Traffic Jam Events, LLC v. Lilley et al

Filing 45

ORDER AND REASONS: For the foregoing reasons, Defendants' Motion to Dismiss 32 is GRANTED IN PART and DENIED IN PART, as set forth in document. Signed by Judge Jane Triche Milazzo on 4/1/2021. (am)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
TRAFFIC JAM EVENTS, LLC

CIVIL ACTION

VERSUS

NO: 2:21-CV-122

WILLIAM LILLEY, LILLEY
CONSULTING, INC., AND
TY PRESTWOOD

SECTION: “H”

ORDER AND REASONS
Before the Court is Defendants William Lilley and Lilley Consulting,
Inc.’s Motion to Dismiss First Amended Complaint (Doc. 32). For the following
reasons, the Motion is GRANTED IN PART and DENIED IN PART.
BACKGROUND
This action arises from an alleged breach of contract. Plaintiff Traffic
Jam Events, LLC (“Traffic Jam”) provides automotive marketing and
advertising services. Defendants William Lilley and Ty Prestwood provided
services to Plaintiff as independent contractors. As part of their work
arrangement with Plaintiff, Plaintiff required that Lilley and Prestwood sign
an agreement titled “Independent Contractor Non-Disclosure and NonSolicitation Agreement” (the “Agreement”).1 In pertinent part, the Agreement
prohibits independent contractors from using, disclosing, or removing
Defendant Lilley signed his Agreement on April 19, 2020. Defendant Prestwood
executed an identical Agreement on April 20, 2020.
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Plaintiff’s confidential information and from soliciting business from Plaintiff’s
customers while working for Plaintiff and for two years thereafter. Following
the termination of Defendant Lilley’s services for Plaintiff on December 21,
2020, Lilley opened a similar business, Strictly Results Marketing Group,
doing business as Lilley Consulting, Inc. (“LCI”). Defendant Prestwood began
working for LCI sometime thereafter. In Plaintiff’s First Amended Complaint,
Plaintiff alleges that Lilley, LCI, and Prestwood solicited business from
Plaintiff’s customers and used, disclosed, or transferred Plaintiff’s confidential
information in derogation of the Agreement. Plaintiff brings claims against
them under Louisiana law for breach of contract and intentional interference
with business relations.
Now before the Court is Defendants Lilley and LCI’s Motion to Dismiss
Plaintiff’s First Amended Complaint wherein they ask this Court to dismiss
Plaintiff’s claims against them. Plaintiff opposes the Motion.
LEGAL STANDARD
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead
enough facts “to state a claim for relief that is plausible on its face.”2 A claim is
“plausible on its face” when the pleaded facts allow the court to “draw the
reasonable inference that the defendant is liable for the misconduct alleged.”3
A court must accept the complaint’s factual allegations as true and must “draw
all reasonable inferences in the plaintiff’s favor.”4 The court need not, however,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 547 (2007)).
3 Id.
4 Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).
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accept as true legal conclusions couched as factual allegations.5 To be legally
sufficient, a complaint must establish more than a “sheer possibility” that the
plaintiff’s claims are true.6 If it is apparent from the face of the complaint that
an insurmountable bar to relief exists and the plaintiff is not entitled to relief,
the court must dismiss the claim.7 The court’s review is limited to the
complaint and any documents attached to the motion to dismiss that are
central to the claim and referenced by the complaint.8
LAW AND ANALYSIS
In Defendant Lilley and LCI’s (hereinafter “Defendants”) Motion to
Dismiss, Defendants argue that: (1) the non-solicitation clause in the
Agreement is unenforceable under Louisiana law; (2) Plaintiff has failed to
state a claim for breach of the Agreement’s confidentiality provisions; and (3)
Plaintiff has failed to state a claim for tortious interference with business
relations. The Court will discuss each in turn:
A. The Enforceability of the Non-Solicitation Clause
The Agreement signed by Lilley contains a provision titled “NonSolicitation of Traffic Jam Customers.” The provision states:
For a period beginning on the date of this Agreement and ending
two (2) years from the date of your termination as an independent
contractor of Traffic Jam, you agree that you shall not, directly or
by assisting others, solicit or attempt to solicit any business from
any of Traffic Jam’s customers, including prospective customers,
with whom you had contact while working as an independent
Iqbal, 556 U.S. at 678.
Id.
7 Lormand, 565 F.3d at 255–57.
8 Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000).
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contractor for Traffic Jam, for purposes of providing automotive
marketing products or services that are competitive with those
provided by Traffic Jam. This non-solicitation restriction shall
apply to territories where you provided automotive marketing
products or services to Traffic Jam’s customers, including
prospective customers, for Traffic Jam. If Traffic Jam provides you
with a customer, that customer shall remain a Traffic Jam
customer after termination of your status as an independent
contractor of Traffic Jam and shall be subject to this nonsolicitation restriction.9
In its First Amended Complaint, Plaintiff contends that Defendants solicited
Traffic Jam customers in breach of the non-solicitation provision of the
Agreement. In their Motion to Dismiss, Defendants now argue that the nonsolicitation provision is not enforceable under Louisiana law.10
Louisiana has a strong public policy disfavoring noncompetition
agreements.11 Accordingly, under Louisiana law, “every contract, agreement,
or provision thereof, by which anyone is restrained from exercising a lawful
profession, trade, or business . . . shall be null and void” unless it meets the
exceptions provided in Louisiana Revised Statute § 23:921.12 Relevant to this
matter is the exception found in Subsection (C), which provides:
Any person, including a corporation and the individual
shareholders of such corporation, who is employed as an agent,
servant, or employee may agree with his employer to refrain from
carrying on or engaging in a business similar to that of the
employer and/or from soliciting customers of the employer within
Doc. 1-2 at 2.
Pursuant to the terms of the Agreement, Louisiana law governs the Agreement’s
interpretation and enforceability. Id.
11 SWAT 24 Shreveport Bossier, Inc. v. Bond, 808 So. 2d 294, 298 (La. 2001)
superseded by statute on other grounds, LA. REV. STAT. § 23:921(D) (internal citations
omitted).
12 LA. REV. STAT. § 23:921(A)(1).
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a specified parish or parishes, municipality or municipalities, or
parts thereof, so long as the employer carries on a like business
therein, not to exceed a period of two years from termination of
employment. An independent contractor, whose work is performed
pursuant to a written contract, may enter into an agreement to
refrain from carrying on or engaging in a business similar to the
business of the person with whom the independent contractor has
contracted, on the same basis as if the independent contractor were
an employee, for a period not to exceed two years from the date of
the last work performed under the written contract.13
Defendants argue that the Agreement’s non-solicitation provision is
unenforceable under § 29:921 because (1) non-solicitation clauses are not
enforceable against independent contractors under Subsection (C); (2) the nonsolicitation clause fails to adequately specify a geographical limitation; and (3)
the clause is impermissibly overbroad and vague. Finding the Agreement’s
non-solicitation clause unenforceable for failure to specify a geographical
limitation, the Court does not address Defendants’ first and third arguments.
Assuming that independent contractors are indeed subject to nonsolicitation clauses, the non-solicitation clause must specify the geographic
scope of the clause for it to be enforceable. As stated above, § 29:921(C) permits
employees to agree “to refrain from carrying on or engaging in a business
similar to that of the employer and/or from soliciting customers of the employer
within a specified parish or parishes, municipality or municipalities, or parts
thereof, so long as the employer carries on a like business therein . . .”14 Because
of Louisiana’s aversion to non-competition agreements, “[a] contract trying to
fit into an exception to [the general rule against non-competition agreements]
13
14

