Praeses, L.L.C. v. Dana S. Bell and Blue Line Innovations, LLC

Judgment rendered June 29, 2022.
Application for rehearing may be filed
within the delay allowed by Art. 2166,
La. C.C.P.

No. 54,601-CA

COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA

*****

PRAESES, L.L.C. Plaintiff-Appellant

versus

DANA S. BELL AND BLUE LINE Defendant-Appellees
INNOVATIONS, LLC

*****

Appealed from the
First Judicial District Court for the
Parish of Caddo, Louisiana
Trial Court No. 624,726

Honorable Craig O. Marcotte, Judge

*****

DOWNER, JONES, MARINO & WILHITE Counsel for Appellant
By: Allison A. Jones
Michael A. Marino

COOK, YANCEY, KING & GALLOWAY Counsel for Appellees
By: Elizabeth M. Carmody
Luke D. Whetstone

*****

Before MOORE, COX, and THOMPSON, JJ.

MOORE, C.J.

Praeses, LLC appeals a judgment that denied its request for a

temporary restraining order (“TRO”) and preliminary injunction to enjoin its

former employee, Dana Bell, from breaching the separation agreement she

signed when she left the company, from disclosing or using alleged trade

secrets she got while working for the company, in violation of the La.

Uniform Trade Secrets Act (“LUTSA”), La. R.S. 51:1431-39, and from

executing a contract with a third party that would, in Praeses’s view, breach

the agreement and violate the law. We affirm.

FACTUAL BACKGROUND

Praeses is a software and telecom company with much of its business

devoted to analyzing phone systems for correctional facilities (“CFs”).

According to Praeses, it has developed “proprietary internal auditing

formulas, methods and processes,” including cross-referencing enormous yet

very specific data sets, and it currently provides these analytics to about 300

CFs. It claims that its “formulas, methods and processes” are unique,

superior, and irreproducible: even though the contracts it has entered with

various CFs become public records, nobody examining them would be able

to understand them – unless they had learned the system from Praeses. It

therefore considers its processes to be trade secrets.

Ms. Bell holds a BS in Finance from LSU-Shreveport, became a

Series 7 licensed financial adviser while working for Morgan Stanley, a

large investment bank, and managed her husband’s family business, Bell

Machine Co. In February 2009, Ms. Bell applied to Praeses and was hired

as a national accounts manager; she signed an employment agreement

obligating her to keep the trade secrets confidential. She left in February

2013, but returned in July 2014, this time as recruiting coordinator, signing

another employment agreement. She was later promoted to director of

corporate affairs, which included the CFs operation. According to Praeses,

in January 2018, Ms. Bell helped assemble a response to a request for

proposals (“RFP”) from the Alabama Department of Corrections, using all

of Praeses’s trade secrets.

Later that month, for reasons not disclosed in the record, Praeses

terminated Ms. Bell. She was immediately cut off from the company’s

computer network and software, and ordered to return the company laptop.

On March 2, 2018, Praeses presented her, and she signed, a separation

agreement and general release (“Separation Agreement”) that included a

two-year noncompetition and nonsolicitation clause. It also had a

confidentiality clause, in which Ms. Bell recognized that Praeses has

“proprietary interest in * * * business methods and systems, * * * research

and development activities, * * * systems manuals procedures, * * * and

similar documents and products relative to the operation of the Employer’s

business[,]” and she agreed that she would “continue to maintain the

confidentiality of such information.” She further agreed that, in the event of

a breach, Praeses was entitled to “immediate injunctive relief, without the

necessity of establishing irreparable injury.” In exchange, Praeses gave her

a $31,250 severance payment, which, it stressed, was not required under

Louisiana’s at-will employment law.

Ms. Bell testified that after she left Praeses, she took a job with NCIC

Inmate Communications, as an independent consultant, performing work

similar to (but more expansive than) the analytics provided by Praeses. She
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then worked as director of business development for Corizon Health, which

coordinates healthcare for CFs and responds to RFPs.

