Sapienza v. Trahan, et al

Filing 191

MEMORANDUM RULING re 133 MOTION for Summary Judgment, and MOTION to Sever Final Judgment filed by Wayne Cutrer, Downhole Chemical Solutions L L C. For the reasons fully explained herein, the Motion for Summary Judgment and to Sever Final Judgment is GRANTED in part and DENIED in part. Plaintiffs' claims against Cutrer and DCS are hereby DISMISSED WITH PREJUDICE. Signed by Magistrate Judge Patrick J Hanna on 9/17/2018. (crt,Alexander, E)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION

RICHARD SAPIENZA

CASE NO. 6:16-CV-01701

VERSUS

MAGISTRATE JUDGE HANNA

TRAHAN ET AL

BY CONSENT OF THE PARTIES

MEMORANDUM RULING
Currently pending is a Motion for Summary Judgment and to Sever Final
Judgment [Rec. Doc. 133], filed by Defendants Wayne Cutrer and Downhole
Chemical Solutions, LLC (collectively “Defendants”). Plaintiffs Richard Sapienza,
individually and/or derivatively as member and manager on behalf of Advanced
Applied Research, LLC (collectively “Plaintiffs”), filed an opposition [Rec. Doc.
139], to which Defendants filed a reply. [Rec. Doc. 143]. Considering the evidence,
the law, and the arguments of the parties, and for the reasons fully explained below,
the motion is GRANTED in part and DENIED in part.
PROCEDURAL BACKGROUND
This lawsuit was brought by Plaintiffs Richard Sapienza (“Sapienza”),
individually and/or derivatively as member and manager on behalf of Advanced
Applied Research, LLC (“AAR”), and involves allegations of, inter alia,
misappropriation and misuse of trade secrets against the following Defendants:
1

David O. Trahan (“Trahan”); Ben D. Davis (“Davis”); Chem Advances, LLC
(“CA”); AAR; Wayne Cutrer (“Cutrer”); Downhole Chemical Solutions, LLC
(“DCS”); Cypress Technologies, LLC (“Cypress Technologies”); and Tarrytown
Ventures, LP (“Tarrytown Ventures”).1 The instant motion for summary judgment
is brought by Cutrer and DCS only; therefore, the facts recited herein focus on those
relevant to Plaintiffs’ allegations against Cutrer and DCS. Likewise, of the seventeen
total counts alleged in the amended complaint, only the following are brought
against “all defendants,” to include Cutrer and DCS: Count One, violations of the
Defend Trade Secrets Act (“DTSA”) and the Louisiana Uniform Trade Secrets Act
(“LUTSA”); Count Seven, intentional and negligent misrepresentation; Count Nine,
conversion; Count Twelve, alter ego and single business enterprise liability; Count
Thirteen, conspiracy; and Count Fourteen, unjust enrichment. 2 This ruling will
therefore focus on the allegations against Cutrer and DCS arising out of those five
counts.
The undersigned previously held a four-day hearing on Plaintiffs’ requests
for injunctive relief, after which proposed findings of fact and recommendations

1

Rec. Docs. 1 (complaint); 32 (first amended and restated complaint).
Rec. Doc. 32, pp. 36–50. Count Sixteen, pursuant to which Plaintiffs reserve the right to seek
declaratory judgment “on all issues so decidable,” does not appear to implicate these Defendants
and the parties have made no arguments in support of or in opposition to Count Sixteen. Count
Seventeen, pursuant to which Plaintiffs sought injunctive relief under the DTSA, LUTSA, and/or
Fed. R. Civ. P. 65, was likewise brought against “All Defendants[;]” however, that request for
relief has been addressed and is not relevant herein. See Rec. Docs. 123 and 131.
2

2

were issued and subsequently adopted by the then-presiding district judge.3
Thereafter, the parties consented to proceed before the undersigned magistrate judge,
at which time the case and all pending motions, including the instant motion for
summary judgment, were referred to the undersigned.4
In opposition to the instant motion, Plaintiffs represented that certain facts had
been unavailable to them and therefore, pursuant to Federal Rule of Civil Procedure
56(d), requested that the Court defer consideration of the motion and allow time to
take additional discovery. 5 On the basis of Plaintiffs’ request, the Court upset the
original hearing on the instant motion and granted Plaintiffs an additional thirty days
to supplement their opposition.6 That same day, Plaintiffs requested, and were
granted, relief from the scheduling order, so that the case-specific deadlines would

