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OWNER–OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., et al., Appellants v. UNITED STATES DEPARTMENT OF TRANSPORTATION, et al.

United States Court of Appeals,

District of Columbia Circuit.

OWNER–OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., et al., Appellants

v.

UNITED STATES DEPARTMENT OF TRANSPORTATION, et al., Appellees

No. 16-5355

|

Argued November 8, 2017

|

Decided January 12, 2018

 

 

Appeal from the United States District Court for the District of Columbia (No. 1:12-cv-01158)

Attorneys and Law Firms

Joyce E. Mayers, Washington, DC, argued the cause for appellants. With her on the briefs were Paul D. Cullen, Sr., and Paul D. Cullen, Jr., Washington, DC.

Caroline D. Lopez, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Matthew M. Collette, Attorney, Washington, DC, Paul M. Geier, Assistant General Counsel, U.S. Department of Transportation, Joy K. Park, Senior Trial Attorney, and Sue Lawless, Assistant Chief Counsel for Enforcement and Litigation, Federal Motor Carrier Safety Administration.

Before: Tatel, Griffith, and Srinivasan, Circuit Judges.

Opinion

Tatel, Circuit Judge:

 

*1 In Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016), the Supreme Court held that “Article III standing requires a concrete injury even in the context of a statutory violation,” id. at 1549. In this case, several commercial truck drivers and their industry association claim they were injured by the Department of Transportation’s violation of its statutory obligation to ensure the accuracy of a database containing driver-safety information. As explained in this opinion, we agree with the district court that, under Spokeo, the asserted injury is, by itself, insufficiently concrete to confer Article III standing. We reverse, however, with respect to two drivers whose information was released to prospective employers because dissemination of inaccurate driver-safety data inflicts an injury sufficiently concrete to confer standing to seek damages.

 

 

I.

To fulfill its mandate of ensuring “the highest degree of safety in motor carrier transportation,” the Federal Motor Carrier Safety Administration, part of the Department of Transportation, maintains the Motor Carrier Management Information System, a database of commercial truck drivers’ safety records. 49 U.S.C. § 113(b). The database includes “accident reports and other safety violations.” Weaver v. Federal Motor Carrier Safety Administration, 744 F.3d 142, 143 (D.C. Cir. 2014). Maintaining the database requires collaboration between state and federal authorities. States serve as the primary reporters of information: they are obligated by statute to “collect[ ] and report [ ] … accurate, complete, and timely motor carrier safety data.” 49 U.S.C. § 31102(c)(2)(P)(i). For its part, the Department must “ensure, to the maximum extent practical, [that] all the data is complete, timely, and accurate,” id. § 31106(a)(3)(F), and “prescribe technical and operational standards to ensure … uniform, timely, and accurate information collection and reporting by the States,” id. § 31106(a)(4)(A).

 

Shippers and other firms looking to hire truck drivers can access certain information in the database, namely, “[c]ommercial motor vehicle accident reports,” “[i]nspection reports that contain no driver-related safety violations,” and “[s]erious driver-related safety violation inspection reports.” Id. § 31150(a). The Department makes this information available through its Pre–Employment Screening Program, which provides employers with reports containing crash data from the previous five years and inspection data from the previous three. See U.S. Department of Transportation, Federal Motor Carrier Safety Administration (FMCSA), Privacy Impact Assessment: Pre–Employment Screening Program (PSP) (Apr. 14, 2010). The Department must “ensure that any information that is released … will be in accordance with the Fair Credit Reporting Act [FCRA] … and all other applicable Federal law.” 49 U.S.C. § 31150(b)(1).

 

To further guarantee the accuracy of the database, the Department must “provide a procedure for [drivers] to correct inaccurate information.” Id. § 31150(b)(4). In order to accomplish this, the Department “established ‘DataQs,’ a web-based dispute resolution procedure that allows ‘[drivers] to challenge [’]” database information. Weaver, 744 F.3d at 143 (quoting Privacy Act of 1974; Department of Transportation, Federal Motor Carrier Safety Administration (FMCSA) 007 Pre–Employment Screening Program, 77 Fed. Reg. 42,548, 42,551 (July 19, 2012)). When a driver files a challenge, the Department forwards it to the relevant state and state officials “decide how to respond.” Id.

 

*2 Appellants are five commercial truck drivers and their industry association, the Owner–Operator Independent Drivers Association, Inc. Between 2010 and 2013, state law-enforcement authorities cited each driver for violating safety regulations. See Owner–Operator Independent Drivers Association v. Department of Transportation, 211 F.Supp.3d 252, 256 (D.D.C. 2016). The drivers successfully challenged the citations in state court: one driver was found not guilty after trial, and the others had their citations dismissed. Id. at 256–57. All but one of the drivers then asked through DataQs to have the violation reports relating to the citations removed from the Department’s database. Their requests were rejected because, according to the relevant state authorities, the database at the time displayed only initial citations, not adjudicated outcomes. Id. at 257. The safety records of two drivers—Klint Mowrer and Fred Weaver, Jr.—including the challenged violation reports, were shared through the Pre–Employment Screening Program; the other drivers’ records were never disseminated. Id. at 260–61.

 

The individual drivers and the industry association then sued, challenging the Department’s failure to ensure the accuracy of the database and seeking injunctive and declaratory relief under the Administrative Procedure Act, as well as damages under the FCRA. The Department moved for summary judgment, arguing (among other things) that the drivers lacked Article III standing because they failed to show concrete injury in fact. Id. at 258. The district court agreed and dismissed the case. Id. at 261. The drivers appeal, and now we consider the issue afresh. See Scenic America, Inc. v. Department of Transportation, 836 F.3d 42, 49 (D.C. Cir. 2016) (“We review the District Court’s decision … as to standing de novo ….”).

 

 

II.

[1]“ ‘[T]he irreducible constitutional minimum of standing’ requires ‘an injury in fact’ that is both ‘concrete and particularized,’ and ‘actual or imminent, not conjectural or hypothetical.’ ” Hancock v. Urban Outfitters, Inc., 830 F.3d 511, 513 (D.C. Cir. 2016) (alteration in original) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). This case focuses on just one element of that test: whether the alleged injury is “concrete.” Specifically, we must determine whether the drivers’ claimed injury—the Department’s failure to discharge its statutory duty to ensure the accuracy of information in the database—is sufficiently concrete to qualify as injury in fact.

 

The touchstone for analyzing whether the violation of a statutory obligation constitutes injury in fact is the Supreme Court’s recent decision in Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016). There, a consumer initiated a class action against a company that operates an online search engine that gathers and disseminates personal information, claiming that some of the disseminated information was incorrect. Id. at 1544. According to the consumer, this violated the FCRA, which imposes procedural requirements on the creation and use of consumer reports, including obligating reporting agencies to adopt mechanisms for ensuring the information’s accuracy. Id. at 1545–46. The Ninth Circuit had concluded that the consumer satisfied Article III’s injury-in-fact requirement because he had alleged that the search engine violated his rights under the FCRA. Id. at 1546.

 

[2]The Supreme Court vacated, explaining that the Ninth Circuit, which had focused only on whether the injury was particularized, failed to consider whether the injury was concrete. See id. at 1548 (“We have made it clear time and time again that an injury in fact must be both concrete and particularized.”). Where the alleged injury arises only from a statutory violation—as in both Spokeo and here—the Court explained, “[a] ‘concrete’ injury must be ‘de facto’; that is, it must actually exist.” Id. Although “Congress may ‘elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law,’ ” this “does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Id. at 1549 (alteration in original) (quoting Lujan, 504 U.S. at 578, 112 S.Ct. 2130). “Article III standing requires a concrete injury even in the context of a statutory violation.” Id. A plaintiff “could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” Id.

 

*3 Our court has had only a few occasions to apply Spokeo. In Hancock v. Urban Outfitters, Inc., 830 F.3d 511 (D.C. Cir. 2016), for example, we found that plaintiffs who alleged that a retailer’s request for their zip codes violated District of Columbia consumer-protection law lacked standing. As we explained, the plaintiffs asserted only “a bare violation of the requirements of D.C. law,” and failed to allege any concrete injury from the disclosure of a zip code, “for example, any invasion of privacy, increased risk of fraud or identity theft, or pecuniary or emotional injury.” Id. at 514. Collecting Spokeo’s scattered definitions of concreteness, we held that a “plaintiff must allege some ‘concrete interest’ that is ‘de facto,’ ‘real,’ and ‘actually exist[s].’ ” Id. (alteration in original) (quoting Spokeo, 136 S.Ct. at 1548, 1549).

