Pure Air Daigle L L C et al v. Stagg, II et al

Filing 131

MEMORANDUM RULING re 63 Motion for Judgment on the Pleadings. Considering the evidence, the law, and the arguments of the parties, and for the reasons fully explained herein, the motion is granted. Signed by Magistrate Judge Patrick J Hanna on 9/6/2017. (crt,Alexander, E)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
PURE AIR DAIGLE, LLC, ET AL.

CIVIL ACTION NO. 6:16-cv-01322

VERSUS

MAGISTRATE JUDGE HANNA

CHARLES STAGG, II, ET AL.

BY CONSENT OF THE PARTIES

MEMORANDUM RULING
Currently pending is the motion for judgment on the pleadings under Fed. R.
Civ. P. 12(c) (Rec. Doc. 63), which was filed by defendants Charles Stagg, II,
Michael Scott Lanclos, and Phillip Courville, Jr. with regard to Count I of the
plaintiffs’ complaint. In Count I, the plaintiffs contended that the Employee
Agreement signed by defendants Stagg, Lanclos, and Courville was a binding
contract that the defendants breached. The motion is opposed. Considering the
evidence, the law, and the arguments of the parties, and for the reasons fully
explained below, the motion is granted.
BACKGROUND
Defendants Stagg, Lanclos, Courville, and Guidry (“the Employee
Defendants”) were all formerly employed by Daigle Welding Supply. The plaintiffs,
Pure Air Daigle, L.L.C., and Pure Air [US], LLC, are the successors of that company.
Defendant Capitol Welders Supply Co. Inc. was a long-time supplier of the plaintiffs.
In 2016, Capitol Welders formed defendant St. Landry Gas & Supply, L.L.C., which

is a competitor of the plaintiffs. The Employee Defendants left their employment
with the plaintiffs and all of them went to work for St. Landry Gas.
In their complaint, the plaintiffs asserted claims against the defendants for
breach of contract, violation of the Louisiana Unfair Trade Practices and Consumer
Protection Law, breach of fiduciary duties, conversion, conspiracy, tortious
interference with contractual relationships, and tortious interference with business
relationships.
The instant motion relates solely to the plaintiffs’ breach of contract claim
against Stagg, Lanclos, and Courville.1 The plaintiffs claim that the Employee
Agreement signed by each of them was a binding contract, and that these defendants
breached the contract by retaining, using, and disclosing the plaintiffs’ confidential
and proprietary information upon the termination of their employment.
LAW AND ANALYSIS
A.

THE APPLICABLE STANDARD
Fed. R. Civ. P. 12(c) states that, after the pleadings are closed but early enough

not to delay trial, a party may move for judgment on the pleadings. A Rule 12(c)
motion is resolved under the same standard as a Fed. R. Civ. P. 12(b)(6) motion to

1

The plaintiffs did not assert a breach of contract claim against the other defendants.

-2-

dismiss.2 A motion brought pursuant to Rule 12(c) “is designed to dispose of cases
where the material facts are not in dispute and a judgment on the merits can be
rendered by looking to the substance of the pleadings and any judicially noticed
facts.”3
A motion to dismiss for failure to state a claim, under Rule 12(b)(6), is
appropriate when a defendant attacks the complaint because it fails to state a legally
cognizable claim.4 When considering a motion to dismiss for failure to state a claim
under Rule 12(b)(6), a district court must limit itself to the contents of the pleadings,
including any attachments thereto.5 The court must accept all well-pleaded facts as
true, and it must view them in the light most favorable to the plaintiff.6 However,
conclusory allegations and unwarranted deductions of fact are not accepted as true,7

2

Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir. 2010); Doe v. MySpace, Inc., 528 F.3d
413, 418 (5th Cir. 2008).
3

Hebert Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990).

4

Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).

5

Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000).

6

In re Katrina Canal Breaches Litigation, 495 F.3d 191, 205 (5th Cir. 2007) (internal
quotations omitted) (quoting Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464,
467 (5th Cir. 2004)); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996).
7

Kaiser Aluminum & Chemical Sales v. Avondale Shipyards, 677 F.2d 1045, 1050 (5th
Cir. 1982) (citing Associated Builders, Inc. v. Alabama Power Company, 505 F.2d 97, 100 (5th Cir.
1974)); Collins v. Morgan Stanley, 224 F.3d at 498.