3

Rec. Docs. 125, 125-1, 125-2, 125-3 (transcript, volumes I – IV); 123 (the undersigned’s
proposed findings); 131 (the then-presiding district court’s order adopting proposed findings).
4
See Rec. Docs. 153, 155, 156, and 158.
5
Rec. Doc. 139, pp. 2, 7-12. Defendants correctly point out that Sapienza’s affidavit [Rec. Doc.
139-1] is, in large part, improper and/or not probative of any facts at issue, to the extent it is based
on Sapienza’s belief rather than personal knowledge. See Richardson v. Oldham, 12 F.3d 1373,
1378 (5th Cir. 1994). However, the Court has exercised its discretion in granting the Plaintiffs’
requests for extensions of time to conduct further discovery and supplement their response and, as
such, the statements set forth in the affidavit are no longer ripe for consideration. Thus,
Defendants’ request to strike the affidavit [Rec. Doc. 143, p. 4 n. 4] is denied as moot.
6
Rec. Doc. 162. The parties were also put on notice that the Court would “consider facts
determined in the preliminary injunction hearing.” See Rec. Doc. 162; see also Fed. R. Civ. P.
65(a)(2) (“[E]vidence that is received on the motion and that would be admissible at trial becomes
part of the trial record and need not be repeated at trial.”); but cf. H & W Indus., Inc. v. Formosa
Plastics Corp., USA, 860 F.2d 172, 178 (5th Cir. 1988) (absent notice to the parties that a decision
on the merits would occur, summary judgment following preliminary injunction hearing was found
to be improper).
3

conform with those deadlines contemplated by the parties’ joint Rule 26(f) report.7
Plaintiffs then filed an untimely motion to again extend the deadline by which to
supplement their opposition to the instant motion, and the Court granted Plaintiffs’
request.8 Despite these extensions, and having been put on notice that the Court
would consider evidence presented during the preliminary injunction hearing,
Plaintiffs failed to supplement their opposition and likewise failed to controvert
Defendants’ statement of uncontested facts. As such, all material facts set forth by
Cutrer and DCS will be deemed admitted, for purposes of the instant motion. 9
FACTUAL BACKGROUND 10
A brief history of the parties’ interrelationships is helpful in understanding the
factual backdrop of this case. In October 2015, Sapienza was a consultant for
EnerSciences Holdings, LLC (“EnerSciences”), which was a company partially
owned by named defendants Davis and Trahan. At the time, Sapienza was assisting

7

See Rec. Docs. 163, 164 (motion and order, respectively); 159 (scheduling order); and 152 (Rule
26(f) report, filed by all parties).
8
Rec. Doc. 167 (motion); Rec. Doc. 168 (order).
9
Rec. Docs. 133-10 (Defendants’ statement of uncontested facts); 139-2 (Plaintiffs’ response).
Pursuant to Local Rule 56.2, “[a]ll material facts set forth in the statement required to be served
by the moving party will be deemed admitted, for purposes of the motion, unless controverted as
required by this rule.” Because Plaintiffs failed to file “a separate, short and concise statement of
the material facts as to which there exists a genuine issue to be tried,” all material facts set forth
by Cutrer and DCS will be deemed admitted, in accordance with Local Rule 56.2.
10
Unless otherwise indicated, the facts are drawn from Defendants’ statement of uncontested facts
and the transcripts from the four-day preliminary injunction hearing. See Rec. Docs. 133-10; 125,
125-1, 125-2, 125-3. To the extent the Court cites findings made as a result of that hearing, it has
determined same to have been established by the evidence presented therein and uncontroverted
by Plaintiffs in response to the instant motion. See Rec. Doc. 123.
4

EnerSciences’ research lab in developing a low temperature gel breaker for Chem
Rock, a limited liability company owned by Cutrer, defendant herein. EnerSciences,
as a research and development company, was intended to rely on a separate entity,
Rapid Specialty Products, to sell its products. When EnerSciences shut down,
Trahan, Davis, and Sapienza decided to create AAR, to keep EnerSciences’ research
team together and replicate its business model.11
AAR, which was officially formed on October 29, 2015, was created to
conduct research and development of chemical technologies for both internal and
third party use, as applicable in agricultural, industrial, oil and gas, and other
markets. AAR does not have an operating agreement; however, its members are
Trahan, Davis, and Sapienza, each of whom was intended to oversee different
aspects of AAR’s business.12 Trahan was intended to oversee the business aspects,
including marketing and sales; Davis was intended to help with marketing and sales
and also secure additional sources of funding; and Sapienza was intended to oversee

11

In October 2015, EnerSciences shut down and its research team continued to research and
develop certain technologies and processes while being paid by Rapid Specialty Products. Two
members of that research team testified during the preliminary injunction (“PI”) hearing that they
were aware that they would work for AAR once it was formed; however they were under the
impression AAR would not be formed until January 2016 and that they would continue to work
for Rapid Specialty Products until then. Their beliefs notwithstanding, AAR was officially formed
on October 29, 2015. See Rec. Doc. 123, pp. 2-3.
12
During the PI hearing, testimony established that AAR’s intended members were Tarrytown
Ventures, with Davis as its sole member; Cypress Technlogies, with Trahan as its sole member;
and Visibly Green, LLC, with Sapienza as its sole member. Rec. Doc. 123, p. 3. However, upon
noticing that the Articles of Organization failed to identify AAR’s members, Trahan filed a notice
of change, identifying AAR’s members as Trahan, Davis and Sapienza. Id. at pp. 3-4.
5

the science and technology aspects, including the researching, inventing,
developing, and testing of chemical technologies and processes. Like EnerSciences,
AAR was never intended to manufacture or market chemicals itself. The initial plan
was for AAR to use Rapid Specialty Products to market internally-developed
products to third parties; however, named defendant CA was ultimately created, in
December 2015, to serve that purpose.13
DCS is an oil and gas fluids company, formed in 2015, that works with
companies, such as AAR and CA, to develop applications of oil and gas chemistry
into products for use by oil and gas companies in the field. DCS is partially owned
by Cutrer and is also a wholly-owned subsidiary of Dynamic Chemical Solutions,
Inc., which has multiple shareholders and a seven-person board of directors. DCS is
not an owner of AAR or CA, nor does it control the operations of AAR or CA.
Neither Trahan, Davis, nor any of their other entities possess either an ownership
interest in DCS or any rights entitling them to profit from DCS’s sales.
In December 2015, Trahan reached out to DCS, in light of Cutrer’s previous
interactions with EnerSciences, including his October 2015 research request
regarding a low temperature gel breaker on behalf of Chem Rock. Cutrer responded
13