 

Although helpful, Hancock does not control here. In that case, we found that a request for potentially harmless information—a zip code—had inflicted no concrete injury. See id. (“If, as the Supreme Court advised, disclosure of an incorrect zip code is not a concrete Article III injury, then even less so is [plaintiffs’] naked assertion that a zip code was requested and recorded without any concrete consequence.”). By contrast, here we address information that could easily harm a driver were it shared with prospective employers. See Appellants’ Br. 41–42 (explaining that reports of safety violations can meaningfully affect a driver’s professional reputation and employment prospects).

 

In support of their argument that they are injured by the mere existence of inaccurate information in the database, the drivers focus on two sentences from Spokeo: “[T]he violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact. In other words, a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.” Spokeo, 136 S.Ct. at 1549. According to the drivers, these sentences mean that the Department’s failure to comply with its statutory obligation to ensure accuracy, by itself, inflicts injury in fact. We disagree. The emphasized phrase “additional harm” clearly presumes that the putative plaintiff had already suffered a de facto injury resulting from the procedural violation. Reinforcing this understanding of Spokeo, the Supreme Court, in explaining the “no additional harm” proposition, cited only examples of torts like libel and slander per se, where, so long as harmful information is publicized, “the law has long permitted recovery by certain tort victims even if their harms may be difficult to prove or measure,” and cases relating to the denial of access to publically available information. Id. at 1549–50 (citing the informational-standing cases FEC v. Akins, 524 U.S. 11, 118 S.Ct. 1777, 141 L.Ed.2d 10 (1998), and Public Citizen v. Department of Justice, 491 U.S. 440, 109 S.Ct. 2558, 105 L.Ed.2d 377 (1989)). Although the Court gave no indication that these two types of cases represent the only instances in which concrete injury results from a bare statutory violation, all of the decisions the drivers discuss fall into these two categories. That is, the violation at issue resulted either from the disclosure of potentially harmful information or from the withholding of public information. See Appellants’ Br. 28–32 (collecting cases).

 

For example, the drivers invoke the Ninth Circuit’s decision on remand in Spokeo, where the court found that the plaintiff had standing because he had “specifically alleged that [the search engine] falsely reported” facts about his age, marital status, education, employment, and wealth. Robins v. Spokeo, Inc., 867 F.3d 1108, 1117 (9th Cir. 2017). The Ninth Circuit also found that the allegations were not too speculative to establish concrete injury because “both the challenged conduct and the attendant injury ha[d] already occurred,” as the search engine “ha[d] indeed published a materially inaccurate consumer report.” Id. at 1118. Rather than supporting the drivers’ allegation of injury, then, Spokeo on remand confirms that actual publication is required to seek FCRA relief, and that a statutory violation is sufficient to confer standing only if “the specific procedural violations alleged … actually harm, or present a material risk of harm to, [concrete] interests.” Id. at 1113.

 

*4 The primary case the drivers cite from this Circuit is Friends of Animals v. Jewell, 828 F.3d 989 (D.C. Cir. 2016), see Appellants’ Br. 27–28, a post-Spokeo informational-standing case in which plaintiffs challenged the Interior Secretary’s failure to publish certain information as required by the Endangered Species Act. The drivers read Jewell to support their claim that Congress has broad latitude to define new injuries, but the opinion in that case emphasizes the narrow scope of informational injuries and makes clear that plaintiffs must suffer real harm to support standing. “A plaintiff suffers sufficiently concrete and particularized informational injury,” we explained, “where the plaintiff alleges that: (1) it has been deprived of information that, on its interpretation, a statute requires the government or a third party to disclose to it, and (2) it suffers, by being denied access to that information, the type of harm Congress sought to prevent by requiring disclosure.” Jewell, 828 F.3d at 992. Jewell is thus of no help to the drivers unless, of course, they can show that the Department’s statutory violation injured them.

 

The other post-Spokeo cases the drivers cite, not one of which comes from this Circuit, similarly involve putative injuries flowing from either disclosure or withholding. Appellants’ Br. 28–32. The courts in each case made clear that plaintiffs must show de facto injury even in the presence of a statutory violation. See, e.g., In re Horizon Healthcare Services Inc. Data Breach Litigation, 846 F.3d 625, 640 (3d Cir. 2017) (“Plaintiffs here do not allege a mere technical or procedural violation of FCRA. They allege instead the unauthorized dissemination of their own private information—the very injury that FCRA is intended to prevent. There is thus a de facto injury that satisfies the concreteness requirement for Article III standing.” (footnotes omitted)); Strubel v. Comenity Bank, 842 F.3d 181, 190 (2d Cir. 2016) (“[A] creditor’s alleged violation of each notice requirement, by itself, gives rise to a ‘risk of real harm’ to the consumer’s concrete interest in the informed use of credit.” (quoting Spokeo, 136 S.Ct. at 1549)).

 

Unlike the injuries in the cited cases, the drivers’ injury results from neither disclosure nor withholding of information. Rather, the drivers claim they suffer concrete harm from the mere fact that the Department, in violation of its statutory obligations, has allowed inaccurate safety information to remain in the database. As the drivers describe it, they “have a concrete interest in the accuracy of their safety records and the reflection those records project of their safety risk to potential employers.” Appellants’ Br. 33. “As long as [the Department] maintain[s] the inaccurate records of safety regulation violations in the database,” the drivers explain, “[the Department] expose[s] [them] to a material risk of harm contrary to their concrete statutory rights to accuracy.” Id. at 38.

 

[3]But does the drivers’ injury actually exist? Or, put another way, if inaccurate information falls into a government database, does it make a sound? Considering the drivers’ claimed harm in light of “both history and the judgment of Congress,” as Spokeo instructs, we think not. Spokeo, 136 S.Ct. at 1549.

 

To begin with, the drivers have identified no historical or common-law analog where the mere existence of inaccurate information, absent dissemination, amounts to concrete injury. They cite libel and slander per se, Appellants’ Br. 35–38, but as explained above, those torts require evidence of publication. See Restatement (First) of Torts § 569 (libel); id. § 570 (slander).

 

Turning then to the judgment of Congress, we see nothing in the relevant statutory provisions indicating that Congress “creat[ed] legal rights” in the database’s accuracy, “the invasion of which creates standing.” Havens Realty Corp. v. Coleman, 455 U.S. 363, 373, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982) (quoting Warth v. Seldin, 422 U.S. 490, 500, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)); cf. Electronic Privacy Information Center v. Presidential Advisory Commission on Election Integrity, No. 17-5171, –––F.3d ––––, ––––, 2017 WL 6564621, at *4 (D.C. Cir. Dec. 26, 2017) (finding that the plaintiff lacks standing because “it has not suffered the type of harm that [the statute] seeks to prevent”). As the safety statute itself demonstrates, Congress chose to protect truck drivers by requiring the Department to ensure the accuracy of their information, not by giving them a right of action to independently enforce that obligation. Section 31106 obligates the Department to ensure the database’s accuracy and creates no right on the part of the drivers to police their records—it speaks only to the Department itself. See 49 U.S.C. § 31106(a)(3)(F) (“The Secretary shall ….”). Section 31150, which authorizes pre-employment screening, likewise reflects Congress’s concern about disclosure, requiring the Department to “ensure that any information that is released … will be in accordance with the [FCRA] and all other applicable Federal law.” Id. § 31150(b)(1) (emphasis added). The FCRA, too, is designed “to curb the dissemination of false information.” Spokeo, 136 S.Ct. at 1550 (emphasis added). These statutes demonstrate that the harm Congress was concerned about was the dissemination of inaccurate information, not its mere existence in the Department’s database.

 

*5 The drivers’ inability to identify a clear common-law analog or to cite statutory support for their injury confirms that the mere existence of inaccurate information in the database is insufficient to confer Article III standing. Even though the inaccuracy results from the Department’s violation of its statutory obligations, the drivers have identified no “ ‘concrete interest’ that is ‘de facto,’ ‘real,’ and ‘actually exist[s].’ ” Hancock, 830 F.3d at 514 (alteration in original) (quoting Spokeo, 136 S.Ct. at 1548, 1549).