-3-

and courts “are not bound to accept as true a legal conclusion couched as a factual
allegation.”8
To survive a Rule 12(b)(6) motion, the plaintiff must plead “enough facts to
state a claim to relief that is plausible on its face.”9 The allegations must be sufficient
“to raise a right to relief above the speculative level,”10 and “the pleading must
contain something more . . . than . . . a statement of facts that merely creates a
suspicion [of] a legally cognizable right of action.”11 “While a complaint . . . does not
need detailed factual allegations, a plaintiff’s obligation to provide the grounds of his
entitlement to relief requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.”12 If the plaintiff fails to
allege facts sufficient to “nudge[ ][his] claims across the line from conceivable to
plausible, [his] complaint must be dismissed.”13

8

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Papasan v. Allain,
478 U.S. 265, 286 (1986)).
9

Bell Atlantic v. Twombly, 550 U.S. at 570.

10

Bell Atlantic v. Twombly, 550 U.S. at 555.

11

Bell Atlantic v. Twombly, 550 U.S. at 555 (quoting 5 C. Wright & A. Miller, Federal
Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004)).
12

Bell Atlantic v. Twombly, 550 U.S. at 555 (citations, quotation marks, and brackets
omitted; emphasis added). See also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
13

Bell Atlantic v. Twombly, 550 U.S. at 570.

-4-

A claim meets the test for facial plausibility “when the plaintiff pleads the
factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”14

“[D]etermining whether a

complaint states a plausible claim for relief . . . [is] a context-specific task that
requires the reviewing court to draw on its judicial experience and common sense.”15
Therefore, “[t]he complaint (1) on its face (2) must contain enough factual matter
(taken as true) (3) to raise a reasonable hope or expectation (4) that discovery will
reveal relevant evidence of each element of a claim.”16
B.

THE APPLICABLE LAW
A federal court sitting in diversity must apply state substantive law and federal

procedural law.17 Because this is a diversity case, Louisiana’s substantive law must
be applied.18 To determine Louisiana law, federal courts look to the final decisions
of the Louisiana Supreme Court.19

14

Ashcroft v. Iqbal, 556 U.S. at 678.

15

Ashcroft v. Iqbal, 556 U.S. at679.

16

Lormand v. US Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009) (quoting Bell Atlantic
v. Twombly, 550 U.S. at 556). See also In Re Southern Scrap, 541 F.3d 584, 587 (5th Cir. 2008).
17

Erie R. R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Gasperini v. Ctr. for Humanities,
Inc., 518 U.S. 415, 427 (1996); Coury v. Moss, 529 F.3d 579, 584 (5th Cir. 2008).
18

See, e.g., Moore v. State Farm Fire & Cas. Co., 556 F.3d 264, 269 (5th Cir. 2009).

19

Moore v. State Farm Fire & Casualty Co., 556 F.3d at 269.

-5-

C.

BREACH OF CONTRACT
Under Louisiana law, a plaintiff must prove three essential elements to prevail

on a claim for breach of contract: (1) the defendant owed an obligation to the
plaintiff; (2) the defendant failed to perform that obligation; and (3) the defendant’s
failure to perform damaged the plaintiff.20 “Under Louisiana law, a plaintiff does not
have an available contractual remedy unless a valid contract existed.”21 In other
words, “before there can be a breach of contract, a contract must exist in the first
place.”22 Under Louisiana law, “[a] contract is formed by the consent of the parties
established through offer and acceptance. Thus, an enforceable contract requires a
meeting of the minds.”23

20

Hayes Fund for First United Methodist Church of Welsh, LLC v. Kerr-McGee Rocky
Mountain, LLC, 2014-2592 (La. 12/08/15), 193 So.3d 1110, 1115; Favrot v. Favrot, 10–0986 (La.
App. 4 Cir. 02/09/11), 68 So.3d 1099, 1108-09, writ denied, 11-0636 (La. 05/06/11), 62 So.3d 127.
See, also, Louisiana Civil Code Articles 1927 and 1994.
21

Perez v. Utility Constructors, Inc., No. 15-4675, 2016 WL 5930877, at *2 (E.D. La.
Oct. 12, 2016).
22

Express Lien, Inc. v. Nationwide Notice, Inc., No. 16-2926, 2016 WL 7097382, at *4
(E.D. La. Dec. 5 2016).
23

Read v. Willwoods Community, 2014-1475 (La. 03/17/15); 165 So. 3d. 883, 887
(internal citations omitted).

-6-

D.

HAVE THE PLAINTIFFS STATED
CLAIM?

