Louisiana Record

Monday, November 18, 2019

Louisiana court refuses to dismiss case against man accused of stealing trade secrets


By Tomas Kassahun | Oct 28, 2018


NEW ORLEANS — The U.S. District Court Eastern District of Louisiana has denied a motion to dismiss filed by a man who is accused of stealing trade secrets from his former business partners.

Complete Logistical Services (CLS), which provides contract labor in the marine industry, brought the allegations against former member Donald Rulh. Rulh misappropriated CLS assets, damaged CLS’ image and took confidential information after he was removed from the company, according to the allegations noted in the court.

Rulh was revoked from managing the business because he allegedly failed to collect payments from clients, refused to reimburse the company for money he borrowed to refinance his private home, arrived intoxicated to company events and changed the locks at the CLS office without notifying other members, according to the opinion.

CLS’ complaints, cited in the court document, allege that Rulh stole confidential documents, which were printed, scanned and emailed to Rulh’s personal email account.

CLS brought claims against Rulh for violations of the Defend Trade Secrets Act, Louisiana Uniform Trade Secrets Act, Computer Fraud and Abuse Act, Louisiana Unfair Trade Practices Act, unjust enrichment, breach of fiduciary duties, duty of loyalty, duty of due care, conversion, conspiracy and fraud. 

To make a claim under the Defend Trade Secrets Act (DTSA), a plaintiff must allege the existence of a trade secret, misappropriation of the trade secret by another and the trade secret’s relation to a good or service used or intended for use in interstate or foreign commerce.

A trade secret under the DTSA includes scientific and technical information that the owner has taken reasonable measures to keep secret and “derives independent economic value...from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information," according to the opinion.

The district court decided that the defendant was not authorized to take the information when he allegedly took it and used this information to form a company with his co-defendants that would compete with CLS.

“Construing the allegations in plaintiff’s complaint as true, as the court must, the court finds plaintiff has sufficiently alleged defendant misappropriated its trade secrets as defined by the DTSA,” the district court opinion said.

For that reason, the court said the plaintiff had adequately pleaded the DTSA’s essential elements and the motion to dismiss with respect to this claim was denied.

In regards to the Computer Fraud and Abuse Act, the district court said it would deny the defendant’s motion on the condition that the plaintiff file an amended complaint addressing the issue within 30 days.

“Plaintiff merely asserts it will sustain more than $5,000 investigating defendant’s actions, but does not substantiate the assertion or define any cost for specific purpose,” the opinion stated. “Thus, the court will order plaintiff to amend its complaint to include more specific damage allegations.”

The court made the ruling on Oct. 15 with Judge Eldon Fallon presiding over the case.


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