Over two years later, in April 2020, the Commonwealth of

Kentucky’s Department of Corrections (“KYDOC”) issued an RFP for

inmate telecom consulting services. This was a contract previously held by

Praeses, but Ms. Bell testified that she had never worked on the KYDOC

contract while there. She quickly formed her own business, Blue Line

Innovations, LLC (“BLI”), and assembled a response to the RFP. She

testified that she did this using Microsoft Excel, Word, Adobe, and various

“interfaces” from the KYDOC website. She submitted it and ultimately

proposed a management fee of 3.92% of gross revenue, or a monthly flat fee

of $19,295.

Praeses also submitted a response to KYDOC’s RFP, using its unique

“formulas, methods and processes.” Ultimately, it proposed a management

fee of 11% of net revenue, including inmate phone, video visitation, tablets,

electronic funding, and recoupment payments.

KYDOC accepted BLI’s proposal. Shocked to have lost this very

lucrative account, Praeses filed an open records request with KYDOC.

Going over the winning proposal, Praeses recognized that BLI was run by its

former employee, Ms. Bell, and then decided that BLI’s approach to the

analytics was “too close” to Praeses’s own formulas, methods, and

processes, which it considered trade secrets.

PROCEEDINGS IN THE DISTRICT COURT

Praeses filed this suit on July 9, 2020, against Ms. Bell and BLI,

seeking a TRO and injunction to prevent them from “unauthorized

appropriation” of its trade secrets. An affidavit from Praeses’s president
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asserted that while she worked there, Ms. Bell became intimately familiar

with its trade secrets, used those in her response to KYDOC, and thereby

misappropriated Praeses’s confidential information. The petition alleged

that her response to the KYDOC RFP was a breach of the Separation

Agreement, a violation of LUTSA, and a violation of the Louisiana Unfair

Trade Practices Act, La. R.S. 51:1405. Praeses did not actually file its

motion for TRO and preliminary injunction until nearly two weeks later,

July 21, 2020.

The district court fixed the bond at $10,000 and granted the TRO on

July 23. Ms. Bell moved to dissolve the TRO, showing that Praeses had also

filed a protest with KYDOC and, as a result, the contract with BLI had been

halted. Ms. Bell felt there was nothing to enjoin.

The matter proceeded to trial over three days in August 2020. Only

two witnesses testified.

For Praeses, the witness was Ann Day, the director of the company’s

Correctional Services Division.1 She stated that the methods they use are

not things one can gather on an Excel spreadsheet or by simple math; the

data is complicated; the system is a “unique parsing,” which took years to

develop. Praeses takes special steps to ensure its confidentiality, including

two-step authentication to access the system, and only 30 of the 88

employees are even allowed to use it (but Ms. Bell was one of them). Over

and over again, Ms. Day stressed how unique and abstruse their methods

were, and how zealously they try to guard them. She admitted that other

businesses compete with Praeses, but those competitors’ proposals come

1
Adam Rosen, the company’s president, who filed the detailed affidavit in
support of the TRO, was not called to testify.
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nowhere near Praeses’s product, for its breathtaking analytical depth. That

was, of course, until they saw BLI’s proposal: its “methodology and

approach” were “really familiar.” Ms. Day meticulously walked through

various portions of the KYDOC proposals from both BLI and Praeses: even

though BLI’s were not nearly as complete, they were so similar that they

could not have been done without “inside knowledge.” To better illustrate

her point, Ms. Day also discussed proposals from other competitors, such as

Secured Perimeters International, Fidelis, and NCIC, to other CFs. Those

proposals, reproduced in various exhibits, were, in her view, simplistic and

superficial compared to Praeses’s.

On cross-examination, Ms. Day was asked what compilations,

exactly, were proprietary. She responded, “It’s not just compiling,” “not just

straightforward mathematical formulas,” and “nobody can find this out

unless they work for Praeses.” She admitted that some of the desired

analysis can be inferred from KYDOC’s RFP and website, but nobody had

ever used Praeses’s “very unique process.” “There’s no class for this stuff.”

