Arthur J. Gallagher & Co. v. O'Neill

Filing 16

ORDER AND REASONS denying 8 Motion to Dismiss for Failure to State a Claim. Signed by Judge Martin L.C. Feldman on 6/14/2017. (clc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ARTHUR J. GALLAGHER & CO.

CIVIL ACTION

V.

NO. 17-2825

BRIAN D. O’NEILL

SECTION "F"
ORDER AND REASONS

Before the Court is the defendant’s Rule 12(b)(6) motion to
dismiss plaintiff’s First Supplemental and Amended Complaint for
Injunctive Relief and Damages. For the following reasons, the
motion is DENIED.
Background
This lawsuit arises out of an alleged breach of employment
agreements.
Brian O’Neill worked for Arthur J. Gallagher & Co. until his
resignation on May 27, 2016. He accepted an employment position
with one of Gallagher’s competitors, Marsh USA. Gallagher brings
this complaint for injunctive relief and damages against O’Neill
for O’Neill’s alleged violations of certain employment agreements
he had with Gallagher.
Specifically,
Executive

Agreement

on

April

with

19,

2007,

Gallagher.

The

O’Neill

executed

Executive

an

Agreement

prohibited O’Neill from competing with Gallagher by soliciting or
providing

service

to,

directly

or

indirectly,

Gallagher’s

customers after O’Neill’s separation of employment with Gallagher.

1

This prohibition was to be in effect for two years following
O’Neill’s termination of employment with Gallagher, irrespective
of the reason for termination. The Executive Agreement went on to
specify

every

parish

and

municipality

that

fell

within

the

Agreement’s “Company Business Area,” where O’Neill was prohibited
from competing with Gallagher. O’Neill was also prohibited, under
the Executive Agreement, from disclosing any confidential or trade
secret

information

he

acquired

during

his

employment

with

Gallagher.
In addition to the Executive Agreement, O’Neill accepted a
Notice of Option Grant and signed the 2011 Long-Term Incentive
Plan Stock Option Award Agreement (Stock Option Award Agreement)
on April 5, 2013, during his employment with Gallagher. The Stock
Option Award Agreement prohibited O’Neill from competing with
Gallagher by soliciting, directly or indirectly, or disclosing any
confidential information after his separation from employment with
Gallagher.
Gallagher alleges that after his employment with Gallagher,
O’Neill

made

Gallagher’s

and

continues

customers.

to

make

Specifically,

contact

with

Gallagher

several

alleges

of

that

O’Neill has made contact with Offshore Liftboats, LLC, Mitchell
Lift Boats, LLC, Tradewinds Towing, LLC, Octopus Towing, LLC, Bisso
Marine,

LCC,

and

Offshore

Marine

Contractors,

Inc.

Gallagher

alleges that O’Neill’s contact with these parties is part of an
2

effort to solicit, aid, counsel, or consult in the transfer of
insurance business from Gallagher to Marsh. Gallagher contends
these efforts not only breach O’Neill’s Executive Agreement, but
the efforts have also resulted in some of Gallagher’s customers
executing Broker of Record letters transferring their business
from Gallagher to Marsh. Gallagher alleges that the value of its
lost

commissions

resulting

from

O’Neill’s

diversion

of

these

accounts and other clients or prospective clients of Gallagher
exceeds $75,000. Gallagher urges that unless O’Neill’s actions are
enjoined, its loss will continue to expand.
Gallagher filed this lawsuit in response to O’Neill’s alleged
conduct

and

brings

a

request

for

preliminary

and

permanent

injunctive relief, claims for breach of contract, misappropriation
of trade secrets and confidential information, and breach of duty
of good faith. In response, O’Neill moves the Court to dismiss the
Gallagher’s claims against him.
I.
Rule 12(b)(6) of the Federal Rules of Civil Procedure allows
a party to move for dismissal of a complaint for failure to state
a claim upon which relief can be granted.

Such a motion is rarely

granted because it is viewed with disfavor.

See Lowrey v. Tex. A

& M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997) (quoting Kaiser
Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d
1045, 1050 (5th Cir. 1982)).
3

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure,
a pleading must contain a "short and plain statement of the claim
showing that the pleader is entitled to relief."