 

[4]As the foregoing analysis demonstrates, although the mere existence of inaccurate database information is not sufficient to confer Article III standing, the dissemination of that information to a potential employer is. At oral argument, Department counsel conceded that the two drivers whose safety records were released to prospective employers, Mowrer and Weaver, would have had standing to seek damages had they preserved the issue for appeal. See Oral Arg. 19:23–41. In our view, however, Mowrer and Weaver did raise the issue, stating in their opening brief that “[a]t a minimum, the false report of a criminal history for [Mowrer] and Weaver constitute[s] the demonstration of the kind of concrete injury sufficient to satisfy Article III standing.” Appellants’ Br. 42; see also Compl. ¶ 192 (describing the Department’s “disseminat[ion of] false, inaccurate, imprecise, incomplete and misleading consumer reports to third parties through the [Pre–Employment Screening Program]”). Given this, and because we agree that the two drivers have suffered concrete harm, we shall remand their damages claims to the district court.

 

[5] [6]In addition to damages, the drivers and their industry association seek prospective relief, including a declaration that the Department violated its statutory obligations and an injunction requiring it to purge the database of inaccurate information. Because “standing is not dispensed in gross,” Town of Chester v. Laroe Estates, Inc., ––– U.S. ––––, 137 S.Ct. 1645, 1650, 198 L.Ed.2d 64 (2017) (quoting Davis v. FEC, 554 U.S. 724, 734, 128 S.Ct. 2759, 171 L.Ed.2d 737 (2008)), the drivers “must demonstrate standing separately for each form of relief sought,” Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 185, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000). In order to have standing to seek prospective relief, the drivers must show that dissemination of their database information is “continuing” or “imminen[t].” Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 108, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).

 

[7]The drivers, however, concede that their information is no longer at risk of dissemination through the Department’s Pre–Employment Screening Program, as inspection data remains available for only three years after the relevant inspection and all of their disputed violations occurred more than three years ago. Appellants’ Br. 45. The association, moreover, has offered no evidence that any other member faces a risk of dissemination. Indeed, any risk of future disclosure of inaccurate information has been virtually eliminated by the Department’s adoption of an interpretive rule in June 2014, which allows States “to reflect the results of adjudicated citations” in the database and prohibits certain favorably adjudicated citations from being disseminated through the Pre–Employment Screening Program. See Motor Carrier Management Information System (MCMIS) Changes To Improve Uniformity in the Treatment of Inspection Violation Data, 79 Fed. Reg. 32,491, 32,491, 32,495 (June 5, 2014). Though the rule applies only to inspections occurring “on or after August 23, 2014,” thus excluding the drivers’ citations here, it ensures that similarly situated individuals face little risk of future harm. Id. at 32,495. Besides, given that our review comes more than three years after the rule’s effective date, all inaccurate records are protected from disclosure because they are either subject to the new rule or have aged out of the three-year Pre–Employment Screening Program reporting period.

 

*6 The drivers insist that, in addition to the Pre–Employment Screening Program, database information is used for other purposes and that the records can be accessed under the Freedom of Information Act, 5 U.S.C. § 552. But the drivers offer no evidence that such use is either imminent or likely, as would be required to support standing at the summary-judgment stage. See Lujan, 504 U.S. at 561, 112 S.Ct. 2130 (“[Standing] must be supported … with the manner and degree of evidence required at the successive stages of the litigation.”).

 

Finally, this case is not at all like our court’s recent decision in Attias v. CareFirst, Inc., 865 F.3d 620 (D.C. Cir. 2017). There, at the motion to dismiss stage, we found that health-insurance customers had standing to sue their insurer after it suffered a cyberattack in which an intruder breached a customer-information database. Id. at 622. We explained that “identity theft … would constitute a concrete and particularized injury” and that “the complaint plausibly alleges that the plaintiffs now face a substantial risk of identity theft,” because “an unauthorized party ha[d] already accessed personally identifying data … and it is much less speculative—at the very least, it is plausible—to infer that this party ha[d] both the intent and the ability to use that data for ill.” Id. at 627–28. Here, not only are we at the summary-judgment stage, where the drivers must produce evidence of injury, see Lujan, 504 U.S. at 561, 112 S.Ct. 2130, but nothing in the record indicates that anyone has recently accessed or used the information at issue or intends to do so in the future. The prospect of future injury is thus purely “speculative.” Attias, 865 F.3d at 626 (quoting Spokeo, 136 S.Ct. at 1548).

 

 

III.

Because the drivers are unharmed by the mere existence of inaccurate information in the Department’s database and because dissemination of that information is not imminent, they—with the exception of Mowrer and Weaver—have suffered no concrete injury in fact sufficient to confer Article III standing. To be sure, it is possible that the mere existence of inaccurate information in a government database could cause concrete harm depending on how that information is to be used. We conclude only that, under the specific circumstances of this case, the drivers have failed to show standing for all of the relief they seek. We thus affirm in part, reverse in part, and remand to the district court for further proceedings consistent with this opinion.

 

So ordered.

LAGNIAPPE LOGISTICS, INC. OF MISSISSIPPI v. SCOTT BURAS, BARRETT McCREARY, TODD NIENABER, CITATION LOGISTICS, L.L.C., CITATION INVESTMENTS, INC.

Court of Appeal of Louisiana,

First Circuit.

LAGNIAPPE LOGISTICS, INC. OF MISSISSIPPI

v.

SCOTT BURAS, BARRETT McCREARY, TODD NIENABER, CITATION LOGISTICS, L.L.C., CITATION INVESTMENTS, INC.

NUMBER 2017 CA 0701

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January 04, 2018

Appealed from the 22nd Judicial District Court In and for the Parish of St. Tammany, Louisiana Trial Court Number 2013-13979

Honorable Richard A. Swartz, Judge

Attorneys and Law Firms

Ernest S. Anderson, Slidell, LA, Attorney for Appellant, Plaintiff –Lagniappe Logistics I, Inc. of Mississippi

Joseph F. Lavigne, P.J. Kee, New Orleans, LA, Attorneys for Appellees, Defendants – Scott Buras, Barrett, McCreary, Todd Nienaber, and Citation Logistics, L.L.C.

BEFORE: McCLENDON, WELCH, AND THERIOT, JJ.

Opinion

WELCH, J.

 

*1 The plaintiff/appellant, Lagniappe Logistics of Mississippi (“Lagniappe”), appeals a judgment dismissing its suit against the defendants/appellees, Scott Buras, Barrett McCreary, Todd Nienaber, and Citation Logistics, LLC, following a bench trial. The trial court found that the plaintiff failed to establish the elements necessary to support claims against the defendants for breach of duty of loyalty by an employee, breach of fiduciary duty, tortious interference with contract, and violation of the Louisiana Unfair Trade Practices Act. For the reasons set forth below, we affirm the judgment of the trial court.

 

 

FACTUAL AND PROCEDURAL BACKGROUND

The plaintiff, Lagniappe, is a freight brokering business. A freight broker acts as an intermediary between shippers seeking to transport freight with carrier/trucking lines. The shipper contacts the freight broker, who in turn locates a carrier to move the load within a short period of time. The loads are quoted, scheduled, and dispatched by individual employees of the freight broker. While a freight broker may be required by certain customers to become qualified vendors or register with the company, freight brokers generally do not have exclusive contracts with their clients. In fact, shippers often seek quotes from several freight brokers in connection with an individual job.

 

Scott Buras, Barrett McCreary, and Todd Nienaber (referred to hereinafter collectively as the “the individual defendants”) were employed by Lagniappe from its formation in 2004 until their simultaneous resignation on June 3, 2013. At all times relevant herein, Lagniappe has been owned in whole or in part by Carlos Rodriquez.1 The individual defendants and Rodriquez met while working for another freight brokering business in the early 2000s, whereupon all four left that employer, and began operations at Lagniappe. Buras and McCreary were employed as dispatchers for Lagniappe, and Nienaber provided bookkeeping services to the company. All three men were at-will employees and were not subject to any type of employment contract, non-competition agreement, or non-solicitation agreement. Prior to their June 3, 2013 resignation, Buras was principal dispatcher at Lagniappe handling the Halliburton business, while McCreary was the principal dispatcher handling the Sunbelt/TMA business.

 

*2 It is undisputed that a majority (approximately 85%) of Lagniappe’s business was derived from its largest customers, Halliburton, Halliburton-related vendors, and Sun Belt Rentals, Inc. (“Sunbelt”)/Transport Management Associates (“TMA”).2 With regard to Halliburton, testimony at trial established that there were two ways that a freight broker could obtain Halliburton business. First, a freight broker could move the load directly for Halliburton, which required that it become an approved vendor. A second way to obtain business from Halliburton was to be added to the routing guide, which would enable Lagniappe to offer quotes to Halliburton-related vendors and provide access to more work. Lagniappe was a direct provider to Halliburton from 2004 to 2008, and in 2008 it was added to the routing guide. With regard to Sunbelt, business could either come directly from Sunbelt or its related entity, TMA. Access to Sunbelt/TMA work was more open and required only registration with the company. Importantly, neither relationship between Lagniappe and Halliburton or Sunbelt/TMA was exclusive, and Lagniappe was required to compete with other freight brokers.