LA. REV. STAT. § 23:921(C).
Id. (emphasis added).
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must strictly comply with the requirements contained in the statute.”15
Accordingly, some Louisiana courts have found unenforceable non-competition
or non-solicitation agreements that do not particularly specify the
municipalities or parishes included in the geographic limitation.16
Here, the Agreement’s non-solicitation restriction applies “to territories
where you provided automotive marketing products or services to Traffic Jam’s
customers, including prospective customers, for Traffic Jam.”17 In Defendants’
Motion to Dismiss, Defendants argue that the Agreement’s non-solicitation
clause is unenforceable as it fails to specifically delineate the parishes to which
it applies. In response, Plaintiff contends that the non-solicitation clause is
valid as Louisiana courts have upheld non-solicitation provisions “where the
geographic limitation was identifiable by reference to the location of the
employer’s business or clients.”18
Plaintiff asks this Court to follow the reasoning of Petroleum Helicopters,
Inc. v. Untereker, wherein the Louisiana Third Circuit Court of Appeal upheld
a clause prohibiting competition “within the parishes in which [the employer]
carries on a like business,” finding that the parishes were sufficiently
“identifiable.”19 Defendants highlight, however, that many Louisiana Circuit
Courts of Appeal have explicitly disagreed with the reasoning of Petroleum

