Byram Healthcare Centers, Inc. v. Rauth

Filing 36

ORDER AND REASONS. It is ORDERED that Defendant's 31 Motion to Dismiss Counterclaim is DENIED. Signed by Judge Carl Barbier. (gec)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BYRAM HEALTHCARE CENTERS,
INC.

CIVIL ACTION

VERSUS

NO: 16-16854

CHRISTI RAUTH

SECTION: “J”(3)

ORDER AND REASONS
Before

the

Court

is

a

Motion

to

Dismiss

Defendant’s

Counterclaim (Rec. Doc. 31) filed by Plaintiff, Byram Healthcare
Centers, Inc. (“Byram”), an opposition thereto (Rec. Doc. 32) filed
by Defendant, Christi Rauth (“Rauth”), and a reply (Rec. Doc. 35)
filed

by

Byram.

Having

considered

the

motion,

the

parties’

submissions, the record, and the applicable law, the Court finds,
for the reasons expressed below, that the motion should be DENIED.
PROCEDURAL HISTORY AND BACKGROUND FACTS
Byram is a company that sells medical products in the area of
urology, incontinence, diabetes, and ostomy.
for Byram in October 2013.
into

a

Rauth began working

Around that time, the parties entered

Confidentiality/HIPAA

Agreement

(“confidentiality

agreement”) whereby Rauth agreed not to disclose any confidential
information to any third parties.

(Rec. Doc. 31 at 2.)

During

the course of her employment, Rauth was promoted to Product Manager
for Urology and Incontinence, where she was responsible for short

1

and long-term strategic marketing of these products.

On November

21, 2016, Rauth informed Byram that she had accepted employment
with a company called United Seating and Mobility, LLC d/b/a
Numotion (“Numotion”), which competes directly with Byram in the
field

of

litigation

urology

and

arises

incontinence

from

medical

circumstances

supplies.

surrounding

This
Rauth’s

transition from Byram to Numotion.
Rauth’s last day of employment at Byram was December 2, 2016.
Rauth alleges that she intended to begin working at Numotion on
December 12, 2016.

However, Byram filed suit against Rauth in

this Court on December 5, 2016, alleging that she misappropriated
certain confidential information belonging to Byram in preparation
for her employment with Numotion.
August

and

containing

September

of

confidential

2016,
or

Byram alleges that between

Rauth

trade

sent

secret

twenty-four
information

emails
to

personal email account for her use after she left Byram.
Doc. 1 at 4-9.)

with

its

(Rec.

Byram further alleges that Rauth’s actions

breached the terms of the confidentiality agreement.
Along

her

verified

complaint

for

injunctive

Id. at 14.
relief

and

damages, Byram also filed a motion for a temporary restraining
order requesting, among other things, that Rauth be enjoined from
working at Numotion until it could be determined whether Rauth had
disclosed any confidential information.

2

(Rec. Doc. 2 at 4.)

Before
restraining

the

Court

order,

the

ruled

on

parties

the

motion

filed

a

for

motion

a

temporary

for

a

joint

stipulated order on December 13, 2016, which the Court granted the
next day.
withdrew

(Rec. Docs. 17, 18.)
Byram’s

Numotion.

request

to

The joint stipulated order

preclude

Rauth

from

working

at

(Rec. Doc. 18 at 2.)

On February 7, 2017, Rauth filed a counterclaim.

Rauth

alleges that Byram violated the Louisiana Unfair Trade Practices
Act

(“LUTPA”)

by

requesting

a

temporary

restraining

order

enjoining Rauth from working at Numotion and that it breached the
confidentiality agreement in bad faith.
Byram

filed

the

instant

motion

to

dismiss

Rauth’s

counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6)
on March 21, 2017.

This motion is now before the Court on the

briefs and without oral argument.
LEGAL STANDARD
Under the Federal Rules of Civil Procedure, a complaint must
contain “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The
complaint must “give the defendant fair notice of what the claim
is and the grounds upon which it rests.” Dura Pharm., Inc. v.
Broudo, 544 U.S. 336, 346 (2005). The allegations “must be simple,
concise, and direct.” Fed. R. Civ. P. 8(d)(1).

3

“Under

Rule

12(b)(6),

a

claim

may

be

dismissed

when

a

plaintiff fails to allege any set of facts in support of his claim
which would entitle him to relief.” Taylor v. Books A Million,
Inc., 296 F.3d 376, 378 (5th Cir. 2002) (citing McConathy v. Dr.
Pepper/Seven Up Corp., 131 F.3d 558, 561 (5th Cir. 1998)). To
survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead
enough facts to “state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is
facially plausible when the plaintiff pleads facts that allow the
court to “draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. A court must accept all
well-pleaded facts as true and must draw all reasonable inferences
in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d
228, 232 (5th Cir. 2009); Baker v. Putnal, 75 F.3d 190, 196 (5th
Cir. 1996). The court is not, however, bound to accept as true
legal conclusions couched as factual allegations. Iqbal, 556 U.S.
at

678.