 

It is undisputed that Rodriquez had little involvement in the day-to-day operations of the company. The individual defendants testified that they had little supervision from Rodriquez in their interactions with customers, and were not provided any type of sales goals or supervisory feedback on their performance. The individual defendants contend that Rodriquez was an absentee owner of the business, who failed to remain involved in the details of the freight brokering business and failed to maintain relationships with the associated customers.

 

Generally, Buras and McCreary had the authority to commit the company to expenditures related to their booking of freight loads. Nienaber handled the bookkeeping, but only as it related to payables and receivables arising out of freight brokering business. Payroll, reimbursements, and other financial matters were within the purview of Rodriquez. Further, the testimony established that Rodriquez was the sole officer of Lagniappe and responsible for handling operational matters related to the company, including opening the mail, handling corporate document filings, and signing paychecks. It is undisputed that the individual defendants did not have the authority to hire or fire employees, set salaries, or discipline other employees. Further, Buras testified that he was not authorized to meet with new clients without Rodriquez present and McCreary had been instructed not to meet with a customer representative without Rodriquez present.

 

At the end of 2012, the defendants were dissatisfied with their situation at Lagniappe and began considering their employment options. The evidence suggests that there was mounting tension between the parties due to personal matters, including Rodriquez’s pending divorce from his wife, who also happened to be McCreary’s sister-in-law. The individual defendants met with local businessmen, Thierry Gaubert and Chris Jean, to discuss the possibility of Gaubert and Jean investing in and joining with the three individual defendants in launching a new freight brokering company. In March of 2013, Citation Logistics, LLC (“Citation”) was registered with the Louisiana Secretary of State. Gaubert, Jean, Buras, McCrery and Nienaber each owned a 20% interest.

 

To engage in the freight brokering business, a company must have a motor carrier (“MC”) license number issued by the United States Department of Transportation. A MC license can be obtained either by application or through a transfer from a person or entity holding a MC license. In preparing to launch the new company, Buras located a dormant MC license, and the holder agreed to transfer the MC license in late March of 2016. The license was in the name of “Citation Logistics.” The holder of the license, Citation Investments, Inc., transferred the MC license to Citation as part of a March 26, 2013 agreement. The individual defendants apparently anticipated that the license would be operational before April 2, 2013, and that they would leave Lagniappe at that time. However, the Department of Transportation did not issue a MC license to Citation until May 30, 2013, setting back the anticipated April 2, 2013 start date until June 3, 2013.

 

*3 It is undisputed that the individual defendants also took other steps in connection with the formation of Citation prior to leaving their employment with Lagniappe, including securing financing and insurance, requesting a tax payer identification number, renting office space, and obtaining email addresses.

 

During February and March of 2013, Buras met face-to-face with four representatives of Halliburton. Buras testified that during three of the meetings he informed the Halliburton representatives that he was leaving Lagniappe, and asked them to consider doing business with him in the future. Additionally, on March 21 and 26, 2013, Buras sent emails to approximately eleven clients associated with Halliburton. All of the emails conveyed essentially the same information. First, Buras stated that there would be “changes” at Lagniappe and that he would be resigning and going to work for another company on April 2, 2013; however, the name Citation is not mentioned in the emails. Second, Buras informed the recipients that he was trying to get all of the Halliburton orders invoiced so that there would be no “outstanding orders” upon his departure. Third, Buras stated as follows regarding upcoming orders: “[p]lease contact another vendor to move the Halliburton orders that are coming up. (it hurts me to say that) I don’t want any invoices left behind to be filled and carrier invoices to be paid for Halliburton orders.” Fourth, Buras stated that the “core group” of Lagniappe would also be leaving when he left. Buras identified the “core group” as the “(people who run this place [with] me).” Fifth, Buras stated “Lagniappe will still be an approved vendor for Halliburton but I do not know who will be here to service the account.” Finally, the closing sentences in the emails varied but all stated as follows: “I hope if/when I am approved to work for Halliburton you will give me an opportunity.”

 

As noted above, the unanticipated delay in the Department of Transportation issuance of the MC license forced the individual defendants to delay the planned April 2, 2013 departure discussed in Buras’ emails. In the meantime, Buras notified his contacts at Halliburton of the unanticipated delay and continued to book freight shipments for Lagniappe, until his resignation.

 

With regard to Lagniappe’s other major client, Sunbelt/TMA, the record shows that on May 30 and 31, 2013, McCreary informed his contacts at Sunbelt/TMA that he was leaving. Internal Sunbelt/TMA emails obtained by the plaintiff demonstrate that Sunbelt/TMA was aware on May 31, 2013, of Citation’s start date of June 4, 2013 and had Citations’ contact information. On May 30, 2013, a Sunbelt “Supplier Registration Form” was submitted on behalf of Citation, but there is no evidence any loads were moved by Citation on behalf of Sunbelt/TMA prior to June 4, 2013.

 

On June 3, 2013, at the close of business, the individual defendants and another dispatcher, Wayne Tedesco, resigned from Lagniappe. The next day Buras, McCreary, and Nienaber began operating Citation. Citation immediately began to conduct business with Sunbelt/TMA. However, it is undisputed that Citation has never done business with Halliburton, and that Lagniappe has remained a qualified vendor for Halliburton and was conducting business with Halliburton as of the date of the trial.

 

*4 Rodriquez testified that he was informed of the June 3, 2013 resignations within hours after they occurred, and he immediately went to the Lagniappe office and assessed the situation. After making an assessment, Rodriquez contacted the owner and operator of H&H Logistics, another freight brokering business, to request their help in keeping the business operating. The owner and operator of H&H Logistics agreed to help Rodriquez for 50% interest in the profits. According to Rodriquez, by 10:00 p.m. on June 3, 2013, he and H&H personnel were at the Lagniappe office. According to Rodriquez, although Lagniappe was “immediately back” in business after the mass departure, Lagniappe’s Halliburton-related business never returned to previous levels, and the Sunbelt/TMA work essentially disappeared.

 

On August 23, 2013, Lagniappe filed the underlying suit against Buras, McCreary, Nienaber, Citation, and Citation Investments, Inc.3 The petition and first supplemental and amending petition alleged that the individual defendants had committed “wanton, intentional and malicious acts in furtherance of their personal interests and in direct opposition to the petitioner’s,” including but not limited to: directly soliciting Lagniappe’s customers, inducing Lagniappe’s customers to not engage in business with Lagniappe, declining to book business on behalf of the Lagniappe, using Lagniappe equipment to set up their new business, stealthily plotting a simultaneous resignation, and hijacking Lagniappe’s business. Lagniappe also asserted that the individual defendants wrongfully and maliciously appropriated proprietary information. Lagniappe alleged that the actions of the individual defendants constituted a breach of contract and a breach of their obligation of loyalty and fiduciary duty to their employer and asserted claims for tortious interference with contract, a violation of the Louisiana Unfair Trade Practices Act (“LUTPA”), and a violation of the Louisiana Unfair Trade Secrets Act (“LUTSA”). Lagniappe also sought an injunction to prohibit the defendants from using the name Lagniappe Logistics.

 

Lagniappe sought damages for lost profits, damage to business reputation, damages due to administrative hardship due to business interruption, unjust enrichment, and fees incurred in reestablishing Lagniappe’s company charter and electronic accounts. Lagniappe asserted that Citation was liable on the basis that the individual defendants were either employed by or associated with the company. Finally, Lagniappe alleged that the individual defendants were part of a partnership, joint venture, or common enterprise with Citation Investments, Inc., which may have created a basis of liability for the entity.

 

Buras, McCreary, Nienaber, and Citation filed an answer and a reconventional demand naming Lagniappe and Carlos Rodriquez as defendants-in-reconvention. The reconventional demand asserted the following claims: (1) invasion of privacy, (2) defamation, and (3) LUTPA. Citation Investments, Inc. also answered the petition, denying all liability in connection with the matter.