Team Env’t Servs., Inc. v. Addison, 2 F.3d 124, 127 (5th Cir. 1993) (quoting Comet
Indus., Inc. v. Lawrence, 600 So. 2d 85, 88 (La. App. 2d Cir.), writ denied, 604 So. 2d 1002
(La. 1992)). See L & B Transp., LLC v. Beech, 568 F. Supp. 2d 689, 693 (M.D. La. 2008).
16 L&B Transp., 568 F. Supp.2d at 693. See, e.g, Aon Risk Servs. of Louisiana, Inc. v.
Ryan, 807 So. 2d 1058, 1060 (La. App. 4 Cir. 2002).
17 Doc. 1-2 at 2.
18 Doc. 35 at 13.
19 731 So. 2d 965, 968 (La. App. 3 Cir. 1999), writ denied, 747 So. 2d 40 (La. 1999).
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Helicopters, Inc., and instead held that Louisiana Revised Statue § 23:921
mandates an explicit listing of applicable parishes and municipalities.20
Currently, there is no binding precedent under Louisiana law controlling this
issue.21 “If there is no ruling by the state’s highest court on the specific
question, the Court must make an Erie guess as to how the state’s highest court
would decide the issue.”22 Several federal courts in Louisiana have already
made an Erie guess on this issue and have sided with Defendants, finding that
Louisiana law demands “mechanical adherence” to the requirements of
§ 23:921.23

