Cloud49 v. Rackspace Tech
24-50385
5th Cir.Mar 11, 2025Background
- Cloud49 provided public cloud management services to the Texas Department of Information Resources (DIR) for five years.
- DIR expanded its cloud management needs and issued multiple Requests for Offers (RFO) for a new Public Cloud Manager contract; Capgemini was retained to manage the bidding.
- Cloud49 outscored Rackspace in the first two rounds of bidding but was surpassed by Rackspace in the final round after scores changed; Rackspace ultimately won the contract.
- Cloud49 protested the contract award, alleging improper scoring and noncompliance with procurement rules, but its protest and administrative appeal were denied.
- Cloud49 sued Capgemini for tortious interference and Rackspace for trade secret misappropriation, tortious interference (existing contract and prospective relations); both defendants obtained summary judgment in the district court.
- On appeal, Cloud49 challenged the summary judgments, asserting the district court improperly discounted its evidence and made credibility determinations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Tortious interference with prospective business | Capgemini falsely blamed Cloud49, influencing the award | No competent, non-conclusory evidence of intent to disrupt | For Capgemini; insufficient facts |
| Defend Trade Secrets Act against Rackspace | Rackspace misappropriated trade secrets via ex-employees | Employees were authorized to share info; no improper means | For Rackspace; no improper means |
| Tortious interference with existing contract | Rackspace induced ex-employees to breach NDAs | No evidence of breach or inducement; no relevant NDA in record | For Rackspace; no breach or inducement |
| Tortious interference with prospective relations vs Rackspace | Rackspace misrepresented staffing expertise | Alleged misrepresentation not material or relied upon | For Rackspace; no actionable representation |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard requires a genuine issue of material fact)
- Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133 (summary judgment inferences must favor non-movant)
- Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909 (elements of tortious interference with prospective business relations)
- Prudential Ins. Co. of Am. v. Fin. Rev. Servs., Inc., 29 S.W.3d 74 (elements of tortious interference with contract)