 

Following discovery, Buras, McCreary, Nienaber, and Citation filed a motion for summary judgment seeking dismissal of the claims asserted against them. In a judgment dated August 5, 2015, the trial court partially granted the defendants’ motion and dismissed Lagniappe’s claims for misappropriation of trade secrets and breach of contract. Thus, the claims remaining for trial included Lagniappe’s claims for breach of duty as employees, LUTPA, and tortious interference of contract, as well as the reconventional demand against Rodriquez and Lagniappe.

 

*5 A five-day bench trial was held on August 25 and 26, 2016, September 9, 2016, and October 25 and 26, 2014. Citation Investments, Inc. was dismissed with prejudice by Lagniappe on the first day of trial following testimony establishing that Citation Investments, Inc.’s only role in the matter was the transfer of the MC license to Citation. In addition to the fact witnesses, the plaintiff presented testimony of two expert witnesses. Michael Napier was accepted by the court as an expert in the trucking transportation business. Harold Asher presented testimony on the financial impact on Lagniappe arising out of the events preceding and following the individual defendants’ resignations.

 

In a judgment signed March 9, 2017, the trial court dismissed with prejudice each of Lagniappe’s claims against Buras, McCreary, Nienaber, and Citation. The judgment also dismissed with prejudice the reconventional demand filed by Buras, McCreary, Nienaber, and Citation against Rodriquez and Lagniappe. Finally, the judgment granted in part and denied in part a motion for spoliation of evidence filed by the defendants in connection with certain Lagniappe emails dating from June 21, 2013 to June 9, 2014.4

 

 

ISSUES ON APPEAL

Lagniappe filed the instant appeal and asserts seven assignments of error. First, Lagniappe asserts that the trial court erred in not allowing Nienaber to be questioned regarding his opinion as to whether the actions of Buras were “inappropriate or wrong,” and in not allowing prior statements and admissions by Nienaber in his deposition on the topic to be admitted into evidence. The second and third assignments of error contest the trial court’s failure to find that the actions of Buras and McCreary violated their obligation of loyalty and fidelity to Lagniappe, and constituted a violation of LUTPA. Lagniappe’s fourth assignment of error asserts that the trial court erred in finding that the individual defendants did not have a fiduciary duty to Lagniappe. In its fifth assignment of error, Lagniappe challenges the trial court’s failure to find the individual defendants’ simultaneous resignation violated their duties of loyalty and qualified as a violation of LUTPA. Lagniappe’s sixth assignment of error avers that the trial court erred in failing to address the damages sustained by Lagniappe from the decline in revenues prior to the individual defendants’ resignations. Finally, Lagniappe seeks review of the trial court’s finding that it did not prove that its loss of revenue following the individual defendants’ resignation was caused by the individual defendants’ conduct prior to such resignations.

 

 

STANDARD OF REVIEW

A court of appeal may not set aside a trial court’s finding of fact in the absence of “manifest error” or unless it is “clearly wrong.” Rosell v. ESCO, 549 So.2d 840, 844 (La. 1989). Before an appellate court may reverse a factfinder’s determinations, it must find from the record that a reasonable factual basis does not exist for the findings and that the record establishes that the findings are clearly wrong. Stobart v. State, through Dept. of Transp. and Development, 617 So.2d 880, 882 (La. 1993). Where there are two permissible views of the evidence, the factfinder’s choice between them cannot be manifestly erroneous or clearly wrong. Id. at 883.

 

 

LAW AND DISCUSSION

  1. Exclusion of Nienaber Testimony

*6 Lagniappe’s first assignment of error asserts that the trial court erred in disallowing its questioning of Nienaber at trial regarding whether he thought that certain statements by Buras in the March 21 and 26, 2013 emails sent to the Lagniappe customers were inappropriate. Following the trial court’s denial of admission, counsel for Lagniappe proffered Nienaber’s deposition testimony wherein he opined that certain statements contained in Buras’ emails to Lagniappe customers were inappropriate.

 

Generally, a witness not testifying as an expert may not give testimony in the form of opinions or inferences. Rideau v. State Farm Mut. Auto. Ins. Co., 2006-0894 (La. App. 1st Cir. 8/29/07), 970 So.2d 564, 572, writ denied, 2007-2228 (La. 1/11/08), 972 So.2d 1168. This rule is subject to the limited exception of La. C.E. art. 701, which provides that a lay witness may provide testimony in the form of opinions or inferences where those opinions or inferences are: (1) rationally based on the perception of the witness, and (2) helpful to a clear understanding of his testimony or the determination of a fact in issue. Id. Thus, a lay witness may give opinion testimony based on his training, investigation, perception of the scene, and observation of physical evidence. Id.

 

Generally, the trial court is granted broad discretion in its evidentiary rulings and its determinations will not be disturbed on appeal absent a clear abuse of that discretion. Wright v. Bennett, 2004-1944 (La. App. 1st Cir. 9/28/05), 924 So.2d 178, 183. Additionally, La. C.E. art. 103(A) provides, in pertinent part, that “[e]rror may not be predicated upon a ruling which admits or excludes evidence unless a substantial right of the party is affected [.]” The proper inquiry for determining whether a party was prejudiced by a trial court’s alleged erroneous ruling on the admission or denial of evidence is whether the alleged error, when compared to the entire record, had a substantial effect on the outcome of the case. If the effect on the outcome is not substantial, reversal is not warranted. A party alleging prejudice by the evidentiary ruling of the trial court bears the burden of so proving. Wright, 924 So.2d at 183.

 

We do not find that the trial court abused its discretion. The exclusion of Nienaber’s opinion as to the propriety of Buras’ emails does not appear to fall within the narrow exceptions of La. C.E. art. 701. Nienaber was not an author of or recipient of the emails; thus, his opinion cannot be said to be rationally based on his perception of the facts surrounding the creation and distribution of the email. See State v. LeBlanc, 2005-0885 (La. App. 1st Cir. 2/10/06), 928 So.2d 599, 604. Similarly, Nienaber’s lack of involvement in the emails renders his testimony unhelpful to the determination of a fact in issue.

 

Lagniappe argues that Nienaber’s opinions in his testimony amount to a statement against interest. However, we find that the trial court correctly found that Nienaber’s statements essentially amount to an opinion regarding the actions of another person, and thus do not constitute a statement against interest. See La. C.E. art. 804(B)(3). The record demonstrates Lagniappe presented the expert testimony of a trucking industry expert on the propriety of Buras’ actions for the trial court’s consideration, which the district court apparently considered and rejected.

 

Finally, critically, Lagniappe presented no proof that any prejudice resulted from the exclusion of Nienaber’s testimony, nor can we find any, particularly in light of Lagniappe’s admission of expert testimony from Napier opining that Buras’ actions were inappropriate. As such, even assuming that the trial court erred in its ruling on the testimony, there is no evidence to demonstrate that the absence of this testimony had a substantial effect on the outcome of the trial. We find no merit to this assignment of error.

 

 

  1. Employee’s Duty of Loyalty and Fidelity — Louisiana Unfair Trade Practices Act

*7 Unfair methods of competition are unlawful in Louisiana. National Oil Service of Louisiana, Inc. v. Brown, 381 So.2d 1269, 1273 (La. App. 4th Cir. 1980). Louisiana Revised Statutes 51:1405(A) prohibits any “unfair or deceptive acts or practices in the conduct of any trade or commerce.” Louisiana Revised Statutes 51:1409(A) grants a right of action to “[a]ny person who suffers any ascertainable loss” from a violation of this prohibition.

 

The Louisiana Supreme Court has found that the range of prohibited practices under LUTPA to be extremely narrow, citing with favor the following explanation of the scope of LUTPA from the federal Fifth Circuit:

LUTPA does not prohibit sound business practices, the exercise of permissible business judgment, or appropriate free enterprise transactions. The statute does not forbid a business to do what everyone knows a business must do: make money. Businesses in Louisiana are still free to pursue profit, even at the expense of competitors, so long as the means used are not egregious. Finally, the statute does not provide an alternate remedy for simple breaches of contract. There is a great deal of daylight between a breach of contract claim and the egregious behavior the statute proscribes.

Cheramie Services, Inc. v. Shell Deepwater Production, Inc., 2009-1633 (La. 4/23/10), 35 So.3d 1053, 1060.

 

It has been left to the courts to determine what constitutes a LUTPA violation on a case-by-case basis. Quality Environmental Processes, Inc. v. I.P. Petroleum Co., 2013-1582 (La. 5/7/14), 144 So.3d 1011, 1025. The plaintiff must show by a preponderance of the evidence that the alleged conduct “offends established public policy and … is immoral, unethical, oppressive, unscrupulous, or substantially injurious.” See Cheramie Services, Inc., 35 So.3d at 1059.