She also admitted that after Ms. Bell left the premises in January 2018, she

had no more access to Praeses’s proprietary information, but she was

adamant that Ms. Bell could not possibly have retained all this process just

from memory. Ms. Day estimated that, based on KYDOC’s projected

annual revenue, Praeses’s proposal would cost about $330,000 a year, and

BLI’s, about $231,000.

On redirect, Ms. Day reiterated her conviction that “business records

are trade secrets.” She also insisted that Ms. Bell had played an active part

in preparing Praeses’s proposal for the Alabama DOC, and this experience

was probably what lodged the unique processes in Ms. Bell’s mind.
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After Ms. Day stepped down, and Praeses rested its case, BLI moved

for involuntary dismissal. The court denied this, commenting that Praeses

had “made a prima facie case.”

For BLI, Ms. Bell described her background – BS in Finance from

LSU-Shreveport, employment at Morgan Stanley, Series 7 certification, and

employment at Bell Machinery and Corizon Health – implying that she had

some natural ability with numbers and professional experience with figuring

government contracts. She denied that she played any part in the Alabama

DOC proposal while she worked at Praeses. BLI’s KYDOC response, she

maintained, was based entirely on data from the telecom provider and the

specific requests in the RFP, processed with Excel, Word, and Adobe. She

admitted that her figures were not as detailed as Praeses’s – Praeses scored

much higher on KYDOC’s technical count – but they were good enough,

with her lower bottom line, to win the contract. She described Praeses’s

vaunted “debit usage report” as not much different from balancing a

checkbook. On cross-examination, she maintained that Praeses’s work is

not “so unique.”

ACTION OF THE TRIAL COURT

After taking the case under advisement, the court rendered an opinion

citing the basic law of injunction, La. C.C.P. art. 3601, and jurisprudence

that preliminary injunction is proper if the plaintiff makes a “prima facie

showing” of the factors, Fluid Disposal Specialties Inc. v. Unifirst Corp.,

50,356 (La. App. 2 Cir. 1/13/16), 186 So. 3d 210.

The court then found, as a fact, that Praeses did not prove a

“protectable trade secret,” as Ms. Day, the only witness, “failed to articulate

exactly what methods, processes, formulas or systems are purported by
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Praeses to be proprietary or susceptible of being proprietary.” Further, an

employee is not required to ignore general information acquired by

experience and committed to memory, Theatre Time Clock Inc. v. Stewart,

276 F. Supp. 593 (E.D. La. 1967), and Ms. Bell acquired general

information and knowledge by experience. The court also noted that Ms.

Day admitted that various items were not being claimed as trade secrets –

formatting or generating the kind of reports that BLI submitted to KYDOC,

the names of proposed reports, and the individual maintenance summary

report.

Next, the court found that the Separation Agreement did not “create” a

trade secret: a confidentiality agreement cannot transform information that is

generally known into a trade secret, citing Cason v. Chesapeake Oper. Inc.,

47,084 (La. App. 2 Cir. 4/11/12), 92 So. 3d 436, 178 Oil & Gas Rep. 986,

writ denied, 12-1290 (La. 9/28/12), 98 So. 3d 840. Finally, the court noted

that if there was any loss, Praeses could recover damages later.

The court rendered judgment dissolving the TRO and denying the

preliminary injunction. Praeses appealed suspensively.

APPLICABLE LAW

A preliminary injunction is a procedural device interlocutory in nature

and designed to preserve the existing status pending a trial of the issues on

the merits of the case. La. C.C.P. art. 3601; Levine v. First Nat’l Bank of

Com., 06-0394 (La. 12/15/06), 948 So. 2d 1051; Tanner v. Succession of

Bourland, 52,918 (La. App. 2 Cir. 11/20/19), 285 So. 3d 104. A preliminary

injunction may be issued on merely a prima facie showing by the plaintiff

that he is entitled to relief. Rand v. City of New Orleans, 17-0596 (La.

