American Registry of Radiologic Technologists v. Bennett

Filing 96

FINDINGS OF FACT AND CONCLUSIONS OF LAW. Signed by Judge David Ezra. (rf)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
AMERICAN REGISTRY OF
RADIOLOGIC TECHNOLOGISTS,

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Plaintiff,
vs.
DIANE BENNETT,
Defendant.

CV. NO. SA-12-CV-00109-DAE

FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Court tried this case without a jury on June 27, 2013 and
June 28, 2013. Shari L.J. Aberle, Esq., and Meghan E. Lind, Esq., appeared
at the hearing on behalf of Plaintiff American Registry of Radiologic
Technologists (“ARRT” or “Plaintiff”); Diane Bennett (“Defendant”)
appeared pro se.
Plaintiff initially filed suit against Defendant and her company,
Limited X-Ray Licensure Course Providers, LLC, in the United States
District Court for the District of Minnesota on April 22, 2009. The United
States District Court for the District of Minnesota concluded that it lacked
personal jurisdiction over the Defendant, and on September 19, 2009

1

transferred the case to this Court (see The American Registry of Radiologic
Technologists v. Bennett et al., Case No. SA-09-CV-00767-XR).
On August 30, 2010, Limited X-Ray Licensure Course
Providers, LLC, filed a voluntary petition for relief under Chapter 7 of the
United States Bankruptcy Code (see In re X-Ray Licensure Course
Providers, LLC, Bankr. Case No. 10-53275-LMC), and on September 2,
2010 Defendant followed suit (see In re Diane Bennett, Bankr. Case No. 1053388-LMC). Pursuant to 11 U.S.C. § 362(a), the Court ordered all
proceedings in case number SA-09-CV-00767-XR stayed pending resolution
of the bankruptcy proceedings.
On December 13, 2010, Plaintiff filed a Complaint against
Defendant in the Bankruptcy Court, thereby initiating an adversary
proceeding (Adv. Proc. No. 10-05137-LMC). Plaintiff alleges that
Defendant obtained access to its copyrighted examination questions by
asking students she taught through her company to send her questions they
saw on ARRT examinations, which she would then send to other students
preparing to take the examination. Plaintiff asserts causes of action for
copyright infringement, breach of contract, tortious interference, and
misappropriation of trade secrets. On February 1, 2012, the case was
withdrawn to this Court pursuant to 28 U.S.C. § 157.
2

The Court has subject matter jurisdiction over this action
pursuant to 28 U.S.C. §§ 1331 and 1338(a) because it arises under the
Copyright Act of 1976, 17 U.S.C. § 101 et seq. The Court has jurisdiction
over Plaintiff’s claims for breach of contract, tortious interference, and
misappropriation of trade secrets pursuant to 28 U.S.C. § 1367. Venue is
proper pursuant to 28 U.S.C. §§ 1391 and 1400.
The Court has considered the record evidence submitted, made
determinations as to relevance and materiality, assessed the credibility of the
witnesses, and ascertained the probative significance of the evidence
presented. Upon consideration of the above, the Court finds the following
facts by a preponderance of the evidence, and in applying the applicable law
to such factual findings, makes the following conclusions of law. To the
extent any findings of fact as stated may also be deemed to be conclusions of
law, they shall also be considered conclusions of law; similarly, to the extent
any conclusions of law as stated may be deemed findings of fact, they shall
also be considered findings of fact. See Compaq Computer Corp. &
Subsidiaries v. C.I.R., 277 F.3d 778, 781 (5th Cir. 2001).

3

I.

FINDINGS OF FACT
The Parties
1.

Plaintiff is a Minnesota nonprofit organization established in

1922 that, among other things, develops and administers examinations for
individuals seeking certification in several fields of medical radiologic
technology.
2.

In addition to developing and administering examinations,

Plaintiff is a credentialing organization, and maintains a registry of ARRTcertified radiologic technologists. To obtain ARRT certification, an
individual must graduate from an approved educational program, agree to
comply with certain standards, and pass an ARRT certification examination.
3.

Defendant is a citizen of the State of Texas residing in Adkins,

TX.
The Examinations
4.

Two ARRT examinations are at issue in this case: the Limited

Scope of Practice in Radiography Examination (“Limited Scope”) and the
Bone Densitometry Equipment Operator Examination (“BDEO”)
(collectively, “the Examinations”). Plaintiff began offering the Limited
Scope examination in 1985 and the BDEO examination in 2003.

4

5.

Bone densitometry equipment operators use x-rays to measure

bone density. Bone density scans are used to diagnose and assess the
treatment or progression of osteoporosis.
6.

Radiography involves the use of x-rays to obtain images used to

diagnose illness and injury. The Limited Scope examination offers
certification in radiography of a specific anatomical area. Thus, by taking
the Limited Scope examination, an individual can become certified to
perform, for example, chest x-rays, or spine x-rays, or x-rays of the
extremities.
7.

Every Limited Scope examination contains certain core

questions, as well as questions relating to the “module” the examinee has
applied to become licensed in: chest, spine, extremity, etc.
8.

The questions that appear on any particular ARRT examination

are drawn from a much larger pool of questions maintained by Plaintiff
(Plaintiff’s “Test Item Bank”).
9.

With respect to the Limited Scope examination specifically,

Plaintiff offer three different examinations per year, and draws from a pool
of approximately 1,100 questions.
10.

Questions are used repeatedly in successive years, as well as

across multiple examinations in the same year. This repeated use of
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questions serves two primary purposes: (1) it ensures continuity in test
difficulty and (2) it ensures comparability of scores between candidates
completing the Examinations at different times.
11.

Plaintiff carefully protects the confidentiality of its questions.

Examination questions are not released or made available to the public.
Even within ARRT, access to the questions is restricted.
12.

Plaintiff obtained a copyright in the Test Item Bank from which

its questions are drawn. Plaintiff also registered its copyright claim with the
United States Copyright Office and obtained a Certificate of Registration.
13.

States contract with Plaintiff to use the Limited Scope and

BDEO examinations as state licensing examinations.
14.

Twenty-eight states require individuals to obtain a license in

order to practice limited scope radiography. Two of those states—
Mississippi and Washington—do not require limited scope licensees to take
any examination. Of the twenty-six states that require prospective limited
scope licensees to take an examination in order to obtain a license, twentyfive contract with Plaintiff.1 Only one state, Ohio, offers a non-ARRT
limited scope examination.

1

The 25 states that contract with Plaintiff to use its Limited Scope
examination for state licensing purposes are: Arizona, Arkansas, California,
Colorado, Delaware, Florida, Illinois, Indiana, Iowa, Kentucky, Maine,
6

15.

Every state that requires an examination to obtain a bone

densitometry equipment operator license uses Plaintiff’s BDEO
examination. Currently, fifteen states use Plaintiff’s BDEO examination for
state licensing purposes.2
16.

Plaintiff has limited contact with state licensing candidates.

Each candidate applies to his or her state for licensing. The state then
submits the names of applicants eligible to sit for the licensing examination
to Plaintiff. Plaintiff provides eligible applicants with an Examination
Handbook, which contains information regarding scheduling the exam, test
center procedures, and detailed specifications describing the content of the
examination (the “Content Specifications”). (Pl. Exs. 8a-8c, 9a-9c.)
Plaintiff administers and scores the examination, and then reports the
number of questions each candidate answered correctly to the state licensing
agency. The state licensing agency then notifies candidates of their
examination and/or licensing results.
17.