During the PI hearing, testimony established that Rapid Specialty Products was a Texas limited
liability company, whose sole member and manager was Novastar Holdings, LLC, a Louisiana
limited liability company whose members were Trahan and Davis. Rec. Doc. 123, p. 3.
Additionally, CA was formed as a Louisiana limited liability company, whose members are
Tarrytown Ventures and Cypress Technologies. Neither Sapienza nor his entity, Visibly Green,
LLC are members of CA. Id. at pp. 5-6.
6

by indicating his immediate interest, on behalf of DCS, in the development of a low
temperature breaker. As a result, Trahan and Cutrer entered into a work-for-hire
agreement between DCS, AAR, and CA, pursuant to which AAR successfully
developed a low temperature breaker that is currently used in certain DCS products.
DCS routinely does business on a handshake, with no written contract.
Consistent with that practice, Trahan and Cutrer did not execute a written contract;
rather, they orally agreed, on behalf of their respective companies, that AAR would
perform the breaker testing and development work for DCS at a set hourly rate, to
be periodically invoiced to DCS. In order for AAR to determine which products
would work for DCS’s intended purposes, DCS provided AAR with certain
parameters for the breaker development. AAR ultimately developed a formulation
with three additives that works with a diluted peroxide to break down polymers at a
slow enough speed to allow the chemicals to function before being broken down.
AAR figured out the additives, each of which is publicly available and commonly
known as a peroxide additive, and conducted testing with various dilutions of
peroxide to determine the optimal formulation for DCS’s needs. After obtaining the
formulation, DCS ordered the additives from CA and sent the additives to an entity
named PeroxyChem to be mixed with peroxide.
On January 27, 2016, an AAR employee and member of its research team,
Suchandra Hazra, completed a Choline Chloride Enhancer Evaluation for AAR.
7

Two days later, on January 29, 2016, CA made modifications to the report and
renamed the product Clay Control 532 (“CC 532”), in order to market and sell it as
a product. DCS buys CC 532 from CA and blends it with choline chloride, a widely
known and commonly used clay control product. DCS hired and paid AAR by the
hour to test various blends to find a commercially viable blend of CC 532 and choline
chloride. DCS provided AAR with its desired specifications, and AAR billed DCS
for hours spent working on the project. As requested by DCS, AAR provided DCS
with a formulation blend of CC 532 and choline chloride. DCS’s end product, using
the cationic starch-choline chloride formulation, is sold under the trade name
Clayblok 35.14 DCS manufactures Clayblok 35 by shipping the chemicals to a
facility, where they are blended based on the specific formulation DCS paid AAR to
develop for DCS, and then markets and sells that blend to its oil and gas customers.
DCS also hired AAR for testing and development of a specific flow aid blend
and a friction reducer sourced by AAR and/or CA. DCS paid AAR for all time
expended in testing the successes of the flow aid blend and friction reducer products
and in determining what specific quantities or dilutions were needed to meet DCS’s
specifications.

14

Defendants represent that, until this lawsuit, DCS was not aware of the source of the cationic
starch, and DCS is still unaware of the specific chemical composition of the starch. See Rec. Doc.
133-10, p. 5, ¶ 25, n. 34; see also Rec. Doc. 133-10, p. 7, ¶ 41 (“DCS did not know what comprised
the CC 532 sold by CA until Sapienza presented the alleged trade secrets in open court.”).
8

Under the direction of Trahan, CA provided AAR with administrative
services, including payroll, accounting, invoicing, human resources, and general
bookkeeping. Trahan appointed his son, Richard “Butch” Trahan, a CA employee,
to oversee AAR’s payroll and other administrative aspects such as accounting and
bookkeeping. Sapienza was aware that Trahan entered into a business arrangement
with DCS and that DCS was paying AAR for its services.
AAR began sending invoices to DCS in June 2016. After reviewing time
entries in Projecturf, a web-based program used to track AAR’s work and protect its
proprietary information, AAR would generate invoices using Quickbooks. AAR
would then provide the invoices to DCS through a web-based program called
Smartsheet. Once an invoice was posted to Smartsheet, Butch Trahan would notify
DCS’s accounting manager that the invoice was available, and DCS would then wire
the money directly to CA’s account.15 In total, AAR has invoiced DCS $771,562.69,
and DCS has paid, in full, each invoice it has received from AAR.