A

PLAUSIBLE BREACH

OF

CONTRACT

The first issue to be addressed in evaluating a breach of contract claim is
whether the parties actually entered into a valid and binding contract. Whether a
contract exists usually requires an analysis of the four corners of the document
purporting to obligate the parties. When ruling on a Rule 12(b)(6) or Rule 12(c)
motion, however, the court is generally constrained to consider only the complaint24
and not the contents of any other documents. When no documents are attached to and
filed along with the complaint, a court deciding a motion pursuant to Rule 12(b)(6)
or Rule 12(c) must ordinarily either exclude consideration of any other additional
documents or convert the motion to a motion for summary judgment under Rule 56
and then consider the additional documents.25
In this case, however, the plaintiffs attached copies of the Employee
Agreements signed by Stagg, Lanclos, and Courville to the complaint. Uncontested
documents referred to in the pleadings may be considered by the court without
converting the motion to one for summary judgment, if they are: (1) attached to the

24

Collins v. Morgan Stanley Dean Witter, 224 F.3d at 498.

25

Fed. R. Civ. P. 12(d).

-7-

motion; (2) referenced in the complaint; and (3) central to the plaintiff's claims.26 A
court may even consider documents outside the complaint that were not physically
attached to the complaint, without converting the motion to a summary judgment
motion, if the documents were referred to in the complaint and are central to the
plaintiff's claim.27 This serves the laudable purpose of considering the complaint in
its entirety.28
Here, the defendants do not contest the authenticity of the Employee
Agreements attached to the complaint. Those documents were filed along with the
complaint, they were referred to in the complaint, and they are central to the
plaintiffs’ breach of contract claim. Therefore, the Employee Agreements may be

26

See In re Katrina Canal Breaches Litig., 495 F.3d at 205 (finding consideration of
insurance contracts that were not unattached to the complaint was permissible because they were
attached to the motions to dismiss, referred to in the complaint, and central to the plaintiffs' claims).
27

Causey v. Sewell Cadillac–Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004). See
Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 313 (5th Cir. 2002)
(finding that the district court properly considered documents not attached to the complaint in ruling
on a Rule 12(c) motion).
28

See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2008) (directing
courts to “consider the complaint in its entirety, as well as other sources courts ordinarily examine
when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the
complaint by reference, and matters of which a court may take judicial notice”) (citing 5B Charles
Alan Wright et al., Federal Practice and Procedure, § 1357 (3d ed. 2004 & Supp. 2007)); Jackson
v. National Ass'n for Advancement of Colored People, 546 Fed. App’x 438, 441 (5th Cir. 2013);
Maloney Gaming Management, L.L.C. v. St. Tammany Parish, 456 Fed. App’x 336, 341 (5th Cir.
2011).

-8-

considered by this Court without converting the instant motion into a motion for
summary judgment.
Under Louisiana law, “a contract is an agreement by two or more parties
whereby obligations are created, modified, or extinguished.”29 There are four
elements for a valid contract: (1) capacity to contract; (2) mutual consent; (3) a
lawful cause; (4) and a valid object.30
Louisiana courts are quite reluctant to find that employment manuals create
contractual rights.31 Louisiana courts have not expressly found that employment
manuals cannot be contracts; instead, the jurisprudence requires that employment
manuals be analyzed on a case by case basis.32 The precise issue presented in this
case is whether the plaintiffs’ employment manual imposed on the Employee
Defendants an obligation not to disclose confidential and proprietary information
either during or after their employment with the plaintiffs. No cases addressing that
specific issue were cited by the parties or located by this Court. Several Louisiana
cases have held that employee manuals and company policies and procedures neither

29

Louisiana Civil Code Article 1906.

30

Granger v. Christus Health Cent. La., 2012-C-1892 (La. 06/28/13), 144 So.3d 736,
760-61; see also Louisiana Civil Code Articles 1918, 1927, 1966, 1971.
31

Wallace v. Shreve Memorial Library, 79 F.3d 427, 431 (5th Cir. 1996).

32

Wallace v. Shreve Memorial Library, 79 F.3d at 431.