See e.g., Turner Pro. Servs., Ltd. v. Broussard, 762 So. 2d 184, 186 (La. App. 1 Cir.
2000, writ denied, 770 So. 2d 356 (La. 2000) (“In our opinion, Petroleum Helicopters goes too
far, and we decline to follow it. Revised Statute 23:921(B) is an exception to Louisiana public
policy against noncompetition agreements, and as such must be strictly construed. Simply
complying with ‘the spirit of 921’ is not sufficient.”); Aon Risk, 807 So. 2d at 1060. (“We beg
to differ with the reasoning of our learned brothers of the Third Circuit. We find that the
clear language of LSA–R.S. 23:921 requires that the agreement specify the parishes,
etc., and that the employer must do business in those parishes. If this Court were to adopt
the position espoused by the plaintiff, there would have been no reason for the legislature to
have included the requirement that the parishes be specified.”); Bell v. Rimkus Consulting
Grp., Inc. of Louisiana, 983 So. 2d 927, 933–34 (La. App. 5 Cir. 2008), writ denied sub
nom. Bell v. Rimkus Consulting Grp., Inc., 983 So. 2d 1276 (La. 2008) (“Although defendant
contends that plaintiffs in their senior capacities possessed sufficient information which
would have allowed them to determine or at least request information regarding which areas
were prohibited in the non-competition agreement, we fail to find that the statute
contemplates such an action on the employee’s part. Rather, the statute requires that the
parishes or municipalities be specified as an objective measure of the agreement’s validity
and for the employee to know and understand the limitations upon the signing of the
agreement.” (citing Aon Risk, 809 So. 2d at 1062)).
21 Ferrellgas, L.P. v. McConathy, No. CIV.A 1:10-CV-00178, 2010 WL 1010831, at *4
(W.D. La. Mar. 15, 2010) (“The Louisiana Supreme Court has not definitively resolved this
issue.”).
22 Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 468 (5th Cir.
2004).
23 Ferrellgas, L.P., 2010 WL 1010831, at *5; Total Safety U.S., Inc. v. Code Red Safety
& Rental, LLC, 423 F. Supp. 3d 309, 315 (E.D. La. 2019) (Feldman, J.); SOUTHEASTRANS,
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In Total Safety U.S., Inc. v. Code Red Safety & Rental, LLC, another
section of this Court addressed the enforceability of a similar non-solicitation
clause within the context of a Rule 12(b)(6) motion to dismiss.24 In Total Safety,
the at-issue non-solicitation clause was geographically limited “to the Parishes
in which the Associate assisted Company in providing its products and
services, as are indicated below by circling.”25 An exhibit to the contract listed
all 64 parishes in Louisiana, but none of the parishes were circled.26 The Total
Safety court found the non-solicitation clause void under § 23:921.27 In so
holding, the court noted that, “[t]ellingly, the Fifth Circuit has never cited
Petroleum Helicopters. It has instead cited Aon Risk and, accordingly, endorsed
an interpretation of Louisiana Revised Statue 23:921(C) that requires
specification of the parishes or municipalities to which a restrictive covenant
applies.”28
Moreover, the Total Safety court found that, despite the presence of a
severability clause, the non-solicitation clause could not be saved by
reformation.29 Ordinarily, if a non-solicitation provision is geographically
overbroad, Louisiana law permits courts to “rely on a severability provision to
INC. v. MORGAN LANDRY, ET AL., No. 20-CV-00086, 2021 WL 972098, at *6 (W.D. La.
Mar. 15, 2021) (“Considering the applicable jurisprudence, the Court concludes that section
23:921 requires a specific listing of every parish in which an employer intends to restrict
competition and in which that employer carries on a like business for an agreement not to
compete or to solicit customers to be valid and enforceable.”)
24 423 F. Supp. 309 (Feldman, J).
25 Id. at 311.
26 Id. at 312.
27 Id. at 314.
28 Id. at 313 n. 2 (citing Brock Servs., L.L.C. v. Rogillio, 936 F.3d 290, 299 (5th Cir.
2019); Arthur J. Gallagher & Co. v. Babcock, 703 F.3d 284, 292 (5th Cir. 2012)). See also Aon
Risk, 802 So. 3d 1058.
29 Total Safety, 423 F. Supp. at 315.
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reform the overbroad provision and ‘excise the offending language.’”30 The
Total Safety court, however, emphasized the distinction between provisions
that are geographically overbroad—those specifying too many localities—from
those that fail to specify any valid geographic area.31 Citing case law from the
United States Fifth Circuit Court of Appeals, the Louisiana First Circuit Court
of Appeal, and the Eastern District of Louisiana, the Total Safety court found
that, unlike a provision which is simply geographically overbroad, a provision
that is deficient for failure to specify any geographical area cannot be reformed
as it “would mean rewriting a disfavored contract into compliance with a
narrowly drawn statutory exception.”32 The Total Safety court thus found the
non-solicitation provision unenforceable in its entirety.33
This Court finds the analysis in Total Safety consistent with that of the
majority of Louisiana Circuit Courts of Appeal and the United States Fifth
Brock Servs., L.L.C. v. Rogillio, 936 F.3d 290, 296–97 (5th Cir. 2019) (quoting SWAT
24, 808 So. 2d at 309)); Total Safety, 523 F. Supp.3d. at 314.
31 See Total Safety, 423 F. Supp. at 314.
32 See id.; Team Envtl. Servs., Inc., 2 F.3d at 127 (finding that a provision prohibiting
competition within 200 miles of the employees’ base of operations could not be saved through
reformation under Louisiana law ); Vartech Sys., Inc. v. Hayden, 951 So. 2d 247, 260–61 (La.
App. 1 Cir. 2006) (“While geographical limits may be inferred from the limits of the noncompete clauses in the non-competition agreements, we decline to reform the non-solicitation
clauses pursuant to the savings clauses in favor of VarTech. Because LSA-R.S. 23:921
requires specificity regarding geographical limitations, the non-solicitation clauses must be
able to stand on their own.” (citations omitted)); Kimball v. Anesthesia Specialists of Baton
Rouge, Inc., 809 So. 2d 405, 413 (La. App. 1 Cir. 2001), writ denied sub nom. Kimball v.
Anesthesia Specialests of Baton Rouge, Inc., 811 So. 2d 883 (La. 2002), and writ denied, 811
So. 2d 886 (La. 2002) (“In this matter, there is a failure to include specified geographic areas
as statutorily required. We cannot simply rewrite the non-compete clause so as to make it
comply with the statute.”); Gearheard v. De Puy Orthopaedics, Inc., No. CIV.A.99-1091, 1999
WL 638582, at *6 (E.D. La. Aug. 19, 1999) (Clement, J.) (“Ordinarily, however, Louisiana
courts decline to save invalid non-competition provisions through reformation.” (citations
omitted)).
33 Total Safety, 423 F. Supp. at 316.
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Circuit and therefore adopts the reasoning therein.34 Further, this Court
rejects Plaintiff’s argument that Total Safety is factually distinguishable. The
Total Safety non-solicitation clause essentially limited its geographic reach to
Louisiana parishes in which the employee assisted the employer. 35 Similarly,
the at-issue non-solicitation clause is limited to “territories” where Defendants
provided services to Plaintiff’s current and potential customers.36 As explained
above, the non-solicitation clause’s failure to specify the applicable parishes or
municipalities is fatal to its enforceability. The Agreement’s severability clause
does not change the analysis. Accordingly, the Court grants the Motion to
Dismiss Plaintiff’s claim for breach of the non-solicitation clause.
B. Breach of the Confidentiality Agreement
The