12/6/17), 235 So. 3d 1077; Tanner v. Succession of Bourland, supra. The
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grant or denial of preliminary injunction will not be disturbed except for a

clear abuse of the trial court’s discretion. Rand v. City of New Orleans,

supra; Board of Sup’rs v. McCalmont, 54,451 (La. App. 2 Cir. 5/25/22), __

So. 3d __.

The Louisiana Uniform Trade Secrets Act is intended to prevent one

person or business from profiting from a trade secret developed by another,

because it would thus be acquiring a free competitive advantage. Bihm v.

Deca Sys. Inc., 16-0356 (La. App. 1 Cir. 8/8/17), 226 So. 3d 466; Omnitech

Int’l Inc. v. Clorox Co., 11 F. 3d 1316 (5 Cir. 1994), cert. denied, 513 U.S.

815, 115 S. Ct. 71, 130 L. Ed. 2d 26 (1994). The operative definition

appears in La. R.S. 51:1431 (4):

(4) “Trade secret” means information, 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.

Actual or threatened misappropriation may be enjoined. La. R.S.

51:1432 A; Innovative Manpower Solutions LLC v. Ironman Staffing LLC,

929 F. Supp. 2d 597 (W.D. La. 2013).

The threshold question in every trade secrecy case is whether a legally

protectable trade secret exists in fact. Fox v. Fox, 49,619 (La. App. 2 Cir.

4/22/15), 164 So. 3d 359, writ not cons., 15-1162 (La. 9/18/15), 177 So. 3d

1063; Marine Pile Drivers LLC v. Welco Inc., 43,498 (La. App. 2 Cir.

8/13/08), 988 So. 2d 878. Information that is generally known or readily

ascertainable is not considered to be confidential. S. Indus. Contractors LLC

v. W. Bldrs. of Amarillo Inc., 45,779 (La. App. 2 Cir. 12/15/10), 56 So. 3d
8

307; Arco Oil & Gas Co. v. DeShazer, 94-504 (La. App. 3 Cir. 11/2/94), 649

So. 2d 11/2/94), 649 So. 2d 444; NCH Corp. v. Broyles, 749 F. 2d 247 (5

Cir. 1985). A confidentiality agreement does not transform information that

is generally known into a trade secret. Arco Oil & Gas Co. v. DeShazer,

supra; Elizabeth A. Rowe, When Trade Secrets Become Shackles: Fairness

and the Inevitable Disclosure Doctrine, 7 Tulane J. Tech. & Intell. Prop. 167

(Spring 2005), and citations therein; Rick J. Norman, La. Prac. Emp. Law §

14:16, Liability to Employer (Nov. 2021 Update), and citations therein.

Whether information or property is a trade secret and whether a party

has improperly disclosed it are questions of fact subject to manifest error

review. Fox v. Fox, supra; Marine Pile Drivers LLC v. Welco Inc., supra;

NCH Corp. v. Broyles, supra.

DISCUSSION

Praeses has designated two assignments of error, but raises a prefatory

argument: the standard for getting a preliminary injunction is that the

plaintiff must make a “prima facie showing that it is entitled to the relief

requested” (emphasis added). Mary Moe LLC v. La. Bd. of Ethics, 03-2220

(La. 4/14/04), 875 So. 2d 22. When the district court denied BLI’s motion

for involuntary dismissal, it commented that Praeses had made a “prima

facie showing.” From this, Praeses suggests that when it rested its case-in-

chief, it made a showing sufficient to obtain the preliminary injunction, and

the issue was settled.

In an action tried by the court without a jury, after the plaintiff has

completed the presentation of his evidence, any party, without waiving his

right to offer evidence in the event the motion is not granted, may move for

a dismissal of the action as to him on the ground that upon the facts and law,
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the plaintiff has shown no right to relief. La. C.C.P. art. 1672 B. The

standard for ruling on the motion is that the court “may then determine the

facts” and either grant or deny the involuntary dismissal. Id. At times,

courts refer to this standard by the shorthand term “prima facie showing,” as

in Phillips v. State, 43,143 (La. App. 2 Cir. 3/19/08), 978 So. 2d 1223.