15

DCS’s accounting manager, Bryan Leonards, testified by affidavit that AAR, CA, and DCS all
had access to Smartsheet. When new AAR and CA invoices were posted to Smartsheet, Butch
Trahan notified Mr. Leonards, at which time Mr. Leonards would wire the amount due from DCS
“directly to CA’s account.” However, “[i]n at least one instance, the money was sent by check or
wire directly to AAR.” Rec. Doc. 133-8, pp. 1-2, ¶¶ 3-4.
9

ANALYSIS
A.

THE SUMMARY JUDGMENT STANDARD
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment

is appropriate when there is no genuine dispute as to any material fact, and the
moving party is entitled to judgment as a matter of law. A fact is material if proof of
its existence or nonexistence might affect the outcome of the lawsuit under the
applicable governing law. 16 A genuine issue of material fact exists if a reasonable
jury could render a verdict for the nonmoving party. 17
The purpose of summary judgment is to isolate and dispose of factually
unsupported claims or defenses.18 The party seeking summary judgment has the
initial responsibility of informing the court of the basis for its motion and identifying
those parts of the record that demonstrate the absence of genuine issues of material
fact.19 If the moving party carries its initial burden, the burden shifts to the
nonmoving party to demonstrate the existence of a genuine issue of a material fact.20

16

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Sossamon v. Lone Star State of Tex.,
560 F.3d 316, 326 (5th Cir. 2009); Hamilton v. Segue Software, Inc., 232 F.3d 473, 477 (5th Cir.
2000).
17
Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008) (citing Anderson, 477 U.S. at 252);
Hamilton, 232 F.3d at 477.
18
See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986).
19
Washburn v. Harvey, 504 F.3d 505, 508 (5th Cir. 2007) (citing Celotex Corp., 477 U.S. at 323).
20
Washburn, 504 F.3d at 508.
10

All facts and inferences are construed in the light most favorable to the nonmoving
party. 21
The court cannot make credibility determinations or weigh the evidence, and
the nonmovant cannot meet his burden with unsubstantiated assertions, conclusory
allegations, or a scintilla of evidence.22 Under Rule 56(c)(3), “[t]he court need
consider only the cited materials, but it may consider other materials in the record.”23
After putting the parties on notice of its intent to do so, for purposes of the instant
motion, the Court considered the evidence presented during the preliminary
injunction hearing held on October 2–5, 2017. 24 “When all of the summary judgment
evidence presented by both parties could not lead a rational trier of fact to find for
the nonmoving party, there is no genuine issue for trial and summary judgment is
proper.” 25

21

Brumfield, 551 F.3d at 326 (citing Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574,
587 (1986)).
22
Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005).
23
Fed. R. Civ. P. 56(c)(3).
24
See Fed. R. Civ. P. 65(a)(2) (Even when the Court does not consolidate the injunction hearing
with trial on the merits, “evidence that is received on the motion and that would be admissible at
trial becomes part of the trial record and need not be repeated at trial.”); see also Brown v.
Livingston, 524 F. App’x 111, 115 (5th Cir. 2013) (consideration of, inter alia, evidence presented
at preliminary injunction hearing resulted in conversion of motion to dismiss into a summary
judgment motion); JSLG, Inc. v. City of Waco, No. 11-131, 2011 WL 13180227, at *1 (W.D. Tex.
Sept. 26, 2011), aff’d, 504 F. App’x 312 (5th Cir. 2012) (considering evidence presented at a
preliminary injunction hearing in granting a motion for summary judgment).
25
Greene v. Syngenta Crop Protection, Inc., 207 F.Supp.2d 537, 542 (M.D. La. 2002) (citing
Matsushita, 475 U.S. at 587).
11

Where, as here, a party seeks “a continuance of a motion for summary
judgment in order to obtain further discovery, [that] party must indicate to the court
by some statement, preferably in writing (but not necessarily in the form of an
affidavit), why he needs additional discovery and how the additional discovery will
create a genuine issue of material fact.” 26 “The nonmoving party ‘may not simply
rely on vague assertions that additional discovery will produce needed, but
unspecified facts.’” 27 Instead, that party must “set forth a plausible basis for
believing that specified facts, susceptible of collection within a reasonable time
frame, probably exist and indicate how the emergent facts, if adduced, will influence
the outcome of the pending summary judgment motion.” 28 “If it appears that further
discovery will not produce evidence creating a genuine issue of material fact, the
district court may, in the exercise of its discretion, grant summary judgment.”29
B.

DEFENDANTS CUTRER AND DCS ARE ENTITLED TO SUMMARY JUDGMENT
As mentioned, only the following five counts are brought against “all

defendants,” to include Cutrer and DCS. Each count will be analyzed in turn.

