IberiaBank v. Darryl Broussard
907 F.3d 826
5th Cir.2018Background
- Darryl Broussard was Senior VP and Chief Lending Officer at Teche Federal Bank; Teche agreed to merge into IberiaBank with a merger date of May 31, 2014.
- Broussard had a Change-in-Control Severance Agreement (CCSA) with Teche promising a 2.99× salary bonus on a change in control, and he signed an Employment Agreement with IberiaBank promising a $250,000 "success bonus" conditioned on performance and loyalty; both contracts contained arbitration clauses (the CCSA allowed recovery of attorneys’ fees; the Employment Agreement did not).
- In the months before the merger Broussard secretly negotiated with competitor JD Bank to move himself and several Teche lending officers, solicited confidential client and loan information from team members, arranged JD Bank offers, and helped locate a JD Bank branch; many lenders rescinded IberiaBank acceptances immediately before the merger.
- After the merger Teche paid Broussard his CCSA bonus; Broussard began employment with IberiaBank but was fired for cause about a month later for recruiting Teche employees and other breaches; IberiaBank refused to pay the $250,000 success bonus.
- IberiaBank sued in federal court alleging breach of the CCSA, breach of the Employment Agreement, CFAA violations for deletions of files, and LUTPA violations; after bench trial the magistrate found Broussard breached the CCSA, violated the CFAA, and denied Broussard’s recovery of broad attorneys’ fees under the CCSA; the Fifth Circuit affirmed most rulings, vacated and remanded the LUTPA decision, and affirmed denial of non-arbitration attorneys’ fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of CCSA (Teche claim) | Broussard breached fiduciary duties and CCSA by recruiting team and sharing confidential info; damages equal to bonus paid. | Broussard argued no harm because merger closed and no lost profits; disputed characterization of conduct. | Court affirmed breach and damages: Broussard caused payment of bonus he wasn’t entitled to. |
| Breach of Employment Agreement (Broussard counterclaim) | Broussard claimed IberiaBank wrongfully withheld $250k success bonus. | IberiaBank argued Broussard failed to perform (fiduciary duty, disclosure) so no obligation to pay. | Court affirmed no breach by IberiaBank; Broussard failed to prove he satisfied conditions. |
| CFAA claim (IberiaBank) | IberiaBank alleged Broussard deleted files without authorization, causing measurable damage. | Broussard contended he had authorization or instructions to delete and challenged hearsay rulings and failure to call witness. | Court affirmed CFAA violation: factfinder credited lack of authorization and awarded damages. |
| LUTPA claim (IberiaBank) | IberiaBank argued Broussard’s conduct was unfair/deceptive competition (recruiting, misuse of confidential info). | Broussard argued trial court properly required narrow showing and found no LUTPA violation. | Fifth Circuit vacated and remanded LUTPA ruling for trial court to reevaluate under correct legal standard (including defendant’s motivation). |
| Tortious interference (Broussard claim) | Broussard claimed IberiaBank’s litigation-hold letter and arbitration demand caused JD Bank to rescind his offer. | IberiaBank argued correspondence was a legitimate protective step supported by good-faith belief of wrongdoing. | Court affirmed summary judgment for IberiaBank: no malice; communications protected legitimate interests. |
| Attorneys’ fees under CCSA | Broussard sought recovery of all litigation fees under CCSA indemnity clause. | IberiaBank argued statutory/public-policy limits and that fees were limited to arbitration expenses; amendment nullified arbitration for Employment Agreement only. | Court held Louisiana law does not categorically bar officer indemnification; but CCSA fees clause was limited to arbitration-related disputes, so broader fees award reversed. |
Key Cases Cited
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (choice-of-law in federal diversity actions)
- Mobil Expl. & Producing U.S. Inc. v. Certain Underwriters Subscribing to Cover Note 95-3317(A), 837 So. 2d 11 (contract interpretation vs. factual breach review under Louisiana law)
- Lewis v. Ascension Par. Sch. Bd., 806 F.3d 344 (bench-trial standard: facts for clear error, law de novo)
- Guzman v. Hacienda Records & Recording Studio, Inc., 808 F.3d 1031 (deference to credibility findings in bench trials)
- United States v. Thomas, 877 F.3d 591 (authorization and CFAA interpretation)
- Computer Mgmt. Assistance Co. v. Robert F. DeCastro, Inc., 220 F.3d 396 (LUTPA requires fraud, deception, or unethical conduct)
- Tubos de Acero de Mexico, S.A. v. Am. Int’l Inv. Corp., 292 F.3d 471 (LUTPA elements discussion)
- Cheramie Servs., Inc. v. Shell Deepwater Prod., Inc., 35 So. 3d 1053 (narrow scope of LUTPA; egregious conduct requirement)
- Turner v. Purina Mills, Inc., 989 F.2d 1419 (LUTPA not a remedy for ordinary contract breaches)