To protect the confidentiality of its questions, Plaintiff requires

candidates to enter into a non-disclosure agreement. Before beginning the
Minnesota, Montana, Nebraska, New Jersey, New Mexico, Oregon,
Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia
and Wyoming.
2
Arizona, California, Colorado, Delaware, Illinois, Kentucky, Minnesota,
Montana, Oregon, South Carolina, Tennessee, Utah, Virginia, West
Virginia, and Wyoming.
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computerized examination, candidates are presented with a screen entitled
“Non-Disclosure Agreement and General Terms of Use for ARRT
Examination Programs.” (Pl. Ex. 1.) The Agreement provides:
This exam is confidential and is protected by trade secret law.
It is made available to you, the examinee, solely for the purpose
of assessing qualifications in the discipline referenced in the
title of this exam. You are expressly prohibited from
disclosing, publishing, reproducing, or transmitting this exam,
in whole or in part, in any form or by any means, verbal or
written, electronic or mechanical, for any purpose, without the
prior express written permission of ARRT.
In order to proceed to the examination, candidates must click a button that
states: “I accept the terms of this agreement.” (Id.)
Defendant’s Conduct
18.

Defendant applied for and obtained ARRT certification in

Radiography in 1993 and Bone Densitometry in 2001. Defendant registered
her certifications with ARRT and annually applied to renew those
registrations.
19.

Each time Defendant renewed her registrations, she signed

Plaintiff’s Application for Renewal of Registration (the “Application”). The
Application requires registrants to sign below the following statement:
The terms and conditions set forth in the “Agreement of
Applicants for Renewal of Registration” section of the ARRT
Rules and Regulations provided to me are hereby incorporated
in and made a part of this Application by this reference as fully
as though the same were set forth in full in this place, and by
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signing this Application in the space provided below, I hereby
consent to, and agree to be legally bound in all respect by each
and all of such terms and conditions.
(Doc. # 47, Aberle Declaration, Ex. 30.)
20.

By signing the Application, Defendant agreed to be bound by

all terms and conditions contained in Plaintiff’s “Governing Documents.”
Plaintiff’s Governing Documents include Plaintiff’s Standards of Ethics.
21.

Plaintiff’s Standards of Ethics prohibit registrants from

engaging in “conduct that subverts or attempts to subvert ARRT’s
examination process,” including: (1) “having unauthorized possession of any
portion of or information concerning a future, current, or previously
administered examination of ARRT;” (2) “disclosing information
concerning any portion of a future, current, or previously administered
examination of ARRT;” (3) “reconstructing (whether by memory or
otherwise) . . . or transmitting any portion of examination materials;” (4)
“using or purporting to use any portion of examination materials which were
obtained improperly or without authorization for the purpose of instructing
or preparing any applicant for examination;” and (5) “disclosing what
purports to be, or under all circumstances is likely to be understood by the
recipient as, any portion of or ‘inside’ information concerning any portion of

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a future, current, or a previously administered examination of ARRT.”
(Doc. # 47, Reid Declaration, Ex. 9.)
22.

In 2007, Defendant started a company called Limited X-Ray

Licensure Course Providers, LLC (“Course Providers”). Defendant was the
sole owner, manager and employee of Course Providers and was responsible
for controlling all of its day-to-day operations.
23.

In her response to Plaintiff’s Motion for Summary Judgment,

Defendant represented to the Court that she prepared students for both
ARRT and non-ARRT examinations. There is no evidence to support this
contention. The evidence overwhelmingly shows that Course Providers
prepared students exclusively for ARRT examinations.
24.

According to the company’s Bylaws, Course Providers was

formed “to provide tutoring assistance to qualifying individuals and an
educational support system to those students trying to pass the ARRT
Limited Scope Radiology Exam or ARRT Limited Scope Bone
Densitometry Exam.” (Pl. Ex. 113.)
25.

Defendant created two study guides, one to prepare students for

Plaintiff’s Limited Scope examination and one for Plaintiff’s BDEO
examination. (Def. Exs. 1, 2.) Defendant requested, and received,
permission to reproduce Plaintiff’s copyright-protected Limited Scope
10

Content Specifications and BDEO Content Specifications in the study
guides. Defendant did so because Plaintiff’s Content Specifications contain
the following notice: “Copyright © 2002 by The American Registry of
Radiologic Technologists. All rights reserved. Reproduction in whole or
part is not permitted without the written consent of The ARRT.”
26.

Course Providers offered students two options: a “class option”

and a “mail option.” Students who chose the “mail option” received a study
guide in the mail. Students who chose the “class option” received the study
guide and were entitled to attend a one-day course. Course Providers
charged students $245.00 for the “class option” and $128.91 for the “mail
option.”
27.

Course Providers’ website marketed Defendant’s services to

individuals hoping to pass a limited scope radiography examination. The
website stated: “Every state has a different name but the same exam is given
in every state by the ARRT (American Registry for Radiologic
Technologists) the highest of credentialing agents in the field of radiology.”
(Pl. Ex. 74.)
28.

The Course Providers website contained a notice that read:

“Copyright 2007–2009 © Course Providers. All rights reserved.” (Pl. Ex.
74.)
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29.

In order to identify prospective students, Defendant regularly

sent letters to states that use Plaintiff’s Limited Scope and BDEO
examinations, requesting the names and addresses of individuals who had
applied to take the examinations. Defendant sent letters to state agencies in
Arizona, Arkansas, California, Florida, Iowa, Kentucky, Nebraska, and
Virginia. (Pl. Exs. 49, 59, 60, 62, 63, 66, 77, 91, 103, 104, 105, 109, 112.)
30.

When state agencies refused to provide the requested

information, Defendant cited to the applicable public records law to obtain
disclosure of the information she sought. (Pl. Exs. 62, 77.)
31.

On at least one occasion, Defendant signed the public records

request “Robert Bennett,” which is her husband’s name. (Pl. Ex. 62.)
32.

In the letters, Defendant indicated that she provided instruction

to individuals taking Plaintiff’s Limited Scope and BDEO examinations.
Defendant also implied that she was affiliated with ARRT.
33.

For example, Defendant sent a letter to the Kentucky

Department for Public Health on January 18, 2007. The letter stated:
My name is Diane Wood and I am a course provider for the
ARRT Limited Scope Radiology Exam and the ARRT Limited
Scope Bone Densitometry Machine Operator Exam. I am
currently under review by the ARRT as an Item Writer and part
of their Exam Committee.
We have been researching the success rate of applicants passing
the Limited Scope Radiology Exam and our research shows that
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your state’s success rate average is low. You average 150
exams a year, your pass rate average is less than 35%. We
would like to request the names and addresses of your
applicants who are taking the exam in the next 90 days and also
names and addresses of the applicants who have failed the
ARRT exam in the past 6 months. It is our intention to work
with each applicant individually providing additional
educational materials so they can have a more successful
outcome in the future and increase the low success rate
averages within this state.
(Pl. Ex. 60.)
34.

Defendant was never a member of ARRT’s Exam Committee.

35.

The Kentucky Department for Public Health forwarded

Defendant’s letter to the ARRT.
36.