26

Krim v. BancTexas Grp., Inc., 989 F.2d 1435, 1442 (5th Cir. 1993) (citations omitted).
Id. (quoting SEC v. Spence & Green Chemical Co., 612 F.2d 896, 901 (5th Cir. 1980)).
28
American Family Life Assur. Co. of Columbus v. Biles, 714 F.3d 887, 894 (5th Cir. 2013)
(quoting Raby v. Livingston, 600 F.3d 552, 561 (5th Cir. 2010) and C.B. Trucking, Inc. v. Waste
Mgmt. Inc., 137 F.3d 41, 44 (1st Cir. 1998)).
29
Krim, 989 F.2d at 1442 (citing Netto v. Amtrak, 863 F.2d 1210, 1216 (5th Cir. 1989);
International Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1267 (5th Cir. 1991)).
27

12

Count One: Violations of the DTSA and the LUTSA
Plaintiffs allege that Sapienza and AAR own the following five trade secrets,
collectively referred to as the “AAR/Sapienza Trade Secrets:” (1) Choline Chloride
Trade Secrets; (2) Hydrogen Peroxide Trade Secrets; (3) Carbon Disulfide Trade
Secrets; (4) Flow Aid Blend Trade Secret; and (5) Hydrogen Sulfide Trade Secrets.30
In Count One, Plaintiffs allege that “Defendants willfully, maliciously, and in bad
faith, misappropriated [and continue to misappropriate] the AAR/Sapienza Trade
Secrets by (a) acquiring them by improper means; [and] (b) disclosing and using
them without express or implied consent.”31
In the background section of the amended complaint, Plaintiffs allege that, as
early as March 2016, “Sapienza learned that Trahan and Davis disclosed certain of
the AAR/Sapienza Trade Secrets to Cutrer on behalf of himself and/or [DCS], still
without the protection of a non-disclosure agreement (or any reasonable protections,
in place) and without a contract or compensation for services.” 32 Plaintiffs further
allege several fact-specific scenarios, between February and August 2016, in which
Trahan and Davis allegedly failed to take reasonable measures to protect the
AAR/Sapienza Trade Secrets in their business dealings with Cutrer and DCS. 33 They

30

Rec. Doc. 32, pp. 36-37, ¶ 85.
Rec. Doc. 32, p. 37, ¶ 86.
32
Id. at p. 32, ¶ 75.
33
Id. at pp. 33-35, ¶¶ 76-81.
31

13

then attempt to attribute these actions or inactions of Trahan and Davis to the instant
Defendants by alleging that “Cutrer and [DCS] misappropriated the AAR/Sapienza
Trade Secrets by acquiring them via the improper means of misrepresentation,
inducement of the breach of duty to maintain secrecy and limit use, electronic means,
and other unlawful means.” 34 And, more specifically, they allege that “these acts by
Cutrer and [DCS] misappropriated the AAR/Sapienza Trade Secrets by disclosing
and using them without express or implied consent because they used improper
means to acquire the knowledge; and/or they knew or should have known that the
knowledge came from persons who used improper means and/or derived
from/through persons who owed a duty to the Plaintiffs to maintain secrecy and limit
use.” 35 Because there is no evidentiary basis underlying these assertions vis-à-vis
Cutrer and DCS, the Court pretermits any further discussion of the alleged facts and
moves directly to the Plaintiffs’ failure to establish the required legal elements of
their claims.
To succeed under the DTSA, a plaintiff must establish (1) the existence of a
trade secret; (2) misappropriation of the trade secret by another; and (3) the trade

34
35

Id. at pp. 35-36, ¶ 82.
Id. at p. 36, ¶ 82.
14

secret’s relation to a good or service used or intended for use in interstate or foreign
commerce. 36 The DTSA defines the term “misappropriation” to mean:
(A) acquisition of a trade secret of another by a person who knows or
has reason to know that the trade secret was acquired by improper
means; or
(B) disclosure or use of a trade secret of another without express or
implied consent by a person who—
(i)

used improper means to acquire knowledge of the trade
secret;

(ii)

at the time of disclosure or use, knew or had reason to know
that the knowledge of the trade secret was—
(I)

derived from or through a person who had used
improper means to acquire the trade secret;

(II)

acquired under circumstances giving rise to a duty to
maintain the secrecy of the trade secret or limit the use
of the trade secret; or

(III) derived from or through a person who owed a duty to
the person seeking relief to maintain the secrecy of the
trade secret or limit the use of the trade secret; or
(iii)

before a material change of the position of the person, knew
or had reason to know that—
(I)

the trade secret was a trade secret; and

(II)

knowledge of the trade secret had been acquired by
accident or mistake[.]37

36

18 U.S.C. § 1836(b)(1); see also Source Prod. & Equip. Co. v. Schehr, No. 16-17528, 2017 WL
3721543, at *2 (E.D. La. Aug. 29, 2017).
37
18 U.S.C. § 1839(5); see also Source Prod., 2017 WL 3721543, at *3.
15

The DTSA also defines the term “improper means[,]” which explicitly “does not
include . . . any other lawful means of acquisition[.]” 38
Similarly, to succeed under the LUTSA, “a complainant 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.”39 “In order to show that the trade
secrets have been misappropriated, [Plaintiffs] would have to prove that (1) a trade
secret existed, and (2) that they were misappropriated by the [Defendants].” 40 The
LUTSA’s definition of “misappropriation” is almost identical to that under the
DTSA, and “improper means” is defined to “include[] theft, bribery,
misrepresentation, breach, or inducement of a breach of a duty to maintain secrecy,
or espionage through electronic or other means.” 41
For purposes of this ruling, the Court assumes that the chemical technologies
and processes developed by AAR related to Choline Chloride and Hydrogen
Peroxide are classified as trade secrets.42 The Court previously made this finding, on