However, this means only that the court wishes to hear all the evidence

before ruling, and does not necessarily create a conclusive finding to support

an injunction under La. C.C.P. art. 3601 A. It is permissible for a court to

deny a defendant’s motion for involuntary dismissal, hear the defendant’s

evidence, and then deny the plaintiff’s request for preliminary injunction.

Brookwood-Riverside LLC v. Baton Rouge Water Works Co., 20-1173 (La.

App. 1 Cir. 5/25/21), 327 So. 3d 1. The district court’s ruling on BLI’s

motion for involuntary dismissal did not resolve the issue of injunctive

relief. Praeses’s contention lacks merit.

LUTSA Violation

By its second assignment of error, Praeses urges that the district court

erred in determining that Praeses did not make a prima facie showing that it

was entitled to a preliminary injunction to protect its trade secrets. It

contends that its “methods, formulas and processes” met every essential

element of a trade secret under R.S. 51:1431 (4): they have independent

economic value, they are not generally known or readily ascertainable, they

were subject to reasonable efforts to maintain their secrecy, and Ms. Bell

was under an obligation not to use or disclose them. It suggests the case is

analogous to Technical Indus. Inc. v. Banks, 419 F. Supp. 2d 903 (W.D. La.

2006), in which the court found that the plaintiff proved that its “Visonic”

pipe inspection process “has not been successfully completed by any other
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company” and was therefore subject to an injunction under LUTSA.

Finally, it submits that it showed irreparable injury, even though R.S.

51:1432 A dispenses with this requirement. Any appropriation of a trade

secret, it shows, must be enjoined. Bihm v. Deca Sys. Inc., supra; Newsouth

Comms. Corp. v. Universal Tel. Co. LLC, 2002 WL 3126558 (E.D. La.

2002).

In support, Praeses cites Ms. Day’s testimony that its reconciliation

services provide a unique way of identifying relevant information from call

data, understanding the data and isolating the relevant information,

efficiently validating the data to generate precise, verified reports, and

summarizing the whole in an easily understood final report. Praeses shows

over 300 CFs nationwide pay for its reports, proving their independent

economic value. It contrasts the reports of its competitors, which are

obviously less detailed and more generic than its own; in Ms. Day’s view,

this proved that Praeses’s services are not generally known or readily

ascertainable. Finally, it shows that it took reasonable measures to protect

the confidentiality of its process, as is broadly stated in the Separation

Agreement.

Of course, an alternative explanation was offered by BLI and Ms.

Bell. They established that about 85% of Praeses’s clients are public

government entities, whose contracts and agreements are matters of public

record, readily accessible and ascertainable, and cannot be considered

confidential or proprietary. In fact, in response to this KYDOC RFP,

Praeses included two reports,2 together with descriptions of what these

These were the “Monthly Remittance Detail Report” and “Monthly Facility
2

Summary Report.”
11

reports contained, all of which was available by public records request. BLI

also showed that Ms. Bell had considerable education and experience in

responding to RFPs, analyzing data, reading contracts, and managing

systems. She was perfectly candid in stating that she studied the KYDOC

RFP, modeled her response on the existing KYDOC contract, and used data

from KYDOC’s telecom provider. She also explained that reports similar to

Praeses’s, though nowhere near as complex, could be generated using Excel,

Word, and Adobe.

In light of the witnesses’ conflicting testimony, we are disinclined to

reverse the district court’s findings. However, further confirmation is

readily seen in the “KYDOC RFP Review and Comparison,” admitted as

Exhibit P-28. This shows that on “Executive Summary” (11 requirements,

savings and efficiencies, examples of report, and description of processes),

out of a maximum of 200 points, Praeses scored 140, compared to BLI’s 90.