On January 31, 2007 Defendant received a letter from Thomas

Kracker, Plaintiff’s Assistant Executive Director. Kracker indicated that
Plaintiff intended to initiate an investigation regarding Defendant’s claim
that she was affiliated with ARRT.
37.

On February 5, 2007, Defendant replied to Kracker. Her letter

stated: “I can see, in retrospect, how the receiver [of my letter] could
misconstrue the relationship between Course Providers and ARRT. When
stating “WE,” I meant Course Providers. I in no way meant to insinuate a
relationship between Course Providers and ARRT, however I can now see
how the letter could imply such. My sincere apologies.” Defendant also

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noted that she would contact all the states she had sent letters to in order to
clear up any confusion. (Pl. Ex. 64.)
38.

Course Providers, and Defendant, promised to provide students

with questions that appeared on the Examinations.
39.

The Course Providers website stated:

After the ARRT send you your candidate number they will also
send you a “Content Specifications” outline. This is an outline
of everything you can expect to see on the exam . . . .
We specialize in exam preparation and what we provide is a
tailor made study guide. This guide follows the ARRT content
specifications exactly, including mock exams with real
questions we have recieved [sic] from previous students who
have taken the exam . . . .
In addition we send you any new questions we get from
students recently taking their exam so you have as many up to
date questions as possible . . . .
(Pl. Ex. 74 (emphasis added).)
40.

In an e-mail to prospective student Rhonda Sims dated July 29,

2007, Defendant wrote:
Additionally we send you more mock exams to practice and
any new questions I get from students who are taking their
exam before you do I will email you as soon as I get them.
After a student that we work with takes their exam they call us
or email us with examples of their test questions and we
incorporate those into the mock exams we give you. As you
know already, the ARRT has 4 different exams they rotate
through, you will never get the same exam twice so we try to
give you as many examples of what to expect on any one of
those 4 tests.
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(Pl. Ex. 80 (emphasis added).) Defendant sent e-mails promising real
examination questions to other prospective students on August 30, 2007,
January 5, 2008, and January 26, 2008. (Pl. Exs. 81, 84, 96.)
41.

As promised, Defendant actively solicited ARRT examination

questions from students who had recently taken the Examinations.
42.

On January 29, 2008, Anthony Macca (“Macca”), one of

Defendant’s students, took the Limited Scope examination. (Pl. Ex. 54 at
ARRT 001789.)3 In an e-mail Defendant sent to Macca that day, she wrote:

3

Defendant moved to strike Plaintiff’s Exhibit 54 before trial on the basis
that Plaintiff did not disclose this evidence during discovery. (Doc. # 75.)
When Plaintiff attached Exhibit 54 to its response to Defendant’s Motion to
Strike, Defendant moved to strike Plaintiff’s response. (Doc. # 78.)
Defendant then renewed her objections to Exhibit 54 at trial.
The Court concludes that Plaintiff’s late production of the newlyproduced documents was harmless, and therefore admits Plaintiff’s Exhibit
54 into evidence. In evaluating whether a discovery violation is harmless,
the Court must look to four factors: “(1) the importance of the evidence; (2)
the prejudice to the opposing party of including the evidence; (3) the
possibility of curing such prejudice by granting a continuance; and (4) the
explanation for the party’s failure to disclose.” Tex. A&M Research Found.
v. Magna Transp., Inc., 338 F.3d 394, 402 (5th Cir. 2003). In this case, the
first factor weighs in favor of admission; the newly-produced documents are
“of paramount importance,” United States v. Filson, 347 F. App’x 987, 990
(5th Cir. 2009), because they relate directly to one of the key issues at trial:
whether Defendant had access to ARRT’s examination questions. The
second factor also weighs in favor of admission of the newly-produced
documents. Defendant was not prejudiced by their late disclosure, since
they demonstrate what she already knew or could have discovered: that her
students were taking ARRT examinations. Defendant would not, therefore,
have benefitted from having these documents long ago. Finally, Plaintiff has
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“I just wanted to check with you to see if you took your exam . . . . If you
. . . have taken your exam please forward any questions to me so that I can
forward them to other student’s [sic], as you can see, it really helps!” (Pl.
Ex. 42.) Macca replied: “Hey, thanks for all emails they helped a ton, i took
my test today but i can not remember the questions 100%, i wish i could im
going to keep trying to peice [sic] them together.” (Id.) In response,
Defendant wrote: “You have GOT TO REMEMBER some questions! You
must! Sit down right now and call Tina and you both try to come up with
some!!! They do really help!!! Even if you could just remember the
questions, you don’t have to remember all the choices! Email me those as
soon as you can!” (Id.)
43.

On January 8, 2008, Defendant e-mailed Darseth Peraza

(“Peraza”), one of her students. She wrote: “Any questions you can
remember after taking your exam please email them so I can pass them onto
other students!” (Pl. Ex. 43.) Peraza took the Limited Scope examination
on December 29, 2008. (Pl. Ex. 54 at ARRT 001781.)

provided an explanation for its failure to disclose the documents earlier.
Plaintiff did not believe that they were relevant, because Defendant did not
explicitly raise the defense that the questions she solicited were from nonARRT examinations until recently. Accordingly, the Court denies
Defendant’s Motions to Strike. (Docs. ## 75, 78.)
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44.

On September 19, 2008, Defendant sent an e-mail to another

student, Adam Brown (“Brown”). She wrote: “I just wanted to check back
with you to see how you did on your exam and if there were any questions
you can remember that I can pass along to other students currently taking it.”
(Pl. Ex. 32.) Brown had taken the Limited Scope examination one month
earlier, on August 11, 2008. (Pl. Ex. 54 at ARRT001477.)
45.

On February 15, 2008, Annie Phillip, one of Defendant’s

students, sent Defendant an e-mail that stated: “I will try to remember the
questions on the exam this time. I will let you know after taking the test.”
(Pl. Ex. 75.) Annie Phillip took the Limited Scope examination on March 5,
2008. (Pl. Ex. 54 at ARRT001777.)
46.

Defendant succeeded in obtaining ARRT examination

questions from students who had already taken the Examinations, and then
sent the questions she obtained to students preparing to take the same
examination.
47.

On April 29, 2008, Defendant sent Brown an e-mail with eight

questions and corresponding answer choices. “Here are the most recent
questions from students just taking it,” the e-mail read. (Pl. Ex. 22.)
48.

On May 29, 2008, Defendant sent Brown and three other

students an e-mail containing fourteen questions. The subject line of the e17

mail was “New Questions.” The next day, Defendant e-mailed the same
students with several more questions, noting: “Heard from another student
and here are a few more test questions.” (Pl. Ex. 34.)
49.

On March 13, 2009, Defendant sent Brown an e-mail

containing 82 “New Questions from students taking the exam.” (Pl. Ex. 25.)
50.

Nicole Steinhaus (“Steinhaus”) and Frank Paduganan

(“Paduganan”), two of Defendant’s students, confirmed that Defendant sent
them questions obtained from students who had already taken the
Examinations. (Pl. Ex. 132, Paduganan Depo. at 13–16, 23, 37–38, 41–42;
Pl. Ex. 133, Steinhaus Depo. at 18–20.) Steinhaus took the Limited Scope
examination on July 8, 2008, November 22, 2008, and August 15, 2009. (Pl.
Ex. 54 at ARRT001463–1464). Paduganan took the Limited Scope
examination on June 14, 2008, August 20, 2008, and November 13, 2008.
(Pl. Ex. 54 at ARRT001456.)
51.