Ashcroft v.

Iqbal, 556 U.S. 662, 678-79 (2009) (citing Fed. R. Civ. P. 8).
"[T]he

pleading

'detailed

factual

standard

Rule

8

allegations,'

announces

but

it

does

demands

not
more

require
than

an

unadorned, the-defendant-unlawfully-harmed-me accusation." Id. at
678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
Thus,

in

considering

a

Rule

12(b)(6)

motion,

the

Court

"accepts 'all well-pleaded facts as true, viewing them in the light
most favorable to the plaintiff.'"

See Martin K. Eby Constr. Co.

v. Dall. Area Rapid Transit, 369 F.3d 464 (5th Cir. 2004) (quoting
Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999)).

But, in

deciding whether dismissal is warranted, the Court will not accept
conclusory allegations in the complaint as true.
at 1050.

Kaiser, 677 F.2d

Indeed, the Court must first identify allegations that

are conclusory and thus not entitled to the assumption of truth.
Iqbal, 556 U.S. at 678-79.

A corollary: legal conclusions "must

be supported by factual allegations." Id. at 678.

Assuming the

veracity of the well-pleaded factual allegations, the Court must
then determine "whether they plausibly give rise to an entitlement
to relief." Id. at 679.
"'To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
4

relief that is plausible on its face.'"

Gonzalez v. Kay, 577 F.3d

600, 603 (5th Cir. 2009) (quoting Iqbal, 556 U.S. at 678) (internal
quotation marks omitted).

"Factual allegations must be enough to

raise a right to relief above the speculative level, on the
assumption that all the allegations in the complaint are true (even
if doubtful in fact)."
footnote omitted).

Twombly, 550 U.S. at 555 (citations and

"A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the
reasonable

inference

misconduct alleged."

that

the

defendant

is

liable

for

the

Iqbal, 556 U.S. at 678 ("The plausibility

standard is not akin to a 'probability requirement,' but it asks
for more than a sheer possibility that a defendant has acted
unlawfully.").

This is a "context-specific task that requires the

reviewing court to draw on its judicial experience and common
sense."

Id. at 679.

"Where a complaint pleads facts that are

merely consistent with a defendant's liability, it stops short of
the line between possibility and plausibility of entitlement to
relief." Id. at 678 (internal quotations omitted) (citing Twombly,
550 U.S. at 557).

"[A] plaintiff's obligation to provide the

'grounds' of his 'entitle[ment] to relief'" thus "requires more
than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do."

Twombly, 550 U.S. at

555 (alteration in original) (citation omitted).
II.
5

In support of his motion to dismiss, the defendant, O’Neill,
contends that the plaintiff has not satisfied its burden to prove
that O’Neill breached any obligation or that any breach resulted
in damages to Gallagher. O’Neill argues that Gallagher does not
contend “how, when, or where contact was made or if O’Neill
initiated such contact.” The defendant further contends that there
was no allegations of any efforts made by O’Neill to solicit
business

form

Gallagher.

Finally,

O’Neill

submits

that

the

complaint failed to allege what confidential, proprietary and
trade

secret

information

O’Neill

had

access

to.

In

sum,

the

defendant contends that the complaint “fails to state any nonconclusory factual allegations for the Court to determine if
Gallagher is entitled to relief.”
In

response,

the

plaintiff

submits

that

it

has

met

its

pleading requirement for the breach of contract claim. Gallagher
contends that it set forth facts to establish that O’Neill entered
into certain contracts with Gallagher. Next, Gallagher urges that
it set forth specific facts regarding how O’Neill breached the
contracts; namely, Gallgher alleges that after his separation from
Gallagher, O’Neill made contacts with certain Gallagher clients
and identified the names of the clients allegedly contacted. In
response to O’Neill’s argument that the complaint fails to state
when, where or how the contact was made, Gallagher urges that such
factual specificity is not required in the pleading state. Finally,
6

