to change how they performed their work for GCRG. In other words,
they never stopped using LCRG information GCRG copied onto its computers.
The trial court did not deny LCRG‟s claim for treble damages because it
concluded GCRG did not continue using LCRG information after being notified by
the attorney general to cease using LCRG information. To the contrary, the trial
court determined that the parties‟ consensual preservation order “prevented
[GCRG] from being able to fully comply” with Section 1409. The trial court
reasoned: “Any attempt to change the parts numbering system or other
information that was taken and used by [GCRG] would have been a direct
violation of that preservation order.”
The preservation order, in part, ordered the parties: 1) “to preserve
documents, information, data and other electronic or digital communications or
compilations of data which are or may be relevant to issues in this litigation”; 2)
“the parties . . . to take appropriate measures to preserve and prevent from deletion,
destruction[,] or alteration any and all records and content pertinent to plaintiffs‟
claims or defendants‟ defenses” as specified in the order; 3) not to modify or delete
on-line storage and/or direct access storage devices attached to any computers
owned or used by the parties and specified individuals; and 4) not perform any
actions that would alter, damage, or corrupt information pertinent to the parties‟
claims.
LCRG contends the trial court‟s conclusion “converted an order to preserve
evidence into a license to use that evidence illegally.” GCRG argues it had to
violate the preservation order to comply with the attorney general‟s notices.
17 LUTPA provides for the issuance of an injunction and the award of treble
damages but does not prohibit an award of treble damages if an injunction is issued
in a case. La.R.S. 51:1407; 1409(A). GCRG did not show how its compliance
with the attorney general‟s notices would have violated the preservation order.
More importantly, GCRG could have obtained court approval to comply with the
attorney general‟s notice and had its computer experts remove LCRG‟s
information from its computers to ensure its compliance with the attorney general‟s
notices would not be construed as a violation of the preservation order. Instead,
GCRG continued doing business as it had before the preservation order and its
receipt of the attorney general‟s notices.
Section 1409 is mandatory. The trial court‟s holding that GCRG is not
liable for treble damages is reversed, and LCRG is awarded treble damages.
ATTORNEY FEES AND COSTS
LCRG urges the trial court legally erred in denying its claims for attorney
fees and costs because LUTPA mandates that it be awarded attorney fees and
costs. LUTPA provides that the court “shall award” to a plaintiff awarded
damages under the act “reasonable attorney fees and costs.” La.R.S. 51:1409(A).
The trial court legally erred in denying LCRG‟s claim for attorney fees and
awarding LCRG only 75% of its costs. The matter is remanded to the trial court to
conduct a hearing and award LCRG its reasonable attorney fees and all its costs.
DISPOSITION
For the reasons herein, the judgment of the trial court is reversed, in part,
and affirmed in part. Lake Charles Rubber and Gasket is awarded judgment
against Gulf Coast Rubber and Gasket, Susan Halay Vincent, and Martin Bryan
Vincent in the amount of $3,850,046 for lost earnings and $8,024,746 for unjust
18 enrichment, treble damages, reasonable attorney fees, and all court costs. Vesta
Halay Johnston is awarded judgment against Gulf Coast Rubber and Gasket, Susan
Halay Vincent, and Martin Bryan Vincent in the amount of $2,702,157 for the
diminished value of her ownership interest in LCRG, treble damages, reasonable
attorney fees, and costs. The matter is remanded to the trial court to determine
LCRG‟s reasonable attorney fees.
AFFIRMED IN PART; AMENDED IN PART; REVERSED IN PART; AND REMANDED WITH INSTRUCTIONS.