Plaintiff was forced to retire 87 questions from its Test Item

Bank as a result of Defendant’s actions. It costs Plaintiff approximately
$1,000 to develop each question in its Test Item Bank.
52.

Nancy Cavallin (“Cavallin”) works for Plaintiff as an Exam

Development Coordinator. From 2001 to 2009, she was responsible for
developing Plaintiff’s Limited Scope examination.
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53.

In February 2008, Cavallin attempted to purchase the “class

option” from the Course Providers website. Her purchase was denied, and
she received a refund. (Def. Ex. 8.) Defendant sent Cavallin an e-mail
explaining that Course Providers had refunded her purchase because it was
not yet authorized to provide test preparation materials to applicants in her
state. (Def. Ex. 9.)
54.

Defendant testified that she searched the Internet for Cavallin’s

name when Cavallin attempted to purchase Defendant’s course in February
2008, and discovered that Cavallin worked for ARRT. Defendant claims
that this led her to believe ARRT approved of her conduct. The Court does
not find this testimony credible.
55.

Because Cavallin’s purchase was denied, she did not obtain

access to Defendant’s study guides or to the questions Defendant had
disseminated by e-mail until they were provided to ARRT during discovery.
She recognized many as ARRT questions immediately.
56.

Plaintiff submitted side-by-side comparisons of its examination

questions and the questions Defendant disseminated. The ARRT
examination questions and the information Defendant distributed in e-mails
contain very similar content. In most cases, similar words and phrases

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appear in the copyrighted work and in the allegedly infringing work, and
both works address the same topic.
57.

After Plaintiff filed suit against Defendant, Defendant consulted

the resources she used to create her study guides. She compared the
questions she disseminated to her students to questions found in the
resources she used, and believes they are similar. She created a document
comparing her questions, ARRT questions, and questions found in other
resources. (Def. Ex. 19.)
58.

Defendant testified that she was “unaware of copyright laws in

general” and was not aware that “questions were copyrightable” before this
lawsuit was filed against her. (TR Day 2 at 154:2–5, 168:24.) The Court
does not find this testimony credible.
59.

In June 2009, Defendant removed from the Course Providers

website all references to providing students with “real questions,” but left
the website otherwise intact. (Id. at 24:5–25.) Defendant was no longer
teaching exam preparation courses, but hoped to continue offering them
through Course Providers once this lawsuit was resolved. (Id. at 25–26.)
However, in August 2010, Course Providers filed for bankruptcy.
60.

Around the same time—August 2010—Defendant formed a

company called Radiology Course Providers, LLC. Defendant intends to
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offer exam preparation courses through Radiology Course Providers, LLC
“someday,” but currently offers only continuing education courses and
radiation safety training. (Id. at 26:8–13.)
61.

In October 2010, Defendant sent an email to a company that

sells educational materials, asking for information about the company’s
Limited Scope Exam Preparation Course. (Pl. Ex. 53.) Defendant signed
the email “Abby Montgomery/Assistant” to make it appear as though her
company had employees, and indicated that her company had a “board,”
although it did not, in order to get a better price. (TR Day 2 at 14–16.)
62.

The Court rejects many of Defendant’s self-serving statements

because the Court finds that Defendant’s testimony generally lacks
credibility. Some of Defendant’s testimony was directly contradicted by
incontrovertible evidence. For example, Defendant’s testimony that she was
unaware of copyright laws until Plaintiff filed suit against her was plainly
false in light of the fact that Defendant requested permission to reproduce
Plaintiff’s copyrighted Content Specifications, and included a notice on the
Course Providers website that read “Copyright 2007–2009 © Course
Providers.” Evidence adduced at trial also establishes that Defendant has a
history of manipulating the truth: she falsely represented to government
agencies that she was a member of ARRT’s Exam Committee; she testified
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under oath that she forged her husband’s signature on a document sent to a
government agency (TR Day 1 at 95:10–17); and after this lawsuit was filed,
she used a fake name and claimed to have a board of directors when
corresponding with a potential business partner in order to obtain a better
price on a product. Most troublingly, Defendant submitted a Declaration to
this Court in which she asserted under penalty of perjury that she has never
asked her students or other persons to provide her with actual questions that
appeared on any examination created or administered by Plaintiff. (Case
No. SA-09-CV-00767-XR, Doc. # 67 Ex. 1 ¶ 8.) At trial, Defendant
admitted that that statement was “not accurate.” (TR Day 1 at 154:21–22.)
Defendant also pointed out that she submitted an Amended Declaration,
which stated:
I would like my statement to be amended to, I do not now
solicit nor have I at any time in the past solicited students or
other persons to provide me with actual questions. I have in the
past however asked students after taking their exam for
questions concerning factual information, not actual questions.
The purpose of asking students was to discern the topics on the
exams and to steer students in the right direction for focusing
their studies. . . . [T]he questions I pass along to other students
do not compromise actual questions from ARRT exams instead
they are Limited X-Ray Licensure, LLC or Defendants
recasting of the topics tested into question format . . . .
(Adv. Proc. No. 10-05137-LMC, Doc. # 56 ¶ 2–3.) This Amended
Declaration was submitted shortly after Plaintiff obtained emails through
22

third party discovery and a forensic examination of Defendant’s computer in
which Defendant solicited ARRT examination questions from her students.
(See Adv. Proc. No. 10-05137-LMC, Doc. # 44 ¶¶ 2–5.)
II.

CONCLUSIONS OF LAW

A.

Defendant’s Affirmative Defenses
63.

Defendant argues that Plaintiff’s claims are barred by laches

and by the doctrine of equitable estoppel.
64.

To establish that Plaintiff’s causes of action are barred by

laches, Defendant must show: (1) a delay in asserting the rights or claims;
(2) that the delay was not excusable; and (3) that the delay caused undue
prejudice to Defendant. Geyen v. Marsh, 775 F.2d 1303, 1310 (5th Cir.
1985).
65.

Defendant points out that in February 2008 when Cavallin

attempted to purchase a study guide from the Course Providers website, the
website contained language indicating that Defendant sent real ARRT
examination questions to students preparing to take the Examinations. Thus,
Defendant reasons, Cavallin must have seen that language and been put on
notice of Plaintiff’s infringing activity. That being so, Defendant argues,
Plaintiff’s failure to bring suit or warn Defendant that her conduct was
unlawful caused Defendant undue prejudice.
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66.

The Court concludes that Plaintiff’s claims are not barred by

laches because Defendant failed to establish that Plaintiff was actually aware
of Defendant’s misconduct in February 2008. Cavallin testified that she did
not recall going to any page on the Course Providers website other than the
page on which she attempted to purchase the study guide. Cavallin’s
purchase request was denied, so she did not actually obtain access to
Defendant’s study guides or to the questions Defendant sent to her students.
No other witness testified that any employee of ARRT was aware, in
February 2008, that Defendant was disseminating ARRT questions to her
students. Dr. Jerry Reid, Plaintiff’s Executive Director, testified that in
February 2008, ARRT was in the process of investigating Defendant, but did
not discover that she was distributing their copyright-protected questions
until later in the investigation. (TR Day 2 at 141–142.)
67.