On “Implementation Plan” (timeline, problems/complaints, and transition),

out of a maximum 300, Praeses scored 230; BLI scored 210. On

“Experience” (company background, other correctional agencies, and

qualifications), out of a maximum of 100, Praeses scored 80; BLI scored 40.

It was only on “Cost,” out of a maximum of 400 points, that BLI outscored

Praeses, 400 to 93. By this objective measure, and in the view of KYDOC

itself, BLI’s proposal was noticeably inferior to Praeses’s in terms of

technical sophistication and utility to the agency. In short, if Ms. Bell had

really misappropriated Praeses’s secret methods, processes, and systems, the

results would have been much closer to the original. This distinguishes the

case from Technical Indus. Inc. v. Banks, supra, in which the court found

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that the technique being used by the defendant was the same as the

distinctive Visonic technology developed by the plaintiff.

In light of this large body of evidence, much of it conflicting, we are

unwilling to say that the district court erred in finding no protectable trade

secret. The court commented on Ms. Day’s rather mechanical intonation of

the phrase “methods, processes and systems,” coupled with an inability to

articulate just what they were. The court also noted Ms. Bell’s education,

experience, and initiative; this court would add, she showed great

practicality and complete candor in explaining how she produced her RFP

response. In short, we find no manifest error or abuse of discretion. This

assignment of error lacks merit.

Breach of Contract

By its first assignment of error, Praeses urges the court erred in failing

to grant a preliminary injunction to preclude Ms. Bell from breaching her

contractual obligations. In support, it cites the plain meaning rule of La.

C.C. art. 2046: “When the words of a contract are clear and explicit and lead

to no absurd consequences, no further interpretation may be made in search

of the parties’ intent.” It contends that in both of its employment agreements

and in the Separation Agreement, Ms. Bell accepted the company’s

definition of trade secrets and agreed to keep them confidential; and that, in

the event of a breach, Praeses was entitled to injunctive relief without having

to show irreparable injury. It lists the individual reports that it claims Ms.

Bell misappropriated from its own unique system and Ms. Day’s testimony

13

that each of these is a trade secret.3 Praeses urges this court to reject Ms.

Bell’s opinion to the contrary as self-serving.

The threshold question in every trade secrecy case is whether a legally

protectable trade secret exists in fact. Fox v. Fox, supra; Marine Pile

Drivers LLC v. Welco Inc., supra. The district court’s finding that

information or property is, or is not, a trade secret and whether a party has,

or has not, improperly disclosed it are questions of fact subject to manifest

error review. Fox v. Fox, supra; Marine Pile Drivers LLC v. Welco Inc.,

supra; NCH Corp. v. Broyles, supra. For the reasons already discussed, this

court has found no manifest error in the district court’s conclusion that

Praeses failed to prove a protectable trade secret. Without proof of this,

there can be no injunctive relief.

Moreover, we agree with the jurisprudence and scholarly commentary

that a confidentiality agreement cannot transform information that is

generally known into a trade secret. Arco Oil & Gas Co. v. DeShazer,

supra; Elizabeth A. Rowe, op. cit. at 188-189; Rick J. Norman, op. cit. at

“iv. Duty to Protect Trade Secrets.” This record supports the district court’s

finding that the contents of BLI’s response, while perhaps beyond the ken of

the average citizen, were not misappropriated from Praeses; they could be

inferred from the structure of the RFP, data from KYDOC’s telecom

providers, data processing available in Excel, Word, and Adobe, and general

accounting principles that Ms. Bell obviously had mastered. We perceive no

abuse of the district court’s discretion. This assignment of error lacks merit.

3
These are the “Monthly Facility Report,” “Free Call Analysis Report,” “Station
Summary Report,” “Excessive Calls to a Single ANI Report,” “Statistical Call History,”
and “Quarterly Call Analysis.”
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CONCLUSION

For the reasons expressed, the judgment is affirmed. All costs are to

be paid by the appellant, Praeses, LLC.

AFFIRMED.

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