“[C]onclusory

allegations

or

legal

conclusions

masquerading as factual conclusions will not suffice to prevent a
motion to dismiss.” Taylor, 296 F.3d at 378.
DISCUSSION
I.

LUTPA Claim
The Louisiana Unfair Trade Practices Act, La. Rev. Stat. §

51:1405

et

seq.,

(“LUTPA”)

prohibits
4

“[u]nfair

methods

of

competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce.”

La. Rev. Stat. § 51:1405.

Rauth alleges that Byram violated the LUTPA by filing a motion for
a temporary restraining order requesting the Court to prevent her
from working at Numotion without any legitimate grounds or basis
for

doing

so.

Rauth

confidentiality

alleges

agreement

suggesting that she did.

and

that
that

she

never

Byram

had

violated
no

the

evidence

Rauth takes particular issue with a

statement in Byram’s verified complaint which alleges that Rauth
had

engaged

in

“past

and

continuing

breaches”

of

confidentiality agreement, which she alleges is not true.

the
(See

Rec. Doc. 1 at 14.)
Rauth

admits

that

she

forwarded

Byram

documents

to

her

personal email account, but she alleges that this was done to
further her work as an employee of Byram.

(Rec. Doc. 25 at 10.)

She avers that it was common practice for Byram employees to send
company documents to their personal email addresses so they could
access and print the documents when they were traveling for work.
Id. at 11.

But Rauth alleges that she never disclosed any

confidential information to third parties and that she did not
intend to use this material to benefit her work at Numotion.
Rauth alleges that when Byram filed a motion for temporary
restraining order, it was fully aware that the confidentiality
agreement authorized Rauth to send emails to her personal account
5

and that this was consistent with the practices of the company’s
employees.

Id. at 12.

Thus, Rauth alleges that Byram’s complaint

was “not well-grounded in fact” when it stated that Rauth had
engaged in past and continuing breaches of the confidentiality
agreement.

(Rec. Doc. 25 at 12.)

Rauth alleges that as a result

of Byram’s request for a temporary restraining order, her start
date at Numotion was delayed, which in turn resulted in a loss of
compensation.

Id. at 13.

Rauth also alleges that she was forced

to retain counsel to defend against the motion and that she
incurred significant attorneys’ fees.

Id.

Byram makes two arguments in support of its motion to dismiss.
First, Byram argues that Rauth’s LUTPA claim is barred by the
Noerr-Pennington Doctrine.

Second, Byram argues that Rauth has

not adequately pled a LUTPA claim.

Each is discussed in turn.

A. Noerr-Pennington Doctrine
The Noerr-Pennington doctrine has developed from two Supreme
Court cases: Eastern Railroad Presidents Conference v. Noerr Motor
Freight, Inc., 365 U.S. 127 (1961), and United Mine Workers of
America v. Pennington, 381 U.S. 657 (1965).

Under the Noerr-

Pennington doctrine, a party who petitions the government for
redress is generally afforded immunity from antitrust liability.
Bryant v. Military Dep't of Mississippi, 597 F.3d 678, 690 (5th
Cir. 2010)

“The essence of the doctrine is that parties who

petition the government for governmental action favorable to them
6

cannot be prosecuted under the antitrust laws even though their
petitions are motivated by anticompetitive intent.”

Video Int'l

Prod., Inc. v. Warner-Amex Cable Commc'ns, Inc., 858 F.2d 1075,
1082 (5th Cir. 1988).

Neither party disputes that the Noerr-

Pennington doctrine applies to defendants who are alleged to have
violated the LUTPA.

See Bayou Fleet, Inc. v. Alexander, 68 F.

Supp. 2d 734, 744 (E.D. La. 1999), aff'd, 234 F.3d 852 (5th Cir.
2000) (finding that “defendants have no liability under . . . the
LUTPA

because

they

are

protected

by

the

Noerr–Pennington

doctrine”).
However,

the

doctrine’s

immunity

does

petitioning activity that qualifies as a “sham.”
at 690.

not

extend

to

Bryant, 597 F.3d

Determining whether litigation is a sham requires the

court to distinguish between objectively reasonable claims and
those claims that “‘lead[] the factfinder to conclude that the
administrative and judicial processes have been abused.’”

Id.

(quoting Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S.
508, 513 (1972).