Defendant’s estoppel defense fails for the same reason.

Plaintiff’s claims are barred under the doctrine of equitable estoppel only if:
(1) Plaintiff knew the facts of Defendant’s alleged misconduct; (2) Plaintiff
intended that its conduct be acted upon or acted in such a way that
Defendant had a right to believe that Plaintiff so intended; (3) Defendant
was ignorant of the true facts; and (4) Defendant relied on Plaintiff’s
conduct to its detriment. Carson v. Dynegy, Inc., 344 F.3d 446, 453 (5th
24

Cir. 2003). As discussed above, Defendant failed to establish that Plaintiff
knew the facts of Defendant’s misconduct.
B.

Copyright Infringement Claim
68.

“A copyright infringement action requires the plaintiff to prove

ownership of a valid copyright and copying by the defendant.” Norma
Ribbon & Trimming, Inc. v. Little, 51 F.3d 45, 47 (5th Cir. 1995).
69.

The first element—ownership of a valid copyright—is

established by proving the originality and copyrightability of the material
and compliance with statutory formalities. Allied Mktg. Grp., Inc. v. CDL
Mktg., Inc., 878 F.2d 806, 811 (5th Cir. 1989).
70.

On April 11, 2013, this Court issued an Order: (1) Denying

Defendant’s Motion for Summary Judgment; (2) Denying Plaintiff’s CrossMotion for Summary Judgment; (3) Denying Defendant’s Motion for
Sanctions/Contempt; and (4) Denying Defendant’s Motion for Sanctions
(“Order Denying Summary Judgment”). (Doc. # 61.) In the Order Denying
Summary Judgment, the Court held that Plaintiff owns a valid copyright in
the questions contained in its Test Item Bank. (Id. at 13.) The Court noted
that Plaintiff’s Certificate of Registration constitutes prima facie evidence of
the validity of the copyright, 17 U.S.C. § 410(c), and found that Defendant
failed to rebut the presumption of validity. (Id. at 8–13.) The Court rejected
25

Defendant’s argument that Plaintiff owns a copyright only in the
compilation of examination questions (i.e., the Test Item Bank in its
entirety) and not in the questions themselves. (Id. at 10.)
71.

The second element of a copyright infringement claim—

actionable copying—is established by proving that: (1) the alleged infringer
actually copied the copyrighted material (often referred to as “factual
copying”); and (2) substantial similarity exists between the copyrighted
work and the allegedly infringing work. See Bridgmon v. Array Sys. Corp.,
325 F.3d 572, 575 (5th Cir. 2003).
72.

“As direct evidence of copying is rarely available, factual

copying may be inferred from (1) proof that the defendant had access to the
copyrighted work prior to creation of the infringing work and (2) probative
similarity.” Peel & Co., Inc. v. The Rug Mkt., 238 F.3d 391, 394 (5th Cir.
2001). “[A]ccess through a third party is legally sufficient.” KepnerTregoe, Inc. v. Leadership Software, Inc., 12 F.3d 527, 533 n.6 (5th Cir.
1994) (quoting Arica Inst., Inc. v. Palmer, 970 F.2d 1067, 1074 (2d Cir.
1992)); see also Kamar Int’l, Inc. v. Russ Berrie & Co., 657 F.2d 1059, 1062
(9th Cir. 1981) (“[E]vidence that a third party with whom both the plaintiff
and defendant were dealing had possession of plaintiff’s work is sufficient to
establish access by the defendant. . . .”) (quoting 3 Nimmer on Copyright,
26

§ 13.02(A) at 13–11 (1981)). Two works are probatively similar if there are
“any similarities between the two works (whether substantial or not) that, in
the normal course of events, would not be expected to arise independently in
the two works and that therefore might suggest that the defendant copied
part of the plaintiff’s work.” Positive Black Talk Inc. v. Cash Money
Records Inc., 394 F.3d 357, 370 (5th Cir. 2004), abrogated on other grounds
by Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010).
73.

Based on the factual findings set forth above, the Court

concludes that Defendant actually copied Plaintiff’s copyrighted questions.
74.

The evidence demonstrates that Defendant had access to

Plaintiff’s questions through her students. Defendant solicited ARRT
examination questions from students who had recently taken the
Examinations, and her students complied. The e-mails she sent to students
preparing to take the Examinations contained questions Defendant described
as “New Questions from students taking the exam.” (Pl. Ex. 25.) Since all
of Defendant’s students took, or were preparing to take, ARRT
examinations, the questions she disseminated could not have come from any
source other than an ARRT examination.
75.

The evidence also demonstrates that the questions Defendant

disseminated are probatively similar to the ARRT questions Defendant is
27

accused of copying. Plaintiff’s side-by-side comparisons show that
Defendant’s questions are too similar to ARRT’s examination questions for
the similarities to have arisen independently. For example, in several
instances Defendant’s question includes the same wrong answer choices as
the corresponding ARRT question. In other cases, Defendant’s question
correctly describes a drawing or an x-ray as it appears in Plaintiff’s Test
Item Bank.
76.

For factual copying to be legally actionable, there must be

substantial similarity between the original work and the copy. See Creations
Unlimited, Inc. v. McCain, 112 F.3d 814, 816 (5th Cir. 1997).
77.

“[A] side-by-side comparison must be made between the

original and the copy to determine whether a layman would view the two
works as ‘substantially similar.’” Id.; see also Nihon Keizai Shimbun, Inc.
v. Comline Bus. Data, Inc., 166 F.3d 65, 70 (2d Cir. 1999) (“The standard
test in determining substantial similarity is the ‘ordinary observer test’:
whether an average lay observer would overlook any dissimilarities between
the works and would conclude that one was copied from the other.”).
78.

Plaintiff’s side-by-side comparisons establish that many of the

questions Defendant disseminated are substantially similar to ARRT’s

28

copyrighted questions. For example, one of the copyrighted questions in
Plaintiff’s Test Item Bank asked:
According to the NCRP (National Council on Radiation
Protection and Measurements), which of the following has the
highest occupational radiation exposure limit?
a.
b.
c.
d.

thorax
head
hands
trunk

Answer: c.
Defendant disseminated a question that read:
Which can handle the most radiation according to the NCRP?
Torso, Head, Hand.
79.

Although not identical, the copyrighted question and the

infringing question are substantially similar. Educ. Testing Servs. v. Simon,
95 F. Supp. 2d 1081, 1088 (C.D. Cal. 1999) (“Substantial similarity does not
require verbatim copying; a coaching school cannot escape copyright
liability by claiming that its copying of secure test questions is not word-forword.”). Both ask the very same question, and the infringing question
effectively lists the same correct and incorrect answer choices as the
copyrighted question. A lay observer would overlook the dissimilarities and
conclude that Defendant’s question was copied from Plaintiff’s examination.

29

80.

The fact that Defendant copied, at most, less than 100 questions

from the many thousands contained in Plaintiff’s Test Item Bank does not
excuse the infringement. See Harper & Row, Publishers, Inc. v. Nation
Enters., 471 U.S. 539, 564–65 (1985) (“[A] taking may not be excused
merely because it is insubstantial with respect to the infringing work.”);
Educ. Testing Servs. v. Katzman, 793 F.2d 533, 542–43 (3d Cir. 1986)
(holding that the copying of even a few questions out of thousands justified a
preliminary injunction where the qualitative value of the material, to both
the originator and the plagiarist, was high).
81.