38

18 U.S.C. § 1839(6)(B).
Computer Mgmt. Assistance Co. v. Robert F. DeCastro, Inc., 220 F.3d 396, 403 (5th Cir. 2000)
(quoting Reingold v. Swiftships, Inc., 126 F.3d 645, 648 (5th Cir. 1997) (citations omitted)).
40
Johnson Controls, Inc. v. Guidry, 724 F. Supp. 2d 612, 628–29 (W.D. La. 2010).
41
La. Rev. Stat. § 51:1431(2) (defining misappropriation) and (1) (defining improper means).
42
Rec. Doc. 123, p. 17 (After the injunction hearing, the Court found that no evidence had been
presented regarding the Carbon Disulfide, Flow Aid Blend, or Hydrogen Sulfide Trade Secrets;
however, the Court further found that the evidence indicated that the chemical technologies and
processes developed by AAR related to Choline Chloride and Hydrogen Peroxide are classified as
trade secrets.); see also Rec. Doc. 32, pp. 12-13, ¶ 24(a) (description of Choline Chloride Trade
Secrets); and p. 13, ¶ 24(b) (description of Hydrogen Peroxide Trade Secrets).
39

16

the basis of the evidence presented during the preliminary injunction hearing, and
Plaintiffs have failed to submit any further evidence of the existence of any other
trade secrets in support of this motion.43 Both of these trade secrets are relevant to
the business dealings with Cutrer and DCS. Nonetheless, as explained below,
Plaintiffs’ attempts to attribute the alleged misappropriation thereof by Trahan and
Davis to Defendants Cutrer and DCS are undermined by these Defendants’
undisputed evidence of a legitimate work-for-hire agreement, pursuant to which
AAR and CA were paid for the work performed on behalf of Cutrer and DCS.
As explained herein, DCS entered into lawful business transactions, pursuant
to an oral work-for-hire agreement, as evidenced by the testimony presented during
the preliminary injunction hearing and the exhibits attached to the instant motion for
summary judgment. 44 Contrary to Plaintiffs’ assertions, such oral agreements are not
prohibited by Louisiana law. 45 Pursuant to that agreement, AAR provided DCS with
technical services and lab work. As work was performed, on a fee-per-hour basis,

43

See Johnson Controls, Inc. v. Guidry, 724 F. Supp. 2d 612, 629 (W.D. La. 2010) (“Determining
whether information qualifies as trade secrets is a question of fact.”).
44
See, e.g., Rec. Doc. 133-2, pp. 10-12; Rec. Doc. 133-3, pp. 10-11; Rec. Doc. 133-5, pp. 13-18;
and Rec. Doc. 122-1, incorporated by reference at Rec. Doc. 133-1, p. 7 n. 17.
45
See La. Civ. Code arts. 1927 (“A contract is formed by the consent of the parties established
through offer and acceptance. Unless the law prescribes a certain formality for the intended
contract, offer and acceptance may be made orally . . .”); 1906 (“A contract is an agreement by
two or more parties whereby obligations are created, modified, or extinguished.”); 2045
(“Interpretation of a contract is the determination of the common intent of the parties.”).
17

AAR invoiced DCS, as indicated in the billing records, and DCS paid each invoice
in full.46
Despite the assumed existence of trade secrets, Plaintiffs’ claims under Count
One fail, because there is no evidence that Cutrer or DCS misappropriated any trade
secret or used any improper means. Aside from conclusory allegations that Trahan
and Davis formed CA for the purpose of misappropriating trade secrets,47 Plaintiffs
have failed to come forward with any evidence to support that allegation, much less
any evidence upon which the Court might find any improper means attributable to
Cutrer and/or DCS. And, as noted, at the summary judgment stage, the nonmovant
cannot meet his burden with unsubstantiated assertions or conclusory allegations.48
Defendants have established that DCS and AAR, as well as CA, entered into an
arms-length business transaction, pursuant to which AAR conducted the requested
testing and development at a set hourly rate and CA provided goods for a market
price. Although DCS provided AAR with its required specifications for each project,
neither Cutrer nor DCS has any ownership interest in or control over the
management or operations of AAR or CA. The evidence further establishes that both
AAR and CA billed DCS for the work and goods, respectively, and DCS paid every
invoice it received. Based on the uncontroverted evidence submitted by these

46

See Rec. Docs. 133-4, 133-8, and 133-9.
See Rec. Doc. 32, pp. 17-25, ¶¶ 30-49.
48
Boudreaux, 402 F.3d at 540.
47

18

Defendants, as well as the testimony presented during the preliminary injunction
hearing, Cutrer and DCS are entitled to summary judgment as to Count One.
Count Seven: Intentional and Negligent Misrepresentation
In the amended complaint, Plaintiffs allege “that Defendants expressly,
repeatedly, and extensively made intentional and negligent misrepresentations to
Sapienza and AAR.” 49 Although Count Seven is drafted generally against “All
Defendants,” only Trahan and Davis are specifically named as having made
“express, repeated, and extensive intentional and negligent misrepresentations[,] . .
. [which] caused injury and loss to Sapienza and AAR.”50 Thus, DCS and Cutrer
correctly point out that Plaintiffs have failed to identify any misrepresentation,
whether negligent or intentional, which was allegedly made by these Defendants.
Because Plaintiffs have not met their burden of establishing any misrepresentation,
DCS and Cutrer are entitled to summary judgment as to Count Seven. 51