 

At-will employment has a strong presence in Louisiana law and jurisprudence. Harrison v. CD Consulting, Inc., 2005-1087 (La. App. 1st Cir. 5/5/06), 934 So.2d 166, 171. Under La. C.C. art. 2747, an employer is generally at liberty to dismiss an employee at any time, for any reason, without incurring liability for the discharge, provided the termination does not violate any statutory or constitutional provision. Quebedeaux v. Dow Chemical Co., 2001-2297 (La. 6/21/02), 820 So.2d 542, 545-546. Likewise, an at-will employee is free to quit at any time without liability to his or her employer. Harrison, 934 So.2d at 171.

 

The courts are concerned not only with the interests of competing employers, but also with the employee’s interests; the interests of the employee in his own mobility and betterment are deemed paramount to the competitive interests of the employers, where neither the employee nor his new employer has committed any illegal act accompanying the employment change. Cheramie Services, Inc., 35 So.3d at 1060. As such, only egregious actions involving elements of fraud, misrepresentation, deception, or other unethical conduct will be sanctioned based on LUTPA. Id.

 

Generally, in the absence of a contrary agreement, an employee is free to compete with his former employer. National Oil Service of Louisiana, Inc., 381 So.2d at 1272. However, all employees whether under contract or not owe a duty of fidelity to their employers. See ODECO Oil & Gas Co. v. Nunez, 532 So.2d 453, 462 (La. App. 1st Cir. 1988), writ denied, 535 So.2d 745 (La. 1989); Dufau v. Creole Engineering, Inc., 465 So.2d 752, 758 (La. App. 5th Cir.), writ denied, 468 So.2d 1207 (La. 1985). This duty binds an employee not to act in antagonism or opposition to the interest of the employer. See Boncosky Services, Inc. v. Lampo, 98-2239 (La. App. 1st Cir. 11/5/99), 751 So.2d 278, 287, writ denied, 2000-0322 (La. 3/24/00), 758 So.2d 798.

 

*8 Solicitation of customers after the end of an employment relationship does not form the basis for a claim of unfair competition. Id. at 288-89. Moreover, courts have found “[e]ven before termination, the employee can seek other work or prepare to compete, except that he may not use confidential information acquired by him from his previous employer.” [Emphasis in original] Innovative Manpower Solutions, LLC v. Ironman Staffing, LLC, 929 F.Supp.2d 597, 617 (W.D. La. 2013); SDT Industries, Inc. v. Leeper, 34,655 (La. App. 2nd Cir. 6/22/01), 793 So.2d 327, 333, citing United Group of Nat. Paper Distributors, Inc. v. Vinson, 27,739 (La. App. 2nd Cir. 1/25/96), 666 So.2d 1338, 1348, writ denied, 96-0714 (La. 9/27/96), 679 So.2d 1358. An employee’s involvement in forming a competitive entity, including the solicitation of business and the hiring of employees, prior to terminating his current employment relationship, in and of itself, is not an unfair trade practice. Id.

 

In its second and third assignments of error, Lagniappe contends that the trial court erred in failing to find that Buras and McCreary’s actions amounted to a breach of their duties of loyalty and fidelity to Lagniappe as well as a violation of LUTPA. In particular, Lagniappe argues that the men solicited and diverted customers of Lagniappe during the term of their employment.5 Finally, Lagniappe contends that the individual defendants’ mass resignation constituted a breach of loyalty and LUTPA violation when viewed in conjunction with the defendants’ pre-resignation acts of customer solicitation and diversion.

 

We consider these arguments below.

 

 

  1. Solicitation – Diversion of Customers

Lagniappe challenges the trial court’s finding that there was insufficient evidence to support Lagniappe’s claims for breach of loyalty and LUTPA against Buras and McCreary for solicitation and diversion of customers prior to their resignation. As to Buras, the trial court explained in its written reasons as follows:

Lagniappe contends that Buras solicited and diverted Halliburton business prior to his resignation. Lagniappe produced evidence indicating that in March and April 2013, Mr. Buras sent emails and visited with several individuals from Halliburton, [its] subsidiaries and vendors, notifying them that he was leaving Lagniappe and directing them to a use a freight broker other than Lagniappe to move their loads.

*9 Defendants dispute Lagniappe’s claims of improper solicitation. There was evidence that Mr. Buras was unsure if Lagniappe could properly service Halliburton’s loads during the time of the complained of communications because he thought he was resigning on April 2, 2013. His testimony was that he was protecting Halliburton, while at the same time protecting his and Lagniappe’s reputation. The evidence showed that Halliburton continued to do business with Lagniappe after the emails were sent, up to, and following the individual Defendants’ resignation. It was established that the individual Defendants continued to generate revenue through the end of their employment which was only slightly less than the previous year. The Court finds that the evidence failed to prove that Mr. Buras’ communications with Halliburton constituted a breach of his duty of loyalty or a violation of LUTPA.

 

Based on our review of the exhibits and testimony, we find that a reasonable basis exists in the record for the trial court’s findings. In explaining the reason for his March 2013 emails to Halliburton representatives, Buras testified that he was aware of Halliburton’s requirement that 90% of the pick-ups and deliveries be timely, and failure to meet this requirement could result in Lagniappe being thrown off the routing guide. Buras explained that he did not want orders to be pending at the time he resigned and risk that said orders not be timely completed as this would negatively impact Lagniappe, Halliburton, and him. The trial court found Buras’ testimony that he sent the email to benefit Lagniappe credible.

 

Further, supporting the reasonableness of the trial court’s finding is the fact that Buras’ March 21 and 26, 2013 emails contain no false or derogatory statements about Lagniappe or Rodriquez. Also, there is no mention of Citation, its contact information, or the use of propriety information belonging to Lagniappe. The fact that the emails discuss the impending departure of Buras and other “core” employees and request consideration for work in the future does not automatically rise to the level of a breach of his duty of loyalty or an unfair trade practice. See United Group of Nat. Paper Distributors, Inc., 666 So.2d at 1348. Finally, there is no evidence in the record that Halliburton declined to send business to Lagniappe as a result of the emails.

 

Regarding Buras’ four meetings with representatives of Halliburton, Buras admitted that in February and March of 2013, he initiated these meetings on his own without notice to Lagniappe or Rodriquez. According to Buras, during all of the meetings, he thanked the customers for the business over the years. In a meeting with Janet White in February of 2013, Buras testified he merely visited with the client face-to-face after years of only talking on the phone, but denied telling White that he was leaving Lagniappe to go work for a new company. However, as to the other three, Buras acknowledged that after thanking the customers for their business he told them that he was leaving Lagniappe and going to a new company. He testified that he gave the name and details regarding Citation to one customer, Paulette Bosely, who he described as a personal friend.

 

There is no evidence that there was any direct and immediate solicitation of business or any diversion of business or commitment by anyone at Halliburton to do business with Citation as a result of the meetings or emails. Several of the Halliburton representatives who received Buras’ email responded that they would miss working with Buras and/or wished him luck in the future, but made no effort to obtain any type of information regarding his new employer or contact information. Further, Buras was informed during his meeting with Chris Souder of Halliburton that Buras would have to go through the application process like any other prospective vendor.

 

Critically, as the defendants point out, until Citation received its MC license number on May 30, 2013, it did not have the ability to engage in the freight brokering business; thus, the diversion of business was not technically possible. The factual scenario herein is distinguishable from that in cases like Dufau, wherein the employee was actually closing business and earning monies that should have gone to his employer. Dufau, 465 So.2d at 758. Therefore, we find the record as a whole supports the trial court’s finding that Buras’ actions did not rise to the level of a breach of loyalty or an unfair trade practice.

 

*10 With respect to the actions of McCreary, the record reasonably supports a finding by the trial court that he did not violate his duty of loyalty or violate LUTPA through his interactions with Sunbelt/TMA prior to his resignation from Lagniappe. The unrefuted record demonstrates that McCreary notified his main contacts at Sunbelt/TMA of his impending departure on May 30 and 31, 2013. McCreary testified that in his discussion with Steve Lowder of Sunbelt/TMA, he did not say anything negative about Lagniappe, and that Lowder expressly told McCreary that Lagniappe would still be given an opportunity to move freight. As noted above, a departing employee is permitted to discuss the details of their departure and make arrangements to prepare to compete. See United Group of Nat. Paper Distributors, Inc., 666 So.2d at 1348.