Defendant infringed Plaintiff’s copyright in its Test Item Bank.
Damages

82.

Plaintiff seeks statutory damages. Section 504(c) of the

Copyright Act provides that a
copyright owner may elect, at any time before final judgment is
rendered, to recover, instead of actual damages and profits, an award
of statutory damages for all infringements involved in the action, with
respect to any one work . . . in a sum of not less than $750 or more
than $30,000 as the court considers just.
17 U.S.C. § 504(c)(1). “[A]ll the parts of a compilation or derivative work
constitute one work.” 17 U.S.C. § 504(c)(1); see also Bryant v. Media Right
Prods., Inc., 603 F.3d 135, 141 (2d Cir. 2010) (“[A]ll parts of a compilation

30

must be treated as one work for the purpose of calculating statutory
damages.”).
83.

“[S]tatutory damages are to be calculated according to the

number of works infringed, not the number of infringements.” Walt Disney
Co. v. Powell, 897 F.2d 565, 569 (D.C. Cir. 1990). Accordingly, where, as
here, there are multiple infringements of one compilation, the copyright
owner is entitled to one award of statutory damages.
84.

If the copyright owner proves, and the Court finds, that

infringement was committed willfully, the Court may in its discretion
increase the award of statutory damages to a sum of not more than $150,000.
17 U.S.C. § 504(c)(2).
85.

“Willfulness is shown where the infringer was provided with

oral or written notice of its transgression of the copyright,” or “where the
defendant has recklessly disregarded the plaintiff’s rights, or upon a showing
that the defendant knew or should have known it infringed upon a
copyrighted work.” Lance v. Freddie Records, Inc., 986 F.2d 1419, at *2
(5th Cir. 1993) (unpublished table decision). For infringement to be
“willful” within the meaning of the statute, it must be done “with knowledge
that the . . . conduct constitutes infringement,” not merely with an “intent to
copy.” Princeton Univ. Press v. Mich. Document Servs., Inc., 99 F.3d 1381,
31

1392 (6th Cir. 1996) (quoting 3 Nimmer on Copyright, § 14.04[B][3]
(1996)).
86.

The Court concludes that Defendant committed infringement

willfully. Based on the evidence adduced at trial, the Court finds that
Defendant was aware that Plaintiff’s questions were copyright protected.
87.

Furthermore, even if Defendant had not been aware that

Plaintiff’s questions were protected by copyright, her actions would have
betrayed a reckless disregard for the rights Plaintiff has in its questions. As
the provider of an exam preparation course, Defendant must have, or should
have, known that her conduct was improper—her contract with Plaintiff
expressly prohibited it, and, as Plaintiff points out, “basic common sense”
dictates that cheating is wrong. Furthermore, Defendant was not unfamiliar
with the law in general, as evidenced by her ability to cite to applicable laws
in order to obtain access to public records from state agencies. Defendant
was also familiar with copyright laws specifically, as evidenced by the fact
that she requested permission to reproduce Plaintiff’s Content
Specifications. The fact that Plaintiff’s Content Specifications—which
contain less sensitive and secure information than the Examinations—are
protected by copyright should have signaled to Defendant that the questions
themselves are also protected. An online search of the United States
32

Copyright Office’s Public Catalog would have revealed that Plaintiff’s Test
Item Bank—and each of its test forms—is copyright-protected. These
factors, together, compel the conclusion that Defendant recklessly
disregarded Plaintiff’s rights. See Nat’l Bd. of Med. Exam’rs v. Optima
Univ. LLC, No. 1:09-CV-01043, 2011 WL 7615071, at *9 (W.D. Tenn.
Sept. 29, 2011) (holding that the owner of a preparation course company
either knew or acted in reckless disregard of the fact that medical licensing
examination questions were copyrighted and reproducing them was
unlawful); Fallaci v. New Gazette Literary Corp., 568 F. Supp. 1172, 1173
(S.D.N.Y. 1983) (holding that the publisher of a copyrighted newspaper
should have been aware that its unauthorized republication of an article from
the Washington Post constituted copyright infringement).
88.

The Court has broad discretion to set the amount of statutory

damages within the minimum and maximum amounts prescribed by the
Copyright Act. Nat’l Football League v. PrimeTime 24 Joint Venture, 131
F. Supp. 2d 458, 472 (S.D.N.Y. 2001). This “broad discretionary power
given courts to make such an award serves the dual purposes of the
Copyright Act: to compensate copyright owners and to provide a deterrent
for would-be infringers.” Id. (quoting Schwartz-Liebman Textiles v. Last
Exit Corp., 815 F. Supp. 106, 108 (S.D.N.Y. 1992)).
33

89.

Based on the Court’s finding of willfulness, the Court may

award up to $150,000 in statutory damages to Plaintiff. The Court
concludes that Plaintiff is entitled to an award of $87,000. Defendant
willfully distributed Plaintiff’s copyright-protected questions for profit.
Defendant’s actions threatened the interests of a number of groups: state
licensing boards, which rely on the integrity of ARRT Examinations for
state licensing purposes; the general public, which relies on the examination
results as an indicator of the examinee’s competence; and other examinees,
who are entitled to assurance that no other examinee enjoys an unfair
advantage. See Nat’l Council of Exam’rs for Eng’g & Surveying v.
Cameron-Ortiz, 626 F. Supp. 2d 262, 267 (D.P.R. 2009). Defendant’s
conduct also threatened Plaintiff’s interest in protecting not only its
intellectual property but also its reputation by ensuring that the information
it provides is reliable. See Murray v. Educ. Testing Servs., 170 F.3d 514,
517 (5th Cir. 1999) (“ETS has the right to protect its own reputation by
assuring the reliability of the information it provides.”). Finally, as a result
of Defendant’s actions, Plaintiff was forced to retire 87 questions, each of
which cost Plaintiff approximately $1,000 to develop. Accordingly, $87,000
will compensate Plaintiff for the injuries it sustained. It will also serve to
deter Defendant—who intends to resume teaching exam preparation courses
34

once this lawsuit is resolved—from committing misconduct of this sort
again.
Attorney’s Fees
90.

Pursuant to Section 505 of the Copyright Act, the Court is

authorized to award costs and attorney’s fees to the prevailing party. 17
U.S.C. § 505. In the Fifth Circuit, “an award of attorney’s fees to the
prevailing party in a copyright action, although left to the trial court’s
discretion, ‘is the rule rather than the exception and should be awarded
routinely.’” Positive Black Talk, 394 F.3d at 380 (quoting McGaughey v.
Twentieth Century Fox Film Corp., 12 F.3d 62, 65 (5th Cir. 1994)).
However, “recovery of attorney’s fees is not automatic.” Virgin Records
Am., Inc. v. Thompson, 512 F.3d 724, 726 (5th Cir. 2008).
91.