49

Rec. Doc. 32, p. 43, ¶ 113.
Id. at p. 44, ¶ 114.
51
Without alleging a particular misrepresentation or breach, Plaintiffs cannot establish intentional
or negligent misrepresentation against DCS or Cutrer. “The elements of a claim for intentional
misrepresentation in Louisiana are: (1) a misrepresentation of a material fact; (2) made with intent
to deceive; and (3) causing justifiable reliance with resultant injury.” Kadlec Med. Ctr. v. Lakeview
Anesthesia Assocs., 527 F.3d 412, 418 (5th Cir. 2008). “To make out a negligent misrepresentation
claim in Louisiana: (1) there must be a legal duty on the part of the defendant to supply correct
information; (2) there must be a breach of that duty, which can occur by omission as well as by
affirmative misrepresentation; and (3) the breach must have caused damages to the plaintiff based
on the plaintiff’s reasonable reliance on the misrepresentation.” Id.
50

19

Count Nine: Conversion
Similar to Count Seven, although Count Nine is drafted generally against “All
Defendants,” only Trahan, Davis and CA are specifically named as having
“converted the Sapienza/AAR Trade Secrets, which caused injury and damage to
Sapienza and AAR.” 52 Plaintiffs allege that they “never gave consent to CA to
possess the Sapienza/AAR Trade Secrets” and they “terminated any consent given
to Trahan and Davis to possess the Sapienza/AAR Trade Secrets, and demanded
return of them[,] [which] Trahan and Davis refused.”53 “Under Louisiana law,
conversion is an intentional tort, committed when one wrongfully does any act of
dominion over the property of another in denial of or inconsistent with the owner’s
possessory rights, such as when one wrongfully exercises or assumes authority over
another’s goods, depriving him of possession, permanently or for an indefinite
time.” 54 Given that Plaintiffs have failed to allege, much less establish, that DCS and
Cutrer committed the intentional tort of conversion, they are entitled to summary
judgment as to Count Nine.

52

Rec. Doc. 32, p. 45, ¶ 120.
Id. at p. 45, ¶ 119.
54
Zaveri v. Condor Petroleum Corp., 27 F. Supp. 3d 695, 708 (W.D. La. 2014) (citing F.G.
Bruschweiler Antiques, Ltd. v. GBA Great British Antiques, LLC, 03-792 (La. App. 5th Cir.
11/25/03); 860 So.2d 644, 649–650 (citations omitted)).
53

20

Count Twelve: Alter Ego and Single Business Enterprise Liability
As relevant to these Defendants, Count Twelve of the amended complaint
alleges that, “upon information and belief, [DCS] is the alter ego of Cutrer[,”] such
that “the entity structure may be disregarded . . . and Cutrer may be held liable for
any liability imposed upon [DCS].” 55 Attached to the motion for summary judgment
are excerpts of Sapienza’s deposition wherein he was asked to support his allegation
that “Cutrer effectively and completely controls both [DCS] and Dynamic
Chemical[.]” 56 Sapienza responded that Cutrer was “listed as the owner . . . of both
. . . entities[;]” that “Dynamic Chemical is a publically traded company[;]” and that
Cutrer is listed, along with others, as an owner of both DCS and its parent company,
Dynamic Chemical, such that Cutrer controls both of those entities. 57 Plainitffs have
offered no evidence, beyond Sapienza’s conclusory assertions, to support this theory
of liability. 58
By Plaintiffs’ own admission, Louisiana courts have traditionally focused on
the following five elements in applying the alter ego doctrine, “(1) commingling of
corporate and shareholder funds; (2) failure to follow statutory formalities for
incorporation and the transaction of corporate affairs; (3) undercapitalization of the
55

Rec. Doc. 32, p. 47, ¶ 129.
Rec. Doc. 133-7, p. 10.
57
Id. at pp. 11-12.
58
As noted, supra, DCS is partially owned by Cutrer and is also a wholly-owned subsidiary of
Dynamic Chemical Solutions, Inc., which has multiple shareholders and a seven-person board of
directors. [Rec. Doc. 133-2, p. 9; Rec. Doc. 140, p. 3, ¶ 11].
56

21

corporation; (4) failure to provide separate bank accounts and bookkeeping records;
and (5) failure to hold regular shareholder or director meetings.”59 Yet, Plaintiffs fail
to allege, much less establish, any of these factors. There is no evidence that DCS
commingles funds with Cutrer; fails to follow statutory formalities for incorporation
or the transaction of corporate affairs; is undercapitalized; fails to provide separate
bank accounts or bookkeeping records; or fails to hold regular meetings.
Accordingly, Cutrer and DCS are entitled to summary judgment as to Count Twelve.
Count Thirteen: Conspiracy
Count Thirteen of the amended complaint alleges that the “Defendants
conspired with one another to commit the underlying intentional torts alleged [in the
complaint, as amended], and acted in furtherance of that conspiracy[,]” and are
therefore liable in solido, pursuant to Louisiana Civil Code article 2324. 60 For the
reasons outlined herein, Plaintiffs have failed to establish that any underlying
intentional tort may be attributed to Cutrer or DCS and have further failed to
establish that the lawful business transactions in which Cutrer and DCS engaged
with Plaintiffs could support their allegations of conspiracy. Accordingly, Cutrer and
DCS are entitled to summary judgment as to Count Thirteen.
59