 

Lagniappe further contends that McCreary’s improper solicitation of the Sunbelt/TMA business is evidenced by an internal email sent by Thigpen of TMA on May 31, 2013, advising his employees of McCreary’s new employment and the applicable contacts. However, Lagniappe did not call a representative from Sunbelt/TMA to discuss the email, and McCreary denied having any prior knowledge of the Sunbelt/TMA internal email. Further, the email sent by Dave Thigpen of TMA can be reasonably found to reflect the internal decision of the customer to pursue future business with McCreary post-resignation, which is not prohibited under the law, particularly where, as here, there were no exclusive contracts existing between any of the parties. We further note that Lagniappe’s assertions that a January 2013 meeting between McCreary and Thigpen had a nefarious purpose were undermined by the unrefuted testimony of McCreary, which established that it was a social visit by Thigpen and his wife to New Orleans on the occasion of their wedding anniversary.

 

We observe that the trial court heard testimony from Napier, Rodriquez, and John Harris of H&H Logistics that the actions of Buras and McCreary violated industry ethical standards. Clearly, in finding that Buras and McCreary did not attempt to unfairly solicit or divert business from Lagniappe, the trial court in its discretion dismissed the testimony of Napier, Harris, and Rodriquez. In light of the entire record, we cannot say that this determination was unreasonable. See Hoyt v. State Farm Mutual Automobile Insurance Company, 623 So.2d 651, 659-660 (La. App. 1st Cir.), writ denied, 629 So.2d 1179 (La. 1993).

 

In considering the above, we are mindful that when findings are based on determinations regarding the credibility of witnesses, the manifest error-clearly wrong standard demands great deference to the trier of fact’s findings; for only the factfinder can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener’s understanding and belief in what is said. See Rosell v. ESCO, 549 So.2d 840, 844 (La. 1989). If the trial court findings are reasonable in light of the record reviewed in its entirety, the court of appeal may not reverse even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Id. Our review of the record herein is constrained by these principles of appellate review.

 

 

  1. Simultaneous Resignation

As noted above, there were no employment contracts in effect between the individual defendants and Lagniappe at the time of their resignation; therefore, the defendants were at-will employees. However, Lagniappe, in its fifth assignment of error, argues that the unique circumstances leading up to and surrounding the simultaneous resignation of the defendants without notice constitutes a breach of the duty of loyal owed by an employee and an unfair trade practice. In support of its position, Lagniappe pointed to the following alleged facts: the advance planning of the individual defendants in preparing to launch their new business, the fact that the individual defendants were highly skilled, high level employees, who ran the day-to-day operations of the company, and Buras and McCreary’s alleged solicitation and diversion of customers ahead of their resignation. Lagniappe contends that at a minimum, McCreary had an elevated duty to the company due to his position as the operations manager. Finally, Lagniappe suggests that the simultaneous resignation was somehow part of a group intent to cause “devastating loss” to Lagniappe.

 

*11 We find no manifest error in the trial court’s rejection of Lagniappe’s assertion that the simultaneous resignation of the defendants was a breach of the defendants’ duty of loyalty to Lagniappe and a violation of LUTPA. Lagniappe does not cite nor did our research reveal any Louisiana cases that stand for the proposition that mass resignation by at-will employees is a breach of the duty of loyalty and constitutes an unfair trade practice. Moreover, Lagniappe’s assertion that certain factors and actions by the defendants render the resignations herein particularly egregious is not supported by the law.

 

The fact that the individual defendants had pursued an advance plan for the formation of Citation is of no moment. It is well established that as long as conduct is neither unlawful nor offensive to public policy, persons are able to discuss changes of employment, effectuate a change of employment, plan to compete, and take preliminary steps in furtherance of that plan. Boncosky Services, Inc., 751 So.2d at 286; United Group of Nat. Paper Distributors, Inc., 666 So.2d at 1348. Here, the actions of the individual defendants in anticipation of their resignation were acceptable preliminary steps in furtherance of effectuating a change in employment. Such acceptable preliminary actions by the defendants include: telling customers of their departure; the meetings with their investor/business partners, Jean and Miller; steps taken towards legally forming the company; renting office space; acquiring business insurance; and, procuring the MC license.

 

The record does not support the assertion that the individual defendants were “key players.” As discussed above, each of the individual defendants testified that they had no authority to hire or fire employees, could not modify an employee’s salary, sign a paycheck, or possess a general grant of authority to obligate the company. Any authority that Buras and McCreary had to obligate their employer was limited to committing to carriers when booking freight jobs for customers, which was the express function of their jobs as dispatchers. Similarly, Nienaber’s authority was limited to handling the accounts payables and receivables related to freight brokering.

 

Finally, we find that the record contains sufficient evidence to support a finding that the defendants’ group resignation was not calculated to decimate Lagniappe’s business as asserted by Lagniappe. Review of the record reveals that the individual defendants did not destroy any documents or computer files before leaving, nor was there any evidence that trade secrets or other propriety information was taken or destroyed by the defendants. Importantly, the evidence in the record is conflicting regarding whether any losses in Lagniappe’s business are related to the actions of the defendants, or the actions of Rodriquez in failing to maintain relationships with the Lagniappe’s customers and his decision to have H&H take over running the company. Additionally, the evidence demonstrated that Nienaber provided a detailed listing of relevant information related to accounts payable and receivables upon resignation, and he assisted H&H employees trying to take over management of the business post-resignation. Assertions that the company was decimated were also undermined by Rodriquez’s testimony that he was able to enlist H&H to assist him in operating Lagniappe within hours after learning of the defendants’ resignations on June 3, 2013.

 

 

III. Fiduciary Relationship

In its fourth assignment of error, Lagniappe asserts that the district court erred in failing to find a fiduciary relationship existed between the individual defendants and Lagniappe. Lagniappe suggests that finding a fiduciary relationship between the individual defendants and Lagniappe would impose a heightened level of scrutiny to the individual defendants’ actions.

 

*12 Whether a fiduciary duty exists, and the extent of that duty, generally depends upon the facts and circumstances of the case and the relationship of the parties. As a basic proposition, for a fiduciary duty to exist, there must be a fiduciary relationship between the parties. Scheffler v. Adams & Reese, LLP, 2006-1774 (La. 2/22/07), 950 So.2d 641, 647. A fiduciary relationship is one that exists when confidence is reposed on one side and there is resulting superiority and influence on the other. Plaquemines Parish Commission Council v. Delta Development Company, Inc., 502 So.2d 1034, 1040 (La. 1987).

 

Generally, employees have no fiduciary duty to their employers. Radcliffe 10, LLC v. Zip Tube Systems of Louisiana, Inc., 2007-1801 (La. App. 1st Cir. 8/29/08), 998 So.2d 107, 117, amended on reh’g, 2007-1801 (La. App. 1st Cir. 12/3/08), 22 So.3d 178, writs denied, 2009-0011 (La. 3/13/09), 5 So.3d 119, and 2009-0024 (La. 3/13/09), 5 So.3d 120. In contrast, as discussed in detail above, all employees owe a duty of fidelity and loyalty to their employers. ODECO Oil & Gas Co., 532 So.2d at 462.

 

The trial court’s determination regarding whether a fiduciary relationship exists is a factual matter. In support of a finding that fiduciary duty existed between the parties, the plaintiff argues that defendants were “highly skilled, high level managers” handling the daily operations, and were “authorized to transact millions of dollars of transactions on behalf of the employer with no oversight or supervision from the owner.” Lagniappe also argues that McCreary’s position as “operations manager” qualified him as a mandatory as opposed to a “mere employee.”

 

We find nothing in the record when viewed as a whole to demonstrate that a reasonable factual basis did not exist for the trial court’s finding that no fiduciary duty existed between the parties. See Stobart, 617 So.2d at 882. The evidence at trial while establishing that the individual defendants were competent and effective at their positions, did not establish that they had some heightened duty to or position in the company.

 

 

  1. Lagniappe’s Damage Claims

Lagniappe’s sixth assignment of error contends that the trial court erred in failing to consider and address the decline in Halliburton’s revenues prior to the individual defendants’ resignations. Specifically, Lagniappe asserts that its expert in certified accountancy and lost profit calculation, Harold Asher, opined that there was a strong correlation between the dates of Buras’ inappropriate actions and drop off in Halliburton revenues. Asher concluded that Lagniappe sustained losses of $83,715.00 between March and April 2013, when compared with March and April of 2012. Asher also testified that there was “very roughly, a 50 percent” decline in revenues from Halliburton work between February 2013 and March 2013. According to Asher, these declines in revenue could only be explained by either Lagniappe leaving the market or by some “involuntary action” occurring to the company. Asher opined that Buras’s actions were the most likely culprit.