The Supreme Court has noted that there is no “precise rule or

formula” for determining whether to award attorney’s fees. Fogerty v.
Fantasy, Inc., 510 U.S. 517, 534 (1994) (quoting Hensley v. Eckerhart, 461
U.S. 424, 436 (1983)). Considerations that may guide a court’s discretion
include the need for compensation and deterrence; the relative financial
strength of the parties; the amount of damages at stake; and whether the
party acted in bad faith. Lieb v. Topstone Indus., Inc., 788 F.2d 151, 156
(3d Cir. 1986). “In the district court’s discretion, fees need not be awarded
35

if the award would not vindicate underlying statutory policies or it would be
inequitable.” Warner Bros. Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120,
1127 (2d Cir. 1989).
92.

The Court concludes that Plaintiff is entitled to recover its

reasonable attorney’s fees and costs. The relative financial strength of the
parties counsels against awarding costs and attorney’s fees to Plaintiff.
However, other considerations strongly weigh in favor of an award.
93.

An award is warranted to compensate Plaintiff for years of

avoidable litigation. Plaintiff was compelled to initiate the lawsuit because
of Defendant’s willful and egregious copyright infringement, and
Defendant’s bad-faith litigation tactics prolonged it unnecessarily. For
example, during discovery, Plaintiff sought all documents relating to
Defendant’s communications with her students. Defendant did not comply
with Plaintiff’s discovery requests; she failed to turn over emails in which
she asked her students to send her questions from ARRT examinations.
Plaintiff was forced to file a motion to compel a forensic examination of
Defendant’s computers, which the Court granted (Case No. SA-09-CV00767-XR, doc. # 90). Defendant filed bankruptcy, and the case was stayed
before the forensic examination could take place. Plaintiff renewed its
motion to compel a forensic examination before the Bankruptcy Court, and
36

again the motion was granted. (Adv. Proc. No. 10-05137-LMC, Doc. # 64.)
Defendant nevertheless refused to comply, and Plaintiff was forced to file a
motion to compel compliance with the Court’s Order. (Adv. Proc. No. 1005137-LMC, doc. # 76.) Furthermore, this case proceeded to trial solely as a
result of Defendant’s misrepresentations to the Court. The Court denied
Plaintiff’s Motion for Summary Judgment because Defendant asserted, in
her response, that she taught students preparing to take non-ARRT
examinations. The evidence at trial established that this assertion was false,
and that Defendant knew it to be false when she made it.
94.

An award of costs and attorney’s fees will also serve the goal of

deterrence. Defendant testified that she intends to resume teaching exam
preparation courses when this case is resolved. Her conduct while litigating
the instant action indicates that she does not recognize that her conduct was
unlawful, and is willing to lie to avoid liability. However, an award of
attorney’s fees may serve to deter her from engaging in unlawful conduct in
the future.
95.

Accordingly, Plaintiff is directed to file a motion for its

reasonable attorney’s fees and costs incurred in litigating this matter within
fourteen (14) days of the date of this Order. Defendant shall have fourteen

37

(14) days to file objections. The Court shall decide the amount of fees and
costs to be awarded on the basis of the parties’ submissions.
Dischargeability of Defendant’s Debt
96.

In September 2010, after Plaintiff initiated this lawsuit,

Defendant filed a voluntary petition for relief under Chapter 7 of the United
States Bankruptcy Code. Plaintiff argues that the debt Defendant owes to
Plaintiff is nondischargeable pursuant to 11 U.S.C. § 523(a)(6).
97.

Section 523(a)(6) of the Bankruptcy Code provides that a debt

“for willful and malicious injury by the debtor to another entity or to the
property of another entity” is not dischargeable under the Bankruptcy Code.
11 U.S.C. § 523(a)(6).
98.

In Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998), the Supreme

Court held that nondischargeability under § 523(a)(6) requires “a deliberate
or intentional injury, not merely a deliberate or intentional act that leads to
injury.” In other words, a debt is nondischargeable only if it arises from an
act committed with the intent to cause injury. Id.
99.

The Fifth Circuit has interpreted Kawaauhau to mean that “an

injury is ‘willful and malicious’ where there is either an objective substantial
certainty of harm or a subjective motive to cause harm.” In re Miller, 156
F.3d 598, 606 (5th Cir. 1998). Thus, a debt is dischargeable if the plaintiff’s
38

injury was either intentionally inflicted or certain to occur when the debtor
committed the injurious act. In re Williams, 337 F.3d 504, 509 (5th Cir.
2003) (“The dischargeability of Williams’s two debts to the Union,
therefore, depends upon the intentional or certain nature of the injury
Williams inflicted upon the Union when he breached the [contract].”).
100.

The Court has found that Defendant willfully infringed

Plaintiff’s copyright. An act of willful infringement necessary qualifies as
an act committed with the intent to cause injury: since “copyright
infringement is a categorically harmful activity,” harm is certain to follow
from a willful act of infringement. In re Braun, 327 B.R. 447, 451 (Bankr.
N.D. Cal. 2005); see also In re Smith, No. EC-009-1117, 2009 WL 7809005,
at *9 (9th Cir. BAP Dec. 17, 2009) (“[I]ntentional infringement is
tantamount to intentional injury under [§ 523(a)(6)] . . . . It is impossible to
separate the ‘conduct’ of trademark infringement from the ‘injury’ of
trademark infringement when considering the defendant’s intent.”); In re
Ahmed, 359 B.R. 34, 39 (Bankr. E.D.N.Y. 2005) (finding that debt was
nondischargeable where district court had previously determined that
infringement was committed willfully for purposes of enhanced statutory
damages award).

39

101.

Moreover, even if Defendant had not been aware that Plaintiff’s

questions were copyrighted, harm was certain to occur when she sent ARRT
examination questions to students preparing to take the Examinations.
Cheating is, by its very nature, harmful. Examinations are meant to assess
the knowledge, aptitude, or ability of examinees. Cheating distorts the
results of an examination—indeed, is intended to distort the results—and
therefore diminishes its value as an assessment tool. Defendant’s conduct
was designed to help possibly unqualified individuals obtain state licenses.
It therefore undercut the value of state licensure and endangered Plaintiff’s
reputation among states that rely on the Examinations as an appropriate
measure of an individual’s knowledge in a particular area.
102.

Accordingly, Defendant’s debt is nondischargeable under

§ 523(a)(6).
C.

Breach of Contract Claim
103.

Under Texas law, “[t]he elements of a breach of contract claim

are: (1) the existence of a valid contract; (2) performance or tendered
performance by the plaintiff; (3) breach of the contract by the defendant; and
(4) damages to the plaintiff resulting from that breach.” Wright v. Christian
& Smith, 950 S.W.2d 411, 412 (Tex. App. 1997).

40

104.

In the Court’s Order Denying Summary Judgment, the Court

held that there was no dispute as to the existence of a valid contract between
Plaintiff and Defendant. (Doc. # 61 at 23–24.) By signing Plaintiff’s
Application annually, Defendant agreed to be bound by the terms of
Plaintiff’s Governing Documents, including Plaintiff’s Standards of Ethics.
105.