-9-

confer contractual rights upon employees nor create exceptions to the “employment
at will” doctrine.33 That is not the issue presented here. One reported case held that
a genuine issue of material fact existed concerning whether a provision set forth in
an employee handbook constituted a valid contractual agreement between a university
and its employees to provide tuition waivers to their children if they died while a fulltime faculty member.34 That is not the issue presented here either, but it creates the
possibility that an employee handbook might, under particular circumstances, be
interpreted as a contract.
Even if this Court were to agree, theoretically, that an employee handbook
could be a contract under Louisiana law, the undisputed facts presented in this case
do not establish that a contract was created. This is so because the plaintiffs cannot
establish that the Employee Agreement was a contract created by the mutual consent
of the parties. There is no suggestion – and certainly no evidence – that the Employee
Agreement was the result of negotiations between the Employee Defendants and the
plaintiffs. Instead, it is clear that the Employee Agreement was issued by the

33

See, e.g., Keller s. Sisters of Charity of Incarnate Word, 597 So.2d 1113, 1115 (La.
App. 2 Cir. 1992; Mix v. Univ. of New Orleans, 609 So.2d 958, 964 (La. App. 4 Cir. 1992), writ
denied, 612 So.2d 83 (La. 1993); Thebner v. Xerox Corp., 480 So.2d 454, 457 (La. App. 3 Cir.
1985).
34

Fairbanks v. Tulane University, 98-1228 (La. App. 4 Cir. 03/31/99), 731 So.2d 983,

991.

-10-

plaintiffs to the Employee Defendants and constitutes a unilateral statement by the
plaintiffs of their policies and procedures.
The Employee Agreement states that “[d]uring your employment at the
Company, you may have access to confidential and proprietary data which is not
known by competitors or within the industry. . . . [A]n employee must not use any
such confidential information for personal benefit or for the benefit of any person,
third party, or entity other than the Company. An employee must also use his/her best
efforts to limit access to such confidential information only to those who have a need
to know it for business purposes for the company. . . . All appropriate precautionary
and security measures should be taken to protect the confidentiality of the
information.” (Rec. Doc. 1-3 at 18; Rec. Doc. 1-4 at 18, Rec. Doc. 1-5 at 18).
However, the Employee Agreement does not define confidential data, proprietary
data, or confidential information. Notably, the Employee Agreement also states that
“[a]ll employees are required to sign the Company’s Non-Disclosure Agreement upon
hire.” (Rec. Doc. 1-3 at 18; Rec. Doc. 1-4 at 18; Rec. Doc. 1-5 at 18). This suggests
that the Employment Agreement contemplated that the plaintiffs’ employees would
be asked to sign a separate nondisclosure agreement, which might have been a
binding contract, but no such agreement was filed along with the complaint or
referenced in the parties’ briefing.
-11-

The Employment Agreement states that “[t]he Company reserves the right to
revise, modify, delete[,] or add to any and all policies, procedures, work rules[,] or
benefits stated in this handbook or in any other document. . . . Any written changes
will be distributed to all employees so that you will be aware of the new policies and
procedures.” (Rec. Doc. 1-3 at 5; Rec. Doc. 1-4 at 5; Rec. Doc. 1-5 at 5). This
clearly indicates that the employees’ consent was not solicited prior to the
formulation of company policies or procedures and that an employee’s recourse upon
disagreement with a policy or procedure was the fact that “[y]ou are free to
terminate your employment with the Company at any time. . . .” (Rec. Doc. 1-3 at
5; Rec. Doc. 1-4 at 5; Rec. Doc. 1-5 at 5).
The Employee Agreement sets forth policies and procedures, the violation of
which may be deemed grounds for the termination of an employee’s employment.
The “Handbook Acknowledgment Receipts” signed by Stagg, Lanclos, and Courville
stated that each of them received a copy of the handbook, but also stated that “this
Handbook states the Company’s policies and practices in effect on the date of
publication. . . . [T]hese policies and procedures are continually evaluated and may
be amended, modified[,] or terminated at any time.” (Rec. Doc. 1-3 at 21; Rec. Doc.
1-4 at 21; Rec. Doc. 1-5 at 21). A document that can be unilaterally amended for any
reason by one party is not a contract to which another party has consented.
-12-

CONCLUSION
For the reasons set forth above, this Court finds that the plaintiffs have not
stated and cannot state a plausible claim for breach of contract against defendants
Stagg, Lanclos, and Courville since the Employee Agreement is not a valid contract.
Accordingly,
IT IS ORDERED that the defendants’ motion for judgment on the pleadings
(Rec. Doc. 63) is GRANTED, and the plaintiff’s breach of contract claim against
defendants Stagg, Lanclos, and Courville is DISMISSED WITH PREJUDICE.
Signed at Lafayette, Louisiana on this 6th day of September, 2017.

____________________________________
PATRICK J. HANNA
UNITED STATES MAGISTRATE JUDGE

-13-