Gallagher contends that it has alleged a breach of contract claim
because it alleges specific damages that it contends is a result
of O’Neill’s breach. As explained already, Gallagher alleges that
it has lost over $75,000 in commissions as a result of O’Neill’s
breach and the ensuing actions of its customers’ switching accounts
from Gallagher to Marsh.
Gallagher also contends that it has satisfied its pleading
requirement

for

its

misappropriation

of

trade

secrets

and

confidential information claim. In response to O’Neill’s argument
that Gallagher failed to allege facts sufficient to show that he
disclosed

any

trade

secrets,

Gallagher

contends

that

it

appropriately alleged that the confidential information regarding
clients and business models, which constituted trade secrets, were
available to O’Neill for use during his employment with Gallagher.
It further alleges that O’Neill used or disclosed trade secret
information for his own purpose or for the benefit of others,
including

Marsh.

And

finally,

Gallagher

alleges

that

it

has

suffered damages as a result of O’Neill’s alleged misappropriation
of

this

confidential

information.

The

Court

agrees

with

the

plaintiff’s contentions.
III.
To establish a breach of contract claim under Louisiana law,
a

plaintiff

must

establish

three

elements:

(1)

the

obligor

undertook an obligation, (2) the obligor breached by failing to
7

perform the obligation, and (3) the breach resulted in damages to
the obligee. Sanga v. Perdomo, (La. App. 5 Cir. 12/30/14); 167 So.
3d 818, 822; see also Coleman v. Sears Home Improvement Prods.,
Inc., No. 16-2537, 2017 WL 1089580, at *9 (E.D. La. Mar. 21, 2017).
Here, Gallagher alleges that: O’Neill entered into two employment
contracts,

O’Neill

Gallagher’s

customers

breached
during

the
new

contracts
employment

by

soliciting

with

Gallagher’s

competitor, and O’Neill’s breach has resulted in at least $75,000
in lost commissions for Gallagher. The Court accordingly finds
that Gallagher has sufficiently pled its claim for breach of
contract. Gallagher has assuredly crossed the pleading requirement
under Rule 8 by alleging specific facts, such as the exact clients
whose business O’Neill has inappropriately solicited. Assuming all
facts in light of the plaintiff, the Court concludes that Gallagher
alleges a cause of action for which the Court can reasonably infer
that the defendant could be liable for his conduct. See Iqbal, 556
U.S. at 678.
Under the Louisiana Uniform Trade Secrets Act (LUTSA), a
plaintiff may recover damages for the actual loss caused by the
misappropriation of a trade secret. La. R.S. 51:1431-39. “To
establish a violation of the LUTSA, the plaintiff must prove (a)
the existence of a trade secret, (b) a misappropriation of the
trade secret by another, and (c) the actual loss caused by the
misappropriation.” 721 Bourbon, Inc. v. B.E.A. Inc., No. 11-710,
8

2011 WL 3747231, at *6 (E.D. La. Aug. 25, 2011) (citing Reingold
v. Swiftshops, Inc., 126 F.3d 645, 648 (5th Cir. 1997)). Here,
Gallagher

has

misappropriated

alleged
the

trade

trade

secrets

secrets

in

existed,

violation

of

O’Neill
certain

employment contracts, and it has suffered and will continue to
suffer

damages

Accordingly,

as

the

a

result

Court

of

finds

O’Neill’s
that

misappropriation.

Gallagher’s

complaint

sufficiently states a claim for misappropriation of trade secrets
under the Federal Rules of Civil Procedure’s generous pleading
standards. 1 See e.g., Iqbal, 556 U.S. at 678 ("[T]he pleading
standard Rule 8 announces does not require 'detailed factual
allegations,'

but

it

demands

more

than

an

unadorned,

the-

defendant-unlawfully-harmed-me accusation.").
Accordingly, IT IS ORDERED that the defendant’s motion to
dismiss is DENIED.
New Orleans, Louisiana, June 14, 2017
______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

1

In his motion to dismiss, the defendant seeks dismissal of the
complaint filed against him, but largely only addresses the breach
of contract claim. For clarity, the Court also addressed the
misappropriation claim. Additionally, the claims for injunctive
relief and breach of duty of good faith stem from the breach of
contract claim; having found that the breach of contract claim is
sufficient to avoid dismissal, the injunctive relief and good faith
claims also withstand this motion to dismiss.
9