Courts employ a two-part test articulated by the

Supreme Court in Prof'l Real Estate Inv'rs, Inc. v. Columbia
Pictures Indus., Inc. to determine whether litigation is a sham.
508 U.S. 49, 60 (1993).

The first step is to determine if the

action is “objectively baseless in the sense that no reasonable
litigant could realistically expect success on the merits.”

Id.

If the litigation is objectively meritless, then the court examines
7

the litigant’s subjective motivation and explores “whether the
baseless lawsuit conceals an attempt to interfere directly with
the business relationships of a competitor, through the use of the
governmental process as opposed to the outcome.”

Id. at 60-61

(emphasis in original) (citations omitted).
At this stage in the litigation, Rauth only needs to allege
facts that plausibly entitle her to relief. Her counterclaim
satisfactorily alleges that the doctrine’s exception for sham
litigation applies.

Rauth alleges that Byram’s attempt to prevent

her from working at Numotion was not based on evidence that she
had

misappropriated

any

confidential

information.

She

also

alleges that it was common practice for Byram’s employees to email
company documents to their personal email addresses, that Byram
was aware of this practice, and that Byram has failed to provide
any evidence that Rauth misappropriated confidential information.
These

facts,

accepted

as

true,

could

plausibly

lead

to

the

conclusion that Byram filed its motion for a temporary restraining
order with the intention of inconveniencing Rauth, preventing her
from working at Numotion, and forcing her to expend time and money
opposing baseless claims.

In sum, Rauth has alleged facts that

would lead to the conclusion that Byram filed an objectively
baseless

motion

in

order

to

interfere

relationships of a competitor.

8

with

the

business

B. LUTPA Claim is Adequately Pleaded
Any person may bring an action pursuant to the LUTPA so long
as she has “suffer[ed] any ascertainable loss of money or movable
property, corporeal or incorporeal, as a result of the use or
employment by another person of an unfair or deceptive method,
act, or practice . . . .”

La. Stat. Ann. § 51:1409.

Courts decide

whether conduct falls within the ambit of the LUTPA on a case-bycase basis.

Cheramie Servs., Inc. v. Shell Deepwater Prod., Inc.,

2009-1633 (La. 4/23/10), 35 So. 3d 1053, 1059.

However, the

plaintiff must allege that the conduct “offends established public
policy and is immoral, unethical, oppressive, unscrupulous, or
substantially injurious.”

Id. (internal citation omitted).

The

conduct also must qualify as “egregious” and “involve[] elements
of

fraud,

misrepresentation,

deception,

conduct” to be sanctionable under the LUTPA.

or

other

unethical

Id.

Acts that constitute valid use of the judicial process are
not unfair trade practices.

See Glod v. Baker, 2004-1483 (La.

App. 3 Cir. 3/23/05), 899 So. 2d 642, 649, writ denied, 2005-1574
(La. 1/13/06), 920 So. 2d 238; see also First Nat. Bank of Commerce
v. Brown, 525 So. 2d 672, 674 (La. Ct. App. 1988).

However, use

of the judicial process to intentionally harass a party may result
in a LUTPA violation.

See Glod, 899 So. 2d at 650; Bank of New

Orleans & Trust Co. v. Phillips, 415 So. 2d 973, 975 (La. Ct. App.
1982).

In fact, a Louisiana court has found that the use of a
9

lawsuit to remove a party’s main competitor from the market “is
exactly what the LUTPA seeks to prevent.”

Prime Ins. Co. v.

Imperial Fire & Cas. Ins. Co., 2014-0323 (La. App. 4 Cir. 10/1/14),
151 So. 3d 670, writ denied, 2014-2241 (La. 1/9/15), 157 So. 3d
1110.
Rauth alleges that Byram’s actions violated Louisiana public
policy against non-compete agreements.

Louisiana law disfavors

noncompetition agreements between employers and employees.

SWAT

24 Shreveport Bossier, Inc. v. Bond, 2000-1695 (La. 6/29/01), 808
So. 2d 294, 317.

These agreements are generally considered to be

against public policy except when they satisfy certain statutory
requirements found in Louisiana Revised Statute § 23:921.

J4H,

L.L.C. v. Derouen, 2010-0319 (La. App. 1 Cir. 9/10/10), 49 So. 3d
10, 13.

Rauth argues that Byram violated public policy when it

relied upon the confidentiality agreement to restrain Rauth from
commencing her employment with Numotion.
Byram

does

not

argue

that

it

satisfied

the

statutory

requirements found in Louisiana Revised Statute § 23:921 because
it

avers

that

it

did

not

intend

to

use

the

confidentiality

agreement as a method for restraining Rauth’s employment.

Byram

argues that the confidentiality agreement is not a facially invalid
covenant not to compete.