In the Court’s Order Denying Summary Judgment, the Court

also concluded that there was no dispute that Plaintiff performed by
renewing Defendant’s registration annually. (Doc. # 61 at 25.) Defendant
now asserts that Plaintiff did not perform its obligations under the contract
because it did not notify Defendant that her conduct violated the ARRT’s
Standards of Ethics. This argument fails. ARRT’s Standards of Ethics do
not require Plaintiff to notify a registered technologist if he or she violates
the Standards of Ethics. In fact, the Standards of Ethics explicitly state:
Conduct that violates the ARRT’s Rules of Ethics may also
violate applicable state or federal law. In addition to the
potential sanctions under the Standards of Ethics, the ARRT
may, without giving prior notice, pursue civil and/or criminal
penalties against the Registered Technologist . . . .
(Def. Ex. 10 at 4.) Defendant does not argue that Plaintiff failed to perform
in any other way.
106.

Based on the factual findings set forth above, the Court now

concludes that Defendant breached her contract with Plaintiff. Defendant
41

agreed to be bound by Plaintiff’s Standards of Ethics, which prohibit, among
other things, “disclosing information concerning any portion of a future,
current, or previously administered examination of ARRT,” and “using or
purporting to use any portion of examination materials which were obtained
improperly or without authorization for the purpose of instructing or
preparing any applicant for examination.” Plaintiff clearly violated these
provisions by soliciting questions from examinees and disseminating the
questions she obtained to students preparing to take the Examinations.
107.

The Court also concludes that Defendant’s breach caused

Plaintiff to suffer actual damages. Plaintiff was forced to retire 87 questions
from its Test Item Bank as a result of Defendant’s breach. The evidence
presented at trial established that the direct cost of developing each question
is approximately $1,000. Thus, Plaintiff lost the value of approximately
$87,000 of its investment as a result of Defendant’s actions.
108.

Accordingly, the Court finds that Defendant is liable for

breaching her contract with Plaintiff.
D.

Tortious Interference Claim
109.

To prevail on a claim for tortious interference, a plaintiff must

establish: “(1) an existing contract subject to interference, (2) a willful and
intentional act of interference with the contract, (3) that proximately caused
42

the plaintiff's injury, and (4) caused actual damages or loss.” Prudential Ins.
Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000).
110.

Plaintiff requires every individual sitting for an ARRT

examination to enter into a non-disclosure agreement, which states that
examinees are “expressly prohibited from disclosing, publishing,
reproducing, or transmitting this exam, in whole or in part, in any form or by
any means, verbal or written, electronic or mechanical, for any purpose,
without the prior express written permission of ARRT.” Examinees cannot
proceed to the examination until they click a button indicating that they
accept the terms of the Agreement. Thus, the Court concludes that Plaintiff
has a contractual relationship with each examinee.
111.

The Court concludes that the evidence submitted at trial also

establishes that Defendant willfully and intentionally interfered with that
contractual relationship by asking her students to disclose questions they
saw on the Examinations.
112.

Defendant argues that she did not have the requisite intent

because she was not aware that her students entered into a non-disclosure
agreement with Plaintiff. See Amigo Broad., LP v. Spanish Broad. Sys.,
Inc., 521 F.3d 472, 490 (5th Cir. 2008) (“[T]he interfering party must have
‘actual knowledge of the contract or business relation in question, or
43

knowledge of facts and circumstances that would lead a reasonable person to
believe in the existence of the contract or business relationship.’”). The
Court does not find this claim credible. Plaintiff’s Examination Handbook
notifies candidates that they will be asked to enter into a non-disclosure
agreement and must accept the terms of the agreement in order to proceed
with the examination. The Examination Handbook states that by entering
into the Agreement, candidates “agree to not disclose exam questions in any
form or remove them from the test center.” (Pl. Ex. 9a at ARRT 000474.)
Defendant was familiar with and had access to the Examination
Handbook—it contains the Content Specifications that Defendant
reproduced in her own study guides. Thus, Defendant “knew or in the
exercise of ordinary care should have known” that her students entered into
a non-disclosure agreement with Plaintiff. Steinmetz & Assocs., Inc. v.
Crow, 700 S.W.2d 276, 278 (Tex. App. 1985).
113.

As for the third element of a tortious interference claim, “[t]o

establish proximate cause, a [plaintiff] must show that ‘the defendant took
an active part in persuading a party to a contract to breach it.’” Amigo
Broad., LP, 521 F.3d at 493 (quoting Davis v. HydPro, Inc., 839 S.W.2d
137, 139 (Tex. App. 1992)). Defendant actively persuaded her students to
disclose questions they saw on the Examinations; as a result, Plaintiff was
44

forced to retire 87 questions. Accordingly, Defendant’s interference
proximately caused Plaintiff’s injury.
114.

Finally, Plaintiff suffered actual loss. As a result of

Defendant’s conduct, Plaintiff lost the value of 87 questions, which each
cost approximately $1,000 to develop. See Cameron-Ortiz, 626 F. Supp. 2d
at 269 (“In a case such as this, involving the infringement of secure
standardized test questions, the loss in fair market value is appropriately
calculated by determining the development costs for any infringed questions
and infringed forms that are retired because of the compromise.”).
115.

The Court finds that Defendant is liable for tortious

interference.
E.

Misappropriation of Trade Secrets Claim
116.

Under Texas law, misappropriation of trade secrets is

established by showing: “(a) a trade secret existed; (b) the trade secret was
acquired through a breach of a confidential relationship or discovered by
improper means; and (c) use of the trade secret without authorization from
the plaintiff.” Phillips v. Frey, 20 F.3d 623, 627 (5th Cir. 1994).
117.

In the Court’s Order Denying Summary Judgment, the Court

held that Plaintiff’s examination questions constitute trade secrets. (Doc.
# 61 at 32.)
45

118.

Based on the factual findings set forth above, the Court

concludes that Defendant improperly acquired Plaintiff’s questions.
“Improper means of acquiring another’s trade secrets include theft, fraud,
unauthorized interception of communications, inducement of or knowing
participation in a breach of confidence, and other means either wrongful in
themselves or wrongful under the circumstances of the case.” Wellogix, Inc.
v. Accenture, L.L.P., 716 F.3d 867, 876 (5th Cir. 2013) (quoting Astoria
Indus. of Iowa, Inc. v. SNF, Inc., 223 S.W.3d 616, 636 (Tex. App. 2007)).
Defendant acquired Plaintiff’s confidential, copyright-protected questions by
inducing her students to violate the non-disclosure agreements they entered
into.
119.

Finally, Defendant used Plaintiff’s questions without

authorization. “Use” is defined as “any exploitation of the trade secret that
is likely to result in injury to the trade secret owner or enrichment to the
defendant.” Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444, 451 (5th
Cir. 2007) (quoting Restatement (Third) of Unfair Competition § 40).
Defendant solicited students (customers) by promising to provide them with
questions that appeared on the Examinations, and did, in fact, provide her
students with questions that appeared on the Examinations. She was not
authorized to do so.
46

120.

The Court finds that Defendant is liable for misappropriation of

trade secrets.
ORDER
Based on the foregoing findings of fact and conclusions of law,
the Court orders that judgment be entered in favor of Plaintiff and against
Defendant in the amount of $87,000. Plaintiff is directed to file a motion for
its reasonable attorney’s fees and costs incurred in litigating this matter
within fourteen (14) days of the date of this Order. Defendant shall have
fourteen (14) days to file objections. The Court shall decide the amount of
fees and costs to be awarded on the basis of the parties’ submissions.
IT IS SO ORDERED.
DATED: San Antonio, Texas, August 26, 2013.

_____________________________
David Alan Ezra
Senior United States District Judge

47