 

In its seventh and final assignment of error, Lagniappe argues that the trial court erred in finding that the drop in revenues following the individual defendants’ resignations were caused by the defendants’ conduct rather than Lagniappe’s own actions. Lagniappe points to Asher’s testimony that the drops occurring to Halliburton business after the resignations were never corrected; thus, they could not be explained as the result of one of the fluctuations in the freight brokering business that can occur. As to Sunbelt/TMA, Asher described the loss as a “sucker punch” because by the time Rodriquez knew there was a problem, the business had been effectively transferred over to Citation.

 

*13 Lagniappe’s assertion the trial court erred in “not addressing” its claim for lost profits incurred pre-resignation is misplaced. The trial court’s judgment clearly dismissed all of Lagniappe’s claims against the defendants. Therefore, it rejected Lagniappe’s claim. Further, the fact that the trial court did not mention this ruling in its written reasons has no bearing on the judgment. See Wooley v. Lucksinger, 2009-0571 (La. 4/1/11), 61 So.3d 507, 572 (“…district court’s oral or written reasons for judgment form no part of the judgment, and that appellate courts review judgments, not reasons for judgment.”).

 

Regardless, we find sufficient evidence in the record to support the trial court’s dismissal of the pre-resignation lost profit claim. First, Lagniappe did not call a witness associated with Halliburton to confirm Asher’s theory that it decreased its business with Lagniappe due to Buras’ actions in February and March of 2013. Further, the trial court’s finding that the defendants did not improperly solicit or divert business from Lagniappe prior to their resignations precludes a finding that they are liable for any losses during that time period. Moreover, Lagniappe’s complaints about pre-resignation losses ignores testimony that the first five months of 2013 boosted revenues of approximately $5.3 million, which is generally agreed by McCreary and Rodriquez to be a very healthy pace.

 

As to the post-resignation lost profits claimed by Lagniappe, the trial court found a lack of evidence to show the losses claimed by Lagniappe were attributable to the individual defendants. The trial court noted evidence in the record demonstrating that Rodriquez immediately delegated his authority and operations to H&H after the resignations. Testimony at trial further established that H&H assigned one employee, Dylan Aymond, to work the Lagniappe customers. Aymond testified that he spent 40% of his workday working for Lagniappe and the remainder for H&H. Aymond, who had five months experience in the business when he was assigned to Lagniappe, also testified that Rodriquez made no efforts to train him how to do Halliburton work; instead, Aymond testified that he was assisted by the customers. Recovered emails demonstrated that in the beginning Aymond incorrectly quoted several Halliburton customers and then approached the customer with a higher quote to complete the job. Also, as noted by the trial court in its written reasons for judgment, Rodriquez testified that in September of 2013, Lagniappe modified its pricing matrix resulting in increased rates for Halliburton.

 

Further, the trial court heard testimony regarding Rodriquez’s failure to maintain customer relationships and lack of involvement in his business. Additionally, recovered emails discovered on the eve of trial demonstrate that Thigpen of TMA attempted to contact Lagniappe and Rodriquez to update information regarding staff changes following the resignation, and Rodriquez did not reach out to Thigpen personally; instead, Aymond sent an email with the new contact information.

 

After weighing and evaluating all of the evidence, the trier of fact is free to accept or reject the opinions expressed by experts. Hoyt, 623 So.2d at 659. Considering the lay and expert testimony as well as other evidence submitted, we can find no error in the trial court’s denial of Lagniappe’s claims for damages or lost profits due to the actions of the individual defendants before and after their resignations. See Guidroz v. State, Through Dept. of Transp. & Development, 94-0253 (La. App. 1st Cir. 12/22/94), 648 So.2d 1361, 1365.

 

 

CONCLUSION

*14 For the above reasons, we affirm the March 9, 2017 judgment of the trial court dismissing the claims of the appellant/plaintiff, Lagniappe Logistics, Inc. of Mississippi, against the defendants/appellees, Scott Buras, Barrett McCreary, Todd Nienaber, and Citation Logistics, LLC. All costs of this appeal are to be paid by the plaintiff/appellant, Lagniappe Logistics, Inc. of Mississippi.

 

AFFIRMED.

 

 

McClendon, J.

 

While the evidence suggests that Scott Buras solicited Halliburton’s business while employed by Lagniappe in violation of the Louisiana Unfair Trade Practices Act, I am constrained to conclude that the trial court did not manifestly err in finding that plaintiff failed to establish damages as a result of these acts. See Dufau v. Creole Engineering, Inc., 465 So.2d 752, 758 (La.App. 5 Cir.), writ denied, 468 So.2d 1207 (La. 1985)(“The solicitation and diversion of an employer’s customers prior to termination constitutes unfair competition entitling the plaintiff to recover damages.”)

 

All Citations

Not Reported in So.3d, 2018 WL 301209, 2017-0701 (La.App. 1 Cir. 1/4/18)

 

 

Footnotes

1

At the time of trial, a separate dispute between Buras, Lagniappe, and Rodriquez was pending in Mississippi state court. The Mississippi suit involved an ownership dispute wherein Buras asserted upon Lagniappe’s formation, both he and Rodriquez were listed as co-owners. In the suit, Buras challenged the enforceability of a March 2006 agreement wherein Buras purported to vest Rodriquez with any ownership rights that Buras had in Lagniappe on the grounds of lack of consent. Review of the pretrial order submitted in the instant action demonstrates that the parties reserved any and all claims, defenses, and any other rights concerning or arising out of that lawsuit and agreed that no preclusive effect will arise therein from this trial. At the trial on the instant action, after some discussion, the defendants stipulated that as to this litigation, Buras was not an owner of Lagniappe, and both parties reiterated their agreement that the decision in the instant action would not have the effect of res judicata in the Mississippi suit.

2

At all times relevant herein, TMA was the billing and shipping arm of Sunbelt.

3

A first supplemental and amending petition was filed on March 19, 2014, naming “Lagniappe Logistics, Inc. of Mississippi” as opposed to “Lagniappe Logistics, Inc.” as the plaintiff herein. The record evidences that the charter of “Lagniappe Logistics, Inc.” had lapsed in Mississippi and Buras picked up the name Lagniappe Logistics, Inc. As such, the entity Lagniappe Logistics, Inc. of Mississippi was created in connection with the reinstatement of an earlier charter assigned to Lagniappe Logistics, Inc. Following the trial, the trial court rejected Lagniappe’s request for injunctive relief, finding that the defendants had never used the name.

4

The spoliation issue arose after the discovery in August of 2016 of a one-year gap in the emails produced by Lagniappe from June 21, 2013 to June 9, 2014. The defendants filed a motion in limine seeking damages commensurate with spoliation. The defendants asserted that the emails demonstrated that Lagniappe lost freight brokering opportunities solely through its own fault. Lagniappe countered that the emails were unknowingly on a computer taken home by an employee and produced a zip drive purporting to contain all of the emails. However, on the eve of trial, August 22, 2016, the defendants filed a supplemental motion and were granted an order requiring Lagniappe to produce the laptop for forensic investigation. A number of emails were discovered on the hard drive by the defendants’ expert. Lagniappe does not dispute the trial court’s ruling on this issue.

5

Further, relatedly, Lagniappe argues that the defendants’ disparaging statements about Rodriquez to Lagniappe customers was disloyal and harmed the business reputation of Lagniappe resulting in the diversion of business, and constituted breach of loyalty. We disagree. There was insufficient evidence to show that any such statements were made with the intent to harm Lagniappe. There was conflicting testimony between the parties as to whether Rodriquez had stated that his wife might get half of the company in their divorce. Further, Rodriquez did not deny that he had suffered from addiction issues associated with prescription medications. Based on the facts presented herein, the individual defendants’ perception that Rodriquez’s personal issues were a threat to the stability of their positions or jobs and were repeated to others cannot be said to be unreasonable on the individual defendants’ part or to constitute a breach of loyalty or unfair trade practice. Further, Lagniappe fails to cite any case law to support such a position.

The record similarly does not support Lagniappe’s assertion that McCreary intended to harm the company’s competitive chances by responding negatively to an inquiry by a Sunbelt/TMA customer as to whether Lagniappe was a minority owned business. The record establishes that Rodriquez had not officially registered as a minority owned company over the years, nor had he directed any of his employees to do so, until after the resignations on June 3, 2013. Neither of these assertions give rise to a claim under LUTPA.

 

 

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