Instead, Byram argues that it simply

requested the Court to delay the commencement of Rauth’s employment

10

at Numotion until the status of the confidential material could be
determined.
Although the Court agrees with Byram that the present case
does not involve an invalid non-compete agreement, Louisiana does
have a public policy disfavoring the restraining of employees from
working at the job of their choice.

See Acadian Cypress & Hardwood

Inc. v. Stewart, 2012-1425 (La. App. 1 Cir. 3/22/13), 121 So. 3d
667, 669 n.1 (noting Louisiana’s “underlying state desire to
prevent an individual from contractually depriving himself of the
ability to support himself and consequently becoming a public
burden” and “the fundamental right of individuals to seek success
in our free-enterprise society”).

Rauth has alleged facts that

lead to the conclusion that Byram violated her ability to seek
employment in the free market by preventing her from working at
Numotion without any other legitimate justification.

Therefore,

she has satisfied the requirement of alleging that Byram’s actions
offended public policy.
Rauth has also adequately pled the other requirements for a
LUTPA

claim.

She

alleges

that

Byram’s

conduct

qualifies

as

immoral, unethical, oppressive, unscrupulous, or substantially
injurious for much the same reasons as have been described above.
See Cheramie Servs., Inc., 35 So. 3d at 1060.

The allegation that

Byram requested the temporary restraining order despite being
aware that there was no evidence that Rauth had violated the
11

confidentiality agreement with the intent to keep her from working
at Numotion satisfies this requirement.

Finally, Rauth alleges

that this conduct has caused her damages insofar as she was forced
to retain counsel and incur significant attorneys’ fees to defend
against the suit.

Accordingly, Byram’s motion to dismiss this

claim is denied.
II.

Breach of Contract Claim

In her breach of contract claim, Rauth alleges that Byram
violated the confidentiality agreement.

Rauth alleges that she

complied with all obligations under the confidentiality agreement,
but that Byram did not.

In particular, Rauth alleges that the

confidentiality agreement itself prevented Byram from requesting
she be withheld from working at Numotion.
confidentiality
disclosing
party.

agreement

Rauth’s

required

confidential

As discussed above, the

Rauth

information

(See Rec. Doc. 2-2 at 1.)

to

refrain

from

to

another

third

In exchange, the agreement

stated that it was not to “be invoked to restrict [Rauth] in the
exercise of [her] technical skill, provided that there is no actual
or impending disclosure of its Confidential Information.”

Id.

This agreement applied “both during employment with [Byram], as
well as after any separation.”

Id.

Thus, Rauth alleges that

Byram’s claim against her for an alleged breach of contract and
the corresponding request to enjoin her from beginning work at
Numotion is, itself, a breach of the confidentiality agreement.
12

Rauth further alleges that Byram’s violation was committed in bad
faith because Byram was aware that its employees sent company
emails to their personal email addresses and because Byram had no
evidence that Rauth had violated the confidentiality agreement.
The essential elements of a claim for breach of contract under
Louisiana law are “(1) the obligor's undertaking an obligation to
perform, (2) the obligor failed to perform the obligation (the
breach), and (3) the failure to perform resulted in damages to the
obligee.” Favrot v. Favrot, 2010-0986, p. 14-15 (La. App. 4 Cir.
2011), 68 So. 3d 1099, 1108-09.
the elements.

Here, Rauth has pleaded all of

Rauth alleges that Byram undertook the obligation

to refrain from inhibiting her ability to exercise her technical
skill after her separation from Byram.

Rauth also pleads that

Byram breached this obligation by filing suit against her and
claiming that she breached the contract.

Finally, Rauth alleges

that this violation led her to incur monetary damages.
Rauth has also adequately pleaded that Byram was in bad faith.
Bad faith refers to the intentional and malicious failure to
perform an obligation.
Comment (b).

La. Civ. Code art. 1997, 1984 Revision

“The term bad faith means more than mere bad judgment

or negligence; it implies the conscious doing of a wrong for
dishonest or morally questionable motives.” Benton v. Clay, 48,245
(La. App. 2 Cir. 8/7/13), 123 So. 3d 212, 219.

Rauth alleges that

Byram was in bad faith because it filed the instant suit and
13

request for a temporary restraining order without any evidentiary
support and without first attempting to resolve this issue in a
less

confrontational

manner.

For

instance,

the

counterclaim

alleges that Byram filed this lawsuit without first contacting
Rauth to discuss its concerns or sending a cease and desist letter.
This allegation suggests that, at the very least, Byram engaged in
morally questionable motives in filing this lawsuit and motion for
temporary restraining order.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss (Rec.
Doc. 31) is DENIED.
New Orleans, Louisiana this 15th day of May, 2017.

____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

14