United States v. Clinical Leasing Serv., Inc., 982 F.2d 900, 902 (5th Cir. 1992) (collecting
Louisiana cases); see also Rec. Doc. 32, p. 47, ¶ 128 (Plaintiffs’ citation to Louisiana case law on
alter ego liability).
60
Rec. Doc. 32, p. 48, ¶¶ 131-132. Louisiana Civil Code article 2324(A) provides: “He who
conspires with another person to commit an intentional or willful act is answerable, in solido, with
that person, for the damage caused by such act.”
22

Count Fourteen: Unjust Enrichment
Count Fourteen of the amended complaint alleges that “Defendants were
enriched without cause at Plaintiffs’ expense,” such that “Defendants are bound to
compensate Plaintiffs,” pursuant to the DTSA and Louisiana Civil Code article
2298. 61 To recover under a theory of unjust enrichment, the Louisiana Supreme
Court has explained that a plaintiff must show the following: “enrichment on the
part of the defendant; impoverishment on the part of plaintiff; [causal] relationship
between the enrichment received by the defendant and the plaintiff’s
impoverishment; and a lack of other remedy at law.” 62 Again, for the reasons
outlined herein, Plaintiffs have failed to establish unjust enrichment, as they entered
into a valid agreement with these Defendants, pursuant to which DCS was billed via
invoices, which it paid in full, for all work performed by AAR. Accordingly, Cutrer
and DCS are entitled to summary judgment as to Count Fourteen.

61

Rec. Doc. 32, pp. 48-49, ¶¶ 134-135. Louisiana Civil Code article 2298 provides, in pertinent
part: “A person who has been enriched without cause at the expense of another person is bound to
compensate that person. The term ‘without cause’ is used in this context to exclude cases in which
the enrichment results from a valid juridical act or the law.” Further, in a civil action brought under
the DTSA with respect to the misappropriation of a trade secret, a court may award “damages for
any unjust enrichment caused by the misappropriation of the trade secret that is not addressed in
computing damages for actual loss[.]” 18 U.S.C. § 1836(b)(3)(B)(II).
62
Carriere v. Bank of Louisiana, 95-3058 (La. 12/13/96); 702 So. 2d 648, 658, on reh’g (Nov. 3,
1997).
23

C.

DEFENDANTS CUTRER AND DCS ARE NOT ENTITLED TO A FINAL JUDGMENT
PURSUANT TO RULE 54(B)
In addition to summary judgment, Defendants Cutrer and DCS seek to sever

final judgment in their favor, pursuant to Federal Rule of Civil Procedure 54(b),
arguing that there is no just reason to delay same. Pursuant to Rule 54(b), “[w]hen
an action presents more than one claim for relief . . . or when multiple parties are
involved, the court may direct entry of a final judgment as to one or more, but fewer
than all, claims or parties only if the court expressly determines that there is no just
reason for delay.” 63 Plaintiffs oppose the request and argue that granting these
Defendants a final judgment under Rule 54(b) would result in piecemeal appeals,
which would be inefficient, uneconomical, and contrary to historical federal policy
against same. The Court agrees, particularly in light of the Defendants’ lack of
articulated basis for requesting same. 64 As the Fifth Circuit has explained, “[s]ince
the inception of the federal judiciary,” the role of a court of appeals “has been to
review final decisions of the trial courts, not to tinker with ongoing cases through
piecemeal appeals, which waste ‘judicial energy,’ create unnecessary delays, and

63

Fed. R. Civ. P. 54(b).
The Court further notes that Defendants have asserted counterclaims, including a request for
attorney’s fees, pursuant to DTSA and LUTSA. See Rec. Doc. 140.
64

24

obstruct the pursuit of meritorious claims.” 65 Accordingly, the request to certify a
final judgment in favor of these Defendants is denied.
CONCLUSION
For the reasons fully explained above, the Motion for Summary Judgment and
to Sever Final Judgment [Rec. Doc. 133], filed by Defendants Wayne Cutrer
(“Cutrer”) and Downhole Chemical Solutions, LLC (“DCS”) is GRANTED insofar
as Cutrer and DCS are entitled to summary judgment and DENIED insofar as Cutrer
and DCS are not entitled to a final judgment under Rule 54(b). Plaintiffs’ claims
against Cutrer and DCS are hereby DISMISSED WITH PREJUDICE.
Signed at Lafayette, Louisiana on this 17th day of September, 2018.

____________________________________
PATRICK J. HANNA
UNITED STATES MAGISTRATE JUDGE

65

Tetra Techs., Inc. v. Cont’l Ins. Co., 755 F.3d 222, 231 (5th Cir. 2014) (citing Sherri A.D. v.
Kirby, 975 F.2d 193, 201 (5th Cir. 1992) (citation omitted) and Ali v. Quarterman, 607 F.3d 1046,
1048 (5th Cir. 2010)).
25