Agreement

prohibits

independent

contractors

from

using,

disclosing, or removing confidential information.37 The Agreement defines
confidential information as information not generally known to the public or
within the industry trade and includes a long list of examples of information
that would be considered “confidential.”38 In Plaintiff’s First Amended
Complaint, Plaintiff alleges that Defendants “used, disclosed, or transferred
Confidential Information in violation of the Agreements in order to unlawfully
compete with Plaintiff.”39 In their Motion to Dismiss, Defendants now argue
See also SOUTHEASTRANS, INC., 2021 WL 972098, at *5–6 (“The Fifth Circuit
has followed the Total Safety/Aon Risk approach to geographic boundaries on noncompetition agreements.” (citing Brock Servs., L.L.C., 936 F.3d at 296)).
35 Total Safety, 423 F. Supp. at 311.
36 The at-issue clause is arguably more ambiguous than that addressed in Total Safety
as it does not define a “territory” or limit its scope to a certain state.
37 Doc. 29-2 at 1–2.
38 Id. at 1.
39 Doc. 29 at 9.
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that Plaintiff has failed to state a claim for breach of the Agreement’s
confidentiality provisions because Plaintiff does not specify the confidential
information that Defendants allegedly misused. The Court disagrees.
To meet the Twombly plausibility standard, a Plaintiff need only plead
“enough facts to rise above the level of sheer speculation, such that there is ‘a
reasonable expectation that discovery will reveal evidence’ supporting a claim
for relief.”40 The Court finds that Plaintiff has met this standard. The specific
confidential information to which Plaintiff refers in its Complaint is
information easily deduced in discovery. Accordingly, Defendants’ Motion to
Dismiss Plaintiff’s claim for breach of the Agreement’s confidentiality
provisions is denied.
C. Tortious Interference with Business Relations
Finally, Defendants argue that Plaintiff has not sufficiently stated a
claim of tortious interference with business relations. The Louisiana tort is
“based on the principle that the right to influence others not to enter business
relationships with others is not absolute.”41 However, Louisiana courts view
the tort with disfavor and have limited the tort’s application by requiring that
the plaintiff demonstrate actual malice, “which is difficult (if not impossible)
to prove in most commercial cases.”42 In fact, “courts in this state frequently
observe that ‘there appear to be no reported cases in which anyone actually has

Motiva Pats., LLC v. Sony Corp., 408 F. Supp. 3d 819, 831 (E.D. Tex. 2019) (quoting
Twombly, 550 U.S. at 556)).
41 Bogues v. La. Energy Consultants, Inc., 71 So.3d 1128, 1134 (La. App. 2 Cir. 2011).
42 D.H. Griffin Wrecking Co., Inc. v. 1031 Canal Dev., LLC, 463 F. Supp. 3d 713, 724–
25 (E.D. La. 2020) (Fallon, J.).
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been held liable for the tort.’”43 To succeed on a claim for tortious interference
with business relations, “a plaintiff must prove by a preponderance of the
evidence that the defendant: (1) ‘acted with actual malice’; (2) ‘actually
prevented the plaintiff from dealing with a third party’; (3) acted ‘improperly,’
i.e., not to ‘protect legitimate interests’; and (4) caused damage to the
plaintiff.44 “Significantly, it is not enough to allege that a defendant’s actions
affected plaintiff’s business interests; the plaintiff must allege that the
defendant actually prevented the plaintiff from dealing with a third party.”45
Here, Plaintiff alleges that “Defendants have acted wantonly and
maliciously in improperly influencing third parties not to deal with Traffic Jam
and these actions were not justified by any legitimate interest.”46 As support
for this claim, Plaintiff alleges that Defendants have actively solicited
Plaintiff’s customers and have leaked confidential information to third
persons. The Court acknowledges that Plaintiff’s burden to ultimately succeed
on this claim is a difficult one. At this very early stage, however, the Court
finds that Plaintiff has plead facts sufficient to state a plausible claim for
tortious interference with business relations. Defendants’ Motion to Dismiss
Plaintiff’s tortious interference claim is denied.

D.H. Griffin Wrecking Company, Inc., 463 F. Supp. 3d at 725.
IberiaBank v. Broussard, 907 F.3d 826, 841 (5th Cir. 2018) (citing Bogues, 71 So.3d
at 1134–35; Henderson v. Bailey Bark Materials, 116 So.3d 30, 37 (La. App. 2 Cir. 2013).
45 Bogues, 71 So.3d at 1135.
46 Doc. 29 at 10.
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43
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CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss is GRANTED
IN PART and DENIED IN PART. Accordingly,
IT IS ORDERED that Plaintiff’s claim against Defendants Lilley and
LCI for breach of the Agreement’s non-solicitation provision is hereby
DISMISSED. Plaintiff’s claims against Defendants for breach of the
Agreement’s confidentiality provisions and for tortious interference with
business relations remain.

New Orleans, Louisiana this 1st day of April, 2021.

____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

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