Vesta Halay Johnston v. Susan Halay Vincent

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

20-357

VESTA HALAY JOHNSTON, ET AL.

VERSUS

SUSAN HALAY VINCENT, ET AL.

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APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2015-4153
HONORABLE G. MICHAEL CANADAY, DISTRICT JUDGE

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ELIZABETH A. PICKETT
JUDGE

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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

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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.

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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,

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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.

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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,

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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

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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.

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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:

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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

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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.

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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.

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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

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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

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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,

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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.

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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.

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

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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.

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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

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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.

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