350 F. Supp. 3d 512
E.D. La.2018Background
- Plaintiff Complete Logistical Services, LLC (CLS) alleges former member Donald Rulh was stripped of managerial authority, then accessed and removed confidential company files (financial statements, customer lists, sales records) and withdrew $222,000 from the company account to form a competing business. CLS attached a nondisclosure agreement to the complaint.
- CLS asserts federal claims under the Defend Trade Secrets Act (DTSA) and the Computer Fraud and Abuse Act (CFAA), plus related state-law claims and seeks injunctive and declaratory relief.
- Rulh moved to dismiss under Rule 12(b)(1), arguing CLS failed to state federal claims (no trade secrets, no reasonable secrecy measures, no misappropriation, no interstate nexus; and CFAA damages not pleaded).
- The court treated the facial jurisdictional attack under the Rule 12(b)(6) standard (accepting well-pled allegations as true) and held oral argument.
- The court found CLS sufficiently pleaded DTSA elements (trade secret, misappropriation, interstate nexus) and denied dismissal as to the DTSA claim.
- As to the CFAA claim, the court held CLS may plead recoverable "loss" via investigation/remediation costs (not solely interruption of service), but ordered CLS to amend its complaint to allege specific damages exceeding $5,000 within 30 days or the CFAA claim will be dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| DTSA — existence of trade secrets | CLS: financials, customer lists, sales analyses were kept confidential and derive independent value | Rulh: information generally known/recallable; not secret | Court: Allegations that files were kept on secured systems and not shared suffice at pleading stage — trade secrets plausibly alleged |
| DTSA — misappropriation/authority to take files | CLS: Rulh had been stripped of authority and took files without consent to form a competitor | Rulh: he was arguably still a member; acquisition not improper | Court: Accepting complaint facts, CLS plausibly alleged misappropriation (improper acquisition/use) |
| DTSA — interstate commerce nexus | CLS: does business across state lines; customer list includes out-of-state clients; trade secrets used in interstate commerce | Rulh: insufficient nexus pleaded | Court: Allegations of multi-state operations and out-of-state customers adequately plead the DTSA nexus |
| CFAA — "loss" amount and nature | CLS: will incur >$5,000 investigating, assessing, and restoring systems (investigative/remediation costs count) | Rulh: no interruption or computer damage; loss allegation conclusory and unsubstantiated | Court: Statute allows investigative/remediation costs as recoverable "loss," but CLS must amend to plead concrete >$5,000 damages; otherwise CFAA claim dismissed |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard)
- Lane v. Halliburton, 529 F.3d 548 (5th Cir.) (facial jurisdictional attack uses Rule 12(b)(6) standard)
- Brown v. Jordan Int’l, 846 F.3d 1167 (11th Cir.) (CFAA loss includes investigative/remediation costs)
- Yoder & Frey Auctioneers, Inc. v. EquipmentFacts, LLC, 774 F.3d 1065 (6th Cir.) (CFAA loss interpretation)
- A.V. ex rel. Vanderhye v. iParadigms, LLC, 562 F.3d 630 (4th Cir.) (CFAA loss analysis)
- Franchise Tax Bd. v. Const. Laborers Vacation Trust, 463 U.S. 1 (DJA does not expand federal subject-matter jurisdiction)
- Pontchartrain Med. Labs., Inc. v. Roche Biomedical Labs., Inc., 677 So.2d 1086 (La. App.) (customer lists can be trade secrets)